As filed with the Securities and Exchange Commission on September 25, 1996
Registration No. 333-10359
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
AMENDMENT NO. 2
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------
IRON MOUNTAIN INCORPORATED
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
<S> <C> <C>
DELAWARE 4226
(State of incorporation) (Primary Standard Industrial 04-3107342
Classification Code Number) (IRS Employer Identification No.)
</TABLE>
745 ATLANTIC AVENUE, BOSTON, MA 02111
(617) 357-4455
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
------------------
C. RICHARD REESE
CHAIRMAN OF THE BOARD OF DIRECTORS
AND CHIEF EXECUTIVE OFFICER
IRON MOUNTAIN INCORPORATED
745 Atlantic Avenue
Boston, MA 02111
(617) 357-4455
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
------------------
Copies to:
WILLIAM J. CURRY ROBERT A. ZUCCARO
SULLIVAN & WORCESTER LLP JONES, DAY, REAVIS & POGUE
One Post Office Square 599 Lexington Avenue
Boston, MA 02109 New York, NY 10022
(617) 338-2800 (212) 326-3939
------------------
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement. If any of
the securities being registered on this Form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, check
the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
------------------
The Registrants hereby amend this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrants
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
================================================================================
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH
STATE.
SUBJECT TO COMPLETION, DATED SEPTEMBER 25, 1996
PROSPECTUS
, 1996
$150,000,000
[IRON MOUNTAIN LOGO]
IRON MOUNTAIN INCORPORATED
% Senior Subordinated Notes due 2006
The % Senior Subordinated Notes due 2006 (the "Notes") are being offered
(the "Offering") by Iron Mountain Incorporated (the "Company" or "Iron
Mountain"). The net proceeds of the Offering will be used to repay outstanding
bank debt and certain other indebtedness and to fund a portion of the purchase
price of the Pending Acquisition.
Interest on the Notes is payable on and , commencing
, 1997. Except as described below, the Notes are not redeemable by
the Company prior to , 2001. Thereafter, the Notes are redeemable at
the option of the Company, in whole or in part, at any time and from time to
time, at the redemption prices set forth herein plus accrued and unpaid interest
to, but excluding, the date of redemption. In addition, during the first 36
months after the date of issuance of the Notes, the Company, at its option, may
redeem up to 35% of the initial principal amount of the Notes with the net
proceeds of one or more Qualified Equity Offerings at a redemption price equal
to %, plus accrued and unpaid interest to, but excluding, the date of
redemption; provided that at least 65% of the initial principal amount of the
Notes remains outstanding after each such redemption. Except as set forth
herein, the Company is not required to make sinking fund or redemption payments
with respect to the Notes at any time prior to maturity. Upon the occurrence of
a Change of Control, each Holder of Notes may require the Company to repurchase
such Notes at 101% of the principal amount thereof, plus accrued and unpaid
interest to, but excluding, the date of repurchase.
The Notes will be general unsecured senior subordinated obligations of the
Company ranking junior to all existing and future Senior Debt of the Company.
The Notes will be fully and unconditionally guaranteed on an unsecured senior
subordinated and joint and several basis (the "Subsidiary Guarantees") by
substantially all of the Company's present and future Restricted Subsidiaries
(collectively, the "Guarantors"). The Subsidiary Guarantees will rank junior to
all existing and future Senior Debt of the Guarantors. As of June 30, 1996, on a
pro forma basis after giving effect to the Transactions, the aggregate
outstanding principal amount of Senior Debt of the Company and the Guarantors
would have been $24.5 million.
The Notes will not be listed on any securities exchange or included in the
National Association of Securities Dealers Automated Quotation System, and there
can be no assurance that there will be a secondary market therefor.
SEE "RISK FACTORS" COMMENCING ON PAGE 10 FOR A DISCUSSION OF CERTAIN MATERIAL
FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE NOTES
OFFERED HEREBY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- -------------------------------------------------------------------------------
Price to Discounts and Proceeds to the
the Public(1) Commissions(2) Company(1)(3)
- -------------------------------------------------------------------------------
Per Note % % %
Total $ $ $
- -------------------------------------------------------------------------------
(1)Plus accrued interest, if any, on the Notes from the date of issuance.
(2)The Company and the Guarantors have agreed to indemnify the Underwriters
against certain liabilities, including liabilities under the Securities
Act of 1933, as amended. See "Underwriting."
(3)Before deduction of expenses payable by the Company estimated to be
$800,000.
The Notes are offered by Donaldson, Lufkin & Jenrette Securities
Corporation, Bear, Stearns & Co. Inc. and Prudential Securities Incorporated
(collectively, the "Underwriters") subject to prior sale, when, as and if
delivered to and accepted by the Underwriters, and subject to certain prior
conditions, including the right of the Underwriters to reject any order in whole
or in part. It is expected that delivery of the Notes will be made in New York,
New York through the facilities of the Depository Trust Company on or about
, 1996, against payment therefor in immediately available
funds.
Donaldson, Lufkin & Jenrette
Securities Corporation
Bear, Stearns & Co. Inc.
Prudential Securities Incorporated
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES OFFERED
HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
2
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should be read in
conjunction with, the more detailed information and financial statements
appearing elsewhere in this Prospectus. References to "Iron Mountain" and the
"Company" include Iron Mountain Incorporated (including predecessor entities)
and its consolidated subsidiaries, unless the context otherwise requires.
THE COMPANY
Iron Mountain is the largest records management company in the United States,
as measured by revenues. The Company is a full-service provider of records
management and related services, enabling customers to outsource records
management functions. Pro forma for the Acquisitions (as defined herein), as of
June 30, 1996, the Company managed approximately 29.6 million Cartons* in 103
records centers in 33 markets nationwide. The Company has a diversified base of
over 19,000 customer accounts, which includes more than half of the Fortune 500
and numerous legal, banking, healthcare, accounting, insurance, entertainment
and government organizations. The Company provides storage and related services
for all major media, including paper (which is the dominant form of records
retention and which has accounted for approximately 85% of the Company's
revenues since 1992), computer disks and tapes, microfilm and microfiche, master
audio and video tapes, film and optical disks, X-rays and blueprints. The
Company's principal services include filing, retrieval and destruction of
records, courier pick-up and delivery, database management and customized
reporting. The Company also sells storage materials and provides consulting and
other records-related services.
The Company continues to capitalize on its leading position in the records
management industry and the industry trends of increased records retention,
outsourcing of records management and vendor consolidation. As a result, the
Company has achieved significant increases in revenues and EBITDA (as defined
herein). From 1991 to 1995, Iron Mountain's total revenues increased from $62.8
million to $104.4 million primarily from internal growth, representing a
compound annual growth rate ("CAGR") of 13.5%. During the same period, storage
revenues grew at a 12.9% CAGR while service and storage material sales revenues
grew at a 14.6% CAGR. From 1991 to 1995, the Company's EBITDA grew from $15.0
million to $26.1 million, representing a 14.9% CAGR. Revenues and EBITDA for the
six months ended June 30, 1996 increased 27.3% (10.2% from internal growth and
17.1% from acquisitions) and 24.8%, respectively, over the same period in 1995.
For a discussion of the significance of EBITDA and other measures of the
Company's performance determined in accordance with generally accepted
accounting principles ("GAAP") and the Company's sources and applications of
cash flow, see "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Overview" and "--Liquidity and Capital Resources."
Industry Overview
According to industry sources, organizations in the United States generate an
estimated four trillion documents each year, many of which must be retained and
remain available for reference for many years. These records may be generally
divided into two categories: active and inactive. Inactive records, which are
the principal focus of the records management industry, consist of records that
are not needed for immediate access but which must be retained for legal or
regulatory reasons or for occasional reference to support ongoing business
operations. Based on industry studies, the Company believes that inactive
records make up approximately 80% of all records. The Company believes that the
volume of inactive records is increasing for a number of reasons, including: (i)
the rapid growth of inexpensive document producing technologies such as
facsimile, desktop printing and computer networking; (ii) increased regulatory
requirements; (iii) concerns over possible future litigation and the resulting
increases in volume and holding periods of documentation; (iv) the high cost of
reviewing records and deciding whether to retain or destroy them; and (v) the
failure of many entities to adopt or follow policies on records destruction.
Despite the growth of new "paperless" technologies, such as the Internet and
e-mail, management believes that stored information remains predominantly
paper-based and that such technologies have promoted the creation of hard copies
of such electronic information.
- -------------
* The term "Carton" is defined as a measurement of volume equal to a single
standard storage carton, approximately 1.2 cubic feet. The number of Cartons
stored does not include storage volumes in the Company's vital records services
and data protection services, which are described under "Business."
3
<PAGE>
The Company believes that it benefits from several industry fundamentals,
including: (i) the historically non- cyclical nature of the records management
industry; (ii) the continued trend towards corporate outsourcing of records
management functions; (iii) the ability of larger records management companies
to achieve economies of scale with respect to labor, real estate costs and the
utilization of management information systems; and (iv) the ongoing
consolidation of the records management industry.
The Company believes that it is one of only four records management providers
with a national operating presence, the balance being regional or, in most
instances, single-city operators. According to the Association of Commercial
Records Centers (the "ACRC"), a trade group of approximately 500 members, as of
January 1994 (the latest date for which such information is available),
approximately 2,600 firms offered records storage and management services in the
United States. The Company believes that there is a trend toward consolidation
in the records management industry and that such trend will continue to
accelerate primarily because of: (i) the opportunities to achieve economies of
scale; (ii) the industry's capital requirements for growth; (iii) customer
demands for more sophisticated technology-based solutions; and (iv) the
preference of certain large, national customers to outsource a significant
portion of their records management functions to one vendor with a national
presence, such as Iron Mountain.
Financial Characteristics of Iron Mountain's Business
Iron Mountain's records management business has the following financial
characteristics:
(bullet)Recurring Revenues. Iron Mountain derives a majority of its revenues
from fixed periodic (usually monthly) fees charged to customers for
storage of records. Storage revenues have grown for 30 consecutive
quarters and have represented approximately 60% of the Company's
total revenues in each of the last five years. Once a customer places
a record in storage with the Company and until that record is
destroyed or permanently removed (for which the Company typically
receives a service fee), the Company receives recurring payments of
fixed periodic fees without incurring additional labor or marketing
expenses or significant capital costs. The stable and growing storage
base also provides the foundation for increases in revenues and
EBITDA from service activities and sales of storage materials.
(bullet)Historically Non-Cyclical Business. Iron Mountain has not experienced
a reduction of its business as a result of past general economic
downturns, although there can be no assurance that this would be the
case in the future. Management believes that the outsourcing of
records management may accelerate during economic downturns as
companies focus on reducing costs through outsourcing non-core
operating functions. In addition, management believes that companies
that have outsourced records management are less likely during
economic downturns to incur the move-out costs and other expenses
associated with switching vendors or moving records management
in-house.
(bullet)Inherent Growth from Existing Customers. The Company's customers have
on average generated additional Cartons at a faster rate than stored
Cartons have been destroyed or permanently removed. From 1992 to
1995, net Cartons from existing customers grew at an average annual
rate of 6.7%. The Company believes the consistent growth of its
storage revenues is the result of a number of additional factors,
including: (i) the trend toward increased records retention; (ii)
customer satisfaction with the Company's services; and (iii) the
costs and inconvenience of moving storage operations in-house or to
another provider of records management services.
(bullet)Diversified and Stable Customer Base. The Company has over 19,000
customer accounts in a variety of industries. The Company currently
provides services to more than half of the Fortune 500 and numerous
legal, banking, healthcare, accounting, insurance, entertainment and
government organizations. Only one of the Company's customers
accounted for more than 3% of revenues in 1993, 1994 or 1995. From
1992 to 1995, average annual permanent removals of Cartons
represented only approximately 4% of total Cartons stored.
(bullet)Capital Expenditures Related Primarily to Growth. The Company's
business requires limited annual maintenance capital expenditures.
Maintenance capital expenditures were $1.8 million, $1.2 million and
$0.9 million in 1993, 1994 and 1995, respectively. From 1992 to 1995,
over 90% of the Company's aggregate capital expenditures were
growth-related investments, primarily in racking systems, new
4
<PAGE>
buildings and leasehold improvements, equipment for new facilities,
management information systems and facilities restructuring. These
growth-related capital expenditures are primarily discretionary and
create additional capacity for increases in revenues and EBITDA.
Business Strategy
Iron Mountain's business strategy is to increase revenues and EBITDA while
maintaining a low-cost operating structure and providing premium service. The
Company intends to generate growth by increasing its storage and service
revenues from existing customers, adding new customers and making acquisitions.
The Company's strategy is based on the following elements:
(bullet)Provide Superior Customer Service. The Company believes it has a
reputation for providing reliable, quality service based on its more
than 45 years of operations, its commitment to providing premium
customer service and the continuity and depth of its management team.
The Company has successfully implemented a decentralized management
structure that enables the Company to respond quickly and flexibly to
local customer needs. Iron Mountain's proprietary Safekeeper(R)
system enables it to quickly provide customized records management
solutions to its customers, enhancing the quality of its services. In
addition, Iron Mountain's national operating presence allows it to
better service large organizations that require records management
functions at multiple, geographically diverse facilities.
(bullet)Capitalize on Operating Efficiencies. Iron Mountain pursues a
low-cost operating strategy based primarily on achieving economies of
scale in the areas of storage, labor and transportation, general and
administrative functions and management information systems. Because
occupancy costs are a major component of the Company's cost of sales,
its real estate management staff aggressively seeks to minimize per
Carton storage costs by designing racking systems and operating space
to maximize facility storage efficiency, negotiating favorable
facility leases, contracting for facilities to be built to its custom
specifications, and leasing larger facilities in order to reduce
operating costs per Carton. The Company seeks to increase labor
efficiency by offering incentive compensation to all full-time
employees based upon achieving specific operating targets. Certain
operating costs, such as the maintenance of local delivery fleets,
general and administrative costs and management information systems,
offer economies of scale, providing the Company with operating
leverage and the ability to increase its efficiency through further
growth.
(bullet)Pursue Acquisition Opportunities. The Company believes that it is
well positioned to participate in the further consolidation of the
records management industry. Iron Mountain's management team has
successfully completed 18 acquisitions since the Company embarked on
a proactive acquisition strategy in mid-1994, and one additional
acquisition is currently pending. The Company intends to continue to
make fold-in acquisitions to augment its operations in existing
markets and to make strategic acquisitions in new geographic markets,
with an emphasis on the 50 largest markets in the United States and
potentially in certain markets outside the United States. Following
an acquisition in a new market, the Company seeks to increase its
business with the acquired customer base and to supplement that
growth both with new customers and through appropriate fold-in
acquisitions. In addition, the Company has successfully reduced the
cost structure of its acquired operations by implementing its
efficient operating strategies and leveraging its centralized
administrative resources and management information systems.
(bullet)Leverage Proprietary Safekeeper System. The Company pioneered the
application of advanced information technology to the records
management industry. Iron Mountain's proprietary Safekeeper system
provides advanced inventory control and information access, enabling
the Company to provide faster, higher quality and more flexible
solutions to its customers and to lower the costs of its operations.
Safekeeper has been designed to easily and effectively integrate
newly acquired records management companies and offer improved levels
of customer service and records management capabilities to customers
acquired through acquisitions. Iron Mountain's Safekeeper system
exploits bar-code technology to provide a comprehensive, standardized
approach to tracking, accessing and retrieving records. Safekeeper
offers state-of-the-art records management capabilities and ease of
access to customers while featuring security functions to protect
customer information from unauthorized access. Since 1992, the
Company has invested $12.5 million to develop and refine its
management information systems, including Safekeeper.
5
<PAGE>
THE OFFERING
<TABLE>
<CAPTION>
<S> <C>
Securities Offered $150,000,000 principal amount of % Senior Subordinated Notes due 2006
(the "Notes").
Maturity Date , 2006
Interest Payment Dates and of each year, commencing
, 1997.
Guarantees The Notes will be fully and unconditionally guaranteed on an unsecured senior
subordinated and joint and several basis (the "Subsidiary Guarantees") by
substantially all of the Company's present and future Restricted Subsidiaries
(collectively, the "Guarantors"). Each of the Guarantors has also guaranteed
unconditionally the indebtedness outstanding under the Company's existing
bank credit facility (the "Credit Agreement") and will guarantee
unconditionally the indebtedness outstanding under the new bank credit
facility the Company intends to enter into with its lenders (the "New
Credit Facility"). See "Description of the Notes--Subsidiary Guarantees."
Subordination The Notes will be general unsecured senior subordinated obligations of the
Company ranking junior to all existing and future Senior Debt of the Company,
including any indebtedness that may be incurred under the Credit Agreement or
the New Credit Facility. The Subsidiary Guarantees will rank junior to all
existing and future Senior Debt of the Guarantors. As of June 30, 1996, on a
pro forma basis after giving effect to the Transactions, the aggregate
outstanding principal amount of Senior Debt of the Company and the Guarantors
would have been $24.5 million. See "Description of the Notes--Subordination."
Optional Redemption Except as described below, the Notes are not redeemable by the Company prior
to , 2001. Thereafter, the Notes are redeemable at the option of the
Company, in whole or in part, at any time and from time to time, at the
redemption prices set forth herein plus accrued and unpaid interest to, but
excluding, the date of redemption. In addition, during the first 36 months
after the date of issuance of the Notes, the Company, at its option, may
redeem up to 35% of the initial principal amount of the Notes with the net
proceeds of one or more Qualified Equity Offerings at a redemption price
equal to %, plus accrued and unpaid interest to, but excluding, the date
of redemption; provided that at least 65% of the initial principal amount of
the Notes remains outstanding after each such redemption. See "Description of
the Notes--Optional Redemption."
Mandatory Redemption Except with respect to required repurchases upon the occurrence of a Change
of Control or in the event of certain Asset Sales, the Company is not
required to make sinking fund or redemption payments with respect to the
Notes at any time prior to maturity. See "Description of the Notes--
Mandatory Redemption."
6
<PAGE>
Change of Control Upon the occurrence of a Change of Control, each Holder of Notes may require the
Company to repurchase such Notes at 101% of the principal amount thereof, plus
accrued and unpaid interest to, but excluding, the date of repurchase. See
"Description of the Notes--Repurchase at the Option of Holders--Change of Control."
Certain Covenants The Indenture governing the Notes (the "Indenture") will contain covenants
restricting or limiting the ability of the Company and its Restricted
Subsidiaries to, among other things: (i) incur additional indebtedness,
including indebtedness ranking senior to the Notes and junior to any Senior
Debt; (ii) pay dividends or make other restricted payments; (iii) make asset
dispositions; (iv) permit liens; (v) enter into sale and leaseback
transactions; (vi) enter into certain mergers; (vii) make certain
investments; and (viii) enter into transactions with related persons. See
"Description of the Notes--Certain Covenants."
Use of Proceeds The net proceeds of the Offering will be used to repay outstanding bank debt and
certain other indebtedness and to fund a portion of the purchase price of the
Pending Acquisition.
</TABLE>
RISK FACTORS
For a discussion of certain material factors that should be considered in
connection with an investment in the Notes offered hereby, see "Risk Factors" on
pages 10 to 14.
7
<PAGE>
SUMMARY HISTORICAL AND PRO FORMA INFORMATION
(Dollars in thousands)
The following summary historical consolidated statements of operations and
balance sheet data of the Company as of and for each of the years ended December
31, 1991, 1992, 1993, 1994 and 1995 have been derived from the Company's audited
consolidated financial statements. The summary historical consolidated
statements of operations and balance sheet data of the Company for the six
months ended June 30, 1995 and 1996 have been derived from the Company's
unaudited condensed consolidated financial statements. The Company's unaudited
condensed consolidated financial statements include all adjustments, consisting
of normal recurring accruals, that the Company considers necessary for a fair
presentation of the financial position and the results of operations for those
periods. Operating results for the six months ended June 30, 1996 are not
necessarily indicative of the results for the entire year ending December 31,
1996. The summary historical and pro forma financial data set forth below should
be read in conjunction with "Pro Forma Condensed Consolidated Financial
Information" and the Notes thereto, with "Selected Financial and Operating
Information" and the Notes thereto, with "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and with Iron Mountain's
Consolidated Financial Statements and the Notes thereto included elsewhere in
this Prospectus.
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------------------------
Historical
-------------------------------------------------- Pro Forma
1991 1992 1993 1994 1995 1995(1)
------- ------- ------- --------- ------ ---------
<S> <C> <C> <C> <C> <C> <C>
Consolidated Statements of Operations Data:
Revenues:
Storage $39,510 $44,077 $48,892 $54,098 $ 64,165 $86,469
Service and Storage Material Sales 23,330 26,596 32,781 33,520 40,271 54,431
------- ------- ------- ------- -------- -------
Total Revenues 62,840 70,673 81,673 87,618 104,436 140,900
Operating Expenses:
Cost of Sales (Excluding Depreciation) 31,375 35,169 43,054 45,880 52,277 69,804
Selling, General and Administrative 16,471 17,630 19,971 20,853 26,035 35,087
Depreciation and Amortization 7,674 5,780 6,789 8,690 12,341 18,182
------- ------- ------- ------- -------- -------
Total Operating Expenses 55,520 58,579 69,814 75,423 90,653 123,073
------- ------- ------- ------- -------- -------
Operating Income $ 7,320 $12,094 $11,859 $12,195 $ 13,783 $17,827
======= ======= ======= ======= ======== =======
Other Data:
EBITDA (2) $14,994 $17,874 $18,648 $20,885 $ 26,124 $36,009
EBITDA as a Percentage of Total Revenues 23.9% 25.3% 22.8% 23.8% 25.0% 25.6%
Capital Expenditures:
Growth (3) -- $11,226 $13,605 $15,829(4) $ 14,395 --
Maintenance -- 818 1,846 1,151 858 --
------- ------- ------- ------- --------
Total Capital Expenditures $ 8,163 $12,044 $15,451 $16,980(4) $ 15,253 --
Approximate Cartons in Storage at End of
Period (in millions) (5) 10.8 12.6 15.5 17.7 23.3 --
Adjusted EBITDA and Credit Ratios:
Adjusted EBITDA (6)
Cash Interest Expense (7)
Ratio of Adjusted EBITDA to Cash Interest
Expense
Ratio of Net Debt to Adjusted EBITDA (8)
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended June 30,
------------------------------------
Historical
------------------ Pro Forma
1995 1996 1996 (1)
------- ------- ---------------
<S> <C> <C> <C>
Consolidated Statements of Operations Data:
Revenues:
Storage $30,748 $39,363 $ 46,224
Service and Storage Material Sales 19,476 24,587 29,127
------- ------- --------
Total Revenues 50,224 63,950 75,351
Operating Expenses:
Cost of Sales (Excluding Depreciation) 25,112 32,383 37,572
Selling, General and Administrative 12,697 16,067 19,339
Depreciation and Amortization 5,428 7,530 9,099
------- ------- --------
Total Operating Expenses 43,237 55,980 66,010
------- ------- --------
Operating Income $ 6,987 $ 7,970 $ 9,341
======= ======= ========
Other Data:
EBITDA (2) $12,415 $15,500 $ 18,440
EBITDA as a Percentage of Total Revenues 24.7% 24.2% 24.5%
Capital Expenditures:
Growth (3) $ 6,730 $10,702 --
Maintenance 592 460 --
------- -------
Total Capital Expenditures $ 7,322 $11,162 --
Approximate Cartons in Storage at End of
Period (in millions) (5) 20.3 26.4 29.6
Adjusted EBITDA and Credit Ratios: As of
June 30, 1996
-------------
Adjusted EBITDA (6) .............................. $ 39,018
Cash Interest Expense (7) ....................... 17,952
Ratio of Adjusted EBITDA to Cash Interest
Expense .......................................... 2.2x
Ratio of Net Debt to Adjusted EBITDA (8) ..... 4.4x
</TABLE>
<TABLE>
<CAPTION>
As of June 30, 1996
-----------------------
Historical Pro Forma(9)
---------- ------------
<S> <C> <C>
Balance Sheet Data:
Cash and Cash Equivalents $ 2,232 $ 2,232
Total Assets 212,630 268,705
Total Debt 118,894 174,518
Stockholders' Equity 54,729 52,501
</TABLE>
(Footnotes on the following page)
8
<PAGE>
- -------------
(Footnotes from the preceding page)
(1) Gives effect to: (i) the Completed Acquisitions (as defined herein); (ii)
the Pending Acquisition (as defined herein); (iii) the consummation of the
Company's initial public offering of its Common Stock, par value $0.01 per
share (the "Common Stock"), which closed on February 6, 1996 (the "Initial
Public Offering") and the application of the net proceeds therefrom; (iv)
the closing under the New Credit Facility; and (v) the application of the
estimated net proceeds from the Offering, as if each had occurred as of
January 1, 1995. The Company will record, in the quarter in which the
Offering is consummated, an extraordinary loss on retirement of debt, net of
related tax benefit. As of June 30, 1996, the amount of such loss would have
been approximately $2.2 million. The pro forma statements of operations data
do not give effect to such loss. See "The Transactions," "Use of Proceeds"
and "Pro Forma Condensed Consolidated Financial Information."
(2) Earnings before interest, taxes, depreciation, amortization and
extraordinary charges ("EBITDA"). Based on its experience in the records
management industry, the Company believes that EBITDA is an important tool
for measuring the performance of records management companies (including
potential acquisition targets) in several areas, such as liquidity,
operating performance and leverage. In addition, lenders use EBITDA as a
criterion in evaluating records management companies, and substantially all
of the Company's financing agreements contain covenants in which EBITDA is
used as a measure of financial performance. However, EBITDA should not be
considered an alternative to operating or net income (as determined in
accordance with GAAP) as an indicator of the Company's performance or to
cash flow from operations (as determined in accordance with GAAP) as a
measure of liquidity. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Overview" and "--Liquidity and Capital
Resources" for discussions of other measures of performance determined in
accordance with GAAP and the Company's sources and applications of cash
flow.
(3) Growth capital expenditures include investments in racking systems, new
buildings and leasehold improvements, equipment for new facilities,
management information systems and facilities restructuring. See
"Management's Discussion and Analysis of Financial Condition and Results
of Operations--Liquidity and Capital Resources--Capital Investments."
(4) Includes $2,901 related to the cost of constructing a records management
facility which was sold in a sale and leaseback transaction in the fourth
quarter of 1994.
(5) The term "Carton" is defined as a measurement of the volume equal to a
single standard storage carton, approximately 1.2 cubic feet. The number of
Cartons stored does not include storage volumes in the Company's vital
records services and data protection services which are described under
"Business." Pro forma Carton information for 1995 is not available.
(6) Gives effect to (i) the Completed Acquisitions completed after June 30, 1996
and (ii) the Pending Acquisition. Adjusted EBITDA, as defined in the
Indenture, equals the sum of (i) EBITDA of the Company and the Restricted
Subsidiaries for the most recent fiscal quarter for which internal financial
statements are available, multiplied by four, plus (ii) Acquisition EBITDA
of each business that has been acquired by the Company since the beginning
of such quarter (including any such acquisition which is occurring on the
date of the calculation), multiplied by a fraction, (a) the numerator of
which is three minus the number of months (and/or any portion thereof) in
such quarter for which the financial results of such acquired business are
included in the EBITDA of the Company and its Restricted Subsidiaries under
clause (i) above, and (b) the denominator of which is three. In addition,
the effects of unusual or non-recurring items occurring in any relevant
period shall be excluded in the calculation of Adjusted EBITDA. With respect
to any such acquired business, Acquisition EBITDA equals the sum of (i)
EBITDA of such acquired business for its last fiscal quarter for which
financial statements are available, multiplied by four (or if such quarterly
statements are not available, EBITDA for the last fiscal year for which
financial statements are available), plus (ii) projected quantifiable
improvements in operating results (on an annualized basis) due to cost
reductions calculated in good faith by the Company or one of its Restricted
Subsidiaries, as certified by an Officers' Certificate filed with the
Trustee, without giving effect to any operating losses of the acquired
business. Such projected quantifiable savings may differ from the cost
savings used to calculate the Pro Forma Condensed Consolidated Statement of
Operations. Adjusted EBITDA is merely a calculation utilized for purposes of
debt incurrence under the Indenture and should not be viewed as indicative
of actual or future results.
(7) Cash interest expense represents total interest expense less amortization of
deferred financing costs and other non-cash interest charges for the twelve
months ended June 30, 1996 on a pro forma basis giving effect to the
Transactions (as defined herein) as if each had occurred on July 1, 1995.
The calculation of cash interest expense assumes an interest rate of 10-1/2%
on the Notes.
(8) Net debt represents total debt less cash and cash equivalents and was
calculated based on the pro forma net debt as of June 30, 1996 of $172.3
million.
(9) Gives effect to: (i) the Completed Acquisitions consummated after June
30, 1996; (ii) the Pending Acquisition; (iii) the closing under the New
Credit Facility; and (iv) the application of the net proceeds from the
Offering, as if each had occurred as of June 30, 1996. See "The
Transactions," "Use of Proceeds" and "Pro Forma Condensed Consolidated
Financial Information."
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RISK FACTORS
Prospective investors should carefully consider the following risk factors,
in addition to the other information contained in this Prospectus, in connection
with an investment in the Notes offered hereby. Certain statements contained
under "Management's Discussion and Analysis of Financial Condition and Results
of Operations," such as those regarding the goals, beliefs or current
expectations of the Company and its management with respect to, among other
things, revenue growth and future capital needs, and other statements contained
in this Prospectus regarding matters that are not historical facts are
forward-looking statements (as such term is defined in the rules promulgated
pursuant to the Securities Act of 1933, as amended). 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, those discussed herein under "Risk Factors."
The Company undertakes no obligation to release publicly the result of any
revisions to these forward-looking statements that may be made to reflect events
or circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
Financial Leverage; Debt Service Requirements. The Company is highly
leveraged due to the substantial indebtedness it has incurred primarily to
finance acquisitions and expand its operations. As of June 30, 1996, on a pro
forma basis, after giving effect to the Transactions, the Company would have had
$174.5 million in total indebtedness and $52.5 million in stockholders' equity.
The Company expects to continue to borrow under the New Credit Facility and
possible future credit arrangements in order to finance possible future
acquisitions and for general corporate purposes.
The ability of the Company to repay the Notes and its other indebtedness will
depend upon future operating performance, which is subject to the success of the
Company's business strategy, prevailing economic conditions, levels of interest
rates and financial, business and other factors, many of which are beyond the
Company's control. The debt service obligations of the Company could have
important consequences, including the following: (i) the ability of the Company
to obtain additional financing for future working capital needs or for possible
future acquisitions or other purposes may be limited; (ii) a substantial portion
of the Company's cash flow from operations will be dedicated to the payment of
principal and interest on its indebtedness, thereby reducing funds available for
other purposes; (iii) the Company may be more vulnerable to adverse economic
conditions than some of its competitors and thus may be limited in its ability
to withstand competitive pressures; and (iv) the Company may be more highly
leveraged than certain of its competitors, which may place it at a competitive
disadvantage.
A substantial portion of the Company's cash flow from operations is required
for debt service. Management believes that cash flow from operations in
conjunction with borrowings from existing and possible future credit facilities
will be sufficient for the foreseeable future to meet debt service requirements
and to make possible future acquisitions and capital expenditures. However,
there can be no assurance in this regard, and the Company's leverage could make
it vulnerable to a downturn in the operating performance of its subsidiaries, a
downturn in economic conditions or, because borrowings under the New Credit
Facility will bear interest at rates which fluctuate, increases in interest
rates on borrowings under the New Credit Facility. If such cash flow were not
sufficient to meet such debt service requirements or payments of principal, the
Company could be required to sell additional equity securities, refinance its
obligations or dispose of assets in order to make such scheduled payments. There
can be no assurance that the Company would be able to effect any of such
transactions or do so on favorable terms.
Subordination; Guarantees. The Notes will be unsecured senior subordinated
obligations of the Company and will be subordinated in right of payment to the
prior payment in full of all existing and future Senior Debt of the Company. At
June 30, 1996, the Company had $103.6 million of indebtedness outstanding that
would have constituted Senior Debt. On a pro forma basis, after giving effect to
the Transactions, the Company would have had $24.5 million of Senior Debt
outstanding. The Company intends to actively pursue additional acquisitions
which would likely be financed through the incurrence of additional
indebtedness. Such additional indebtedness may constitute Senior Debt. The
Indenture allows the Company to incur Senior Debt from time to time under the
New Credit Facility or otherwise, subject to certain limitations. Upon any
acceleration of the maturity of the Notes or upon any payment or distribution of
assets of the Company to creditors upon any liquidation, dissolution, winding-
up, reorganization, assignment for the benefit of creditors, marshaling of
assets or any bankruptcy, insolvency or similar proceedings of the Company, the
holders of all Senior Debt will be first entitled to receive payment in full of
all amounts due or to become due thereon before the Holders of Notes will be
entitled to receive any payment in respect of the principal of or premium, if
any, or interest on the Notes. In addition, upon the occurrence of a
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<PAGE>
payment default or certain other defaults in respect of outstanding Senior
Debt, Holders of Notes may be prevented from receiving payments with respect
to the Notes for an extended period. See "Description of the Notes--
Subordination."
Iron Mountain's subsidiaries have guaranteed on a senior subordinated basis
its obligations under the Credit Agreement and will guarantee its obligations
under the New Credit Facility. Iron Mountain's obligations under the Credit
Agreement are secured by a first priority security interest in substantially all
of its assets (including the stock of its subsidiaries). Iron Mountain's
obligations under the New Credit Facility will be secured by a pledge of the
stock of its subsidiaries. If Iron Mountain becomes insolvent or is liquidated
or if the indebtedness under the Credit Agreement or the New Credit Facility is
accelerated, the lenders under the Credit Agreement or the New Credit Facility
would be entitled to exercise the remedies available to a secured lender.
Accordingly, such lenders will have a prior claim on such assets of Iron
Mountain and its subsidiaries. In such event, it is possible that there would be
no assets remaining from which claims of the Holders of Notes could be satisfied
or, if any assets remained, such assets might be insufficient to fully satisfy
such claims. The Company may incur additional secured indebtedness in the
future. See "Description of the Notes--Certain Covenants--Incurrence of
Indebtedness and Issuance of Preferred Stock" and "--Liens."
Iron Mountain is a holding company, substantially all of the assets of which
are the stock of its subsidiaries. Substantially all of the operations of the
Company are currently conducted by Iron Mountain's direct and indirect wholly
owned subsidiaries, all of which will be Guarantors, subject to the terms of the
Indenture. Management of the Company believes that separate financial statements
of such subsidiaries are not meaningful or material to investors and therefore
such statements have not been included in this Prospectus. The Company does not
currently expect that it will be required to prepare separate financial
statements for any of its subsidiaries in the foreseeable future and does not
expect to do so.
Unenforceability and Release of Guarantees. Iron Mountain's obligations under
the Notes will be guaranteed, jointly and severally, on a senior subordinated
basis by the Guarantors. To the extent that a court were to find that (i) a
Subsidiary Guarantee was incurred by a Guarantor with intent to hinder, delay or
defraud any present or future creditor or the Guarantor contemplated insolvency
with a design to prefer one or more creditors to the exclusion in whole or in
part of others, or (ii) such Guarantor did not receive fair consideration or
reasonably equivalent value for issuing its Subsidiary Guarantee and such
Guarantor (a) was insolvent; (b) was rendered insolvent by reason of the
issuance of such Subsidiary Guarantee; (c) was engaged or about to engage in a
business or transaction for which the remaining assets of such Guarantor
constituted unreasonably small capital to carry on its business; (d) intended to
incur, or believed that it would incur, debts beyond its ability to pay such
debts as they mature; or (e) was a defendant in an action for money damages or
had a judgment for money damages docketed against it (if, in either case, after
final judgment, the judgment is unsatisfied), then in each such case, a court
could avoid or subordinate such Subsidiary Guarantee in favor of the Guarantor's
other creditors. The measure of insolvency for purposes of the foregoing will
vary depending upon the law of the jurisdiction which is being applied.
Generally, however, a company will be considered insolvent for purposes of the
foregoing if, at the time it incurs any given obligation, the sum of the
company's debts (including unliquidated or contingent debt) is greater than all
the company's property at a fair valuation, or if the present fair salable value
of the company's assets is less than the amount that will be required to pay its
probable liability on its existing debts (including unliquidated or contingent
debt) as they become absolute and matured.
To the extent any Subsidiary Guarantee were to be avoided as a fraudulent
conveyance or held unenforceable for any other reason, Holders of Notes would
cease to have any claim in respect of such Guarantor and would be creditors
solely of the Company and any Guarantor whose Subsidiary Guarantee was not
avoided or held unenforceable. In such event, the claims of the Holders of Notes
against the issuer of an invalid Subsidiary Guarantee would be subject to the
prior payment of all liabilities of such Guarantor, including without
limitation, to the extent valid and enforceable, such Guarantor's guarantee of
indebtedness of Iron Mountain under the Credit Agreement or the New Credit
Facility, as the case may be, and any other Senior Debt of Iron Mountain
guaranteed by such Guarantor. There can be no assurance that, after providing
for all prior claims, there would be sufficient assets to satisfy the claims of
the Holders of Notes relating to any voided Subsidiary Guarantee. See
"Description of the Notes--Subordination."
Based upon financial and other information currently available to it, the
Company believes that the Notes and the Subsidiary Guarantees are being incurred
for proper purposes and in good faith, and that the Company and each Guarantor
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are solvent and will continue to be solvent after issuing the Notes or the
Subsidiary Guarantees, as the case may be, will have sufficient capital for
carrying on their businesses after such issuance and will be able to pay their
debts as they mature. There can be no assurance, however, that a court would
reach the same conclusion.
Any Guarantor may be released from its Subsidiary Guarantee at any time upon
any sale, exchange or transfer in compliance with the provisions of the
Indenture by the Company of the capital stock of such Guarantor or substantially
all of the assets of such Guarantor and, in certain other circumstances, a
Guarantor may be released from its Subsidiary Guarantee in connection with the
Company's designation of such Guarantor as an Unrestricted Subsidiary. See
"Description of the Notes--Certain Covenants--Additional Subsidiary Guarantees."
Restrictions Imposed by Terms of Indebtedness. The Indenture will contain
covenants restricting or limiting the ability of the Company and its Restricted
Subsidiaries to, among other things: (i) incur additional indebtedness,
including indebtedness ranking senior to the Notes and junior to any Senior
Debt; (ii) pay dividends or make other restricted payments; (iii) make asset
dispositions; (iv) permit liens; (v) enter into sale and leaseback transactions;
(vi) enter into certain mergers; (vii) make certain investments; and (viii)
enter into transactions with related persons. In addition, the Credit Agreement
contains, and the New Credit Facility will contain, certain other and more
restrictive covenants than those contained in the Indenture. See "Description of
New Credit Facility." This may adversely affect the Company's ability to pursue
its acquisition strategy. The Credit Agreement also requires, and the New Credit
Facility will require, 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
New Credit Facility, the Indenture or both. In the event of a default under the
New Credit Facility or the Indenture, the lenders could seek to declare all
amounts outstanding under the New Credit Facility, 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 New Credit Facility could
proceed against the collateral granted to them to secure that indebtedness. If
the indebtedness under the New Credit Facility or the Notes were to be
accelerated, there can be no assurance that the assets of the Company would be
sufficient to repay in full that indebtedness and the other indebtedness of the
Company. The Notes are subordinated to all existing and future Senior Debt of
the Company, including indebtedness under the Credit Agreement or the New Credit
Facility, as the case may be, and the Guarantees are subordinated to all
existing and future Senior Debt of the Guarantors, including guarantees by the
Guarantors of the indebtedness outstanding under the Credit Agreement or the New
Credit Facility, as the case may be. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations--Liquidity and Capital
Resources."
Holding Company Structure; Dependence Upon Operations of Subsidiaries.
Substantially all of the tangible assets of the Company are held by, and
substantially all of the Company's operating revenues are derived from
operations of, the Company's subsidiaries. Therefore, the Company's ability to
pay interest and principal when due to Holders of Notes will be dependent upon
the receipt of sufficient funds from such subsidiaries. However, the Company's
obligations under the Notes will be guaranteed, jointly and severally, on a
senior subordinated basis, by substantially all of the Company's present and
future Restricted Subsidiaries.
Risk of Inability to Finance Change of Control Offer. In the event of a
Change of Control, the Company will be required to offer to purchase all Notes
then outstanding 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 the Company would be able to obtain
such funds through a refinancing of the Notes to be purchased or otherwise, or
that the purchase would be permitted under the Credit Agreement, the New Credit
Facility or the terms of other financing instruments, as the case may be. Also,
the requirement that the Company offer to purchase all Notes then outstanding in
the event of a Change of Control may have the effect of deterring a third party
from effecting a transaction that would constitute a Change of Control. See
"Description of the Notes--Repurchase at the Option of Holders--Change of
Control."
Absence of Public Market for the Notes. There is no public market for the
Notes. The Notes will not be listed on any securities exchange or included in
the National Association of Securities Dealers Automated Quotation System. The
Company has been advised by the Underwriters that, following the completion of
the Offering, the Underwriters presently intend to make a market in the Notes;
however, they are under no obligation to do so and may discontinue any
market-making activities at any time without notice. No assurance can be given
as to the liquidity of the trading market for the Notes or that an active public
market will develop or, if developed, will
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<PAGE>
continue. If an active public market does not develop or is not maintained,
the market price and liquidity of the Notes may be adversely affected. See
"Underwriting."
Risks Associated with Acquisition Strategy. The Company has pursued and
intends to continue to pursue acquisitions of records management businesses as a
key component of its growth strategy. Since mid-1994, the Company has acquired
or entered into agreements to acquire 19 companies (of which 18 have been
completed and one is pending) engaged in the records management and related
businesses for estimated cash purchase prices aggregating $103.2 million (not
including contingent payments of up to $4.6 million based upon the achievement
of certain revenue targets from 1996 through 1998). See "The Transactions" and
"Recent and Pending Acquisitions." Possible future acquisitions may be for
purchase prices significantly larger than those paid for acquisitions
consummated since mid-1994. 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 the Company's operating results. The success of any completed acquisition
will depend in part on Iron Mountain's ability to integrate effectively the
acquired records management business into the Company. The process of
integrating such acquired businesses may involve unforeseen difficulties and may
require a disproportionate amount of management's attention and the Company's
financial and other resources. No assurance can be given that the Pending
Acquisition will be completed, that additional suitable acquisition candidates
will be identified, financed and purchased on acceptable terms, or that recent
acquisitions or future acquisitions, if completed, will be successful. See
"Business--Growth Strategy--Growth through Acquisitions."
Acquisitions by the Company in excess of $25 million individually and $50
million in the aggregate per year will require the approval of the majority
lenders under the Credit Agreement, and the New Credit Facility will contain
similar or other restrictions on acquisitions. No assurance can be given that
the lenders will consent to any acquisitions that the Company proposes to make
in excess of such limits.
The size, timing and integration of possible future acquisitions may cause
substantial fluctuations in operating results from quarter to quarter. As a
result, operating results for any quarter may not be indicative of the results
that may be achieved for any subsequent fiscal quarter or for a full fiscal
year.
Competition; Alternative Technologies. The Company faces competition from one
or more competitors in all geographic areas where it operates. The Company
believes that competition for customers is based on price, reputation for
reliability, quality of service and scope and scale of technology, and believes
that it generally competes effectively based on these factors. As a result of
this competition, the records management industry has for the past several years
experienced downward pricing pressures. While Iron Mountain believes that this
pricing climate 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 the Company's results of
operations. The Company also competes for acquisition candidates. Some of the
Company's competitors may possess greater financial and other resources than the
Company. If any such competitor were to devote additional resources to the
records management business and such acquisition candidates or to focus its
strategy on the Company's markets, the Company's results of operations could be
adversely affected. In addition, the Company faces competition from the internal
document handling capability of its current and potential customers. There can
be no assurance that these organizations will outsource more of their document
management needs or that they will not bring in-house some or all of the
functions they currently outsource. See "Business--The Records Management
Industry" and "Business--Competition."
The substantial majority of the Company's revenues have been derived from the
storage of paper documents and from related services. Such storage requires
significant physical space. Alternative technologies for generating, capturing,
managing, transmitting and storing information have been developed, many of
which require significantly less space than paper. Such technologies include
computer media, microforms, audio/video tape, film, CD-ROM and optical disk.
None of these technologies has replaced paper as the principal means for storing
information. However, there can be no assurance that one or more non-paper-based
technologies (whether now existing or developed in the future) may not in the
future reduce or supplant the use of paper as a preferred medium, which could in
turn adversely affect the Company's business.
Casualty. The Company currently maintains and intends to continue to
maintain, to the extent such insurance is available on commercially reasonable
terms, comprehensive liability, fire, flood and earthquake (where appropriate)
and extended coverage insurance with respect to the properties that it now owns
or leases or that it
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may in the future own or lease, with customary limits and deductibles. Certain
types of loss, however, may not be fully insurable on a cost-effective basis,
such as losses from earthquakes, or may be altogether uninsurable, such as
losses from riots. In addition, as of June 30, 1996, 24 of the Company's 89
records management facilities were located in California and the Company derived
approximately 30% of its revenues for the six months ended June 30, 1996 from
its operations in California. The Company has in the past suffered damages and
losses from an earthquake and a riot in California, which damages and losses
were substantially covered by insurance. In the future, should uninsured losses
or damages occur, the Company could lose both its investment in and anticipated
profits and cash flow from the affected property and may continue to be
obligated on any leasehold obligations, mortgage indebtedness or other
obligations related to such property. As a result, any such loss could
materially adversely affect the Company. See "Business--Insurance."
Environmental Matters. As of June 30, 1996, the Company owned or leased
approximately 6.3 million square feet of 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 the Company contain or may contain
ACMs. In addition, certain of the properties formerly or currently owned or
operated by the Company were previously used for industrial or other purposes
that involved the use or storage of hazardous substances or petroleum products
or the generation and disposal of hazardous wastes, and in some instances,
included the operation of underground storage tanks ("USTs").
In connection with its former and current ownership or operation of certain
properties, the Company may be potentially liable for environmental costs such
as those discussed above and as more specifically described under
"Business--Environmental Matters." The Company has from time to time conducted
certain environmental investigations and remedial activities at certain of its
former and current facilities, but an in-depth environmental review of the
properties has not been conducted by or on behalf of the Company.
The Company believes it is in substantial compliance with all applicable
material environmental laws. The Company has not received any written notice
from any governmental authority or third party asserting, and is not otherwise
aware of, any material environmental noncompliance, liability or claim relating
to hazardous substances or wastes, petroleum products or material environmental
laws applicable to Company operations in connection with any of its present or
former properties other than as described under "Business--Environmental
Matters." However, no assurance can be given that there are, or as a result of
possible future acquisitions there will be, no environmental conditions for
which the Company might be liable in the future or that future regulatory
action, as well as compliance with future environmental laws, will not require
the Company to incur costs for or at its properties that could have a material
adverse effect on the Company's financial condition and results of operations.
Reliance on Executive Officers. The Company's success is partially
dependent upon the performance and continued availability of its current
executive officers. The Company does not have employment contracts with any
of its current executive officers. There can be no assurance that the Company
will be able to retain such officers, the loss of whom could have a material
adverse effect upon the Company. See "Management."
Recent Publicity. On September 3, 1996, The Boston Globe, a regional daily
newspaper, published a business news article regarding the Company. The article
contained numerous statements about the Company and quotations from the
Company's Chief Executive Officer. The article did not set forth material
information or cautionary statements relevant to an evaluation of the statements
and quotations regarding the Company in the article. Prospective investors in
the Notes should not rely on such article and should only rely upon the
information and cautionary statements contained in this Prospectus, including
"Risk Factors" and "Management's Discussion and Analysis of Financial Condition
and Results of Operations."
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THE COMPANY
Iron Mountain is the largest records management company in the United States,
as measured by revenues. The Company is a full-service provider of records
management and related services, enabling customers to outsource data and
records management functions. Pro forma for the Acquisitions, as of June 30,
1996, the Company managed approximately 29.6 million Cartons in 103 records
centers in 33 markets nationwide. The Company has a diversified base of over
19,000 customer accounts, which includes more than half of the Fortune 500 and
numerous legal, banking, healthcare, accounting, insurance, entertainment and
government organizations. The Company provides storage and related services for
all major media, including paper (which is the dominant form of records
retention and which has accounted for approximately 85% of the Company's
revenues since 1992), computer disks and tapes, microfilm and microfiche, master
audio and video tapes, film and optical disks, X-rays and blueprints. The
Company's principal services include filing, retrieval and destruction of
records, courier pick-up and delivery, database management and customized
reporting. The Company also sells storage materials and provides consulting and
other records-related services.
Iron Mountain's operations date to 1951, when a corporate predecessor
commenced storage operations in a network of underground vaults in a former iron
ore mine, focusing on the maximum-security storage of corporate vital records in
the Northeast. That company was acquired by Schooner Capital Corporation
("Schooner") in 1975, after which its focus shifted to more general records
management. In 1988, a corporate affiliate of Schooner acquired the Bell &
Howell Records Management Company and its subsidiaries ("BHRM") for
approximately $75 million. At that time, BHRM conducted storage operations in
various states, with significant operations in California. The current Iron
Mountain was incorporated in 1990 as part of a recapitalization that
consolidated the former BHRM operations with the predecessor's Northeast
operations.
The principal executive offices of the Company are located at 745 Atlantic
Avenue, Boston, Massachusetts 02111. Its telephone number is (617) 357-4455.
THE TRANSACTIONS
In connection with the Offering, the Company intends to: (i) repay all
indebtedness outstanding under the Credit Agreement; (ii) repay its 13.42%
Senior Subordinated Notes due December 14, 2000 (the "Chrysler Notes"); (iii)
repay certain indebtedness incurred by the Company in connection with a 1990
acquisition and represented by two junior subordinated notes (collectively, the
"FDS Notes"), one of which is held by Schooner; (iv) fund the purchase price of
the Pending Acquisition described below under "Recent and Pending Acquisitions;"
and (v) enter into the New Credit Facility (the foregoing, together with the
Offering and the application of the net proceeds therefrom and the Completed
Acquisitions consummated after June 30, 1996, are referred to collectively as
the "Transactions").
Sources and Uses of Funds
The estimated sources and uses of funds in connection with the
Transactions are set forth below (in millions):
Sources of Funds:
New Credit Facility $ 13.7
Senior Subordinated Notes due 2006 150.0
------
Total Sources $163.7
======
Uses of Funds:
Repay Credit Agreement (1) $ 92.9
Repay Chrysler Notes (1) 14.8
Repay FDS Notes (1) 0.4
Purchase Price of Pending Acquisition and
Acquisitions Completed after June 30, 1996 (2) 47.5
Estimated Fees and Expenses (3) 8.1
------
Total Uses $163.7
======
(Footnotes on the following page)
15
<PAGE>
- -----------
(Footnotes from the preceding page)
(1) Balances are as of June 30, 1996.
(2) Acquisitions completed after June 30, 1996 were initially financed by
borrowings under the Credit Agreement and a portion of the net proceeds of
the Offering will be used to repay such indebtedness.
(3) Consists of estimated fees and expenses related to the Offering, the
repayment of the Credit Agreement, the Chryster Notes and the FDS Notes and
the closing of the New Credit Facility.
Repayment of Credit Agreement Indebtedness. The Company is party to the
Amended and Restated Credit Agreement dated as of January 31, 1995, as amended
(as so amended, the "Credit Agreement") among the Company, the lenders party
thereto and The Chase Manhattan Bank (National Association), as agent for such
lenders. Borrowings by the Company under the Credit Agreement during the most
recent twelve months were used to finance acquisitions and for working capital.
The Credit Agreement has a final maturity date of July 31, 2002. The weighted
average interest rate on September 3, 1996 on the indebtedness outstanding under
the Credit Agreement was 8.5%.
Repayment of Chrysler Notes. Pursuant to a Note Purchase Agreement dated as
of December 14, 1990, as amended, the Company issued the Chrysler Notes in an
aggregate principal amount of $15.0 million to Chrysler Capital Corporation. The
Company will repay the Chrysler Notes in full with a portion of the net proceeds
of the Offering; the amount shown under "Uses of Funds" above does not include
related fees and expenses.
Repayment of FDS Notes. In connection with a 1990 acquisition, the Company
issued to First Document Storage Corporation of America $450,000 in principal
amount of the FDS Notes, which mature in March 2000 and bear interest at the
rate of 8% per annum. In 1991, Schooner acquired $382,500 in principal amount of
the FDS Notes as an investment. The Company intends to use a portion of the net
proceeds from the Offering to repay the FDS Notes in their entirety.
Pending Acquisition. A portion of the net proceeds from the Offering,
together with borrowings under the New Credit Facility, will be used to fund
the Pending Acquisition described under "Recent and Pending Acquisitions"
below.
New Credit Facility. The Company intends to replace the Credit Agreement with
the New Credit Facility. The New Credit Facility will provide the Company with
revolving credit availability of up to $100 million for the Pending Acquisition
and possible future acquisitions, working capital and other corporate purposes,
and will terminate on September 30, 2001. As was the case with the Credit
Agreement, the Company's obligations under the New Credit Facility will be
guaranteed by substantially all of the Company's subsidiaries; however, unlike
the Credit Agreement, the New Credit Facility will be secured only by the pledge
of the stock of such subsidiaries. See "Description of New Credit Facility" for
a description of the anticipated terms of the New Credit Facility. No assurance
can be given that the Company will enter into the New Credit Facility on these
or any other terms. The Offering is not conditioned on the closing of the New
Credit Facility.
16
<PAGE>
RECENT AND PENDING ACQUISITIONS
As part of its growth strategy, since mid-1994 the Company has acquired or
entered into agreements to acquire 19 records management businesses. Since
January 1, 1995, the Company has purchased for cash 15 such businesses (the
"Completed Acquisitions") and has entered into a definitive agreement to acquire
one additional records management business (the "Pending Acquisition" and,
together with the Completed Acquisitions, the "Acquisitions").
The total purchase price of the Completed Acquisitions was approximately
$80.1 million (not including contingent payments of up to $0.6 million based
upon the achievement of certain revenue targets during 1996 and 1997), and the
purchase price of the Pending Acquisition is approximately $20.2 million (not
including contingent payments of up to $4.0 million based upon the achievement
of certain revenue targets during 1997 and 1998). The Completed Acquisitions
represent in the aggregate total annual revenues of approximately $32.0 million,
and the Pending Acquisition represents total annual revenues of approximately
$8.8 million (calculated in each case by reference to the revenues of each such
acquired business during the twelve months ended December 31, 1995, which
calculation includes an estimate of total revenues for the portion of 1995, if
any, during which any such acquired business was included in the Company's
results of operations). See "Pro Forma Condensed Consolidated Financial
Information."
The following table presents certain information for each acquisition
completed since 1994 and for the Pending Acquisition.
<TABLE>
<CAPTION>
Principal
State(s) of
Acquisition Operation Completion Date
- ----------- -------------- ----------------------
<S> <C> <C>
1994 Acquisitions
Data protection service business of Media Management Group, Inc. Connecticut June 1994
Data protection service business of Digital Equipment Corporation Massachusetts July 1994
Storage and Retrieval Concepts, Inc. Ohio October 1994
1995 Acquisitions
National Business Archives, Inc. Maryland March 1995
DataFile Services, Inc. Texas October 1995
Brooks Records Center, Inc. Delaware December 1995
Data Management Business Records Storage, Inc. Georgia December 1995
1996 Acquisitions
Nashville Vault Company, Ltd. Tennessee January 1996
Florida Data Bank, Inc. Florida January 1996
DataVault Corporation Massachusetts February 1996
Data Storage Systems, Inc. California March 1996
Brambles CRC, Inc. Ohio and April 1996
Kentucky
Records management business of Output Technologies Central Region, Inc. Missouri May 1996
Records management business of The Fortress Corporation Massachusetts July 1996
and Florida
Data Archive Services, Inc. and Data Archive Services of Miami, Inc. Florida August 1996
DKA Industries, Inc. (d/b/a Systems Record Storage) Florida August 1996
International Record Storage and Retrieval Service, Inc. New Jersey September 1996
Security Archives Corporation California September 1996
Pending Acquisition Status
----------------------
Mohawk Business Record Storage, Inc. Definitive
Minnesota Agreement
</TABLE>
The closing of the Pending Acquisition is subject to various conditions and
no assurance can be given that the Pending Acquisition will be completed. See
"Risk Factors--Risks Associated with Acquisition Strategy." The Offering is not
conditioned upon the completion of the Pending Acquisition, and the Pending
Acquisition is not conditioned upon completion of the Offering.
17
<PAGE>
USE OF PROCEEDS
The gross proceeds from the Offering will be used: (i) to repay indebtedness
under the Credit Agreement, the Chrysler Notes and the FDS Notes; (ii) to fund a
portion of the purchase price of the Pending Acquisition; and (iii) to pay
certain fees and expenses related to the Offering. See "The Transactions" and
"Recent and Pending Acquisitions." The net proceeds to the Company from the
Offering are estimated to be approximately $144.7 million, after deducting
underwriting discounts and commissions and estimated Offering expenses. In the
event the Pending Acquisition is not consummated, the available net proceeds
from the Offering will be used for possible future acquisitions and for general
corporate purposes. Prior to funding the Pending Acquisition or to such other
use, the net proceeds from the Offering will be invested in short-term,
dividend-paying or interest-bearing investment grade securities.
CAPITALIZATION
(Dollars in thousands, except per share data)
The following table sets forth the capitalization of the Company at June 30,
1996 and pro forma to give effect to the Transactions as if they had occurred on
June 30, 1996.
<TABLE>
<CAPTION>
As of June 30, 1996
---------------------
Actual Pro Forma
------- ----------
<S> <C> <C>
Cash and Cash Equivalents $ 2,232 $ 2,232
======== ========
Long-term Debt (Including Current Maturities):
Credit Agreement $ 92,850 $ --
New Credit Facility -- 13,731
Real Estate Mortgages 10,761 10,761
Senior Subordinated Notes due 2006 -- 150,000
Chrysler Notes 14,807 --
FDS Notes and Other 476 26
-------- --------
Total Long-term Debt 118,894 174,518
Stockholders' Equity:
Common Stock, $0.01 par value; 13,000,000 Shares
Authorized, 9,627,141 Issued and Outstanding 96 96
Non-voting Common Stock, $0.01 par value;
1,000,000 Shares Authorized, 500,000 Issued and
Outstanding 5 5
Additional Paid-in Capital 62,014 62,014
Accumulated Deficit (7,386) (9,614)
-------- --------
Total Stockholders' Equity 54,729 52,501
-------- --------
Total Capitalization $173,623 $227,019
======== ========
</TABLE>
18
<PAGE>
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The following unaudited Pro Forma Condensed Consolidated Balance Sheet has
been prepared based upon the unaudited historical condensed consolidated balance
sheet of Iron Mountain as of June 30, 1996 and the balance sheets as of June 30,
1996 of the Completed Acquisitions consummated after June 30, 1996 and the
Pending Acquisition, and gives effect to: (i) such Completed Acquisitions and
the Pending Acquisition; (ii) the closing under the New Credit Facility; and
(iii) the application of the estimated net proceeds from the Offering (after
deducting underwriting discounts and commissions and estimated expenses of the
Offering), as if each had occurred as of June 30, 1996. The following unaudited
Pro Forma Condensed Consolidated Statements of Operations for the six months
ended June 30, 1996 and for the year ended December 31, 1995 give effect to each
of the above transactions and to (i) the Completed Acquisitions which occurred
before June 30, 1996 and (ii) the Initial Public Offering and the application of
the net proceeds therefrom, as if each had occurred as of January 1, 1995. Pro
forma adjustments are described in the accompanying notes.
The following unaudited Pro Forma Condensed Consolidated Statements of
Operations are not necessarily indicative of the actual results of operations
that would have been reported if the events described above had occurred as of
January 1, 1995, nor do they purport to indicate the results of the Company's
future operations. Furthermore, the pro forma results do not give effect to all
cost savings or incremental costs that may occur as a result of the integration
and consolidation of the Acquisitions. In the opinion of management, all
adjustments necessary to present fairly such pro forma financial statements have
been made.
The pro forma condensed consolidated financial information should be read in
conjunction with "Capitalization" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and with the Financial Statements
and the Notes thereto included elsewhere in this Prospectus.
19
<PAGE>
IRON MOUNTAIN INCORPORATED
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1996
(In thousands)
<TABLE>
<CAPTION>
Pending and Pro Forma
Iron Completed Iron
Mountain Acquisitions (1) Adjustments Mountain
--------- ------------------- ----------- --------
<S> <C> <C> <C> <C>
Assets
Current Assets $ 25,865 $ 3,302 $ 941 (A) $ 30,108
Property, Plant and Equipment, net 103,004 6,940 4,324 (A) 114,268
Goodwill, net 72,213 20 36,037 (A) 108,270
Other Long-term Assets 11,548 480 4,031 (A) 16,059
-------- ------- ------- --------
Total Assets $212,630 $10,742 $45,333 $268,705
======== ======= ======= ========
Liabilities and Stockholders' Equity
Current Liabilities $ 23,129 $ 7,337 $(8,182)(B) $ 22,284
Long-term Debt, net of current portion 115,700 388 58,236 (B) 174,324
Other Long-term Liabilities 6,769 1,281 (1,219)(B) 6,831
Deferred Rent 7,897 242 220 (B) 8,359
Deferred Income Taxes 4,406 -- -- 4,406
Stockholders' Equity 54,729 1,494 (3,722)(B) 52,501
-------- ------- ------- --------
Total Liabilities and Stockholders' Equity $212,630 $10,742 $45,333 $268,705
======== ======= ======= =======
</TABLE>
- -----------
(1) See Schedule A for detail of the Pending and Completed Acquisitions.
The accompanying Notes are an integral part of
these pro forma financial statements.
20
<PAGE>
IRON MOUNTAIN INCORPORATED
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1996
(In thousands, except per share data)
<TABLE>
<CAPTION>
Pending and Pro Forma
Iron Completed Iron
Mountain Acquisitions (1) Adjustments Mountain
-------- ---------------- ----------- --------
<S> <C> <C> <C> <C>
Revenues:
Storage $39,363 $ 6,861 $ -- $46,224
Service and Storage Material Sales 24,587 4,540 -- 29,127
------- ------- ------ -------
Total Revenues 63,950 11,401 -- 75,351
Operating Expenses:
Cost of Sales (Excluding Depreciation) 32,383 5,518 (329)(D) 37,572
Selling, General and Administrative 16,067 4,454 (1,182)(E) 19,339
Depreciation and Amortization 7,530 750 819 (F) 9,099
------- ------- ------ -------
Total Operating Expenses 55,980 10,722 (692) 66,010
------- ------- ------ -------
Operating Income 7,970 679 692 9,341
Interest Expense 6,385 334 2,980 (G) 9,699
------- ------- ------ -------
Income (Loss) before Provision
(Benefit) for Income Taxes 1,585 345 (2,288) (358)
Provision (Benefit) for Income Taxes 888 (30) (705)(H) 153
------- ------- ------ -------
Net Income (Loss) 697 375 (1,583) (511)
Accretion of Redeemable Put Warrant 280 -- (280)(I) --
------- ------- ------ -------
Net Income (Loss) Applicable to Common
Stockholders $ 417 $ 375 $(1,303) $ (511)
======= ======= ======= =======
Net Income (Loss) per Common and Common
Equivalent Share $ 0.04 $ (0.05)
Weighted Average Common and Common
Equivalent Shares Outstanding 9,899 400 (J) 10,299
Other Data:
EBITDA $15,500 $ 1,429 $ 1,511 $18,440
</TABLE>
- ------------
(1) See Schedule B for detail of the Pending and Completed Acquisitions.
The accompanying Notes are an integral part of
these pro forma financial statements.
21
<PAGE>
IRON MOUNTAIN INCORPORATED
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
(In thousands, except per share data)
<TABLE>
<CAPTION>
Pending and Pro Forma
Iron Completed Iron
Mountain Acquisitions (1) Adjustments Mountain
-------- ---------------- ----------- --------
<S> <C> <C> <C> <C>
Revenues:
Storage $ 64,165 $22,304 $ -- $ 86,469
Service and Storage Material Sales 40,271 14,897 (737)(C) 54,431
-------- ------- ------ -------
Total Revenues 104,436 37,201 (737) 140,900
Operating Expenses:
Cost of Sales (Excluding Depreciation) 52,277 18,581 (1,054)(D) 69,804
Selling, General and Administrative 26,035 11,604 (2,552)(E) 35,087
Depreciation and Amortization 12,341 2,962 2,879 (F) 18,182
-------- ------- ------ -------
Total Operating Expenses 90,653 33,147 (727) 123,073
-------- ------- ------ -------
Operating Income 13,783 4,054 (10) 17,827
Interest Expense 11,838 1,814 5,751 (G) 19,403
-------- ------- ------ -------
Income (Loss) before Provision for
Income Taxes 1,945 2,240 (5,761) (1,576)
Provision for Income Taxes 1,697 102 (1,427)(H) 372
-------- ------- ------ -------
Net Income (Loss) 248 2,138 (4,334) (1,948)
Accretion of Redeemable Put Warrant 2,107 -- (2,107)(I) --
-------- ------- ------ -------
Net Income (Loss) Applicable to Common
Stockholders $ (1,859) $ 2,138 $(2,227) $(1,948)
======== ======= ====== =======
Net (Loss) per Common and Common
Equivalent Share $ (0.24) $ (0.19)
Weighted Average Common and Common
Equivalent Shares Outstanding 7,784 2,350 (J) 10,134
Other Data:
EBITDA $ 26,124 $ 7,016 $ 2,869 $36,009
</TABLE>
- ------------
(1) See Schedule C for detail of the Pending and Completed Acquisitions.
The accompanying Notes are an integral part of
these pro forma financial statements.
22
<PAGE>
SCHEDULE A
IRON MOUNTAIN INCORPORATED
SCHEDULE OF PENDING AND COMPLETED ACQUISITIONS
AS OF JUNE 30, 1996
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Acquisitions
Completed Pending
after Pending and
June 30, Acquisition Completed
1996 (Mohawk) Acquisitions
---------- ------------ -------------
<S> <C> <C> <C>
Assets
Current Assets $1,814 $1,488 $ 3,302
Property, Plant and Equipment, net 3,135 3,805 6,940
Goodwill, net 20 -- 20
Other Long-term Assets 249 231 480
------ ------ -------
Total Assets $5,218 $5,524 $10,742
====== ====== =======
Liabilities and Stockholders' Equity (Deficit)
Current Liabilities $3,367 $3,970 $ 7,337
Long-term Debt, net of current portion 388 -- 388
Other Long-term Liabilities 1,281 -- 1,281
Deferred Rent 242 -- 242
Stockholders' Equity (Deficit) (60) 1,554 1,494
------ ------ -------
Total Liabilities and Stockholders'
Equity $5,218 $5,524 $10,742
====== ====== =======
</TABLE>
The accompanying Notes are an integral part of
these pro forma financial statements.
23
<PAGE>
SCHEDULE B
IRON MOUNTAIN INCORPORATED
SCHEDULE OF PENDING AND COMPLETED ACQUISITIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1996
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Pending
Pending and
Completed Acquisition Completed
Acquisitions(1) (Mohawk) Acquisitions
--------------- ----------- ------------
<S> <C> <C> <C>
Revenues:
Storage $4,210 $2,651 $ 6,861
Service and Storage Material Sales 2,454 2,086 4,540
------ ------ -------
Total Revenues 6,664 4,737 11,401
Operating Expenses:
Cost of Sales (Excluding Depreciation) 3,161 2,357 5,518
Selling, General and Administrative 2,840 1,614 4,454
Depreciation and Amortization 391 359 750
------ ------ -------
Total Operating Expenses 6,392 4,330 10,722
------ ------ -------
Operating Income (Loss) 272 407 679
Interest Expense 209 125 334
------ ------ -------
Income before (Benefit) for Income
Taxes 63 282 345
(Benefit) for Income Taxes (30) -- (30)
------ ------ -------
Net Income $ 93 $ 282 $ 375
====== ====== =======
Other Data:
EBITDA $ 663 $ 766 $ 1,429
</TABLE>
- -----------
(1) Represents historical results of operations for each Completed Acquisition
consummated in 1996 for the period in 1996 prior to acquisition by the
Company. See "Overview" in the accompanying Notes.
The accompanying Notes are an integral part of
these pro forma financial statements.
24
<PAGE>
SCHEDULE C
IRON MOUNTAIN INCORPORATED
SCHEDULE OF PENDING AND COMPLETED ACQUISITIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Completed Acquisitions (1)
----------------------------------------------------------
Pending
National Total Pending and
Business Data Nashville Completed Acquisition Completed
Archives Management Vault Other Acquisitions (Mohawk) Acquisitions
-------- ---------- --------- ----- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Storage $ 758 $2,912 $ 636 $13,293 $17,599 $4,705 $22,304
Service and Storage
Material Sales 471 2,308 739 7,284 10,802 4,095 14,897
----- ------ ------ ------- ------- ------ -------
Total Revenues 1,229 5,220 1,375 20,577 28,401 8,800 37,201
Operating Expenses:
Cost of Sales (Excluding
Depreciation) 712 2,543 499 10,183 13,937 4,644 18,581
Selling, General and
Administrative 89 1,418 327 6,936 8,770 2,834 11,604
Depreciation and Amortization 55 506 122 1,621 2,304 658 2,962
----- ------ ------ ------- ------- ------ -------
Total Operating Expenses 856 4,467 948 18,740 25,011 8,136 33,147
----- ------ ------ ------- ------- ------ -------
Operating Income 373 753 427 1,837 3,390 664 4,054
Interest Expense 14 494 61 976 1,545 269 1,814
----- ------ ------ ------- ------- ------ -------
Income before Provision for
Income Taxes 359 259 366 861 1,845 395 2,240
Provision for Income Taxes -- 87 -- 15 102 -- 102
----- ------ ------ ------- ------- ------ -------
Net Income $ 359 $ 172 $ 366 $ 846 $ 1,743 $ 395 $ 2,138
===== ====== ====== ======= ======= ====== =======
Other Data:
EBITDA $ 428 $1,259 $ 549 $ 3,458 $ 5,694 $1,322 $ 7,016
</TABLE>
- ------------
(1) Represents historical results of operations for each Completed Acquisition
for the period in 1995 prior to acquisition by the Company.
See "Overview" in the accompanying Notes.
The accompanying Notes are an integral part of
these pro forma financial statements.
25
<PAGE>
IRON MOUNTAIN INCORPORATED
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
Overview
In March 1995, the Company acquired National Business Archives, Inc.
("NBA") for $15.7 million. In October 1995, the Company acquired DataFile
Services, Inc. In December 1995, the Company acquired Data Management
Business Records Storage, Inc. ("Data Management") for $14.5 million. In
December 1995, the Company also acquired Brooks Records Center, Inc. In
January 1996, the Company acquired Nashville Vault Company, Ltd. ("Nashville
Vault") for $3.5 million. In January 1996, the Company also acquired Florida
Data Bank, Inc. ("FDB"). In February 1996, the Company acquired DataVault
Corporation. In March 1996, the Company acquired Data Storage Systems, Inc.
In April 1996, the Company acquired Brambles CRC, Inc. ("CRC"). In May 1996,
the Company acquired the records management business of Output Technologies
Central Region, Inc. In July 1996, the Company acquired the records
management business of The Fortress Corporation. In August 1996, the Company
acquired Data Archive Services, Inc. and Data Archive Services of Miami, Inc.
(collectively, "DAS") and DKA Industries, Inc. In September 1996, the Company
acquired International Record Storage and Retrieval Service, Inc. and
Security Archives Corporation. The results of operations of the Acquisitions
which were consummated prior to June 30, 1996 are included in the results of
operations of the Company from their respective dates of acquisition. The
historical balance sheet of the Company at June 30, 1996 includes the
acquisitions consummated prior to June 30, 1996. The aggregate purchase price
of the foregoing acquisitions, excluding NBA, Data Management and Nashville
Vault, was $46.4 million (not including contingent payments of up to $0.6
million based upon the achievement of certain revenue targets during 1996 and
1997).
During September 1996, the Company entered into a definitive agreement to
purchase Mohawk Business Record Storage, Inc. ("Mohawk") for $20.2 million (not
including contingent payments of up to $4.0 million based upon the achievement
of certain revenue targets during 1997 and 1998). The closing of the Pending
Acquisition is subject to various conditions, and no assurance can be given that
such acquisition will be completed. All of the Completed Acquisitions have been,
and the Pending Acquisition, if consummated, will be, accounted for as
purchases.
The accompanying unaudited pro forma condensed consolidated financial
statements reflect the following as though each had occurred on January 1, 1995:
(i) the Initial Public Offering and the application of the net proceeds
therefrom; (ii) the Offering and the application of the net proceeds therefrom;
(iii) the closing of the New Credit Facility; and (iv) the Acquisitions. The
Company will record, in the quarter in which the Offering is consummated, an
extraordinary loss on retirement of debt, net of related tax benefit. As of June
30, 1996, the amount of such loss would have been approximately $2.2 million.
While the extraordinary charge has been reflected in the accompanying pro forma
balance sheet, the pro forma statements of operations do not give effect to such
loss. Such loss consists of the write-off of deferred financing costs, original
issue discount, prepayment penalty and loss on termination of interest rate
protection agreements.
Balance Sheet
The aggregate consideration paid or to be paid for the Acquisitions is
approximately $100.3 million in cash (not including up to $4.6 million of
contingent payments based upon the achievement of certain revenue targets from
1996 through 1998). The excess of the purchase price over the book value of the
net assets acquired for each of the Acquisitions has been allocated to tangible
and intangible assets, based on the Company's estimate of the fair value of the
net assets acquired. The allocations of the purchase price as illustrated below
may change upon final appraisal of the fair value of the net assets acquired.
26
<PAGE>
<TABLE>
<CAPTION>
(In millions)
<S> <C> <C>
Acquisitions Completed Prior to June 30, 1996:
Book value of net assets acquired $11.6
Allocation of purchase price in excess of acquired assets:
Property, Plant and Equipment (Fair Value Adjustment) 5.4
Other Long-term Assets (Covenants not to Compete) 2.8
Current Liabilities (Relocation and Other Reserves) (1.8)
Deferred Rent (Unfavorable Lease Liability) (5.3)
Goodwill 40.1
--
Purchase Price of Acquisitions Completed Prior to June 30, 1996 $ 52.8
Acquisitions Completed after June 30, 1996 and the Pending
Acquisition:
Book value of net assets acquired $ 9.2
Allocation of purchase price in excess of acquired assets:
Property, Plant and Equipment (Fair Value Adjustment) 4.8
Other Long-term Assets (Covenants not to Compete) 0.2
Current Liabilities (Relocation and Other Reserves) (2.3)
Deferred Rent (Unfavorable Lease Liability) (0.4)
Goodwill 36.0
--
Purchase Price of Acquisitions Pending as of June 30, 1996 47.5
------
Total Purchase Price of Acquisitions $100.3
======
</TABLE>
The Acquisitions completed prior to June 30, 1996 were financed with
long-term debt and proceeds from the Initial Public Offering. The Acquisitions
completed after June 30, 1996 and the Pending Acquisition are assumed to be
financed with long-term debt. The Company will fund the purchase price of the
Pending Acquisition with a portion of the net proceeds from the Offering and the
New Credit Facility. See "Recent and Pending Acquisitions," "The Transactions"
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations."
The accompanying pro forma condensed consolidated balance sheet as of June
30, 1996 has been prepared as if the Transactions had all been completed as of
June 30, 1996 and reflects the following adjustments:
(A) The pro forma adjustments to Assets consist of the following:
<TABLE>
<CAPTION>
Property, Other
Current Plant and Long-term
Assets Equipment Goodwill Assets
------- --------- -------- ---------
(In millions)
<S> <C> <C> <C> <C>
Acquisition Entries:
Reverse assets of acquired companies not purchased $(0.6) $(0.2) $ -- $(0.5)
Record estimated fair value of assets of acquired
companies -- 4.5 -- --
Record increase in intangible assets equal to the excess
of purchase price over fair value of net assets
acquired -- -- 36.0 0.2
----- ----- ----- -----
Total Acquisition Entries (0.6) 4.3 36.0 (0.3)
----- ----- ----- -----
Use of Proceeds Entries:
Record deferred financing fees associated with the Notes
and the New Credit Facility -- -- -- 6.3
Write-off of pre-existing deferred financing costs -- -- -- (2.0)
Tax benefit associated with extraordinary charge related
to early retirement of pre-existing debt 1.5 -- -- --
----- ----- ----- -----
Total Use of Proceeds Entries 1.5 -- -- 4.3
----- ----- ----- -----
Total Adjustments $ 0.9 $ 4.3 $36.0 $ 4.0
===== ===== ===== =====
</TABLE>
27
<PAGE>
(B) The pro forma adjustments to Liabilities and Stockholders' Equity consist of
the following:
<TABLE>
<CAPTION>
Other
Current Long-term Long-term Deferred Stockholders'
Liabilities Debt Liabilities Rent Equity
----------- --------- ------------ --------- -------------
(In millions)
<S> <C> <C> <C> <C> <C>
Acquisition Entries:
Reverse liabilities and equity not assumed in
connection with Acquisitions closing after
June 30, 1996 $(5.2) $ (0.4) $(1.2) $(0.2) $(1.5)
Record unfavorable lease obligation -- -- -- 0.4 --
Record additional debt to finance
Acquisitions closing after June 30, 1996 47.5
----- ------ ----- ----- -----
Total Acquisition Entries (5.2) 47.1 (1.2) 0.2 (1.5)
----- ------ ----- ----- -----
Use of Proceeds Entries:
Issuance of the Notes -- 150.0 -- -- --
Borrowings under New Credit Facility -- 13.7 -- -- --
Prepayment of Credit Agreement, Chrysler
Notes and FDS Notes (3.0) (105.1) -- -- --
Use of proceeds to repay debt issued to
finance Acquisitions closing after June 30,
1996 -- (47.5) -- -- --
Extraordinary charge, net of tax benefit,
related to early retirement of pre-existing
debt -- -- -- -- (2.2)
----- ------ ----- ----- -----
Total Use of Proceeds Entries (3.0) 11.1 -- -- (2.2)
----- ------ ----- ----- -----
Total Adjustments $(8.2) $ 58.2 $(1.2) $ 0.2 $(3.7)
===== ====== ===== ===== =====
</TABLE>
Statements of Operations
All of the Acquisitions, except Data Management, FDB, CRC and DAS, have a
December 31 fiscal year end. Data Management's and CRC's fiscal year end is June
30, DAS's fiscal year end is May 31 and FDB's fiscal year end is August 31.
Accordingly, Data Management's, CRC's, DAS's and FDB's results of operations
were calendarized to the twelve months ended December 31, 1995 and the six
months ended June 30, 1996.
The accompanying pro forma condensed consolidated statements of operations
for the year ended December 31, 1995 and for the six months ended June 30, 1996
have been prepared as if the Transactions and the Initial Public Offering had
occurred on January 1, 1995 and reflect the following adjustments:
(C) A pro forma adjustment has been made to eliminate a $0.7 million
non-recurring gain on the sale of property and equipment by Data Management in
the year ended December 31, 1995.
(D) Pro forma adjustments for the six months ended June 30, 1996 and for the
year ended December 31, 1995 have been made to reduce cost of sales by $0.3
million and $1.1 million, respectively, to eliminate specific expenses that
would not have been incurred had the Acquisitions occurred at the beginning of
1995. Such cost savings relate to (i) the termination of certain employees due
to the integration and consolidation of certain Acquisitions and (ii) a
reduction in warehouse rent expense related to facilities the Company will
vacate upon completion of certain Acquisitions.
(E) Pro forma adjustments for the six months ended June 30, 1996 and for the
year ended December 31, 1995 have been made to reduce selling, general and
administrative expenses by $1.2 million and $2.6 million, respectively, to
eliminate specific expenses that would not have been incurred had the
Acquisitions occurred as of January 1, 1995. Such cost savings relate to (i) the
termination of certain employees due to the integration and consolidation of
certain Acquisitions and (ii) the elimination of related party expenses and
management fees in excess of amounts that would have been incurred by the
Company for the services rendered. Additional cost savings
28
<PAGE>
that the Company expects to realize through integration of the Acquisitions into
the Company's operations have not been reflected herein.
(F) A pro forma adjustment has been made to reflect additional depreciation
and amortization expense on the fair value of the assets acquired and goodwill.
Property and equipment are depreciated over three to 50 years, goodwill is
amortized over 25 years and covenants not-to-compete are amortized over two to
five years on a straight-line basis. Such depreciation and amortization may
change upon final appraisal of the fair market value of the net assets acquired.
(G) The pro forma adjustments to interest expense consist of the following:
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
---------- ------------
(In millions)
<S> <C> <C>
Acquisition Entries:
Reverse interest expense on debt not assumed in connection with Acquisitions $(0.3) $ (1.8)
Record interest expense due to assumption of unfavorable lease liabilities in
connection with the NBA and Mohawk acquisitions 0.1 0.1
Use of Proceeds Entries:
Reverse interest expense on pre-existing debt of the Company retired with
proceeds of the Offering (5.7) (10.3)
Record interest expense from issuance of the Notes at an assumed interest rate
of 10-1/2%, plus amortization of deferred financing costs 8.1 16.2
Record interest expense at an assumed interest rate of 7.85%, plus amortization
of deferred financing fees associated with the New Credit Facility 0.8 1.6
----- ------
Total Adjustments $ 3.0 $ 5.8
===== ======
</TABLE>
A 1/4% increase (or decrease) in the assumed 10-1/2% interest rate with
respect to the Notes would increase (or decrease) annual interest expense with
respect to the Notes by $375,000. A 1/8% increase (decrease) in the interest
rate with respect to the New Credit Facility would increase (decrease) annual
interest expense with respect to the assumed borrowings under the New Credit
Facility by approximately $17,000.
(H) A pro forma adjustment has been made to adjust the provision for income
taxes to a 40% rate on pro forma income before nondeductible goodwill
amortization and other nondeductible expenses.
(I) Pro forma adjustments of $0.3 million and $2.1 million for the periods
ended June 30, 1996 and December 31, 1995, respectively, have been made to
eliminate the accretion of a redeemable put warrant.
(J) A pro forma adjustment has been made to adjust the pro forma weighted
average common and common equivalent shares outstanding as if the Initial Public
Offering had occurred on January 1, 1995.
29
<PAGE>
SELECTED CONSOLIDATED FINANCIAL AND OPERATING INFORMATION (In thousands,
except per share amounts and Carton data)
The following selected consolidated statements of operations and balance
sheet data of the Company as of and for each of the years ended December 31,
1991, 1992, 1993, 1994 and 1995 have been derived from the Company's audited
consolidated financial statements. The selected consolidated statements of
operations and balance sheet data of the Company for the six months ended June
30, 1995 and 1996 have been derived from the Company's unaudited condensed
consolidated financial statements. The Company's unaudited condensed
consolidated financial statements include all adjustments, consisting of normal
recurring accruals, that the Company considers necessary for a fair presentation
of the financial position and the results of operations for those periods.
Operating results for the six months ended June 30, 1996 are not necessarily
indicative of the results for the entire year ending December 31, 1996. The
selected consolidated financial and operating information set forth below should
be read in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and with Iron Mountain's Consolidated
Financial Statements and the Notes thereto included elsewhere in this
Prospectus.
<TABLE>
<CAPTION>
Six Months Ended
Year Ended December 31, June 30,
--------------------------------------------------- ------------------
1991 1992 1993 1994 1995 1995 1996
------- ------ ------ --------- ------- ------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
Consolidated Statements of Operations Data:
Revenues:
Storage $39,510 $44,077 $48,892 $54,098 $ 64,165 $30,748 $39,363
Service and Storage Material Sales 23,330 26,596 32,781 33,520 40,271 19,476 24,587
------ ----- ----- --------- ------ ----- -------
Total Revenues 62,840 70,673 81,673 87,618 104,436 50,224 63,950
Operating Expenses:
Cost of Sales (Excluding Depreciation) 31,375 35,169 43,054 45,880 52,277 25,112 32,383
Selling, General and Administrative 16,471 17,630 19,971 20,853 26,035 12,697 16,067
Depreciation and Amortization 7,674 5,780 6,789 8,690 12,341 5,428 7,530
------ ----- ----- --------- ------ ----- -------
Total Operating Expenses 55,520 58,579 69,814 75,423 90,653 43,237 55,980
------ ----- ----- --------- ------ ----- -------
Operating Income 7,320 12,094 11,859 12,195 13,783 6,987 7,970
Interest Expense 8,612 8,412 8,203 8,954 11,838 5,936 6,385
Income (Loss) before Provision for Income
Taxes (1,292) 3,682 3,656 3,241 1,945 1,051 1,585
Provision for Income Taxes 105 2,095 2,088 1,957 1,697 631 888
------ ----- ----- --------- ------ ----- -------
Net Income (Loss) (1,397) 1,587 1,568 1,284 248 420 697
Accretion of Redeemable Put Warrant 417 626 940 1,412 2,107 953 280
------ ----- ----- --------- ------ ----- -------
Net Income (Loss) Applicable to Common
Stockholders $(1,814) $ 961 $ 628 $ (128) $ (1,859) $ (533) $ 417
====== ===== ===== ========= ====== ===== =======
Net Income (Loss) per Common and Common
Equivalent Share $ (0.23) $ 0.12 $ 0.08 $ (0.02) $ (0.24) $ (0.07) $ 0.04
Weighted Average Common and Common Equivalent
Shares Outstanding 8,038 8,052 8,067 7,984 7,784 7,790 9,899
Other Data:
EBITDA (1) $14,994 $17,874 $18,648 $20,885 $ 26,124 $12,415 $15,500
EBITDA as a Percentage of Total Revenues 23.9% 25.3% 22.8% 23.8% 25.0% 24.7% 24.2%
Capital Expenditures:
Growth (2) -- $11,226 $13,605 $15,829(3) $ 14,395 $ 6,730 $10,702
Maintenance -- 818 1,846 1,151 858 592 460
------ ----- ----- --------- ------ ----- -------
Total Capital Expenditures $ 8,163 $12,044 $15,451 $16,980(3) $ 15,253 $ 7,322 $11,162
Additions to Customer Acquisition Costs $ -- $ 1,268 $ 922 $ 1,366 $ 1,379 $ 418 $ 717
Approximate Cartons in Storage at End of
Period (in millions) (4) 10.8 12.6 15.5 17.7 23.3 20.3 26.4
Ratio of Earnings to Fixed Charges (5) 0.9x 1.3x 1.3x 1.2x 1.1x 1.1x 1.2x
</TABLE>
(Footnotes on the following page)
30
<PAGE>
<TABLE>
<CAPTION>
As of December 31,
----------------------------------------------
As of
June 30,
1991 1992 1993 1994 1995 1996
------ ------ ------ ------ ------ --------
<S> <C> <C> <C> <C> <C> <C>
Balance Sheet Data:
Cash and Cash Equivalents $ 407 $ 498 $ 591 $ 1,303 $ 1,585 $ 2,232
Total Assets 107,874 115,429 125,288 136,859 186,881 212,630
Total Debt 68,229 73,304 78,460 86,258 121,874 118,894
Stockholders' Equity 22,291 23,419 24,047 22,869 21,011 54,729
</TABLE>
- --------------
(Footnotes from the preceding page)
(1) Earnings before interest, taxes, depreciation, amortization and
extraordinary charges ("EBITDA"). Based on its experience in the records
management industry, the Company believes that EBITDA is an important tool
for measuring the performance of records management companies (including
potential acquisition targets) in several areas, such as liquidity,
operating performance and leverage. In addition, lenders use EBITDA as a
criterion in evaluating records management companies, and substantially all
of the Company's financing agreements contain covenants in which EBITDA is
used as a measure of financial performance. However, EBITDA should not be
considered an alternative to operating or net income (as determined in
accordance with GAAP) as an indicator of the Company's performance or to
cash flow from operations (as determined in accordance with GAAP) as a
measure of liquidity. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Overview" and "--Liquidity and Capital
Resources" for discussions of other measures of performance determined in
accordance with GAAP and the Company's sources and applications of cash
flow.
(2) Growth capital expenditures include investment in racking systems, new
buildings and leasehold improvements, equipment for new facilities,
management information systems and facilities restructuring. See
"Management's Discussion and Analysis of Financial Condition and Results
of Operations--Liquidity and Capital Resources--Capital Investments."
(3) Includes $2,901 related to the cost of constructing a records management
facility which was sold in a sale and leaseback transaction in the fourth
quarter of 1994.
(4) The term "Carton" is defined as a measurement of the volume equal to a
single standard storage carton, approximately 1.2 cubic feet. The number of
Cartons stored does not include storage volumes in the Company's vital
records services and data protection services which are described under
"Business."
(5) The pro forma ratio of earnings to fixed charges, giving effect to the
Transactions as if each had occurred as of January 1, 1995, would have been
0.9x for the year ended December 31, 1995 and 0.9x for the six months ended
June 30, 1996. For the year ended December 31, 1995 and the six months ended
June 30, 1996, the Company would have needed to generate additional income
from continuing operations, before provision for income taxes, of $1,576 and
$358 to cover its pro forma fixed charges of $26,162 and $13,272,
respectively. The ratio of earnings to fixed charges was 0.9x for the fiscal
year ended December 31, 1991. For such period, the Company would have needed
to generate additional income from continuing operations, before provision
for income taxes, of $1,292 to cover its fixed charges of $11,689.
31
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the Selected
Consolidated Financial and Operating Information and Iron Mountain's
Consolidated Financial Statements and the Notes thereto and the other financial
and operating information included elsewhere in this Prospectus. This Prospectus
contains, in addition to historical information, forward-looking statements that
include risks and uncertainties. The Company's actual results may differ
materially from the results discussed in the forward-looking statements. Factors
that might cause such a difference include those discussed below, as well as
those discussed elsewhere in this Prospectus. The Company undertakes no
obligation to release publicly the result of any revisions to these
forward-looking statements that may be made to reflect events or circumstances
after the date hereof or to reflect the occurrence of unanticipated events.
Overview
The Company's primary financial objective is to increase its EBITDA, which is
a source of funds to service indebtedness and for investment in continued
internal growth and growth through acquisitions. The Company has benefited from
growth in EBITDA, which has increased from $17.9 million in 1992 to $26.1
million in 1995 (a CAGR of 13.5%), but other measures of the Company's financial
performance, such as net income and net income applicable to common
stockholders, have been negatively affected by this objective. In 1994 and 1995,
the Company experienced net losses applicable to common stockholders. Such net
losses are attributable in part to significant increases in non-cash charges
associated with the Company's pursuit of its growth strategy, namely, (i)
increases in depreciation and amortization expenses associated with expansion of
the Company's storage capacity and the acquisition of certain large volume
accounts and (ii) increases in goodwill amortization associated with
acquisitions accounted for under the purchase method. In addition, net income
available to common stockholders has been negatively affected by a non-cash
charge for accretion of a redeemable put warrant, which was redeemed upon
completion of the Company's Initial Public Offering. See Note 5 of Notes to the
Company's Audited Consolidated Financial Statements.
Iron Mountain's revenues consist of storage revenues and service and storage
material sales revenues. Storage revenues are derived from charges for storing
records (either on a per unit or a per cubic foot of records basis), and have
accounted for approximately 60% of total revenues in each of the last three
years and for the six months ended June 30, 1996. Service and storage material
sales revenues are derived primarily from the Company's courier operations
(consisting primarily of the pickup and delivery of records upon customer
request), additions of new Cartons, temporary removal of records from storage,
refiling of removed records, destructions of records, permanent withdrawals from
storage and sales of specially designed storage containers and related supplies.
Customers are generally billed on a monthly basis on contractually agreed-upon
terms.
While the Company's total revenues have increased from $70.7 million in 1992
to $104.4 million in 1995, average revenue on a per Carton basis has declined
over this period. The year-over-year declines in average revenue per Carton for
1993, 1994 and 1995 were approximately 8%, 7% and 2%, respectively. Such
declines were attributable to: (i) increases in sales to large volume accounts,
which typically generate lower revenue per Carton (in particular the Resolution
Trust Corporation (the "RTC") account, which incorporated substantial volume
discounts, although such discounts were offset by revenues from special service
projects during 1993 and 1994); (ii) a facilities management arrangement with a
large volume account under which, prior to July 1996, the Company managed the
customer's records management facility and, therefore, the charges to the
customer prior to July 1996 did not include a rent component; and (iii)
industry-wide pricing pressures. Despite this decline, the Company has been able
to maintain its EBITDA margins through increased overall operating efficiencies
and economies of scale as well as specific efficiencies realized in the
servicing of large volume accounts. For 1992, 1993, 1994, 1995 and the six
months ended June 30, 1996, EBITDA margins were 25.3%, 22.8%, 23.8%, 25.0% and
24.2%, respectively.
Pursuant to its 1992 contract with the RTC, the Company participated in the
consolidation and centralization of a large number of records on behalf of the
RTC. This activity, which entailed extensive services and the Company's start-up
of operations in two new markets, resulted in a significant increase in service
and storage material sales revenues in 1993. After the labor-intensive process
of assembling and inventorying the records was substantially completed in 1994,
the revenue from RTC service and storage material sales began to decrease, which
decrease was partially offset by increases in storage revenues due to an
increase in Cartons stored. The contract
32
<PAGE>
has been renewed effective July 27, 1996 for a one-year term by the Federal
Deposit Insurance Corporation (the "FDIC"), as successor in interest to the RTC,
and may be renewed at the option of the FDIC for three further terms of one year
each. Although the substantial costs of removing its records from the Company's
facilities may act as a disincentive to the FDIC to select another vendor, there
can be no assurance that this contract will be further renewed or that the terms
of any such renewal will be as favorable to Iron Mountain as the terms of the
current contract.
Cost of sales consists primarily of wages and benefits, facility occupancy
costs, vehicle and other equipment costs and supplies. Of these, the most
significant are wages and benefits and facility occupancy costs. Over the past
several years, Iron Mountain has been able to reduce per Carton storage costs
by: (i) designing racking systems and operating space to maximize facility
storage efficiency; (ii) negotiating favorable facility leases and having
facilities built to its custom specifications; and (iii) leasing larger
facilities, which, when filled, are less expensive per Carton to operate.
Selling, general and administrative expenses consist primarily of management,
administrative, sales and marketing wages and benefits, and also include travel,
communications, professional fees, bad debts, training, office equipment and
supplies expenses.
The Company's depreciation and amortization charges result primarily from the
capital-intensive nature of the records management industry and the acquisitions
the Company has completed. The principal components of depreciation relate to
racking systems and related equipment, new buildings and leasehold improvements,
equipment for new facilities and computer system software and hardware.
Amortization primarily relates to goodwill and noncompetition agreements arising
from acquisitions and customer acquisition costs. The Company has accounted for
all of its acquisitions under the purchase method. Since the purchase price for
records management companies is usually substantially in excess of the book
values of their assets, these purchases have given rise to significant goodwill
and, accordingly, significant levels of amortization. Although amortization is a
non-cash charge, it does decrease reported net income. Accordingly, the faster
the Company expands by making such acquisitions, the more likely it will be to
incur amortization charges, reducing net income.
In February 1996, the Company received net proceeds of $33.3 million from its
Initial Public Offering. The Company used $6.6 million of such net proceeds to
repurchase a warrant to acquire 444,385 shares of Common Stock (the "Warrant").
For financial reporting purposes, the Company was required to record a non-cash
charge (based on the estimated redemption value calculated using the effective
interest rate method), resulting in substantial charges to net income applicable
to common stockholders over the period the Warrant was outstanding. See Note 5
of Notes to the Company's Audited Consolidated Financial Statements. The
remaining net proceeds were used by the Company to fund acquisitions (including
Completed Acquisitions consummated after the closing of the Initial Public
Offering), to repay indebtedness used to fund acquisitions and for working
capital.
In December 1995, the Company decided to consolidate its corporate accounting
activities by transferring to Boston, Massachusetts those accounting activities
previously performed in Los Angeles, California. As a result of such transfer,
the Company recorded charges of $0.5 million and $0.3 million in the fourth
quarter of 1995 and the first six months of 1996, respectively.
Forward-Looking Statements Regarding Revenues
One of the Company's goals is to achieve revenue growth of five to 10 percent
per year from its existing business through the end of 1997. In addition, over
the same period, the Company's goal is to achieve revenue growth of between 10
to 15 percent per year as a result of acquisitions. There can be no assurance
that the Company will be able to meet these goals. See "Risk Factors."
33
<PAGE>
Results of Operations
The following table sets forth, for the periods indicated, information
derived from the Company's consolidated statements of operations, expressed as a
percentage of revenue. There can be no assurance that the trends in revenue
growth or operating results shown below will continue in the future.
<TABLE>
<CAPTION>
Six Months
Year Ended December 31, Ended June 30,
----------------------- --------------
1993 1994 1995 1995 1996
----- ----- ----- ---- ------
<S> <C> <C> <C> <C> <C>
Revenues:
Storage 59.9% 61.7% 61.4% 61.2% 61.6%
Service and Storage Material Sales 40.1 38.3 38.6 38.8 38.4
----- ----- ----- ----- -----
Total Revenues 100.0 100.0 100.0 100.0 100.0
----- ----- ----- ----- -----
Operating Expenses:
Cost of Sales (Excluding Depreciation) 52.7 52.4 50.1 50.0 50.6
Selling, General and Administrative 24.5 23.8 24.9 25.3 25.1
Depreciation and Amortization 8.3 9.9 11.8 10.8 11.8
----- ----- ----- ----- -----
Total Operating Expenses 85.5 86.1 86.8 86.1 87.5
----- ----- ----- ----- -----
Operating Income 14.5 13.9 13.2 13.9 12.5
Interest Expense 10.0 10.2 11.3 11.8 10.0
----- ----- ----- ----- -----
Income before Provision for Income Taxes 4.5 3.7 1.9 2.1 2.5
Provision for Income Taxes 2.6 2.2 1.7 1.3 1.4
----- ----- ----- ----- -----
Net Income 1.9% 1.5% 0.2% 0.8% 1.1%
===== ===== ===== ===== =====
EBITDA 22.8% 23.8% 25.0% 24.7% 24.2%
</TABLE>
Six Months Ended June 30, 1996 Compared to Six Months Ended June 30, 1995
Storage revenues increased from $30.7 million for the first six months of
1995 to $39.4 million for the first six months of 1996, an increase of $8.7
million or 28.0%. Ten acquisitions completed by the Company in 1995 and the
first six months of 1996 accounted for $5.5 million or 63.7% of such increase.
The balance of the storage revenues growth resulted primarily from net increases
in Cartons stored by existing customers and from sales to new customers.
Service and storage material sales revenues increased from $19.5 million for
the first six months of 1995 to $24.6 million for the first six months of 1996,
an increase of $5.1 million or 26.2%. Acquisitions accounted for $3.4 million or
66.2% of such increase. The balance of such increase resulted from increases in
service and storage material sales to existing customers and the addition of new
customer accounts.
For the reasons discussed above, total revenues increased from $50.2 million
for the first six months of 1995 to $64.0 million for the first six months of
1996, an increase of $13.8 million or 27.3%. Of such increase, $8.9 million or
64.6% was attributable to acquisitions completed by the Company in 1995 and the
first six months of 1996.
Cost of sales (excluding depreciation) increased from $25.1 million for the
first six months of 1995 to $32.4 million for the first six months of 1996, an
increase of $7.3 million or 29.0%, and increased as a percentage of revenues
from 50.0% for the first six months of 1995 to 50.6% for the first six months of
1996. The increase was primarily attributable to the increase in Cartons stored,
increased expenses related to the severe winter weather on the Atlantic coast
during the first quarter of 1996 and expenses related to certain facility
relocations.
Selling, general and administrative expenses increased from $12.7 million for
the first six months of 1995 to $16.1 million for the first six months of 1996,
an increase of $3.4 million or 26.5%, and decreased as a percentage of revenues
from 25.3% for the first six months of 1995 to 25.1% for the first six months of
1996. The $3.4 million increase was primarily attributable to the costs
associated with becoming a public company, with accelerated acquisition
activity, including certain redundant transitional expenses as new acquisitions
were integrated into the Company, and the addition of personnel needed to
support the Company's growth. Additionally, the selling, general
34
<PAGE>
and administrative expenses of acquired companies tend to be higher than Iron
Mountain's, and cost reductions and other possible synergies are not realized
immediately.
Depreciation and amortization expense increased from $5.4 million for the
first six months of 1995 to $7.5 million for the first six months of 1996, an
increase of $2.1 million or 38.7%, and increased as a percentage of revenues
from 10.8% for the first six months of 1995 to 11.8% for the first six months of
1996. The increase was primarily attributable to the additional depreciation and
amortization expense related to the aforementioned acquisitions, capital
expenditures, including racking systems, information systems and improvements to
existing facilities, and additions to customer acquisition costs.
As a result of the foregoing factors, operating income increased from $7.0
million for the first six months of 1995 to $8.0 million for the first six
months of 1996, an increase of $1.0 million or 14.1%. As a percentage of
revenues, operating income decreased from 13.9% for the first six months of 1995
to 12.5% for the first six months of 1996.
Interest expense increased from $5.9 million for the first six months of 1995
to $6.4 million for the first six months of 1996, an increase of $0.5 million or
7.6%. The increase was primarily attributable to increased indebtedness to
finance acquisitions and capital expenditures. The decrease in interest expense
as a percentage of revenues was primarily attributable to a net decrease in
interest rates.
As a result of the foregoing factors, income before provision for income
taxes increased from $1.1 million (2.1% of revenues) for the first six months of
1995 to $1.6 million (2.5% of revenues) in the first six months of 1996, an
increase of $0.5 million or 50.8%. Provision for income taxes increased from
$0.6 million (1.3% of revenues) for the first six months of 1995 to $0.9 million
(1.4% of revenues) for the first six months of 1996. The Company's effective tax
rate is higher than statutory rates primarily due to the amortization of the
nondeductible portion of goodwill associated with acquisitions made prior to the
change in tax laws which now generally permit deduction of such expenses.
Net income increased from $0.4 million (0.8% of revenues) for the first six
months of 1995 to $0.7 million (1.1% of revenues) for the first six months of
1996, an increase of $0.3 million, or 66.0%. Net income (loss) applicable to
common stockholders was a $0.5 million net loss (1.1% of revenues), after
accretion of $0.9 million related to the Warrant, for the first six months of
1995 compared to net income of $0.4 million (0.7% of revenues), after accretion
of $0.3 million related to the Warrant, for the first six months of 1996. The
Warrant was redeemed in full in February 1996, with a portion of the proceeds
from the Initial Public Offering. As a result of such redemption, there will be
no future charges for such accretion.
As a result of the foregoing factors, EBITDA increased from $12.4 million for
the first six months of 1995 to $15.5 million for the first six months of 1996,
an increase of $3.1 million, or 24.8%. As a percentage of revenues, EBITDA
decreased from 24.7% for the first six months of 1995 to 24.2% for the first six
months of 1996.
Year Ended December 31, 1995 Compared to Year Ended December 31, 1994
Storage revenues increased from $54.1 million in 1994 to $64.2 million in
1995, an increase of $10.1 million or 18.6%. Seven acquisitions completed
between June 1994 and December 1995 accounted for $5.7 million or 56.7% of such
increase. The balance of the storage revenues growth resulted primarily from net
increases in Cartons stored by existing customers and from sales to new
customers.
Service and storage material sales revenues increased from $33.5 million in
1994 to $40.3 million in 1995, an increase of $6.8 million or 20.1%. This
increase was accomplished despite a decrease of approximately $0.8 million in
such revenues received from the RTC, which decrease was primarily due to a
reduction in revenues from special service projects. Acquisitions accounted for
$4.3 million or approximately 63.5% of such increase. The balance of such
increase resulted from increases in service and storage material sales to
existing customers and the addition of new customer accounts.
For the reasons discussed above, total revenues increased from $87.6 million
in 1994 to $104.4 million in 1995, an increase of $16.8 million or 19.2%. Of
such increase, $10.0 million or 59.4% was attributable to acquisitions made by
the Company between June 1994 and December 1995. The monthly average Cartons
stored increased approximately 22% in 1995 as compared to 1994, from
approximately 16.7 million Cartons to approximately 20.4 million Cartons. The
percentage increase was greater than that of total revenues primarily for the
reason described in the third paragraph under "Overview" above.
35
<PAGE>
Cost of sales (excluding depreciation) increased from $45.9 million in 1994
to $52.3 million in 1995, an increase of $6.4 million or 13.9%, and decreased as
a percentage of revenues from 52.4% in 1994 to 50.1% in 1995. The $6.4 million
increase resulted primarily from an increase in Cartons stored. The decrease as
a percentage of revenues was due primarily to increased storage efficiencies
resulting from relocations to, or additions of, newer, higher density facilities
as well as increased utilization of storage capacity.
Selling, general and administrative expenses increased from $20.9 million in
1994 to $26.0 million in 1995, an increase of $5.1 million or 24.9%, and
increased as a percentage of revenues from 23.8% in 1994 to 24.9% in 1995. The
$5.1 million increase was due primarily to increases in field management and
administrative staffing, including increases due to acquisitions. Of the 1.1%
increase as a percentage of revenues, $0.6 million (0.6% of revenues) resulted
from a provision for a judgment in a lawsuit relating to a 1992 incident and a
$0.5 million (0.5% of revenues) charge for the relocation of the corporate
accounting function from Los Angeles to Boston.
Depreciation and amortization expenses increased from $8.7 million in 1994 to
$12.3 million in 1995, an increase of $3.6 million or 42.0%, and increased as a
percentage of revenues from 9.9% in 1994 to 11.8% in 1995. Depreciation and
amortization expenses, both in absolute dollars and as a percentage of revenues,
continued to increase, primarily as a result of the Company's acquisitions and
growth-related capital investments for racking systems, improvements to records
management facilities, information systems and customer acquisition costs.
Amortization during 1995 included a one-time charge of $0.9 million (0.9% of
revenues) in connection with the write-down of the goodwill of a subsidiary due
to the Company's decision to sell such subsidiary at an estimated price which is
$0.9 million less than such subsidiary's book value and related goodwill. The
Company subsequently decided not to sell such subsidiary.
As a result of the foregoing factors, operating income increased from $12.2
million in 1994 to $13.8 million in 1995, an increase of $1.6 million or 13.0%,
and decreased as a percentage of revenues from 13.9% to 13.2%.
Interest expense increased from $9.0 million in 1994 to $11.8 million in
1995. This increase was due primarily to increased levels of indebtedness
primarily to finance acquisitions, as well as higher interest rates and higher
deferred financing charges.
As a result of the foregoing factors, income before provision for income
taxes decreased from $3.2 million (3.7% of revenues) in 1994 to $1.9 million
(1.9% of revenues) in 1995, a decrease of $1.3 million or 40.0%. Provision for
income taxes decreased from $2.0 million (2.2% of revenues) to $1.7 million
(1.7% of revenues). The Company's effective tax rates for 1994 and 1995 were
higher than statutory rates primarily due to $1.5 million and $2.5 million,
respectively, of amortization of nondeductible goodwill.
Net income decreased $1.1 million from $1.3 million (1.5% of revenues) in
1994 to $0.2 million (0.2% of revenues) in 1995 as a result of the factors
outlined above.
As a result of the foregoing factors, EBITDA increased from $20.9 million in
1994 to $26.1 million in 1995, an increase of $5.2 million or 25.1%, and
increased as a percentage of revenues from 23.8% to 25.0%. These increases
reflect continuing economies of scale and increased operating efficiencies,
which were partially offset by the $0.6 million (0.6% of revenues) reserve
relating to the judgment in the lawsuit referred to above and by the $0.5
million (0.5% of revenues) charge for the relocation of the corporate accounting
function from Los Angeles to Boston.
Year Ended December 31, 1994 Compared to Year Ended December 31, 1993
Storage revenues increased from $48.9 million in 1993 to $54.1 million in
1994, an increase of $5.2 million or 10.6%. The substantial majority of the
storage revenues growth resulted from sales to new customers and increases in
Cartons stored from existing customers. Three acquisitions completed between
June and October 1994 accounted for only $0.8 million of the increase.
Service and storage material sales revenues increased from $32.8 million in
1993 to $33.5 million in 1994, an increase of $0.7 million or 2.3%. This
increase was due primarily to an increase in services provided to existing and
new customers, which was partially offset by a $0.9 million decrease in such
revenues received from the RTC primarily due to a reduction in revenues from
special service projects.
For the reasons discussed above, total revenues increased from $81.7 million
in 1993 to $87.6 million in 1994, an increase of $5.9 million or 7.3%. The
monthly average Cartons stored increased from approximately 14.5 million
36
<PAGE>
in 1993 to approximately 16.7 million in 1994, an increase of approximately 15%.
The percentage increase in Cartons stored was greater than that of total
revenues for the reasons discussed in the third paragraph under "Overview"
above.
Cost of sales (excluding depreciation) increased from $43.1 million in 1993
to $45.9 million in 1994, an increase of $2.8 million or 6.6%, and decreased as
a percentage of revenues from 52.7% in 1993 to 52.4% in 1994. The $2.8 million
increase was due primarily to increases in storage capacity. The decrease as a
percentage of revenues was due primarily to increased storage efficiencies.
Selling, general and administrative expenses increased from $20.0 million in
1993 to $20.9 million in 1994, an increase of $0.9 million or 4.4%, and
decreased as a percentage of revenues from 24.5% in 1993 to 23.8% in 1994. The
increase in such expenses was due primarily to inflationary increases in wages
and benefits, partially offset by a $0.2 million decrease in bad debt expense.
The decrease as a percentage of revenues was due to operating efficiencies and
the decrease of 0.3% in bad debt expense.
Depreciation and amortization expenses increased from $6.8 million in 1993 to
$8.7 million in 1994, an increase of $1.9 million or 28.0%, and increased as a
percentage of revenues from 8.3% in 1993 to 9.9% in 1994. This increase, both in
dollars and as a percentage of revenues, was due primarily to an increase in
depreciation charges resulting from capital expenditures for racking systems and
improvements to records management facilities and information systems.
As a result of the foregoing factors, operating income increased from $11.9
million in 1993 to $12.2 million in 1994, an increase of $0.3 million or 2.8%,
and decreased from 14.5% of revenues to 13.9% of revenues.
Interest expense increased from $8.2 million in 1993 to $9.0 million in 1994,
an increase of $0.8 million or 9.2%, due primarily to increased levels of
indebtedness.
As a result of the foregoing factors, income before provision for income
taxes decreased from $3.7 million in 1993 (4.5% of revenues) to $3.2 million in
1994 (3.7% of revenues), a decrease of $0.5 million or 11.4%. Provision for
income taxes decreased from $2.1 million in 1993 (2.6% of revenues) to $2.0
million in 1994 (2.2% of revenues). The Company's effective tax rates for
financial reporting purposes for 1994 and 1993 exceeded statutory tax rates
primarily because of $1.5 million of amortization of nondeductible goodwill in
each year.
Net income decreased from $1.6 million (1.9% of revenues) to $1.3 million
(1.5% of revenues) as a result of the factors outlined above.
As a result of the foregoing factors, EBITDA increased from $18.6 million in
1993 to $20.9 million in 1994, an increase of $2.3 million or 12.0%, and
increased as a percentage of revenues from 22.8% to 23.8%. The increase as a
percentage of revenues reflected economies of scale and increased operating
efficiencies.
37
<PAGE>
Recent Quarterly Financial Data
The following table sets forth certain consolidated statements of operations
data of the Company for the quarterly periods shown. The unaudited quarterly
information has been prepared on the same basis as the annual financial
information and, in management's opinion, includes all adjustments (consisting
of normal recurring accruals) necessary to present fairly the information for
the quarters presented. The operating results for any quarter are not
necessarily indicative of results for the year or for any future period.
<TABLE>
<CAPTION>
Three Months Ended
-----------------------------------------------------------------------------------------
1994 1995
------------------------------------------ -------------------------------------------
Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31
------- ------- -------- ------- ------- ------- -------- -------
(In thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Storage $12,863 $13,220 $13,855 $14,160 $14,882 $15,866 $16,246 $17,171
Service and Storage
Material Sales 8,452 8,489 8,171 8,408 9,456 10,020 10,324 10,471
------- ------- ------- ------- ------- ------- ------- -------
Total Revenues 21,315 21,709 22,026 22,568 24,338 25,886 26,570 27,642
Operating Expenses:
Cost of Sales
(Excluding
Depreciation) 11,429 11,325 11,509 11,617 12,224 12,888 12,888 14,277
Selling, General and
Administrative 5,146 5,113 5,329 5,265 5,849 6,848(2) 6,358 6,980(4)
Depreciation and
Amortization 1,845 1,936 2,526(1) 2,383 2,752 2,676 3,775(3) 3,138
------- ------- ------- ------- ------- ------- ------- -------
Total Operating
Expenses 18,420 18,374 19,364 19,265 20,825 22,412 23,021 24,395
------- ------- ------- ------- ------- ------- ------- -------
Operating Income $ 2,895 $ 3,335 $ 2,662 $ 3,303 $ 3,513 $ 3,474 $ 3,549 $ 3,247
======= ======= ======= ======= ======= ======= ======= =======
EBITDA $ 4,740 $ 5,271 $ 5,188 $ 5,686 $ 6,265 $ 6,150(2) $ 7,324 $ 6,385(4)
</TABLE>
<TABLE>
<CAPTION>
1996
-----------------------
Mar. 31 June 30
-------- -------
<S> <C> <C>
Revenues:
Storage $19,154 $20,209
Service and Storage
Material Sales 11,874 12,713
------- -------
Total Revenues 31,028 32,922
Operating Expenses:
Cost of Sales
(Excluding
Depreciation) 15,668 16,715
Selling, General and
Administrative 7,807 8,260(5)
Depreciation and
Amortization 3,608 3,922
------- -------
Total Operating Expenses 27,083 28,897
------- -------
Operating Income $ 3,945 $ 4,025
======= =======
EBITDA $ 7,553 $ 7,947(5)
</TABLE>
- ------------
(1) Includes a $277 write-down relating to the closing of two facilities.
(2) Includes a $600 reserve for litigation.
(3) Includes a $900 write-down of the goodwill of a subsidiary as described
in "Results of Operations."
(4) Includes a charge of $500 relating to the relocation of the Company's
corporate accounting function.
(5) Includes a charge of $321 relating to the relocation of the Company's
corporate accounting function.
Liquidity and Capital Resources
In February 1996, the Company raised $33.3 million, net of underwriters'
discounts and commissions and associated costs, in the Initial Public Offering.
The net proceeds from the Initial Public Offering were used to retire the
Warrant, to fund acquisitions, to repay debt that had been incurred to make
acquisitions and for working capital.
As the Company has sought to increase its EBITDA, it has made significant
capital investments, consisting primarily of acquisitions; growth-related
capital expenditures, including racking systems, information systems and
improvements to existing facilities; and customer acquisition costs. Cash paid
for these investments during the first six months of 1996 amounted to $19.2
million, $11.2 million and $0.7 million, respectively. These investments have
been primarily funded through a portion of the net proceeds of the Initial
Public Offering, cash flows from operations and borrowings under the Credit
Agreement.
Stockholders' equity has been negatively affected primarily by the accretion
of the Warrant, interest expense, depreciation and amortization expenses
associated with expansion of the Company's storage capacity and the acquisition
of certain large volume accounts, and amortization of goodwill. In part as a
result of the Initial Public Offering, the Company's ratio of total debt to
stockholders' equity decreased from 3.1-to-1 at December 31, 1992 to 2.2-to-1 at
June 30, 1996. On a pro forma basis (after giving effect to the Transactions),
the ratio of total debt to stockholders' equity at June 30, 1996 would have been
3.3-to-1.
The Company currently intends to apply a portion of the net proceeds from
the Offering to the prepayment of the Credit Agreement, the Chrysler Notes
and the FDS Notes. The Company will record, in the quarter in which
38
<PAGE>
the Offering is consummated, an extraordinary loss on retirement of debt, net of
related tax benefit. Assuming the Transactions were to be consummated on
September 30, 1996, the amount of such loss would be approximately $2.0 million.
Such loss will consist of the write-down of deferred financing costs, original
issue discount, prepayment penalty and loss on possible termination of certain
interest rate protection agreements.
Capital Investments
For 1994, 1995 and the six months ended June 30, 1996, the Company's
growth-related capital expenditures were $15.8 million, $14.4 million and $10.7
million, respectively. Included in capital expenditures for 1994 is $2.9 million
for the construction of a records management facility which was sold in a sale
and leaseback transaction. Growth-related capital expenditures consist primarily
of investment in racking systems, new building and leasehold improvements,
equipment for new facilities, management information systems and facilities
restructuring. For 1994, 1995 and the six months ended June 30, 1996, the
Company's maintenance capital expenditures were $1.2 million, $0.9 million and
$0.5 million, respectively.
In addition, the Company incurs costs (net of revenues received for the
initial transfer of records) related to the acquisition of large volume accounts
(typically over 10,000 Cartons). For 1994, 1995 and the six months ended June
30, 1996, the Company's additions to customer acquisition costs were $1.4
million, $1.4 million and $0.7 million, respectively.
The Company currently expects that its capital expenditures (other than
capital expenditures related to future acquisitions, which cannot be presently
estimated) for the second half of 1996 will be between $9 million and $10
million, and for 1997 will be between $18 million and $21 million. The Company
expects to fund these expenditures and costs from cash flows from operations and
by borrowings under the New Credit Facility.
Recent and Pending Acquisitions
The Company's liquidity and capital resources have been significantly
impacted by acquisitions and, given the Company's acquisition strategy, may be
significantly impacted for the foreseeable future. In order to capitalize on
industry consolidation, the Company in mid-1994 adopted a more active
acquisition strategy. Since mid-1994, the Company has acquired or entered into
agreements to acquire 19 records management businesses, 18 of which have been
completed and one of which is pending, for a total purchase price of $103.2
million (not including contingent payments of up to $4.6 million based upon the
achievement of certain revenue targets during 1996 through 1998). The Company
has historically financed its acquisitions with borrowings under the Credit
Agreement in conjunction with cash flows provided by operations and, more
recently, from a portion of the proceeds of the Initial Public Offering. Net
borrowings for acquisitions during 1994, 1995 and the first six months of 1996
totaled $2.1 million, $32.3 million and $19.0 million, respectively. In
addition, subsequent to June 30, 1996, the Company has incurred an additional
$28.3 million under the Credit Agreement to fund the Completed Acquisitions
consummated after such date. The Company intends to use a portion of the net
proceeds from the Offering, together with borrowings under the New Credit
Facility, to fund the Pending Acquisition. The Company's future interest expense
may increase significantly as a result of the additional indebtedness the
Company may incur to finance possible future acquisitions. To the extent that
future acquisitions are financed by additional borrowings under the New Credit
Facility or other credit facilities, the resulting increase in debt and interest
expense could have a negative effect on such measures of liquidity as debt to
equity, EBITDA to debt and EBITDA to interest expense.
Sources of Funds
During the six months ended June 30, 1996, the Company generated $8.1 million
in cash flows from operations as compared to $8.2 million for the same period of
the prior year. Such change in cash flows from operations resulted from a $3.1
million increase in EBITDA and an increase in accounts payable, which were
partially offset by an increase in accounts receivable and other changes in
working capital accounts. During the years ended December 31, 1994 and 1995, the
Company generated cash flows from operations of $11.6 million and $15.7 million,
respectively.
At December 31, 1995, the Company had estimated net operating loss
carryforwards of approximately $7.3 million for federal income tax purposes. As
a result of such loss carryforwards, cash paid for income taxes has historically
been substantially lower than the provision for income taxes.
39
<PAGE>
Net cash flows provided by financing activities were $6.7 million and $34.1
million in 1994 and 1995, respectively, substantially all of which was provided
under the Credit Agreement, and $23.7 million for the six months ended June 30,
1996, substantially all of which was provided by the net proceeds of the Initial
Public Offering and under the Credit Agreement.
Credit Arrangements of the Company
The Credit Agreement provides for total borrowings not to exceed $130 million
and consists of the following facilities: (i) a $15 million revolving working
capital facility; (ii) a $10 million term loan; (iii) a $55 million revolving
acquisition credit facility; and (iv) a $50 million term loan. At June 30, 1996,
all borrowings under the Credit Agreement bore interest at a weighted average
annual rate of 8.5%. The obligations under the Credit Agreement are secured by
substantially all of the Company's assets, including the stock of its operating
subsidiaries. The Company also has the Chrysler Notes outstanding. These
facilities require the Company to meet certain financial covenants and ratios.
See Note 3 of Notes to the Company's Audited Consolidated Financial Statements.
The Company intends to apply a portion of the net proceeds from the Offering
to prepay in its entirety all indebtedness outstanding under the Credit
Agreement and the Chrysler Notes. See "The Transactions" and "Use of Proceeds."
In addition, the Company intends to terminate the Credit Agreement and to enter
into the New Credit Facility as a replacement bank credit facility. The New
Credit Facility will provide the Company with revolving credit availability of
$100 million for acquisitions, working capital and other corporate purposes. See
"Description of the New Credit Facility" for a more detailed description of the
anticipated terms of the New Credit Facility. No assurance can be given that the
Company will enter into the New Credit Facility on these or any other terms. The
Offering is not conditioned on the closing of the New Credit Facility.
The annual maturities of Iron Mountain's indebtedness for the second half of
1996 and for 1997, 1998, 1999 and 2000 are $1.6 million, $3.4 million, $8.3
million, $8.4 million and $32.5 million, respectively. Giving pro forma effect
to the Transactions, the annual maturities of Iron Mountain's indebtedness for
the second half of 1996 and for 1997, 1998, 1999 and 2000 would be $0.1 million,
$0.4 million, $0.4 million, $0.4 million and $7.8 million, respectively.
As of June 30, 1996, the Company had available under the Credit Agreement
$6.2 million under the working capital facility and $24.7 million under the
acquisition credit facility. Subsequent to June 30, 1996, the Company borrowed
$28.3 million under the acquisition credit facility to finance acquisitions, and
amended the Credit Agreement to increase the acquisition credit facility by $5.0
million. As of June 30, 1996, on a pro forma basis, after giving effect to the
Transactions (see "The Transactions" and "Use of Proceeds"), the Company would
have had $174.5 million in total indebtedness and an aggregate of approximately
$86.3 million available under the New Credit Facility.
Under the Credit Agreement, Iron Mountain is required to use, and may in the
future use, interest rate protection products to reduce its exposure to
increases in interest rates. Under the New Credit Facility, Iron Mountain will
also be required to use such interest rate protection products. As of June 30,
1996, the Company had $118.9 million of total debt, of which $26.0 million had
fixed interest rates and $92.9 million had variable interest rates, $30.0
million of which was covered by interest rate protection products, certain of
which may be terminated in connection with the repayment of the Credit
Agreement. See Note 3 of Notes to the Company's Audited Consolidated Financial
Statements.
Future Capital Needs
Iron Mountain's ability to generate cash adequate to fund its needs depends
generally on the results of its operations and the availability of financing.
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. Depending on the
pace of the Company's acquisitions, the Company may elect to seek additional
financing during the next two years. The Company anticipates that any such
financing will be debt financing, including the issuance of debt securities.
However, depending on market conditions and the preferences of acquisition
candidates, the Company would consider issuing equity securities. However, there
can be no assurance in this regard or that the terms available for any future
financing, if required, would be favorable to Iron Mountain.
40
<PAGE>
Seasonality
Historically, the Company's business has not been subject to seasonality in
any material respect.
Inflation
Certain of the Company's expenses, such as wages and benefits, occupancy
costs and equipment repair and replacement, are subject to normal inflationary
pressures. Although the Company to date has been able to offset inflationary
cost increases through increased operating efficiencies, there can be no
assurance that the Company will be able to offset any future inflationary cost
increases through similar efficiencies or increased storage or service charges.
41
<PAGE>
BUSINESS
Introduction
Iron Mountain is the largest records management company in the United States,
as measured by revenues. The Company is a full-service provider of records
management and related services, enabling customers to outsource data and
records management functions. Pro forma for the Transactions, as of June 30,
1996, the Company managed approximately 29.6 million Cartons in 103 records
centers in 33 markets nationwide. The Company has a diversified base of over
19,000 customer accounts, which includes more than half of the Fortune 500 and
numerous legal, banking, healthcare, accounting, insurance, entertainment and
government organizations. The Company provides storage and related services for
all major media, including paper (which is the dominant form of records
retention and which has accounted for approximately 85% of the Company's
revenues since 1992), computer disks and tapes, microfilm and microfiche, master
audio and video tapes, film and optical disks, X-rays and blueprints. The
Company's principal services include filing, retrieval and destruction of
records, courier pick-up and delivery, database management and customized
reporting. The Company also sells storage materials and provides consulting and
other records-related services.
The Records Management Industry
Overview
Based on publicly available information, organizations in the United States
generate an estimated four trillion documents each year. Many of these documents
must be retained and available for reference for many years. These records may
be generally divided into two categories: active and inactive. Active records
relate to ongoing and recently completed activities or contain information that
is frequently referenced. Active records are usually stored and managed on-site
by the organization which originated them to ensure ready availability.
Inactive records are the principal focus of the records management industry.
Inactive records consist of those records which are not needed for immediate
access but which must be retained for legal reasons or regulatory compliance or
for occasional reference in support of ongoing business operations. Based on
industry studies, the Company believes that inactive records make up
approximately 80% of all records.
[TRIANGLE GRAPHIC]
ACTIVE 20%
INACTIVE 80%
Growth of Market; Outsourcing
The Company believes that the volume of inactive records is increasing for a
number of reasons, including: (i) the rapid growth of inexpensive
document-producing technologies such as facsimile, desktop printing and computer
networking; (ii) increased regulatory requirements; (iii) concerns over possible
future litigation and the resulting increases in volume and holding periods of
documentation; (iv) the high cost of reviewing records and deciding whether to
retain or destroy them; and (v) the failure of many entities to adopt or follow
policies on records destruction. Despite the growth of new "paperless"
technologies, such as the Internet and e-mail, management believes that stored
information remains predominantly paper-based and that such technologies have
promoted the creation of hard copies of such electronic information.
The Company believes that the records management industry will gain a growing
share of this increased volume as more large organizations make the strategic
decision to outsource their records management as part of
42
<PAGE>
a growing trend to outsource a wide variety of functions that can be performed
more cost-effectively by third parties, though there can be no assurance in this
regard. Records management companies can offer occupancy and labor cost
reductions while at the same time providing greater levels of service than are
typically available in-house.
Highly Fragmented Industry
Most records management companies serve a single local market, and are often
either owner-operated or ancillary to another business, such as a moving
company. According to the ACRC, as of January 1994 (the latest date for which
such information is available), approximately 2,600 firms offered records
storage and management services in the United States. The Company believes that
there are only four national providers in the industry (including the Company)
and that the rest are regional or, in most instances, single-city operators.
Increasing Industry Consolidation
The Company believes that there is a trend towards consolidation in the
records management industry and that it will continue and accelerate because of
the industry's capital requirements for growth, customer demands for more
sophisticated technology solutions, a trend for certain large customers to
contract with one vendor in multiple cities and opportunities to achieve
economies of scale.
The records management business requires significant up-front capital
investment for real estate, racking systems and management information
technology. Economies of scale available in these areas can reward larger
initial capital investments by reducing per unit storage costs. However, such
economies of scale are only realized once a facility begins storage operations
and fills available capacity. Thus, larger companies with both access to capital
and the ability to quickly fill a new facility enjoy a competitive cost
advantage, thereby putting pressures on smaller competitors.
Financial Characteristics of Iron Mountain's Business
Iron Mountain's records management business has the following financial
characteristics:
(bullet)Recurring Revenues. Iron Mountain derives a majority of its revenues
from fixed periodic (usually monthly) fees charged to customers for
storage of records. Storage revenues have grown for 30 consecutive
quarters and have represented approximately 60% of the Company's
total revenues in each of the last five years. Once a customer places
a record in storage with the Company and until that record is
destroyed or permanently removed (for which the Company typically
receives a service fee), the Company receives recurring payments of
fixed periodic fees without incurring additional labor or marketing
expenses or significant capital costs. The stable and growing storage
base also provides the foundation for increases in revenues and
EBITDA from service activities and sales of storage materials.
(bullet)Historically Non-Cyclical Business. Iron Mountain has not experienced
a reduction of its business as a result of past general economic
downturns, although there can be no assurances that this would be the
case in the future. Management believes that the outsourcing of
records management may accelerate during economic downturns as
companies focus on reducing costs through outsourcing non-core
operating functions. In addition, management believes that companies
that have outsourced records management are less likely during
economic downturns to incur the move-out costs and other expenses
associated with switching vendors or moving records management
in-house.
(bullet)Inherent Growth from Existing Customers. The Company's customers have
on average generated additional Cartons at a faster rate than stored
Cartons have been destroyed or permanently removed. From 1992 to
1995, net Cartons from existing customers grew at an average annual
rate of 6.7%. The Company believes the consistent growth of its
storage revenues is the result of a number of additional factors,
including: (i) the trend toward increased records retention; (ii)
customer satisfaction with the Company's services; and (iii) the
costs and inconvenience of moving storage operations in-house or to
another provider of records management services.
(bullet)Diversified and Stable Customer Base. The Company has over 19,000
customer accounts in a variety of industries. The Company
currently provides services to more than half of the Fortune 500
and numerous legal, banking, healthcare, accounting, insurance,
entertainment and government organizations. Only one
43
<PAGE>
of the Company's customers accounted for more than 3% of revenues in
1993, 1994 or 1995. From 1992 to 1995, average annual permanent
removals of Cartons represented only approximately 4% of total
Cartons stored.
(bullet)Capital Expenditures Related Primarily to Growth. The Company's
business requires limited annual maintenance capital expenditures.
Maintenance capital expenditures were $1.8 million, $1.2 million and
$0.9 million in 1993, 1994 and 1995, respectively. From 1992 to 1995,
over 90% of the Company's aggregate capital expenditures were
growth-related investments, primarily in racking systems, new
buildings and leasehold improvements, equipment for new facilities,
management information systems and facilities restructuring. These
growth-related capital expenditures are primarily discretionary and
create additional capacity for increases in revenues and EBITDA.
Growth Strategy
Iron Mountain's growth strategy is to expand aggressively in existing and new
markets through increased business from existing customers, additions of new
customers and acquisitions. The Company's goal is to be one of the largest
records management companies in each of its markets. In addition, through its
growth strategy, the Company seeks to attain increasing economies of scale in
order to provide high-quality service at competitive prices.
The following table sets forth the Company's approximate growth in Cartons
stored by existing customers, new customers and as a result of acquisitions for
the three years ended December 31, 1993, 1994 and 1995 and the twelve months
ended June 30, 1996. The figures for the twelve months ended June 30, 1996 are
not necessarily indicative of the results that will be achieved for the twelve
months ended December 31, 1996.
Cartons Added to Storage(1)
(In millions)
<TABLE>
<CAPTION>
Year Ended December 31, Twelve Months
----------------------- Ended June 30,
1993 1994 1995 1996
---- ---- ---- ---------------
<S> <C> <C> <C> <C>
Cartons at Beginning of Period 12.6 15.5 17.7 20.3
==== ==== ==== ====
Additions from Existing Customers
Gross Cartons Added(2) 1.9 2.6 2.5 3.1
Cartons Deleted:
Destructions (0.6) (0.9) (1.0) (1.1)
Permanent Removals (0.6) (0.6) (0.6) (0.8)
---- ---- ---- ----
Net Carton Growth from Existing Customers 0.7 1.1 0.9 1.2
Additions from New Customers(2) 2.2 1.0 1.4 1.8
Additions from Acquisitions 0.0 0.1 3.3 3.1
---- ---- ---- ----
Total Carton Additions 2.9 2.2 5.6 6.1
==== ==== ==== ====
Percentage Increase 23% 14% 32% 30%
</TABLE>
- -----------
(1) Excludes storage volumes attributable to the Company's vital records
services and data protection services.
(2) Gross Cartons added by the RTC or its successor the FDIC were
approximately 0.9 million, 0.3 million, 0.3 million and 0.3 million for
1993, 1994, 1995 and the twelve months ended June 30, 1996, respectively.
RTC additions in 1993 are included in Additions from New Customers because
the initial transfer of Cartons from the RTC commenced in the fourth quarter
of 1992 and continued into 1993. Additions in 1994, 1995 and the twelve
months ended June 30, 1996 are included in Additions from Existing
Customers.
Growth from Existing Customers
Existing Iron Mountain customers have contributed to storage and services
revenue growth because they have on average generated additional Cartons at a
faster rate than old Cartons are destroyed or permanently removed. In order to
maximize growth opportunities from existing customers, the Company seeks to
maintain high levels of customer retention by providing premium customer service
through its decentralized customer support staff.
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The local customer support staff, working in conjunction with the corporate
staff, is also responsible for marketing additional services to existing
customers, including records tracking, indexing, customized reporting, vital
records management and records management consulting services.
Additions of New Customers
The Company's direct sales force is dedicated solely to establishing new
account relationships and draws on the Company's national marketing organization
and senior management. New customer sales efforts have resulted in the addition
of more than 900 new customer accounts in each of the last three years.
Iron Mountain segments its market into large volume accounts (typically over
10,000 Cartons) and standard accounts. As of June 30, 1996, large volume
accounts represented more than half of the total Cartons stored. The two
segments differ in complexity of service and technology needs, purchasing
behavior and purchasing leverage. The Company employs different database
marketing techniques, program design features and pricing structures to meet the
needs of each segment. In recent years the Company's large volume account
segment has grown rapidly, driven by strategic outsourcing initiatives and the
Company's marketing efforts. In 1993, 1994, 1995 and the six months ended June
30, 1996, large volume accounts represented 88%, 70%, 76% and 63% respectively,
of the additions of Cartons from new customers.
Growth through Acquisitions
Iron Mountain has had a successful record of acquiring and integrating
smaller records management companies. From 1990 through 1994, Iron Mountain
completed five acquisitions. In order to capitalize on industry consolidation,
the Company in mid-1994 adopted a more active acquisition strategy and
implemented changes in its management, systems and financial infrastructure,
including the consummation of the Initial Public Offering, to execute such
strategy. Since June 1994, the Company has acquired or entered into agreements
to acquire 19 companies, 18 of which have been completed and one of which is
pending. The Company operates in 32 markets nationwide and intends to continue
to make fold-in acquisitions in existing markets and to make strategic
acquisitions in new geographic markets, with an emphasis on the 50 largest
markets in the United States. The Company's corporate development staff is
engaged in an ongoing review of acquisition candidates. As of the date hereof,
the Company is in contact with approximately 40 companies, and expects that it
will continue to meet several new candidates each month, although the actual
number may vary from month to month and there can be no assurance that any such
review will result in an acquisition. Management believes that Iron Mountain is
well positioned to participate in the further consolidation of the records
management industry. See "Risk Factors--Risks Associated with Acquisition
Strategy" and "Recent and Pending Acquisitions."
The Company seeks to expand its national presence, size and customer base
through new-market acquisitions. Management believes that the high start-up
costs of commencing operations make acquisitions an attractive means of entering
new markets. The Company seeks to acquire records management companies in
markets where management believes there is the potential for growth. Within such
markets, the Company uses a variety of criteria to evaluate acquisition
candidates, including the capacity and condition of existing storage facilities,
past and current operating performance and revenues and the experience and depth
of existing management. The Company is also considering investments in records
management businesses outside of the United States. See "Potential International
Investments."
The Company believes that it can use its expertise and central administrative
organization to leverage the acquisition candidate's local market presence,
promoting the development of underperforming facilities and enhancing the value
of the local assets. The Company believes that its new-market acquisition
strategy could have a number of benefits, including: (i) continued growth in
revenues and EBITDA and diversification across a greater number of markets; (ii)
introduction of the Company's efficient storage, labor, transportation and other
operating efficiencies into new markets; (iii) the increased utilization of
efficiencies available through the Company's central administrative and
management information functions; (iv) increased market awareness of Iron
Mountain's national scope and presence; and (v) increased overall scale, which
should broaden the range of and facilitate the Company's capital-raising
activities. See "Risk Factors--Risks Associated with Acquisition Strategy."
The Company also intends to continue to make fold-in acquisitions to augment
its operations in existing markets. The Company's goal in its existing markets
is to exploit economies of scale while maintaining high quality
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service. Following a new-market acquisition, the Company seeks to increase its
business with the acquired customer base and to supplement that growth with new
customers and, potentially, with appropriate fold-in acquisitions so that the
Company may benefit from economies of scale.
Premium Service Strategy
Organizations selecting a provider of records management services consider a
number of factors in addition to price. Management believes that Iron Mountain
is a "premium" brand in the marketplace based upon its reputation for
reliability, customer-oriented organization, investment in technology and
national operating presence. The Company seeks to exploit its strengths in each
of these areas to maintain customer relationships and to attract new customers.
Reputation for Reliability. The Company believes it has a reputation for
reliability based on its more than 40 years of operations, the continuity and
depth of its management, its successful historical growth, the quality and
diversity of its customer base which includes more than half the Fortune 500,
its technological capabilities and its size and financial resources.
Customer-Oriented Organization and Locally Responsive Management. Iron
Mountain has developed a decentralized, local management structure that brings
significant management experience and stability to local markets and allows the
Company to respond directly, effectively and flexibly to customers. Broad
operating authority is delegated to regional Vice Presidents and to local
managers. In pursuing its acquisition strategy, Iron Mountain seeks to
capitalize upon the experience and strengths of existing management. In
addition, all full-time union and non-union employees participate in
incentive-based compensation programs that provide payments based on profits or
attainment of specified objectives for the unit in which they work. Iron
Mountain believes that the experience, stability and commitment of its regional
and local management is integral to its ability to provide superior customer
service and maximize growth potential.
Investment in Technology. The Company has invested $12.5 million in
technology since 1992 in order to provide faster and more flexible solutions
for its customers and to enhance the quality and lower the costs of its own
operations. The Company believes that its technological capabilities,
especially its Safekeeper system, are a significant tool in attracting new
customers. The Company plans to continue to invest in its proprietary
technologies in the future. See "Technology and Development; Management
Information Systems."
National Operating Presence. The Company believes it is one of only four
records management companies with a national operating presence. Traditionally,
the purchase decision for large multi-site customers has been made at the local
level. Recently, however, the Company has found that certain large organizations
have sought to obtain operating and economic efficiencies by outsourcing a
significant portion of their records management functions with a single records
management company. The Company seeks to use its national operating presence to
compete for such large multi-site customer accounts.
Low-Cost Operating Strategy
Iron Mountain pursues a low-cost operating strategy based primarily on
achieving economies of scale in the areas of storage, labor and transportation,
general and administrative functions and management information systems. The
Company believes that it is one of the few records management companies with the
size and resources to realize significant economies of scale in these areas.
Storage Costs
Because occupancy costs are a major component of the Company's cost of sales,
reducing per Carton storage costs is a primary strategic goal of the Company and
its real estate management staff. The Company seeks to minimize per Carton
storage costs by: (i) designing racking systems and operating space to maximize
facility storage efficiency; (ii) negotiating favorable facility leases and
having facilities built to its custom specifications; and (iii) leasing larger
facilities, which, when filled, are less expensive per Carton to operate. Since
1991, the Company has acquired or leased 11 custom-designed records management
facilities. The average Carton density (the ratio of standard Carton storage
capacity to total square feet of floor space) of these facilities is
approximately twice
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that of the Company's overall average Carton density. As a result of these
practices and after giving effect to the consummation of the Acquisitions,
average Carton density in the Company's facilities increased 32% from December
31, 1992 to June 30, 1996.
Labor and Transportation Efficiency
The Company has made significant investments in computer technologies for its
service operations, resulting in greater efficiencies. In addition, by
increasing its operations and customer base in a local market area, the Company
seeks to maximize its courier delivery fleet usage and to increase delivery and
routing efficiencies.
The Company's incentive structure has also contributed to labor efficiency.
Each of the Company's full-time employees participates in incentive compensation
programs based upon achievement of specific operating targets designed to
integrate the objectives and performance of records management facility
employees and managers. For the six months ended June 30, 1996, the Company's
employees earned incentive compensation in an amount equal to approximately
10.8% of the base wages paid by the Company.
In part as a result of the foregoing factors, while the number of Cartons
stored at the Company's facilities between January 1, 1992 and June 30, 1996
increased by approximately 15.6 million (or approximately 144%), the Company's
staff increased during the same period by approximately 520 employees (or
approximately 65%).
G&A and MIS Efficiencies
The Company's corporate staff provides support to local management in the
areas of acquisitions, marketing, facility acquisition and leasing, racking
system purchasing, finance and accounting and human resource management. In
addition, the Company's corporate staff is responsible for the design and
support of all records management technology. The Company believes that central
support in these areas provides local managers with competitive advantages over
smaller, local competitors and results in significant economies of scale.
Technology and Development; Management Information Systems
The Company pioneered the application of advanced information technology to
the records management industry. Iron Mountain's proprietary Safekeeper system
provides advanced inventory control and information access, enabling the Company
to provide faster, higher quality and more flexible solutions to its customers
and to lower the costs of its operations. Iron Mountain's Safekeeper system
exploits bar-code technology to provide inventory integrity and a comprehensive,
standardized approach to tracking, accessing and retrieving records. Safekeeper
offers state-of-the-art records management capabilities and ease of access to
customers while featuring security functions to protect customer information
from unauthorized access. The system coordinates inventory control, order entry,
billing, material sales, service activity, accounts receivable and management
reporting, and features system-driven quality assurance and error-prevention.
Since 1992, the Company has invested $12.5 million to develop and refine its
management information systems, including Safekeeper.
Safekeeper is built on an open systems architecture which is fully portable
and can be implemented in small processing environments with several users and
in large processing environments with hundreds of users. This allows the Company
a substantial measure of flexibility and vendor independence, and reduces the
risk of technological obsolescence.
Safekeeper has improved the Company's customer support and operating
efficiency in the following ways:
(bullet)Acquisition System Integration. Safekeeper has been designed to
easily and effectively integrate newly acquired records management
companies and offer improved levels of customer service and records
management capabilities to customers acquired through acquisitions.
The critical components of integrating acquisition systems are the
abilities to match the acquired company's carton identifiers,
location identifiers, records descriptive data, and billing data.
Safekeeper is designed with flexible, comprehensive capabilities in
each of these areas. Consequently, an acquired company's inventory
can be converted to Safekeeper without having to relabel cartons or
reset and relabel inventory locations. The customers of the acquired
company retain their records data and receive similar billing rate
structures. In addition, acquisition customers experience minimal
disruption during integration and, after conversion, gain access to
advanced records management and information access capabilities.
Safekeeper utilizes a suite of
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conversion routines to automate the conversion process and
effectively translate customer and inventory information.
(bullet)Storage Efficiency. Safekeeper enables the Company to maximize the
efficient use of storage space at its facilities. When cartons are
added or returned to storage, Safekeeper identifies available space
and the location of the customer's other records at the facility.
Because there is a continual flow of cartons into and out of the
Company's facilities, Safekeeper also permits facility operators to
utilize space that becomes available as soon as cartons are removed.
Safekeeper can pinpoint the location of any carton, enabling facility
operators to quickly determine the optimal location for new or
returning cartons.
(bullet)Inventory Integrity. Bar-coding and scanning are used to track a
carton or a record throughout its life cycle at Iron Mountain.
Safekeeper identifies inventory discrepancies during the order
processing cycle and forces their resolution before they affect the
customer. This forced discrepancy resolution means that errors must
be resolved before an order can be closed; until the order is closed,
billing cannot be processed. Management believes that this
system-driven quality assurance is a significant advantage over the
"best efforts" approach used by most of its competitors.
(bullet)Customer Information Access. Customers can access their records
management data through a variety of formats, including direct access
via Safekeeper Online, access on their own PCs via Safekeeper
Desktop, integration of their internal system with Safekeeper via
automated file transfers and paper reports. Safekeeper Online enables
a customer to place orders directly via online access, resulting in
efficiencies for Iron Mountain order processing. It features robust
querying and searching tools to enable customers to identify records
with only partial information. Safekeeper Desktop is a PC
application, run from customers' desktop or network PCs; it provides
customers with an entire set of records management data along with
user-friendly tools for querying, reporting, and editing.
Safekeeper's suite of file transfers enable customers to
automatically transfer records data and service requests from their
internal system to Safekeeper. The paper reports include inventory
detail and summary, service activity analysis, quality assurance, and
management review.
(bullet)Records Management Flexibility. Safekeeper offers full life-cycle
records management, from file creation to destruction, enabling each
customer to establish schedules for records retention and destruction
as dictated by the customer's specific needs. Safekeeper can flexibly
accommodate large or small amounts of records management data in
accordance with customer requirements. A series of customer-specific
features and options allows Iron Mountain to tailor the records
management functionality and reporting to the customer's needs.
(bullet)Security. Safekeeper incorporates strict security protocols and
procedures for all customers to prevent unauthorized access to a
client's records information. Advanced security features that can
automatically restrict access by departmental identification and/or
type of service request are available to customers that are
internally set up to provide this information.
In addition to Safekeeper, the Company's data protection services facilities
utilize the Company's Media Link(tm) software, a state-of-the-art media
management system which provides integrated bar-code tracking and electronic
data interface between customer and Iron Mountain facilities, as well as audit
trail and remote inventory query functionality. The Company plans to continue to
invest in its proprietary technologies in the future in order to enhance its
customer service as well as to increase its own operating efficiency.
Description of Iron Mountain Records Management Services
Iron Mountain's records management services consist primarily of the storage
operations for the management of hard copy documents. These and related services
and products sold have, since 1992, accounted for approximately 85% of the
Company's revenues. The balance of the Company's revenues come from the storage
and service of vital records and data protection, consulting and other services.
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Storage Operations
Storage revenues accounted for approximately 60% of revenues in each of the
Company's last five fiscal years. Storage charges are generally billed monthly
on a per storage unit basis (usually either per unit or per cubic foot of
records) and include the provision of space, racking, computerized inventory and
activity tracking, physical security, environmental and climate control and fire
protection.
The storage of a carton begins by issuing Safekeeper bar-coded labels to the
customer. The customer packs records in cartons and affixes the bar-coded label
to each carton. Customer personnel and the Iron Mountain driver conduct a
physical count of the cartons and the driver signs for the cartons, which are
then transported to the records management facility. Upon delivery to the
facility, the cartons are subjected to a second physical count. The cartons are
delivered to available space identified by Safekeeper and the bar-coded
information is scanned into the computer together with a bar-coded location
identifier. At the same time, a computer operator enters the customer's data
describing the stored material into the computer and the system confirms that
the cartons sent match the data entered in the computer. Under the Company's
computer control system, the order can only be closed out when all requisite
steps and checks have been completed and counts and locations have been
reconciled.
Service and Courier Operations
Principal services include adding cartons to storage, temporary removal of
files or cartons from storage, refiling of removed records, permanent
withdrawals from storage and destruction of records. Service charges are
generally assessed for each procedure on a per unit basis. The Safekeeper system
controls the service processes from order entry through transportation and
invoicing.
Courier operations consist primarily of the pickup and delivery of records
upon customer request. Courier delivery schedules can be tailored to fit
customers' needs, but generally customer orders received by 4:00 p.m. on a
business day are delivered the following business day. The Company also provides
same-day and immediate delivery during business hours and emergency delivery at
night and on weekends and holidays. Charges for courier services are based on
urgency of delivery, volume and location and are billed monthly as incurred. The
Company currently utilizes a fleet of approximately 250 owned or leased delivery
vehicles.
Vital Records Services
Vital records contain critical or irreplaceable data such as master audio and
video recordings, film, software source code and other highly proprietary
information. Vital records may require special facilities or services, either
because of the data they contain or the media on which they are recorded. The
Company's charges for providing enhanced security and special climate-controlled
environments for vital records are higher than for typical storage functions.
The Company provides the same ancillary services for vital records as it
provides for its other storage operations.
Data Protection Services
Data protection services consist of the storage, backup and archiving of
computer media as part of corporate disaster and business recovery plans.
Computer tapes, cartridges and disk packs are transported off-site by the
Company's courier operations on a scheduled basis to secure, climate-controlled
facilities, where they are available to customers 24 hours a day, 365 days a
year, to facilitate data recovery in the event of a disaster. This process is
managed by Iron Mountain's Media Link software, a state-of-the-art media
management system which provides integrated bar-code tracking, electronic data
interface between customer and Iron Mountain's facilities as well as audit trail
and remote inventory query functionality. Iron Mountain also manages tape
library relocation and supports disaster recovery testing and execution.
Additional Services and Products
Iron Mountain offers a variety of additional services, which customers may
request or contract for on an individual basis. These services include
performing records inventories, packing records into cartons or other
containers, computerized indexing of files and individual documents, developing
schedules for the retention and destruction of records and records management
consulting services. The Company also sells a full line of specially designed
corrugated cardboard, metal and plastic storage containers.
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The Company's subsidiary, Iron Mountain Information Partners, Inc., provides
professional consulting services to large customers, enabling them to develop
and implement comprehensive records management programs. The Company's
consulting business draws on the Company's 45 years of experience to analyze the
practices of such companies and assist them in creating more effective programs
of records management. The Company's consultants work with such customers to
develop policies for document review, analysis and evaluation and for scheduling
of document retention and destruction.
In addition to its historical focus on the management of inactive records,
the Company has recently begun to provide services for the management of active
records. The Company can provide these services, which generally include
document and file processing and storage, both off-site at its own facilities
and by supplying its own personnel to perform management functions on-site at
the customer's premises. The Company sees active records management as a
potential source of future revenue growth for the Company, although there can be
no assurance in this regard.
Potential International Investments
Iron Mountain is considering capitalizing upon its expertise in the records
management industry by making investments in records management businesses
outside the United States. From time to time, the Company has had discussions
concerning such investments. Such investments, if consummated, would be subject
to risks and uncertainties relating to the indigenous political, social,
regulatory, tax and economic structures of countries in those areas, as well as
fluctuations in currency valuation, exchange controls, expropriation and
governmental policies limiting returns to foreign investors. At this time, there
can be no assurance as to whether any such investment will be made or, if made,
will be successful in achieving its objectives.
Customers
The Company's customer base is diversified in terms of revenue and industry
concentration. The Company has over 19,000 customer accounts. Iron Mountain
considers each invoice it delivers to its customers a separate customer account
and, accordingly, an organization which receives more than one invoice
represents multiple customer accounts. The chart below shows, as of June 1994,
the relative amounts of revenue attributable to certain business sectors.
[PIE CHART]
Other Financial Institutions 10%
Health Care 10%
Professional Services 7%
Government 6%
Manufacturing 4%
Retail 4%
Entertainment 2%
Other 19%
Legal Services 16%
Depository Institutions 14%
Insurance Companies 5%
The Company services accounts of all sizes, from small businesses and
professional groups to over half of the Fortune 500. Other than the RTC or its
successor, the FDIC, which accounted for 7.4%, 6.3%, 4.8% and 3.6% of Iron
Mountain's revenues for the years ended December 31, 1993, 1994 and 1995 and the
six months ended June 30, 1996, respectively, no account or related set of
accounts generated more than 3% of Iron Mountain's revenues during any such
period.
The Company's contract with the FDIC, as successor under the contract to the
RTC, was renewed effective July 27, 1996 for a one-year term, with three further
annual renewal options at the election of the FDIC. Although the substantial
costs of removing its records from the Company's facilities may act as a
disincentive to the FDIC
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to select another vendor, there can be no assurance that the contract will be
further renewed or that the terms of such renewal will be as favorable to
Iron Mountain as the terms of the current contract. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Overview."
Marketing and Sales
The Company uses database marketing and a dedicated sales force to focus
exclusively on new business development. A corporate marketing organization
provides sales support, training, marketing communications and product
management as support functions. The program has successfully produced over 900
new customer accounts per year since 1991. The selling effort is bolstered by
regional and senior managers focused on key account selling.
Properties
As of June 30, 1996, Iron Mountain conducted operations through 77 leased and
12 owned facilities containing a total of approximately 6.3 million square feet
of space. The leased facilities typically have initial lease terms of 10 years
with options to renew for an additional 10 years. The weighted average remaining
term of the leases on these facilities is approximately 7.0 years. In addition,
many of the leases contain either a purchase option or a right of first refusal
upon the sale of the property. The leases include one property leased from
affiliates of the Company. See "Management--Executive Compensation--Compensation
Committee Interlocks and Insider Participation" and Note 8 of Notes to the
Company's Audited Consolidated Financial Statements.
As of June 30, 1996, the Company owned or leased (directly or through its
subsidiaries) the following records management facilities in the geographic
locations indicated below.
Records
Management
State Facilities
- ----- ----------
Arizona 2
California 24
Colorado 3
Connecticut 2
Delaware 1
Florida 4
Georgia 8
Illinois 3
Kansas 1
Kentucky 1
Massachusetts 7
Maryland 3
Missouri 2
New Hampshire 1
New Jersey 4
New York 4
Ohio 4
Pennsylvania 2
Rhode Island 1
Tennessee 1
Texas 8
Virginia 3
--
Total 89
==
The Company or its principal subsidiary is a guarantor of a substantial
portion of the leases to which other subsidiaries are party. Substantially all
of the property and assets currently owned and leased by the Company or its
subsidiaries are pledged as security for the lenders under the Credit Agreement.
It is expected that, in connection with the New Credit Facility, such liens
(other than the pledge of the stock of the Company's subsidiaries) will be
released. See Notes 3 and 7 of Notes to the Company's Audited Consolidated
Financial Statements for additional information regarding the Credit Agreement
and the minimum annual rental commitments of the Company, respectively.
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Employees
A key feature of Iron Mountain's operating strategy is its decentralized
management structure and reliance on local management operating in local
business environments. The Company's operations are divided into three areas
comprising seven local management regions to maximize marketing and operating
effectiveness and to minimize supervisory costs. The management regions, each of
which is managed by a Vice President, are further divided into a total of 27
districts, each managed by a General Manager. The management regions are
overseen by offices in Boston and Los Angeles, but regional Vice Presidents and
General Managers have broad operating authority. The Company's headquarters
staff performs a variety of central administrative and support functions in
order to maximize the time and resources that local personnel can devote to
customer service and client development.
Iron Mountain had approximately 1,200 full-time employees as of June 30,
1996, of whom approximately 89% are employed at the district level, 8% at the
corporate level and the balance at the area and regional levels.
Approximately 11% of the Company's employees are represented by various
Teamsters Union locals under five different agreements. Two of these agreements,
representing 42 employees, have expired and are currently under negotiation.
Based on its prior experience with the two union locals involved in these
negotiations, the Company expects that it will enter into new agreements on
satisfactory terms. The remaining three contracts expire in December 1996, March
1997 and March 1999. In addition, at two of Iron Mountain's facilities an
election, subject to National Labor Relations Board regulations, was held on
June 20, 1996. A majority of the approximately 40 employees voted for
representation by a Teamsters Union local. The election results have not been
certified as of the date hereof.
All non-union employees are eligible to participate in the Company's benefit
programs, which include medical, dental, life, short and long-term disability
and accidental death and dismemberment plans. Unionized employees receive these
types of benefits through their unions. In addition to base compensation and
other usual benefits, all full-time union and non-union employees participate in
some form of incentive-based compensation program that provides payments based
on profits, collections, or attainment of specified objectives for the unit in
which they work. Management believes that the Company has good relationships
with its employees and unions.
Competition
Iron Mountain competes with three other national companies as well as a large
number of local and regional concerns. The Company believes that competition for
customers is based on price, reputation for reliability, quality of service and
scope and scale of technology, and believes that it generally competes
effectively based on these factors. Management believes that, except for Pierce
Leahy Corp., all of these competitors have records management revenues
significantly lower than those of the Company. To accommodate growth, a records
management vendor must invest in incremental storage capacity, which requires
added warehouses, racking systems, and related equipment including computer
systems capable of tracking increasingly large inventories. The amount of such
investment is significant relative to the immediate return that can be realized,
and the faster a vendor grows, the more capital is required. As a result, the
industry trend toward consolidation will, in management's opinion, continue and
accelerate. In addition, the Company faces competition from the internal
document handling capability of its current and potential customers. There can
be no assurance that these organizations will outsource more of their document
management needs or that they will not bring in-house some or all of the
functions they currently outsource. The Company also faces competition for
acquisition candidates.
The substantial majority of the Company's revenues have been derived from the
storage of paper documents and from related services. Such storage requires
significant physical space. Alternative technologies for generating, capturing,
managing, transmitting and storing information have been developed, many of
which require significantly less space than paper. Such technologies include
computer media, microforms, audio/video tape, film, CD-ROM and optical disk.
None of these technologies has replaced paper as the principal means for storing
information. However, there can be no assurance that one or more non-paper-based
technologies (whether now existing or developed in the future) may not in the
future significantly reduce or supplant the use of paper as a preferred medium,
which could in turn adversely affect the Company's business.
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Insurance
Iron Mountain carries a comprehensive property insurance policy with insurers
that it believes to be reputable and in amounts that it believes to be
appropriate, covering replacement cost of real and personal property, including
improvements. Subject to sub-limits, the policy also covers extraordinary
expenses associated with business interruption and damage or loss from flood or
earthquake, subject to certain deductibles. Separate policies for California
earthquake insurance carry other deductibles that may be significant. Iron
Mountain also maintains general liability and excess liability insurance
covering bodily injury, property damage and personal injury. See "Risk
Factors--Casualty."
The Company's standard form of contract sets forth an agreed maximum value
for each carton or other storage unit held by the Company as a limitation on
liability for loss or damage, as permitted under the Uniform Commercial Code. In
contracts containing such limits, such values are nominal, and the Company
believes that in typical circumstances its liability would be so limited in the
event of loss or damage relating to the value of information stored on media
held by the Company. However, certain of the Company's agreements with certain
large volume accounts contain no such limits or contain higher limits or
supplemental insurance arrangements.
Environmental Matters
Under various 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 ACMs. Such laws may impose liability for the 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. The Company is
aware of the presence of ACMs at some of the Company's facilities, but believes
that such materials are in acceptable condition at this time. The Company
believes that future costs related to any remediation of ACMs at these
facilities will not be material, either on an annual basis or in the aggregate,
although there can be no assurance with respect thereto.
In addition, certain of the properties formerly or currently owned or
operated by the Company were previously used for industrial or other purposes
that involved the use or storage of hazardous substances or petroleum products
or the generation and disposal of hazardous wastes and, in some instances,
included the operation of USTs. In connection with its former and current
ownership or operation of certain properties, the Company may be potentially
liable for environmental costs such as those discussed above, and as more
specifically described below.
At the Company's Hollywood, California facilities, certain USTs and
contaminated soils have been removed. Some additional contamination of soils and
groundwater remains and may be migrating. In 1990 and 1991, the Company filed
certain reports documenting its efforts and site conditions with the appropriate
environmental agencies pursuant to various environmental laws. Investigations
conducted on behalf of the Company in connection with its on-site remedial
activities disclosed that regional groundwater contamination, unrelated to the
Company's property, exists. At this time, the Company has not received any
notice from any regulatory agency or third party seeking further remediation of
soil or groundwater by the Company; however, there can be no assurance that such
further action will not be sought in the future. The Company has accrued
estimated costs of $0.8 million that it believes it may reasonably be expected
to incur in connection with this site if such additional remediation were to
become necessary; however, there can be no assurance as to the adequacy of such
accrual. The Company believes the ultimate outcome of the foregoing will not
have a material adverse effect on the Company's financial condition or results
of operations. See Note 7 of Notes to the Company's Audited Consolidated
Financial Statements.
The Company has also from time to time conducted certain environmental
investigations and remedial activities at certain of its other former and
current facilities, but an in-depth environmental review of the properties has
not been conducted by or on behalf of the Company. The Company believes that it
is in substantial compliance
53
<PAGE>
with all applicable material environmental laws. The Company has not received
any written notice from any governmental authority or third party asserting, and
is not otherwise aware of, any material noncompliance, liability or claim
relating to hazardous substances or wastes, petroleum products or material
environmental laws applicable to Company operations in connection with any of
its present or former properties other than as described above. However, no
assurance can be given that there are no environmental conditions for which the
Company might be liable in the future or that future regulatory action, as well
as compliance with future environmental laws, will not require the Company to
incur costs for or at its properties that could have a material adverse effect
on the Company's financial condition and results of operations.
Legal Proceedings
The Company is involved in litigation from time to time in the ordinary
course of business. In the opinion of management, no material legal proceedings
are pending to which the Company, or any of its properties, is subject.
54
<PAGE>
MANAGEMENT
Directors, Executive Officers and Certain Other Officers
The Directors, executive officers and certain other officers of the Company
are as follows:
<TABLE>
<CAPTION>
Names of Directors and Executive Officers Age Position
- ----------------------------------------- --- --------
<S> <C> <C>
C. Richard Reese(1) 50 Chairman of the Board of Directors and Chief
Executive Officer
David S. Wendell 42 President and Chief Operating Officer, Director
Eugene B. Doggett(1) 60 Executive Vice President and Chief Financial
Officer, Director
Robert P. Swift 55 Executive Vice President
Kenneth F. Radtke, Jr. 51 Executive Vice President
Constantin R. Boden(2)(3) 60 Director
Arthur D. Little(2)(3) 52 Director
Vincent J. Ryan(1)(3) 60 Director
Names of Certain Other Officers Age Position
- ------------------------------- --- --------
Jean A. Bua 38 Vice President and Corporate Controller
James R. Jandl 42 Vice President of Human Resources
John F. Kenny 39 Vice President of Corporate Development
Joseph J. Larizza 54 Vice President and Chief Information Officer
John P. Lawrence 45 Vice President and Treasurer
Kenneth A. Rubin 34 Vice President of Marketing
T. Anthony Ryan 56 Vice President of Real Estate
</TABLE>
- -------------
(1) Member of the Executive Committee; Mr. Ryan is the Chairman of the
Executive Committee.
(2) Member of the Audit Committee; Mr. Boden is the Chairman of the Audit
Committee.
(3) Member of the Compensation Committee; Mr. Little is the Chairman of the
Compensation Committee.
The Board of Directors currently consists of six directors. There are three
classes of directors who serve for three-year terms and are elected on a
staggered basis, one class of two directors standing for election each year. The
term of the Class B Directors, C. Richard Reese and Arthur D. Little, will
expire at the 1997 Annual Meeting of Stockholders, the term of the Class C
Directors, Eugene B. Doggett and Constantin R. Boden, will expire at the 1998
Annual Meeting of Stockholders and the term of the Class A Directors, David S.
Wendell and Vincent J. Ryan, will expire at the 1999 Annual Meeting. Directors
of each class will thereafter hold office until the third annual meeting of the
stockholders of the Company following their election or until their successors
are elected and qualified.
The executive officers and other officers were elected by the Board of
Directors on June 14, 1996. All executive officers and other officers hold
office at the discretion of the Board until the first meeting of the Iron
Mountain Board following the next annual meeting of stockholders and until their
successors are chosen and qualified.
Directors and Executive Officers
C. Richard Reese is the Chairman of the Board of Directors of Iron
Mountain, a position he has held since November 1995, and the Chief Executive
Officer, a position he has held since December 1981. Prior to November 1995,
Mr. Reese was the President of Iron Mountain, a position he had held since
1981. Mr. Reese is also a Director of Schooner. Prior to joining Iron
Mountain, he lectured at Harvard Business School in "Entrepreneurship" and
provided consulting services to small and medium-sized emerging enterprises.
Mr. Reese has also served as president and a Director of the ACRC. He holds a
Master of Business Administration degree from Harvard Business School.
David S. Wendell is the President and Chief Operating Officer of Iron
Mountain, a position he has held since November 1995. After practicing law
with Brown & Wood, Mr. Wendell joined Iron Mountain in 1984, where he has
served in a variety of positions. Prior to November 1995, he was Executive
Vice President, Atlantic Area and
55
<PAGE>
prior to 1991, he was Vice President, New England Region. He holds a Master
of Business Administration degree from Harvard Business School and a Juris
Doctor degree from the University of Virginia.
Eugene B. Doggett is the Executive Vice President and Chief Financial Officer
of Iron Mountain, a position he has held since 1987. Mr. Doggett is also a
Director of Schooner. Prior to joining the Company, he had extensive experience
in commercial and investment banking, as well as financial and general
management experience at senior levels. He holds a Master of Business
Administration degree from Harvard Business School.
Robert P. Swift is an Executive Vice President of Iron Mountain, a position
he has held since November 1995. Prior to November 1995, Mr. Swift was the
Executive Vice President, Western Area of Iron Mountain and prior to 1988, Mr.
Swift was employed in various positions at Bell & Howell Records Management
Company.
Kenneth F. Radtke, Jr. is an Executive Vice President of Iron Mountain, a
position that he has held since June 1996. Prior to June 1996, Mr. Radtke was
Northeast Regional Vice President and prior to 1995 was Sales Manager, New
York Region. Mr. Radtke has worked in the records and information industry
since 1988 as President and Chief Executive Officer, Dataport Company, Inc.
and Senior Vice President, Arcus, Inc. He holds a graduate degree from the
University of Wisconsin, Graduate School of Banking.
Constantin R. Boden is a Director of Iron Mountain, a position he has held
since December 1990. Mr. Boden is on the advisory board of Boston Capital
Ventures, a risk capital concern. For 33 years, until January 1995, Mr. Boden
was employed by Bank of Boston, most recently as Executive Vice President,
International Banking. He holds a Master of Business Administration degree from
Harvard Business School.
Arthur D. Little is a Director of Iron Mountain, a position he has held since
November 1995. Mr. Little is a principal of The Little Investment Company, which
he founded in 1992. Prior to that, he was Managing Director of and also a
partner in Narragansett Capital, Inc., a private investment firm. He holds a
Bachelor of Arts degree in history from Stanford University.
Vincent J. Ryan is a Director of Iron Mountain. Mr. Ryan is the founder of
Schooner and has served as Chairman and Chief Executive Officer of Schooner
since 1971. Prior to November 1995, Mr. Ryan served as Chairman of the Board
of Directors of Iron Mountain. Mr. Ryan also serves as a Director and member
of the Executive Committee of Continental Cablevision, Inc. He holds a
Bachelors of Arts degree in English from Boston University.
Certain Other Officers
Jean A. Bua is Vice President and Corporate Controller. Ms. Bua joined
Iron Mountain in such capacity in March 1996. From 1993 to 1996, Ms. Bua was
the Corporate Controller for Duracraft Corp., a consumer products
manufacturer. Prior to that, Ms. Bua was the accounting manager for a
high-tech manufacturer and was a management consultant for Ernst & Young. She
holds a Master of Business Administration degree from the University of Rhode
Island. Ms. Bua is a certified public accountant.
James R. Jandl is Vice President of Human Resources. Mr. Jandl joined Iron
Mountain in 1989. For the preceding nine years he was involved in human
resources management in the hospitality industry with focus on operational
start-up and turn-around situations. He holds a masters degree in psychology
from West Georgia College.
John F. Kenny is Vice President of Corporate Development, with primary
responsibility for implementing the Company's acquisition strategy. Mr. Kenny
joined Iron Mountain in 1991. Prior to 1991, he was a Vice President of CS First
Boston Merchant Bank, New York, with responsibility for risk capital, portfolio
and transaction management. He holds a Master of Business Administration degree
from Harvard Business School.
Joseph J. Larizza is Vice President and Chief Information Officer, with
responsibility for management information systems, including oversight of the
development of Iron Mountain's Safekeeper system. Prior to joining Iron Mountain
in 1996, Mr. Larizza was the chief information officer at Service America, a
large food service corporation and, prior to that, chief information officer at
the Advertising Checking Bureau, with responsibility for information systems and
development of client-server products. He holds a Bachelors degree in management
from Post College.
John P. Lawrence is Vice President and Treasurer, with responsibility for
acquisition integration, internal audit, risk management and purchasing and
contracting. Mr. Lawrence has been associated with Iron Mountain since 1988.
56
<PAGE>
Prior to 1988, he worked for Hewlett Packard for nine years in various
management positions in finance, control, marketing and manufacturing. He holds
a Master of Business Administration degree from Harvard Business School.
Kenneth A. Rubin is Vice President of Marketing. Mr. Rubin joined Iron
Mountain in 1989. Prior to 1989, he was Director of both Sales and Marketing
for Leahy/Instar, a records management company. He was also a founding
director of Software Escrow Security. He holds a Bachelors degree in
political science from Drew University.
T. Anthony Ryan is Vice President of Real Estate. Mr. Ryan manages the real
estate department of Iron Mountain and is responsible for identifying and
evaluating new facility opportunities and negotiating long-term leases. He has
been involved in real estate development for 22 years. His work experience
includes positions as Director of Development for Gilbane Property, Vice
President of CRJ Investments and, more recently, Vice President and Partner at
the Linpro Company. He holds a Bachelors degree in history from The George
Washington University.
Biographical information of the Directors, executive officers and other
officers is as of September 24, 1996.
Executive Compensation
The following table provides certain information concerning compensation
earned by the Chief Executive Officer and each other executive officer serving
in such capacity at December 31, 1995 who received compensation in excess of
$100,000 (the "Named Executive Officers") for the years ended December 31, 1994
and December 31, 1995.
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
---------------------- -----------------------------------
Number of Shares
Underlying All Other
Name and Principal Position Year(1) Salary Bonus Options Compensation(2)
- --------------------------- ------ ------ ----- ----------------- --------------
<S> <C> <C> <C> <C> <C>
C. Richard Reese 1995 $261,765 $200,000 0 $1,790
Chairman of the Board and
Chief Executive Officer 1994 $255,400 $125,000 0 $1,623
David S. Wendell 1995 $136,627 $ 62,731 35,469 $1,573
President and Chief
Operating Officer 1994 $129,800 $ 50,000 0 $1,352
Eugene B. Doggett 1995 $192,274 $165,000 0 $1,790
Executive Vice President
and Chief Financial
Officer 1994 $187,500 $ 93,750 0 $1,623
Robert P. Swift 1995 $131,119 $ 24,397 8,096 $1,243
Executive Vice President 1994 $126,600 $ 16,740 0 $ 865
</TABLE>
- -----------
(1) In accordance with the requirements of Item 402(b) of Regulation S-K,
information is presented for the Company's two most recent years.
(2) Reflects the Company's matching contribution to the Iron Mountain Profit
Sharing Retirement Plan for each individual.
57
<PAGE>
Compensation Committee Interlocks and Insider Participation
Prior to November 1995, Iron Mountain's Compensation Committee of the
Board of Directors consisted of Constantin R. Boden and Vincent J. Ryan, who
was until November 17, 1995 the Chairman of the Board. The present
Compensation Committee consists of Mr. Little, who is the Chairman of the
Committee, and Messrs. Boden and Ryan.
Messrs. Reese and Doggett are executive officers of Iron Mountain and are
directors of Schooner. Prior to November 1995, they were also executive
officers of Schooner. Mr. Ryan is the Chairman of the Board and principal
stockholder of Schooner.
In 1993, the Company paid fees of $95,927 to Vincent J. Ryan for consulting
services. In each of 1994 and 1995, the Company paid fees of $111,048 to
Schooner for consulting services rendered by Mr. Ryan. These services and fees
terminated as of December 31, 1995.
Iron Mountain Records Management, Inc. ("IMRM"), a subsidiary of the Company,
is the tenant under a lease dated January 1, 1991 for a 31,500 square-foot
building in Houston, Texas. The owner of the building is IM Houston (CR) Limited
Partnership, a Texas limited partnership, of which Mountain Realty, Inc., a
Massachusetts corporation whose sole stockholder is Vincent J. Ryan, is the sole
general partner, and the limited partners of which are C. Richard Reese and
Eugene B. Doggett. The term of the lease expires December 31, 2000, with two
five-year extension options exercisable by IMRM. IMRM currently pays annual rent
in the amount of approximately $94,000, subject to adjustment in 1997 and 1999
(and in the option periods if the term is extended) based upon percentage
changes in the consumer price index, with a floor of 3% and a ceiling of 5%,
compounded annually. As tenant, IMRM is responsible for taxes, insurance and
maintenance. The space is used by IMRM as a records management facility. During
1993, 1994, 1995 and the six months ended June 30, 1996, IMRM paid rent in the
annual amount of $88,000, $88,000, $93,000 and $47,000, respectively, under the
lease. The lease is, in the opinion of management, on commercially reasonable
terms, no less favorable to IMRM than could have been obtained from an
unaffiliated party at the time of the transaction.
The Company paid compensation of $120,000, $144,000, $154,000 and $62,000
for 1993, 1994, 1995 and the six months ended June 30, 1996, respectively, to
Mr. T. Anthony Ryan. Mr. Ryan is Vice President, Real Estate, of the Company
and is the brother of Mr. Vincent J. Ryan, a Director and the former Chairman
of the Board of the Company. The Company believes that the terms of Mr.
Ryan's employment are no less favorable to it than would be negotiable with
an unrelated third party.
Iron Mountain is indebted to Schooner in the principal amount of $382,500
under a junior subordinated note, which was incurred by Iron Mountain in 1990 in
connection with an acquisition. Schooner subsequently acquired the note from the
holder as an investment. The Company intends to use a portion of the net
proceeds from the Offering to prepay such indebtedness in its entirety.
See "The Transactions--Repayment of FDS Notes."
Schooner leases space from Iron Mountain at Iron Mountain's corporate
headquarters. Such lease is a tenancy- at-will and may be terminated by either
Iron Mountain or Schooner at any time. As consideration for such lease, Schooner
pays rent to Iron Mountain based on its pro rata share of all expenses related
to the use and occupancy of the premises. The rent paid by Schooner to Iron
Mountain under such lease was approximately $48,000, $58,000, $49,000 and
$33,000 in 1993, 1994, 1995 and the six months ended June 30, 1996,
respectively.
Employees of Schooner were eligible to participate in the Iron Mountain
Profit Sharing Retirement Plan, a Section 401(k) plan, as well as the Company's
group medical, dental, life, disability and accidental death and dismemberment
arrangements (the "Company Benefit Plans"). Schooner reimbursed the Company for
costs incurred as a result of the participation of Schooner employees in Company
Benefit Plans. Participation by Schooner employees in the Company Benefit Plans
terminated shortly after the consummation of the Initial Public Offering.
Director Compensation
Directors who are employees of the Company do not receive additional
compensation for serving as directors. Each director who is not an employee of
the Company (each an "Eligible Director") receives an annual retainer fee of
$10,000 as compensation for his or her services as a member of the Board of
Directors and is also paid $2,500 per quarter (to a maximum of $10,000 per year)
for attendance at meetings (the "Director's Compensation"). All directors of the
Company are reimbursed for out-of-pocket expenses incurred in attending meetings
of the Board of Directors or committees thereof, and for other expenses incurred
in their capacities as directors of the Company.
58
<PAGE>
Pursuant to the Iron Mountain Incorporated 1995 Stock Plan for Non-Employee
Directors (the "Directors Plan"), Eligible Directors may elect to receive all or
a portion of their Director Compensation in the form of Common Stock. An
Eligible Director electing to receive Common Stock under the Directors Plan
will, as an incentive, receive in lieu of cash an amount of Common Stock
equivalent to 110% of the Director Compensation otherwise due to be paid in
cash. The Company has reserved 15,000 shares of Common Stock for issuance under
the Directors Plan.
Stock Option Information
Effective November 30, 1995, Iron Mountain instituted the Iron Mountain
Incorporated 1995 Stock Incentive Plan (the "Stock Option Plan"), which is
administered by the Compensation Committee, as a restatement of Iron Mountain's
then-existing stock option plan. The purpose of the Stock Option Plan is to
encourage key employees, directors, and consultants of the Company and its
subsidiaries who render services of special importance to, and who have
contributed or may be expected to contribute materially to the success of, the
Company or a subsidiary to continue their association with the Company and its
subsidiaries by providing favorable opportunities for them to participate in the
ownership of the Company and in its future growth through the granting of
restricted shares ("Restricted Stock"), options to acquire Common Stock
("Options"), stock appreciation rights ("SARs") and other rights to compensation
in amounts determined by the value of the Common Stock. Restricted Stock, SARs
and other rights are referred to collectively as "Other Rights."
The total number of shares of Common Stock that may be subject to Options and
Other Rights under the Stock Option Plan may not exceed 1,000,000. As of June
30, 1996, options for 757,827 shares of Common Stock were outstanding under the
Stock Option Plan and 213,258 shares of Common Stock were available for grants
of Options and/or Other Rights under the Stock Option Plan. The duration of the
Options granted under the Stock Option Plan may be specified pursuant to each
respective stock option agreement, but in no event can any Option intended to
qualify as an incentive stock option (an "ISO") within the meaning of Section
422 of the Internal Revenue Code of 1986, as amended (the "Code"), be
exercisable after the expiration of 10 years after the date of grant. In the
case of any employee who owns (or is considered under Section 424(d) of the Code
as owning) stock possessing more than 10% of the total combined voting power of
all classes of stock of the Company or any of its Subsidiaries, no ISO shall be
exercisable after the expiration of five years from its date of grant.
The following table sets forth certain information concerning the grant of
Options to Messrs. Wendell and Swift. Neither of the other Named Executive
Officers was granted Options in 1995.
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Potential Realizable Value At
Number of % of Total Assumed Annual Rates of
Securities Options Stock Appreciation for
Underlying Granted to Exercise Option Terms(2)
Options Employees in Price Per Expiration -----------------------------
Name Granted Fiscal Year Share Date 5%($) 10%($)
- ---- ------------ -------------- ----------- -------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
David S. Wendell 35,469 21.9% $16.125 (1) $359,688 $911,521
President and Chief Operating
Officer
Robert P. Swift 8,096 5.0% $16.125 2/5/2006 $ 82,101 $208,066
Executive Vice President
</TABLE>
- ------------
(1) Options granted to Mr. Wendell with respect to 29,410 shares of Common Stock
expire February 5, 2006, and options with respect to the remaining 6,059
shares expire 60 days after termination of Mr. Wendell's employment with the
Company.
(2) Potential Realizable Value is based on the assumed growth rates for an
assumed ten-year option term. 5% annual growth results in a Common Stock
price per share of $26.27, and 10% results in a Common Stock price per share
of $41.82, respectively, for such term. The actual value, if any, an
executive may realize will depend on the excess of the market price of the
Common Stock over the exercise price on the date the option is exercised, so
that there is no assurance the value realized by an executive will be at or
near the amounts reflected in this table.
59
<PAGE>
The following table sets forth certain information with respect to the
unexercised Options granted to Messrs. Wendell and Swift. Neither of such
individuals exercised any stock options during the year ended December 31, 1995.
Neither of the other Named Executive Officers has any unexercised Options.
Fiscal Year End Option Values
<TABLE>
<CAPTION>
Value of Unexercised
Number of Unexercised In-the-Money-Options at
Options at December 31, 1995 December 31, 1995(1)
-------------------------------- ----------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ------------ ------------- ----------- -------------
<S> <C> <C> <C> <C>
David S. Wendell 71,077 53,266 $676,653 $169,427
President and Chief Operating
Officer
Robert P. Swift 11,566 15,806 $110,108 $ 73,399
Executive Vice President
</TABLE>
- ------------
(1) Based on the initial public offering price of $16.00 per share, less the
exercise price.
CERTAIN TRANSACTIONS
In 1993, in connection with the employment of David S. Wendell, the Company
made demand loans to Mr. Wendell in an aggregate principal amount of $70,000 in
connection with Mr. Wendell's purchase of a home. The loans bear interest at a
rate equal to the Company's cost to borrow such funds and are secured by a
second mortgage on the home. As of September 3, 1996, the principal balance of
the loans was $25,000.
See "Management--Executive Compensation--Compensation Committee Interlocks
and Insider Participation" for a discussion of: (i) certain payments to Vincent
J. Ryan and Schooner for consulting services; (ii) a lease between a partnership
affiliated with Messrs. Doggett, Reese and Ryan and a subsidiary of the Company;
(iii) the familial relationship between Vincent J. Ryan, an Iron Mountain
Director, and T. Anthony Ryan, an Iron Mountain officer; (iv) a lease between
Schooner and the Company; (v) certain indebtedness of Iron Mountain to Schooner
to be repaid with a portion of the net proceeds of the Offering; and (vi)
Schooner's prior participation in Iron Mountain's 401(k) plan and certain other
employee benefit plans.
60
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information known to the Company with
respect to beneficial ownership of Common Stock by: (i) each stockholder known
by the Company to be the beneficial owner of more than five percent of the
Common Stock; (ii) each director; (iii) each Named Executive Officer; and (iv)
all executive officers and directors of the Company as a group. Such information
is presented as of September 3, 1996.
Amount of Beneficial
Ownership(1)
------------------------------
Percent
Name Shares Owned
- ---------------------------------- ------------ --------------
Directors and Executive Officers:
C. Richard Reese(2) 1,127,503 11.7%
David S. Wendell(3) 83,815 *
Eugene B. Doggett(4) 219,745 2.3%
Robert P. Swift(5) 15,421 *
Constantin R. Boden(6) 19,746 *
Arthur D. Little(7) 98,730 1.0%
Vincent J. Ryan(8) 3,503,250 36.4%
All Directors and executive
officers as a group (8 persons)(9) 4,371,289 45.0%
Five Percent Stockholder:
Schooner Capital Corporation(10) 1,909,384 19.8%
- -----------
* Less than 1%
(1) Except as otherwise indicated, the persons named in the table above have
sole voting and investment power with respect to all shares of Common Stock
shown as beneficially owned by them.
(2) Mr. Reese is a director and Chairman of the Board and Chief Executive
Officer of the Company. Includes 12,160 shares of Common Stock held by
trusts for the benefit of Mr. Reese's children, as to which Mr. Reese
disclaims beneficial ownership. Also includes 668,166 shares of Common Stock
as to which Mr. Reese shares beneficial ownership with Schooner as a result
of a 1988 deferred compensation arrangement, as amended, between Schooner
and Mr. Reese relating to Mr. Reese's former services as President of
Schooner. Pursuant to such arrangement, upon the earlier to occur of (i)
Schooner's sale or exchange of substantially all of the shares of Common
Stock held by Schooner or (ii) the cessation of Mr. Reese's employment with
Iron Mountain, Schooner is required to transfer such shares of Common Stock
to Mr. Reese or remit to Mr. Reese cash in an amount equal to the then
current fair market value of such shares of Common Stock. Schooner has
agreed to vote the shares of Common Stock subject to such arrangement at the
direction of Mr. Reese. Mr. Reese's address is c/o Iron Mountain
Incorporated, 745 Atlantic Avenue, Boston, Massachusetts 02111.
(3) Mr. Wendell is a director and President and Chief Operating Officer of
the Company. Includes 79,960 shares that Mr. Wendell has the right to
acquire pursuant to currently exercisable options. See "Executive
Compensation." Mr. Wendell's address is c/o Iron Mountain Incorporated,
745 Atlantic Avenue, Boston, Massachusetts 02111.
(4) Mr. Doggett is a director and Executive Vice President and Chief Financial
Officer of the Company. Includes 29,550 shares of Common Stock as to which
Mr. Doggett shares beneficial ownership with Schooner as a result of a 1988
deferred compensation arrangement, as amended, between Schooner and Mr.
Doggett relating to Mr. Doggett's former services as Chief Financial Officer
of Schooner. Pursuant to such arrangement, upon the earlier to occur of (i)
Schooner's sale or exchange of substantially all of the shares of Common
Stock held by Schooner or (ii) the cessation of Mr. Doggett's employment
with Iron Mountain, Schooner is required to transfer such shares of Common
Stock to Mr. Doggett or remit to Mr. Doggett cash in an amount equal to the
then current fair market value of such shares of Common Stock. Schooner has
agreed to vote the shares of Common Stock subject to such arrangement at the
direction of Mr. Doggett. Mr. Doggett's address is c/o Iron Mountain
Incorporated, 745 Atlantic Avenue, Boston, Massachusetts 02111.
61
<PAGE>
(5) Mr. Swift is a director and Executive Vice President of the Company.
Consists of shares that Mr. Swift has the right to acquire pursuant to
currently exercisable options. See "Executive Compensation." Mr. Swift's
address is c/o Iron Mountain Incorporated, 1340 East 6th Street, Los
Angeles, California 90021.
(6) Mr. Boden is a director of the Company. Mr. Boden's address is c/o
Boston Capital Ventures, 45 School Street, Boston, Massachusetts 02110.
(7) Mr. Little is a director of the Company. Consists of 49,365 shares held
by The Little Family Trust and 49,365 shares held by The Little Family
Foundation, as to which Mr. Little disclaims beneficial ownership. Mr.
Little's address is c/o The Little Investment Company, 33 Broad Street,
Boston, Massachusetts 02109.
(8) Mr. Ryan is a director of the Company. Mr. Ryan holds 1,593,866 shares
of Common Stock. The remaining shares of Common Stock listed as being
beneficially owned by Mr. Ryan are held by Schooner, as to which Mr.
Ryan has sole voting power and investment power as the Chairman of the
Board and principal stockholder of Schooner. Mr. Ryan's address is c/o
Schooner Capital Corporation, 745 Atlantic Avenue, Boston, Massachusetts
02111. See footnote (10) regarding shares held by Schooner.
(9) Includes 96,156 shares that directors and executive officers have the right
to acquire pursuant to currently exercisable options.
(10) Mr. Ryan is the Chairman of the Board and the principal stockholder of
Schooner and, accordingly has sole voting and investment power with respect
to the shares of Common Stock held by Schooner. Includes 668,166 shares of
Common Stock as to which Schooner shares beneficial ownership with Mr.
Reese as described in footnote (2). Also includes 29,550 shares of Common
Stock as to which Schooner shares beneficial ownership with Mr. Doggett as
described in footnote (4). Schooner has agreed to vote the shares of Common
Stock subject to such arrangements at the direction of Mr. Reese or Mr.
Doggett, as the case may be.
62
<PAGE>
DESCRIPTION OF THE NOTES
General
The Notes will be issued pursuant to an Indenture (the "Indenture") among the
Company, the Subsidiary Gaurantors (as defined below) and First Bank National
Association, as trustee (the "Trustee"). The terms of the Notes include those
stated in the Indenture and those made part of the Indenture by reference to the
Trust Indenture Act of 1939 (the "Trust Indenture Act"). The Notes are subject
to all such terms, and Holders of Notes are referred to the Indenture and the
Trust Indenture Act for a statement thereof. The following summary of certain
provisions of the Indenture does not purport to be complete and is qualified in
its entirety by reference to the Indenture, including the definitions therein of
certain terms used below. A copy of the proposed form of Indenture has been
filed as an exhibit to the Registration Statement of which this Prospectus is a
part. The definitions of certain terms used in the following summary are set
forth below under "Certain Definitions."
Principal, Maturity and Interest
The Notes will be general unsecured obligations of the Company, will be
limited in aggregate principal amount to $150 million and will mature on
, 2006. Interest on the Notes will accrue at the rate of % per
annum and will be payable semi-annually in arrears on and ,
commencing on , 1997, to Holders of record on the immediately
preceding and . Interest on the Notes will accrue from the most
recent date to which interest has been paid or, if no interest has been paid,
from the date of original issuance. Interest will be computed on the basis of a
360-day year comprised of twelve 30-day months. The Notes will be payable both
as to principal and interest at the office or agency of the Company maintained
for such purpose within the City and State of New York or, at the option of the
Company, payment of interest may be made by check mailed to the Holders of Notes
at their addresses set forth in the register of Holders of Notes. Until
otherwise designated by the Company, the Company's office or agency in New York
will be the office of the Trustee maintained for such purpose. The Notes will be
issued in registered form, without coupons, and in denominations of $1,000 and
integral multiples thereof.
Subsidiary Guarantees
The Company's payment obligations under the Notes will be jointly and
severally guaranteed (the "Subsidiary Guarantees") on an unsecured senior
subordinated basis by all of the Company's existing and future Restricted
Subsidiaries other than the Excluded Restricted Subsidiaries (each, a
"Subsidiary Guarantor"). See "Certain Covenants--Additional Subsidiary
Guarantees." Each Subsidiary Guarantee will be subordinated to the prior payment
in full of all Senior Debt of each such Subsidiary Guarantor, which on a pro
forma basis would have been $24.5 million at June 30, 1996 for all Subsidiary
Guarantors. Notwithstanding the subordination provisions contained in the
Indenture, the obligations of a Subsidiary Guarantor under its Subsidiary
Guarantee will be unconditional. See "Risk Factors--Unenforceability and Release
of Guarantees."
Subordination
The payment of principal of, premium, if any, and interest on the Notes will
be subordinated in right of payment, as set forth in the Indenture, to the prior
payment in full in cash of all Obligations with respect to Senior Debt, whether
outstanding on the date of the Indenture or thereafter incurred.
Upon any payment or distribution to creditors of the Company or any
Subsidiary Guarantor in a liquidation or dissolution of the Company or such
Subsidiary Guarantor or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or any Subsidiary
Guarantor or its property, an assignment for the benefit of creditors or any
marshaling of the assets and liabilities of the Company or any Subsidiary
Guarantor, (a) the holders of Senior Debt will be entitled to receive payment in
full in cash of all Obligations due in respect of such Senior Debt (including
interest after the commencement of any such proceeding at the rate specified in
the applicable Senior Debt, whether or not allowed as a claim in such
proceeding) before the Holders of Notes will be entitled to receive any payment
or distribution with respect to the Notes, and (b) until all Obligations with
respect to Senior Debt are paid in full in cash, any payment or distribution to
which the Holders of Notes would be entitled shall be made to the holders of
Senior Debt.
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Neither the Company nor any Subsidiary Guarantor may make any payment or
distribution upon or in respect of the Notes, including, without limitation, by
way of set-off or otherwise, or redeem (or make a deposit in redemption of),
defease or acquire any of the Notes for cash, properties or securities if (a) a
default in the payment of any Obligation in respect of any Senior Debt occurs
and is continuing or (b) any other default (or any event that, after notice or
passage of time would become a default) (a "Non-Monetary Default") occurs and is
continuing with respect to Senior Debt and, in the case of clause (b), the
Trustee receives a notice of such default (a "Payment Blockage Notice") from the
holders (or the agent or representative of such holders) of any Designated
Senior Debt. Payments on the Notes may and shall be resumed (i) in the case of a
payment default, on the date on which such default is cured or waived and (ii)
in the case of a Non-Monetary Default, on the earlier of the date on which such
Non-Monetary Default is cured or waived or 179 days after the date on which the
applicable Payment Blockage Notice is received, unless the maturity of any
Senior Debt has been accelerated. Any number of Payment Blockage Notices may be
given, provided, however, that (A) not more than one Payment Blockage Notice may
be commenced during any period of 360 consecutive days and (B) any Non-Monetary
Default that existed or was continuing on the date of delivery of any Payment
Blockage Notice to the Trustee (to the extent the holder of Designated Senior
Debt, or such trustee or agent, giving such Payment Blockage Notice had
knowledge of the same) shall not be the basis for a subsequent Payment Blockage
Notice, unless such default has been cured or waived for a period of not less
than 90 consecutive days.
The Indenture will further require that the Company promptly notify holders
of Senior Debt if payment of the Notes is accelerated because of an Event of
Default.
As a result of the subordination provisions described above, in the event of
a liquidation or insolvency, Holders of Notes may recover less ratably than
creditors of the Company who are holders of Senior Debt. On a pro forma basis,
after giving effect to the Transactions, the principal amount of Senior Debt of
the Company and the Restricted Subsidiaries outstanding at June 30, 1996 would
have been $24.5 million. The Indenture will not limit the amount of additional
Indebtedness, including Senior Debt, that the Company and its Subsidiaries can
incur if certain financial tests are met. See "Certain Covenants--Incurrence of
Indebtedness and Issuance of Preferred Stock."
Optional Redemption
The Notes will not be redeemable at the Company's option prior to
, 2001. Thereafter, the Notes will be subject to redemption at the
option of the Company, in whole or in part, upon not less than 30 nor more than
60 days' notice, at the redemption prices (expressed as percentages of principal
amount) set forth below plus accrued and unpaid interest thereon to but
excluding the applicable redemption date, if redeemed during the twelve-month
period beginning on of the years indicated below:
Year Percentage
- ---- ----------
2001 %
2002 %
2003 %
2004 and thereafter 100%
Notwithstanding the foregoing, at any time during the first 36 months after
the date of issuance of the Notes, the Company may redeem up to 35% of the
initial principal amount of the Notes originally issued with the net proceeds of
one or more Qualified Equity Offerings at a redemption price equal to % of the
principal amount of such Notes, plus accrued and unpaid interest, if any, to but
excluding the date of redemption; provided, that at least 65% of the principal
amount of Notes originally issued remains outstanding immediately after the
occurrence of any such redemption and that such redemption occurs within 60 days
following the closing of any such Qualified Equity Offering.
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Mandatory Redemption
Except with respect to required repurchases upon the occurrence of a Change
of Control or in the event of certain Asset Sales, each as described below under
"Repurchase at the Option of Holders," the Company is not required to make
sinking fund or redemption payments with respect to the Notes.
Repurchase at the Option of Holders
Change of Control
Upon the occurrence of a Change of Control, each Holder of Notes will have
the right to require the Company to repurchase all or any part (equal to $1,000
or an integral multiple thereof) of such Holder's Notes pursuant to the offer
described below (the "Change of Control Offer") at an offer price in cash equal
to 101% of the aggregate principal amount thereof plus accrued and unpaid
interest, if any, to but excluding the date of purchase (the "Change of Control
Payment"). Within 30 calendar days following any Change of Control, the Company
will mail a notice to each Holder stating: (a) that the Change of Control Offer
is being made pursuant to the covenant entitled "Change of Control" and that all
Notes tendered will be accepted for payment; (b) the purchase price and the
purchase date, which will be no earlier than 30 calendar days nor later than 60
calendar days from the date such notice is mailed (the "Change of Control
Payment Date"); (c) that any Note not tendered will continue to accrue interest;
(d) that, unless the Company defaults in the payment of the Change of Control
Payment, all Notes accepted for payment pursuant to the Change of Control Offer
will cease to accrue interest on and after the Change of Control Payment Date;
(e) that Holders electing to have any Notes purchased pursuant to a Change of
Control Offer will be required to surrender the Notes, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Notes completed, to
the Paying Agent at the address specified in such notice prior to the close of
business on the fifth Business Day preceding the Change of Control Payment Date;
(f) that Holders will be entitled to withdraw their election if the Paying Agent
receives, not later than the close of business on the second Business Day
preceding the Change of Control Payment Date, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of Notes delivered for purchase, and a statement that such Holder is
withdrawing his election to have such Notes purchased; and (g) that Holders
whose Notes are being purchased only in part will be issued new Notes equal in
principal amount to the unpurchased portion of the Notes surrendered, which
unpurchased portion must be equal to $1,000 in principal amount or an integral
multiple thereof. The Company will comply with the requirements of Rule 14e-1
under the Exchange Act and any other securities laws and regulations thereunder
to the extent such laws and regulations are applicable to the repurchase of the
Notes in connection with a Change of Control.
On the Change of Control Payment Date, the Company will, to the extent
lawful, (a) accept for payment Notes or portions thereof tendered pursuant to
the Change of Control Offer, (b) deposit with the Paying Agent an amount equal
to the Change of Control Payment in respect of all Notes or portions thereof so
tendered and (c) deliver or cause to be delivered to the Trustee the Notes so
accepted together with an Officers' Certificate stating the Notes or portions
thereof tendered to the Company. The Paying Agent will promptly mail to each
Holder of Notes so accepted the Change of Control Payment for such Notes, and
the Trustee will promptly authenticate and mail to each Holder a new Note equal
in principal amount to any unpurchased portion of the Notes surrendered, if any;
provided that each such new Note will be in a principal amount of $1,000 or an
integral multiple thereof.
Except as described above with respect to a Change of Control, the Indenture
does not contain provisions that permit the Holders of the Notes to require that
the Company repurchase or redeem the Notes in the event of a takeover,
recapitalization or similar restructuring, nor does it contain any other "event
risk" protections for Holders of the Notes.
Although the Change of Control provision may not be waived by the Company,
and may be waived by the Trustee only in accordance with the provisions of the
Indenture, there can be no assurance that any particular transaction (including
a highly leveraged transaction) cannot be structured or effected in a manner not
constituting a Change of Control.
The Credit Agreement currently prohibits the Company from purchasing any
Notes prior to the expiration of the Credit Agreement and also provides that
certain change of control events with respect to the Company would constitute a
default thereunder. The New Credit Facility will contain, and any future credit
agreements or other
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agreements relating to Senior Debt to which the Company becomes a party may
contain, similar restrictions and provisions. In the event a Change of Control
occurs at a time when the Company is prohibited from purchasing Notes, the
Company could seek the consent of its lenders to the purchase of Notes or could
attempt to refinance the borrowings that contain such prohibition. If the
Company does not obtain such a consent or repay such borrowings, the Company
will remain prohibited from purchasing Notes. In such case, the Company's
failure to purchase tendered Notes would constitute an Event of Default under
the Indenture which would, in turn, constitute a default under the Credit
Agreement and is expected to constitute an event of default under the New Credit
Facility. In such circumstances, the subordination provisions in the Indenture
would likely restrict payments to the Holders of Notes.
"Change of Control" means the occurrence of any of the following events:
(a) any "person" or "group" (as such terms are used in Sections 13(d) and
14(d) of the Exchange Act), other than the Principal Stockholders (or any of
them), is or becomes the "beneficial owner" (as defined in Rules 13d-3 and
13d-5 under the Exchange Act), directly or indirectly, of more than a
majority of the voting power of all classes of Voting Stock of the Company;
(b) the Company consolidates with, or merges with or into, another Person
or conveys, transfers, leases or otherwise disposes of all or substantially
all of its assets to any Person, or any Person consolidates with, or merges
with or into, the Company, in any such event pursuant to a transaction in
which the outstanding Voting Stock of the Company is converted into or
exchanged for cash, securities or other property, other than any such
transaction where (i) the outstanding Voting Stock of the Company is not
converted or exchanged at all (except to the extent necessary to reflect a
change in the jurisdiction of incorporation) or is converted into or
exchanged for (A) Voting Stock (other than Disqualified Stock) of the
surviving or transferee Person or (B) cash, securities and other property
(other than Capital Stock described in the foregoing clause (A)) of the
surviving or transferee Person in an amount that could be paid as a
Restricted Payment as described under the "Restricted Payments" covenant and
(ii) immediately after such transaction, no "person" or "group" (as such
terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than
the Principal Stockholders (or any of them), is the "beneficial owner" (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or
indirectly, of more than a majority of the total outstanding Voting Stock of
the surviving or transferee Person;
(c) during any consecutive two-year period, individuals who at the
beginning of such period constituted the Board of Directors (together with
any new directors whose election to such Board of Directors, or whose
nomination for election by the stockholders of the Company, was approved by a
vote of 66-2/3% of the directors then still in office who were either
directors at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of the Board of Directors then in office; or
(d) the Company is liquidated or dissolved or adopts a plan of liquidation
or dissolution other than in a transaction which complies with the provisions
described under "Consolidation, Merger and Sale of Assets."
Asset Sales
The Indenture will provide that the Company will not, and will not permit any
of its Restricted Subsidiaries to, (a) sell, lease, convey or otherwise dispose
of any assets (including by way of a Sale and Leaseback Transaction, but
excluding a Qualifying Sale and Leaseback Transaction) other than sales of
inventory in the ordinary course of business (provided that the sale, lease,
conveyance or other disposition of all or substantially all of the assets of the
Company will be governed by the provisions of the Indenture described above
under the caption "Change of Control" and/or the provisions described below
under the caption "Merger, Consolidation or Sale of Assets" and not by the
provisions of this covenant), or (b) issue or sell Equity Interests of any of
its Restricted Subsidiaries, that, in the case of either clause (a) or (b)
above, whether in a single transaction or a series of related transactions, (i)
have a fair market value in excess of $1.0 million, or (ii) result in Net
Proceeds in excess of $1.0 million (each of the foregoing, an "Asset Sale"),
unless (x) the Company (or the Restricted Subsidiary, as the case may be)
receives consideration at the time of such Asset Sale at least equal to the fair
market value (evidenced by an Officers' Certificate delivered to the Trustee,
and for Asset Sales having a fair market value or resulting in net proceeds in
excess of $5.0 million, evidenced by a resolution of the Board of Directors set
forth in an Officers' Certificate
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delivered to the Trustee) of the assets sold or otherwise disposed of and (y) at
least 75% of the consideration therefor received by the Company or such
Restricted Subsidiary is in the form of cash or like-kind assets (in each case
as determined in good faith by the Company, evidenced by a resolution of the
Board of Directors and certified by an Officers' Certificate filed with the
Trustee); provided, however, that the amount of (A) any liabilities (as shown on
the Company's or such Restricted Subsidiary's most recent balance sheet or in
the notes thereto) of the Company or such Restricted Subsidiary (other than
liabilities that are by their terms subordinated to the Notes or any Subsidiary
Guarantee) that are assumed by the transferee of any such assets and (B) any
notes or other obligations received by the Company or such Restricted Subsidiary
from such transferee that are immediately converted by the Company or such
Restricted Subsidiary into cash (to the extent of the cash received) or Cash
Equivalents, shall be deemed to be cash for purposes of this provision; and
provided, further, that the 75% limitation referred to in the foregoing clause
(y) shall not apply to any Asset Sale in which the cash portion of the
consideration received therefrom is equal to or greater than what the after-tax
proceeds would have been had such Asset Sale complied with the aforementioned
75% limitation. A transfer of assets or issuance of Equity Interests by the
Company to a Wholly Owned Restricted Subsidiary or by a Wholly Owned Restricted
Subsidiary to the Company or to another Wholly Owned Restricted Subsidiary will
not be deemed to be an Asset Sale.
Within 360 days of any Asset Sale, the Company may, at its option, apply an
amount equal to the Net Proceeds from such Asset Sale either (a) to permanently
reduce Senior Debt, or (b) to an investment in a Restricted Subsidiary or in
another business or capital expenditure or other long-term/tangible assets, in
each case, in the same line of business as the Company or any of its Restricted
Subsidiaries was engaged in on the date of the Indenture or in businesses
similar or reasonably related thereto. Pending the final application of any such
Net Proceeds, the Company may temporarily reduce Senior Bank Debt or otherwise
invest such Net Proceeds in any manner that is not prohibited by the Indenture.
Any Net Proceeds from such Asset Sale that are not applied or invested as
provided in the first sentence of this paragraph will be deemed to constitute
"Excess Proceeds." When the aggregate amount of Excess Proceeds exceeds $5.0
million, the Company shall make an offer to all Holders of Notes (an "Asset Sale
Offer") to purchase the maximum principal amount of Notes that may be purchased
out of the Excess Proceeds, at an offer price in cash in an amount equal to 100%
of the principal amount thereof plus accrued and unpaid interest, if any, to the
date of purchase, in accordance with the procedures set forth in the Indenture.
To the extent that the aggregate amount of Notes tendered pursuant to an Asset
Sale Offer is less than the Excess Proceeds, the Company may use any remaining
Excess Proceeds for general corporate purposes. If the aggregate principal
amount of Notes surrendered by Holders thereof exceeds the amount of Excess
Proceeds, the Trustee shall select the Notes to be purchased on a pro rata
basis. Upon completion of such offer to purchase, the amount of Excess Proceeds
shall be reset at zero.
Selection and Notice
If less than all of the Notes are to be redeemed at any time, selection of
Notes for redemption will be made by the Trustee in compliance with the
requirements of the principal national securities exchange, if any, on which the
Notes are listed, or, if the Notes are not so listed, on a pro rata basis, by
lot or by such method as the Trustee shall deem fair and appropriate, provided
that no Notes of $1,000 or less shall be redeemed in part. Notices of redemption
shall be mailed by first class mail at least 30 but not more than 60 days before
the redemption date to each Holder of Notes to be redeemed at its registered
address. If any Note is to be redeemed in part only, the notice of redemption
that relates to such Note shall state the portion of the principal amount
thereof to be redeemed. A new Note in principal amount equal to the unredeemed
portion thereof will be issued in the name of the Holder thereof upon
cancellation of the original Note. On and after the redemption date, interest
will cease to accrue on Notes or portions of them called for redemption.
Certain Covenants
Restricted Payments
The Indenture will provide that the Company will not, and will not permit any
of its Restricted Subsidiaries to, directly or indirectly: (a) declare or pay
any dividend or make any distribution on account of the Company's or any of its
Restricted Subsidiaries' Equity Interests (other than dividends or distributions
payable in Equity Interests (other than Disqualified Stock) of the Company or
such Restricted Subsidiary or dividends or distributions payable to the Company
or any Restricted Subsidiary); (b) purchase, redeem or otherwise acquire or
retire for value
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any Equity Interests of the Company or any Restricted Subsidiary or other
Affiliate of the Company (other than any such Equity Interests owned by the
Company or any Restricted Subsidiary); (c) purchase, redeem or otherwise acquire
or retire prior to scheduled maturity for value any Indebtedness that is
subordinated in right of payment to the Notes or (d) make any Investment other
than a Permitted Investment (all such payments and other actions set forth in
clauses (a) through (d) above being collectively referred to as "Restricted
Payments"), unless, at the time of such Restricted Payment:
(i) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; and
(ii) the Company would, at the time of such Restricted Payment and after
giving pro forma effect thereto, have been permitted to incur at least $1.00
of additional Indebtedness pursuant to the test set forth in the first
paragraph of the covenant entitled "Incurrence of Indebtedness and Issuance
of Preferred Stock;" and
(iii) such Restricted Payment, together with the aggregate of all other
Restricted Payments made by the Company and its Restricted Subsidiaries after
the date of the Indenture is less than (x) the cumulative EBITDA of the
Company, minus 1.75 times the cumulative Consolidated Interest Expense of the
Company, in each case for the period (taken as one accounting period) from
June 30, 1996, to the end of the Company's most recently ended fiscal quarter
for which internal financial statements are available at the time of such
Restricted Payment, plus (y) the aggregate net Equity Proceeds received by
the Company from the issuance or sale since the date of the Indenture of
Equity Interests of the Company or of debt securities of the Company that
have been converted into such Equity Interests (other than Equity Interests
or convertible debt securities sold to a Restricted Subsidiary of the Company
and other than Disqualified Stock or debt securities that have been converted
into Disqualified Stock), plus (z) $2.0 million.
The foregoing provisions will not prohibit (A) the payment of any dividend
within 60 days after the date of declaration thereof, if at said date of
declaration such payment would have complied with the provisions of the
Indenture; (B) the redemption, repurchase, retirement or other acquisition or
retirement for value of any Equity Interests of the Company in exchange for, or
with the net cash proceeds of, the substantially concurrent sale (other than to
a Restricted Subsidiary of the Company) of other Equity Interests of the Company
(other than any Disqualified Stock); (C) the defeasance, redemption, repurchase,
retirement or other acquisition or retirement for value of Indebtedness that is
subordinated or pari passu in right of payment to the Notes in exchange for, or
with the net cash proceeds of, a substantially concurrent issuance and sale
(other than to a Restricted Subsidiary of the Company) of Equity Interests of
the Company (other than Disqualified Stock); (D) the defeasance, redemption,
repurchase, retirement or other acquisition or retirement for value of
Indebtedness that is subordinated or pari passu in right of payment to the Notes
in exchange for, or with the net cash proceeds of, a substantially concurrent
issue and sale (other than to the Company or any of its Restricted Subsidiaries)
of Refinancing Indebtedness; (E) the repurchase of any Indebtedness subordinated
or pari passu in right of payment to the Notes at a purchase price not greater
than 101% of the principal amount of such Indebtedness in the event of a Change
of Control in accordance with provisions similar to the "Change of Control"
covenant, provided that prior to or contemporaneously with such repurchase the
Company has made the Change of Control Offer as provided in such covenant with
respect to the Notes and has repurchased all Notes validly tendered for payment
in connection with such Change of Control Offer; (F) the prepayment of the
Chrysler Notes, together with premium and interest thereon; (G) the prepayment
of $450,000 of junior subordinated notes issued by the Company in connection
with a 1990 acquisition, together with interest thereon; and (H) additional
payments to current or former employees or directors of the Company for
repurchases of stock, stock options or other equity interests, provided that the
aggregate amount of all such payments under this clause (H) does not exceed
$500,000 in any year and $2.0 million in the aggregate.
The Restricted Payments described in clauses (B), (C), (E) and (H) of the
immediately preceding paragraph will be Restricted Payments that will be
permitted to be taken in accordance with such paragraph but will reduce the
amount that would otherwise be available for Restricted Payments under clause
(iii) of the first paragraph of this section, and the Restricted Payments
described in clauses (A), (D), (F) and (G) of the immediately preceding
paragraph will be Restricted Payments that will be permitted to be taken in
accordance with such paragraph and will not reduce the amount that would
otherwise be available for Restricted Payments under clause (iii) of the first
paragraph of this section.
If an Investment results in the making of a Restricted Payment, the aggregate
amount of all Restricted Payments deemed to have been made as calculated under
the foregoing provision will be reduced by the amount of any net
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reduction in such Investment (resulting from the payment of interest or
dividends, loan repayment, transfer of assets or otherwise) to the extent such
net reduction is not included in the Company's EBITDA; provided, however, that
the total amount by which the aggregate amount of all Restricted Payments may be
reduced may not exceed the lesser of (a) the cash proceeds received by the
Company and its Restricted Subsidiaries in connection with such net reduction
and (b) the initial amount of such Investment.
If the aggregate amount of all Restricted Payments calculated under the
foregoing provision includes an Investment in an Unrestricted Subsidiary or
other Person that thereafter becomes a Restricted Subsidiary, such Investment
will no longer be counted as a Restricted Payment for purposes of calculating
the aggregate amount of Restricted Payments. For the purpose of making any
calculations under the Indenture, (a) an Investment will include the fair market
value of the net assets of any Restricted Subsidiary at the time that such
Restricted Subsidiary is designated an Unrestricted Subsidiary and will exclude
the fair market value of the net assets of any Unrestricted Subsidiary that is
designated as a Restricted Subsidiary, (b) any property transferred to or from
an Unrestricted Subsidiary will be valued at fair market value at the time of
such transfer, provided that, in each case, the fair market value of an asset or
property is as determined by the Board of Directors in good faith, and (c)
subject to the foregoing, the amount of any Restricted Payment, if other than
cash, will be determined by the Board of Directors, whose good faith
determination will be conclusive.
The Board of Directors may designate a Restricted Subsidiary to be an
Unrestricted Subsidiary in compliance with the covenant entitled "Unrestricted
Subsidiaries." Upon such designation, all outstanding Investments by the Company
and its Restricted Subsidiaries (except to the extent repaid in cash) in the
Subsidiary so designated will be deemed to be Restricted Payments made at the
time of such designation and will reduce the amount available for Restricted
Payments under the first paragraph of this covenant. Such designation will only
be permitted if such Restricted Payment would be permitted at such time and if
such Restricted Subsidiary otherwise meets the definition of an Unrestricted
Subsidiary.
Incurrence of Indebtedness and Issuance of Preferred Stock
The Indenture will provide that the Company will not, and will not permit any
of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue,
assume, guaranty or otherwise become directly or indirectly liable with respect
to (collectively, "incur") any Indebtedness (including Acquired Debt) and that
the Company will not permit any of its Restricted Subsidiaries to issue any
shares of preferred stock; provided, however, that the Company may incur
Indebtedness and may permit a Restricted Subsidiary to incur Indebtedness if at
the time of such incurrence and after giving effect thereto the Leverage Ratio
would be less than 6.0 to 1.0.
The foregoing limitations will not apply to (a) the incurrence by the
Company or any Restricted Subsidiary of Senior Bank Debt in an aggregate
amount not to exceed $25.0 million at any one time outstanding, (b) the
issuance by the Restricted Subsidiaries of Subsidiary Guarantees, (c) the
incurrence by the Company and its Restricted Subsidiaries of the Existing
Indebtedness, (d) the issuance by the Company of the Notes, (e) the
incurrence by the Company and its Restricted Subsidiaries of Capital Lease
Obligations and/or additional Indebtedness constituting purchase money
obligations up to an aggregate of $2.5 million at any one time outstanding,
provided that the Liens securing such Indebtedness constitute Permitted
Liens, (f) the incurrence of Indebtedness between (i) the Company and its
Restricted Subsidiaries and (ii) the Restricted Subsidiaries, (g) Hedging
Obligations that are incurred for the purpose of fixing or hedging interest
rate risk with respect to any floating rate Indebtedness that is permitted by
the terms of the Indenture to be outstanding, (h) the incurrence by the
Company and its Restricted Subsidiaries of Indebtedness arising out of
letters of credit, performance bonds, surety bonds and bankers' acceptances
incurred in the ordinary course of business up to an aggregate of $2.0
million at any one time outstanding, (i) the incurrence by the Company and
its Restricted Subsidiaries of Indebtedness consisting of guarantees,
indemnities or obligations in respect of purchase price adjustments in
connection with the acquisition or disposition of assets, including, without
limitation, shares of Capital Stock, and (j) the incurrence by the Company
and its Restricted Subsidiaries of Refinancing Indebtedness issued in
exchange for, or the proceeds of which are used to repay, redeem, defease,
extend, refinance, renew, replace or refund, Indebtedness referred to in
clauses (b) through (e) above, and this clause (j).
Liens
The Indenture will provide that neither the Company nor any of its Restricted
Subsidiaries may directly or indirectly create, incur, assume or suffer to exist
any Lien (other than a Permitted Lien) upon any property or assets
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now owned or hereafter acquired, or any income, profits or proceeds therefrom,
or assign or otherwise convey any right to receive income therefrom, unless (a)
in the case of any Lien securing any Indebtedness that is subordinate to the
Notes, the Notes are secured by a Lien on such property, assets or proceeds that
is senior in priority to such Lien and (b) in the case of any other Lien, the
Notes are equally and ratably secured with the obligation or liability secured
by such Lien.
Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries
The Indenture will provide that the Company will not, and will not permit any
of its Restricted Subsidiaries to, directly or indirectly, create or otherwise
cause or suffer to exist or become effective any encumbrance or restriction on
the ability of any Restricted Subsidiary to (a) (i) pay dividends or make any
other distributions to the Company or any of its Restricted Subsidiaries (A) on
its Capital Stock or (B) with respect to any other interest or participation in,
or measured by, its profits, or (ii) pay any Indebtedness owed to the Company or
any of its Restricted Subsidiaries, (b) make loans or advances to the Company or
any of its Restricted Subsidiaries or (c) transfer any of its properties or
assets to the Company or any of its Restricted Subsidiaries, except for such
encumbrances or restrictions existing under or by reason of (1) Existing
Indebtedness, (2) the Credit Agreement as in effect as of the date of the
Indenture, and any amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancing thereof, provided that such
amendments, modifications, restatements, renewals, increases, supplements,
refundings, replacements or refinancings are no more restrictive in the
aggregate with respect to such dividend and other payment restrictions than
those contained in the Credit Agreement as in effect on the date of the
Indenture, (3) the Indenture and the Notes, (4) applicable law, (5) any
instrument governing Indebtedness or Capital Stock of a Person acquired by the
Company or any of its Restricted Subsidiaries as in effect at the time of such
acquisition (except to the extent such Indebtedness was incurred in connection
with or in contemplation of such acquisition), which encumbrance or restriction
is not applicable to any Person, or the properties or assets of any Person,
other than the Person, or the property or assets of the Person, so acquired,
provided that the EBITDA of such Person is not taken into account in determining
whether such acquisition was permitted by the terms of the Indenture, (6)
customary non-assignment provisions in leases entered into in the ordinary
course of business and consistent with past practices, (7) restrictions on the
transfer of property subject to purchase money or Capital Lease Obligations
otherwise permitted by clause (e) of the covenant entitled "Incurrence of
Indebtedness and Issuance of Preferred Stock," or (8) permitted Refinancing
Indebtedness, provided that the restrictions contained in the agreements
governing such Refinancing Indebtedness are no more restrictive in the aggregate
than those contained in the agreements governing the Indebtedness being
refinanced.
Merger, Consolidation, or Sale of Assets
The Indenture will provide that the Company may not consolidate or merge with
or into (whether or not the Company is the surviving corporation), or sell,
assign, transfer, lease, convey or otherwise dispose of all or substantially all
of its properties or assets in one or more related transactions, to another
Person unless: (a) the Company is the surviving corporation or the Person formed
by or surviving any such consolidation or merger (if other than the Company) or
to which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made is a corporation organized or existing under the laws of
the United States, any state thereof or the District of Columbia; (b) the Person
formed by or surviving any such consolidation or merger (if other than the
Company) or the Person to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made assumes all the obligations
of the Company under the Notes and the Indenture pursuant to a supplemental
indenture in a form reasonably satisfactory to the Trustee; (c) immediately
after such transaction no Default or Event of Default exists; and (d) the
Company or any Person formed by or surviving any such consolidation or merger,
or to which such sale, assignment, transfer, lease, conveyance or other
disposition shall have been made, will, at the time of such transaction and
after giving pro forma effect thereto, be permitted to incur at least $1.00 of
additional Indebtedness pursuant to the test set forth in the first paragraph of
the covenant entitled "Incurrence of Indebtedness and Issuance of Preferred
Stock."
Transactions with Affiliates
The Indenture will provide that the Company will not, and will not permit any
of its Restricted Subsidiaries to, sell, lease, transfer or otherwise dispose of
any of its properties or assets to, or purchase any property or assets from, or
enter into any contract, agreement, understanding, loan, advance or guarantee
with, or for the benefit of,
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any Affiliate (each of the foregoing, an "Affiliate Transaction"), unless (a)
such Affiliate Transaction is on terms that are no less favorable to the Company
or the relevant Restricted Subsidiary than those that would have been obtained
in a comparable transaction by the Company or such Restricted Subsidiary with a
non-Affiliated Person and (b) the Company delivers to the Trustee (i) with
respect to any Affiliate Transaction involving aggregate payments in excess of
$1.0 million, a resolution of the Board of Directors set forth in an Officers'
Certificate certifying that such Affiliate Transaction complies with clause (a)
above and such Affiliate Transaction is approved by a majority of the
disinterested members of the Board of Directors and (ii) with respect to any
Affiliate Transaction involving aggregate payments in excess of $5.0 million, an
opinion as to the fairness to the Company or such Restricted Subsidiary from a
financial point of view issued by an investment banking firm of national
standing; provided, however, that (A) any employment agreement entered into by
the Company or any of its Restricted Subsidiaries in the ordinary course of
business and consistent with the past practice of the Company or such Restricted
Subsidiary, (B) transactions between or among the Company and/or its Restricted
Subsidiaries, (C) transactions permitted by the provisions of the Indenture
described above under the covenant entitled "Restricted Payments" and (D) the
grant of stock, stock options or other equity interests to employees and
directors of the Company in accordance with duly adopted Company stock grant,
stock option and similar plans, in each case, shall not be deemed Affiliate
Transactions; and further provided that (1) the provisions of clause (b) shall
not apply to sales of inventory by the Company or any Restricted Subsidiary to
any Affiliate in the ordinary course of business and (2) the provisions of
clause (b) (ii) shall not apply to loans or advances to the Company or any
Restricted Subsidiary from, or equity investments in the Company or any
Restricted Subsidiary by, any Affiliate to the extent permitted by the
provisions of the Indenture described above under the covenant entitled
"Incurrence of Indebtedness and Issuance of Preferred Stock."
Certain Senior Subordinated Debt
The Indenture will provide that (a) the Company will not incur any
Indebtedness that is subordinated or junior in right of payment to any Senior
Debt of the Company and senior in any respect in right of payment to the
Notes, and (b) the Company will not permit any Restricted Subsidiary to incur
any Indebtedness that is subordinated or junior in right of payment to its
Senior Debt and senior in any respect in right of payment to its Subsidiary
Guarantee.
Additional Subsidiary Guarantees
The Indenture will provide that if any entity (other than an Excluded
Restricted Subsidiary) shall become a Restricted Subsidiary after the date of
the Indenture, then such Restricted Subsidiary shall execute a Subsidiary
Guarantee and deliver an opinion of counsel with respect thereto, in accordance
with the terms of the Indenture.
The Indenture will provide that no Restricted Subsidiary may consolidate with
or merge with or into (whether or not such Restricted Subsidiary is the
surviving Person), another Person (other than the Company) whether or not
affiliated with such Restricted Subsidiary unless (a) subject to the provisions
of the following paragraph, the Person formed by or surviving any such
consolidation or merger (if other than such Restricted Subsidiary) assumes all
the obligations of such Restricted Subsidiary under its Subsidiary Guaranty, if
any, pursuant to a supplemental indenture in form and substance reasonably
satisfactory to the Trustee; (b) immediately after giving effect to such
transaction, no Default or Event of Default exists; and (c) such Restricted
Subsidiary, or any Person formed by or surviving any such consolidation or
merger, would be permitted to incur, immediately after giving effect to such
transaction, at least $1.00 of additional Indebtedness pursuant to the test set
forth in the first paragraph of the covenant entitled "Incurrence of
Indebtedness and Issuance of Preferred Stock."
The Indenture will provide that in the event of (a) a sale or other
disposition of all of the assets of any Restricted Subsidiary, by way of merger,
consolidation or otherwise, (b) a sale or other disposition of all of the
capital stock of any Restricted Subsidiary, or (c) the designation of a
Restricted Subsidiary as an Unrestricted Subsidiary in accordance with the terms
of the covenant entitled "Unrestricted Subsidiaries," then such Subsidiary (in
the event of a sale or other disposition, by way of such a merger, consolidation
or otherwise, of all of the capital stock of such Restricted Subsidiary or in
the event of the designation of such Restricted Subsidiary as an Unrestricted
Subsidiary) or the corporation acquiring the property (in the event of a sale or
other disposition of all of the assets of such Restricted Subsidiary) will be
released and relieved of any obligations under its Subsidiary Guarantee;
provided that the Net Proceeds of such sale or other disposition are applied in
accordance with the applicable provisions of the Indenture. See "Redemption or
Repurchase at Option of Holders--Asset Sales."
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Unrestricted Subsidiaries
The Board of Directors may designate any Subsidiary (including any Restricted
Subsidiary or any newly acquired or newly formed Subsidiary) to be an
Unrestricted Subsidiary so long as: (i) neither the Company nor any Restricted
Subsidiary is directly or indirectly liable for any Indebtedness of such
Subsidiary; (ii) no default with respect to any Indebtedness of such Subsidiary
would permit (upon notice, lapse of time or otherwise) any holder of any other
Indebtedness of the Company or any Restricted Subsidiary to declare a default on
such other Indebtedness or cause the payment thereof to be accelerated or
payable prior to its stated maturity; (iii) any Investment in such Subsidiary
deemed to be made as a result of designating such Subsidiary an Unrestricted
Subsidiary will not violate the provisions of the covenant entitled "Restricted
Payments;" (iv) neither the Company nor any Restricted Subsidiary has a
contract, agreement, arrangement, understanding or obligation of any kind,
whether written or oral, with such Subsidiary other than (A) those that might be
obtained at the time from Persons who are not Affiliates of the Company or (B)
administrative, tax sharing and other ordinary course contracts, agreements,
arrangements and understandings or obligations entered into in the ordinary
course of business; and (v) neither the Company nor any Restricted Subsidiary
has any obligation to subscribe for additional shares of Capital Stock or other
Equity Interests in such Subsidiary, or to maintain or preserve such
Subsidiary's financial condition or to cause such Subsidiary to achieve certain
levels of operating results other than as permitted under the covenant entitled
"Restricted Payments." Notwithstanding the foregoing, the Company may not
designate as an Unrestricted Subsidiary any Subsidiary which, on the date of the
Indenture, is a Significant Subsidiary, and may not sell, transfer or otherwise
dispose of any properties or assets of any such Significant Subsidiary to an
Unrestricted Subsidiary, other than in the ordinary course of business.
The Board of Directors may designate any Unrestricted Subsidiary as a
Restricted Subsidiary; provided that such designation will be deemed to be an
incurrence of Indebtedness by a Restricted Subsidiary of any outstanding
Indebtedness of such Unrestricted Subsidiary and such designation will only
be permitted if (i) such Indebtedness is permitted under the "Incurrence of
Indebtedness and Issuance of Preferred Stock" covenant and (ii) no Default or
Event of Default would occur as a result of such designation.
Limitation on Sale and Leaseback Transactions.
The Company will not, and will not permit any Restricted Subsidiary to, enter
into any Sale and Leaseback Transaction unless (a) the consideration received in
such Sale and Leaseback Transaction is at least equal to the fair market value
of the property sold, as determined by a resolution of the Board of Directors of
the Company, and (b) the Company or such Restricted Subsidiary could incurr the
Attributable Indebtedness in respect of such Sale and Leaseback Transaction in
compliance with the covenant entitled "Incurrence of Indebtedness and Issuance
of Preferred Stock."
Reports
Whether or not required by the rules and regulations of the Securities and
Exchange Commission (the "Commission"), so long as any Notes are outstanding,
the Company will furnish to the Holders of Notes (a) all quarterly and annual
financial information that would be required to be contained in a filing with
the Commission on Forms 10-Q and 10-K if the Company were required to file such
Forms, including a "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and, with respect to the annual information only, a
report thereon by the Company's certified independent accountants and (b) all
financial information that would be required to be included in a Form 8-K filed
with the Commission if the Company were required to file such reports. In
addition, whether or not required by the rules and regulations of the
Commission, the Company will file a copy of all such information and reports
with the Commission for public availability (unless the Commission will not
accept such a filing) and make such information available to investors who
request it in writing.
Events of Default and Remedies
The Indenture will provide that each of the following constitutes an Event of
Default: (a) default for 30 days in the payment when due of interest on the
Notes (whether or not prohibited by the subordination provisions of the
Indenture); (b) default in payment when due of the principal of or premium, if
any, on the Notes (whether or not prohibited by the subordination provisions of
the Indenture); (c) failure by the Company to comply with the provisions
described under "Change of Control;" (d) failure by the Company or any
Subsidiary Guarantor for 60 days after written notice from the Trustee or
Holders of not less than 25% of the aggregate principal amount of the Notes
outstanding to comply with any of its other agreements in the Indenture, Notes
or the Subsidiary Guarantees; (e) default under any mortgage, indenture or
instrument under which there may be issued or by which there may be secured or
evidenced any Indebtedness for money borrowed by the Company or any of its
Restricted Subsidiaries (or the payment of which is guaranteed by the Company or
any of its Restricted Subsidiaries) whether such Indebtedness or guarantee
exists on the date of the Indenture or is created thereafter, if (i) such
default results in the acceleration of such Indebtedness prior to its express
maturity or shall constitute a default in the payment of such Indebtedness at
final maturity of such Indebtedness, and (ii) the principal amount of any such
Indebtedness
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that has been accelerated or not paid at maturity, when added to the aggregate
principal amount of all other such Indebtedness that has been accelerated or not
paid at maturity, exceeds $5.0 million; (f) failure by the Company or any of its
Restricted Subsidiaries to pay final judgments aggregating in excess of $5.0
million, which judgments remain unpaid, undischarged or unstayed for a period of
60 days; (g) certain events of bankruptcy or insolvency with respect to the
Company or any of its Restricted Subsidiaries that are Significant Subsidiaries;
and (h) except as permitted by the Indenture or the Subsidiary Guarantees, any
Subsidiary Guarantee issued by a Restricted Subsidiary shall be held in any
judicial proceeding to be unenforceable or invalid or shall cease for any reason
to be in full force and effect, or any Restricted Subsidiary or any Person
acting on behalf of any Restricted Subsidiary shall deny or disaffirm in writing
its obligations under its Subsidiary Guarantee.
If any Event of Default occurs and is continuing, the Trustee or the Holders
of at least 25% in principal amount of the then outstanding Notes may declare
all the Notes to be due and payable immediately; provided, however, that if any
Obligation with respect to Senior Bank Debt is outstanding pursuant to the
Credit Agreement upon a declaration of acceleration of the Notes, the principal,
premium, if any, and interest on the Notes will not be payable until the earlier
of (i) the day which is five business days after written notice of acceleration
is received by the Company and the Credit Agent, or (ii) the date of
acceleration of the Indebtedness under the Credit Agreement. Notwithstanding the
foregoing, in the case of an Event of Default arising from certain events of
bankruptcy or insolvency with respect to the Company or any Restricted
Subsidiary that is a Significant Subsidiary, the principal of, and premium, if
any, and any accrued and unpaid interest on all outstanding Notes will become
due and payable without further action or notice. Holders of the Notes may not
enforce the Indenture or the Notes except as provided in the Indenture. In the
event of a declaration of acceleration of the Notes because an Event of Default
has occurred and is continuing as a result of the acceleration of any
Indebtedness described in clause (e) of the preceding paragraph, the declaration
of acceleration of the Notes shall be automatically annulled if the holders of
any Indebtedness described in clause (e) have rescinded the declaration of
acceleration in respect of such Indebtedness within 30 days of the date of such
declaration and if (i) the annulment of the acceleration of the Notes would not
conflict with any judgment or decree of a competent jurisdiction, and (ii) all
existing Events of Default, except non-payment of principal or interest on the
Notes that became due solely because of the acceleration of the Notes, have been
cured or waived.
In the case of any Event of Default occurring by reason of any willful action
(or inaction) taken (or not taken) by or on behalf of the Company with the
intention of avoiding payment of the premium that the Company would have had to
pay if the Company then had elected to redeem the Notes pursuant to the optional
redemption provisions of the Indenture, an equivalent premium shall also become
and be immediately due and payable to the extent permitted by law upon the
acceleration of the Notes. If an Event of Default occurs prior to , 2004 by
reason of any willful action (or inaction) taken (or not taken) by or on behalf
of the Company with the intention of avoiding the prohibition on redemption of
the Notes prior to , 2004, then the premium specified in the Indenture shall
also become immediately due and payable to the extent permitted by law upon the
acceleration of the Notes.
The Holders of a majority in aggregate principal amount of the Notes then
outstanding by notice to the Trustee may on behalf of the Holders of all of the
Notes waive any existing Default or Event of Default and its consequences under
the Indenture except a continuing Default or Event of Default in the payment of
interest on, or the principal of, the Notes. Subject to certain limitations,
Holders of a majority in principal amount of the then outstanding Notes may
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders of the Notes notice of any continuing Default or Event of
Default (except a Default or Event of Default relating to the payment of
principal or interest) if it determines that withholding notice is in their
interest.
The Company is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and the Company is required upon
becoming aware of any Default or Event of Default, to deliver to the Trustee a
statement specifying such Default or Event of Default.
No Personal Liability of Directors, Officers, Employees and Stockholders
No director, officer, employee, incorporator or stockholder of the Company or
any Restricted Subsidiary, as such, shall have any liability for any obligations
of the Company or any Restricted Subsidiary under the Notes, the Subsidiary
Guarantees or the Indenture or for any claim based on, in respect of, or by
reason of, such obligations or their creation. Each Holder of Notes by accepting
a Note and the Subsidiary Guarantees waives and releases
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all such liability. The waiver and release are part of the consideration for
issuance of the Notes and the Subsidiary Guarantees. Such waiver may not be
effective to waive liabilities under the federal securities laws and it is the
view of the Commission that such a waiver is against public policy.
Legal Defeasance and Covenant Defeasance
The Company may, at its option and at any time, elect to have all of its
obligations discharged with respect to the outstanding Notes ("Legal
Defeasance") except for (a) the rights of Holders of outstanding Notes to
receive payments in respect of the principal of, premium, if any, and interest
on such Notes when such payments are due, (b) the Company's obligations with
respect to the Notes concerning issuing temporary Notes, registration of Notes,
mutilated, destroyed, lost or stolen Notes and the maintenance of an office or
agency for payment and money for security payments held in trust, (c) the
rights, powers, trusts, duties and immunities of the Trustee, and the Company's
obligations in connection therewith and (d) the Legal Defeasance provisions of
the Indenture. In addition, the Company may, at its option and at any time,
elect to have the obligations of the Company released with respect to certain
covenants that are described in the Indenture ("Covenant Defeasance"), and
thereafter any omission to comply with such obligations shall not constitute a
Default or Event of Default with respect to the Notes. In the event Covenant
Defeasance occurs, certain events (not including non-payment, bankruptcy,
receivership and insolvency events) described under "Events of Default" will no
longer constitute an Event of Default with respect to the Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance, (a) the
Company must irrevocably deposit with the Trustee, in trust, for the benefit of
the Holders of the Notes, cash in Dollars, non-callable Government Securities,
or a combination thereof, in such amounts as will be sufficient, in the opinion
of a nationally recognized firm of independent public accountants, to pay the
principal of, premium, if any, and interest on the outstanding Notes on the
stated maturity or on the applicable redemption date, as the case may be, of
such principal or installment of principal of, premium, if any, or interest on
the outstanding Notes; (b) in the case of Legal Defeasance, the Company shall
have delivered to the Trustee an opinion of counsel in the United States
reasonably acceptable to the Trustee confirming that (i) the Company has
received from, or there has been published by, the Internal Revenue Service a
ruling or (ii) since the date of the Indenture, there has been a change in the
applicable federal income tax law, in either case to the effect that, and based
thereon such opinion of counsel shall confirm that, the Holders of the
outstanding Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Legal Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Legal Defeasance had not occurred; (c) in the
case of Covenant Defeasance, the Company shall have delivered to the Trustee an
opinion of counsel in the United States reasonably acceptable to the Trustee
confirming that the Holders of the outstanding Notes will not recognize income,
gain or loss for federal income tax purposes as a result of such Covenant
Defeasance and will be subject to federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such Covenant
Defeasance had not occurred; (d) no Default or Event of Default shall have
occurred and be continuing on the date of such deposit or insofar as Events of
Default from bankruptcy or insolvency events are concerned, at any time in the
period ending on the 91st day after the date of deposit; (e) such Legal
Defeasance or Covenant Defeasance shall not result in a breach or violation of,
or constitute a default under, any material agreement or instrument to which the
Company or any of its Subsidiaries is a party or by which the Company or any of
its Subsidiaries is bound; (f) the Company shall have delivered to the Trustee
an opinion of counsel to the effect that after the 91st day following the
deposit, the trust funds will not be subject to the effect of any applicable
bankruptcy, insolvency, reorganization or similar laws affecting creditors'
rights generally; (g) the Company shall have delivered to the Trustee an
Officers' Certificate stating that the deposit was not made by the Company with
the intent of preferring the Holders of Notes over the other creditors of the
Company with the intent of defeating, hindering, delaying or defrauding
creditors of the Company or others; and (h) the Company shall have delivered to
the Trustee an Officers' Certificate and an opinion of counsel, each stating
that all conditions precedent provided for relating to the Legal Defeasance or
the Covenant Defeasance have been complied with.
Transfer and Exchange
A Holder may transfer or exchange Notes in accordance with the Indenture.
The Registrar and the Trustee may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and the Company may
require a Holder to pay any taxes and fees required by law or permitted by
the Indenture. The
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Company is not required to transfer or exchange any Note selected for
redemption. Also, the Company is not required to transfer or exchange any Note
for a period of 15 days before a selection of Notes to be redeemed.
The registered Holder of a Note will be treated as the owner of it for all
purposes.
Book-Entry, Delivery and Form
The Notes will be represented by one or more fully registered global notes
(collectively, the "Global Note"). The Global Note will be deposited upon
issuance with, or on behalf of, The Depository Trust Company, as Depositary (the
"Depositary"), and registered in the name of the Depositary or a nominee of the
Depositary (the "Global Note Registered Owner"). Except as set forth below, the
Global Note may be transferred, in whole and not in part, only to another
nominee of the Depositary or to a successor of the Depositary or its nominee.
The Depositary has advised the Company that the Depositary is a
limited-purpose trust company created to hold securities for its participating
organizations (collectively, the "Participants") and to facilitate the clearance
and settlement of transactions in those securities between the Participants
through electronic book-entry changes in accounts of its Participants. The
Participants include securities brokers and dealers (including the
Underwriters), banks, trust companies, clearing corporations and certain other
organizations. Access to the Depositary's systems is also available to other
entities such as banks, brokers, dealers and trust companies that clear through
or maintain a custodial relationship with a Participant, either directly or
indirectly (collectively, the "Indirect Participants"). Persons who are not
Participants may beneficially own securities held by or on behalf of the
Depositary only through the Participants or the Indirect Participants. The
ownership interest and transfer of ownership interest of each actual purchaser
of each security held by or on behalf of the Depositary are recorded on the
records of the Participants and Indirect Participants.
The Depositary has also advised the Company that, pursuant to procedures
established by it, (i) upon deposit of the Global Note, the Depositary will
credit the accounts of Participants designated by the Underwriters with portions
of the principal amount of the Global Note and (ii) ownership of such interests
in the Global Note will be shown on, and the transfer of ownership thereof will
be effected only through, records maintained by the Depositary (with respect to
the Participants) or by the Participants and the Indirect Participants (with
respect to other owners of beneficial interests in the Global Note). The laws of
some states require that certain persons take physical delivery in definitive
form of securities that they own. Consequently, the ability to transfer the
Notes will be limited to that extent.
Except as provided below, owners of interests in the Global Note will not
have Notes registered in their names, will not receive physical delivery of the
Notes in definitive form and will not be considered the registered owners or
holders thereof under the Indenture for any purpose.
Payments in respect of the principal of and premium, if any, and interest on
any Notes registered in the name of the Global Note Registered Owner will be
payable by the Trustee to the Global Note Registered Owner in its capacity as
the registered holder under the Indenture. Under the terms of the Indenture, the
Company and the Trustee will treat the persons in whose names the Notes,
including the Global Note, are registered as the owners thereof for the purpose
of receiving such payments and for any and all other purposes whatsoever.
Consequently, neither the Company, the Trustee nor any agent of the Company or
the Trustee has or will have any responsibility or liability for (i) any aspect
of the Depositary's records or any Participant's records relating to or payments
made on account of beneficial ownership interests in the Global Note, or for
maintaining, supervising or reviewing any of the Depositary's records or any
Participant's records relating to the beneficial ownership interests in the
Global Note or (ii) any other matter relating to the actions and practices of
the Depositary or any of its Participants. The Depositary has advised the
Company that its current practice, upon receipt of any payment in respect of
securities such as the Notes (including principal and interest), is to credit
the accounts of the relevant Participants with the payment on the payment date,
in amounts proportionate to their respective holdings in principal amount of
beneficial interests in the relevant security as shown on the records of the
Depositary. Payments by the Participants and the Indirect Participants to the
beneficial owners of the Notes will be governed by standing instructions and
customary practices and will be the responsibility of the Participants or the
Indirect Participants and will not be the responsibility of the Depositary, the
Trustee or the Company. Neither the Company nor the Trustee will be liable for
any delay by the Depositary or any of its Participants in identifying the
beneficial owners of the Notes, and
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the Company and Trustee may conclusively rely on and will be protected in
relying on instructions from the Global Note Registered Owner for all purposes.
The Global Note is exchangeable for definitive Notes: (i) if the Depositary
notifies the Company that it is unwilling or unable to continue as Depositary of
the Global Note and the Company thereupon fails to appoint a successor
Depositary; (ii) if the Company, at its option, notifies the Trustee in writing
that it elects to cause the issuance of the Notes in definitive registered form;
or (iii) if there shall have occurred and be continuing an Event of Default or
any event which after notice or lapse of time or both would be an Event of
Default with respect to the Notes. Such definitive Notes shall be registered in
the names of the owners of the beneficial interests in the Global Note as
provided by the Participants. Upon issuance of the Notes in definitive form, the
Trustee is required to register the Notes in the name of, and cause the Notes to
be delivered to, the person or persons (or the nominee thereof) identified as
the beneficial owners as the Depositary shall direct.
Settlement for purchases of beneficial interests in the Global Note upon the
original issuance thereof will be required to be made by wire transfer in
immediately available funds. Payments in respect of the Notes represented by the
Global Note (including principal, premium, if any, and interest) will be made by
wire transfer in immediately available funds to the accounts specified by the
Global Note Registered Owner. With respect to the definitive Notes, the Company
will make all payments of principal, premium, if any, and interest by wire
transfer in immediately available funds to the accounts specified by the Holders
thereof or, if no such account is specified, by mailing a check to such Holder's
registered address. Secondary trading in long-term notes of corporate issuers is
generally settled in clearing-house or next-day funds. In contrast, the
beneficial interests in the Global Note are expected to trade in the
Depositary's Same-Day Funds Settlement System, in which secondary market trading
activity in those beneficial interests would be required by the Depositary to
settle in immediately available funds. There is no assurance as to the effect,
if any, that settlement in immediately available funds would have on trading
activity in such beneficial interests.
Amendment, Supplement and Waiver
Except as provided in the next two succeeding paragraphs, the Indenture or
the Notes may be amended or supplemented with the consent of the Holders of at
least a majority in principal amount of the Notes then outstanding (including
consents obtained in connection with a tender offer or exchange offer for
Notes), and any existing default or compliance with any provision of the
Indenture or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes (including consents
obtained in connection with a tender offer or exchange offer for Notes).
Without the consent of each Holder affected, an amendment or waiver may not
(with respect to any Notes held by a non-consenting Holder of Notes): (a) reduce
the principal amount of Notes whose Holders must consent to an amendment,
supplement or waiver; (b) reduce the principal of or change the fixed maturity
of any Note or alter the provisions with respect to the redemption of the Notes
in a manner adverse to the Holders of the Notes; (c) reduce the rate of or
change the time for payment of interest on any Note; (d) waive a Default or
Event of Default in the payment of principal of or premium, if any, or interest
on the Notes (except a rescission of acceleration of the Notes by the Holders of
at least a majority in aggregate principal amount of the then outstanding Notes
and a waiver of the payment default that resulted from such acceleration); (e)
make any Note payable in money other than that stated in the Notes; (f) make any
change in the provisions of the Indenture relating to waivers of past Defaults
or the rights of Holders of Notes to receive payments of principal of or
premium, if any, or interest on the Notes; (g) waive a redemption payment with
respect to any Note (other than a payment required by one of the covenants
described above under the caption "Repurchase at the Option of Holders"); (h)
except pursuant to the Indenture, release any Restricted Subsidiary from its
obligations under its Subsidiary Guarantee, or change any Subsidiary Guarantee
in any manner that would materially adversely affect the Holders; or (i) make
any change in the foregoing amendment and waiver provisions.
Notwithstanding the foregoing, without the consent of any Holder of Notes,
the Company and the Trustee may amend or supplement the Indenture or the Notes
to cure any ambiguity, defect or inconsistency, to provide for uncertificated
Notes in addition to or in place of certificated Notes, to provide for the
assumption of the Company's obligations to Holders of the Notes in the case of a
merger or consolidation, to make any change that would provide any additional
rights or benefits to the Holders of the Notes or that does not adversely affect
the legal rights under
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the Indenture of any such Holder, or to comply with requirements of the
Commission in order to effect or maintain the qualification of the Indenture
under the Trust Indenture Act.
Concerning the Trustee
The Indenture contains certain limitations on the rights of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases or to realize on certain property received in respect of any such
claim as security or otherwise. The Trustee will be permitted to engage in other
transactions; however, if it acquires any conflicting interest it must eliminate
such conflict within 90 days, apply to the Commission for permission to continue
or resign.
The Holders of a majority in principal amount of the then outstanding Notes
will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee, subject to
certain exceptions. The Indenture provides that in case an Event of Default
shall occur (which shall not be cured), the Trustee will be required, in the
exercise of its power, to use the degree of care of a prudent man in the conduct
of his own affairs. Subject to such provisions, the Trustee will be under no
obligation to exercise any of its rights or powers under the Indenture at the
request of any Holder of Notes, unless such Holder shall have offered to the
Trustee security and indemnity satisfactory to it against any loss, liability or
expense.
Additional Information
Anyone who receives this Prospectus may obtain a copy of the Indenture
without charge by writing to Iron Mountain Incorporated, 745 Atlantic Avenue,
Boston, MA 02111, Attention: Executive Vice President/Chief Financial Officer.
Certain Definitions
Set forth below are certain defined terms used in the Indenture. Reference is
made to the Indenture for a full disclosure of all such terms, as well as any
other capitalized terms used herein for which no definition is provided.
"Acquired Debt" means, with respect to any specified Person, (a) Indebtedness
of any other Person, existing at the time such other Person merged with or into
or became a Subsidiary of such specified Person, including Indebtedness incurred
in connection with, or in contemplation of, such other Person merging with or
into or becoming a Subsidiary of such specified Person and (b) Indebtedness
encumbering any asset acquired by such specified Person.
"Acquisition EBITDA" means, as of any date of determination, with respect to
an Acquisition EBITDA Entity, the sum of (a) EBITDA of such Acquisition EBITDA
Entity for its last fiscal quarter for which financial statements are available
at such date of determination, multiplied by four (or if such quarterly
statements are not available, EBITDA for the most recent fiscal year for which
financial statements are available), plus (b) projected quantifiable
improvements in operating results (on an annualized basis) due to cost
reductions calculated in good faith by the Company or one of its Restricted
Subsidiaries, as certified by an Officers' Certificate filed with the Trustee,
without giving effect to any operating losses of the acquired Person.
"Acquisition EBITDA Entity" means, as of any date of determination, a
business or Person (a) which has been acquired by the Company or one of its
Restricted Subsidiaries and with respect to which financial results on a
consolidated basis with the Company have not been made available for an entire
fiscal quarter or (b) which is to be acquired in whole or in part with
Indebtedness, the incurrence of which will require the calculation on such date
of the Acquisition EBITDA of such Acquisition EBITDA Entity for purposes of the
covenant entitled "Incurrence of Indebtedness and Issuance of Preferred Stock."
"Adjusted EBITDA" means, as of any date of determination and without
duplication, the sum of (a) EBITDA of the Company and its Restricted
Subsidiaries for the most recent fiscal quarter for which internal financial
statements are available at such date of determination, multiplied by four,
and (b) Acquisition EBITDA of each business or Person that is an Acquisition
EBITDA Entity as of such date of determination, multiplied by a fraction, the
numerator of which is three minus the number of months (and/or any portion
thereof) in such most recent fiscal quarter for which the financial results
of such Acquisition EBITDA Entity are included in the EBITDA of the Company
and its Restricted Subsidiaries under clause (a) above, and (ii) the
denominator of which is three. The
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effects of unusual or non-recurring items in respect of the Company, a
Restricted Subsidiary or an Acquisition EBITDA Entity occurring in any period
shall be excluded in the calculation of Adjusted EBITDA.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided, however,
that beneficial ownership of 10% or more of the voting securities of a Person
shall be deemed to be control.
"Attributable Indebtedness" in respect of a Sale and Leaseback Transaction
means, as of the time of determination, the greater of (a) the fair market value
of the property subject to such arrangement (as determined by the Board of
Directors of the Company) and (b) the present value (discounted at the rate of
interest implicit in such transaction) of the total obligations of the lessee
for rental payments during the remaining terms of the lease included in such
Sale and Leaseback Transaction (including any period for which such lease has
been extended).
"Capital Lease Obligation" means, at the time any determination thereof is to
be made, the amount of the liability in respect of a capital lease that would at
such time be so required to be capitalized on the balance sheet in accordance
with GAAP.
"Capital Stock" means any and all shares, interests, participations, rights
or other equivalents (however designated) of corporate stock, including, without
limitation, with respect to partnerships, partnership interests (whether general
or limited) and any other interest or participation that confers on a Person the
right to receive a share of the profits and losses of, or distributions of
assets of, such partnership.
"Cash Equivalents" means (a) securities with maturities of one year or less
from the date of acquisition, issued, fully guaranteed or insured by the United
States Government or any agency thereof, (b) certificates of deposit, time
deposits, overnight bank deposits, bankers acceptances and repurchase agreements
issued by a Qualified Issuer having maturities of 270 days or less from the date
of acquisition, (c) commercial paper of an issuer rated at least A-2 by Standard
& Poor's Rating Group, a division of McGraw Hill, Inc., or P-2 by Moody's
Investors Service, or carrying an equivalent rating by a nationally recognized
rating agency if both of the two named rating agencies cease publishing ratings
of investments and having maturities of 270 days or less from the date of
acquisition, (d) money market accounts or funds with or issued by Qualified
Issuers and (e) Investments in money market funds substantially all of the
assets of which are comprised of securities and other obligations of the types
described in clauses (a) through (c) above.
"Consolidated Adjusted Net Income" means, for any period, the net income (or
net loss) of the Company and its Restricted Subsidiaries for such period as
determined on a consolidated basis in accordance with GAAP, adjusted to the
extent included in calculating such net income or loss by excluding (a) any net
after-tax extraordinary gains or losses (less all fees and expenses relating
thereto), (b) any net after-tax gains or losses (less all fees and expenses
relating thereto) attributable to Asset Sales, (c) the portion of net income (or
loss) of any Person (other than the Company or a Restricted Subsidiary),
including Unrestricted Subsidiaries, in which the Company or any Restricted
Subsidiary has an ownership interest, except to the extent of the amount of
dividends or other distributions actually paid to the Company or any Restricted
Subsidiary in cash dividends or distributions by such Person during such period,
and (d) the net income (or loss) of any Person combined with the Company or any
Restricted Subsidiary on a "pooling of interests" basis attributable to any
period prior to the date of combination.
"Consolidated Income Tax Expense" means, for any period, the provision for
federal, state, local and foreign income taxes of the Company and its Restricted
Subsidiaries for such period as determined on a consolidated basis in accordance
with GAAP.
"Consolidated Interest Expense" means, for any period, without duplication,
the sum of (a) the amount which, in conformity with GAAP, would be set forth
opposite the caption "interest expense" (or any like caption) on a consolidated
statement of operations of the Company and its Restricted Subsidiaries for such
period, including, without limitation, (i) amortization of debt discount, (ii)
the net cost of interest rate contracts (including amortization of discounts),
(iii) the interest portion of any deferred payment obligation, (iv) amortization
of debt issuance costs, and (v) the interest component of Capital Lease
Obligations of the Company and its Restricted Subsidiaries, plus (b) all
interest on any Indebtedness of any other Person guaranteed and paid by the
Company or any of its Restricted Subsidiaries; provided, however, that
Consolidated Interest Expense will not include any gain or loss from
extinguishment of debt, including write-off of debt issuance costs.
"Consolidated Non-Cash Charges" means, for any period, the aggregate
depreciation, amortization and other non-cash expenses of the Company and its
Restricted Subsidiaries reducing Consolidated Adjusted Net Income for
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such period, determined on a consolidated basis in accordance with GAAP
(excluding any such non-cash charge that requires an accrual of or reserve for
cash charges for any future period).
"Credit Agent" means The Chase Manhattan Bank, in its capacity as
administrative agent for the lenders party to the Credit Agreement, or any
successor or successors party thereto.
"Credit Agreement" means that certain Credit Agreement, dated as of December
10, 1990, as amended and restated as of April 15, 1993, and as further amended
and restated as of January 31, 1995, among the Company, the lenders party
thereto and the Credit Agent, as the same may be refunded, replaced or
refinanced by the New Credit Facility, and in each case as amended, restated,
supplemented, modified, renewed, refunded, increased, extended, replaced or
refinanced from time to time.
"Default" means any event that is or with the passage of time or the giving
of notice or both would be an Event of Default.
"Designated Senior Debt" means (a) Senior Bank Debt and (b) other Senior Debt
the principal amount of which is $50.0 million or more at the date of
designation by the Company in a written instrument delivered to the Trustee;
provided that Senior Debt designated as Designated Senior Debt pursuant to
clause (b) shall cease to be Designated Senior Debt at any time that the
aggregate principal amount thereof outstanding is $10.0 million or less.
"Disqualified Stock" means any Capital Stock which, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, for cash or other property (other than Capital Stock that is not
Disqualified Stock) pursuant to a sinking fund obligation or otherwise, or is
redeemable at the option of the Holder thereof, in whole or in part, in each
case on or prior to the stated maturity of the Notes.
"Dollars" and "$" mean lawful money of the United States of America.
"EBITDA" means for any period Consolidated Adjusted Net Income for such
period increased by (a) Consolidated Interest Expense for such period, plus (b)
Consolidated Income Tax Expense for such period, plus (c) Consolidated Non-Cash
Charges for such period.
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Equity Proceeds" means (a) with respect to Equity Interests (or debt
securities converted into Equity Interests) issued or sold for cash Dollars, the
aggregate amount of such cash Dollars and (b) with respect to Equity Interests
(or debt securities converted into Equity Interests) issued or sold for any
consideration other than cash Dollars, the aggregate Market Price thereof
computed on the date of the issuance or sale thereof.
"Excluded Restricted Subsidiary" means any Wholly Owned Restricted Subsidiary
principally engaged in the records management business domiciled outside the
United States of America if the issuance of a Subsidiary Guarantee by such
Subsidiary would, as determined in a resolution of the Board of Directors set
forth in an Officers' Certificate delivered to the Trustee, create a tax
disadvantage that is material in relation to the aggregate amount of the
Company's and any Restricted Subsidiary's Investment or proposed Investment
therein.
"Existing Indebtedness" means Indebtedness of the Company and its
Subsidiaries (other than under the Credit Agreement) in existence on the date of
the Indenture, until such amounts are repaid.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which guarantee
or obligations the full faith and credit of the United States of America is
pledged.
"Guarantee" means, as applied to any obligation, (a) a guarantee (other than
by endorsement of negotiable instruments for collection in the ordinary course
of business), direct or indirect, in any manner, of any part or all of such
obligation and (b) an agreement, direct or indirect, contingent or otherwise,
the practical effect of which is to assure in any way the payment or performance
(or payment of damages in the event of non-performance) of all or any part of
such obligation, including, without limiting the foregoing, the obligation to
reimburse amounts drawn down under letters of credit securing such obligations.
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"Hedging Obligations" means, with respect to any Person, the obligations of
such Person under (a) interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements and (b) other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates.
"Indebtedness" means (without duplication), with respect to any Person,
whether recourse is to all or a portion of the assets of such Person, and
whether or not contingent, (a) every obligation of such Person for money
borrowed, (b) every obligation of such Person evidenced by bonds, debentures,
notes or other similar instruments, (c) every reimbursement obligation of such
Person with respect to letters of credit, bankers' acceptances or similar
facilities issued for the account of such Person, (d) every obligation of such
Person issued or assumed as the deferred purchase price of property or services,
(e) every Capital Lease Obligation and every obligation of such Person in
respect of Sale and Leaseback Transactions that would be required to be
capitalized on the balance sheet in accordance with GAAP, (f) all Disqualified
Stock of such Person valued at the greater of its voluntary or involuntary
maximum fixed repurchase price, plus accrued and unpaid dividends (unless
included in such maximum repurchase price), (g) all obligations of such Person
under or with respect to Hedging Obligations which would be required to be
reflected on the balance sheet as a liability of such Person in accordance with
GAAP and (h) every obligation of the type referred to in clauses (a) through (g)
of another Person and dividends of another Person the payment of which, in
either case, such Person has guaranteed. For purposes of this definition, the
"maximum fixed repurchase price" of any Disqualified Stock that does not have a
fixed repurchase price will be calculated in accordance with the terms of such
Disqualified Stock as if such Disqualified Stock were repurchased on any date on
which Indebtedness is required to be determined pursuant to the Indenture, and
if such price is based upon, or measured by, the fair market value of such
Disqualified Stock, such fair market value will be determined in good faith by
the board of directors of the issuer of such Disqualified Stock. Notwithstanding
the foregoing, trade accounts payable and accrued liabilities arising in the
ordinary course of business and any liability for federal, state or local taxes
or other taxes owed by such Person shall not be considered Indebtedness for
purposes of this definition. The amount outstanding at any time of any
Indebtedness issued with original issue discount is the aggregate principal
amount at maturity of such Indebtedness, less the remaining unamortized portion
of the original issue discount of such Indebtedness at such time, as determined
in accordance with GAAP.
"Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of loans (including
Guarantees), advances or capital contributions (excluding commission, travel and
similar advances to officers and employees made in the ordinary course of
business), purchases or other acquisitions for consideration of Indebtedness,
Equity Interests or other securities and all other items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.
"Leverage Ratio" means, at any date, the ratio of (a) the aggregate principal
amount of Indebtedness of the Company and its Restricted Subsidiaries
outstanding as of the most recent available quarterly or annual balance sheet to
(b) Adjusted EBITDA, after giving pro forma effect, without duplication, to (i)
the incurrence, repayment or retirement of any Indebtedness by the Company or
its Restricted Subsidiaries since the last day of the most recent full fiscal
quarter of the Company, (ii) if the Leverage Ratio is being determined in
connection with the incurrence of Indebtedness by the Company or a Restricted
Subsidiary, such Indebtedness, and (iii) the Indebtedness to be incurred in
connection with the acquisition of any Acquisition EBITDA Entity.
"Lien" means, with respect to any asset, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind in respect of such asset, whether
or not filed, recorded or otherwise perfected under applicable law (including
any conditional sale or other title retention agreement, any lease in the nature
thereof, any option or other agreement to sell or give a security interest in
and any filing of or agreement to give any financing statement under the Uniform
Commercial Code, or equivalent statutes, of any jurisdiction).
"Market Price" means, (a) with respect to the calculation of Equity Proceeds
from the issuance or sale of debt securities which have been converted into
Equity Interests, the value received upon the original issuance or sale of such
converted debt securities, as determined reasonably and in good faith by the
Board of Directors, and (b) with respect to the calculation of Equity Proceeds
from the issuance or sale of Equity Interests, the average of the daily closing
prices for such Equity Interests for the 20 consecutive trading days preceding
the date of such computation. The closing price for each day shall be (a) if
such Equity Interests are then listed or admitted to trading on the New York
Stock Exchange, the closing price on the NYSE Consolidated Tape (or any
successor consolidated tape reporting transactions on the New York Stock
Exchange) or, if such composite tape shall not be in use or shall not report
transactions in such Equity Interests, or if such Equity Interests shall be
listed on a stock exchange other
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than the New York Stock Exchange (including for this purpose the Nasdaq National
Market), the last reported sale price regular way for such day, or in case no
such reported sale takes place on such day, the average of the closing bid and
asked prices regular way for such day, in each case on the principal national
securities exchange on which such Equity Interests are listed or admitted to
trading (which shall be the national securities exchange on which the greatest
number of such Equity Interests have been traded during such 20 consecutive
trading days), or (b) if such Equity Interests are not listed or admitted to
trading on any such exchange, the average of the closing bid and asked prices
thereof in the over-the-counter market as reported by the National Association
of Securities Dealers Automated Quotation System or any successor system, or if
not included therein, the average of the closing bid and asked prices thereof
furnished by two members of the National Association of Securities Dealers
selected reasonably and in good faith by the Board of Directors for that
purpose. In the absence of one or more such quotations, the Market Price for
such Equity Interests shall be determined reasonably and in good faith by the
Board of Directors.
"Net Proceeds" means the aggregate cash proceeds received by the Company or
any of its Restricted Subsidiaries in respect of any Asset Sale, which amount is
equal to the excess, if any, of (a) the cash received by the Company or such
Restricted Subsidiary (including any cash payments received by way of deferred
payment pursuant to, or monetization of, a note or installment receivable or
otherwise, but only as and when received) in connection with such disposition
over (b) the sum of (i) the amount of any Indebtedness which is secured by such
asset and which is required to be repaid in connection with the disposition
thereof, plus (ii) the reasonable out-of-pocket expenses incurred by the
Company or such Restricted Subsidiary, as the case may be, in connection with
such disposition or in connection with the transfer of such amount from such
Restricted Subsidiary to the Company, plus (iii) provisions for taxes, including
income taxes, attributable to the disposition of such asset or attributable to
required prepayments or repayments of Indebtedness with the proceeds thereof,
plus (iv) if the Company does not first receive a transfer of such amount from
the relevant Restricted Subsidiary with respect to the disposition of an asset
by such Restricted Subsidiary and such Restricted Subsidiary intends to make
such transfer as soon as practicable, the out-of-pocket expenses and taxes that
the Company reasonably estimates will be incurred by the Company or such
Restricted Subsidiary in connection with such transfer at the time such transfer
is expected to be received by the Company (including, without limitation,
withholding taxes on the remittance of such amount).
"Obligations" means any principal, interest (including post-petition
interest, whether or not allowed as a claim in any proceeding), penalties, fees,
costs, expenses, indemnifications, reimbursements, damages and other liabilities
payable under or in connection with any Indebtedness.
"Officers' Certificate" means a certificate signed, unless otherwise
specified, by any two of the Chairman of the Board, a Vice Chairman of the
Board, the President, the Chief Financial Officer, the Controller, or an
Executive Vice President of the Company, and delivered to the Trustee.
"Permitted Investments" means (a) any Investments in the Company or in a
Restricted Subsidiary (other than an Excluded Restricted Subsidiary) of the
Company, including without limitation the Guarantee of Indebtedness permitted
under the covenant entitled "Incurrence of Indebtedness and Issuance of
Preferred Stock;" (b) any Investments in Cash Equivalents; (c) Investments by
the Company or any Restricted Subsidiary of the Company in a Person, if as a
result of such Investment (i) such Person becomes a Restricted Subsidiary (other
than an Excluded Restricted Subsidiary) of the Company or (ii) such Person is
merged, consolidated or amalgamated with or into, or transfers or conveys
substantially all of its assets to, or is liquidated into, the Company or a
Restricted Subsidiary (other than an Excluded Restricted Subsidiary) of the
Company; (d) Investments in assets (including accounts and notes receivable)
owned or used in the ordinary course of business; (e) Investments for any
purpose related to the Company's records management business in an aggregate
outstanding amount not to exceed $10.0 million; and (f) Investments by the
Company or a Restricted Subsidiary (other than an Excluded Restricted
Subsidiary) in one or more Excluded Restricted Subsidiaries, the aggregate
outstanding amount of which does not exceed 10% of the consolidated assets of
the Company and its Restricted Subsidiaries.
"Permitted Liens" means:
(a) Liens existing as of the date of issuance of the Notes;
(b) Liens on property or assets of the Company or any Restricted
Subsidiary securing Senior Debt;
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(c) Liens on any property or assets of a Restricted Subsidiary granted
in favor of the Company or any Wholly Owned Restricted Subsidiary;
(d) Liens securing the Notes or the Guarantees;
(e) any interest or title of a lessor under any Capital Lease Obligation or
Sale and Leaseback Transaction so long as the Indebtedness, if any, secured
by such Lien does not exceed the principal amount of Indebtedness permitted
under the covenant entitled "Incurrence of Indebtedness and Issuance of
Preferred Stock;"
(f) Liens securing Acquired Debt created prior to (and not in connection
with or in contemplation of) the incurrence of such Indebtedness by the
Company or any Restricted Subsidiary; provided that such Lien does not extend
to any property or assets of the Company or any Restricted Subsidiary other
than the assets acquired in connection with the incurrence of such Acquired
Debt;
(g) Liens securing Hedging Obligations permitted to be incurred pursuant to
clause (g) of the covenant entitled "Incurrence of Indebtedness and Issuance
of Preferred Stock;"
(h) Liens arising from purchase money mortgages and purchase money security
interests, or in respect of the construction of property or assets, incurred
in the ordinary course of the business of the Company or a Restricted
Subsidiary; provided that (i) the related Indebtedness is not secured by any
property or assets of the Company or any Restricted Subsidiary other than the
property and assets so acquired or constructed and (ii) the Lien securing
such Indebtedness is created within 60 days of such acquisition or
construction;
(i) statutory Liens or landlords' and carriers', warehousemen's,
mechanics', suppliers', materialmen's, repairmen's or other like Liens
arising in the ordinary course of business and with respect to amounts not
yet delinquent or being contested in good faith by appropriate proceedings,
if a reserve or other appropriate provision, if any, as shall be required in
conformity with GAAP shall have been made therefor;
(j) Liens for taxes, assessments, government charges or claims with respect
to amounts not yet delinquent or that are being contested in good faith by
appropriate proceedings diligently conducted, if a reserve or other
appropriate provision, if any, as is required in conformity with GAAP has
been made therefor;
(k) Liens incurred or deposits made to secure the performance of tenders,
bids, leases, statutory obligations, surety and appeal bonds, government
contracts, performance bonds and other obligations of a like nature incurred
in the ordinary course of business (other than contracts for the payment of
money);
(l) easements, rights-of-way, restrictions and other similar charges or
encumbrances not interfering in any material respect with the business of the
Company or any Restricted Subsidiary incurred in the ordinary course of
business;
(m) Liens arising by reason of any judgment, decree or order of any court
so long as such Lien is adequately bonded and any appropriate legal
proceedings that may have been duly initiated for the review of such
judgment, decree or order shall not have been finally terminated or the
period within which such proceedings may be initiated shall not have expired;
(n) Liens arising under options or agreements to sell assets;
(o) other Liens securing obligations incurred in the ordinary course of
business, which obligations do not exceed $1.0 million in the aggregate at
any one time outstanding; and
(p) any extension, renewal or replacement, in whole or in part, of any Lien
described in the foregoing clauses (a) through (o); provided that any such
extension, renewal or replacement shall not extend to any additional property
or assets.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Principal Stockholders" means each of Vincent J. Ryan, Schooner Capital
Corporation, C. Richard Reese, Eugene B. Doggett, and their respective
Affiliates.
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"Qualified Equity Offering" means an offering of Capital Stock, other than
Disqualified Stock, of the Company for Dollars, whether registered or exempt
from registration under the Securities Act.
"Qualified Issuer" means (a) any lender party to the Credit Agreement or (b)
any commercial bank (i) which has capital and surplus in excess of $500,000,000
and (ii) the outstanding short- term debt securities of which are rated at least
A-2 by Standard & Poor's Rating Group, a division of McGraw-Hill, Inc. or at
least P-2 by Moody's Investors Service, or carry an equivalent rating by a
nationally recognized rating agency if both of the two named rating agencies
cease publishing ratings of investments.
"Qualifying Sale and Leaseback Transaction" means any Sale and Leaseback
Transaction between the Company or any of its Restricted Subsidiaries and any
bank, insurance company or other lender or investor providing for the leasing to
the Company or such Restricted Subsidiary of any property (real or personal)
which has been or is to be sold or transferred by the Company or such Restricted
Subsidiary to such lender or investor or to any Person to whom funds have been
or are to be advanced by such lender or investor and where the property in
question has been constructed or acquired after the date of the Indenture.
"Refinancing Indebtedness" means new Indebtedness incurred or given in
exchange for, or the proceeds of which are used to repay, redeem, defease,
extend, refinance, renew, replace or refund, other Indebtedness; provided,
however, that (a) the principal amount of such new Indebtedness shall not exceed
the principal amount of Indebtedness so repaid, redeemed, defeased, extended,
refinanced, renewed, replaced or refunded (plus the amount of fees, premiums,
consent fees, prepayment penalties and expenses incurred in connection
therewith); (b) such Refinancing Indebtedness shall have a Weighted Average Life
to Maturity equal to or greater than the Weighted Average Life to Maturity of
the Indebtedness so repaid, redeemed, defeased, extended, refinanced, renewed,
replaced or refunded or shall mature after , 2006; (c) to the extent such
Refinancing Indebtedness refinances Indebtedness that has a final maturity date
occurring after , 2006, such new Indebtedness shall have a final scheduled
maturity not earlier than the final scheduled maturity of the Indebtedness so
repaid, redeemed, defeased, extended, refinanced, renewed, replaced or refunded
and shall not permit redemption at the option of the holder earlier than the
earliest date of redemption at the option of the holder of the Indebtedness so
repaid, redeemed, defeased, extended, refinanced, renewed, replaced or refunded;
(d) to the extent such Refinancing Indebtedness refinances Indebtedness
subordinate to the Notes, such Refinancing Indebtedness shall be subordinated in
right of payment to the Notes and to the extent such Refinancing Indebtedness
refinances Notes or Indebtedness pari passu with the Notes, such Refinancing
Indebtedness shall be pari passu with or subordinated in right of payment to the
Notes, in each case on terms at least as favorable to the holders of Notes as
those contained in the documentation governing the Indebtedness so repaid,
redeemed, defeased, extended, refinanced, renewed, replaced or refunded; and (e)
with respect to Refinancing Indebtedness incurred by a Restricted Subsidiary,
such Refinancing Indebtedness shall rank no more senior, and shall be at least
as subordinated, in right of payment to the Subsidiary Guarantee of such
Restricted Subsidiary as the Indebtedness being extended, refinanced, renewed,
replaced or refunded.
"Restricted Subsidiary" means (a) each direct or indirect Subsidiary of the
Company existing on the date of the Indenture and (b) any other direct or
indirect Subsidiary of the Company formed, acquired or existing after the date
of the Indenture, in each case which is not designated by the Board of Directors
as a "Unrestricted Subsidiary."
"Sale and Leaseback Transaction" means any transaction or series of related
transactions pursuant to which a Person sells or transfers any property or asset
in connection with the leasing, or the resale against installment payments, of
such property or asset to the seller or transferor.
"Senior Bank Debt" means all Obligations outstanding under or in connection
with the Credit Agreement (including Guarantees of such Obligations by
Subsidiaries of the Company).
"Senior Debt" means (a) the Senior Bank Debt and (b) any other Indebtedness
permitted to be incurred by the Company or any Restricted Subsidiary, as the
case may be, under the terms of the Indenture, unless the instrument under which
such Indebtedness is incurred expressly provides that it is (i) on a parity with
or subordinated in right of payment to the Notes or (ii) subordinated to Senior
Debt on terms substantially similar to those of the Notes. Notwithstanding
anything to the contrary in the foregoing, Senior Debt shall not include (i) any
liability for federal, state, local or other taxes owed or owing by the Company,
(ii) any Indebtedness of the Company to any of its Subsidiaries or other
Affiliates, (iii) any trade payables or (iv) any Indebtedness that is incurred
in violation of the Indenture, provided that such Indebtedness shall be deemed
not to have been incurred in violation of the
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<PAGE>
Indenture for purposes of this clause (iv) if, in the case of any obligations
under the Credit Agreement, the holders of such obligations or their agent or
representative shall have received a representation from the Company to the
effect that the incurrence of such Indebtedness does not violate the provisions
of the Indenture.
"Significant Subsidiary" means any Subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Act, as such Regulation is in effect on the date hereof.
"Subsidiary" means, with respect to any Person, any corporation, association
or other business entity of which more than 50% of the total voting power of
shares of Capital Stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by such Person or
one or more of the other Subsidiaries of such Person or a combination thereof.
"Unrestricted Subsidiary" means (a) any Subsidiary that is designated by the
Board of Directors as an Unrestricted Subsidiary in accordance with the
"Unrestricted Subsidiaries" covenant and (b) any Subsidiary of an Unrestricted
Subsidiary.
"Voting Stock" means any class or classes of Capital Stock pursuant to which
the holders thereof have the general voting power under ordinary circumstances
to elect at least a majority of the board of directors, managers or trustees of
any Person (irrespective of whether or not, at the time, stock of any other
class or classes has, or might have, voting power by reason of the happening of
any contingency).
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (a) the sum of the
products obtained by multiplying (x) the amount of each then remaining
installment, sinking fund, serial maturity or other required payment of
principal, including payment at final maturity, in respect thereof, by (y) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (b) the then outstanding principal
amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" means any Restricted Subsidiary of the
Company all of the outstanding Capital Stock or other ownership interests of
which (other than directors' qualifying shares) shall at the time be owned by
the Company or by one or more Wholly Owned Restricted Subsidiaries of the
Company.
DESCRIPTION OF NEW CREDIT FACILITY
The Company intends to replace the Credit Agreement with the New Credit
Facility. The following description is based upon the current draft credit
agreement relating to the New Credit Facility. No assurances can be given that
the Company will enter into the New Credit Facility on these or any other terms.
The Offering is not conditioned on the closing of the New Credit Facility.
The New Credit Facility will be a $100 million revolving credit facility with
up to $2 million of availability for letters of credit. The New Credit Facility
will terminate on September 30, 2001, at which time all outstanding revolving
credit loans and other amounts payable thereunder will become due. Borrowings
under the New Credit Facility may be used to finance possible future
acquisitions, as well as for working capital and general corporate purposes. As
with the Credit Agreement, the Company's obligations under the New Credit
Facility will be guaranteed by substantially all of the Company's subsidiaries;
however, unlike the Credit Agreement, the New Credit Facility will be secured
only by the pledge of the stock of such subsidiaries. Prepayments of outstanding
borrowings under the New Credit Facility will be required in certain
circumstances out of the proceeds of certain insurance payments, condemnations,
issuances of indebtedness and asset dispositions.
The New Credit Facility will permit the Company to elect from time to time,
as to all or any portion of the borrowings thereunder, an interest rate based
upon (i) a fluctuating rate equal to the highest of (x) the prime rate of The
Chase Manhattan Bank, (y) the secondary market rate for three-month certificates
of deposit (adjusted for statutory reserves and FDIC assessments), plus 1%, or
(z) the overnight federal funds rate plus 1/2 of 1% (the "Adjusted Base Rate")
or (ii) the interest rates prevailing on the date of determination in the London
interbank market (the "Eurodollar Rate") for the interest period selected by the
Company, plus, in the case of either (i) or (ii), a margin (the "Applicable
Margin") over the Adjusted Base Rate or the Eurodollar Rate. The Applicable
Margins for loans bearing interest at a rate based upon the Adjusted Base Rate
or the Eurodollar Rate ("Eurodollar Loans"), and commitment fees on the undrawn
portion of the New Credit Facility, will vary based on the Company's
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<PAGE>
achieving and maintaining specified ratios of funded indebtedness (net of cash
and cash equivalents on hand) to EBITDA.
The New Credit Facility will provide for payment by the Company in respect of
letters of credit of: (i) a per annum fee equal to the Applicable Margin for
Eurodollar Loans from time to time in effect; (ii) a fronting fee of 1/4 of 1%;
plus (iii) customary issuing fees and expenses.
The New Credit Facility will contain covenants restricting the ability of the
Company and its subsidiaries to, among other things: (i) declare dividends or
redeem or repurchase capital stock; (ii) make optional payments and
modifications of subordinated and other debt instruments; (iii) incur liens and
engage in sale and leaseback transactions; (iv) make loans and investments; (v)
incur indebtedness and contingent obligations; (vi) make capital expenditures;
(vii) engage in mergers, acquisitions and asset sales; (viii) enter into
transactions with affiliates; and (ix) make changes in their lines of business.
The Company will also be 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 Company will also be
required to make certain customary affirmative covenants.
Events of default under the New Credit Facility will include: (i) the
Company's failure to pay principal or interest when due; (ii) the Company's
material breach of any covenant, representation or warranty contained in the
loan documents; (iii) customary cross-default provisions; (iv) events of
bankruptcy, insolvency or dissolution of the Company or its subsidiaries; (v)
the levy of certain judgments against the Company, its subsidiaries or their
assets; (vi) certain adverse events under ERISA plans of the Company or its
subsidiaries; (vii) the actual or asserted invalidity of security documents or
guarantees of the Company or its subsidiaries; (viii) a change of control of the
Company; and (ix) the creation of certain environmental liabilities.
DESCRIPTION OF CAPITAL STOCK
The Company's authorized capital stock consists of 13,000,000 shares of
Common Stock, 1,000,000 shares of Nonvoting Common Stock, $.01 par value per
share (the "Nonvoting Common Stock"), and 2,000,000 shares of Preferred Stock,
$.01 par value per share. On September 3, 1996, 9,627,141 shares of Common Stock
were outstanding and 500,000 shares of Nonvoting Common Stock were outstanding.
Holders of shares of Common Stock are entitled to one vote per share for each
matter submitted to the stockholders of the Company without cumulative voting
rights in the election of Directors. Holders of Nonvoting Common Stock have no
right to vote on any matter voted on by the stockholders of the Company, except
as may otherwise be provided by law. In all other respects (other than as to
convertibility), the rights of holders of the Common Stock and the Nonvoting
Common Stock are identical. 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.
The 2,000,000 authorized and unissued shares of Preferred Stock may be issued
with such designations, preferences, limitations and relative rights as the
Board of Directors may authorize including, but not limited to: (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 the Company 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 the Company 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.
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<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement
(the "Underwriting Agreement") between the Company and Donaldson, Lufkin &
Jenrette Securities Corporation ("DLJ"), Bear, Stearns & Co. Inc. ("Bear
Stearns") and Prudential Securities Incorporated (together with DLJ and Bear
Stearns, the "Underwriters"), each of the several Underwriters has severally
agreed to purchase from the Company, and the Company has agreed to sell to each
of the Underwriters, the respective principal amounts of Notes set forth
opposite its name below, at the public offering price set forth on the cover
page of this Prospectus, less the underwriting discount:
Principal Amount
Underwriters of Notes
- ------------ ----------------
Donaldson, Lufkin & Jenrette Securities Corporation $
Bear, Stearns & Co. Inc.
Prudential Securities Incorporated
------------
$150,000,000
============
The Underwriting Agreement provides that the obligations of the several
Underwriters are subject to certain conditions precedent, including the approval
of certain legal matters by counsel. The Company and the Guarantors have agreed
to indemnify the Underwriters against certain liabilities and expenses,
including liabilities under the Securities Act or to contribute to payments that
the Underwriters may be required to make in respect thereof. The nature of the
Underwriters' obligations is such that the Underwriters are committed to
purchase all of the Notes if any of the Notes are purchased.
The Underwriters have advised the Company that they propose to offer the
Notes directly to the public initially at the public offering price set forth on
the cover page of this Prospectus and to certain dealers at such offering price
less a concession not to exceed % of the principal amount of the Notes. The
Underwriters may allow, and such dealers may reallow, discounts not in excess of
% of the principal amount of the Notes to certain other dealers. After the
initial public offering of the Notes, the offering price and other selling terms
may be changed by the Underwriters.
The Notes are a new issue of securities, have no established trading market,
will not be listed on any securities exchange or included in the National
Association of Securities Dealers Automated Quotation System and may not be
widely distributed. The Company has been advised by the Underwriters that,
following the completion of this Offering, the Underwriters presently intend to
make a market in the Notes as permitted by applicable laws and regulations. The
Underwriters, however, are under no obligation to do so and may discontinue any
market-making activities at any time at the sole discretion of the Underwriters.
No assurances can be given as to the liquidity of any trading market for the
Notes.
VALIDITY OF SECURITIES
The validity of the securities offered hereby will be passed upon for the
Company by Sullivan & Worcester LLP, Boston, Massachusetts, and for the
Underwriters by Jones, Day, Reavis & Pogue, New York, New York. Jas. Murray
Howe, Secretary of the Company, 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 each of the three years ended December 31,
1995 included in this Prospectus and elsewhere in the Registration Statement
have been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their reports with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in giving said reports.
The financial statements of National Business Archives, Inc. for the two
years ended December 31, 1993 and 1994, included in this Prospectus and
elsewhere in the Registration Statement have been audited by Wolpoff & Company,
LLP, independent public accountants, as indicated in their report with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in giving said report.
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<PAGE>
The financial statements of Data Management Business Records Storage, Inc.
for the year ended June 30, 1995, included in this Prospectus and elsewhere in
the Registration Statement have been audited by Morrison and Smith, independent
public accountants, as indicated in their report with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in giving
said report.
The financial statements of Nashville Vault Company, Ltd., for the year ended
December 31, 1995, included in this Prospectus and elsewhere in the Registration
Statement have been audited by Geo. S. Olive & Co. LLC, independent public
accountants, as indicated in their report with respect thereto, and are included
herein in reliance upon the authority of said firm as experts in giving said
report.
The combined financial statements of Data Archive Services, Inc. and Data
Archive Services of Miami, Inc. for the year ended May 31, 1996, included in
this Prospectus and elsewhere in the Registration Statement have been audited by
Perless, Roth, Jonas & Hartney, CPAs, PA, independent public accountants, as
indicated in their report with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in giving said report.
The financial statements of Data Storage Systems, Inc. for the year ended
December 31, 1995, included in this Prospectus and elsewhere in the Registration
Statement have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their report with respect thereto, and are included
herein in reliance upon the authority of said firm as experts in giving said
report.
The financial statements of DataVault Corporation, for the year ended
December 31, 1995, included in this Prospectus and elsewhere in the Registration
Statement have been audited by Robert F. Gayton, CPA, independent public
accountant, as indicated in his report with respect thereto, and are included
herein in reliance upon the authority of said firm as an expert in giving said
report.
The financial statements of International Record Storage and Retrieval
Service, Inc. for the year ended December 31, 1995, included in this Prospectus
and elsewhere in the Registration Statement have been audited by Rothstein, Kass
& Company, P.C., independent public accountants, as indicated in their report
with respect thereto, and are included herein in reliance upon the authority of
said firm as experts in giving said report.
The financial statements of DKA Industries, Inc., for the year ended December
31, 1995, included in this Prospectus and elsewhere in the Registration
Statement have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their report with respect thereto, and are included
herein in reliance upon the authority of said firm as experts in giving said
report.
The financial statements of Security Archives Corporation, for the year ended
December 31, 1995, included in this Prospectus and elsewhere in the Registration
Statement have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their report with respect thereto, and are included
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 this Prospectus and elsewhere in the
Registration Statement have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their report with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in giving
said report.
ADDITIONAL INFORMATION
The Company has filed with the Commission, Washington, D.C. 20549, a
Registration Statement on Form S-1 under the Securities Act with respect to the
Notes offered hereby. This Prospectus does not contain all of the information
set forth in the Registration Statement and the exhibits and schedules thereto.
For further information with respect to the Company and the Notes offered
hereby, reference is made to the Registration Statement and the exhibits and
schedules filed therewith. Statements contained in this Prospectus as to the
contents of any contract or any other document to which reference is made are
not necessarily complete, and in each instance reference is made to the copy of
such contract or other document filed as an exhibit to the Registration
Statement. Each such statement is qualified in all respects by such reference. A
copy of the Registration Statement may be inspected without charge at the
offices of the Commission in Washington D.C. 20549, and copies of all or any
part of the Registration Statement may be obtained from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 upon
the payment of the fees prescribed by the Commission.
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<PAGE>
The Company is subject to the informational requirements of the Exchange Act and
in accordance therewith files reports, proxy statements and other information
with the Commission. Such reports, proxy statements and other information filed
by the Company can be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Room 1024, Judiciary
Plaza, Washington, D.C. 20549, and at the Commission's Regional Offices at
Citicorp Center, 500 West Madison, Suite 1400, Chicago, Illinois 60661 and 7
World Trade Center, Suite 1300, New York 10048. Copies of such material can be
obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Room 1024, Judiciary Plaza, Washington, D.C. 20549, at prescribed
rates. In addition, the Common Stock is listed on the Nasdaq National Market,
and such reports, proxy statements and certain other information can also be
inspected at the offices of Nasdaq Operations, 1735 K Street, N.W., Washington,
D.C. 20006. The Commission maintains a Web site that contains reports, proxy
statements and other information filed with the Commission; the address of such
site is http://www.sec.gov. Certain such reports, proxy statements and other
information filed with the Commission by the Company on or after August 14, 1996
may be found at such Web site.
88
<PAGE>
INDEX TO FINANCIAL STATEMENTS
Page
-------
Financial Statements of Iron Mountain Incorporated:
Unaudited Condensed Consolidated Interim Financial Statements ......... F-2
Audited Consolidated Financial Statements ............................. F-8
Financial Statements of Completed Acquisitions:
National Business Archives, Inc. ...................................... F-24
Data Management Business Records Storage, Inc. ........................ F-33
Nashville Vault Company, Ltd. ......................................... F-44
Data Archive Services, Inc. and Data Archive Services of Miami, Inc. .. F-50
Data Storage Systems, Inc. ............................................ F-59
DataVault Corporation ................................................. F-66
International Record Storage and Retrieval Service, Inc. .............. F-72
DKA Industries, Inc. d/b/a Systems Record Storage ..................... F-80
Security Archives Corporation ......................................... F-88
Financial Statements of Pending Acquisition:
Mohawk Business Record Storage, Inc. .................................. F-96
F-1
<PAGE>
IRON MOUNTAIN INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
ASSETS
<TABLE>
<CAPTION>
December 31, June 30,
1995 1996
------------ ---------
<S> <C> <C>
Current Assets:
Cash and Cash Equivalents ........................................ $ 1,585 $ 2,232
Accounts Receivable (Less allowance for doubtful accounts of $651
and of $790, respectively) .................................... 16,936 19,756
Inventories ...................................................... 682 523
Deferred Income Taxes ............................................ 1,943 2,036
Prepaid Expenses and Other ....................................... 1,862 1,318
------------ ---------
Total Current Assets ........................................... 23,008 25,865
Property, Plant and Equipment:
Property, Plant and Equipment .................................... 125,240 141,601
Less: Accumulated Depreciation ................................... (32,564) (38,597)
------------ ---------
Net Property, Plant and Equipment .............................. 92,676 103,004
Other Assets:
Goodwill ......................................................... 59,253 72,213
Customer Acquisition Costs ....................................... 5,210 5,671
Deferred Financing Costs ......................................... 2,638 2,268
Other ............................................................ 4,096 3,609
------------ ---------
Total Other Assets ............................................. 71,197 83,761
------------ ---------
Total Assets ................................................... $186,881 $212,630
============ =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current Portion of Long-term Debt ................................ $ 2,578 $ 3,194
Accounts Payable ................................................. 4,797 6,342
Accrued Expenses ................................................. 10,917 10,638
Deferred Income .................................................. 3,108 2,454
Other Liabilities ................................................ 469 501
------------ ---------
Total Current Liabilities ...................................... 21,869 23,129
Long-term Debt, Net of Current Portion ............................ 119,296 115,700
Deferred Rent ..................................................... 7,983 7,897
Deferred Income Taxes ............................................. 3,621 4,406
Other Long-term Liabilities ....................................... 6,769 6,769
Commitments and Contingencies
Redeemable Put Warrant ............................................ 6,332 --
Stockholders' Equity:
Preferred Stock .................................................. 5 --
Common Stock--Voting ............................................. 0 96
Common Stock--Non-voting ......................................... -- 5
Additional Paid-In Capital ....................................... 28,809 62,014
Accumulated Deficit .............................................. (7,803) (7,386)
------------ ---------
Total Stockholders' Equity ..................................... 21,011 54,729
------------ ---------
Total Liabilities and Stockholders' Equity ..................... $186,881 $212,630
============ =========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
F-2
<PAGE>
IRON MOUNTAIN INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended June 30,
-----------------------------
1995 1996
------------ --------------
<S> <C> <C>
Revenues:
Storage .......................................................... $15,866 $20,209
Service and Storage Material Sales ............................... 10,020 12,713
------------ --------------
Total Revenues ................................................. 25,886 32,922
Operating Expenses:
Cost of Sales (Excluding Depreciation) ........................... 12,888 16,715
Selling, General and Administrative .............................. 6,848 8,260
Depreciation and Amortization .................................... 2,676 3,922
------------ --------------
Total Operating Expenses ....................................... 22,412 28,897
------------ --------------
Operating Income .................................................. 3,474 4,025
Interest Expense .................................................. 2,868 3,091
------------ --------------
Income Before Provision for Income Taxes .......................... 606 934
Provision for Income Taxes ........................................ 364 523
------------ --------------
Net Income ........................................................ 242 411
Accretion of Redeemable Put Warrant ............................... 501 --
------------ --------------
Net Income (Loss) Applicable to Common Stockholders ............... $ (259) $ 411
============ ==============
Net Income (Loss) Per Common and Common Equivalent Share .......... $ (0.03) $ 0.04
============ ==============
Weighted Average Common and Common Equivalent Shares Outstanding .. 7,779 10,336
============ ==============
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
F-3
<PAGE>
IRON MOUNTAIN INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended June 30,
--------------------------
1995 1996
---------- ------------
<S> <C> <C>
Revenues:
Storage .......................................................... $30,748 $39,363
Service and Storage Material Sales ............................... 19,476 24,587
---------- ------------
Total Revenues ................................................. 50,224 63,950
Operating Expenses:
Cost of Sales (Excluding Depreciation) ........................... 25,112 32,383
Selling, General and Administrative .............................. 12,697 16,067
Depreciation and Amortization .................................... 5,428 7,530
---------- ------------
Total Operating Expenses ....................................... 43,237 55,980
---------- ------------
Operating Income .................................................. 6,987 7,970
Interest Expense .................................................. 5,936 6,385
---------- ------------
Income Before Provision for Income Taxes .......................... 1,051 1,585
Provision for Income Taxes ........................................ 631 888
---------- ------------
Net Income ........................................................ 420 697
Accretion of Redeemable Put Warrant ............................... 953 280
---------- ------------
Net Income (Loss) Applicable to Common Stockholders ............... $ (533) $ 417
========== ============
Net Income (Loss) Per Common and Common Equivalent Share .......... $ (0.07) $ 0.04
========== ============
Weighted Average Common and Common Equivalent Shares Outstanding .. 7,790 9,899
========== ============
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
F-4
<PAGE>
IRON MOUNTAIN INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended June 30,
--------------------------
1995 1996
---------- ------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income ...................................................... $ 420 $ 697
Adjustments to Reconcile Net Income to Net Cash
Provided by Operations:
Depreciation and Amortization .................................. 5,428 7,530
Amortization of Financing Costs ................................ 756 429
Provision for Deferred Income Taxes ............................ 540 492
Changes in Assets and Liabilities (Exclusive of Acquisitions):
Accounts Receivable ............................................ (910) (2,194)
Inventories .................................................... (29) 174
Prepaid Expenses and Other Current Assets ...................... (195) 444
Other Assets ................................................... 180 674
Accounts Payable ............................................... 645 1,545
Accrued Expenses ............................................... 1,324 (279)
Deferred Income ................................................ 127 (865)
Other Current Liabilities ...................................... (27) (474)
Deferred Rent .................................................. (86) (86)
Other Long-term Liabilities .................................... 1 --
---------- ------------
Cash Flows Provided by Operations ............................. 8,174 8,087
Cash Flows from Investing Activities:
Capital Expenditures ............................................ (7,322) (11,162)
Additions to Customer Acquisition Costs ......................... (418) (717)
Cash Paid for Acquisitions ...................................... (15,484) (19,187)
Other ........................................................... -- (25)
---------- ------------
Cash Flows Used in Investing Activities ....................... (23,224) (31,091)
Cash Flows Provided by Financing Activities:
Repayment of Debt ............................................... (8,369) (29,515)
Net Proceeds from Borrowings .................................... 25,186 26,500
Financing Costs ................................................. (1,402) (24)
Proceeds from Exercise of Stock Options ......................... 200 --
Repurchase of Stock ............................................. (199) --
Proceeds from Initial Public Offering, Net of Costs and Expenses -- 33,302
Retirement of Put Warrant ....................................... -- (6,612)
---------- ------------
Cash Flows Provided by Financing Activities ................... 15,416 23,651
---------- ------------
Increase in Cash and Cash Equivalents ............................ 366 647
Cash and Cash Equivalents, Beginning of Period ................... 1,303 1,585
---------- ------------
Cash and Cash Equivalents, End of Period ......................... $ 1,669 $ 2,232
========== ============
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
F-5
<PAGE>
IRON MOUNTAIN INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except per share data)
(Unaudited)
1. General
The interim condensed consolidated financial statements presented herein
have been prepared by Iron Mountain Incorporated ("Iron Mountain" or the
"Company") without audit and, in the opinion of management, reflect all
adjustments of a normal recurring nature necessary for a fair presentation.
Interim results are not necessarily indicative of results for a full year.
The condensed consolidated balance sheet presented as of December 31,
1995, has been derived from the consolidated financial statements that have
been audited by the Company's independent public accountants. The unaudited
condensed consolidated financial statements have been prepared pursuant to
the rules and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in the annual
financial statements prepared in accordance with generally accepted
accounting principles have been omitted pursuant to those rules and
regulations, but the Company believes that the disclosures are adequate to
make the information presented not misleading. The condensed consolidated
financial statements and notes included herein should be read in conjunction
with the consolidated financial statements and notes included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1995.
2. Initial Public Offering of Common Stock
On February 6, 1996, the Company completed the sale of 2,350 shares of its
common stock in an initial public offering at a price of $16.00 per share.
The proceeds from the public offering were $34,968 after underwriting
discounts and commissions, and $33,302 after other expenses of the offering
totaling $1,666. Such net proceeds were used to retire the redeemable put
warrant for $6,612, to fund acquisitions, to repay debt that had been
incurred to make acquisitions and for working capital.
3. Acquisitions and Dispositions
During 1995, the Company purchased four records management businesses.
During the six months ended June 30, 1996, the Company purchased six
additional records management businesses. Each of these acquisitions was
accounted for using the purchase method of accounting, and accordingly, the
results of operations for each acquisition have been included in the
consolidated results of the Company from the respective acquisition dates.
The purchase price for the 1996 acquisitions exceeded the underlying fair
value of the net assets acquired by $14,554, which has been assigned to
goodwill and is being amortized over the estimated benefit period of 25
years. Funds used to make the various acquisitions were provided through the
Company's acquisition credit facility and, indirectly, a portion of the net
proceeds of the Company's initial public offering. A summary of the cash
consideration and allocation of the purchase price as of the acquisition
dates are as follows:
1996
--------
Fair Value of Assets Acquired in 1996 ............... $20,104
Liabilities Assumed ................................. (917)
--------
Cash Paid ........................................... $19,187
========
F-6
<PAGE>
IRON MOUNTAIN INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(In thousands except per share data)
(Unaudited)
The following unaudited pro forma information shows the results of the
Company's operations for the year ended December 31, 1995 and the six months
ended June 30, 1996, as though each of the completed acquisitions had
occurred as of January 1, 1995.
1995 1996
------- ---------
Revenues ...................................... $123,438 $65,678
Net Income (Loss) ............................. (348) 728
Accretion of Redeemable Put Warrant ........... 2,107 280
------- ---------
Net Income (Loss) Applicable to Stockholders .. $ (2,455) $ 448
======= =========
Net Income (Loss) Per Share ................... $ (0.32) $ 0.05
======= =========
The pro forma results have been prepared for comparative purposes only and
are not necessarily indicative of the actual results of operations had the
acquisitions taken place as of January 1, 1995 or the results that may occur
in the future. Furthermore, the pro forma results do not give effect to all
cost savings or incremental costs which may occur as a result of the
integration and consolidation of the companies.
4. Long-term Debt
Long-term debt as of December 31, 1995 and June 30, 1996, is as follows:
1995 1996
------- --------
Term Loans A and B ......................... $ 59,625 $ 58,750
$50,000 Acquisition Credit Facility ........ 34,400 25,300
$15,000 Working Capital Facility ........... 1,700 8,800
Chrysler Notes ............................. 14,772 14,807
Real Estate Mortgages ...................... 10,797 10,761
Other ...................................... 580 476
------- --------
Total Long-term Debt .................... 121,874 118,894
Less: Current Portion ...................... (2,578) (3,194)
------- --------
Long-term Debt, Net of Current Portion .. $119,296 $115,700
======= ========
5. Commitments and Contingencies
Litigation
During the second quarter of 1996, the Company paid $600 to cover the
uninsured portion of a judgment previously entered by the California Workers
Compensation Board against the Company relating to injuries sustained by a
driver employed by a courier company used at the time by the Company. This
amount had been fully reserved in the second quarter of 1995 and therefore
had no impact on the results of operations for the three and six month
periods ended June 30, 1996.
Iron Mountain is presently involved as a defendant in various litigation
which has occurred in the normal course of business. Management believes it
has meritorious defenses in all such actions, and in any event, the amount of
damages, if such matters were decided adversely, would not have a material
adverse effect on Iron Mountain's financial condition or results of
operations.
6. Subsequent Events
Subsequent to June 30, 1996, the Company acquired four records management
businesses for $23,523 in transactions that were accounted for as purchases.
On August 29, 1996 the Company amended its Credit Agreement to increase its
Acquisition Credit Facility from $50,000 to $55,000.
F-7
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of
Iron Mountain Incorporated:
We have audited the accompanying consolidated balance sheets of Iron Mountain
Incorporated (a Delaware corporation) and its subsidiaries, as of December
31, 1994 and 1995 and the related consolidated statements of operations,
stockholders' equity and cash flows for each of the three years in the period
ended December 31, 1995. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Iron Mountain Incorporated
and its subsidiaries, as of December 31, 1994 and 1995 and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1995, in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Los Angeles, California
February 26, 1996
F-8
<PAGE>
IRON MOUNTAIN INCORPORATED
CONSOLIDATED BALANCE SHEETS--DECEMBER 31, 1994 AND 1995
(In thousands)
ASSETS
<TABLE>
<CAPTION>
December 31,
--------------------
1994 1995
------- ---------
<S> <C> <C>
Current Assets:
Cash and Cash Equivalents ........................................ $ 1,303 $ 1,585
Accounts Receivable (Less allowance for doubtful accounts of $531
and $651 as of 1994 and 1995, respectively) ..................... 13,270 16,936
Inventories ...................................................... 503 682
Deferred Income Taxes ............................................ 778 1,943
Prepaid Expenses and Other ....................................... 1,223 1,862
------- ---------
Total Current Assets ........................................... 17,077 23,008
Property, Plant and Equipment:
Property, Plant and Equipment .................................... 99,753 125,240
Less--Accumulated Depreciation ................................... (24,735) (32,564)
------- ---------
Net Property, Plant and Equipment .............................. 75,018 92,676
Other Assets:
Goodwill ......................................................... 36,720 59,253
Customer Acquisition Costs ....................................... 4,273 5,210
Deferred Financing Costs ......................................... 2,247 2,638
Other ............................................................ 1,524 4,096
------- ---------
Total Other Assets ............................................. 44,764 71,197
------- ---------
Total Assets ...................................................... $136,859 $186,881
======= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current Portion of Long-term Debt ................................ $ 628 $ 2,578
Accounts Payable ................................................. 3,756 4,797
Accrued Expenses ................................................. 4,710 10,917
Deferred Income .................................................. 2,096 3,108
Other Liabilities ................................................ 344 469
------- ---------
Total Current Liabilities ...................................... 11,534 21,869
Long-term Debt, Net of Current Portion ............................ 85,630 119,296
Other Long Term Liabilities ....................................... 7,296 6,769
Deferred Rent ..................................................... 2,837 7,983
Deferred Income Taxes ............................................. 2,468 3,621
Commitments and Contingencies
Redeemable Put Warrant ............................................ 4,225 6,332
Stockholders' Equity:
Preferred Stock .................................................. 5 5
Common Stock ..................................................... 0 0
Additional Paid-In Capital ....................................... 28,808 28,809
Accumulated Deficit .............................................. (5,944) (7,803)
------- ---------
Total Stockholders' Equity ..................................... 22,869 21,011
------- ---------
Total Liabilities and Stockholders' Equity ........................ $136,859 $186,881
======= =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-9
<PAGE>
IRON MOUNTAIN INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995
(In thousands except per share data)
<TABLE>
<CAPTION>
1993 1994 1995
-------- -------- ----------
<S> <C> <C> <C>
Revenues:
Storage .................................................. $48,892 $54,098 $ 64,165
Service and Storage Material Sales ....................... 32,781 33,520 40,271
-------- -------- ----------
Total Revenues ........................................ 81,673 87,618 104,436
Operating Expenses:
Cost of Sales (Excluding Depreciation) ................... 43,054 45,880 52,277
Selling, General and Administrative ...................... 19,971 20,853 26,035
Depreciation and Amortization ............................ 6,789 8,690 12,341
-------- -------- ----------
Total Operating Expenses .............................. 69,814 75,423 90,653
-------- -------- ----------
Operating Income ......................................... 11,859 12,195 13,783
Interest Expense ......................................... 8,203 8,954 11,838
-------- -------- ----------
Income Before Provision for Income Taxes ................. 3,656 3,241 1,945
Provision for Income Taxes ............................... 2,088 1,957 1,697
-------- -------- ----------
Net Income ............................................... 1,568 1,284 248
Accretion of Redeemable Put Warrant ...................... 940 1,412 2,107
-------- -------- ----------
Net Income (Loss) Applicable to Common Stockholders ...... $ 628 $ (128) $ (1,859)
======== ======== ==========
Net Income (Loss) Per Common and Common Equivalent Share . $ 0.08 $ (0.02) $ (0.24)
Weighted Average Common and Common Equivalent Shares
Outstanding ............................................. 8,067 7,984 7,784
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-10
<PAGE>
IRON MOUNTAIN INCORPORATED
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
AS OF DECEMBER 31, 1993, 1994 AND 1995
(Dollars in thousands)
<TABLE>
<CAPTION>
December 31,
----------------------------------
1993 1994 1995
-------- -------- ----------
<S> <C> <C> <C>
Series A1 Preferred Stock:
Balance, Beginning of Period .................................. $ 2 $ 2 $ 1
Conversion of 100,000 Shares of Series A1 Preferred Stock to
Series A2 Preferred Stock .................................... -- (1) --
Conversion of 43,500 Shares of Series A1 Preferred Stock to
Series A3 Preferred Stock .................................... -- -- (1)
-------- -------- ----------
Balance, End of Period; (150,000, 50,000 and 6,500 Shares
Outstanding as of December 31, 1993, 1994 and 1995,
Respectively) ................................................ 2 1 0
Series A2 Preferred Stock:
Balance, Beginning of Period .................................. -- -- 1
Conversion of 100,000 Shares of Series A1 Preferred Stock to
Series A2 Preferred Stock .................................... -- 1 --
Repurchase of 2,000 Shares of Series A2 Preferred Stock ....... -- -- 0
-------- -------- ----------
Balance, End of Period; (None Outstanding as of December 31,
1993; 100,000 and 98,000 Shares Outstanding as of December 31,
1994 and 1995, Respectively) ................................. -- 1 1
Series A3 Preferred Stock:
Balance, Beginning of Period .................................. -- -- --
Conversion of 43,500 Shares of Series A1 Preferred Stock to
Series A3 Preferred Stock .................................... -- -- 1
-------- -------- ----------
Balance, End of Period (None outstanding December 31, 1993 and
1994; 43,500 Shares Outstanding December 31, 1995) ........... -- -- 1
Series C Preferred Stock:
Balance, End of Period; (351,395 Shares Outstanding as of
December 31, 1993, 1994 and 1995, Respectively) .............. 3 3 3
-------- -------- ----------
Total Preferred Stock ........................................ 5 5 5
-------- -------- ----------
Class A Common Stock:
Balance, Beginning of Period .................................. 0 0 0
Stock Options Exercised for 15,976 Shares of Class A Common
Stock in 1995 ................................................ -- -- 0
-------- -------- ----------
Balance, End of Period; 28,912, 28,912 and 44,888 Shares
Outstanding as of December 31, 1993, 1994 and 1995,
Respectively) ................................................ 0 0 0
Class C Common Stock:
Balance, Beginning of Period .................................. 0 0 --
Repurchase of 17,289 Shares of Class C Common Stock ........... -- (0) --
-------- -------- ----------
Balance, End of Period; (17,289 Shares Outstanding as of
December 31, 1993; None Outstanding as of December 31, 1994
and 1995) .................................................... 0 -- --
-------- -------- ----------
Total Common Stock ........................................... 0 0 0
-------- -------- ----------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-11
<PAGE>
IRON MOUNTAIN INCORPORATED
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY -- (Continued)
<TABLE>
<CAPTION>
December 31,
----------------------------
1993 1994 1995
------ ------ --------
<S> <C> <C> <C>
Additional Paid in Capital:
Balance, Beginning of Period ........................ $29,858 $29,858 $28,808
Class C Common Stock Repurchased, 17,289 Shares ..... -- (1,050) --
Series A2 Preferred Stock Repurchased, 2,000 Shares . -- -- (199)
Class A Common Stock, Options Exercised, 15,976
Shares ............................................. -- -- 200
------ ------ --------
Balance, End of Period .............................. 29,858 28,808 28,809
------ ------ --------
Accumulated Deficit:
Balance, Beginning of Period ........................ (6,444) (5,816) (5,944)
Net Income .......................................... 1,568 1,284 248
Accretion of Redeemable Put Warrant ................. (940) (1,412) (2,107)
------ ------ --------
Balance, End of Period .............................. (5,816) (5,944) (7,803)
------ ------ --------
Total Stockholders' Equity ........................... $24,047 $22,869 $21,011
====== ====== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-12
<PAGE>
IRON MOUNTAIN INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995
(In thousands)
<TABLE>
<CAPTION>
1993 1994 1995
------- ------- ---------
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net Income .................................... $ 1,568 $ 1,284 $ 248
Adjustments to Reconcile Net Income to Cash
Flows Provided by Operations:
Depreciation and Amortization ............... 6,789 8,690 12,341
Amortization of Financing Costs ............. 954 1,046 1,135
Loss on Sale of Fixed Assets ................ 145 278 400
Provision for Deferred Income Taxes ......... 1,766 1,714 1,179
Changes in Deferred Rent .................... 605 441 (110)
Changes in Other Long-term Liabilities ...... 1,051 (394) (527)
Changes in Assets and Liabilities
(Exclusive of Acquisitions):
Accounts Receivable ......................... (1,005) (1,807) (2,541)
Inventory ................................... (33) (39) (100)
Prepaid Expenses ............................ (304) (517) (639)
Accounts Payable ............................ 304 83 265
Accrued Expenses ............................ (70) 1,191 4,252
Deferred Income ............................. 971 (26) (301)
Other Liabilities ........................... 80 (369) 125
------- ------- ---------
Cash Flows Provided by Operations ........... 12,821 11,575 15,727
------- ------- ---------
Cash Flows from Investing Activities:
Capital Expenditures ......................... (15,451) (16,980) (15,253)
Additions to Customer Acquisition Costs ...... (922) (1,366) (1,379)
Cash Paid for Acquisitions ................... -- (2,846) (33,048)
Proceeds from Sale of Assets ................. 14 2,973 73
Other, Net ................................... (209) 705 71
------- ------- ---------
Cash Flows Used in Investing Activities ..... (16,568) (17,514) (49,536)
------- ------- ---------
Cash Flows Provided by Financing Activities:
Repayment of Debt .............................. (4,659) (13,642) (812)
Net Proceeds from Borrowings ................... 9,100 21,350 36,350
Cash From Exercise of Stock Options ............ -- -- 200
Repurchase of Stock ............................ -- (1,050) (199)
Financing Costs ................................ (601) (7) (1,448)
------- ------- ---------
Cash Flows Provided by Financing Activities ... 3,840 6,651 34,091
------- ------- ---------
Increase in Cash ............................... 93 712 282
Cash and Cash Equivalents, Beginning of Year ... 498 591 1,303
------- ------- ---------
Cash and Cash Equivalents, End of Year ......... $ 591 $ 1,303 $ 1,585
======= ======= =========
Supplemental Information:
Cash Paid for Interest ......................... $ 7,239 $ 7,741 $ 9,111
======= ======= =========
Cash Paid for Income Taxes ..................... $ 859 $ 339 $ 1,177
======= ======= =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-13
<PAGE>
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995
(Amounts in thousands except share data)
1. Nature of Business
The accompanying financial statements represent the consolidated accounts
of Iron Mountain Incorporated (formerly Iron Mountain Information Services,
Inc.) and its subsidiaries (collectively Iron Mountain or the Company). Iron
Mountain is a full service records management company providing storage and
related services for all media in various locations throughout the United
States to Fortune 500 Companies and numerous legal, banking, health care,
accounting, insurance, entertainment, and government organizations.
2. Summary of Significant Accounting Policies
a. Principles of Consolidation
The financial statements reflect the financial position and results of
operations of Iron Mountain on a consolidated basis. All significant
intercompany account balances and transactions with affiliates have been
eliminated.
b. Property, Plant and Equipment
Property, plant and equipment are stated at cost and depreciated using the
straight-line method with the following useful lives:
Buildings ........................ 40 to 50 years
Leasehold improvements ........... 8 to 10 years or the
life of the lease,
whichever is shorter
Racking .......................... 10 to 20 years
Warehouse equipment/vehicles ..... 5 to 10 years
Office equipment ................. 3 to 5 years
Computer hardware and software ... 3 to 5 years
Property, plant and equipment consist of the following:
December 31,
------------------
1994 1995
------ --------
Real property ..................... $33,118 $ 34,162
Leasehold improvements ............ 8,958 11,206
Racking ........................... 35,977 53,348
Warehouse equipment/vehicles ...... 5,238 5,810
Furniture and fixtures ............ 2,411 2,754
Computer hardware and software .... 9,771 13,729
Construction in progress .......... 4,280 4,231
------ --------
$99,753 $125,240
====== ========
Minor maintenance costs are expensed as incurred. Major improvements to
the leased buildings are capitalized as leasehold improvements and
depreciated as described above.
c. Revenue Recognition
Storage and service revenues are recognized in the month the respective
service is provided. Storage material sales are recognized when shipped to
the customer. Amounts related to future storage for customers where storage
fees are billed in advance are accounted for as deferred income and amortized
over the applicable period. These amounts are included in deferred income in
the accompanying financial statements.
F-14
<PAGE>
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(Amounts in thousands except share data)
d. Goodwill
Goodwill reflects the cost in excess of fair value of the net assets of
companies acquired in purchase transactions. Goodwill is amortized using the
straight-line method from the date of acquisition over the expected period to
be benefited, currently estimated at 25 years. The Company assesses the
recoverability of goodwill, as well as other long lived assets based upon
expectations of future undiscounted cash flows in accordance with Statement
of Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long Lived Assets and for Long Lived Assets to be Disposed of." Accumulated
amortization of goodwill was $11,205 and $15,071 as of December 31, 1994 and
1995, respectively.
e. Deferred Financing Costs
Deferred financing costs are amortized over the life of the related debt
using the effective interest rate method. As of December 31, 1994 and 1995,
deferred financing costs were $6,271, and $4,688, respectively, and
accumulated amortization of those costs were $4,024, and $2,050,
respectively.
f. Customer Acquisition Costs
Costs, net of revenues received for the initial transfer of the records,
related to the acquisition of large volume accounts (accounts consisting of
10,000 or more cartons) are capitalized and amortized for an appropriate
period not exceeding 12 years, unless the customer terminates its
relationship with the Company, at which time the unamortized cost is charged
to expense. However, in the event of such termination, the Company collects
and records as income permanent removal fees that generally equal or exceed
the amount of unamortized customer acquisition costs. As of December 31, 1994
and 1995 those costs were $5,114 and $6,492, respectively, and accumulated
amortization of those costs were $841 and $1,282, respectively.
g. Deferred Rent
The Company has entered into various leases for buildings used in the
storage of records. Certain leases have fixed escalation clauses or other
features which require normalization of the rental expense over the life of
the lease resulting in deferred rent being reflected in the accompanying
balance sheets. In addition, the Company has assumed various unfavorable
leases in connection with certain of its acquisitions. The discounted present
value of these lease obligations in excess of market rate at the date of the
acquisition was recorded as a deferred rent liability and is being amortized
over the remaining lives of the respective leases.
h. Inventories
Inventories are carried at the lower of cost using the first-in, first-out
basis or market and are comprised primarily of cartons.
i. Accrued expenses
Accrued expenses consist of the following:
December 31,
----------------
1994 1995
----- -------
Accrued incentive compensation ............. $1,202 $ 1,701
Accrued vacation ........................... 809 1,014
Accrued interest ........................... 145 1,737
Accrued workers' compensation .............. 499 2,415
Other ...................................... 2,055 4,050
----- -------
Accrued expenses ........................... $4,710 $10,917
===== =======
F-15
<PAGE>
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(Amounts in thousands except share data)
j. Net Income (Loss) Per Common Share
Net income (loss) per common share is computed based on the weighted
average number of common and common stock equivalent shares outstanding
during each period. Common stock equivalents consist of preferred stock that
is convertible into common stock and employee options to purchase common
stock. Pursuant to certain SEC regulations, the calculation of weighted
average shares outstanding assumes the conversion of preferred stock for all
periods presented. The stock options have not been included in the
calculation of common stock equivalents because their dilutive effect was
immaterial.
k. Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that effect the reported amounts of assets and liabilities and
the disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
l. Cash and Cash Equivalents
The Company defines cash and cash equivalents to include cash on hand and
cash invested in short-term securities which have original maturities of less
than 90 days.
3. Debt
Debt consists of the following:
<TABLE>
<CAPTION>
December 31,
------------------
1994 1995
------ --------
<S> <C> <C>
Working Capital Line and $36,000 Term Loan Refinanced in 1995 $59,934 $ --
Term Loans A and B ........................................... -- 59,625
$50,000 Acquisition Credit Facility .......................... -- 34,400
$15,000 Working Capital Facility ............................. -- 1,700
Chrysler Notes ............................................... 14,693 14,772
Real Estate Mortgages ........................................ 10,855 10,797
Other ........................................................ 776 580
------ --------
Long-term Debt ............................................... 86,258 121,874
Less -- current portion ...................................... (628) (2,578)
------ --------
Long-term Debt, Net of Current Portion ....................... $85,630 $119,296
====== ========
</TABLE>
During 1994, the Company had a revolving credit facility of $44,625. This
facility along with a $36,000 senior term loan was refinanced on January 31,
1995 under an amended and restated credit agreement (the Credit Agreement).
Interest on the $36,000 senior debt term loan and the $44,625 revolving
credit facility was based, at the Company's option, on a choice of base rates
plus a margin. The margin varied depending upon the base rate selected.
F-16
<PAGE>
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(Amounts in thousands except share data)
The Credit Agreement is with a syndicate of lenders and provides for four
separate credit facilities representing an aggregate commitment of $125,000
as follows:
Maturity
Amount Date
------ --------
Term Loan A ............................ $10,000 2000
Term Loan B ............................ 50,000 2002
Working Capital Facility ............... 15,000 2000
Acquisition Credit Facility ............ 50,000 2002
Commencing in 1996, Term Loans A and B are payable in quarterly
installments of $625 and $125, respectively. Term Loan B has a balloon
payment due upon maturity of $46,375. The Working Capital Facility is due in
full upon maturity and the Acquisition Credit Facility is payable in eight
quarterly installments equal to one-eighth of the outstanding balance
commencing in 2000.
Interest rates on all four facilities under the Credit Agreement are
based, at the Company's option, on a choice of base rates plus a margin. The
margin varies for each facility depending upon the base rate selected. The
margins are subject to adjustment after January 1996 based on the Company's
ability to meet certain financial covenant targets. At December 31, 1995, the
effective interest rates for Term Loans A and B were 8.22% and 8.72%,
respectively, and for the Working Capital Facility and Acquisition Credit
Facility were 9.75% and 8.72%, respectively. There is a commitment fee of
1/2% per year on the unused portion of the Working Capital Facility and
Acquisition Credit Facility.
The $15,000 Chrysler Notes were issued in 1990 and mature in 2000. Annual
principal payments of $5,000 commence in 1998. A warrant was issued in
connection with the Chrysler Notes to which management assigned an initial
value of $750 for financial reporting purposes (see Note 5). The value of the
warrant is being accounted for as an original issue discount of the Chrysler
Notes and is being amortized as interest expense over the life of the loan
using the effective interest rate method. The note is junior only to the
Credit Agreement and has an effective interest rate of 13.7%.
The Credit Agreement and Chrysler Notes specify certain minimum or maximum
relationships between operating cash flows (earnings before interest, taxes,
depreciation and amortization) and interest, total debt and fixed charges.
There are restrictions on dividends, sales or pledging of assets, capital
expenditures and change in business and ownership; cash dividends are
effectively prohibited. The Company was in compliance with the applicable
provisions of these agreements at December 31, 1995. Loans under the Credit
Agreement are secured by substantially all of the stock and assets of the
Company's subsidiaries, with the exception of a secondary position on two
owned properties encumbered by first mortgages.
The real estate mortgages consist of an $8,037, 10 year, 11% mortgage
based on 30 year amortization with a balloon payment due October, 2000 and a
$3,000, 8% note that is payable in various installments commencing in 1996
and maturing in November, 2006.
The Company is required to maintain interest rate protection under the
Credit Agreement. In 1988, the Company entered into an interest rate swap
(which expired in October 1995) whereby the Company paid a fixed interest
rate of 9.28% and received a rate equal to the 3-month LIBOR rate. The
interest was based on the outstanding notional principal amount which was
$2,338 at December 31, 1994. The Company has also purchased two interest rate
caps under which it will receive payments in the event that the three month
LIBOR rate exceeds those specified in the caps. Each cap covers $10,000 of
notional principal amount. One had a rate cap of 6.5% and expired on August
11, 1995 and the other has a rate cap of 7.5% and expires August 12, 1997.
On March 24, 1995, the Company entered into two three-year interest rate
collar swap transactions. Under these agreements, interest costs for the debt
covered by the notional amount of these contracts will essentially float when
the three-month LIBOR is between 6% and 7.5% but the Company will receive a
payment from the bank in the event that the three month LIBOR interest rate
exceeds 7.5%, or make a payment to the bank if such rate
F-17
<PAGE>
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(Amounts in thousands except share data)
is below 6%. Each transaction covers $10,000 of notional principal amount
which will result in a maximum interest cost (including margin and
transaction costs) of approximately 10.54% and 10.67%, respectively, for the
covered amounts. In the event of non-performance by the counterparty, the
Company would be exposed to additional interest rate risk if the variable
interest rate were to exceed the ceiling (7.5%) under the terms of the swap
agreement.
Maturities of long-term debt are as follows:
Year Amount
---- --------
1996 ....................................... $ 2,578
1997 ....................................... 3,386
1998 ....................................... 8,320
1999 ....................................... 8,366
2000 ....................................... 28,824
Thereafter ................................. 70,400
------
$121,874
======
Based on the borrowing rates currently available to the Company for loans
with similar terms and average maturities, the Company has estimated the
following fair values for its long-term debt and swap agreements as of
December 31, 1995 as follows:
Carrying Fair
Amount Value
-------- ----------
Credit Agreement ............. $(95,725) $(95,725)
Chrysler Notes ............... (14,772) (15,737)
Real Estate Mortgages ........ (10,797) (11,849)
Other ........................ (580) (580)
Swap Agreements .............. 25 (638)
The fair value of the various swap agreements is based on the estimated
amount a bank would charge to terminate the various swap agreements.
4. Acquisitions and Dispositions
During 1994, the Company purchased substantially all of the assets, and
assumed certain liabilities, of three separate records management businesses.
During 1995, the Company purchased substantially all of the assets, subject
to certain liabilities, of four records management businesses. Each of these
acquisitions was accounted for using the purchase method of accounting and
accordingly, the results of operations for each acquisition have been
included in the consolidated results of the Company from the respective
acquisition dates. The excess of the purchase price over the underlying fair
value of the assets and liabilities of each acquisition has been assigned to
goodwill ($2,484 and $26,054 in 1994 and 1995, respectively) and is being
amortized over the estimated benefit period of 25 years. Funds used to make
the various acquisitions were provided through the Company's acquisition
credit facilities. A summary of the cash consideration and allocation of the
purchase price as of the acquisition dates are as follows:
1994 1995
----- --------
Fair value of assets acquired ..... $3,223 $41,286
Liabilities assumed ............... (377) (8,238)
--- ------
Cash paid ......................... $2,846 $33,048
=== ======
F-18
<PAGE>
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(Amounts in thousands except share data)
The following unaudited pro forma combined information shows the results of
the Company's operations for the years ended December 31, 1994 and 1995 as
though each of the completed acquisitions had occurred as of January 1, 1994.
1994 1995
------- -------
Revenues ............................................ $103,644 $112,675
Net income (loss) ................................... 574 (577)
Accretion of redeemable Put Warrant ................. 1,412 2,107
----- -----
Net loss applicable to Common Stockholders .......... $ (838) $ (2,684)
===== =====
Net loss per common share ........................... $(0.10) $(0.34)
The pro forma results have been prepared for comparative purposes only and
are not necessarily indicative of the actual results of operations had the
acquisitions taken place as of January 1, 1994 or the results that may occur
in the future. Furthermore, the pro forma results do not give effect to all
cost savings or incremental costs which may occur as a result of the
integration and consolidation of the companies.
In 1995, the Company made a decision to sell one of its subsidiaries and has
estimated that the purchase price will be $900 less than the book value of
the assets and related goodwill. Consequently, the Company has recorded an
impairment of the related goodwill in the accompanying statement of
operations for 1995.
5. Common and Preferred Stock and Redeemable Put Warrant
During 1995, the Company declared a 15.4215-for-1 stock split of the Class
A and Class B Common Stock in the form of a stock dividend payable on
November 29, 1995 to stockholders of record on November 28, 1995. All
weighted average common share and stock related data in the consolidated
financial statements have been retroactively restated to reflect the stock
split.
The Company has authorized the following eight classes of capital stock as
of December 31, 1995:
Number of Shares
-------------------------
Par Issued and
Equity Type Value Authorized Outstanding
- ----------------------------------- -------- --------- ------------
Class A Common (voting) ........... $0.01 13,000,000 44,888
Class B Common (non-voting) ....... $0.01 10,300,000 --
Class C Common (non-voting) ....... $0.01 1 --
Series A1 Preferred (non-voting) .. $0.01 6,500 6,500
Series A2 Preferred (non-voting) .. $0.01 98,000 98,000
Series A3 Preferred (voting) ...... $0.01 43,500 43,500
Series B Preferred (voting) ....... $0.01 148,000 --
Series C Preferred (voting) ....... $0.01 351,395 351,395
Upon consummation of the underwritten public offering of common stock (See
Note 10), all shares of preferred stock were automatically converted into
shares of common stock. The number of common shares received upon conversion
were as follows:
Preferred Common
-------- ----------
Series A1 and Series A3 ........... 50,000 987,314
Series A2 ......................... 98,000 1,935,146
Series C .......................... 351,395 4,809,793
The preferred stock is entitled to weighted average anti-dilution
protection and receives dividends on a common stock equivalent basis.
F-19
<PAGE>
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(Amounts in thousands except share data)
In anticipation of the public offering, the Board of Directors approved and
the shareholders ratified a recapitalization plan as follows:
The designation of three new classes of stock:
Authorized
Class Shares
- ----- -----------
Preferred Stock, $0.01 par value .................... 2,000,000
Common Stock, $0.01 par value ....................... 13,000,000
Nonvoting Common Stock, $0.01 par value ............. 1,000,000
In connection with the issuance of the Chrysler Notes, the Company also
issued a warrant, dated December 14, 1990 (the Warrant), exercisable for
444,385 shares of common stock for nominal consideration upon the occurrence
of certain specified events, including the effectiveness of an underwritten
public offering of the Company's capital stock, and at any time after
December 14, 1995. Chrysler Capital had the right to put (the Put) all or any
part of the Warrant to the Company at any time after December 14, 1995, at
the higher of a formula price based on a specified multiple of the Company's
operating cash flow for the preceding 12 months, subject to certain
adjustments, or fair market value of the Company (the Put Price). The Put was
to terminate upon the consummation of an underwritten public offering which
yielded net proceeds of not less than $10 million to the Company. Chrysler
Capital and the Company reached an agreement pursuant to which Chrysler
Capital would not exercise the Warrant or the Put until April 30, 1996 and
the Company would redeem the Warrant upon completion of the closing of the
public offering (See Note 10). On February 7, 1996, the Warrant was redeemed
for $6,612. This Warrant has been accreted each year using the effective
interest rate method based on the Warrant's estimated redemption value at its
estimated redemption date of February 15, 1996 and is reflected as a
redeemable put warrant in the accompanying balance sheets.
In September, 1991 the Company created a non-qualified stock option plan
pursuant to which up to 444,385 shares of Class A common stock of the Company
can be issued at the discretion of the stock option committee to key
employees, consultants and directors.
The following is a summary of stock option transactions during the applicable
periods:
Option Price
Options Per Share
------- ------------------
Options outstanding, December 31, 1992 ..... 302,040 $6.48 - $12.58
Expired ................................... (18,506) 6.48
-----
Options outstanding, December 31, 1993 ..... 283,534 6.48 - 12.58
Expired ................................... (23,903) 6.48
-----
Options outstanding, December 31, 1994 ..... 259,631 6.48 - 12.58
Granted ................................... 162,184 12.58 - 16.00
Exercised ................................. (15,976) 12.58
Expired ................................... (6,370) 12.58
-----
Options outstanding, December 31, 1995 ..... 399,469 $6.48 - $16.00
=====
The stock options were granted at an amount equal to or greater than the fair
market value at the date of grant as determined by the Board of Directors.
There are no shares available for grant under the 1991 plan as of December
31, 1995. The majority of options become exercisable ratably over a period of
five years unless the holder terminates employment. As of December 31, 1995,
175,380 of the options outstanding were exercisable.
Effective November 30, 1995, the Board of Directors approved the adoption of
the 1995 Stock Incentive Plan (the Stock Option Plan), which replaced the
previous stock option plan. A total of 1,000,000 shares of Class A Common
Stock are available for grant as options and other rights under the Stock
Option Plan, including the options issued under the 1991 plan. The number of
options available for grant at December 31, 1995 was 555,615.
F-20
<PAGE>
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(Amounts in thousands except share data)
6. Income Taxes
The Company accounts for income taxes in accordance with SFAS No. 109
which requires the recognition of deferred tax assets and liabilities for the
expected tax consequences of temporary differences between the tax and
financial reporting bases of assets and liabilities.
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities are
presented below:
December 31,
--------------------
1994 1995
------- ---------
Current deferred tax assets:
Accrued liabilities ................................ $ 527 $ 1,585
Other .............................................. 251 358
----- -------
Current deferred tax assets ......................... $ 778 $ 1,943
===== =======
Non-current deferred tax assets (liabilities):
Accrued liabilities ................................ $ 1,147 $ 3,462
Net operating loss carryforwards ................... 3,280 2,522
AMT credit ......................................... 206 628
Deferred income .................................... 791 360
Other .............................................. 511 792
----- -------
Non-current deferred tax assets ..................... 5,935 7,764
----- -------
Other assets principally due to differences in
amortization ....................................... (1,165) (2,051)
Plant and equipment, principally due to differences
in depreciation ................................... (5,383) (7,201)
Customer acquisition costs ......................... (1,335) (1,716)
Other .............................................. (520) (417)
----- -------
Non-current deferred tax liabilities ................ (8,403) (11,385)
----- -------
Net non-current deferred tax liability .............. $(2,468) $ (3,621)
===== =======
The Company and its subsidiaries file a consolidated Federal income tax
return. The provision for income taxes consists of the following components:
Years ended December 31,
------------------------
1993 1994 1995
----- ----- ------
Federal -- current ......................... $ 131 $ 68 $ 422
Federal -- deferred ........................ 1,645 1,416 837
State -- current ........................... 191 175 96
State -- deferred .......................... 121 298 342
--- --- ----
$2,088 $1,957 $1,697
=== === ====
A reconciliation of total income tax expense and the amount computed by
applying the U.S. Federal income tax rate of 34% to income before income
taxes is as follows:
1993 1994 1995
----- ----- ------
Computed "expected" tax provision ............ $1,243 $1,102 $ 661
Increase in income taxes resulting from:
State taxes ................................. 206 312 289
Non-deductible Goodwill amortization ........ 521 521 843
Other ....................................... 118 22 (96)
--- --- ----
$2,088 $1,957 $1,697
=== === ====
F-21
<PAGE>
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(Amounts in thousands except share data)
The Company has estimated Federal net operating loss carryforwards of
$7,296 at December 31, 1995 to reduce future Federal income taxes, if any,
which begin to expire in 2005.
The Company has estimated state net operating loss carryforwards of
approximately $441 to reduce future state income taxes, if any.
The Company has alternative minimum tax credit carryforwards of $628 which
have no expiration date and are available to reduce future income taxes, if
any.
7. Commitments and Contingencies
a. Leases
Iron Mountain leases most of its facilities under various operating
leases. A majority of these leases have renewal options of five to ten years
and have either fixed escalation clauses or Consumer Price Index escalation.
The Company also leases equipment under operating and capital leases,
primarily computers which have an average lease life of three years. Trucks
and office equipment are also leased and have remaining lease lives ranging
from one to five years. Rent expense was $12,680, $13,555, and $15,661 for
the years ended December 31, 1993, 1994 and 1995, respectively.
Minimum future lease payments are as follows:
Year Operating
----------------------------------------------------- ----------
1996 ................................................ $ 18,278
1997 ................................................ 15,571
1998 ................................................ 13,585
1999 ................................................ 13,332
2000 ................................................ 13,537
Thereafter .......................................... 53,465
--------
Total minimum lease payments ........................ $127,768
========
b. Litigation
In 1992, the Company was named co-defendant in a suit alleging personal
injuries sustained in an automobile collision with a driver employed by a
courier company used at the time by Iron Mountain. The courier company
subsequently filed for bankruptcy. In March, 1995, a judgment was entered
against the Company in the Superior Court of the State of California for
County of Los Angeles. The Company has accrued $600 in the accompanying
financial statements which approximates the uninsured portion of the
judgment.
Iron Mountain is presently involved as a defendant in various litigation
which has occurred in the normal course of business. Management believes it
has meritorious defenses in all such actions, and in any event, the amount of
damages, if such matters were decided adversely, would not have a material
adverse effect on Iron Mountain's financial condition or results of
operations.
c. Other
The Company may be responsible for environmental clean-up costs at certain
of its facilities. Estimated costs of $800 to perform the necessary
remediation work are included in other liabilities in the accompanying
balance sheets. In 1994, the Company incurred losses at one of its facilities
in California, resulting from the Northridge earthquake. The Company has
filed a claim for reimbursement with its insurance carrier and has received
partial reimbursement to date, with the balance of $1,400 expected to be
received upon the insurance company's completion of its review of the pending
claim. Management believes the ultimate outcome of the above issues will not
have a material adverse effect on Iron Mountain's financial condition or
results of operations.
F-22
<PAGE>
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(Amounts in thousands except share data)
8. Related Party Transactions
a. Rental Arrangements
Iron Mountain leases space to an affiliated company, Schooner Capital
Corporation (Schooner) for its corporate headquarters located in Boston,
Massachusetts. Accordingly, for the years ended December 31, 1993, 1994 and
1995, Schooner paid Iron Mountain rent totaling $48, $58, and $49,
respectively. Iron Mountain leases one facility from a landlord which is a
related party. Total rental payments for the years ended December 31, 1993,
1994 and 1995 for this facility totaled $88, $88, and $93, respectively. In
the opinion of management, both of these leases were entered into at market
prices and terms.
b. Long Term Debt
Iron Mountain is obligated in the amount of $383 on a junior subordinated
note bearing interest at 8%, payable in March, 2000. This note, originally
issued in connection with an acquisition, was purchased by and is now held by
Schooner.
9. Profit Sharing Retirement Plan
The Company has a defined contribution plan which covers all non-union
employees meeting certain service requirements. Eligible employees may elect
to defer from 1 to 15% of compensation per pay period up to the amount
allowed by the Internal Revenue Code. The Company makes matching
contributions based on the amount of the employee contribution and years of
credited service, according to a schedule as described in the Plan documents.
The Company has expensed $131, $146, and $294, for the years ended
December 31, 1993, 1994 and 1995, respectively.
10. Subsequent Events
In January and February 1996, the Company acquired three records services
businesses for $10,047 in transactions that will be accounted for as
purchases.
On February 6, 1996, the Company completed an initial public offering of
its stock. The net proceeds from the public offering of $34,968 were used to
repay $28,313 of indebtedness and interest under the acquisition credit
facility, to retire a warrant of $6,612, and for working capital.
F-23
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of
National Business Archives, Inc.:
Towson, Maryland.
We have audited the accompanying balance sheet of National Business Archives,
Inc. as of December 31, 1993 and 1994, and the related statements of income,
stockholder's equity (deficit) and cash flows for the years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of National Business Archives,
Inc. as of December 31, 1993 and 1994, and the results of its operations and
its cash flows for the years then ended, in conformity with generally
accepted accounting principles.
Wolpoff & Company, LLP
Baltimore, Maryland
November 3, 1995
F-24
<PAGE>
NATIONAL BUSINESS ARCHIVES, INC.
BALANCE SHEETS
ASSETS
December 31,
-----------------------
1993 1994
--------- ----------
Current Assets:
Cash--Note 1 .............................. $ -- $ 1,000
Note Receivable, Related Party--Note 2 .... -- 1,416,148
Accounts Receivable--Note 1 ............... 714,974 687,645
Inventory--Note 1 ......................... 75,620 69,149
Prepaid Expenses .......................... 149,724 44,362
------- --------
Total Current Assets ................... 940,318 2,218,304
------- --------
Property, Plant and Equipment--Notes 1 and
4:
Shelving .................................. 2,702,645 3,153,726
Motor Vehicles ............................ 479,961 498,011
Computers and Software .................... 195,033 212,830
Furniture, Fixtures and Equipment ......... 148,638 195,544
Leasehold Improvements .................... 76,820 318,258
------- --------
3,603,097 4,378,369
Less Accumulated Depreciation ............. 1,083,347 1,255,781
------- --------
Property, net .......................... 2,519,750 3,122,588
------- --------
Other Assets .............................. 7,498 56,001
------- --------
Total Assets ........................... $3,467,566 $5,396,893
======= ========
The notes to financial statements are an integral part of this statement.
F-25
<PAGE>
NATIONAL BUSINESS ARCHIVES, INC.
BALANCE SHEETS
LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)
<TABLE>
<CAPTION>
December 31,
------------------------
1993 1994
---------- ----------
<S> <C> <C>
Current Liabilities:
Accounts Payable ..................................... $ 171,566 $ 302,222
Accrued Expenses ..................................... 176,355 238,354
Deferred Revenue--Note 1 ............................. 977,212 1,201,314
Long-term Liabilities, Current Portion--Notes 2 and 4 652,584 63,092
Note Payable, Related Party--Note 2 .................. 150,000 --
Dividends Payable--Note 3 ............................ 11,064 --
-------- --------
Total Current Liabilities. ........................ 2,138,781 1,804,982
-------- --------
Long-term Liabilities:
Note Payable, Bank--Note 3 ........................... -- 2,333,901
Notes Payable, Stockholder--Note 2 ................... 1,913,333 355,000
Motor Vehicle Loans Payable--Note 4 .................. 171,636 100,582
-------- --------
2,084,969 2,789,483
Less Current Portion ................................. 652,584 63,092
-------- --------
Total Long-term Liabilities ....................... 1,432,385 2,726,391
-------- --------
Deferred Rent--Note 5 ................................ 1,068,904 1,007,488
-------- --------
Total Liabilities .................................... 4,640,070 5,538,861
-------- --------
Commitments--Notes 2 and 5
Stockholder's Equity (Deficit):
Common Stock ......................................... 100 100
Accumulated Deficit .................................. (1,172,604) (142,068)
-------- --------
Total Stockholder's Equity (Deficit) .............. (1,172,504) (141,968)
-------- --------
Total Liabilities and Stockholder's
Equity (Deficit) ................................. $ 3,467,566 $5,396,893
======== ========
</TABLE>
The notes to financial statements are an integral part of this statement.
F-26
<PAGE>
NATIONAL BUSINESS ARCHIVES, INC.
STATEMENTS OF INCOME
Year Ended December 31,
------------------------
1993 1994
--------- -----------
Revenue:
Storage .............................. $3,406,317 $3,872,529
Service and Storage Material Sales ... 2,586,223 2,825,546
------- ---------
Total Revenue ..................... 5,992,540 6,698,075
------- ---------
Operating Expenses:
Cost of Sales (Excluding Depreciation) 3,273,478 3,866,897
Selling, General and Administrative .. 1,040,057 1,093,935
Depreciation and Amortization ........ 286,843 344,800
------- ---------
Total Operating Expenses .......... 4,600,378 5,305,632
------- ---------
Operating Income ..................... 1,392,162 1,392,443
Interest Expense ..................... 187,115 101,490
------- ---------
Net Income--Note 1 ................... $1,205,047 $1,290,953
======= =========
The notes to financial statements are an integral part of this statement.
F-27
<PAGE>
NATIONAL BUSINESS ARCHIVES, INC.
STATEMENTS OF STOCKHOLDER'S EQUITY (DEFICIT)
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------
1993 1994
----------- ------------
<S> <C> <C>
Common Stock:
5,000 Shares Authorized, 100 Shares Issued and
Outstanding,
No Par Value .......................................... $ 100 $ 100
--------- ----------
Retained Earnings (Deficit):
Beginning Balance ....................................... (2,283,254) (1,172,604)
Net Income .............................................. 1,205,047 1,290,953
Dividends ............................................... (94,397) (260,417)
--------- ----------
Ending Balance .......................................... (1,172,604) (142,068)
--------- ----------
Total Stockholder's Equity (Deficit) .................... $(1,172,504) $ (141,968)
========= ==========
</TABLE>
The notes to financial statements are an integral part of this statement.
F-28
<PAGE>
NATIONAL BUSINESS ARCHIVES, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------
1993 1994
---------- ------------
<S> <C> <C>
Cash Flows From Operating Activities:
Net Income .............................................. $ 1,205,047 $ 1,290,953
-------- ----------
Adjustments to Reconcile Net Income to Net Cash Provided
by Operating Activities
Depreciation and Amortization .......................... 286,843 344,800
(Gain) Loss on Disposal of Assets ...................... (1,115) 3,818
Increase in Accounts Payable ........................... 26,685 130,656
Increase in Accrued Expenses ........................... 145,939 61,991
Change in Accounts Receivable .......................... (121,414) 27,329
Change in Inventory .................................... (19,161) 6,471
Change in Prepaid Expenses ............................. (27,949) 105,362
Decrease in Deferred Rent Payable ...................... (62,830) (61,416)
Increase in Deferred Revenue ........................... 154,985 224,102
-------- ----------
Total Adjustments .................................... 381,983 843,113
-------- ----------
Net Cash Provided by Operating Activities ........... 1,587,030 2,134,066
-------- ----------
Cash Flows From Investing Activities:
Property and Equipment Expenditures ..................... (534,070) (955,924)
Proceeds from Disposal of Assets ........................ 7,783 12,973
Other Assets ............................................ -- (57,000)
Loan to Related Party ................................... -- (1,416,148)
-------- ----------
Net Cash Used by Investing Activities ................ (526,287) (2,416,099)
-------- ----------
Cash Flows From Financing Activities:
Stockholder Loan Proceeds ............................... 672,222 --
Stockholder Note Principal Payments ..................... (580,558) (1,558,333)
Net Bank Loan Proceeds .................................. -- 2,333,901
Bank Loan Principal Payments ............................ (1,218,662) --
Motor Vehicle Loan Proceeds ............................. 106,226 21,419
Repayment of Motor Vehicle Loans ........................ (106,638) (92,473)
Net Proceeds to Related Party ........................... 150,000 (150,000)
Dividends Paid .......................................... (83,333) (271,481)
-------- ----------
Net Cash Used by Financing Activities ................ (1,060,743) 283,033
-------- ----------
Net Change in Cash ...................................... -- 1,000
Cash at Beginning of Year ............................... -- --
-------- ----------
Cash at End of Year ..................................... $ -- $ 1,000
======== ==========
Supplemental Disclosures of Cash Flow Information:
Cash Paid During the Year for Interest ................. $ 166,875 $ 106,965
======== ==========
</TABLE>
The notes to financial statements are an integral part of this statement.
F-29
<PAGE>
NATIONAL BUSINESS ARCHIVES, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994
NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Activity
National Business Archives, Inc. was incorporated under the laws of
Maryland pursuant to Articles of Incorporation dated June 18, 1987. The
Company provides record storage and management services in the
Baltimore-Washington area.
Cash
Cash in excess of the minimum balance required is swept daily to and
offset against the revolving loan (see Note 3).
Allowance for Doubtful Accounts
The Company established an allowance for doubtful accounts of $120,000 in
the current year.
Inventory
Inventory is stated at the lower of cost or market and is comprised of
computer tape cases and records and storage boxes used in the business.
Property, Plant and Equipment
Property is recorded at cost. Depreciation is computed using either the
straight-line method or accelerated methods with useful lives ranging from 5
to 7 years for equipment, 20 years for shelving and 31.5 to 39 years for
leasehold improvements.
Revenue Recognition
Revenue is recognized when earned. Storage revenue is billed either
monthly, quarterly or annually, depending on the terms of the lease. The
estimated amount of storage revenue collected in advance as of December 31,
1993 and 1994, is shown as deferred revenue.
Income and Taxes
The shareholder has elected under Subchapter S of the Internal Revenue
Code to report the Company's income at the shareholder level. Accordingly, no
provision for income taxes is included herein.
NOTE 2--RELATED PARTY TRANSACTIONS
Note Receivable, Related Party
In December 1994, the Company advanced $1,416,148 to James F. Knott
Development Corp., an entity related to the shareholder. The unsecured loan
is due on demand and bears interest at 9.5%. The note was repaid in January
1995.
On May 19, 1994, the loan remaining from the sole shareholder was repaid
when the revolving loan was modified. The interest expense in 1993 and 1994
was $108,652 and $39,037.
F-30
<PAGE>
NATIONAL BUSINESS ARCHIVES, INC.
NOTES TO FINANCIAL STATEMENTS -- (Continued)
NOTE 2--RELATED PARTY TRANSACTIONS -- (Continued)
The sole shareholder loaned an additional $355,000 to the Company. This
unsecured loan is subordinated to the bank loans. The terms are as follows:
<TABLE>
<CAPTION>
Balance
--------------------
Lender 12/31/93 12/31/94 Interest Rate Terms Maturity Date
---------------- --------- ------- ------------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
Stockholder .... $1,558,333 $ -0- Prime + 2% * October 1, 1996
Stockholder .... 355,000 355,000 -- Non-interest October 1, 1996
bearing
------- -----
$1,913,333 $355,000
======= =====
</TABLE>
* Principal was payable in consecutive monthly installments of $45,833
commencing on November 1, 1993 (36 X $45,833 = $1,650,000).
The remaining stockholder note balance of $355,000 matures in 1996.
Note Payable, Related Party
James F. Knott Development Corp., an entity related to the shareholder,
advanced the Company various amounts in 1993 and 1994. The loans were due on
demand and bear interest at 6.5%. The balance at December 31, 1993 and 1994,
was $150,000 and $-0-, respectively. Interest on the unsecured loans for 1993
and 1994 was $7,228 and $23,807, respectively.
Office and Warehouse Leases
See Note 5.
NOTE 3--NOTE PAYABLE, BANK
On December 19, 1994, the revolving loan was modified for the second time
and the amount available was increased to $3,000,000. The balance at December
31, 1993 and 1994, was $-0- and $2,333,901, respectively. The terms of the
loan are interest only at prime + 1/2% (prime at December 31, 1994, was 8.5%)
until maturity on December 31, 1996. The loan is secured by all property and
assets of the Company. The maximum unpaid outstanding principal available
under the revolving loan is $2,500,000 and $1,500,000 as of December 31, 1995
and 1996, respectively. Interest on this loan was $51,408 and $25,049 in 1993
and 1994, respectively.
Under the loan agreement, the Company is permitted to pay dividends to its
sole shareholder in an aggregate amount equal to the amount of federal and
state income taxes due on the taxable income of the Company, as if such
taxable income was the sole taxable income of the shareholder.
NOTE 4--MOTOR VEHICLE LOANS PAYABLE
Pertinent information on the motor vehicle loans payable is as follows:
<TABLE>
<CAPTION>
Balance
------------------
Total
Interest Monthly
Lender 12/31/93 12/31/94 Rate Payments Maturity Collateral
- ---------------------- ------- ------- ------- ------- -------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Ford Motor Credit .... Automobiles/
$171,636 $100,582 6.42-12% $9,442 3/95-8/97 Trucks
Less Current Portion . 103,077 63,092
----- -----
$ 68,559 $ 37,490
===== =====
</TABLE>
F-31
<PAGE>
NATIONAL BUSINESS ARCHIVES, INC.
NOTES TO FINANCIAL STATEMENTS -- (Continued)
NOTE 4--MOTOR VEHICLE LOANS PAYABLE -- (Continued)
Interest on these loans was $15,077 and $11,825 in 1993 and 1994,
respectively.
The remaining principal payments on these loans are as follows:
1995 .............................. $ 63,092
1996 .............................. 33,596
1997 .............................. 3,894
------
$100,582
======
NOTE 5--COMMITMENTS
Deferred Rent
Office and warehouse leases:
<TABLE>
<CAPTION>
Square Effective Lease Free Expiration
Lessor* Feet Date Term Rent Date
- --------------------------------- ------ ------- ---------------- ---------- ----------
<S> <C> <C> <C> <C> <C>
B.W.I.P. Associates Limited 11 Yrs. 7.5
Partnership .................. 68,200 12/01/87 Mths.** 8 Mths. 7/15/99
Dorsey Run Industrial Park 10 Yrs. 9
Limited Partnership (DRIP) .... 142,885 11/01/89 Mths. 14 Mths. 7/31/00
DRIP ............................ 42,413 9/01/94 5 Years -- 8/31/99
DRIP ............................ 97,587 3/01/95 4 Yrs. 6 Mths. -- 8/31/99
</TABLE>
* Lessors are related to sole shareholder.
** Lease term was extended 1 year and 7.5 months in the current year.
Annual rental expense recognized on the straight-line basis on the above
leases for 1993 and 1994 was $1,092,132 and $1,146,564, respectively.
Future minimum annual rental payments are as follows:
1995 ...................................... $1,764,714
1996 ...................................... 1,825,706
1997 ...................................... 1,834,600
1998 ...................................... 1,826,606
1999 ...................................... 1,427,525
2000 ...................................... 510,099
----------
Total minimum future rental payments ......... $9,189,250
==========
NOTE 6--SUBSEQUENT EVENT
On March 1, 1995, the Company sold all of its assets to Iron Mountain
Records Management, Inc. and all debt was repaid from the proceeds of the
sale. In addition, the Company's assets were released from security interests
held by the bank with the full payment of the note payable (see Note 3).
F-32
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of
Data Management Business Records Storage, Inc.:
We have audited the accompanying balance sheet of Data Management Business
Records Storage, Inc. as of June 30, 1995 and the related statement of
operations and retained earnings (deficit), and cash flows for the year then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Data Management Business
Records Storage, Inc. as of June 30, 1995 and the results of their operations
and their cash flows for the year then ended in conformity with generally
accepted accounting principles.
MORRISON AND SMITH
Tuscaloosa, Alabama
September 18, 1995
(except for Note 14, as
to which the date is
December 1, 1995)
F-33
<PAGE>
DATA MANAGEMENT BUSINESS RECORDS STORAGE, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, September 30,
1995 1995
---------- -------------
(unaudited)
<S> <C> <C>
ASSETS
Cash ................................................... $ 125,982 $ 626,578
Accounts receivables, net .............................. 576,979 517,903
Materials inventory .................................... 7,909 7,909
Prepaid expenses ....................................... 11,744 12,867
Other .................................................. 115,154 374
-------- -----------
Total current assets ................................ 837,768 1,165,631
-------- -----------
Plant, property and equipment, net ..................... 3,334,017 2,435,362
-------- -----------
Intangible assets ...................................... 572,558 533,228
Notes receivable, intercompany ......................... 316,551 373,082
Deferred income tax .................................... 810,431 554,752
Other .................................................. 11,748 11,748
-------- -----------
1,711,288 1,472,810
-------- -----------
Total assets ...................................... $ 5,883,073 $ 5,073,803
======== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Accounts payable--trade ................................ $ 92,193 $ 61,592
Accrued expenses ....................................... 136,505 137,043
Unearned income ........................................ 309,735 309,735
Current portion--leases ................................ 68,242 63,240
Current portion--notes ................................. 5,353,941 4,428,159
-------- -----------
Total current liabilities ........................... 5,960,616 4,999,769
-------- -----------
Leases payable, long-term .............................. 114,216 96,885
Notes payable, long-term ............................... 1,328,764 1,292,495
Notes payable, intercompany ............................ 50,000 38,760
Deferred compensation payable .......................... 12,115 --
Earnest money deposit .................................. 154,988 --
-------- -----------
Total long-term liabilities ......................... 1,660,083 1,428,140
-------- -----------
Total liabilities ................................. 7,620,699 6,427,909
Stockholders' equity (deficit)
Common stock ........................................... 500 500
Paid-in capital ........................................ 1,321,809 1,321,809
Retained earnings (deficit) ............................ (3,059,935) (2,676,415)
-------- -----------
(1,737,626) (1,354,106)
======== ===========
Total liabilities and stockholders'
equity (deficit) ............................... $ 5,883,073 $ 5,073,803
======== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-34
<PAGE>
DATA MANAGEMENT BUSINESS RECORDS STORAGE, INC.
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS (DEFICIT)
Three
Year Ended Months Ended
June 30, September 30,
1995 1995
----------- -------------
(Unaudited)
Revenues:
Storage .................................... $ 3,143,737 $ 797,715
Services and storage material sales ........ 1,683,035 414,650
Net gain (loss) on sale of assets .......... (4,045) 738,049
--------- -----------
Total Revenues ............................ 4,822,727 1,950,414
--------- -----------
Operating expenses:
Cost of sales (excluding depreciation) ..... 891,293 310,610
Selling, administrative and general expenses 2,730,013 767,702
Depreciation and amortization .............. 510,831 115,653
--------- -----------
Total operating expenses .................. 4,132,137 1,193,965
--------- -----------
Operating income ............................ 690,590 756,449
Interest expense ............................ (551,569) (121,915)
Other income (expense), net ................. 611 4,664
--------- -----------
Income before provision for income taxes .... 139,632 639,198
Provision for income taxes .................. 55,589 255,678
--------- -----------
Net income .................................. 84,043 383,520
Retained earnings (deficit)--beginning ...... (3,143,978) (3,059,935)
--------- -----------
Retained earnings (deficit)--ending ......... $(3,059,935) $(2,676,415)
========= ===========
The accompanying notes are an integral part of these financial statements.
F-35
<PAGE>
DATA MANAGEMENT BUSINESS RECORDS STORAGE, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three
Year Ended Months Ended
June 30, September 30,
1995 1995
---------- -------------
(Unaudited)
<S> <C> <C>
Cash Flow from Operating Activities:
Cash received from customers and affiliates ........................... $ 4,769,087 $1,271,441
Cash paid for cost of sales ........................................... (873,587) (218,510)
Cash paid for operating expenses ...................................... (2,693,965) (805,400)
Interest expense ...................................................... (550,807) (113,677)
Income taxes paid ..................................................... -- (457)
Interest and dividends received ....................................... 1,082 3,691
Other income (expense) ................................................ (471) 973
-------- -----------
Net Cash from Operating Activities .................................. 651,339 138,061
-------- -----------
Cash Flow from Investing Activities:
Proceeds from escrow money deposit .................................... 154,988 --
Proceeds from sale of assets and equipment ............................ 12,117 1,686,742
Payments for purchase of property and equipment ....................... (554,247) (280,623)
Payments (to) from employees for advances ............................. (9,635) 9,670
Payments (to) from affiliates for advances ............................ (151,360) (67,771)
Payments for investments and intangibles .............................. (3,494) (726)
Payments for deposits ................................................. -- (374)
-------- -----------
Net Cash from Investing Activities .................................. (551,631) 1,346,918
-------- -----------
Cash Flows from Financing Activities:
Proceeds from borrowings .............................................. 272,330 --
Repayment of debt ..................................................... (276,748) (984,383)
-------- -----------
Net Cash from Financing Activities .................................. (4,418) (984,383)
-------- -----------
Net change in cash and cash equivalents ................................ 95,290 500,596
Cash and cash equivalents at beginning of period ....................... 30,692 125,982
-------- -----------
Cash and cash equivalents at end of period ............................. $ 125,982 $ 626,578
======== ===========
Reconciliation of net income to net cash provided by operating
activities:
Net income ............................................................ $ 84,043 $ 383,520
Depreciation and amortization ......................................... 510,831 115,653
Deferred compensation ................................................. 6,304 --
(Gain) loss on sale of assets ......................................... 4,045 (738,049)
(Increase) decrease in accounts receivable ............................ (72,453) 59,076
(Increase) in inventory ............................................... (1,581) --
(Increase) decrease in prepayments and escrow ......................... (49,272) 104,361
Increase (decrease) in accounts payable, accrued expenses and
unearned income .................................................... 114,290 (42,178)
Decrease in deferred tax benefit ...................................... 55,132 255,678
-------- -----------
Net cash provided by operating activities .............................. $ 651,339 $ 138,061
======== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-36
<PAGE>
DATA MANAGEMENT BUSINESS RECORDS STORAGE, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1995
NOTE 1--ORGANIZATIONAL HISTORY OF THE COMPANY
Data Management Business Records Storage, Inc. ("the Company"), organized
in 1985, provides data management and storage ("DMS") services in the
Atlanta, Georgia market. The Company currently has 1,447,024 cubic feet of
warehouse capacity.
The Company is a wholly owned subsidiary of Outdoor West, Inc., a
management and holding company. Outdoor West, Inc. also owns two subsidiaries
which operate in the outdoor advertising business, Outdoor West, Inc. of
Georgia and Outdoor West, Inc. of Tennessee.
NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Method of Accounting
The Company's financial statements are presented on the accrual basis.
Cash Equivalents
For purposes of reporting cash flows, cash and cash equivalents include
money market accounts and highly liquid debt instruments purchased with a
maturity of three months or less.
The Company maintains cash balances at several financial institutions.
Accounts at each institution are insured by the Federal Deposit Insurance
Corporation up to $100,000. Uninsured balances held in accounts at the
Company's primary lender aggregate $25,982 at June 30, 1995.
Allowance for Doubtful Trade Receivables
Bad debts are accounted for on the reserve method. The allowance for
doubtful accounts at June 30, 1995 was $837.
Materials Inventory
Materials inventory is valued at cost using the first-in, first-out
method.
Property and Depreciation
Property and equipment are recorded at cost. Depreciation is provided on
the straight-line method over the estimated useful lives of the respective
assets. Maintenance and repairs are charged to expense as incurred; major
renewals and betterments are capitalized. When items of property and
equipment are sold or retired, the related cost and accumulated depreciation
are removed from the accounts and any gain or loss is recognized.
Major classifications of property and equipment and their respective
depreciable lives are summarized below:
Years
------
Buildings ........................................... 15-40
Leasehold improvements .............................. 5-40
Autos and trucks .................................... 3-6
Equipment, construction ............................. 5-12
Shelving ............................................ 12
Computer equipment .................................. 5
Office furniture and fixtures ....................... 5-10
Leased assets ....................................... 7-25
F-37
<PAGE>
DATA MANAGEMENT BUSINESS RECORDS STORAGE, INC.
NOTES TO FINANCIAL STATEMENTS -- (Continued)
NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (Continued)
Intangible Assets
In acquisitions of record storage businesses, agreements not to compete
and goodwill were part of the purchase price. Non-compete agreements are
amortized over the lives of the agreements ranging from ten to twenty years;
goodwill is amortized over forty years. Loan costs are amortized over the
lives of the loans.
Income Taxes
The Company is included in a consolidated federal income tax return of an
affiliated group. Income tax expense in the Company's statement of operations
has been allocated based on the ratio that each member's separate taxable
income bears to the sum of the separate taxable incomes of all members having
taxable income for the year. Unused net operating losses and tax credits
available for carryforward to future years are detailed in Note 4.
NOTE 3--INTANGIBLE ASSETS
Intangible assets as of June 30, 1995 consist of:
Accumulated
Cost Amortization Net
--------- ----------- ---------
Non-compete agreements ............ $ 698,000 $418,282 $279,718
Loan costs ........................ 257,197 166,422 90,775
Goodwill .......................... 253,781 51,716 202,065
------- --------- -------
Total .......................... $1,208,978 $636,420 $572,558
======= ========= =======
NOTE 4--FEDERAL INCOME TAXES
The Company accounts for income taxes in accordance with the provisions of
Statement of Financial Accounting Standards Number 109, "Accounting for
Income Taxes". Under the provisions of Statement No. 109, a current tax
liability or asset is recognized for the estimated taxes currently payable or
refundable for the current year and a deferred tax liability or asset is
recognized for the estimated future tax effects attributable to temporary
differences and carryforwards. Temporary differences represent the difference
between the book and tax bases of assets or liabilities that will result in
taxable or deductible amounts in future years when the asset or liability is
recovered or settled.
Summary of the provision for income tax expense (benefit) for the year
ended June 30, 1995 is as follows:
Currently payable ................................... $ 457
Deferred ............................................ (4,595)
Utilization of operating loss carryforward .......... 59,727
------
Provision for income tax expense .................... $55,589
======
A reconciliation of income tax at the statutory rate to the Company's
effective rate is as follows:
Computed at the expected statutory rate ............. 38.0%
Officer's life insurance ............................ .9
Amortization of goodwill ............................ 1.7
Deferred compensation ............................... 1.7
Other differences ................................... (2.5)
----
Effective rate ...................................... 39.8%
====
F-38
<PAGE>
DATA MANAGEMENT BUSINESS RECORDS STORAGE, INC.
NOTES TO FINANCIAL STATEMENTS -- (Continued)
NOTE 4--FEDERAL INCOME TAXES -- (Continued)
For the year ended June 30, 1995, the Company was included in a
consolidated federal income tax return. The Company had carryovers as
follows:
Carryover Amount Expiration
--------------------------- --------- -----------
Net operating loss ........ $2,109,000 2004-2009
Contributions ............. 5,510 1996-1999
The deferred tax benefit consisted of the following at June 30, 1995:
Deferred tax benefit:
Net operating loss carryforward .......... $801,420
Other temporary differences .............. 9,011
-------
810,431
Valuation allowance ...................... -0-
-------
Net deferred tax benefit ................. $810,431
=======
Even though the Company has net operating loss carryforwards from fiscal
years ended June 30, 1985 through June 30, 1994, management believes that it
is more likely than not that it will generate taxable income sufficient to
realize the tax benefit associated with net operating loss and tax credit
carryforwards. This belief is based upon, among other factors, expectations
of continued growth in sales and changes in operations, as well as
consideration of available tax planning strategies. Specifically, the Company
has plans to consolidate operations in the DMS business by selling a
warehouse and moving files to an existing leased facility. The sale of the
warehouse facility is expected to result in a significant gain as the
facility's best use, due to its location and structure, is other than
warehouse space. Additionally, the Company has plans to sell the operating
assets of the DMS business at a significant gain. Management believes that no
valuation allowance is appropriate given the current estimates of future
taxable income. If the Company is unable to generate sufficient taxable
income in the future through operating results, or through the sales
discussed in Note 14, increases in the valuation allowance will be required
through a charge to income tax expense.
NOTE 5--CAPITAL STOCK
Common stock of the Company has a par value of $0.10 per share; 5,000
shares were authorized, issued and outstanding.
NOTE 6--PROPERTIES AND FACILITIES
1995
------------
Land ................................................ $ 364,657
Buildings ........................................... 1,831,905
Leasehold improvements .............................. 126,501
Autos and trucks .................................... 355,032
Equipment ........................................... 110,916
Shelving ............................................ 2,586,900
Computer equipment .................................. 334,018
Office furniture and fixtures ....................... 128,503
Leased assets ....................................... 313,667
----------
6,152,099
Less accumulated depreciation ....................... (2,818,082)
----------
$ 3,334,017
==========
F-39
<PAGE>
DATA MANAGEMENT BUSINESS RECORDS STORAGE, INC.
NOTES TO FINANCIAL STATEMENTS -- (Continued)
NOTE 7--NOTES PAYABLE
<TABLE>
<CAPTION>
Interest Balance
Maturity Collateral and Repayment Terms Rate June 30, 1995
- ---------- --------------------------------------------------- ------------ --------------
<S> <C> <C> <C>
6/96 Substantially all of assets of the Company except
those subject to prior liens and the outstanding
stock of the Company pari passu with other major
lender. Interest due monthly and principal
payments of approximately $60,000 due 9/30/95; 7.62%-
12/31/95 and 3/31/96. Remaining principal balance LIBOR+
due 6/30/96. 3.25% $5,124,242
2/01-3/01 Certain assets of DMS on purchase money
contracts, non-competes; due $16,667 monthly 10.00% 1,071,038
9/99 Real estate of DMS due $4,152 monthly 9.00% 384,892
9/94-4/96 Rolling stock and equipment, principal and
interest of approximately $9,000 due monthly Various 102,533
------------
$6,682,705
============
</TABLE>
Principal maturities of notes payable for the five years ending after
June 30, 1995 are:
6/30/96 ............................................. $ 5,353,941
6/30/97 ............................................. 195,314
6/30/98 ............................................. 196,611
6/30/99 ............................................. 522,343
6/30/00 ............................................. 272,365
Maturities after 5 years ............................ 142,131
----------
Total maturities ................................. 6,682,705
Less current maturities ............................. (5,353,941)
----------
Long term maturities ............................. $ 1,328,764
==========
At June 30, 1995, a substantial portion of the Company's notes payable
were due within one year. However, as discussed in Note 14, substantially all
of the operating assets of the Company were sold effective November 30, 1995.
The proceeds of this sale were sufficient to pay all of the Company's notes
payable.
Additional Restrictions Required by Long-Term Debt
The Company, its parent and affiliates entered into loan agreements with
Massachusetts Mutual Life Insurance Company and National Westminster Bank
USA. The affiliated group is required to comply with certain restrictive
covenants which require, among other things, limitations on capital
expenditures and corporate overhead and a deadline for providing audited
financial statements. While the affiliated group was in violation of these
agreements, the two lenders have issued waivers for the covenant violations
as of June 30, 1995.
NOTE 8--TRANSACTIONS WITH RELATED PARTIES
The Company has various lease and management agreements with affiliates.
The Company's parent, Outdoor West, Inc., charges the Company a management
fee which covers executive management supervision in addition to general
management services which include leasing, accounting, finance, personnel and
general supervision
F-40
<PAGE>
DATA MANAGEMENT BUSINESS RECORDS STORAGE, INC.
NOTES TO FINANCIAL STATEMENTS -- (Continued)
NOTE 8--TRANSACTIONS WITH RELATED PARTIES -- (Continued)
responsibilities. Amounts included in the statement of operations with
respect to transactions with affiliates for June 30, 1995 are:
Outdoor
West, The Eagle
Inc. Group
--------- ----------
Income
Land Lease ......................... $ -- $ 4,900
Expenses
Management fees ..................... 398,000 --
Interest ............................ -- 13,932
Building rental ..................... -- 103,875
------- --------
Net transactions with related parties $(398,000) $(112,907)
======= ========
Receivables from and payables to affiliates as of June 30, 1995 are:
Accounts receivable from:
Outdoor West, Inc. ......................... $316,551
=======
Notes payable to:
Outdoor West, Inc. of Georgia .............. $ 50,000
=======
Charles H. Renfroe is Chairman of the Board of Directors of the Company.
The Eagle Group is a sole proprietorship, owned by Mr. Renfroe, which
operates a mini-warehouse project and leases office and warehouse space to
Outdoor West, Inc. of Georgia and to the Company. In addition, the Eagle
Group owns 19 parcels of land leased to Outdoor West, Inc. of Georgia and
Tennessee.
In the opinion of management, all of the transactions with related parties
are at rates and terms equivalent to those that prevail in arm's-length
transactions.
NOTE 9--UNEARNED INCOME
Unearned income represents primarily income billed one month in advance
for record storage. Most of this was recognized as income in July, 1995.
NOTE 10--OBLIGATIONS UNDER CAPITAL LEASE
The Company is the lessee of property under capital leases with
expirations as disclosed in the following table. Assets and liabilities under
capital leases are recorded at the lower of the present value of the minimum
lease payments or the fair value of the asset. The assets are depreciated
over the lower of their related lease terms or their estimated productive
lives. Depreciation of assets under capital leases is included in
depreciation expense for 1995.
Interest rates on capitalized leases vary and are imputed based on the
lower of the Company's incremental borrowing rate at the inception of each
lease or the lessor's implicit rate of return.
General Description of Capital Leases
June 30,
1995 Termination
Leased Property Balance Dates
--------------- ----------- ----------------
Equipment ......................... $182,457 10/05/96-12/19/99
=========
F-41
<PAGE>
DATA MANAGEMENT BUSINESS RECORDS STORAGE, INC.
NOTES TO FINANCIAL STATEMENTS -- (Continued)
NOTE 10--OBLIGATIONS UNDER CAPITAL LEASE -- (Continued)
Net Obligations Under Capital Leases at June 30, 1995:
Capital Less: Balance
Lease Imputed Sheet
Balance Interest Values
------- ------- --------
Current liabilities ........... $ 84,078 $15,836 $ 68,242
===== ===== ======
Long-term liabilities ......... $129,366 $15,150 $114,216
===== ===== ======
Gross Assets and Accumulated Depreciation
June 30, 1995
--------------
Equipment and automobiles ......... $313,667
Less accumulated depreciation ..... (68,721)
------------
$244,946
============
Minimum Future Lease Payments
Years Ended June 30
-------------------
1996 .............................................. $ 84,078
1997 .............................................. 73,109
1998 .............................................. 30,229
1999 .............................................. 17,352
2000 .............................................. 8,676
------
Total minimum lease payments .................... 213,444
Less imputed interest ............................... 30,986
------
Present value of net minimum lease payments ......... $182,458
======
NOTE 11--OBLIGATIONS UNDER OPERATING LEASES
The Company leases real estate under operating leases expiring in various
years through January 31, 2008.
Minimum future rental payments under non-cancellable operating leases
having remaining terms in excess of one year as of June 30, 1995 for each of
the next five years in the aggregate are:
Years Ended June 30 Amount
------------------ ----------
1996 .............................................. $ 745,918
1997 .............................................. 528,299
1998 .............................................. 425,770
1999 .............................................. 428,208
2000 .............................................. 418,197
Subsequent to 2000 ................................ 3,373,556
--------
$5,919,948
========
Rental expense under all operating leases for the fiscal year ended
June 30, 1995:
Rental Expense ...................................... $491,139
======
The Company leases real estate from affiliates. The leases are classified
as operating leases and provide for minimum annual rentals of $103,875 with
expirations ranging from February 28, 1996 to January 6, 2000. See Note 8.
F-42
<PAGE>
DATA MANAGEMENT BUSINESS RECORDS STORAGE, INC.
NOTES TO FINANCIAL STATEMENTS -- (Continued)
NOTE 12--COMMITMENTS AND CONTINGENCIES
The Company began a self-insured program for its group health plan
January 1, 1990. The Company is liable for claims up to $20,000 per employee
annually and aggregate claims up to $154,861 annually. Self-insurance costs
are accrued based upon the aggregate of the liability for reported claims and
an actuarially determined estimated liability for claims incurred but not
reported.
NOTE 13--PROFIT SHARING PLAN
Effective January 1, 1994, the Company implemented a profit sharing plan
described in Internal Revenue Code Section 401(k). All employees of the
Company are eligible to participate once they meet the eligibility and
participation requirements of the plan. Employees become eligible for
participation in the plan after attaining age 21 and completing 12 months of
service.
Under the terms of the plan, participants may contribute a portion of
their compensation to the plan on a tax deferred basis. Employee
contributions may not exceed the annual limitations established by the
Treasury. The Company matches 10% of the first 6% of compensation contributed
by each participant. During the year ended June 30, 1995 the cost of the plan
to the Company totaled $7,128.
NOTE 14--SUBSEQUENT EVENTS
On July 31, 1995 the Company sold a warehouse and distribution facility.
Proceeds from the sale were $1,850,000. The transaction resulted in a gain of
approximately $740,000 which will be included in net income from operations
for the fiscal year ending June 30, 1996.
On December 1, 1995, the Company sold, effective November 30, 1995,
substantially all of its operating assets.
F-43
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Partners Nashville Vault Company, Ltd.:
We have audited the accompanying balance sheet of Nashville Vault Company,
Ltd. (a Tennessee limited partnership) as of December 31, 1995, and the
related statements of income, partners' capital and cash flows for the year
then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Nashville Vault Company,
Ltd. at December 31, 1995, and the results of its operations and its cash
flows for the year then ended, in conformity with generally accepted
accounting principles.
Geo. S. Olive & Co. LLC
Indianapolis, Indiana
January 16, 1996
F-44
<PAGE>
NASHVILLE VAULT COMPANY, LTD.
(A TENNESSEE LIMITED PARTNERSHIP)
BALANCE SHEET
December 31,
1995
------------
ASSETS
Current assets:
Cash and cash equivalents ............... $ 275,806
Accounts receivable--trade .............. 180,609
Prepaid expenses ........................ 60
----------
Total current assets .................. 456,475
Property and equipment:
Building and improvements ............... 1,148,652
Furniture and equipment ................. 269,798
Vehicles ................................ 88,386
----------
1,506,836
Accumulated depreciation and amortization (833,520)
----------
$ 673,316
----------
$1,129,791
==========
LIABILITIES
Current liabilities:
Accounts payable and accrued expenses ... $ 104,662
Deferred revenue ........................ 43,253
Convertible notes payable ............... 325,000
----------
Total current liabilities ............. 472,915
PARTNERS' CAPITAL ....................... 656,876
----------
$1,129,791
==========
The accompanying notes are an integral part of these financial statements.
F-45
<PAGE>
NASHVILLE VAULT COMPANY, LTD.
(A TENNESSEE LIMITED PARTNERSHIP)
STATEMENT OF INCOME
Year Ended
December 31,
1995
----------------
Revenue:
Storage ........................................... $ 636,302
Service and storage material sales ................ 738,338
--------------
Total revenue .................................. $1,374,640
Operating expenses:
Cost of sales (excluding depreciation) ............ 499,389
Selling, general and administrative expenses ...... 326,674
Depreciation and amortization ..................... 122,021
--------------
Total operating expenses ....................... 948,084
--------------
Operating income .................................... 426,556
Other income (expense):
Interest income ................................... 18,994
Interest expense .................................. (80,022)
--------------
(61,028)
--------------
Net income .......................................... $ 365,528
==============
STATEMENT OF PARTNERS' CAPITAL
Balance, Beginning of Year .......................... $ 306,499
Net income ........................................ 365,528
Cash distributions ................................ (15,151)
--------------
Balance, End of Year ................................ $ 656,876
==============
The accompanying notes are an integral part of these financial statements.
F-46
<PAGE>
NASHVILLE VAULT COMPANY, LTD.
(A TENNESSEE LIMITED PARTNERSHIP)
STATEMENT OF CASH FLOWS
Year Ended
December 31,
1995
----------------
Operating Activities:
Net income ............................................... $ 365,528
Items not affecting net cash provided by operating
activities:
Depreciation and amortization ......................... 122,021
Gain on disposal of property and equipment ............ (141)
Changes in other items:
Accounts receivable--trade ......................... (333)
Prepaid expenses ................................... 16,761
Accounts payable and accrued expenses .............. 41,230
Deferred revenue ................................... (2,012)
--------------
Net cash provided by operating activities .......... $ 543,054
Investing Activities:
Purchase of property and equipment ....................... (30,908)
Proceeds from sale of property and equipment ............. 2,300
Proceeds from sale of investments ........................ 310,000
Purchase of investments .................................. (210,000)
--------------
Net cash provided by investing activities .......... 71,392
Financing Activities:
Payments on debt ......................................... (489,969)
Cash distribution to partners ............................ (15,151)
--------------
Net cash used by financing activities .............. (505,120)
--------------
Net increase in Cash and Cash Equivalents .................. 109,326
Cash and Cash Equivalents, Beginning of Year ............... 166,480
--------------
Cash and Cash Equivalents, End of Year ..................... $ 275,806
==============
Supplemental Cash Flows Information:
Cash paid during the year for interest ................... $ 80,022
Equipment acquired with installment note ................. 48,854
The accompanying notes are an integral part of these financial statements.
F-47
<PAGE>
NASHVILLE VAULT COMPANY, LTD.
(A TENNESSEE LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
1. Nature of Operations
Nashville Vault Company, Ltd. (the "Partnership") is a limited partnership
formed pursuant to the Uniform Limited Partnership Act of Tennessee on
February 21, 1985 to renovate, own and operate a maximum security facility
containing safe deposit boxes and secured storage vaults in Nashville.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statement and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
2. Summary of Significant Accounting Policies
Cash Equivalents
The Partnership considers all liquid investments with original maturities
of three months or less to be cash equivalents. At December 31, 1995, cash
equivalents consisted of savings accounts. From time to time during the year,
the Partnership's cash accounts exceeded federally insured limits.
Property and Equipment
Property and equipment are carried at cost, and such cost is being
recovered using straight-line and accelerated methods of depreciation, with
useful lives of 15 to 31.5 years for building and improvements, 5 to 7 years
for furniture and equipment, and 5 years for vehicles.
Revenue Recognition
Revenue is recognized when earned. Revenue billed in advance is shown as
deferred revenue.
Advertising Costs
The Partnership expenses advertising costs as incurred. Advertising costs
were $6,787 in 1995.
Income Tax Status
Since the entity is a partnership, it is not subject to federal and state
income taxes and, accordingly, no provision for federal and state taxes on
income is required. The partners include their allocable share of the net
income or loss in their respective income tax returns.
3. Convertible Notes Payable
The 12% convertible notes, payable to certain limited partners, are
convertible into limited partnership units at a conversion price of $12,500
for one limited partnership unit. On January 1, 1996, all convertible notes
were converted into 26 limited partnership units.
4. Employee Benefits
On January 1, 1994, the Partnership established a 401(k) defined
contribution plan for the benefit of substantially all of its employees,
which allows for both employee and Partnership contributions. The Partnership
contribution consists of a matching contribution of 25 percent of employee
contributions, up to 3.75 percent of eligible employee compensation. The
Partnership contribution to the plan was $3,924 for 1995. This plan was
terminated on December 31, 1995.
F-48
<PAGE>
NASHVILLE VAULT COMPANY, LTD.
(A TENNESSEE LIMITED PARTNERSHIP) -- (Continued)
5. Partnership Agreement
The Agreement of Limited Partnership (as amended) specifies the allocation
of profits, losses, and distributions to be allocated 1% to the General
Partner and 99% to the Investor Limited Partners.
Under the agreement, the limited partners are not liable for any debts of
the Partnership nor are they required to make any additional capital
contributions.
6. Related Party Transactions
The Partnership leases the ground on which its building is located from
family members of stockholders of the General Partner and pays real estate
taxes and other related expenses under the lease which expires November 30,
2000. On January 1, 1996, the Partnership exercised an option to purchase the
land for $250,000. Rent expense in 1995 was $29,000.
The General Partner, USA Vault Corporation, is guaranteed a monthly
management fee for the operation of the Partnership. The fee begins at $1,000
per month increasing to $2,000 and $3,000 monthly when annual gross revenue
exceeds $200,000 and $300,000, respectively. The Partnership incurred
management fees to the General Partner of $32,000 in 1995.
The Partnership pays fees to a company owned by the president of USA Vault
Corporation for accounting and bookkeeping services. Fees paid totaled
$12,000 for 1995.
7. Major Customer
Sales from a major customer approximated 10% of sales and 19% of accounts
receivable at December 31, 1995.
8. Subsequent Event
On January 4, 1996, the Partnership sold, effective January 1, 1996,
substantially all of its operating assets for approximately $3,450,000 to
Iron Mountain Record Management, Inc.
F-49
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Directors and Stockholders
Data Archive Services, Inc. and Data Archive Services of Miami, Inc.:
We have audited the accompanying combined balance sheet of Data Archive
Services, Inc. and Data Archive Services of Miami, Inc. (Florida
Corporations) as of May 31, 1996, and the related combined statements of
operations and retained earnings, and cash flows for the year then ended.
These combined financial statements are the responsibility of the company's
management. Our responsibility is to express an opinion on these combined
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the combined financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the combined
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the financial position of Data Archive
Services, Inc. and Data Archive Services of Miami, Inc. as of May 31, 1996,
and the results of their operations and their cash flows for the year then
ended, in conformity with generally accepted accounting principles.
The combined financial statements include the financial statements of Data
Archive Services, Inc. and Data Archive Services of Miami, Inc., which are
related through controlled ownership and management.
Perless, Roth, Jonas & Hartney, CPAs, PA
Miami, Florida
July 30, 1996
(except for Note 11,
for which the date
is August 9, 1996)
F-50
<PAGE>
DATA ARCHIVE SERVICES, INC.
COMBINED BALANCE SHEET
MAY 31, 1996
ASSETS
Current Assets:
Cash ........................................ $ 155,435
Accounts Receivable ......................... 291,711
Due from Related Party ...................... 19,379
Inventories ................................. 4,061
Prepaid Expenses ............................ 45,673
Income Taxes Receivable ..................... 34,485
-------
Total Current Assets ..................... 550,774
Property, Plant and Equipment:
Shelving .................................... 565,513
Office Furniture and Equipment .............. 217,686
Vaults ...................................... 110,139
Leasehold Improvements ...................... 61,914
Vehicle ..................................... 18,237
-------
973,489
Less: Accumulated Depreciation .............. (490,025)
-------
Property, Plant and Equipment, Net ....... 483,464
Other Assets ................................ 46,730
-------
Total Assets ............................. $1,080,938
=======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current Portion of Long-Term Liabilities .... $ 129,407
Accounts Payable ............................ 251,207
Accrued Expenses ............................ 126,909
Loan Payable to Stockholder ................. 165,154
Deferred Revenue ............................ 170,140
Income Taxes Payable ........................ 8,365
-------
Total Current Liabilities ................ 851,182
Long-Term Liabilities:
Lease Obligation Payable .................... 7,117
Installment Obligations Payable ............. 145,298
Line of Credit Payable to Bank .............. 100,000
Less: Current Portion of Long-Term
Liabilities ............................... (129,407)
-------
Total Long-Term Liabilities .............. 123,008
Stockholders' Equity:
Capital Stock ............................... 11,000
Additional Paid-in Capital .................. 50,050
Retained Earnings ........................... 45,698
-------
Total Stockholders' Equity ............... 106,748
-------
Total Liabilities and Stockholders' Equity $1,080,938
=======
The accompanying notes are an integral part of these financial statements.
F-51
<PAGE>
DATA ARCHIVE SERVICES, INC.
COMBINED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
FOR THE YEAR ENDED MAY 31, 1996
Revenues:
Storage ............................................. $1,106,051
Service and Storage Material Sales .................. 609,955
---------
Total Revenues .................................... 1,716,006
Operating Expenses:
Cost of Sales (Excluding Depreciation) .............. 962,801
Selling, General and Administrative ................. 919,022
Depreciation and Amortization ....................... 38,285
---------
Total Operating Expenses .......................... 1,920,108
---------
Operating Loss ...................................... (204,102)
Interest Expense, Net ............................... (3,177)
Loss Before Income Tax Benefit ...................... (207,279)
Income Tax Benefit .................................. 1,190
---------
Net Loss ............................................ (206,089)
Retained Earnings--Beginning of Year ................ 251,787
---------
Retained Earnings--End of Year ...................... $ 45,698
=========
The accompanying notes are an integral part of these financial statements.
F-52
<PAGE>
DATA ARCHIVE SERVICES, INC.
COMBINED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED MAY 31, 1996
Cash Flows From Operating Activities:
Net Loss ............................................ $(206,089)
Adjustments to Reconcile Net Loss to Net
Cash Provided by Operating Activities:
Depreciation and Amortization ...................... 38,285
Loss on Abandonment of Assets ...................... 26,725
Increase in Accounts Receivable .................... (82,260)
Increase in Inventories ............................ (1,146)
Increase in Prepaid Expenses ....................... (6,538)
Increase in Income Taxes Receivable ................ (34,485)
Decrease in Due from Related Party ................. 49,793
Decrease in Other Assets ........................... 29,875
Increase in Accounts Payable ....................... 166,391
Increase in Accrued Expenses ....................... 72,577
Increase in Deferred Revenue ....................... 52,710
Increase in Income Taxes Payable ................... 6,624
---------
Total Adjustments ................................ 318,551
---------
Net Cash Provided by Operating Activities ........ 112,462
---------
Cash Flows From Investing Activities:
Property, Plant and Equipment Expenditures .......... (369,522)
Cash Flows From Financing Activities:
Advances from Stockholder ........................... 288,050
Repayments to Stockholder ........................... (122,896)
Proceeds from Line of Credit ........................ 100,000
Proceeds from Lease and Installment Obligations ..... 150,337
Repayments on Lease and Installment Obligations ..... (48,190)
---------
Net Cash Provided by Financing Activities ........ 367,301
---------
Net Increase in Cash ................................ 110,241
Cash at Beginning of Year ........................... 45,194
---------
Cash at End of Year ................................. $ 155,435
=========
Supplemental Disclosures of Cash Flow Information:
Cash Paid During the Year for Interest .............. $ 7,485
=========
Cash Paid During the Year for Income Taxes .......... $ 13,443
=========
The accompanying notes are an integral part of these financial statements.
F-53
<PAGE>
DATA ARCHIVE SERVICES, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
MAY 31, 1996
NOTE 1--NATURE OF BUSINESS
The accompanying financial statements represent the combined accounts of
Data Archive Services, Inc. and Data Archive Services of Miami, Inc.
(Affiliate). Data Archive Services, Inc. and Affiliate (the Companies) are
records management companies providing storage and related services primarily
in Dade, Broward and Palm Beach Counties.
NOTE 2--SIGNIFICANT ACCOUNTING POLICIES
a. Principles of Combination
The financial statements reflect the financial position and results of
operations of the Companies on a combined basis. All significant intercompany
balances and transactions have been eliminated.
b. Property and Equipment
Property and equipment are recorded at cost and depreciated using the
straight-line and declining balance methods with the following useful lives:
Years
------
Leasehold Improvements 14-20
Shelving 8-33
Vaults and Security Systems 8-10
Office Furniture and Equipment 5-7
Vehicle 6
Expenditures for repairs and maintenance are charged to expense as
incurred. Expenditures for major renewals and betterments, which
significantly extend the useful lives of existing property and equipment, are
capitalized and depreciated. Upon retirement or disposition of property and
equipment, the cost and related accumulated depreciation are removed from the
accounts and any resulting gain or loss is recognized in income.
c. Allowance for Doubtful Trade Receivables
Bad debts are accounted for on the reserve method. As at May 31, 1996, no
reserve for doubtful accounts was required.
d. Revenue Recognition
Storage and service revenues are recognized in the month the respective
service is provided. Storage material sales are recognized when shipped to
the customer. Amounts related to future storage for customers when storage
fees are billed in advance are accounted for as deferred revenue and
amortized over the applicable period. These amounts are included in deferred
revenue in the accompanying financial statements.
e. Inventories
Inventories are carried at the lower of cost using the first-in, first-out
basis, or market and are comprised primarily of boxes.
f. Cash and Cash Equivalents
The Companies define cash and cash equivalents to include cash on hand and
cash invested in short-term securities which have original maturities of less
than 90 days.
F-54
<PAGE>
DATA ARCHIVE SERVICES, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (Continued)
g. Financial Statements Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions which affect the reporting of assets and liabilities as of the
dates of the financial statements and revenues and expenses during the
reporting period. Actual results may differ from these estimates.
h. Income Taxes
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109 (SFAS No. 109), "Accounting For Income
Taxes". Under SFAS No. 109, an asset and liability approach is required. Such
approach results in the recognition of deferred tax assets and liabilities
for the expected future tax consequences of temporary differences between the
book carrying amounts and the tax basis of assets and liabilities.
NOTE 3--LONG-TERM LIABILITIES
<TABLE>
<CAPTION>
<S> <C>
Long-Term Liabilities consist of the following:
Line of Credit with Bank--$100,000
Line of Credit Secured by Substantially all of the Assets. Interest,
Paid Monthly, Calculated at 1% above Published Prime. Principal
Balance is due and Payable March 22, 1997 ............................ $100,000
Financing, Primarily for Shelving
Principal and Interest Calculated at 12.27%, Paid in Monthly
Installments of $3,184 ............................................... 140,552(A)
Other Financing for Shelving, Equipment, and a Vehicle. Principal and
Interest Ranging from 9.82% to 13.19%, Paid in Monthly Installments of
$734 ................................................................. 11,863
----------
Long-Term Liabilities .................................................. 252,415
Less: Current Portion .................................................. 129,407
----------
Long-Term Liabilities, Net of Current Portion .......................... $123,008
==========
</TABLE>
The scheduled repayment of long-term liabilities is as follows:
<TABLE>
<CAPTION>
Year Amount
----- ---------
<S> <C>
1997 ............................................................... $129,407
1998 ............................................................... 27,891
1999 ............................................................... 30,144
2000 ............................................................... 32,000
2001 ............................................................... 32,973
-------
$252,415
=======
</TABLE>
(A) This obligation is non-cancelable with no offset. Therefore the payoff
amount, if Data Archive Services, Inc. cancels this agreement, is
based upon the remaining payments. The cancellation amounts versus the
outstanding indebtedness for the 12 months ended May 31 are as
follows:
Number
of
Remaining Outstanding Cancellation
Year Payments Indebtedness Indebtedness
---------------- ------- ----------- -------------
1996 59 $140,552 $187,856
1997 47 118,363 149,648
1998 35 93,294 111,440
1999 23 64,971 73,232
2000 11 32,971 35,024
F-55
<PAGE>
DATA ARCHIVE SERVICES, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (Continued)
NOTE 4--CONTINGENCIES AND COMMITMENTS
Obligations Under Operating Leases
The Companies presently lease all their facilities under various operating
leases. Several of these leases have renewal options of three (3) years and
have consumer price index escalation clauses. The Companies also lease
computer equipment and warehouse equipment under operating leases expiring at
various dates within a two (2) year period. Rent expense for the year ended
May 31, 1996 is as follows:
Rent--Premises ...................................... $432,742
=======
Rent--Computer and Warehouse Equipment .............. $ 91,537
=======
Minimum future lease payments for the 12 months ended May 31, are as
follows:
Lease
Computer
and
Lease Warehouse
Year Premises Equipment
----------------------------------- --------- ----------
1997 .............................. $ 358,263 $ 79,658
1998 .............................. 356,291 32,840
1999 .............................. 356,291 --
2000 .............................. 356,291 --
2001 .............................. 356,291 --
Thereafter ........................ 3,767,123 --
------- --------
$5,550,550 $112,498
======= ========
Certain of the operating leases contracted for by the companies are
contracted with the controlling shareholder of the Companies. This is
discussed more fully in Note 7 "Transactions With Related Parties".
Concentration of Credit Risk
The Companies maintain their bank accounts with FDIC financial
institutions. As at May 31, 1996, the cash balance in one (1) of the accounts
exceeded the insured limits by approximately $42,000.
NOTE 5--PROFIT SHARING PLAN
Effective January 1, 1995, the Companies implemented a profit sharing plan
described in Internal Revenue Code Section 401(k). All employees of the
Companies are eligible to participate once they meet the eligibility and
participation requirements of the plan. Employees become eligible for
participation in the plan after attaining age 21 and completing 12 months of
service.
Under the terms of the plan, participants may contribute a portion of
their compensation to the plan on a tax deferred basis. Employee
contributions may be made with a maximum deferral up to 15 percent of
compensation, not to exceed the annual limitations established by the
Treasury.
The Companies are required to make contributions to the plan, but the
amount of the contribution is determined by the Companies. During the year
ended May 31, 1996, the Companies contributed $12,013 to the plan.
NOTE 6--CAPITAL STOCK
Common stock of Data Archive Services, Inc. has a par value of $1.00 per
share; 1,000 shares are authorized, issued and outstanding. Common stock of
Data Archive Services of Miami, Inc. (Affiliate) has a par value of $0.01 per
share; 1,000,000 shares are authorized, issued and outstanding. There have
been no changes in the capital stock of both companies during the fiscal year
ended May 31, 1996.
F-56
<PAGE>
DATA ARCHIVE SERVICES, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (Continued)
NOTE 7--TRANSACTIONS WITH RELATED PARTIES
P. Douglas McCraw, chief operating officer and controlling shareholder of
the Companies has entered into certain lease and loan arrangements with the
Companies. The Companies have entered into various lease and loan
arrangements either through Mr. McCraw or other companies controlled by Mr.
McCraw.
These lease and loan arrangements are as follows:
<TABLE>
<CAPTION>
Number
of
Lease Months
Expense Remaining Total
May 31, on Lease
Lessor and Description 1996 Lease Obligation
------------------------------------------ ----------- ------- -----------
<S> <C> <C> <C>
DAS Imaging Systems, Inc.
Computer Equipment ..................... $73,140 17 $ 103,615
P. Douglas McCraw
Ft. Lauderdale Storage Facility ........ 22,366 238 4,478,446
Galt Ocean Mile Partnership
Ft. Lauderdale Storage Facility ........ 27,943 87 120,147
P. Douglas McCraw Month
Lower Matecumbe Facility ............... to
10,845 Month --
P. Douglas McCraw
Miami Storage Facility .................. 84,241 84 628,766
P. Douglas McCraw
Miami Storage Facility ................. 28,603 160 321,221
Receivables from and Payables to Related
Parties:
Loan Receivable from:
DAS Imaging Systems, Inc. ............. $ 19,379
=========
Loan Payble to:
P. Douglas McCraw--Non-Interest
Bearing Loan ......................... $ 165,154
=========
Amounts Included in Accounts Payable:
P. Douglas McCraw--Lease--Miami
Storage Facilities ................... $ 27,559
Galt Ocean Mile Partnership--Lease
Ft. Lauderdale Storage Facility ...... 7,308
P. Douglas McCraw--Lease--Other
Facilities ........................... 4,518
---------
$ 39,385
=========
</TABLE>
NOTE 8--INCOME TAXES
The income tax benefit (provision) consisted of the following:
Current Federal Credit .............................. $ 24,615
Current Federal Provision ........................... (18,532)
Current State Provision ............................. (4,893)
-------
Total Current Credit ............................. $ 1,190
=======
At May 31, 1996, there are no temporary differences which would give rise
to deferred tax assets and liabilities except as follows. Data Archive
Services, Inc. has a federal operating loss carryforward of $167,621, and a
state
F-57
<PAGE>
DATA ARCHIVE SERVICES, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (Continued)
operating loss carryforward of $318,682, which will expire in 2011.
Realization of the deferred tax asset of $75,000 associated with the loss
carryforwards is dependent upon the future earnings of this company. Because
of the uncertainty of realization of this asset, a valuation allowance has
been recognized for the entire deferred tax asset.
NOTE 9--FAIR VALUE OF FINANCIAL INSTRUMENTS
The following disclosure of the estimated fair value of financial
instruments is made in accordance with the requirements of SFAS No. 107,
"Disclosures About Fair Value of Financial Instruments." These estimates have
been determined by the Companies using available market information and
appropriate valuation techniques based on information as of May 31, 1996. As
considerable judgment is inherent in the development of these estimates, they
are not necessarily indicative of the amounts that the companies could
realize in the current market exchange.
The recorded amounts and fair values are as follows:
May 31, 1996
--------------------
Recorded Fair
Amount Value
------- ---------
Assets:
Cash ........................................ $155,435 $155,435
Due from Related Party ...................... 19,379 19,379
Liabilities:
Current Portion of Long-Term Liabilities .... 129,407 129,407
Long-Term Liabilities ....................... 123,008 123,008
NOTE 10--SIGNIFICANT COMPONENTS OF COMBINED FINANCIAL STATEMENTS
The significant components of the entities, before elimination, comprising
the combined financial statements are as follows:
Data
Archive Data Archive
Services, Services of
Inc. Miami, Inc.
----------- ------------
Total Assets ............................... $ 953,885 $255,729
========= ==========
Total Liabilities .......................... $1,000,747 $102,119
========= ==========
Total Stockholders'
Equity (Deficit) ........................ $ (46,862) $153,610
========= ==========
Net Income (Loss) .......................... $ (276,619) $ 70,530
========= ==========
NOTE 11--SUBSEQUENT EVENTS
Effective August 1, 1996, all of the outstanding capital stock of the
Companies was sold to Iron Mountain Records Management, Inc. All debt of the
Companies will be repaid from the proceeds of the sale.
F-58
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of Iron Mountain Incorporated:
We have audited the accompanying balance sheet of Data Storage Systems,
Inc. (a California corporation) as of December 31, 1995, and the related
statements of operations, shareholders' deficit and cash flows for the year
then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Data Storage Systems,
Inc. as of December 31, 1995 and the results of its operations and its cash
flows for the year then ended, in conformity with generally accepted
accounting principles.
Arthur Andersen LLP
San Jose, California
May 17, 1996
F-59
<PAGE>
DATA STORAGE SYSTEMS, INC.
BALANCE SHEET
DECEMBER 31, 1995
Assets
Current Assets:
Cash ......................................... $ 185,278
Accounts receivable .......................... 243,923
Prepaid expenses and other ................... 23,624
----------
Total current assets ..................... 452,825
Property and Equipment:
Equipment and improvements ................... 1,020,762
Less--Accumulated depreciation ............... 828,074
----------
Net property and equipment ................... 192,688
Other Assets ................................. 12,297
----------
Total assets ............................. $ 657,810
==========
Liabilities and Shareholders' Deficit
Current Liabilities:
Accounts payable ............................. $ 27,822
Accrued liabilities .......................... 70,876
Deferred revenue ............................. 65,504
Notes payable ................................ 993,402
Accrued interest ............................. 313,875
----------
Total current liabilities ................ 1,471,479
----------
Shareholders' Deficit:
Series A preferred stock, no par value-
Authorized--1,000,000 shares
Outstanding--1,000,000 shares .............. 1,000,000
Series B preferred stock, no par value-
Authorized--500,000 shares
Outstanding--266,666 shares ................ 365,333
Series C preferred stock, no par value-
Authorized--2,000,000 shares
Outstanding--1,083,334 shares .............. 650,000
Common stock, no par value-
Authorized--137,000,000 shares
Outstanding--110,756,630 shares ............ 1,178,967
Accumulated deficit .......................... (4,007,969)
----------
Total shareholders' deficit .............. (813,669)
----------
Total liabilities and shareholders'
deficit .................................... $ 657,810
==========
The accompanying notes are an integral part of these financial statements.
F-60
<PAGE>
DATA STORAGE SYSTEMS, INC.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
Revenues:
Storage ............................................. $ 739,177
Service and storage material sales .................. 586,673
--------
1,325,850
--------
Operating Expenses:
Cost of sales (excluding depreciation) .............. 556,092
Selling, general, and administrative ................ 316,905
Depreciation and amortization ....................... 131,314
--------
Total operating expenses ........................ 1,004,311
--------
Operating Income .................................... 321,539
Interest Expense .................................... 127,477
--------
Net income .......................................... $ 194,062
========
STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Series Series
Series A B C Total
Preferred Preferred Preferred Common Accumulated Shareholders'
Stock Stock Stock Stock Deficit Deficit
--------- ------- ------- --------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1994 $1,000,000 $365,333 $650,000 $ 79,333 $(4,202,031) $(2,107,365)
Issuance of common stock
on conversion of notes
payable ................ -- -- -- 1,099,634 -- 1,099,634
Net income ............... -- -- -- -- 194,062 194,062
------- ----- ----- ------- --------- -----------
Balance at December 31, 1995 $1,000,000 $365,333 $650,000 $1,178,967 $(4,007,969) $ (813,669)
======= ===== ===== ======= ========= ===========
</TABLE>
F-61
<PAGE>
DATA STORAGE SYSTEMS, INC.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1995
Cash Flows from Operating Activities:
Net income .................................................... $ 194,062
Adjustments to reconcile net income to net cash
used in operating activities--
Depreciation and amortization ............................. 69,575
Net changes in assets and liabilities-
Accounts receivable ..................................... 2,361
Inventory ............................................... (3,300)
Prepaids and other ...................................... 12,337
Accounts payable ........................................ (142,056)
Accrued liabilities ..................................... (179,529)
--------
Net cash used in operating activities .................. (46,550)
--------
Cash Flows from Financing Activities:
Proceeds from notes payable ................................... 206,258
--------
Net Increase in Cash ............................................ 159,708
Cash at Beginning of Period ..................................... 25,570
--------
Cash at End of Period ........................................... $ 185,278
========
Supplemental Disclosure of Noncash Financing Activities:
The Company issued 109,963,296 shares of common stock on conversion
of notes payable amounting to $1,099,634
The accompanying notes are an integral part of these financial statements.
F-62
<PAGE>
DATA STORAGE SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
1. ORGANIZATION OF THE COMPANY:
Data Storage Systems, Inc. (a California corporation) operates a
records-storage warehouse in San Jose, California.
The Company entered into a merger agreement with Iron Mountain Records
Management, Inc. in November 1995. The merger was effective as of February 29,
1996. Iron Mountain is the surviving entity and the Company became a wholly
owned subsidiary of Iron Mountain.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Cash
For purposes of the statements of cash flows, the Company considers all
highly liquid investments with an original maturity of 90 days or less to be
cash equivalents.
Equipment and Improvements
Equipment and improvements are stated at cost and depreciated using the
straight-line method over the estimated useful lives (ranging from three to
seven years) or over the shorter of the estimated useful life of the asset or
its lease term for leasehold improvements. Equipment and improvements consist
of the following:
Warehouse equipment ................................. $ 931,814
Office equipment .................................... 68,006
Improvements ........................................ 20,942
--------
$1,020,762
========
Revenue Recognition
Revenue is recognized ratably over the time that the Customer's records
are in storage. Customers are billed one month in advance for storage and in
arrears for service. Advance billings for storage are recorded as deferred
revenue.
Income Taxes
The Company accounts for income taxes pursuant to the provisions of
Statement of Financial Accounting Standards No. 109 "Accounting for Income
Taxes" (SFAS 109). SFAS 109 requires recognition of deferred tax liabilities
and assets for the expected future tax consequences of events that have been
included in the financial statements or tax returns. Under this method,
deferred tax liabilities and assets are determined using the current
applicable enacted tax rate and provisions of the enacted tax law.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
the disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
3. NOTES PAYABLE AND RELATED PARTIES:
At December 31, 1995, the Company had several notes payable totaling
$993,402 to shareholders with varying interest rates ranging from 10.0% to
18.8%. These notes are payable upon demand. The fair value of the notes
F-63
<PAGE>
DATA STORAGE SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS -- (Continued)
payable does not materially differ from the carrying value. On February 29,
1996, these notes and the related accrued interest were converted to shares
of common stock in connection with the acquisition of the Company by Iron
Mountain Records Management, Inc.
4. PREFERRED STOCK:
Series A, Series B, and Series C Convertible Preferred Stock
The Convertible Preferred Stock outstanding consists of 1,000,000,
266,666, and 1,083,334 shares of Series A Convertible Preferred Stock
("Series A"), Series B Convertible Preferred Stock ("Series B"), and Series C
Convertible Preferred Stock ("Series C"), respectively.
The rights and preferences of the Series A, Series B and Series C
Convertible Preferred Stock are as follows:
Dividends
The holders of the Series C shall be entitled when and if declared by the
Board of Directors, to dividends at a rate of $0.05 per share, per annum,
payable in preference and priority to payment of any dividend to the holders
of Series A, Series B or Common Stock. The holders of the Series A shall be
entitled when and if declared by the Board of Directors, to dividends at a
rate of $0.09 per share, per annum, payable in preference and priority to
payment of any dividend to the holders of Series B or Common Stock. The
holders of the Series B shall be entitled when and if declared by the Board
of Directors, to dividends at a rate of $0.12 per share, per annum, payable
in preference and priority to payment of any dividend to the holders of
Common Stock. After an equal amount per share has been paid on all Common and
Preferred Stock, the holders of Series B shall be entitled to dividends in an
amount per share equal to any further dividend on Common Stock. Dividends are
not cumulative.
Liquidation Preference
In the event of any liquidation, dissolution, or winding up of the
Company, either voluntary or involuntary, distributions to the shareholders
of the Company shall be made in the following manner:
The holders of the Series C shall be entitled to receive, prior and in
preference to any distribution of any assets or surplus funds of the Company
to the holders of the Series A, Series B or Common Stock, an amount equal to
$0.60 per share for each share of Series C held by them. If the assets and
funds are insufficient to permit the payment of the entire preferential
amount, then the entire assets and funds legally available for distribution
shall be distributed ratably among the holders of Series C.
The holders of the Series A shall be entitled to receive, prior and in
preference to any distribution of any assets or surplus funds of the Company
to the holders of the Series B or Common Stock, an amount equal to $1.00 per
share for each share of Series A held by them. If the remaining assets and
funds are insufficient to permit the payment of the entire preferential
amount, then the entire assets and funds legally available for distribution
shall be distributed ratably among the holders of Series A.
The holders of the Series B shall be entitled to receive, prior and in
preference to any distribution of any assets or surplus funds of the Company
to the holders of Common Stock, an amount equal to $1.37 per share for each
share of Series B held by them. If the remaining assets and funds are
insufficient to permit the payment of the entire preferential amount, then
the entire assets and funds legally available for distribution shall be
distributed ratably among the holders of Series B.
After the distribution of the preferential amounts to the preferred
shareholders, the holders of Common Stock shall be entitled to receive an
amount equal to $0.40 per share for each share of Common Stock held by them.
After the aforementioned distributions to the holders of Preferred and Common
Stock, all remaining assets and funds of the Company legally available for
distribution shall be distributed ratably among the holders of Common and
F-64
<PAGE>
DATA STORAGE SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS -- (Continued)
Preferred Stock based on the number of shares of Common, Series A, B and C
(on an as converted basis) then issued and outstanding.
Conversion
Each share of Series A, B and C shall be convertible into the number of
shares of Common Stock which results from dividing $1.00 in the case of
Series A and B, and $0.60 in the case of Series C by the conversion price per
share applicable to such series of Preferred Stock at the time of conversion.
The conversion rate is subject to adjustment for anti-dilution as defined in
the Certificate of Incorporation.
Each share of Series A, B and C shall automatically be converted into
shares of Common Stock immediately upon the closing of the issuance of shares
following the effectiveness of a registration statement under the Securities
Act of 1933 when the net proceeds equal or exceed $5,000,000 and the price
per share of Common Stock is not less than $4.00.
Additionally, Series B shall automatically be converted into shares of
Common Stock: (1) immediately upon the closing of any sale or sales of its
Preferred Stock when the aggregate gross proceeds equal or exceeds $1,000,000
and the price per share of Preferred Stock is not less than $1.00, (2) the
last day of any fiscal year in which the Company realizes gross revenues of
at least $1,000,000 and (3) the last day of any fiscal year in which the
Company realizes after-tax operating income of at least $200,000. Because of
the pending merger of the Company, no conversion of the Series B took place.
5. COMMITMENTS:
The Company leases its facility under an operating lease which expires in
December 1997. Future minimum rental payments as of December 31, 1995 under
this lease are $432,000, ($216,000 for 1996 and $216,000 for 1997). Facility
rent expense for the year ended December 31, 1995 was $218,420.
6. INCOME TAXES:
As of December 31, 1995, the Company had Federal net operating loss
("NOL") carryforwards for tax purposes of approximately $2,538,548 which
expire in fiscal years 2004 and 2008. The Company had a net deferred tax
asset at December 31, 1995 of approximately $1,057,000. Realization of the
deferred tax asset is dependent upon the Company achieving adequate levels of
taxable income. A valuation allowance has been recognized against the entire
net deferred tax asset because of uncertainty of realization of the asset.
The use of the NOL is limited to maximum amounts each year as a result of the
change in control to Iron Mountain.
F-65
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of Iron Mountain Incorporated:
I have audited the accompanying balance sheet of DataVault Corporation as of
December 31, 1995 and the related statements of income and accumulated
deficit, and cash flows for the year then ended. These financial statements
are the responsibility of the Company's management. My responsibility is to
express an opinion on these financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. I believe that my audit provides a
reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of DataVault Corporation as of
December 31, 1995 and the results of its operations and its cash flows for
the year then ended in conformity with generally accepted accounting
principles.
Robert F. Gayton, CPA
Natick, Massachusetts
August 7, 1996
F-66
<PAGE>
DATAVAULT CORPORATION
BALANCE SHEET
DECEMBER 31, 1995
ASSETS
Current Assets:
Cash ......................................... $ 115,492
Accounts receivable .......................... 315,555
Prepaid expenses and supplies ................ 45,828
---------
Total current assets ...................... 476,875
Property, Plant and Equipment (Note 2):
Land ......................................... 130,000
Building and improvements .................... 1,224,857
Furniture and equipment ...................... 1,125,925
---------
2,480,782
Less--Accumulated depreciation ............... 1,228,376
---------
Property, plant and equipment, net ........ 1,252,406
Other Assets:
Customer acquisition costs ................... 45,600
Deferred financing costs ..................... 49,014
---------
Total other assets ........................ 94,614
---------
Total Assets ................................. $1,823,895
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt ............ $ 44,450
Accounts payable ............................. 17,890
Deferred income .............................. 47,438
---------
Total current liabilities ................. 109,778
Long-Term Debt (Note 2):
Mortgage note payable--bank .................. 665,076
Mortgage note payable--bank .................. 70,001
Mortgage note payable--SBA ................... 609,003
Equipment notes payable ...................... 7,558
---------
1,351,638
Less--Current portion ........................ 44,450
---------
Total long-term debt, net of current
portion .................................... 1,307,188
Notes Payable to Stockholder (Note 3) ........ 379,499
---------
Total Liabilities ......................... 1,796,465
---------
Commitments and Contingencies (Note 4)
Stockholders' Equity:
Common stock, no par value --
Authorized--30,000 shares
Issued and outstanding--15,000 shares ...... 7,500
Additional paid-in capital ................... 50,000
Accumulated deficit .......................... (30,070)
---------
Total Stockholders' Equity ................ 27,430
---------
Total Liabilities and Stockholders' Equity ... $1,823,895
=========
The accompanying notes are an integral part of these financial statements.
F-67
<PAGE>
DATAVAULT CORPORATION
STATEMENT OF INCOME AND ACCUMULATED DEFICIT
FOR THE YEAR ENDED DECEMBER 31, 1995
Revenue:
Storage ............................................. $1,637,995
Service ............................................. 519,479
---------
Total revenue .................................... 2,157,474
Operating Expenses:
Cost of sales (excluding depreciation) .............. 410,860
Selling, general and administrative ................. 1,333,609
Depreciation and amortization ....................... 198,901
---------
Total operating expenses ......................... 1,943,370
---------
Operating Income ................................. 214,104
Interest Expense .................................... 124,270
---------
Income before income tax ......................... 89,834
Provision for State Income Tax ...................... 456
---------
Net income ....................................... 89,378
Cash distribution of Subchapter S Earnings .......... (24,309)
Accumulated Deficit--Beginning ...................... (95,139)
---------
Accumulated Deficit--Ending ......................... $ (30,070)
=========
The accompanying notes are an integral part of these financial statements.
F-68
<PAGE>
DATAVAULT CORPORATION
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1995
Cash Flows From Operating Activities:
Net income .................................................... $ 89,378
Adjustments to reconcile net income to cash provided by
operating activities--
Depreciation and amortization ................................ 198,901
Changes in:
Accounts receivable ......................................... 28,467
Prepaid expenses and supplies ............................... 27,626
Accounts payable ............................................ (23,081)
Deferred income ............................................. (1,356)
--------
Cash provided by operating activities ...................... 319,935
Cash Flows From Investing Activities:
Acquisition of fixed assets ................................... (43,970)
Cash Flows from Financing Activities:
Repayment of notes ............................................ (184,915)
Repayment of shareholder loan ................................. (67,598)
Distribution of Subchapter S earnings ......................... (24,309)
--------
Cash used by financing activities .......................... (276,822)
--------
Net decrease in cash ....................................... (857)
Cash--beginning of year .................................... 116,349
--------
Cash--end of year .......................................... $ 115,492
========
Supplemental disclosure of cash flow information:
Cash paid for interest ........................................ $ 124,270
Cash paid for taxes ........................................... 456
The accompanying notes are an integral part of these financial statements.
F-69
<PAGE>
DATAVAULT CORPORATION
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
NOTE 1--ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Organization--DataVault Corporation (the Company) is a Massachusetts
corporation. The Company provides record storage and management services in
the New England area.
Use of Estimates--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that effect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the
dates of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
Revenue Recognition--Revenue is recognized when the services are provided.
Amounts related to future storage that have been billed in advance are
recorded as deferred revenue and recognized over the applicable period.
Plant and Equipment--Plant and equipment are recorded at cost. Maintenance
and repairs are charged to expense and major improvements are capitalized.
Depreciation is computed on the straight line and declining balance methods
over estimated useful lives as follows:
Building and improvements .................. 15-31 years
Furniture and fixtures ..................... 5 years
Equipment .................................. 5 years
Deferred Costs--Deferred financing costs are amortized over the life of
the related debt. Customer acquisition costs related to the initial transfer
of records are amortized over the term of the initial storage agreement.
Income Taxes--The Company has elected to be taxed as a Small Business
Corporation. Accordingly, net income and other items of Federal and state tax
significance are reported on the income tax returns of the individual
shareholders.
NOTE 2--LONG-TERM DEBT
During 1993, the Company constructed an addition to the records storage
facility. The Company refinanced the existing mortgage loan in conjunction
with supplemental financing for the addition. The refinanced mortgage will be
paid in monthly installments over a 20 year period. The interest rate will be
9% adjustable every three years with initial monthly payments of $6,361.
The additional bank mortgage note of $70,001 is due in monthly
installments of $640 over 20 years at an interest rate of 8.75%, adjustable
every three years.
Additional financing for the records storage facility has been obtained
from Bay Colony Development Corp., a Certified Development Company. This
financing has been funded by debentures issued by the development company and
guaranteed by the Small Business Administration. Monthly payments of $5,290
will be made over 20 years and include interest at 6.359% and a service fee.
The mortgage notes are secured by land, buildings and business assets of
the Corporation and the personal guaranty of the sole shareholder.
The equipment notes are payable in monthly installments of approximately
$2,100 over various periods up to five years at interest rates from 8% to
14%. The notes are secured by certain furniture and equipment.
F-70
<PAGE>
DATAVAULT CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (Continued)
DECEMBER 31, 1995
Maturities of long-term debt are as follows:
Year Amount
----------------------------------------------------- ----------
1996 $ 44,450
1997 38,660
1998 40,570
1999 42,610
2000 44,800
Thereafter 1,140,548
--------
$1,351,638
========
The fair value of the Company's assets and liabilities which qualify as
financial instruments under Statement of Financial Accounting Standards No.
107, "Disclosures about Fair Value of Financial Instruments", approximates
the carrying value of amounts presented in the balance sheet.
NOTE 3--NOTES PAYABLE TO STOCKHOLDER
Stockholder notes are due on demand, bear interest at rates varying from
7.5% to 12% and are subordinated to mortgage and term notes payable.
NOTE 4--COMMITMENTS AND CONTINGENCIES
In addition to the storage facility referred to in Note 2, the Company
operates an additional data storage facility and maintains its corporate
headquarters in premises leased through the year 2000 at an annual rental of
approximately $84,000.
NOTE 5--RENTALS UNDER STORAGE AGREEMENTS
The following is a schedule by years of approximate minimum future rentals
under non-cancellable storage agreements as of December 31, 1995:
Year Amount
---- ---------
1996 ................................................ $1,345,000
1997 ................................................ 1,183,000
---------
$2,528,000
=========
NOTE 6--SUBSEQUENT EVENT
Effective February 1, 1996, the Company sold all of its assets to Iron
Mountain Records Management, Inc. All debt was repaid from the proceeds of
the sale.
F-71
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Directors
Iron Mountain Incorporated:
We have audited the accompanying balance sheet of International Record
Storage and Retrieval Service, Inc. as of December 31, 1995 and the related
statements of operations, stockholders' deficit, and cash flows for the year
then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of International Record Storage
and Retrieval Service, Inc. as of December 31, 1995, and the results of its
operations and its cash flows for the year then ended in conformity with
generally accepted accounting principles.
Rothstein, Kass & Company, P.C.
Roseland, New Jersey
July 19, 1996
F-72
<PAGE>
INTERNATIONAL RECORD STORAGE AND RETRIEVAL SERVICE, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
December
31, June 30,
1995 1996
---------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash ................................................... $ 134,340 $ 66,151
Accounts receivable, less allowance for doubtful
accounts of $16,000 in 1995 and 1996 ................. 255,276 264,020
Inventories ............................................ 13,505 12,997
Prepaid expenses and other ............................. 24,690 33,576
-------- ----------
Total current assets ................................. 427,811 376,744
Equipment and improvements, less accumulated depreciation
of $244,831 in 1995 and $277,428 in 1996 ............... 437,522 452,340
Deferred income taxes .................................... 171,000 160,000
Other assets ............................................. 21,667 21,667
-------- ----------
$ 1,058,000 $ 1,010,751
======== ==========
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current liabilities:
Current portion of long-term debt ...................... $ 13,474 $ 14,459
Accounts payable ....................................... 5,449 31,757
Accrued expenses ....................................... 62,558 69,714
Due affiliates ......................................... 617,173 513,261
Deferred income ........................................ 86,096 89,529
Deferred compensation, current portion ................. 40,401 41,940
-------- ----------
Total current liabilities ............................ 825,151 760,660
-------- ----------
Notes payable, net of current portion .................... 7,572 --
Deferred compensation, net of current portion ............ 772,518 751,156
Deferred rent ............................................ 236,035 233,254
Commitments and contingency
Stockholders' deficiency:
Common stock, no par value, authorized, issued and
outstanding 100 shares ............................... 100 100
Additional paid-in capital ............................. 970,792 970,792
Accumulated deficit .................................... (1,754,168) (1,705,211)
-------- ----------
Total stockholders' deficiency ....................... (783,276) (734,319)
-------- ----------
$ 1,058,000 $ 1,010,751
======== ==========
</TABLE>
See independent public accountants' report and notes to financial statements.
F-73
<PAGE>
INTERNATIONAL RECORD STORAGE AND RETRIEVAL SERVICE, INC.
STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
<TABLE>
<CAPTION>
Six Months Ended
June 30,
---------------------------
Year
Ended
December
31,
1995 1995 1996
----------- ----------- ------------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
Revenues:
Storage ............................... $ 962,463 $ 462,275 $ 528,604
Service and storage material sales .... 620,428 322,215 312,739
--------- --------- ----------
Total revenues ...................... 1,582,891 784,490 841,343
--------- --------- ----------
Operating expenses:
Costs of sales (excluding depreciation) 790,127 380,347 430,969
Selling, general and administrative ... 427,748 212,704 247,085
Depreciation and amortization ......... 72,723 36,065 34,741
--------- --------- ----------
Total operating expenses ............ 1,290,598 629,116 712,795
--------- --------- ----------
Operating income ....................... 292,293 155,374 128,548
Interest expense ....................... 66,681 34,536 32,591
--------- --------- ----------
Income before provision for income taxes 225,612 120,838 95,957
Provision for income taxes ............. 21,000 13,000 11,000
--------- --------- ----------
Net income ............................. 204,612 107,838 84,957
Accumulated deficit:
Beginning of period .................... (1,908,780) (1,908,780) (1,754,168)
Dividends .............................. (50,000) -- (36,000)
--------- --------- ----------
End of period .......................... $(1,754,168) $(1,800,942) $(1,705,211)
========= ========= ==========
</TABLE>
See independent public accountants' report and notes to financial statements.
F-74
<PAGE>
INTERNATIONAL RECORD STORAGE AND RETRIEVAL SERVICE, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------------
Year
Ended
December
31,
1995 1995 1996
---------- -------- ----------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net income .......................................... $ 204,612 $107,838 $ 84,957
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for doubtful accounts .................... 8,000 8,000 --
Depreciation ....................................... 72,723 36,065 34,741
Provision for deferred income taxes ................ 21,000 13,000 11,000
Gain on disposal of property and equipment ......... (7,468) (7,468) --
Increase (decrease) in cash attributable to changes
in assets and liabilities:
Accounts receivable ............................... (102,421) (82,045) (8,744)
Inventories ....................................... 1,825 (4,824) 508
Prepaid expenses and other ........................ (22,921) (33,881) (8,886)
Accounts payable .................................. (8,110) 40,228 26,308
Accrued expenses .................................. 42,810 27,031 7,156
Deferred income ................................... 13,016 8,074 3,433
Deferred compensation and other liabilities ....... (50,195) (31,099) (19,823)
Deferred rent ..................................... 20,452 5,281 (2,781)
-------- ------ --------
Net Cash Provided by Operating Activities ............ 193,323 86,200 127,869
-------- ------ --------
Cash Flows from Investing Activities:
Proceeds from the sale of property and equipment .... 17,565 17,565 --
Acquisitions of property and equipment .............. (67,810) (67,027) (49,559)
-------- ------ --------
Net Cash used in Investing Activities ................ (50,245) (49,462) (49,559)
-------- ------ --------
Cash Flow from Financing Activities:
Repayment of notes payable .......................... (59,089) (42,814) (6,587)
Advances from (repayments to) affiliates ............ 81,310 61,673 (103,912)
Dividends paid ...................................... (50,000) -- (36,000)
-------- ------ --------
Net Cash Provided by (used in) Financing Activities .. (27,779) 18,859 (146,499)
-------- ------ --------
Increase (Decrease) in Cash .......................... 115,299 55,597 (68,189)
Cash, beginning of period ............................ 19,041 19,041 134,340
-------- ------ --------
Cash, end of period .................................. $ 134,340 $ 74,638 $ 66,151
======== ====== ========
Supplemental Disclosure of Cash Flow Information, cash $
paid during the period for interest ................ $ 66,681 34,536 $ 32,591
======== ====== ========
</TABLE>
See independent public accountants' report and notes to financial statements.
F-75
<PAGE>
INTERNATIONAL RECORD STORAGE AND RETRIEVAL SERVICE, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1--NATURE OF BUSINESS:
The Company is engaged principally in the storage of records for customers
in the New Jersey-New York area and providing ancillary services in
conjunction with such records.
NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Revenue Recognition
Storage and service revenues are recognized in the month the respective
service is provided. Storage material sales are recognized when shipped to
the customer. The Company invoices storage charges to its customers in
advance and these advanced billings are recorded as accounts receivable and
the related revenues are included as deferred income in the accompanying
financial statements.
Inventories
Inventories are carried at the lower of cost or market using the first-in
first-out basis and are comprised primarily of cartons.
Income Taxes
The Company has elected to be treated as an "S" Corporation under the
applicable sections of the Internal Revenue Code. Under these sections,
corporate income or loss is allocated to the stockholders for inclusion in
their personal income tax returns. Accordingly, there is no provision for
federal income tax in the accompanying financial statements. State income
taxes are recorded in accordance with Statement of Financial Accounting
Standards
No. 109.
Equipment and Improvements
Equipment and improvements are stated at cost and depreciated using the
straight-line method with the following useful lives:
Office Equipment .................................... 5 years
Transportation equipment ............................ 5 to 10 years
Shelving and warehouse improvements ................. 10 to 15 years
Impairment of Long-Lived Assets
The Company periodically assesses the recoverability of the carrying
amounts of long-lived assets, including intangible assets. A loss is
recognized when expected undiscounted future cash flows are less than the
carrying amount of the asset. The impairment loss is the difference by which
the carrying amount of the asset exceeds its fair value.
Deferred Rent
The Company's lease for its building used in the storage of records has
fixed escalation clauses which require the normalization of rental expense
over the life of the lease, resulting in deferred rent being reflected in the
accompanying balance sheets.
F-76
<PAGE>
INTERNATIONAL RECORD STORAGE AND RETRIEVAL SERVICE, INC.
NOTES TO FINANCIAL STATEMENTS -- (Continued)
NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
Fair Value of Financial Instruments
The fair value of the Company's assets and liabilities which qualify as
financial instruments under Statement of Financial Accounting Standards (SFAS)
No. 107, "Disclosures about Fair Value of Financial Instruments", approximates
the carrying amounts presented in the balance sheets.
Unaudited Financial Statements
The unaudited financial statements included herein have been prepared in
accordance with generally accepted accounting principles. In the opinion of
management, the unaudited financial statements include all adjustments of a
normal and recurring nature which are necessary for a fair presentation. The
results of operations for the six months ended June 30, 1995 and 1996 are not
necessarily indicative of the results expected for the full year.
NOTE 3--EQUIPMENT AND IMPROVEMENTS:
Equipment and improvements consist of the following:
December
31, June 30,
1995 1996
---------- ----------
(Unaudited)
Office equipment ........................... $ 97,919 $ 106,427
Transportation equipment ................... 108,217 108,217
Shelving and warehouse improvements ........ 476,217 515,124
-------- --------
682,353 729,768
Less accumulated depreciation .............. (244,831) (277,428)
-------- --------
$ 437,522 $ 452,340
======== ========
NOTE 4--NOTES PAYABLE:
Long-term debt consists of various loans payable in monthly installments
of approximately $1,200 including interest at rates ranging between 8.4% and
10.2% with the final payment June 1997. The loans are collateralized by
certain equipment.
Aggregate principal payment requirements in each of the years subsequent
to December 31, 1995 are as follows:
1996 ................................................ $13,474
1997 ................................................ 7,572
NOTE 5--RELATED PARTY TRANSACTIONS:
The Company is affiliated, through common ownership, with a real estate
management company, International Management Services, Inc. (IMS). IMS
provides certain administrative services to the Company under agreements
designed to reimburse IMS for the approximate cost of providing such
services. Amounts due affiliates are non-interest bearing and have no
specific repayment terms.
The Company incurred charges for management fees to IMS of approximately
$90,000 for the year ended December 31, 1995 and $44,000 and $50,000 for the
six months ended June 30, 1995 (unaudited) and 1996 (unaudited),
respectively.
F-77
<PAGE>
INTERNATIONAL RECORD STORAGE AND RETRIEVAL SERVICE, INC.
NOTES TO FINANCIAL STATEMENTS -- (Continued)
NOTE 6--DEFERRED COMPENSATION:
The Company is obligated under an Income Continuation agreement dated
October 1, 1994 with a former employee providing for a payment of $100,000
annually for the life of the employee. In 1994, the Company recorded an
expense of $864,297 representing the present value of the benefits for the
employee's life expectancy discounted at the rate of 7.5% per annum. Payments
commenced in September 1994 and amounted to $100,000 for the year ended
December 31, 1995 and $50,000 for each of the six month periods ended June
30, 1995 (unaudited) and 1996 (unaudited).
NOTE 7--INCOME TAXES:
The provision for income taxes in the accompanying statements of
operations consists of the following:
Year
Ended Six Months Ended
December June 30,
31, ----------------------
1995 1995 1996
---------- -------- ----------
(Unaudited) (Unaudited)
State income taxes deferred ... $21,000 $13,000 $11,000
======== ====== ========
A reconciliation of total income tax expense and the amount computed by
applying the state income tax rate of 9% to income before income taxes is as
follows:
Year
Ended Six Months Ended
December June 30,
31, ----------------------
1995 1995 1996
---------- -------- ----------
(Unaudited) (Unaudited)
Computed "expected" tax
provision .................. $20,000 $11,000 $ 9,000
Other ....................... 1,000 2,000 2,000
-------- ------ --------
$21,000 $13,000 $11,000
======== ====== ========
The Company has approximately $1,000,000 of net operating loss
carryforwards for state income tax purposes at December 31, 1995. These
carryforwards, which management expects will be fully utilized, expire
through the year 2000.
The components of the Company's deferred tax assets and liabilities are as
follows:
Year Six
Ended Months
December Ended
31, June 30,
1995 1996
---------- ----------
(Unaudited)
Deferred Tax Assets:
Tax benefit attributable to:
Net operating loss carryforwards ......... $ 89,000 $ 80,000
Deferred rent ............................ 21,000 21,000
Deferred compensation .................... 73,000 71,000
Other .................................... 2,000 2,000
Deferred tax liability, tax depreciation in
excess of book depreciation .............. (14,000) (14,000)
-------- --------
Net Deferred Tax Asset .................... $171,000 $160,000
======== ========
F-78
<PAGE>
INTERNATIONAL RECORD STORAGE AND RETRIEVAL SERVICE, INC.
NOTES TO FINANCIAL STATEMENTS -- (Continued)
NOTE 8--RETIREMENT PLANS:
The Company maintains a 401(k) plan for the benefit of its employees. The
Company contributes to the plan annually, at their discretion, up to 4% of
each participant's compensation. The expense amounted to $4,311 for the year
ended December 31, 1995 and $1,960 and $1,839 for the six months ended June
30, 1995 (unaudited) and 1996 (unaudited), respectively.
NOTE 9--LEASE COMMITMENTS:
The Company occupies general office and warehouse facilities under an
operating lease expiring December 31, 2002, providing for minimum annual
rentals as follows:
Year ending
December 31,
1996 ................................................ $ 318,000
1997 ................................................ 318,000
1998 ................................................ 318,000
1999 ................................................ 318,000
2000 ................................................ 350,000
Thereafter .......................................... 700,000
--------
$2,322,000
========
Rent expense for facilities charged to operations was $273,791 for the
year ended December 31, 1995 and $113,556 and $158,506 for the six months
ended June 30, 1995 (unaudited) and 1996 (unaudited), respectively.
NOTE 10--CONTINGENCY:
The Company is a defendant in a legal proceeding with the lessor of its
office and warehouse facilities relating to alleged damages suffered in
connection with the cancellation of a proposed sale of the property to a
third party. The claim does not specify an amount of damages and the Company
has responded to the complaint and made a counter claim. It is management's
opinion that the outcome of this litigation will not have a material effect
on the Company's financial position or results of operations.
F-79
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors of
Iron Mountain Incorporated:
We have audited the accompanying balance sheet of DKA Industries, Inc. d/b/a
Systems Record Storage (a Florida corporation) as of December 31, 1995, and
the related statements of operations and accumulated deficit and cash flows
for the year then ended. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of DKA Industries, Inc. d/b/a
Systems Record Storage as of December 31, 1995, and the results of its
operations and its cash flows for the year then ended in conformity with
generally accepted accounting principles.
Arthur Andersen LLP
Orlando, Florida
August 30, 1996
F-80
<PAGE>
DKA INDUSTRIES, INC.
d/b/a SYSTEMS RECORD STORAGE
BALANCE SHEETS--DECEMBER 31, 1995, AND JUNE 30, 1996
ASSETS
<TABLE>
<CAPTION>
December 31, June 30,
1995 1996
-------------- ----------
(Unaudited)
<S> <C> <C>
Current Assets:
Cash $ 24,665 $ 22,083
Accounts receivable 121,064 170,858
Inventories 3,049 5,286
Prepaid expenses and other 11,695 11,320
--------- ---------
Total current assets 160,473 209,547
Property and Equipment, net 150,729 141,362
Goodwill, net 20,625 20,312
--------- ---------
Total assets $ 331,827 $ 371,221
========= =========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Current maturities of notes payable $ 89,013 $ 47,411
Note payable to related party 285,000 285,000
Accounts payable and accrued expenses 10,807 21,959
Deferred income 58,617 69,074
--------- ---------
Total current liabilities 443,437 423,444
Notes payable, less current maturities 218,781 215,310
Deferred income 63,401 55,167
Deferred rent 10,318 8,598
--------- ---------
Total liabilities 735,937 702,519
--------- ---------
Commitments and Contingencies
Stockholders' Deficit:
Common stock, $1 par value, 1,000 shares authorized, issued
and outstanding 1,000 1,000
Accumulated deficit (405,110) (332,298)
--------- ---------
Total stockholders' deficit (404,110) (331,298)
--------- ---------
Total liabilities and stockholders' deficit $ 331,827 $ 371,221
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-81
<PAGE>
DKA INDUSTRIES, INC.
d/b/a SYSTEMS RECORD STORAGE
STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
FOR THE YEAR ENDED DECEMBER 31, 1995,
AND THE SIX-MONTH PERIOD ENDED JUNE 30, 1996
<TABLE>
<CAPTION>
Year Six Months
Ended Ended
December 31, June 30,
1995 1996
-------------- ----------
(Unaudited)
<S> <C> <C>
Revenues:
Storage $ 638,442 $ 358,150
Service and storage material sales 386,637 219,328
---------- ---------
Total revenues 1,025,079 577,478
---------- ---------
Operating Expenses:
Costs of sales (excluding depreciation and
amortization) 462,387 224,599
Selling, general and administrative 400,310 200,031
Depreciation and amortization 72,625 36,313
---------- ---------
Total operating expenses 935,322 460,943
---------- ---------
Operating Income 89,757 116,535
Interest Expense 56,387 30,023
---------- ---------
Net income 33,370 86,512
Accumulated Deficit, beginning of period (425,768) (405,110)
Distributions (12,712) (13,700)
---------- ---------
Accumulated Deficit, end of period $ (405,110) $(332,298)
========== =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-82
<PAGE>
DKA INDUSTRIES, INC.
d/b/a SYSTEMS RECORD STORAGE
STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1995,
AND THE SIX-MONTH PERIOD ENDED JUNE 30, 1996
<TABLE>
<CAPTION>
Year Six Months
Ended Ended
December 31, June 30,
1995 1996
-------------- ----------
(Unaudited)
<S> <C> <C>
Cash Flows From Operating Activities:
Net income $ 33,370 $ 86,512
Adjustments to reconcile net income to net cash
provided by operating activities--
Depreciation and amortization 72,625 36,313
Changes in assets and liabilities--
Accounts receivable 8,819 (49,794)
Inventories (1,430) (2,237)
Prepaid expenses and other -- 375
Accounts payable and accrued expenses (12,079) 11,152
Deferred income 128 2,223
Deferred rent (3,440) (1,720)
--------- ---------
Net cash provided by operating activities 97,993 82,824
--------- ---------
Cash Flows used in Investing Activities:
Acquisitions of property and equipment (75,528) (26,633)
--------- ---------
Cash Flow From Financing Activities:
Repayment on notes payable (253,660) (45,073)
Additional borrowing on notes payable 268,522 --
Distributions to shareholders (12,712) (13,700)
--------- ---------
Net cash provided by (used in) financing
activities 2,150 (58,773)
--------- ---------
Net increase (decrease) in cash 24,615 (2,582)
Cash, beginning of period 50 24,665
--------- ---------
Cash, end of period $ 24,665 $ 22,083
========= =========
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for interest $ 56,387 $ 30,023
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-83
<PAGE>
DKA INDUSTRIES
d/b/a SYSTEMS RECORD STORAGE
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
1. Nature of Business
DKA Industries, Inc. d/b/a Systems Record Storage (the Company) provides
record storage and management services in the Orlando, Florida, area.
2. Summary of Significant Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Revenue Recognition
Storage and service revenues are recognized in the month the respective
service is provided. Storage material sales are recognized when shipped to
the customer. Amounts related to future storage for customers where storage
fees are billed in advance are accounted for as deferred income and
recognized in the applicable period.
Inventories
Inventories are carried at the lower of cost or market using the first-in,
first-out basis, and are comprised primarily of cartons.
Goodwill
Goodwill is amortized over 40 years. For 1995, amortization was $625. As
of December 31, 1995, there was $4,375 of accumulated amortization.
Income Taxes
The Company has elected to be treated as an S corporation under the
applicable sections of the Internal Revenue Code. Under these sections,
corporate income or loss is allocated to the stockholders for inclusion in
their personal income tax returns. Accordingly, there is no provision for
federal income taxes in the accompanying financial statements.
Property and Equipment
Equipment and improvements are stated at cost and depreciated or amortized
using accelerated methods with the following useful lives:
<TABLE>
<CAPTION>
Years
------
<S> <C>
Office and computer equipment 5-7
Transportation equipment 5
Warehouse equipment and
improvements 7-10
</TABLE>
Deferred Rent
The Company's lease for its building used in the storage of records has
uneven rental payments which requires the normalization of rental expense
over the life of the lease, resulting in deferred rent being reflected in the
accompanying balance sheet.
F-84
<PAGE>
DKA INDUSTRIES
d/b/a SYSTEMS RECORD STORAGE
NOTES TO FINANCIAL STATEMENTS -- (Continued)
Fair Value of Financial Instruments
The fair value of the Company's assets and liabilities which qualify as
financial instruments under Statement of Financial Accounting Standards No.
107, "Disclosures about Fair Value of Financial Instruments," approximates
the carrying amounts presented in the balance sheet.
Unaudited Financial Statements
The unaudited financial statements included herein have been prepared
pursuant to the rules and regulations of the Securities and Exchange
Commission. In the opinion of management, the unaudited financial statements
include all adjustments of a normal and recurring nature which are necessary
for a fair presentation. The results of operations for the six months ended
June 30, 1996, are not necessarily indicative of the results expected for the
full year.
3. Significant Customer
One major customer accounted for approximately 38 percent of revenue
during 1995 and 27 percent of accounts receivable at December 31, 1995.
4. Property and Equipment
Property and equipment consisted of the following:
<TABLE>
<CAPTION>
December 31,
1995
------------
<S> <C>
Office and computer equipment $ 68,250
Transportation equipment 60,976
Warehouse equipment and improvements 388,636
---------
517,862
Less -- Accumulated depreciation and
amortization (367,133)
---------
$ 150,729
=========
</TABLE>
5. Notes Payable
Notes payable consisted of the following at December 31, 1995:
<TABLE>
<CAPTION>
Amount
---------
<S> <C>
Line of credit agreement with maximum borrowing of $50,000, bearing interest at prime
plus 1% (9.5% at December 31, 1995), collateralized by accounts receivable,
inventory, equipment and improvements. The line of credit is payable upon demand
and expires September 23, 1996. As of December 31, 1995, the Company had $35,000
available on the line of credit. $15,000
F-85
<PAGE>
DKA INDUSTRIES
d/b/a SYSTEMS RECORD STORAGE
NOTES TO FINANCIAL STATEMENTS -- (Continued)
Amount
Note payable, collateralized by accounts receivable, inventory, equipment and
improvements, due in monthly installments through November 29, 2000, of $3,357, plus
interest at prime plus 1% (9.5% at December 31, 1995). $ 201,387
Note payable, collateralized by the purchased assets of the Company, due in monthly
principal and interest payments of $2,500 through October 1998, interest at 11%. 71,686
Other notes payable, collateralized by certain transportation equipment of the
Company, principal due in monthly installments of $887 through August 1998,
interest at prime plus 1% (9.5% at December 31, 1995). 19,721
--------
307,794
Less -- Current maturities (89,013)
--------
$218,781
========
</TABLE>
Aggregate principal payment requirements in each of the years subsequent
to December 31, 1995, are as follows:
<TABLE>
<CAPTION>
Year Ending
December 31, Amount
- ------------- --------
<S> <C>
1996 $ 89,013
1997 71,751
1998 66,495
1999 40,284
2000 40,251
--------
$307,794
========
</TABLE>
All the notes payable were paid in full subsequent to December 31, 1995,
in connection with the acquisition described in Note 9.
6. Related Party Transactions
As of December 31, 1995, the Company had a $285,000 note payable to a
former owner of the Company. The note payable is due on demand. The interest
on the note payable is 10 percent and payable monthly. The note payable was
paid in full subsequent to December 31, 1995, in connection with the
acquisition described in Note 9.
7. Retirement Plans
The Company maintains a 401(k) plan for the benefit of its employees. All
employees who have completed 12 months of service, 1,000 hours and attained
the age of 21 are eligible to enroll in the plan. Employees may contribute up
to 15 percent of their pay. Employees are always 100 percent vested in their
contributions. The Company matches 25 percent of employee salary deferral
contribution, up to a maximum of 4 percent. Employees are 20 percent vested
in employer contributions after three years of service and become an
additional 20 percent vested for each subsequent year of service. The
employer matching contribution expense amounted to $1,941 for the year ended
December 31, 1995. Subsequent to December 31, 1995, the plan was terminated
(see Note 9).
F-86
<PAGE>
DKA INDUSTRIES
d/b/a SYSTEMS RECORD STORAGE
NOTES TO FINANCIAL STATEMENTS -- (Continued)
8. Lease Commitments
The Company occupies office and warehouse facilities and rents a vehicle
under operating leases that expire during December 1998, providing for
minimum annual rentals as follows:
<TABLE>
<CAPTION>
Year Ending
December 31, Amount
- -------------
<S> <C>
1996 $238,438
1997 238,438
1998 237,940
--------
$714,816
========
</TABLE>
Rent expense for facilities charged to operations was $232,960 for the
year ended December 31, 1995.
9. Subsequent Event
Effective August 1, 1996, substantially all of the Company's assets and
certain liabilities were acquired by Iron Mountain Records Management, Inc.
Proceeds from the sale were used to repay all the outstanding notes payable,
and the remainder was distributed to the owners.
F-87
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of
Iron Mountain Incorporated:
We have audited the accompanying balance sheet of Security Archives
Corporation (a Minnesota corporation) as of December 31, 1995, and the
related statements of operations and accumulated deficit and cash flows for
the year then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Security Archives
Corporation as of December 31, 1995, and the results of its operations and
its cash flows for the year then ended in conformity with generally accepted
accounting principles.
Arthur Andersen LLP
Minneapolis, Minnesota
August 23, 1996
(except for Note 6, as
to which the date is
September 6, 1996)
F-88
<PAGE>
SECURITY ARCHIVES CORPORATION
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
December 31, June 30,
1995 1996
-------------- ----------
(Unaudited)
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 32,819 $ 49,044
Accounts receivable, net of allowance for doubtful accounts
of $49,382 and $4,408 140,950 165,006
Inventories 9,905 23,229
Prepaid expenses 33,192 31,710
--------- -----------
Total current assets 216,866 268,989
--------- -----------
Property and Equipment 997,992 1,067,355
Less -- Accumulated depreciation (358,283) (418,255)
--------- -----------
Net property and equipment 639,709 649,100
--------- -----------
Other Assets: 37,818 27,410
--------- -----------
$ 894,393 $ 945,499
========= ===========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities:
Accounts payable $ 10,992 $ 36,554
Current portion of long-term debt --
Capital leases and other debt 21,747 206,313
Related parties 59,437 611,600
Accrued expenses 44,875 31,499
--------- -----------
Total current liabilities 137,051 885,966
--------- -----------
Long-term Notes Payable 257,891 --
Long-term Notes Payable -- related parties 768,926 34,346
Commitments and Contingencies
Stockholder's Equity:
Capital stock 25,000 shares, $1 par 1,200 shares issued and
outstanding 1,200 1,200
Paid-in capital 646,229 646,229
Accumulated deficit (916,904) (622,242)
--------- -----------
Total stockholder's equity (deficit) (269,475) 25,187
--------- -----------
$ 894,393 $ 945,499
========= ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-89
<PAGE>
SECURITY ARCHIVES CORPORATION
STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
<TABLE>
<CAPTION>
Year Ended Six Months Ended June
December 31, 30
-----------------------
1995 1995 1996
--------------- --------- ----------
(Unaudited)
<S> <C> <C> <C>
Revenues:
Storage $ 917,637 $ 459,566 $ 497,501
Service and storage materials sales 500,989 222,107 489,278
----------- --------- ---------
Total revenues 1,418,626 681,673 986,779
----------- --------- ---------
Operating Expenses:
Cost of sales (excluding depreciation) 669,017 328,210 388,016
Selling, general and administrative 525,518 234,249 197,393
Depreciation and amortization 99,159 46,080 59,972
----------- --------- ---------
Total operating expenses 1,293,694 608,539 645,381
----------- --------- ---------
Income from operations 124,932 73,134 341,398
----------- --------- ---------
Interest expense 92,988 46,815 46,736
Net Income 31,944 26,319 294,662
Accumulated Deficit, beginning of
period (948,848) (948,848) (916,904)
----------- --------- ---------
Accumulated Deficit, end of period $ (916,904) $(922,529) $(622,242)
=========== ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-90
<PAGE>
SECURITY ARCHIVES CORPORATION
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended Six Months Ended
December 31, June 30
----------------------
1995 1995 1996
--------------- -------- ----------
(Unaudited)
<S> <C> <C> <C>
Operating Activities:
Net income
$ 31,944 $ 26,319 $ 294,662
Adjustments to reconcile net income to net
cash provided by operating activities --
Depreciation and amortization 99,159 46,080 59,972
Changes in assets and liabilities:
Accounts receivable (2,424) (31,408) (24,056)
Inventories 1,538 (2,292) (13,324)
Prepaid expenses (4,962) (4,558) 1,482
Accounts payable and accrued expenses 1,565 6,884 12,186
Other 10,068 6,958 10,408
--------- -------- ---------
Net cash provided by operating activities 136,888 47,983 341,330
--------- -------- ---------
Investing Activities:
Purchase of property and equipment (193,797) (103,791) (69,363)
--------- -------- ---------
Financing Activities:
Proceeds from notes payable 227,000 112,284 49,983
Principal payments on notes payable (161,606) (56,122) (305,725)
--------- -------- ---------
Net cash provided by (used for) financing
activities 65,394 56,162 (255,742)
--------- -------- ---------
Net increase in Cash 8,485 354 16,225
Cash and cash equivalents, at beginning of
period 24,334 24,334 32,819
--------- -------- ---------
Cash and cash equivalents, at end of period $ 32,819 $ 24,688 $ 49,044
========= ========= =========
Supplemental Disclosure:
Interest paid $ 92,989 $ 46,815 $ 41,815
========= ======== =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-91
<PAGE>
SECURITY ARCHIVES CORPORATION
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
1. Organization of Business and Significant Accounting Policies
Security Archives Corporation (the Company), a Minnesota corporation, is a
full service records management company providing storage and related
services for all media. The Company serves numerous legal, banking,
healthcare, accounting, insurance, entertainment and retail organizations in
the Los Angeles, California metropolitan area.
Inventories
Inventories are carried at the lower of cost (using the first-in,
first-out basis) or market and are comprised primarily of cartons.
Property and Equipment
Depreciation and amortization of property and equipment are recorded using
the straight-line and accelerated methods. Property and equipment consist of
the following:
<TABLE>
<CAPTION>
Useful December 31,
Lives 1995
------------------ ------------
<S> <C> <C>
Warehouse and disintegration equipment 9 years $645,326
Leasehold improvements 10 years 103,928
Transportation equipment 5 years 112,946
Office equipment 5 to 10 years 135,792
--------
$997,992
========
</TABLE>
Minor maintenance costs are expensed as incurred. Major improvements are
capitalized and depreciated as described above.
Revenue Recognition
Storage and service revenues are recognized in the month the respective
service is provided. Storage material sales are recognized when shipped to
the customer. The Company has two customers which accounted for 25% of
revenues for the year ended December 31, 1995.
Cash and Cash Equivalents
The Company considers all highly liquid investments purchased with a
maturity of three months or less to be cash equivalents.
Other Assets
Other assets consist of customer acquisition costs. Costs, net of revenues
received for the initial transfer of records, related to the acquisition of
accounts are capitalized and amortized for an appropriate period not
exceeding three years, unless the customer terminates its relationship with
the Company, at which time the unamortized cost is charged to expense.
However, in the event of such termination, the Company collects and records
as income permanent removal fees that generally equal or exceed the amount of
unamortized customer acquisition costs.
Financial Instruments
Unless otherwise noted, financial instruments are stated at cost, which
approximates fair value.
F-92
<PAGE>
SECURITY ARCHIVES CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (Continued)
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. These estimates relate primarily to the realizability of
accounts receivable and the adequacy of certain accrued expenses. Actual
results could differ from those estimates.
Unaudited Financial Information
The financial information as of June 30, 1996 and for the six-month
periods ended June 30, 1996 and 1995 is unaudited and has been prepared
pursuant to the rules and regulations of the Securities and Exchange
Commission. In the opinion of management, such information reflects all
normal recurring adjustments necessary for a fair presentation. Operating
results for the six months ended June 30, 1996 are not necessarily indicative
of the results that may be expected for the year ending December 31, 1996.
Included in service and storage materials sales for the six months ended June
30, 1996 is $250,000 of fees paid to the Company for removal of cartons for a
large customer that transferred its business to Iron Mountain Incorporated.
2. Notes Payable
Notes payable consisted of the following:
<TABLE>
<CAPTION>
December 31,
1995
------------
<S> <C>
Long-term revolving note payable, providing for borrowings of up
to $600,000, interest payable monthly at 8.25%, principal due
May 31, 1997 $ 234,554
Obligations under capital leases, payable in various installments
through 1999, 8.75-9.25% imputed interest 45,084
Long-term revolving note payable, providing for borrowings of up
to $50,000, interest payable monthly at the prime rate plus 1%
(9.5% at December 31, 1995), principal due May 31, 1997 --
Unsecured notes payable to stockholder, principal due in various
installments through 2000, interest payable monthly at rates
varying from 9.75-10% 826,695
Other related party obligations 1,668
----------
Total notes payable 1,108,001
Less -- Current maturities (81,184)
----------
Notes payable, net of current maturities $1,026,817
==========
</TABLE>
F-93
<PAGE>
SECURITY ARCHIVES CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (Continued)
Maturities of long-term debt are as follows:
<TABLE>
<CAPTION>
Year Amount
<S> <C>
1996 $ 81,184
1997 904,709
1998 76,989
1999 41,778
2000 3,341
$1,108,001
==========
</TABLE>
3. Operating Leases
Future minimum payments, by year and in the aggregate, under noncancelable
operating leases with initial or remaining terms of one year or more consist
of the following at December 31, 1995:
<TABLE>
<CAPTION>
Minimum
Year Payment
-------- ----------
<S> <C>
1996 $ 367,452
1997 367,452
1998 367,452
1999 367,452
2000 367,452
Thereafter 926,022
Total $2,763,282
==========
</TABLE>
The Company's rent expense for operating leases was $380,832 for the year
ended December 31, 1995, and $204,210 for the six month period ended June 30,
1996.
4. Income Taxes
The Company accounts for income taxes in accordance with SFAS No. 109
which requires the recognition of deferred tax assets and liabilities for the
expected tax consequences of temporary differences between the tax and
financial reporting bases of assets and liabilities.
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities are
presented below (in thousands):
<TABLE>
<CAPTION>
<S> <C>
Deferred income tax assets $ 312
Deferred income tax liabilities (42)
Valuation allowance (270)
-----
$ --
=====
</TABLE>
As of December 31, 1995, the Company has NOL carryforwards of $745,106
which expire in varying amounts through 2009. The primary deferred tax
liabilities consist of tax over book depreciation. The valuation allowance
relates to uncertainties surrounding the realization of the NOL
carryforwards.
F-94
<PAGE>
SECURITY ARCHIVES CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (Continued)
5. Related Party Transactions
The Company provides management services to affiliated entities in
exchange for a management fee. Management fee revenue was $92,040 for the
year ended December 31, 1995 and $28,020 for the six months ended June 30,
1996.
In addition, the Company has notes payable to a related party. Interest
expense on related party notes payable was $58,302 for the year ended
December 31, 1995 and $31,907 for the six months ended June 30, 1996.
6. Sale of Operating Assets
On September 6, 1996 the Company entered into an agreement to sell
substantially all of its operating assets to Iron Mountain Records
Management, Inc. All debt of the Company will be repaid from the proceeds of
the sale.
F-95
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of
Iron Mountain Incorporated:
We have audited the accompanying balance sheet of Mohawk Business Record
Storage, Inc. (a Minnesota corporation) as of December 31, 1995, and the
related statements of operations and retained earnings and cash flows for the
year then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Mohawk Business Record
Storage, Inc. as of December 31, 1995, and the results of its operations and
its cash flows for the year then ended in conformity with generally accepted
accounting principles.
Arthur Andersen LLP
Minneapolis, Minnesota
September 6, 1996
F-96
<PAGE>
MOHAWK BUSINESS RECORD STORAGE, INC.
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
December 31, June 30,
1995 1996
-------------- ------------
(Unaudited)
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 223,478 $ 112,547
Accounts receivable (less allowance for doubtful accounts of
$5,000 and $9,000 in 1995 and 1996, respectively) 1,186,858 1,228,167
Notes receivable, stockholder 100,000 --
Inventories 31,548 49,009
Prepaid expenses and other 51,110 81,718
Current portion of note receivable, related company 15,996 15,996
----------- -----------
Total current assets 1,608,990 1,487,437
----------- -----------
Property and Equipment 9,049,148 9,160,561
Less -- Accumulated depreciation (5,013,510) (5,355,137)
----------- -----------
Net property and equipment 4,035,638 3,805,424
----------- -----------
Other Assets:
Other 15,000 15,000
Long-term note receivable, related company 222,004 216,004
----------- -----------
237,004 231,004
----------- -----------
$ 5,881,632 $ 5,523,865
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 47,887 $ 64,378
Notes payable--
Bank 1,625,000 1,000,000
Related parties 333,200 2,024,100
Accrued expenses 507,450 442,461
Deferred revenue 551,947 439,255
---------- -----------
Total current liabilities 3,065,484 3,970,194
---------- -----------
Long-term Notes Payable, stockholders 1,400,000 --
Commitments and Contingencies (Note 4) -- --
Stockholders' Equity:
Common stock, 25,000 shares, $1 par, 4,000 shares issued and
outstanding 4,000 4,000
Paid-in capital 46,000 46,000
Retained earnings 1,366,148 1,503,671
----------- ----------
Total stockholders' equity 1,416,148 1,553,671
----------- ----------
$ 5,881,632 $5,523,865
=========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-97
<PAGE>
MOHAWK BUSINESS RECORD STORAGE, INC.
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
<TABLE>
<CAPTION>
Year Ended
December 31, Six Months Ended June 30
1995 1995 1996
--------------- --------- -----------
(Unaudited)
<S> <C> <C> <C>
Revenues:
Storage $4,705,253 $2,310,469 $ 2,651,026
Service and storage material sales 4,094,977 2,053,952 2,085,531
---------- ---------- -----------
Total revenues 8,800,230 4,364,421 4,736,557
---------- ---------- -----------
Operating Expenses:
Cost of sales (excluding
depreciation) 4,644,836 2,387,642 2,356,940
Selling, general and administrative 2,833,687 1,535,504 1,613,978
Depreciation and amortization 657,586 218,298 358,670
---------- ---------- -----------
Total operating expenses 8,136,109 4,141,444 4,329,588
---------- ---------- -----------
Operating Income 664,121 222,977 406,969
Interest Expense 297,868 141,785 134,918
Interest Income 28,382 16,448 9,968
---------- ---------- -----------
Net Income 394,635 97,640 282,019
Retained Earnings, beginning of
period 1,262,433 1,262,433 1,366,148
Dividend Distributions (290,920) -- (144,496)
---------- ---------- -----------
Retained Earnings, end of period $1,366,148 $1,360,073 $ 1,503,671
========== ========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-98
<PAGE>
MOHAWK BUSINESS RECORD STORAGE, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended
December 31, Six Months Ended June 30
1995 1995 1996
--------------- ---------- ----------
(Unaudited)
<S> <C> <C> <C>
Operating Activities:
Net income $ 394,635 $ 97,640 $ 282,019
Adjustments to reconcile net income to
net cash provided by operating
activities--
Depreciation and amortization 657,586 218,298 358,670
Gain (Loss) on sale of assets (6,662) 31,138 (11,955)
Changes in assets and liabilities:
Accounts receivable (38,848) 168,318 (41,309)
Inventories (2,299) (8,245) (17,461)
Prepaid expenses and other (29,817) (101,092) (30,608)
Deferred revenue 69,238 (115,562) (112,692)
Accounts payable and accrued expenses 233,202 97,613 (48,498)
----------- ---------- ---------
Net cash provided by operating activities 1,277,035 388,108 378,166
----------- ---------- ---------
Investing Activities:
Purchase of property and equipment (1,869,325) (1,251,924) (128,456)
Notes receivable 12,000 (52,500) 106,000
Proceeds from sale of assets 31,143 20,500 11,955
Other (15,000) (15,000) --
----------- ---------- ---------
Net cash used for investing activities (1,841,182) (1,298,924) (10,501)
----------- ---------- ---------
Financing Activities:
Proceeds from notes payable 1,659,482 1,292,745 343,880
Principal payments on notes payable (744,582) (204,100) (677,980)
Dividend distributions (290,920) -- (144,496)
----------- ---------- ---------
Net cash provided by (used for) financing
activities 623,980 1,088,645 (478,596)
----------- ---------- ---------
Net Increase (Decrease) in Cash 59,833 177,829 (110,931)
Cash and Cash Equivalents, beginning of
period 163,645 163,645 223,478
----------- ----------- ----------
Cash and Cash Equivalents, end of period $ 223,478 $ 341,474 $ 112,547
========== =========== ==========
Supplemental Disclosure:
Interest paid $ 301,018 $ 144,935 $ 134,918
=========== =========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-99
<PAGE>
MOHAWK BUSINESS RECORD STORAGE, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
1. Organization of Business and Significant Accounting Policies
Mohawk Business Record Storage, Inc. (the Company), a Minnesota
corporation, is a full-service records management company providing storage
and related services for all media. The Company serves numerous legal,
banking, healthcare, accounting, insurance, entertainment and retail
organizations in the Minneapolis and Saint Paul, Minnesota metropolitan
areas.
Property and Equipment
Depreciation and amortization of property and equipment are recorded using
the straight-line and accelerated methods. Property and equipment consist of
the following:
<TABLE>
<CAPTION>
December 31,
Useful Lives 1995
----------------- ------------
<S> <C> <C>
Warehouse and disintegration
equipment 7 to 10 years $ 5,585,597
Leasehold improvements 10 to 39 years 1,441,291
Transportation equipment 5 to 10 years 723,603
Office equipment 5 to 10 years 1,298,657
----------
$9,049,148
==========
</TABLE>
Minor maintenance costs are expensed as incurred. Major improvements to
the leased buildings are capitalized as leasehold improvements and
depreciated as described above.
Revenue Recognition
Storage and service revenues are recognized in the month the respective
service is provided. Storage material sales are recognized when shipped to
the customer. Amounts related to future storage for customers where storage
fees are billed in advance are accounted for as deferred revenue and
amortized over the applicable period. These amounts are included in deferred
revenue in the accompanying balance sheet. The Company has one customer which
accounted for 13% of revenues for the year ended December 31, 1995.
Cash and Cash Equivalents
The Company considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents.
Inventories
Inventories are carried at the lower of cost (first-in, first-out basis)
or market and are comprised primarily of cartons.
Accrued Expenses
Accrued expenses consisted of the following:
<TABLE>
<CAPTION>
December 31,
1995
----------------
<S> <C>
Accrued incentive
compensation $ 307,621
Accrued profit sharing 160,000
Other 39,829
--------------
Accrued expenses $507,450
==============
</TABLE>
F-100
<PAGE>
MOHAWK BUSINESS RECORD STORAGE, INC.
NOTES TO FINANCIAL STATEMENTS -- (Continued)
Income Taxes
The Company has elected to be taxed as an S corporation under the
applicable Internal Revenue Code sections. The net income of the Company is
included in the individual income tax returns of the stockholders.
Accordingly, there is no provision for federal income taxes in the
accompanying financial statements.
Financial Instruments
Unless otherwise noted, financial instruments are stated at cost, which
approximates fair value.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. These estimates relate primarily to the realizability of
accounts receivable and the adequacy of certain accrued expenses. Actual
results could differ from those estimates.
Concentrations of Credit Risk
Credit risk with respect to accounts receivable is generally spread across
a large number of customers with dispersion across different businesses. As
of December 31, 1995, one customer accounted for 17% of outstanding accounts
receivable.
Unaudited Financial Information
The financial information as of June 30, 1996 and for the six-month
periods ended June 30, 1995 and 1996 is unaudited and has been prepared
pursuant to the rules and regulations of the Securities and Exchange
Commission. In the opinion of management, such information reflects all
normal recurring adjustments necessary for a fair presentation. Operating
results for the six months ended June 30, 1996 are not necessarily indicative
of the results that may be expected for the year ending December 31, 1996.
2. Debt
Notes Payable
Notes payable consisted of the following:
<TABLE>
<CAPTION>
December 31,
1995
------------
<S> <C>
Unsecured notes payable to stockholders, principal due February 1997, interest payable
monthly at the prime rate (8.5% at December 31, 1995) $1,400,000
Unsecured notes payable to related parties, due on demand, interest payable monthly at
the prime rate (8.5% at December 31, 1995) 333,200
----------
Total notes payable 1,733,200
Less -- Current maturities (333,200)
----------
Notes payable, net of current maturities $1,400,000
==========
</TABLE>
F-101
<PAGE>
MOHAWK BUSINESS RECORD STORAGE, INC.
NOTES TO FINANCIAL STATEMENTS -- (Continued)
Line of Credit
The Company has a $2,000,000 revolving credit agreement with a bank which
is payable on demand. Borrowings bear interest at the prime rate and are
collateralized by property and equipment, certain intangible assets and the
personal guarantees of the Company's stockholders.
The line-of-credit agreement contains various covenants which require the
Company to maintain certain specified financial ratios. The Company was in
compliance with these covenants as of December 31, 1995.
Additional information relating to the line of credit is as follows:
<TABLE>
<CAPTION>
1995
-----------
<S> <C>
Borrowings outstanding at year-end $1,625,000
Available borrowings at year-end 375,000
Average borrowings outstanding during the
year 1,436,000
Range of interest rates during the year 8.5%-9.0%
</TABLE>
3. Notes Receivable
Stockholder
The Company loaned $452,300 to one of its stockholders on May 12, 1992.
Interest is being paid monthly to the Company at the prime rate. Principal is
payable upon demand. The balance due to the Company under this agreement as
of December 31, 1995 was $100,000 and was repaid during the six-month period
ended June 30, 1996.
Related Company
The Company loaned $400,000 to a related partnership certain of whose
partners are also stockholders of the Company. The proceeds of this loan were
used to purchase a building that the Company is renting from this partnership
(see Note 4). Interest is payable monthly by the partnership at the prime
rate. Monthly principal payments are $1,333. Principal outstanding at
December 31, 1995 was $238,000.
4. Commitments and Contingencies
Operating Leases -- Related Parties
The Company has lease agreements for warehouse and office space with a
partnership whose partners are also stockholders of the Company. The leases
are operating leases with varying terms expiring between May 1998 and November
2009. The Company pays all maintenance, insurance and utilities. Rent expense
under these leases was $509,000 for 1995.
The Company has another lease agreement for additional warehouse space
with a partnership, certain of whose partners are also stockholders of the
Company. The lease is an operating lease with a term of 10 years through July
2000. The Company pays all taxes, maintenance, insurance and utilities. Rent
expense under this lease was $472,000 for 1995.
F-102
<PAGE>
MOHAWK BUSINESS RECORD STORAGE, INC.
NOTES TO FINANCIAL STATEMENTS -- (Continued)
Future minimum lease payments on these operating leases for each of the
next five years and thereafter are as follows:
<TABLE>
<CAPTION>
<S> <C>
1996 $ 980,000
1997 980,000
1998 857,000
1999 769,000
2000 and thereafter 3,226,000
$6,812,000
==========
</TABLE>
Purchase Order Commitment
In June 1996, the Company committed to purchase approximately $450,000 in
additional warehouse storage racking.
5. Employee Benefits
Profit-Sharing Plan
The Company has a profit-sharing plan covering substantially all of its
full-time employees. Contributions are determined annually by the board of
directors. Benefits are provided upon retirement, disability or death on the
basis of funds added to the trust accounts and earnings during periods of
participation. The total contribution to this plan was $160,000 for the year
ended December 31, 1995.
Employee Benefit Plan
The Company has adopted a salary deduction benefit plan which provides
child care, medical and dental premiums, and other unreimbursed medical
expenses. All regular employees who complete more than 25 hours per week of
service are eligible to participate on a voluntary basis. The Company does
not match employee contributions.
Bonus Plans
The Company has agreed to pay bonuses to each of two of its stockholders
equal to 20% of the net profits of the Company, as defined. Two other
stockholders and a member of senior management each are entitled to receive
bonuses equal to 5% of the net profits of the Company. In addition, the vice
president of one of the Company's divisions receives a bonus equal to 10% of
that division's net profits, as defined. Bonus expense for the year ended
December 31, 1995 was $703,000.
6. Sale of Operating Assets
On September 6, 1996, the Company entered into an agreement to sell
substantially all of its operating assets to Iron Mountain Records
Management, Inc.
F-103
<PAGE>
No dealer, salesperson or other person has been authorized to give any
information or to make any representations not contained in this Prospectus in
connection with the offer made 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 of the Underwriters. This Prospectus does not constitute
an offer to sell or solicitation of an offer to buy any security other than the
Notes offered hereby, nor does it constitute an offer to sell, or a solicitation
of an offer to buy, to any person in any jurisdiction where such an offer or
solicitation would be unlawful. Neither the delivery of this Prospectus nor any
sale made hereunder shall, under any circumstances, create any implication that
the information contained herein is correct as of any time subsequent to the
date hereof.
TABLE OF CONTENTS
Page
Prospectus Summary 3
Summary Historical and Pro Forma
Information 8
Risk Factors 10
The Company 15
The Transactions 15
Recent and Pending Acquisitions 17
Use of Proceeds 18
Capitalization 18
Pro Forma Condensed Consolidated
Financial Information 19
Selected Consolidated Financial and
Operating Information 30
Management's Discussion and Analysis of
Financial Condition and Results of
Operations 32
Business 42
Management 55
Certain Transactions 60
Principal Stockholders 61
Description of the Notes 63
Description of New Credit Facility 84
Description of Capital Stock 85
Underwriting 86
Validity of Securities 86
Experts 86
Additional Information 87
Index to Financial Statements F-1
$150,000,000
[IRON MOUNTAIN LOGO]
IRON MOUNTAIN
INCORPORATED
% Senior Subordinated Notes
due 2006
-------------------
P R O S P E C T U S
-------------------
Donaldson, Lufkin & Jenrette
Securities Corporation
Bear, Stearns & Co. Inc.
Prudential Securities Incorporated
, 1996
<PAGE>
Part II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
Securities and Exchange Commission
fee $ 51,725
NASD filing fee 15,500
Blue Sky fees and expenses 15,000
Rating Agency fees and expenses 80,000
Printing and engraving fees 200,000
Accountants' fees and expenses 300,000
Legal fees and expenses 100,000
Trustee's fees and expenses 6,000
Miscellaneous 31,775
--------
Total $800,000
========
The foregoing, except for the Securities and Exchange Commission fee and the
NASD filing fee, are estimated.
Item 14. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law (the "DGCL") provides, in
effect, that any person made a party to any action by reason of the fact that he
is or was a director, officer, employee or agent of the Company may and, in
certain cases, must be indemnified by the Company against, in the case of a
non-derivative action, judgments, fines, amounts paid in settlement and
reasonable expenses (including attorney's fees) incurred by him as a result of
such action, and in the case of a derivative action, against expenses (including
attorney's fees), if in either type of action he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the Company. This indemnification does not apply, in a derivative action, to
matters as to which it is adjudged that the director, officer, employee or agent
is liable to the Company, unless upon court order it is determined that, despite
such adjudication of liability, but in view of all the circumstances of the
case, he is fairly and reasonable entitled to indemnity for expenses, and, in a
non-derivative action, to any criminal proceeding in which such person had
reasonable cause to believe his conduct was unlawful.
Article Sixth of the Company's Amended and Restated Certificate of
Incorporation provides that the Company shall indemnify each person who is or
was an officer or director of the Company to the fullest extent permitted by
Section 145 of the DGCL.
Article Seventh of the Company's Amended and Restated Certificate of
Incorporation states that no director of the Company shall be liable to the
Company or its stockholders for monetary damages for breach of fiduciary duty as
a director, except to the extent that exculpation from liability is not
permitted under the Delaware General Corporation Law as in effect when such
breach occurred.
Reference is made to Section 7 of the Underwriting Agreement filed as Exhibit
1 hereto, pursuant to which the underwriters have agreed to indemnify officers
and directors of the Company against certain liabilities.
Item 15. Recent Sales of Unregistered Securities.
The Company's Amended and Restated Certificate of Incorporation provides for
16,000,000 shares of authorized capital stock, each with par value $.01 per
share, as follows: 13,000,000 shares of authorized Common Stock, 1,000,000
shares of authorized Nonvoting Common Stock and 2,000,000 shares of Preferred
Stock. On February 6, 1996, simultaneously with the consummation of the
Company's Initial Public Offering and without any action on the part of the
holders thereof, all outstanding shares of the Company's Series A1 Convertible
Preferred Stock, par value $0.01 per share ("Series A1 Preferred Stock"), Series
A2 Convertible Preferred Stock, par value $0.01 per share, Series A3 Convertible
Preferred Stock, par value $0.01 per share, and Series C Convertible Preferred
Stock, par value $0.01 per share (the "Old Preferred Stock"), was automatically
converted into shares
II-1
<PAGE>
of Common Stock (or, in the case of one holder, shares of Common Stock and
500,000 shares of Nonvoting Common Stock). All of the shares of Common Stock and
Nonvoting Common Stock issued as a result of such conversion were issued by the
Company in reliance on the exemptions provided by Sections 3(a)(9) and 4(2) of
the Securities Act. No commission or other remuneration was paid or given by the
Company directly or indirectly for effecting the exchange.
On January 31, 1994, one shareholder of the Company exchanged 98,000 shares
of Series A1 Preferred Stock for an equal number of shares of Series A2
Preferred Stock. On November 28, 1995, another shareholder of the Company
exchanged 43,500 shares of Series A1 Preferred Stock for an equal number of
shares of Series A3 Preferred Stock. All such shares were issued by the Company
in reliance on the exemptions provided by Sections 3(a)(9) and 4(2) of the
Securities Act. No commission or other remuneration was paid or given by the
Company directly or indirectly for effecting the exchange.
In 1995, the Company (i) issued options to acquire an aggregate of 162,184
shares of its Class A Common Stock pursuant to its stock option plan to certain
of its officers and employees and (ii) issued to one employee an aggregate of
1,036 shares of Class A Common Stock pursuant to the exercise of stoock options
granted under the Company's stock option plan for an aggregate purchase price of
$200,984. In 1995, the Company also issued options to acquire an aggregate of
65,152 shares of its Common Stock pursuant to its stock option plan to certain
of its officers and employees (which grants were conditioned on the consummation
of the Initial Public Offering). In April 1996, the Company issued options to
acquire an additional 361,452 shares. All securities referred to in this
paragraph were issued by the Company in reliance on the exemption provided by
Section 4(2) of the Securities Act or Rule 701 promulgated thereunder.
Item 16. Exhibits and Financial Statement Schedules.
Each exhibit marked by an asterisk (*) is incorporated by reference to the
Company's Registration Statement No. 33-99950 filed with the Securities and
Exchange Commission on December 1, 1995. Each exhibit marked with a double
asterisk (**) is incorporated by reference to Amendment No. 2 to the Company's
Registration Statement filed with the Securities and Exchange Commission on
January 11, 1996. Each exhibit marked with a triple asterisk (***) is
incorporated by reference to the Company's Registration Statement No. 333-10359
filed with the Securities and Exchange Commission on August 16, 1996. Each
exhibit marked with a quadruple asterisk (****) is incorporated by reference to
Amendment No. 1 to the Company's Registration Statement filed with the
Securities and Exchange Commission on September 11, 1996. Exhibit 3.2 is
incorporated by reference to the Company's Quarterly Report on Form 10-Q (File
No. 0-27584) filed with the Securities and Exchange Commission on August 14,
1996. Exhibit numbers in parentheses refer to the exhibit numbers in the
applicable filing.
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit
Number Item Exhibit
- ------ ---- -------
<S> <C> <C>
1 Form of Underwriting Agreement **** (1)
3.1 Amended and Restated Certificate of Incorporation of the Company * (3.1)
3.1A Certificate of Incorporation of Iron Mountain Records Management, Inc. Filed herewith as
Exhibit 3.1A
3.1B Certificate of Incorporation of Metro Business Archives, Inc. Filed herewith as
Exhibit 3.1B
3.1C Certificate of Incorporation of Criterion Atlantic Property, Inc. **** (3.1C)
3.1D Certificate of Incorporation of Criterion Property, Inc. **** (3.1D)
3.1E Articles of Incorporation of Hollywood Property, Inc. **** (3.1E)
3.1F Certificate of Incorporation of IM San Diego, Inc. **** (3.1F)
3.1G Certificate of Incorporation of Iron Mountain Information Partners, Inc. **** (3.1G)
3.1H Articles of Organization of Iron Mountain Data Protection Services, Inc. **** (3.1H)
II-2
<PAGE>
Exhibit
Number Item Exhibit
- ------ ---- -------
3.1I Articles of Incorporation of Iron Mountain Records Management of Filed herewith as
Maryland, Inc. Exhibit 3.1I
3.1J Articles of Incorporation of Iron Mountain Records Management of Ohio, Filed herewith as
Inc. Exhibit 3.1J
3.1K Certificate of Incorporation of Iron Mountain Wilmington, Inc. **** (3.1K)
3.1L Articles of Incorporation of Data Storage Systems, Inc. Filed herewith as
Exhibit 3.1L
3.1M Certificate of Formation of Iron Mountain Records Management of Missouri **** (3.1M)
LLC
3.1N Articles of Organization of Iron Mountain Records Management of Boston, **** (3.1N)
Inc.
3.1O Articles of Incorporation of Data Archive Services, Inc. Filed herewith as
Exhibit 3.1O
3.1P Articles of Incorporation of Data Archives Services of Miami, Inc. **** (3.1P)
3.2 Bylaws of the Company, as amended * (3)
3.2A Bylaws of Iron Mountain Records Management, Inc. **** (3.2A)
3.2B Bylaws of Metro Business Archives, Inc. **** (3.2B)
3.2C Bylaws of Criterion Atlantic Property, Inc. **** (3.2C)
3.2D Bylaws of Criterion Property, Inc. **** (3.2D)
3.2E Bylaws of Hollywood Property, Inc. **** (3.2E)
3.2F Bylaws of IM San Diego, Inc. **** (3.2F)
3.2G Bylaws of Iron Mountain Information Partners, Inc. **** (3.2G)
3.2H Bylaws of Iron Mountain Data Protection Services, Inc. **** (3.2H)
3.2I Bylaws of Iron Mountain Records Management of Maryland, Inc. Filed herewith as
Exhibit 3.2I
3.2J Bylaws of Iron Mountain Records Management of Ohio, Inc. Filed herewith as
Exhibit 3.2J
3.2K Bylaws of Iron Mountain Wilmington, Inc. **** (3.2K)
3.2L Bylaws of Data Storage Systems, Inc. Filed herewith as
Exhibit 3.2L
3.2M Limited Liability Company Agreement of Iron Mountain Records Management **** (3.2M)
of Missouri LLC
3.2N Bylaws of Iron Mountain Records Management of Boston, Inc. **** (3.2N)
3.2O Bylaws of Data Archives Services, Inc. Filed herewith as
Exhibit 3.2O
3.2P Bylaws of Data Archive Services of Miami, Inc. **** (3.2P)
4.1 Registration Rights Agreement between the Company and certain * (4.1)
Stockholders, dated as of December 14, 1990
4.2 Form of Indenture for the Notes **** (4.2)
5 Opinion of Sullivan & Worcester LLP Filed herewith as
Exhibit 5
10.1 Credit Agreement between the Company and Chase Manhattan Bank (N.A.) as * (10.1)
Agent, dated as of December 10, 1990, amended and restated as of April
15, 1993 and further amended and restated as of January 31, 1995
10.2 Consent and Amendment No. 1 to the Credit Agreement, dated as of November * (10.2)
1, 1995 between the Company and Chase Manhattan Bank (N.A.) as Agent
II-3
<PAGE>
Exhibit
Number Item Exhibit
- ------ ---- -------
10.3 Consent and Amendment No. 2 to the Credit Agreement, dated as of November * (10.3)
2, 1995 between the Company and Chase Manhattan Bank (N.A.) as Agent
10.3A Amendment No. 3 to the Credit Agreement, dated as of August 29, 1996, **** (10.3A)
among the Company, the lenders party thereto and The Chase Manhattan
Bank, as Agent
10.3B Draft of Credit Agreement, dated as of September 30, 1996, among Filed herewith
the Company, the lenders party thereto and The as Exhibit 10.3B
Chase Manhattan Bank, as Administrative Agent
10.4 Note Purchase Agreement between the Company and Chrysler Capital * (10.4)
Corporation, dated as of December 14, 1990, as amended
10.4A Letter agreement, dated July 15, 1996, between the Company and Chrysler *** (10.4A)
Capital Corporation
10.5 Subordinated Term Note between the Company and Schooner Capital * (10.5)
Corporation, dated February 11, 1991
10.6 Iron Mountain Incorporated 1995 Stock Incentive Plan * (10.6)
10.7 Form of Iron Mountain Incorporated 1995 Stock Plan for Non-Employee ** (10.7)
Directors
10.8 Asset Purchase and Sale Agreement, dated as of July 8, 1994, between Iron * (10.8)
Mountain Data Protection Services, Inc. and Digital Equipment Corporation
10.9 Asset Purchase and Sale Agreement, dated as of October 31, 1994, among * (10.9)
Iron Mountain Records Management of Ohio, Inc., Storage and Retrieval
Concepts, Inc., Thomas Waldon and Dann Scheiferstein
10.10 Asset Purchase and Sale Agreement, dated as of February 28, 1995, among * (10.10)
Iron Mountain Records Management ("IMRM"), National Business Archives,
Inc., and James F. Knott
10.11 Asset Purchase Agreement, dated July 19, 1995, among IMRM, DataFile * (10.11)
Services, Inc. and Cynthia and Lee Macklin
10.12 Asset Purchase and Sale Agreement, dated as of October 5, 1995, among * (10.12)
IMRM, Brooks Records Center, Inc. and Forty Acres, Ltd.
10.13 Asset Purchase and Sale Agreement, dated as of November 1, 1995, among * (10.13)
IMRM, Nashville Vault Company, Ltd. and USA Vault Corporation
10.14 Asset Purchase and Sale Agreement, dated November 14, 1995, among IMRM, * (10.14)
Data Vault Corporation and Ralph Stoddard III
10.15 Merger Agreement, dated as of November 17, 1995, among IMRM, Temp DSSI, * (10.15)
Inc. and Data Storage Systems, Inc.
10.16 Asset Purchase and Sale Agreement, dated November 17, 1995, among IMRM, * (10.16)
Florida Data Bank, Inc., Carl J. Strang III, Carl J. Strang II and 6/10
Corporation
10.17 Asset Purchase and Sale Agreement, dated November 22, 1995 among IMRM, * (10.17)
Data Management Business Records Storage, Inc. and Outdoor West, Inc.
10.18 Record Center Storage Services Agreement between IMRM and Resolution * (10.18)
Trust Corporation, dated July 31, 1992
10.19 Lease between IMRM and IM Houston (CR) Limited Partnership, dated January * (10.19)
1, 1991
10.20 Asset Purchase and Sale Agreement, dated July 11, 1996, among IMRM, ***(10.20)
The Fortress Corporation and certain subsidiaries
II-4
<PAGE>
Exhibit
Number Item Exhibit
- ------ ---- -------
10.21 Stock Purchase and Sale Agreement, dated as of August 9, 1996, *** (10.21)
among IMRM and the shareholders of Data Archive Services of
Miami, Inc. and Data Archives Services, Inc.
10.22 Asset Purchase and Sale Agreement, dated August 13, 1996, among IMRM, *** (10.22)
International Record Storage and Retrieval Service, Inc. and Laurance
Winnerman, Sanford Winnerman and Penny Novak
10.23 Asset Purchase Agreement, dated as of September 6, 1996, among IMRM, **** (10.23)
Mohawk Business Record Storage, Inc., Michael M. Rabin, Richard K. Rabin,
Herman Ladin and Sidney Ladin
11 Statement re: computation of per share earnings *** (11)
12 Statement re: computation of ratio of earnings to fixed charges **** (12)
21 Subsidiaries of the Company Filed herewith as
Exhibit 21
23.1 Consent of Sullivan & Worcester LLP Contained in
Exhibit 5 filed
herewith
23.2 Consent of Arthur Andersen LLP **** (23.2)
23.3 Consent of Wolpoff & Company, LLP **** (23.3)
23.4 Consent of Morrison and Smith **** (23.4)
23.5 Consent of Geo. S. Olive & Co. LLC **** (23.5)
23.6 Consent of Robert F. Gayton, CPA **** (23.6)
23.7 Consent of Perless, Roth, Jonas & Hartney, CPAs, PA **** (23.7)
23.8 Consent of Rothstein, Kass & Company, P.C. **** (23.8)
24 Powers of Attorney **** Previously
filed as Exhibit
24 and on Pages
II-6 and II-7 of
the Registration
Statement
25 Statement re eligibility of trustee **** (25)
</TABLE>
II-5
<PAGE>
(b) Financial Statement Schedules
The following Financial Statement Schedule is filed herewith:
Schedule II--Valuation and Qualifying Accounts
Item 17. Undertakings
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the Registrants, the
Registrants have been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by a Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, such Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
The undersigned Registrants hereby undertake that:
(1) For purposes of determining any liability under the Act, the information
omitted from the form of prospectus filed as part of this registration
statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Act, each
post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, Iron
Mountain Incorporated has duly caused this amendment to its Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Boston, Commonwealth of Massachusetts, on September
25, 1996.
IRON MOUNTAIN INCORPORATED
By: /s/ C. Richard Reese
-----------------------------
Name: C. Richard Reese
Title: Chairman of the Board of Directors
and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended, this
amendment to the Registrant's Registration Statement on Form S-1 relating to
Iron Mountain Incorporated's Senior Subordinated Notes and the guarantees
thereof has been signed below by the following persons in the capacities and on
the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ C. Richard Reese Chairman of the Board of Directors September 25, 1996
- ---------------------- and Chief Executive Officer
C. Richard Reese
* President, Chief Operating Officer September 25, 1996
- ---------------------- and Director
David S. Wendell
* Executive Vice President, Chief September 25, 1996
- ---------------------- Financial Officer and Director
Eugene B. Doggett
* Director September 25, 1996
- ----------------------
Constantin R. Boden
* Director September 25, 1996
- ----------------------
Arthur D. Little
* Director September 25, 1996
- ----------------------
Vincent J. Ryan
* Vice President and Corporate September 25, 1996
- ---------------------- Controller
Jean A. Bua
*By: /s/ C. Richard Reese
--------------------
C. Richard Reese
Attorney-in-fact
</TABLE>
II-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, their
undersigned Registrants have each duly caused this amendment to their
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Boston, Commonwealth of Massachusetts, on
September 25, 1996.
IRON MOUNTAIN RECORDS MANAGEMENT, INC.
METRO BUSINESS ARCHIVES, INC.
CRITERION ATLANTIC PROPERTY, INC.
CRITERION PROPERTY, INC.
HOLLYWOOD PROPERTY, INC.
IM SAN DIEGO, INC.
IRON MOUNTAIN INFORMATION PARTNERS, INC.
IRON MOUNTAIN DATA PROTECTION SERVICES, INC.
IRON MOUNTAIN RECORDS MANAGEMENT OF MARYLAND, INC.
IRON MOUNTAIN RECORDS MANAGEMENT OF OHIO, INC.
IRON MOUNTAIN WILMINGTON, INC.
DATA STORAGE SYSTEMS, INC.
IRON MOUNTAIN RECORDS MANAGEMENT OF MISSOURI LLC
IRON MOUNTAIN RECORDS MANAGEMENT OF BOSTON, INC.
DATA ARCHIVE SERVICES, INC.
By: /s/ C. Richard Reese
--------------------
Name: C. Richard Reese
Title: Chairman of the Board of Directors
and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended, this
amendment to the Registrants' Registration Statement on Form S-1 relating to
Iron Mountain Incorporated's Senior Subordinated Notes and the guarantees
thereof has been signed below by the following persons in the capacities and on
the dates indicated and each of the undersigned officers and directors or
managers of Iron Mountain Records Management of Maryland, Inc., Iron Mountain
Records Management of Ohio, Inc., Data Storage Systems, Inc., and Data Archive
Services Inc., hereby severally constitutes and appoints C. Richard Reese, David
S. Wendell and Eugene B. Doggett, and each of them, to sign for him or her, and
in his or her name in the capacity indicated below, such Registration Statement
for the purpose of registering such securities under the Securities Act of 1933,
as amended, and any and all amendments thereto, including without limitation any
registration statement or post-effective amendment thereof filed under and
meeting the requirements of Rule 462(b) under the Securities Act, hereby
ratifying and confirming our signatures as they may be signed by our attorneys
to such Registration Statement and any and all amendments thereto.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ C. Richard Reese Chairman of the Board and Director, September 25, 1996
- --------------------- and Chief Executive Officer
C. Richard Reese
/s/ Eugene B. Doggett Executive Vice President and Chief September 25, 1996
- --------------------- Financial Officer, and Manager of
Eugene B. Doggett Iron Mountain Records Management
of Missouri, LLC
/s/ Jean A. Bua Vice President and Corporate September 25, 1996
- --------------------- Controller
Jean A. Bua
</TABLE>
II-8
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of
Iron Mountain Incorporated:
We have audited, in accordance with generally accepted auditing standards,
the consolidated financial statements of Iron Mountain Incorporated for each of
the three years in the period ended December 31, 1995 and have issued our report
thereon dated February 26, 1996. Our audits were made for the purpose of forming
an opinion on those statements taken as a whole. The accompanying supplemental
schedule is the responsibility of the Company's management and is presented for
purposes of complying with the Securities and Exchange Commission's rules and
regulations under the Securities and Exchange Act of 1934 and is not a required
part of the basic financial statements. The supplemental schedule has been
subjected to the auditing procedures applied in our audits of the basic
financial statements and, in our opinion, is fairly stated, in all material
respects, in relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Los Angeles, California
February 26, 1996
S-1
<PAGE>
SCHEDULE II
IRON MOUNTAIN INCORPORATED
VALUATION AND QUALIFYING ACCOUNTS
Years Ended December 31, 1993, 1994 and 1995
(In thousands)
<TABLE>
<CAPTION>
Balance at Balance
beginning Charged to at end
of year expense Deductions of year
---------- ---------- ---------- -------
<S> <C> <C> <C> <C>
Year ended December 31, 1993
Allowance for doubtful accounts $424 $581 $(503) $502
Year ended December 31, 1994
Allowance for doubtful accounts $502 $356 $(327) $531
Year ended December 31, 1995
Allowance for doubtful accounts $531 $630 $(510) $651
</TABLE>
S-2
<PAGE>
Exhibit Index
<TABLE>
<CAPTION>
Exhibit
Number Item Exhibit
- ------- ---- -------
<S> <C> <C>
1 Form of Underwriting Agreement **** (1)
3.1 Amended and Restated Certificate of Incorporation of the Company * (3.1)
3.1A Certificate of Incorporation of Iron Mountain Records Management, Inc. Filed herewith as
Exhibit 3.1A
3.1B Certificate of Incorporation of Metro Business Archives, Inc. Filed herewith as
Exhibit 3.2B
3.1C Certificate of Incorporation of Criterion Atlantic Property, Inc. **** (3.1C)
3.1D Certificate of Incorporation of Criterion Property, Inc. **** (3.1D)
3.1E Articles of Incorporation of Hollywood Property, Inc. **** (3.1E)
3.1F Certificate of Incorporation of IM San Diego, Inc. **** (3.1F)
3.1G Certificate of Incorporation of Iron Mountain Information Partners, Inc. **** (3.1G)
3.1H Articles of Organization of Iron Mountain Data Protection Services, Inc. **** (3.1H)
3.1I Articles of Incorporation of Iron Mountain Records Management of Filed herewith as
Maryland, Inc. Exhibit 3.1I
3.1J Articles of Incorporation of Iron Mountain Records Management of Ohio, Filed herewith as
Inc. Exhibit 3.1J
3.1K Certificate of Incorporation of Iron Mountain Wilmington, Inc. **** (3.1K)
3.1L Articles of Incorporation of Data Storage Systems, Inc. Filed herewith as
Exhibit 3.1L
3.1M Certificate of Formation of Iron Mountain Records Management of Missouri **** (3.1M)
LLC
3.1N Articles of Organization of Iron Mountain Records Management of Boston, **** (3.1N)
Inc.
3.1O Articles of Incorporation of Data Archive Services, Inc. Filed herewith as
Exhibit 3.1O
3.1P Articles of Incorporation of Data Archives Services of Miami, Inc. **** (3.1P)
3.2 Bylaws of the Company, as amended * (3)
3.2A Bylaws of Iron Mountain Records Management, Inc. **** (3.2A)
3.2B Bylaws of Metro Business Archives, Inc. **** (3.2B)
3.2C Bylaws of Criterion Atlantic Property, Inc. **** (3.2C)
3.2D Bylaws of Criterion Property, Inc. **** (3.2D)
3.2E Bylaws of Hollywood Property, Inc. **** (3.2E)
3.2F Bylaws of IM San Diego, Inc. **** (3.2F)
3.2G Bylaws of Iron Mountain Information Partners, Inc. **** (3.2G)
3.2H Bylaws of Iron Mountain Data Protection Services, Inc. **** (3.2H)
3.2I Bylaws of Iron Mountain Records Management of Maryland, Inc. Filed herewith as
Exhibit 3.2I
3.2J Bylaws of Iron Mountain Records Management of Ohio, Inc. Filed herewith as
Exhibit 3.2J
3.2K Bylaws of Iron Mountain Wilmington, Inc. **** (3.2K)
3.2L Bylaws of Data Storage Systems, Inc. Filed herewith as
Exhibit 3.2L
3.2M Limited Liability Company Agreement of Iron Mountain Records Management **** (3.2M)
of Missouri LLC
3.2N Bylaws of Iron Mountain Records Management of Boston, Inc. **** (3.2N)
3.2O Bylaws of Data Archives Services, Inc. Filed herewith as
Exhibit 3.2O
3.2P Bylaws of Data Archive Services of Miami, Inc. **** (3.2P)
4.1 Registration Rights Agreement between the Company and certain * (4.1)
Stockholders, dated as of December 14, 1990
4.2 Form of Indenture for the Notes **** (4.2)
<PAGE>
Exhibit
Number Item Exhibit
- ------- ---- -------
5 Opinion of Sullivan & Worcester LLP Filed herewith as
Exhibit 5
10.1 Credit Agreement between the Company and Chase Manhattan Bank (N.A.) as * (10.1)
Agent, dated as of December 10, 1990, amended and restated as of April
15, 1993 and further amended and restated as of January 31, 1995
10.2 Consent and Amendment No. 1 to the Credit Agreement, dated as of November * (10.2)
1, 1995 between the Company and Chase Manhattan Bank (N.A.) as Agent
10.3 Consent and Amendment No. 2 to the Credit Agreement, dated as of November * (10.3)
2, 1995 between the Company and Chase Manhattan Bank (N.A.) as Agent
10.3A Amendment No. 3 to the Credit Agreement, dated as of August 29, 1996, **** (10.3A)
among the Company, the lenders party thereto and The Chase Manhattan
Bank, as Agent
10.3B Draft of Credit Agreement, dated as of September 30, 1996, among
the Filed herewith as Company, the parties lender thereto and The
Chase Manhattan Bank, as Exhibit 10.3B Administrative Agent
10.4 Note Purchase Agreement between the Company and Chrysler Capital * (10.4)
Corporation, dated as of December 14, 1990, as amended
10.4A Letter agreement, dated July 15, 1996, between the Company and Chrysler *** (10.4A)
Capital Corporation
10.5 Subordinated Term Note between the Company and Schooner Capital * (10.5)
Corporation, dated February 11, 1991
10.6 Iron Mountain Incorporated 1995 Stock Incentive Plan * (10.6)
10.7 Form of Iron Mountain Incorporated 1995 Stock Plan for Non-Employee ** (10.7)
Directors
10.8 Asset Purchase and Sale Agreement, dated as of July 8, 1994, between Iron * (10.8)
Mountain Data Protection Services, Inc. and Digital Equipment Corporation
10.9 Asset Purchase and Sale Agreement, dated as of October 31, 1994, among * (10.9)
Iron Mountain Records Management of Ohio, Inc., Storage and Retrieval
Concepts, Inc., Thomas Waldon and Dann Scheiferstein
10.10 Asset Purchase and Sale Agreement, dated as of February 28, 1995, among * (10.10)
Iron Mountain Records Management ("IMRM"), National Business Archives,
Inc., and James F. Knott
10.11 Asset Purchase Agreement, dated July 19, 1995, among IMRM, DataFile * (10.11)
Services, Inc. and Cynthia and Lee Macklin
10.12 Asset Purchase and Sale Agreement, dated as of October 5, 1995, among * (10.12)
IMRM, Brooks Records Center, Inc. and Forty Acres, Ltd.
10.13 Asset Purchase and Sale Agreement, dated as of November 1, 1995, among * (10.13)
IMRM, Nashville Vault Company, Ltd. and USA Vault Corporation
10.14 Asset Purchase and Sale Agreement, dated November 14, 1995, among IMRM, * (10.14)
Data Vault Corporation and Ralph Stoddard III
10.15 Merger Agreement, dated as of November 17, 1995, among IMRM, Temp DSSI, * (10.15)
Inc. and Data Storage Systems, Inc.
10.16 Asset Purchase and Sale Agreement, dated November 17, 1995, among IMRM, * (10.16)
Florida Data Bank, Inc., Carl J. Strang III, Carl J. Strang II and 6/10
Corporation
10.17 Asset Purchase and Sale Agreement, dated November 22, 1995 among IMRM, * (10.17)
Data Management Business Records Storage, Inc. and Outdoor West, Inc.
10.18 Record Center Storage Services Agreement between IMRM and Resolution * (10.18)
Trust Corporation, dated July 31, 1992
10.19 Lease between IMRM and IM Houston (CR) Limited Partnership, dated January * (10.19)
1, 1991
<PAGE>
Exhibit
Number Item Exhibit
- ------- ---- -------
10.20 Asset Purchase and Sale Agreement, dated July 11, 1996, among IMRM, ***(10.20)
The Fortress Corporation and certain subsidiaries
10.21 Stock Purchase and Sale Agreement, dated as of August 9, 1996, *** (10.21)
among IMRM and the shareholders of Data Archive Services of
Miami, Inc. and Data Archives Services, Inc.
10.22 Asset Purchase and Sale Agreement, dated August 13, 1996, among IMRM, *** (10.22)
International Record Storage and Retrieval Service, Inc. and Laurance
Winnerman, Sanford Winnerman and Penny Novak
10.23 Asset Purchase Agreement, dated as of September 6, 1996, among IMRM, **** (10.23)
Mohawk Business Record Storage, Inc., Michael M. Rabin, Richard K. Rabin,
Herman Ladin and Sidney Ladin
11 Statement re: computation of per share earnings *** (11)
12 Statement re: computation of ratio of earnings to fixed charges **** (12)
21 Subsidiaries of the Company Filed herewith as
Exhibit 21
23.1 Consent of Sullivan & Worcester LLP Contained in
Exhibit 5 filed
herewith
23.2 Consent of Arthur Andersen LLP **** (23.2)
23.3 Consent of Wolpoff & Company, LLP **** (23.3)
23.4 Consent of Morrison and Smith **** (23.4)
23.5 Consent of Geo. S. Olive & Co. LLC **** (23.5)
23.6 Consent of Robert F. Gayton, CPA **** (23.6)
23.7 Consent of Perless, Roth, Jonas & Hartney, CPAs, PA **** (23.7)
23.8 Consent of Rothstein, Kass & Company, P.C. **** (23.8)
24 Powers of Attorney **** Previously
filed as Exhibit
24 and on Pages
II-6 and II-7 of
the Registration
Statement
25 Statement re eligibility of trustee **** (25)
</TABLE>
Each exhibit marked by an asterisk (*) is incorporated by reference to the
Company's Registration Statement No. 33-99950 filed with the Securities
and Exchange Commission on December 1, 1995. Each exhibit marked with a double
asterisk (**) is incorporated by reference to Amendment No. 2 to the Company's
Registration Statement filed with the Securities and Exchange Commission on
January 11, 1996. Each exhibit marked with a triple asterisk (***) is
incorporated by reference to the Company's Registration Statement No. 333-10359
filed with the Securities and Exchange Commission on August 16, 1996. Each
exhibit marked with a quadruple asterisk (****) is incorporated by reference to
Amendment No. 1 to the Company's Registration Statement filed with the
Securities and Exchange Commission on September 11, 1996. Exhibit 3.2 is
incorporated by reference to the Company's Quarterly Report on Form 10-Q (File
No. 0-27584) filed with the Securities and Exchange Commission on August 14,
1996. Exhibit numbers in parentheses refer to the exhibit numbers in the
applicable filing.
CERTIFICATE OF OWNERSHIP AND MERGER
OF
IRON MOUNTAIN DATA PROTECTION SERVICES, INC.
(a Delaware corporation)
INTO
IRON MOUNTAIN RECORDS MANAGEMENT, INC.
(a Delaware corporation)
It is hereby certified that:
1. Iron Mountain Records Management, Inc. (hereinafter sometimes referred
to as the "Corporation") is a business corporation of the State of Delaware.
2. The Corporation is the owner of all of the outstanding shares of each
class of the stock of Iron Mountain Data Protection Services, Inc. ("IMDPS"),
which is also a business corporation of the State of Delaware.
3. On December 18, 1995, the Board of Directors of the Corporation adopted
the following resolutions to merger IMDPS into the Corporation:
RESOLVED: That IMDPS be merged into this Corporation, and that all of the
estate, property, rights, privileges, powers and franchises of
IMDPS be vested in and held and enjoyed by this Corporation as
fully and entirely and without change or diminution as the same
were before held and enjoyed by IMDPS in its name.
RESOLVED: That this Corporation shall assume all of the obligations of
IMDPS.
RESOLVED: That this Corporation shall cause to be executed and filed and/or
recorded the documents prescribed by the laws of the State of
Delaware and by the laws of any other appropriate jurisdiction and
will cause to be performed all necessary acts within the State of
Delaware and within any other appropriate jurisdiction.
RESOLVED: That the effective time of the Certificate of Ownership and Merger
setting forth a copy of these resolutions, and the time when the
merger therein
<PAGE>
provided for shall become effective, shall be 11:59 p.m., December
31, 1995.
Executed on December 19, 1995.
IRON MOUNTAIN RECORDS
MANAGEMENT, INC.
By:/s/ Eugene B. Doggett
-----------------------------
Eugene B. Doggett
Executive Vice President
Attest:
/s/ Garry B. Watzke
- ---------------------------
Garry B. Watzke
Secretary
-2-
<PAGE>
CERTIFICATE OF OWNERSHIP AND MERGER
OF
METRO RECORDS MANAGEMENT, INC.
(a California corporation)
into
IRON MOUNTAIN RECORDS MANAGEMENT, INC.
(a Delaware corporation)
It is hereby certified that:
1. Iron Mountain Records Management, Inc. (hereinafter sometimes referred
to as the "Corporation") is a business corporation of the State of Delaware.
2. The Corporation is the owner of all of the outstanding shares of stock
of Metro Records Management, Inc., which is a business corporation of the State
of California.
3. The laws of the State of California, the jurisdiction of organization
of Metro Records Management, Inc., permit the merger of a business corporation
of that jurisdiction with a business corporation of another jurisdiction.
4. The laws of the State of Delaware, the jurisdiction of organization of
Iron Mountain Records Management, Inc., permit the merger of a business
corporation of that jurisdiction with a business corporation of another
jurisdiction.
5. The Corporation hereby merges Metro Records Management, Inc. into the
Corporation.
6. The following is a copy of the resolutions adopted on December 23, 1993
by the Board of Directors of the Corporation to merge the said Metro Records
Management, Inc. into the Corporation:
RESOLVED: That Metro Records Management, Inc. be merged into this
Corporation, and that all of the estate, property, rights,
privileges, powers, and franchises of Metro Records Management,
Inc. be vested in and held and enjoyed by this Corporation as
fully and entirely and without change or diminution as the same
were before held and enjoyed by Metro Records Management, Inc. in
its name.
<PAGE>
RESOLVED: That this Corporation assume all of the obligations of Metro
Records Management, Inc.
RESOLVED: That this Corporation shall cause to be executed and filed and/or
recorded the documents prescribed by the laws of the State of
Delaware, by the laws of the State of California, and by the laws
of any other appropriate jurisdiction and will cause to be
performed all necessary acts within the jurisdiction of
organization of Metro Records Management, Inc. and of this
Corporation and in any other appropriate jurisdiction.
RESOLVED: That the effective time of the Certificate of Ownership and
Merger setting forth a copy of these resolutions shall be 11:59
p.m. on December 31, 1993, and that, insofar as the General
Corporation Law of the State of Delaware or the General
Corporation Law of the State of California shall govern the same,
said time shall be the effective merger time.
Executed on December 23, 1993.
IRON MOUNTAIN RECORDS
MANAGEMENT, INC.
By: /s/E.B. Doggett
----------------------------
Its Executive Vice President
Attest:
/s/ Garry B. Watzke
- ----------------------------
Its Secretary
-2-
<PAGE>
CERTIFICATE OF OWNERSHIP AND MERGER
OF
IRON MOUNTAIN/PACIFIC RECORDS MANAGEMENT, INC.
(a Delaware corporation)
INTO
IRON MOUNTAIN RECORDS MANAGEMENT, INC.
(a Delaware corporation)
It is hereby certified that:
1. Iron Mountain Records Management, Inc. (hereinafter sometimes referred
to as the "Corporation") is a business corporation of the State of Delaware.
2. The Corporation is the owner of all of the outstanding shares of each
class of the stock of Iron Mountain/Pacific Records Management, Inc. ("IM/PAC"),
which is also a business corporation of the State of Delaware.
3. On December 26, 1990, the Board of Directors of the Corporation adopted
the following resolutions to merge IM/PAC into the Corporation:
RESOLVED: That IM/PAC be merged into this Corporation, and that all of the
estate, property, rights, privileges, powers and franchises of
IM/PAC be vested in and held and enjoyed by this Corporation as
fully and entirely and without change or diminution as the same
were before held and enjoyed by IM/PAC in its name.
RESOLVED: That this Corporation shall assume all of the obligations of
IM/PAC.
RESOLVED: That this Corporation shall cause to be executed and filed and/or
recorded the documents prescribed by the laws of the State of
Delaware and by the laws of any other appropriate jurisdiction
and will cause to be performed all necessary acts within the
State of Delaware and within any other appropriate jurisdiction.
RESOLVED: That the effective time of the Certificate of Ownership and
Merger setting forth a copy of these resolutions, and the time
when the merger therein provided for shall become effective,
shall be 12:01 a.m., January 1, 1991.
<PAGE>
Executed on December 26, 1990
IRON MOUNTAIN RECORDS
MANAGEMENT, INC.
By:/s/Eugene B. Doggett
---------------------------
Eugene B. Doggett
Executive Vice President
Attest:
/s/Garry B. Watzke
- ---------------------
Garry B. Watzke
Assistant Secretary
-2-
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
IRON MOUNTAIN INFORMATION SERVICES, INC.
Pursuant to Section 242
of the Corporation Law of the
State of Delaware
Iron Mountain Information Services, Inc. (hereinafter called the
"Corporation"), organized and existing under and by virtue of the General
Corporation Law of the State of Delaware, does hereby certify as follows:
By written consent of the Board of Directors of the Corporation a
resolution was duly adopted, pursuant to Sections 141(f) and 242 of the General
Corporation Law of the State of Delaware, setting forth an amendment to the
Restated Certificate of Incorporation of the Corporation and declaring said
amendment to be advisable. All the stockholders of the Corporation duly approved
said proposed amendment by written consent in accordance with Sections 228 and
242 of the General Corporation Law of the State of Delaware. The resolution
setting forth the amendment is as follows:
RESOLVED: That Article FIRST of the Certificate of Incorporation be, and
it hereby is, amended to read in its entirety as follows:
"FIRST: The name of the Corporation is Iron Mountain Records
Management, Inc."
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused its corporate seal to be
affixed hereto and this Certificate of Amendment to be signed by its Executive
Vice President and attested by its Assistant Secretary as of this 9th day of
November, 1990.
ATTEST: IRON MOUNTAIN INFORMATION
SERVICES, INC.
By:/s/Garry B. Watzke By:/s/Eugene B. Doggett
------------------------- ---------------------------
Garry B. Watzke Eugene B. Doggett
Assistant Secretary Executive Vice President
-2-
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
FRIGATE, LTD.
Pursuant to Section 242
of the Corporation Law of the
State of Delaware
Frigate, Ltd. (hereinafter called the "Corporation"), organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware, does hereby certify as follows:
By written consent of the Board of Directors of the Corporation a
resolution was duly adopted, pursuant to Sections 141(f) and 242 of the General
Corporation Law of the State of Delaware, setting forth an amendment to the
Restated Certificate of Incorporation of the Corporation and declaring said
amendment to be advisable. The sole stockholder of the Corporation duly approved
said proposed amendment by written consent in accordance with Sections 228 and
242 of the General Corporation Law of the State of Delaware. The resolution
setting forth the amendment is as follows:
RESOLVED: That Article FIRST of the Certificate of Incorporation be, and it
hereby is, amended to read in its entirety as follows:
"FIRST: The name of the Corporation is Iron Mountain
Information Services, Inc."
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused its corporate seal to be
affixed hereto and this Certificate of Amendment to be signed by its Vice
President and attested by its Assistant Secretary as of this 9th day of
November, 1989.
ATTEST: CRITERION RECORDS MANAGEMENT
CORPORATION
By:/s/Garry B. Watzke By:/s/Eugene B. Doggett
----------------------- ------------------------
Garry B. Watzke Eugene B. Doggett
Assistant Secretary Vice President
-2-
<PAGE>
Certificate of Incorporation
of
FRIGATE, LTD.
FIRST: The name of the corporation is Frigate, Ltd.
SECOND: The address of its registered office in the State of Delaware is
No. 229 South State Street in the City of Dover, County of Kent. The name of its
registered agent at such address is The Prentice-Hall Corporation System, Inc.
THIRD: The nature of the business or purposes to be conducted or promoted
is to carry on and to engage in any lawful business, act or activity for which
corporations may be organized under the General Corporation Law of the State of
Delaware; and to possess and exercise all the powers and privileges granted by
the General Corporation Law of the State of Delaware or by any other law of the
State of Delaware or by this Certificate of Incorporation together with any
powers incidental thereto.
FOURTH: The total number of shares of all classes of stock which the
corporation shall have authority to issue is (i) 25,000 shares of Common Stock,
$.01 par value (the "Common Stock"), and (ii) 25,000 shares of Preferred Stock,
$.01 par value (the "Preferred Stock"). The following is a statement of the
designations and the powers, privileges and rights, and the qualifications,
limitations or restrictions thereof in respect of each class of capital stock of
the corporation.
-1-
<PAGE>
4.1 COMMON STOCK.
------------
4.1.1 General. The voting, dividend and liquidation rights of the holders
of the Common Stock are subject to and qualified by the rights of the holders of
the Preferred Stock.
4.1.2 Voting. The holders of shares of Common Stock are entitled to one
vote for each share held at all meetings of stockholders (and written actions in
lieu of meetings). There shall be no cumulative voting.
4.1.3 Dividends. Dividends may be declared and paid on the Common Stock
from funds lawfully available therefor when and as determined by the Board of
Directors and subject to any preferential dividend rights of any
then-outstanding Preferred Stock.
4.1.4 Liquidation. Upon the dissolution or liquidation of the corporation,
whether voluntary or involuntary, holders of Common Stock will be entitled to
receive the net assets of the corporation available for distribution to its
stockholders, subject to any preferential rights of any then-outstanding
Preferred Stock.
4.2 PREFERRED STOCK.
---------------
4.2.1 General. The rights, preferences, powers and privileges and the
restrictions, qualifications and limitations of the Preferred Stock are set
forth below. Authority is hereby expressly granted to the Board of Directors to
issue the Preferred Stock.
As used herein, the term "Junior Stock" shall mean, with respect to the
Preferred Stock, the Common Stock or any other equity security of the
corporation ranking junior to the Preferred Stock as to dividends or assets.
4.2.2 No Voting Rights. Except as otherwise required by the laws of the
State of Delaware, holders of shares of the Preferred Stock shall have no voting
rights.
-2-
<PAGE>
4.2.3 Dividends. The holders of the then-outstanding Preferred Stock shall
be entitled to receive, when and as declared by the Board, out of any funds
legally available therefor, dividends at the annual rate of $165.00 per share
payable quarterly in cash on the first day of January, April, July and October
of each year. To the extent that dividends are not paid in cash, dividends may,
at the election of the Board of Directors of the corporation, be paid in
additional shares of Preferred Stock in lieu of cash. Dividends on the Preferred
Stock shall be cumulative and shall accrue on each share of Preferred Stock from
the date of issue thereof. Dividends payable on the Preferred Stock for any
period less than a full quarter shall be computed on the basis of a 360-day
year. So long as any shares of the Preferred Stock are outstanding, the
corporation shall not declare, pay or set apart any dividend on any Junior Stock
(other than dividends payable in shares of Common Stock) or declare, make or set
apart any distribution on any Junior Stock unless concurrently therewith all
accrued dividends or distributions on the Preferred Stock, through the date of
such declaration, payment, making or setting apart of any dividend or
distribution on the Junior Stock, are declared, paid, made or set apart, as the
case may be.
4.2.4 Liquidation. In the event of any liquidation, dissolution or winding
up of the corporation, whether voluntary or involuntary, the holders of the
Preferred Stock (including any shares of Preferred Stock issued as a dividend
upon the Preferred Stock pursuant to Section 4.2.3 hereof) shall be entitled,
before any distribution or payment is made upon any shares of any Junior Stock,
to be paid an amount per share equal to $1,000.00 plus an amount equal to all
unpaid dividends thereon, if any, through the date of such payment to the
holders of the Preferred Stock before any payment shall be made to the
-3-
<PAGE>
holders of the Junior Stock, and the holders of the Preferred Stock shall not be
entitled to any further distribution of assets. If, upon any dissolution,
liquidation or winding up of the corporation, the net assets available for
distribution to the corporation's stockholders shall be insufficient to permit
payment to the holders of the Preferred Stock of the amount distributable as
aforesaid, the entire assets of the corporation to be so distributed shall be
distributed pro rata among the holders of the Preferred Stock. Upon any such
liquidation, dissolution or winding up, after the holders of the Preferred Stock
shall have been paid in full the amount to which they shall be entitled
hereunder, the remaining net assets of the corporation may be distributed to the
holders of the Junior Stock. Written notice of such liquidation, dissolution or
winding up, setting a payment date, the amount of the payment to holders of the
Preferred Stock, and the place where said amount shall be payable shall be given
not less than thirty (30) days prior to the payment date stated therein, to each
holder of record of the Preferred Stock. The liquidation preference provided for
herein with respect to the Preferred Stock shall be equitably adjusted to
reflect any combination or split-up with respect to the Preferred Stock.
4.2.5 Redemption.
----------
(a) Redemption of Preferred Stock. Shares of the Preferred Stock shall be
subject to redemption, at the option of the corporation exercised by vote of the
Board of Directors, at any time and from time to time, upon notice given as
hereinafter provided, at a price equal to $1,000.00 per share (the "Redemption
Price"), together with all accrued but unpaid dividends thereon. Any amounts
required to be paid pursuant to this Section 4.2.5 shall be paid by delivery of
cash or certified or official bank check.
-4-
<PAGE>
(b) Redemption Procedure. Not less than sixty (60) days' prior
written notice shall be given by mail, postage prepaid to the holders of record
of the Preferred Stock to be redeemed, addressed to each such holder at his post
office address as shown by the records of the corporation. Said notice shall
specify the manner of payment for the shares of Preferred Stock called for
redemption and the place at which and the date, which date shall not be a legal
holiday in Boston, Massachusetts, on which such shares will be redeemed and
shall specify the shares called for redemption. If such notice of redemption
shall have been duly given and if on or before the redemption date specified in
such notice the funds necessary for such redemption shall have been set aside so
as to be and continue to be available therefor, then, notwithstanding that any
certificate for shares so called for redemption shall not have been surrendered
for cancellation, after the close of business on such redemption date, the
shares so called for redemption shall no longer be deemed outstanding, the
dividends thereon shall cease to accrue, and all rights with respect to shares
so called for redemption, including the rights, if any, to receive notice and to
vote, shall forthwith after the close of business on such redemption date cease
and determine, except only the right of the holders thereof to receive the
amount payable upon redemption thereof. Subject to the provisions hereof, the
Board of Directors shall have authority to prescribe the manner in which the
Preferred Stock shall be redeemed from time to time.
(c) Redeemed or Otherwise Acquired Shares to be Retired. Any shares of the
Preferred Stock redeemed pursuant to this Section 4.2.5 or otherwise acquired by
the corporation in any manner whatsoever shall be permanently retired and shall
not under any
-5-
<PAGE>
circumstances be reissued; and the corporation may from time to time take such
appropriate corporate action as may be necessary to reduce the authorized
Preferred Stock accordingly.
(d) Shares to be Redeemed. All shares of Preferred Stock to be redeemed
shall be selected pro rata, and there shall be so redeemed from each registered
holder in whole shares, as nearly as practicable to the nearest share, that
proportion of all of the shares to be redeemed which the number of shares held
of record by such holder bears to the total number of the shares of Preferred
Stock at the time outstanding.
(e) All Past Dividends Must Be Paid Prior to Redemption. Except with the
consent of the holders of not less than 66-2/3% of the shares of Preferred Stock
at the time outstanding scheduled to be redeemed pursuant to this Section 4.2.5,
the corporation shall not purchase or redeem shares of Preferred Stock at the
time outstanding unless all dividends on such Preferred Stock for all past
dividend periods shall have been paid or declared and a sum sufficient for the
payment thereof set apart.
FIFTH: The name and mailing address of the incorporator are as follows:
NAME MAILING ADDRESS
---- ---------------
Bryan G. Tyson Sullivan & Worcester
One Post Office Square
Boston, Massachusetts 02109
SIXTH: The names and mailing addresses of the persons who are to serve as
directors until the first annual meeting of stockholders, or until their
successors are elected and qualify, are:
-6-
<PAGE>
NAME MAILING ADDRESS
---- ---------------
C. Richard Reese Schooner Capital Corporation
99 Bedford Street
Boston, Massachusetts 02111
Eugene B. Doggett Schooner Capital Corporation
99 Bedford Street
Boston, Massachusetts 02111
Jas. Murray Howe Sullivan & Worcester
One Post Office Square
Boston, Massachusetts 02109
SEVENTH: The corporation is to have perpetual existence.
EIGHTH: The stockholders of the corporation shall not be personally liable
for the payment of the corporation's debts to any extent whatever.
NINTH: The following additional provisions are inserted for the management
of the business and the conduct of the affairs of the corporation.
9.1 Except as otherwise provided in the Certificate of Incorporation or by
the By-Laws of the corporation as from time to time amended, the business and
affairs of the corporation shall be managed by its Board of Directors, and,
without limitation, the Board of Directors of the corporation is hereby
specifically authorized and empowered from time to time in its discretion:
(a) to make, alter, amend and repeal the By-Laws of the corporation; and
(b) to determine for any purpose and in any manner not inconsistent with
the other provisions of this Certificate of Incorporation the amount of the
gross assets, of the liabilities, of the net assets or of the net profits of the
corporation as the same exist or shall have existed at any time or for any
period or periods, and to create, increase, abolish or
-7-
<PAGE>
reduce any reserve or reserves for accrued, accruing or contingent liabilities
or expenses, including taxes and other charges.
9.2 The Board of Directors in its discretion may submit any contract,
transaction or act for approval or ratification at any annual meeting of the
stockholders or at any meeting of the stockholders called for the purpose of
considering any such contract, transaction or act, and any contract, transaction
or act that shall be approved or be ratified by the vote of the holders of a
majority of the stock of the corporation which is represented in person or by
proxy at such meeting and entitled to vote thereat (provided that a lawful
quorum of stockholders be there represented in person or by proxy) shall be as
valid and as binding upon the corporation and upon all of the stockholders of
the corporation as though it had been approved or ratified by every stockholder
of the corporation.
9.3 Meetings of the stockholders may be held without the State of
Delaware, if the By-Laws so provide. The books of the corporation may be kept
(subject to any statutory provision) outside the State of Delaware at such place
or places as may be from time to time designated by the Board of Directors or in
the By-Laws of the corporation. Elections of directors need not be by ballot
unless the By-Laws shall otherwise provide.
9.4 The corporation shall have power to indemnify any person who was or is
a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, by reason of the fact that such person is
or was a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, trustee,
employee or agent of another corporation, partnership, joint venture, trust or
other entity to the fullest extent permitted by law or any agreement, vote of
stockholders or
-8-
<PAGE>
directors or otherwise, or by any By-Law of this corporation, but the adoption
of any such By-Law shall not be deemed to be exclusive of any other rights to
indemnification any such person may be entitled to under any law, agreement,
vote of stockholders or directors or otherwise.
TENTH: Whenever a compromise or arrangement is proposed between the
corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this corporation under
the provisions of section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this corporation under the provisions of section 279 of Title 8 of the
Delaware Code, order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this corporation, as the case may be,
and also on this corporation.
-9-
<PAGE>
ELEVENTH: No director shall be personally liable to the corporation or any
stockholder for monetary damages for breach of fiduciary duty as a director,
except, in addition to any and all other requirements for such liability, (i)
for any breach of such director's duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) to the extent
provided under Section 174 of Title 8 of the Delaware Code (relating to the
General Corporation Law of the State of Delaware) or any amendment thereto or
successor provision thereto, or (iv) for any transaction for which such director
derived an improper personal benefit. Neither the amendment nor repeal of this
Article ELEVENTH, nor the adoption of any provision of this certificate of
incorporation inconsistent with this Article ELEVENTH, shall eliminate or reduce
the effect of this Article ELEVENTH in respect of any matter occurring, or any
cause of action, suit or claim that, but for this Article ELEVENTH, would accrue
or arise, prior to such amendment, repeal, or adoption of an inconsistent
provision.
TWELFTH: The corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
I, THE UNDERSIGNED, being the incorporator hereinbefore named, for the
purpose of forming a corporation pursuant to the General Corporation Law of the
State of Delaware, do make this Certificate hereby declaring and certifying that
this is my act and deed and the
-10-
<PAGE>
facts herein stated are true, and accordingly have hereunto set my hand this
fourth day of November, 1988.
/s/Bryan G. Tyson
--------------------------
Bryan G. Tyson
-11-
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
CRITERION RECORDS MANAGEMENT (NY) INC.
----------------------
Under Section 805 of the
Business Corporation Law
----------------------
Pursuant to the provisions of Section 805 of the Business Corporation Law,
the undersigned E. B. Doggett, Vice President, and Garry B. Watzke, Assistant
Secretary, of CRITERION RECORDS MANAGEMENT (NY) INC., hereby certify:
FIRST: The name of the corporation is CRITERION RECORDS MANAGEMENT (NY)
INC.
SECOND: That the Certificate of Incorporation of the corporation was filed
by the Department of State, Albany, New York, on the 10th day of September, 1971
under the original name BEKINS ARCHIVAL SERVICES, INC.
THIRD: That the amendment to the Certificate of Incorporation effected by
this Certificate is as follows:
Article FIRST of the Certificate of Incorporation, relating to the
corporate name, is hereby amended to read as follows:
"FIRST: The name of the corporation is METRO BUSINESS ARCHIVES, INC."
<PAGE>
FOURTH: That the amendment of the Certificate of Incorporation was
authorized by a vote of the Board of Directors followed by the unanimous written
consent of the holders of all outstanding shares entitled to vote on an
amendment to the Certificate of Incorporation.
IN WITNESS WHEREOF, we hereunto sign our names and affirm that the
statements made herein are true under the penalties of perjury, this 9th day of
February, 1989.
CRITERION RECORDS MANAGEMENT (NY) INC.
/s/Eugene B. Doggett
------------------------------------------
E. B. Doggett, Vice President
/s/Garry B. Watzke
------------------------------------------
Garry B. Watzke, Assistant Secretary
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<PAGE>
Certificate of Amendment of the Certificate of Incorporation
of
Bell & Howell Records Management Company, Inc.
(a New York corporation)
Under Section 805 of the Business Corporation Law
-------------------------
It is hereby certified that:
FIRST: The name of the corporation is Bell & Howell Records
Management Company, Inc.
SECOND: The certificate of incorporation of the corporation was
filed by the Department of State on September 10, 1971, under the original name
of BEKINS ARCHIVAL SERVICES, INC.
THIRD: The amendment of the certificate of incorporation of the
corporation effected by this certificate of amendment is as follows: To change
the name of the corporation.
FOURTH: To accomplish the foregoing amendment, Article FIRST of the
certificate of incorporation of the corporation, relating to the name of the
corporation, is hereby amended to read as follows:
"FIRST: The name of the corporation is CRITERION
RECORDS MANAGEMENT (NY) INC."
FIFTH: The foregoing amendment of the certificate of incorporation
of the corporation was authorized by the consent in writing of all the members
of the Board of Directors of the corporation, followed by the unanimous written
consent of the holder of all of the outstanding shares of the corporation
entitled to vote on the said amendment of the certificate of incorporation.
<PAGE>
IN WITNESS WHEREOF, I have subscribed this document on the date set
forth below and do hereby affirm, under the penalties of perjury, that the
statements contained therein have been examined by us and are true and correct.
Date: as of November 10, 1988 CRITERION RECORDS MANAGEMENT
CORPORATION, Shareholder
/s/E.B. Doggett
--------------------------------------------------------
By: E. B. Doggett, a corporate officer of Criterion
Records Management Corporation, the holder of all of
the outstanding shares entitled to vote on the amendment
of the certificate of incorporation of the corporation.
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<PAGE>
* * * * * * * * * * * * * * *
Verification of Signer of
Certificate of Amendment
------------------------------
VOTING CORPORATE SHAREHOLDER
STATE OF )
) SS.:
COUNTY OF )
E. B. Doggett, being duly sworn deposes and says that he is the Vice
President of Criterion Records Management Corporation, the corporation which
signed the foregoing certificate of amendment in the capacity of a shareholder;
that he signed said certificate in the corporate name; that he has read the said
certificate and knows the contents thereof; and that the statements contained
therein are true to his own knowledge.
/s/E.B. Doggett
------------------------------------------
E. B. Doggett, Vice President of Criterion
Records Management Corporation
Subscribed and sworn to
before me on November 9, 1988
/s/Deborah Ruegger Wilson
- ---------------------------
Notary Public
<PAGE>
CERTIFICATE OF AMENDMENT
OF
THE CERTIFICATE OF INCORPORATION
OF
BEKINS RECORD STORAGE CO., INC.
Under Section 805 of the Business Corporation Law
It is hereby certified that:
FIRST: The name of the corporation is BEKINS RECORD STORAGE, INC., the
name under which it was formed was BEKINS ARCHIVAL SERVICES, INC.
SECOND: The certificate of incorporation of the corporation was filed by
the Department of State on September 10, 1971.
THIRD: An amendment to the certificate of incorporation was filed on March
31, 1977. The subject matter of said amendment was to change the name of the
corporation from BEKINS ARCHIVAL SERVICES, INC. to BEKINS RECORD STORAGE CO.,
INC. The amendment was effected by changing Article FIRST of the certificate of
incorporation to read, "FIRST; The name of the corporation is BEKINS RECORDS
MANAGEMENT CO., INC.
FOURTH: The amendment of the certificate of incorporation of the
corporation effected by this certificate of amendment is as follows:
To change the name of the corporation.
<PAGE>
FIFTH: To accomplish the foregoing amendment, Article FIRST of the
certificate of incorporation of the corporation, relating to the name of the
corporation, is hereby amended to read as follows:
"FIRST: The name of the corporation is BEKINS RECORDS
MANAGEMENT CO., INC."
SIXTH: The foregoing amendment of the certificate of incorporation of the
corporation was authorized by the unanimous written consent of the holders of
all of the outstanding shares of the corporation entitled to vote on the said
amendment of the certificate of incorporation.
IN WITNESS WHEREOF, WE have subscribed this document on January 29, 1981,
and do hereby affirm, under the penalties of perjury, that the statements
contained therein have been examined by us and are true and correct.
/s/Lee Waters
------------------------------
Lee Waters, President
/s/Ronald L. Hartman
------------------------------
Ronald L. Hartman, Secretary
County of Los Angeles )
) ss:
State of California )
Lee Waters and Ronald L. Hartman, being duly sworn, state that they are the
President and Secretary, respectively, of BEKINS RECORD STORAGE CO., INC.; that
they are authorized by said respondent to execute and file with the Department
of State of the State of
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<PAGE>
New York this report and to verify the facts and statements contained in said
report and schedules attached; that they have carefully examined all of such
statements contained in the report and schedules; that they have knowledge of
such matters set forth therein and that all such statements made and such
matters set forth therein are true and correct to the best of his knowledge,
information, and belief.
Subscribed and sworn to before me, a Notary Public in and for the State
and county above named, this 29th day of January, 1981.
/s/Geri Williams
------------------------------
Geri Williams
My commission expires: October 8, 1983
-3-
<PAGE>
Certificate of Amendment of the Certificate of Incorporation
of
BEKINS ARCHIVAL SERVICES, INC.
Under Section 805 of the Business Corporation Law
-------------------------
FIRST: The name of the corporation is BEKINS ARCHIVAL
SERVICES, INC.
SECOND: The certificate of incorporation of the corporation
was filed by the Department of State on September 10, 1971.
THIRD: The amendment of the certificate of incorporation of
the corporation effected by this certificate of amendment is as follows:
To change the name of the corporation.
FOURTH: To accomplish the foregoing amendment, Article FIRST
of the certificate of incorporation of the corporation, relating to the name of
the corporation, is hereby amended to read as follows:
"FIRST: The name of the corporation is
BEKINS RECORD STORAGE CO., INC."
FIFTH: The foregoing amendment of the certificate of
incorporation of the corporation was authorized by the unanimous written consent
of the holders of all of the outstanding shares of the corporation entitled to
vote on the said amendment of the certificate of incorporation.
IN WITNESS WHEREOF, WE have subscribed this document on March
28, 1977 and do hereby affirm, under the penalties of perjury, that the
statements contained therein have been examined by us and are true and correct.
/s/Lawrence A. Weinsheimer
--------------------------------
Lawrence A. Weinsheimer
Vice President
<PAGE>
and
/s/Norman S. Marshall
------------------------------
Norman S. Marshall
Secretary
-2-
<PAGE>
CERTIFICATE OF INCORPORATION OF
BEKINS ARCHIVAL SERVICES, INC.
(UNDER SECTION 402 OF THE BUSINESS CORPORATION LAW)
The undersigned, for the purpose of forming a corporation pursuant
to Section 402 of the Business Corporation Law of the State of New York,
certify:
1. The name of the corporation shall be BEKINS ARCHIVAL
SERVICES, INC.
2. The corporation shall engage in the business of storage,
warehousing, transportation, hauling and delivery of personal property and
business records and to all other transactions and businesses incidental
thereto, and do make all contracts, and to do all things proper, incidental and
conducive to the complete attainment of such purposes.
3. The office of the corporation shall be located in the County,
City and State of New York.
4. The aggregate number of shares which the corporation shall have
authority to issue shall be 200, all of which shall be common stock of one class
and without par value.
5. The Secretary of State of the State of New York is designated as
the agent of the corporation upon whom process in any action or proceeding
against it may be served. The address to which the Secretary of State shall mail
a copy of process in any action or proceeding against the corporation which may
be served upon him is c/o The Corporation Trust Company, 277 Park Avenue, New
York, New York 10017.
<PAGE>
6. The name and address of the Registered Agent, which is to be the
agent of the corporation upon whom process against it may be served is The
Corporation Trust Company, 227 Park Avenue, New York, New York 10017.
7. Each of the Incorporators is a natural person over the age of
twenty- one years.
IN WITNESS WHEREOF we have signed this Certificate of Incorporation
on August 30, 1971.
/s/Marvin S. Maltzman
------------------------------
Marvin S. Maltzman
1335 South Figueroa Street
Los Angeles, California
/s/Lloyd C. Ownbey, Jr.
------------------------------
Lloyd C. Ownbey, Jr.
1335 South Figueroa Street
Los Angeles, California
/s/Don Creighton Jack
------------------------------
Don Creighton Jack
1335 South Figueroa Street
Los Angeles, California
In witness whereof, we have made, signed and acknowledged this
Certificate of Incorporation this 30th day of August 1971.
-2-
<PAGE>
STATE OF CALIFORNIA )
) ss
COUNTY OF LOS ANGELES )
On the 30th day of August, 1971, before me personally came Marvin S. Maltzman,
Lloyd C. Ownbey, Jr., and Don Creighton Jack, to me known and known to me to be
the individuals described in and who executed the foregoing certificate and they
acknowledge to me that they executed the same.
/s/Jeanetta F. Behrens
------------------------------
Notary Public
My Commission Expires September 11, 1971
-3-
CERTIFICATE OF INCORPORATION
OF
IRON MOUNTAIN RECORDS MANAGEMENT OF MARYLAND, INC.
FIRST: The name of the Corporation is Iron Mountain Records Management of
Maryland, Inc.
SECOND: The address of the Corporation's registered office in the State of
Delaware is 1013 Centre Road in the City of Wilmington, County of New Castle.
The name of the Corporation's registered agent at such address is The
Prentice-Hall Corporation System, Inc.
THIRD: The nature of the business and purposes to be conducted or promoted
by the Corporation are as follows:
To engage in any lawful business, act or activity for which corporations
may be organized under the General Corporation Law of the State of
Delaware; and to possess and exercise all the powers and privileges
granted by the General Corporation Law of the State of Delaware or by any
other law of the State of Delaware or by this Certificate of Incorporation
together with any powers incidental thereto.
FOURTH: The total number of shares of capital stock which the Corporation
shall have authority to issue is one thousand (1,000) shares of Common Stock
with par value $0.01 per share.
FIFTH: The name and mailing address of the sole incorporator is as
follows:
Name Mailing Address
Beth-Jean McCurdy Sullivan & Worcester LLP
One Post Office Square
Boston, Massachusetts 02109
SIXTH: The name and mailing address of the person who is to serve as sole
director until the first meeting of stockholders, or until his successor is
elected and qualified, which ever first occurs, are as follows:
Name Mailing Address
C. Richard Reese 745 Atlantic Avenue, Boston, MA 02111
<PAGE>
Certificate of Incorporation of
Iron Mountian Records Management of Maryland, Inc.
Page 2
SEVENTH: For the management of the business and for the conduct of the
affairs of the Corporation, and in further definition, limitation and regulation
of the powers of its directors and stockholders, it is further provided:
1. The number of directors of the Corporation shall be as prescribed in
the By-laws of the Corporation but such number may from time to time
be increased or decreased in such manner as may be prescribed by the
By-laws.
2. In furtherance and not in limitation of the powers conferred by the
laws of the State of Delaware, the Board of Directors is expressly
authorized and empowered:
(a) Subject to the applicable provisions of the By-laws then in
effect, to determine, from time to time, whether and to what
extent and at what times and places and under what conditions
and regulations the accounts and books of the Corporation, or
any of them, shall be open to the inspection of the
stockholders, and no stockholder shall have any right to
inspect any account or document of the Corporation, except as
conferred by the laws of the State of Delaware, unless and
until authorized so to do by resolution of the Board of
Directors or of the stockholders of the Corporation.
(b) Without the assent or vote of the stockholders to authorize
and issue obligations of the Corporation, secured or
unsecured, to include therein such provisions as to
redeemability, convertibility or otherwise, as the Board of
Directors, in its sole discretion, may determine, and to
authorize the mortgaging or pledging, as security therefor, of
any property of the Corporation, real or personal, including
after-acquired property.
(c) To establish a bonus, profit-sharing or other types of
incentive or compensation plans for the employees (including
officers and Directors) of the Corporation and to fix the
amount of profits to be distributed or shared and to determine
the persons to participate in any such plans and the amounts
their respective participants.
(d) To make, alter, amend or repeal the By-laws of the
Corporation.
(e) To determine for any purpose and in any manner not
inconsistent with the other provisions of this Certificate of
Incorporation the amount of the gross assets, of the
liabilities, of the net assets or of the net profits of the
Corporation as the same may exist or shall have existed at any
time or for any period or periods, and to create, increase,
abolish or reduce any reserve or reserves for accrued,
accruing or contingent liabilities or expenses, including
taxes and other charges.
<PAGE>
Certificate of Incorporation of
Iron Mountian Records Management of Maryland, Inc.
Page 3
In addition to the powers and authorities hereinbefore or by statute
expressly conferred upon it, the Board of Directors may exercise all such powers
and do all such acts and things as may be exercised or done by the Corporation,
subject, nevertheless, to the provisions of the laws of the State of Delaware,
of the Certificate of Incorporation and of the By-laws of the Corporation.
3. Any Director or any officer elected or appointed by the stockholders
or by the Board of Directors may be removed at any time in such
manner as shall be provided in the By-laws of the Corporation.
4. In the absence of fraud, no contract or other transaction between
the Corporation and any other corporation, and no act of the
Corporation, shall in any way be affected or invalidated by the fact
that any of the Directors of the Corporation are pecuniarily or
otherwise interested in, or are directors or officer of, such other
corporation and, in the absence of fraud, any Director may be a
member, may be a party to, or may be pecuniarily or otherwise
interested in, any contract or transaction of the Corporation;
provided, in any case, that the fact that -------- he or such firm
is so interested shall be disclosed or shall have been known to the
Board of Directors or a majority thereof; and any Director of the
Corporation who is also a director or officer of any such other
corporation, or who is also interested, may be counted in
determining the existence of a quorum at any meeting of the Board of
Directors of the Corporation which shall authorize any such
contract, act or transaction and may vote thereat to authorize any
such contract, act or transaction, with like force and effect as if
he were not such director or officer of such corporation, or not so
interested.
5. Any contract, act or transaction of the Corporation or of the
Directors may be ratified by vote of a majority of the shares having
voting powers at any meeting of stockholders, or at any special
meeting called for such purpose, and such ratification shall, so far
as permitted by law and by this Certificate of Incorporation, be as
valid and as binding as though ratified by every stockholder of the
Corporation.
6. No Director of the Corporation shall be liable to any person on
account of any action undertaken by him as such director in reliance
in good faith upon the existence of any fact or circumstance
reported or certified to the Board of Directors by any officer of
the Corporation or by any independent auditor, engineer, or
consultant retained or employed as such by the Board of Directors.
7. Meetings of the stockholders may be held without the State of
Delaware, if the By-laws so provide. The books of the Corporation
may be kept (subject to any statutory provision) outside the State
of
<PAGE>
Certificate of Incorporation of
Iron Mountian Records Management of Maryland, Inc.
Page 4
Delaware at such place or places as may be from time to time
designated by the Board of Directors or in the By-laws of the
Corporation. Elections of directors need not be by ballot unless
the By-laws shall otherwise provide.
EIGHTH: No director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director; provided, however, that a director of the Corporation shall
be liable for (i) breach of the director's duty of loyalty to the Corporation or
its stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or knowing violation of law, (iii) under section 174 of
Title 8 of the Delaware Code relating to the General Corporation Law of the
State of Delaware, or (iv) for any transaction from which the director derived
an improper personal benefit. If the General Corporation Law of the State of
Delaware is hereafter amended to permit further limitation on or elimination of
the personal liability of the Corporation's directors for breach of fiduciary
duty, then a director of the Corporation shall be exempt from such liability for
any such breach to the full extent permitted by the General Corporation Law of
the State of Delaware as so amended from time to time. Any repeal or
modification of the foregoing provisions of this Article, or the adoption of any
provision inconsistent herewith, shall not adversely affect any right or
protection of a director of the Corporation hereunder in respect of any act or
omission of such director occurring prior to such repeal, modification or
adoption of an inconsistent provision.
NINTH: The stockholders of the Corporation shall not be personally liable
for the payment of the Corporation's debts.
TENTH: Each person who is or was or had agreed to become a director or
officer of the Corporation or who is or was serving or who had agreed to serve
at the request of the Board of Directors or an officer of the Corporation as an
employee or agent of the Corporation or as a director, officer, partner, member,
trustee, administrator, employee or agent of another corporation, partnership,
joint venture, limited liability company, trust or other enterprise (including
without limitation any employee benefit plan or any trust associated therewith),
shall be indemnified by the Corporation to the full extent permitted from time
to time by the Delaware General Corporation Law or any other applicable laws as
presently or hereafter in effect. This Article shall inure to the benefit of
each such person and his or her heirs, executors, administrators and estate.
Without limiting the generality or the effect of the foregoing, the Corporation
may enter into one or more agreements with any person which provide for
indemnification greater or different than that provided in this Article. Neither
the amendment nor repeal of this Article nor the adoption of any provision of
this Certificate of Incorporation inconsistent with this Article shall reduce,
eliminate or adversely affect any right or protection hereunder of any person in
respect of any act or omission occurring prior to the effectiveness of such
amendment, repeal or adoption.
ELEVENTH: From time to time any of the provisions of this Certificate of
Incorporation may be amended, altered or repealed, and other provisions
authorized by the
<PAGE>
Certificate of Incorporation of
Iron Mountian Records Management of Maryland, Inc.
Page 5
laws of the State of Delaware at the time in force may be added or
inserted in the manner and at the time prescribed by said laws, and all rights
at any time conferred upon the stockholders of the Corporation by this
Certificate of Incorporation are granted subject to the provisions of this
Article ELEVENTH.
IN WITNESS WHEREOF, I have hereunto set my hand on September 12, 1996.
/s/ Beth-Jean McCurdy
Beth-Jean McCurdy
Sole Incorporator
CERTIFICATE OF INCORPORATION
OF
IRON MOUNTAIN RECORDS MANAGEMENT OF OHIO, INC.
FIRST: The name of the Corporation is Iron Mountain Records Management of
Ohio, Inc.
SECOND: The address of the Corporation's registered office in the State of
Delaware is 1013 Centre Road in the City of Wilmington, County of New Castle.
The name of the Corporation's registered agent at such address is The
Prentice-Hall Corporation System, Inc..
THIRD: The nature of the business and purposes to be conducted or promoted
by the Corporation are as follows:
To engage in any lawful business, act or activity for which corporations
may be organized under the General Corporation Law of the State of
Delaware; and to possess and exercise all the powers and privileges
granted by the General Corporation Law of the State of Delaware or by any
other law of the State of Delaware or by this Certificate of Incorporation
together with any powers incidental thereto.
FOURTH: The total number of shares of capital stock which the Corporation
shall have authority to issue is one thousand (1,000) shares of Common Stock
with par value $0.01 per share.
FIFTH: The name and mailing address of the sole incorporator is as
follows:
Name Mailing Address
Beth-Jean McCurdy Sullivan & Worcester LLP
One Post Office Square
Boston, Massachusetts 02109
SIXTH: The name and mailing address of the person who is to serve as sole
director until the first meeting of stockholders, or until his successor is
elected and qualified, which ever first occurs, are as follows:
Name Mailing Address
C. Richard Reese 745 Atlantic Avenue, Boston, MA 02111
<PAGE>
Certificate of Incorporation of
Iron Mountain Records Management of Ohio, Inc.
Page 2
SEVENTH: For the management of the business and for the conduct of the
affairs of the Corporation, and in further definition, limitation and regulation
of the powers of its directors and stockholders, it is further provided:
1. The number of directors of the Corporation shall be as
prescribed in the By-laws of the Corporation but such number
may from time to time be increased or decreased in such manner
as may be prescribed by the By-laws.
2. In furtherance and not in limitation of the powers conferred
by the laws of the State of Delaware, the Board of Directors
is expressly authorized and empowered:
(a) Subject to the applicable provisions of the By-laws then
in effect, to determine, from time to time, whether and to what
extent and at what times and places and under what conditions and
regulations the accounts and books of the Corporation, or any of
them, shall be open to the inspection of the stockholders, and no
stockholder shall have any right to inspect any account or document
of the Corporation, except as conferred by the laws of the State of
Delaware, unless and until authorized so to do by resolution of the
Board of Directors or of the stockholders of the Corporation.
(b) Without the assent or vote of the stockholders to
authorize and issue obligations of the Corporation, secured or
unsecured, to include therein such provisions as to redeemability,
convertibility or otherwise, as the Board of Directors, in its sole
discretion, may determine, and to authorize the mortgaging or
pledging, as security therefor, of any property of the Corporation,
real or personal, including after-acquired property.
(c) To establish a bonus, profit-sharing or other types of
incentive or compensation plans for the employees (including
officers and Directors) of the Corporation and to fix the amount of
profits to be distributed or shared and to determine the persons to
participate in any such plans and the amounts their respective
participants.
(d) To make, alter, amend or repeal the By-laws of the
Corporation.
(e) To determine for any purpose and in any manner not
inconsistent with the other provisions of this Certificate of
Incorporation the amount of the gross assets, of the liabilities, of
the net assets or of the net profits of the Corporation as the same
may exist or shall have existed at any time or for any period or
periods, and to create, increase, abolish or reduce any reserve or
reserves for accrued, accruing or contingent liabilities or
expenses, including taxes and other charges.
<PAGE>
Certificate of Incorporation of
Iron Mountain Records Management of Ohio, Inc.
Page 3
In addition to the powers and authorities hereinbefore or by statute
expressly conferred upon it, the Board of Directors may exercise all such powers
and do all such acts and things as may be exercised or done by the Corporation,
subject, nevertheless, to the provisions of the laws of the State of Delaware,
of the Certificate of Incorporation and of the By-laws of the Corporation.
3. Any Director or any officer elected or appointed by the
stockholders or by the Board of Directors may be removed at
any time in such manner as shall be provided in the By-laws of
the Corporation.
4. In the absence of fraud, no contract or other transaction
between the Corporation and any other corporation, and no act
of the Corporation, shall in any way be affected or
invalidated by the fact that any of the Directors of the
Corporation are pecuniarily or otherwise interested in, or are
directors or officer of, such other corporation and, in the
absence of fraud, any Director may be a member, may be a party
to, or may be pecuniarily or otherwise interested in, any
contract or transaction of the Corporation; provided, in any
case, that the fact that -------- he or such firm is so
interested shall be disclosed or shall have been known to the
Board of Directors or a majority thereof; and any Director of
the Corporation who is also a director or officer of any such
other corporation, or who is also interested, may be counted
in determining the existence of a quorum at any meeting of the
Board of Directors of the Corporation which shall authorize
any such contract, act or transaction and may vote thereat to
authorize any such contract, act or transaction, with like
force and effect as if he were not such director or officer of
such corporation, or not so interested.
5. Any contract, act or transaction of the Corporation or of the
Directors may be ratified by vote of a majority of the shares
having voting powers at any meeting of stockholders, or at any
special meeting called for such purpose, and such ratification
shall, so far as permitted by law and by this Certificate of
Incorporation, be as valid and as binding as though ratified
by every stockholder of the Corporation.
6. No Director of the Corporation shall be liable to any person
on account of any action undertaken by him as such director in
reliance in good faith upon the existence of any fact or
circumstance reported or certified to the Board of Directors
by any officer of the Corporation or by any independent
auditor, engineer, or consultant retained or employed as such
by the Board of Directors.
7. Meetings of the stockholders may be held without the State of
Delaware, if the By-laws so provide. The books of the
Corporation may be kept (subject to any statutory provision)
outside the State of
<PAGE>
Certificate of Incorporation of
Iron Mountain Records Management of Ohio, Inc.
Page 4
Delaware at such place or places as may be from time to time
designated by the Board of Directors or in the By-laws of the
Corporation. Elections of directors need not be by ballot
unless the By-laws shall otherwise provide.
EIGHTH: No director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director; provided, however, that a director of the Corporation shall
be liable for (i) breach of the director's duty of loyalty to the Corporation or
its stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or knowing violation of law, (iii) under section 174 of
Title 8 of the Delaware Code relating to the General Corporation Law of the
State of Delaware, or (iv) for any transaction from which the director derived
an improper personal benefit. If the General Corporation Law of the State of
Delaware is hereafter amended to permit further limitation on or elimination of
the personal liability of the Corporation's directors for breach of fiduciary
duty, then a director of the Corporation shall be exempt from such liability for
any such breach to the full extent permitted by the General Corporation Law of
the State of Delaware as so amended from time to time. Any repeal or
modification of the foregoing provisions of this Article, or the adoption of any
provision inconsistent herewith, shall not adversely affect any right or
protection of a director of the Corporation hereunder in respect of any act or
omission of such director occurring prior to such repeal, modification or
adoption of an inconsistent provision.
NINTH: The stockholders of the Corporation shall not be personally liable
for the payment of the Corporation's debts.
TENTH: Each person who is or was or had agreed to become a director or
officer of the Corporation or who is or was serving or who had agreed to serve
at the request of the Board of Directors or an officer of the Corporation as an
employee or agent of the Corporation or as a director, officer, partner, member,
trustee, administrator, employee or agent of another corporation, partnership,
joint venture, limited liability company, trust or other enterprise (including
without limitation any employee benefit plan or any trust associated therewith),
shall be indemnified by the Corporation to the full extent permitted from time
to time by the Delaware General Corporation Law or any other applicable laws as
presently or hereafter in effect. This Article shall inure to the benefit of
each such person and his or her heirs, executors, administrators and estate.
Without limiting the generality or the effect of the foregoing, the Corporation
may enter into one or more agreements with any person which provide for
indemnification greater or different than that provided in this Article. Neither
the amendment nor repeal of this Article nor the adoption of any provision of
this Certificate of Incorporation inconsistent with this Article shall reduce,
eliminate or adversely affect any right or protection hereunder of any person in
respect of any act or omission occurring prior to the effectiveness of such
amendment, repeal or adoption.
ELEVENTH: From time to time any of the provisions of this Certificate of
Incorporation may be amended, altered or repealed, and other provisions
authorized by the
<PAGE>
Certificate of Incorporation of
Iron Mountain Records Management of Ohio, Inc.
Page 5
laws of the State of Delaware at the time in force may be
added or inserted in the manner and at the time prescribed by said laws, and all
rights at any time conferred upon the stockholders of the Corporation by this
Certificate of Incorporation are granted subject to the provisions of this
Article ELEVENTH.
IN WITNESS WHEREOF, I have hereunto set my hand on September 12, 1996.
/s/ Beth-Jean McCurdy
Beth-Jean McCurdy
Sole Incorporator
CERTIFICATE OF INCORPORATION
OF
DATA STORAGE SYSTEMS, INC.
FIRST: The name of the Corporation is Data Storage Systems, Inc.
SECOND: The address of the Corporation's registered office in the State of
Delaware is 1013 Centre Road in the City of Wilmington, County of New Castle.
The name of the Corporation's registered agent at such address is The
Prentice-Hall Corporation System, Inc.
THIRD: The nature of the business and purposes to be conducted or promoted
by the Corporation are as follows:
To engage in any lawful business, act or activity for which corporations
may be organized under the General Corporation Law of the State of
Delaware; and to possess and exercise all the powers and privileges
granted by the General Corporation Law of the State of Delaware or by any
other law of the State of Delaware or by this Certificate of Incorporation
together with any powers incidental thereto.
FOURTH: The total number of shares of capital stock which the Corporation
shall have authority to issue is one thousand (1,000) shares of Common Stock
with par value $0.01 per share.
FIFTH: The name and mailing address of the sole incorporator is as
follows:
Name Mailing Address
Nicole M. Belytschko Sullivan & Worcester LLP
One Post Office Square
Boston, Massachusetts 02109
SIXTH: The name and mailing address of the person who is to serve as sole
director until the first meeting of stockholders, or until his successor is
elected and qualified, which ever first occurs, are as follows:
Name Mailing Address
C. Richard Reese 745 Atlantic Avenue
Boston, Massachusetts 02111
-1-
<PAGE>
SEVENTH: For the management of the business and for the conduct of the
affairs of the Corporation, and in further definition, limitation and regulation
of the powers of its directors and stockholders, it is further provided:
1. The number of directors of the Corporation shall be as prescribed in
the By-laws of the Corporation but such number may from time to time
be increased or decreased in such manner as may be prescribed by the
By-laws.
2. In furtherance and not in limitation of the powers conferred by the
laws of the State of Delaware, the Board of Directors is expressly
authorized and empowered:
(a) Subject to the applicable provisions of the By-laws then in
effect, to determine, from time to time, whether and to what
extent and at what times and places and under what conditions
and regulations the accounts and books of the Corporation, or
any of them, shall be open to the inspection of the
stockholders, and no stockholder shall have any right to
inspect any account or document of the Corporation, except as
conferred by the laws of the State of Delaware, unless and
until authorized so to do by resolution of the Board of
Directors or of the stockholders of the Corporation.
(b) Without the assent or vote of the stockholders to authorize
and issue obligations of the Corporation, secured or
unsecured, to include therein such provisions as to
redeemability, convertibility or otherwise, as the Board of
Directors, in its sole discretion, may determine, and to
authorize the mortgaging or pledging, as security therefor, of
any property of the Corporation, real or personal, including
after-acquired property.
(c) To establish a bonus, profit-sharing or other types of
incentive or compensation plans for the employees (including
officers and Directors) of the Corporation and to fix the
amount of profits to be distributed or shared and to determine
the persons to participate in any such plans and the amounts
their respective participants.
(d) To make, alter, amend or repeal the By-laws of the
Corporation.
(e) To determine for any purpose and in any manner not
inconsistent with the other provisions of this Certificate of
Incorporation the amount of the gross assets, of the
liabilities, of the net assets or of the net profits of the
Corporation as the same may exist or shall have existed at any
time or for any period or periods, and to create, increase,
abolish or reduce any reserve or reserves for accrued,
accruing or contingent liabilities or expenses, including
taxes and other charges.
-2-
<PAGE>
In addition to the powers and authorities hereinbefore or by statute
expressly conferred upon it, the Board of Directors may exercise all
such powers and do all such acts and things as may be exercised or
done by the Corporation, subject, nevertheless, to the provisions of
the laws of the State of Delaware, of the Certificate of
Incorporation and of the By-laws of the Corporation.
3. Any Director or any officer elected or appointed by the stockholders
or by the Board of Directors may be removed at any time in such
manner as shall be provided in the By-laws of the Corporation.
4. In the absence of fraud, no contract or other transaction between
the Corporation and any other corporation, and no act of the
Corporation, shall in any way be affected or invalidated by the fact
that any of the Directors of the Corporation are pecuniarily or
otherwise interested in, or are directors or officer of, such other
corporation and, in the absence of fraud, any Director may be a
member, may be a party to, or may be pecuniarily or otherwise
interested in, any contract or transaction of the Corporation;
provided, in any case, that the fact that he or such firm is so
interested shall be disclosed or shall have been known to the Board
of Directors or a majority thereof; and any Director of the
Corporation who is also a director or officer of any such other
corporation, or who is also interested, may be counted in
determining the existence of a quorum at any meeting of the Board of
Directors of the Corporation which shall authorize any such
contract, act or transaction and may vote thereat to authorize any
such contract, act or transaction, with like force and effect as if
he were not such director or officer of such corporation, or not so
interested.
5. Any contract, act or transaction of the Corporation or of the
Directors may be ratified by vote of a majority of the shares having
voting powers at any meeting of stockholders, or at any special
meeting called for such purpose, and such ratification shall, so far
as permitted by law and by this Certificate of Incorporation, be as
valid and as binding as though ratified by every stockholder of the
Corporation.
6. No Director of the Corporation shall be liable to any person on
account of any action undertaken by him as such director in reliance
in good faith upon the existence of any fact or circumstance
reported or certified to the Board of Directors by any officer of
the Corporation or by any independent auditor, engineer, or
consultant retained or employed as such by the Board of Directors.
7. Meetings of the stockholders may be held without the State of
Delaware, if the Bylaws so provide. The books of the Corporation may
be kept (subject to any statutory provision) outside the State of
Delaware at such place or places as may be from time to time
designated by the Board of Directors or in the By-laws of the
-3-
<PAGE>
Corporation. Elections of directors need not be by ballot unless the
By-laws shall otherwise provide.
EIGHTH: No director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director; provided, however, that a director of the Corporation shall
be liable for (i) breach of the director's duty of loyalty to the Corporation or
its stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or knowing violation of law, (iii) under section 174 of
Title 8 of the Delaware Code relating to the General Corporation Law of the
State of Delaware, or (iv) for any transaction from which the director derived
an improper personal benefit. If the General Corporation Law of the State of
Delaware is hereafter amended to permit further limitation on or elimination of
the personal liability of the Corporation's directors for breach of fiduciary
duty, then a director of the Corporation shall be exempt from such liability for
any such breach to the full extent permitted by the General Corporation Law of
the State of Delaware as so amended from time to time. Any repeal or
modification of the foregoing provisions of this Article, or the adoption of any
provision inconsistent herewith, shall not adversely affect any right or
protection of a director of the Corporation hereunder in respect of any act or
omission of such director occurring prior to such repeal, modification or
adoption of an inconsistent provision.
NINTH: The stockholders of the Corporation shall not be personally liable
for the payment of the Corporation's debts.
TENTH: Each person who is or was or had agreed to become a director or
officer of the Corporation or who is or was serving or who had agreed to serve
at the request of the Board of Directors or an officer of the Corporation as an
employee or agent of the Corporation or as a director, officer, partner, member,
trustee, administrator, employee or agent of another corporation, partnership,
joint venture, limited liability company, trust or other enterprise (including
without limitation any employee benefit plan or any trust associated therewith),
shall be indemnified by the Corporation to the full extent permitted from time
to time by the Delaware General Corporation Law or any other applicable laws as
presently or hereafter in effect. This Article shall inure to the benefit of
each such person and his or her heirs, executors, administrators and estate.
Without limiting the generality or the effect of the foregoing, the Corporation
may enter into one or more agreements with any person which provide for
indemnification greater or different than that provided in this Article. Neither
the amendment nor repeal of this Article nor the adoption of any provision of
this Certificate of Incorporation inconsistent with this Article shall reduce,
eliminate or adversely affect any right or protection hereunder of any person in
respect of any act or omission occurring prior to the effectiveness of such
amendment, repeal or adoption.
ELEVENTH: From time to time any of the provisions of this Certificate of
Incorporation may be amended, altered or repealed, and other provisions
authorized by the laws of the State of Delaware at the time in force may be
added or inserted in the manner and at the time
-4-
<PAGE>
prescribed by said laws, and all rights at any time conferred upon the
stockholders of the Corporation by this Certificate of Incorporation are granted
subject to the provisions of this Article ELEVENTH.
IN WITNESS WHEREOF, I have hereunto set my hand on September 13, 1996.
/s/ Nicole M. Belytschko
Nicole M. Belytschko
Sole Incorporator
-5-
CERTIFICATE OF INCORPORATION
OF
DATA ARCHIVE SERVICES, INC.
FIRST: The name of the Corporation is Data Archive Services, Inc.
SECOND: The address of the Corporation's registered office in the State of
Delaware is 1013 Centre Road in the City of Wilmington, County of New Castle.
The name of the Corporation's registered agent at such address is The
Prentice-Hall Corporation System, Inc.
THIRD: The nature of the business and purposes to be conducted or promoted
by the Corporation are as follows:
To engage in any lawful business, act or activity for which corporations
may be organized under the General Corporation Law of the State of
Delaware; and to possess and exercise all the powers and privileges
granted by the General Corporation Law of the State of Delaware or by any
other law of the State of Delaware or by this Certificate of Incorporation
together with any powers incidental thereto.
FOURTH: The total number of shares of capital stock which the Corporation
shall have authority to issue is one thousand (1,000) shares of Common Stock
with par value $0.01 per share.
FIFTH: The name and mailing address of the sole incorporator is as
follows:
Name Mailing Address
Beth-Jean McCurdy Sullivan & Worcester LLP
One Post Office Square
Boston, Massachusetts 02109
SIXTH: The name and mailing address of the person who is to serve as sole
director until the first meeting of stockholders, or until his successor is
elected and qualified, which ever first occurs, are as follows:
Name Mailing Address
C. Richard Reese 745 Atlantic Avenue, Boston, MA 02111
<PAGE>
Certificate of Incorporation of
Data Archive Services, Inc.
Page 2
SEVENTH: For the management of the business and for the conduct of the
affairs of the Corporation, and in further definition, limitation and regulation
of the powers of its directors and stockholders, it is further provided:
1. The number of directors of the Corporation shall be as prescribed in
the By-laws of the Corporation but such number may from time to time
be increased or decreased in such manner as may be prescribed by the
By-laws.
2. In furtherance and not in limitation of the powers conferred by the
laws of the State of Delaware, the Board of Directors is expressly
authorized and empowered:
(a) Subject to the applicable provisions of the By-laws then in
effect, to determine, from time to time, whether and to what
extent and at what times and places and under what conditions
and regulations the accounts and books of the Corporation, or
any of them, shall be open to the inspection of the
stockholders, and no stockholder shall have any right to
inspect any account or document of the Corporation, except as
conferred by the laws of the State of Delaware, unless and
until authorized so to do by resolution of the Board of
Directors or of the stockholders of the Corporation.
(b) Without the assent or vote of the stockholders to authorize
and issue obligations of the Corporation, secured or
unsecured, to include therein such provisions as to
redeemability, convertibility or otherwise, as the Board of
Directors, in its sole discretion, may determine, and to
authorize the mortgaging or pledging, as security therefor, of
any property of the Corporation, real or personal, including
after-acquired property.
(c) To establish a bonus, profit-sharing or other types of
incentive or compensation plans for the employees (including
officers and Directors) of the Corporation and to fix the
amount of profits to be distributed or shared and to determine
the persons to participate in any such plans and the amounts
their respective participants.
(d) To make, alter, amend or repeal the By-laws of the
Corporation.
(e) To determine for any purpose and in any manner not
inconsistent with the other provisions of this Certificate of
Incorporation the amount of the gross assets, of the
liabilities, of the net assets or of the net profits of the
Corporation as the same may exist or shall have existed at any
time or for any period or periods, and to create, increase,
abolish or reduce any reserve or reserves for accrued,
accruing or contingent liabilities or expenses, including
taxes and other charges.
<PAGE>
Certificate of Incorporation of
Data Archive Services, Inc.
Page 3
In addition to the powers and authorities hereinbefore or by statute
expressly conferred upon it, the Board of Directors may exercise all such powers
and do all such acts and things as may be exercised or done by the Corporation,
subject, nevertheless, to the provisions of the laws of the State of Delaware,
of the Certificate of Incorporation and of the By-laws of the Corporation.
3. Any Director or any officer elected or appointed by the stockholders
or by the Board of Directors may be removed at any time in such
manner as shall be provided in the By-laws of the Corporation.
4. In the absence of fraud, no contract or other transaction between
the Corporation and any other corporation, and no act of the
Corporation, shall in any way be affected or invalidated by the fact
that any of the Directors of the Corporation are pecuniarily or
otherwise interested in, or are directors or officer of, such other
corporation and, in the absence of fraud, any Director may be a
member, may be a party to, or may be pecuniarily or otherwise
interested in, any contract or transaction of the Corporation;
provided, in any case, that the fact that -------- he or such firm
is so interested shall be disclosed or shall have been known to the
Board of Directors or a majority thereof; and any Director of the
Corporation who is also a director or officer of any such other
corporation, or who is also interested, may be counted in
determining the existence of a quorum at any meeting of the Board of
Directors of the Corporation which shall authorize any such
contract, act or transaction and may vote thereat to authorize any
such contract, act or transaction, with like force and effect as if
he were not such director or officer of such corporation, or not so
interested.
5. Any contract, act or transaction of the Corporation or of the
Directors may be ratified by vote of a majority of the shares having
voting powers at any meeting of stockholders, or at any special
meeting called for such purpose, and such ratification shall, so far
as permitted by law and by this Certificate of Incorporation, be as
valid and as binding as though ratified by every stockholder of the
Corporation.
6. No Director of the Corporation shall be liable to any person on
account of any action undertaken by him as such director in reliance
in good faith upon the existence of any fact or circumstance
reported or certified to the Board of Directors by any officer of
the Corporation or by any independent auditor, engineer, or
consultant retained or employed as such by the Board of Directors.
7. Meetings of the stockholders may be held without the State of
Delaware, if the By-laws so provide. The books of the Corporation
may be kept (subject to any statutory provision) outside the State
of
<PAGE>
Certificate of Incorporation of
Data Archive Services, Inc.
Page 4
Delaware at such place or places as may be from time to time
designated by the Board of Directors or in the By-laws of the
Corporation. Elections of directors need not be by ballot unless the
By-laws shall otherwise provide.
EIGHTH: No director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director; provided, however, that a director of the Corporation shall
be liable for (i) breach of the director's duty of loyalty to the Corporation or
its stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or knowing violation of law, (iii) under section 174 of
Title 8 of the Delaware Code relating to the General Corporation Law of the
State of Delaware, or (iv) for any transaction from which the director derived
an improper personal benefit. If the General Corporation Law of the State of
Delaware is hereafter amended to permit further limitation on or elimination of
the personal liability of the Corporation's directors for breach of fiduciary
duty, then a director of the Corporation shall be exempt from such liability for
any such breach to the full extent permitted by the General Corporation Law of
the State of Delaware as so amended from time to time. Any repeal or
modification of the foregoing provisions of this Article, or the adoption of any
provision inconsistent herewith, shall not adversely affect any right or
protection of a director of the Corporation hereunder in respect of any act or
omission of such director occurring prior to such repeal, modification or
adoption of an inconsistent provision.
NINTH: The stockholders of the Corporation shall not be personally liable
for the payment of the Corporation's debts.
TENTH: Each person who is or was or had agreed to become a director or
officer of the Corporation or who is or was serving or who had agreed to serve
at the request of the Board of Directors or an officer of the Corporation as an
employee or agent of the Corporation or as a director, officer, partner, member,
trustee, administrator, employee or agent of another corporation, partnership,
joint venture, limited liability company, trust or other enterprise (including
without limitation any employee benefit plan or any trust associated therewith),
shall be indemnified by the Corporation to the full extent permitted from time
to time by the Delaware General Corporation Law or any other applicable laws as
presently or hereafter in effect. This Article shall inure to the benefit of
each such person and his or her heirs, executors, administrators and estate.
Without limiting the generality or the effect of the foregoing, the Corporation
may enter into one or more agreements with any person which provide for
indemnification greater or different than that provided in this Article. Neither
the amendment nor repeal of this Article nor the adoption of any provision of
this Certificate of Incorporation inconsistent with this Article shall reduce,
eliminate or adversely affect any right or protection hereunder of any person in
respect of any act or omission occurring prior to the effectiveness of such
amendment, repeal or adoption.
ELEVENTH: From time to time any of the provisions of this Certificate of
Incorporation may be amended, altered or repealed, and other provisions
authorized by the
<PAGE>
Certificate of Incorporation of
Data Archive Services, Inc.
Page 5
laws of the State of Delaware at the time in force may be added or inserted in
the manner and at the time prescribed by said laws, and all rights at any time
conferred upon the stockholders of the Corporation by this Certificate of
Incorporation are granted subject to the provisions of this Article ELEVENTH.
IN WITNESS WHEREOF, I have hereunto set my hand on September 12, 1996.
/s/ Beth-Jean McCurdy
Beth-Jean McCurdy
Sole Incorporator
BY - LAWS
of
IRON MOUNTAIN RECORDS MANAGEMENT OF MARYLAND, INC.
(a Delaware Corporation)
<PAGE>
IRON MOUNTAIN RECORDS MANAGEMENT OF MARYLAND, INC.
(a Delaware Corporation)
BY-LAWS
TABLE OF CONTENTS
ARTICLE I OFFICES...........................................................1
SECTION 1. Registered Office.....................................1
ARTICLE II SEAL.............................................................1
ARTICLE III MEETING OF STOCKHOLDERS.........................................1
SECTION 1. Place of Meeting......................................1
SECTION 3. Special Meetings......................................1
SECTION 4. Notice................................................2
SECTION 5. Quorum and Adjournments...............................2
SECTION 6. Votes; Proxies........................................3
SECTION 7. Organization..........................................4
SECTION 8. Consent of Stockholders in Lieu of Meeting............4
ARTICLE IV DIRECTORS........................................................5
SECTION 1. Number................................................5
SECTION 2. Term of Office........................................5
SECTION 3. Vacancies.............................................5
SECTION 4. Removal by Stockholders...............................6
SECTION 5. Meetings..............................................6
SECTION 6. Votes.................................................6
SECTION 7. Quorum and Adjournment................................7
SECTION 8. Compensation..........................................7
SECTION 9. Action By Consent of Directors........................7
ARTICLE V COMMITTEES OF DIRECTORS...........................................7
SECTION 1. Executive Committee...................................7
SECTION 2. Audit Committee.......................................8
SECTION 3. Other Committees......................................9
SECTION 4. Term of Office.......................................10
ARTICLE VI OFFICERS........................................................10
SECTION 1. Officers.............................................10
SECTION 2. Vacancies............................................11
SECTION 3. Chairman of the Board................................11
SECTION 4. President............................................11
SECTION 5. Executive Vice Presidents and Vice Presidents
.....................................................11
SECTION 6. Secretary............................................11
SECTION 7. Assistant Secretaries................................11
SECTION 8. Treasurer............................................12
SECTION 9. Assistant Treasurers.................................12
SECTION 10. Controller...........................................12
SECTION 11. Assistant Controllers................................12
SECTION 12. Subordinate Officers.................................13
SECTION 13. Compensation.........................................13
<PAGE>
SECTION 14. Removal..............................................13
SECTION 15. Bonds................................................13
ARTICLE VII CERTIFICATES OF STOCK..........................................13
SECTION 1. Form and Execution of Certificates...................13
SECTION 2. Transfer of Shares...................................14
SECTION 3. Closing of Transfer Books............................15
SECTION 4. Fixing Date for Determination of Stockholders
of Record............................................15
SECTION 5. Lost or Destroyed Certificates.......................16
SECTION 6. Uncertificated Shares................................17
ARTICLE VIII EXECUTION OF DOCUMENTS........................................17
SECTION 1. Execution of Checks, Notes, etc......................17
SECTION 2. Execution of Contracts, Assignments, etc.............17
SECTION 3. Execution of Proxies.................................17
ARTICLE IX INSPECTION OF BOOKS.............................................17
ARTICLE X FISCAL YEAR......................................................18
ARTICLE XI AMENDMENTS......................................................18
ARTICLE XII INDEMNIFICATION................................................18
SECTION 1. Indemnification......................................18
SECTION 2. Authorization........................................20
SECTION 3. Expense Advance......................................21
SECTION 4. Nonexclusivity.......................................21
SECTION 5. Insurance............................................21
SECTION 6. "The Corporation"....................................21
SECTION 7. Other Indemnification................................22
SECTION 8. Other Definitions....................................22
SECTION 9. Continuation of Indemnification......................22
SECTION 10. Amendment or Repeal..................................22
<PAGE>
IRON MOUNTAIN RECORDS MANAGEMENT OF MARYLAND, INC.
(a Delaware Corporation)
BY-LAWS
ARTICLE I OFFICES
-------------------
SECTION 1. Registered Office. The registered office of the Corporation
shall be located in Wilmington, County of New Castle, State of Delaware, and the
name of the resident agent in charge thereof shall be Corporation Service
Company.
SECTION 2. Other Offices. The Corporation may also have offices at such
other places, within or without the State of Delaware, as the Board of Directors
may from time to time appoint or the business of the Corporation may require.
ARTICLE II SEAL
-----------------
The seal of the Corporation shall, subject to alteration by the Board of
Directors, consist of a flat-faced circular die with the word "Delaware",
together with the name of the Corporation and the year of incorporation, cut or
engraved thereon.
ARTICLE III MEETING OF STOCKHOLDERS
-------------------------------------
SECTION 1. Place of Meeting. Meetings of the stockholders shall be held
either within or without the State of Delaware at such place as the Board of
Directors may fix from time to time.
SECTION 2. Annual Meetings. The annual meeting of stockholders shall be
held for the election of directors on such date and at such time as the Board of
Directors may fix from time to time. Any other proper business may be transacted
at the annual meeting.
SECTION 3. Special Meetings. Special meetings of the stockholders for any
purpose or purposes may be called by the Chairman of the Board of Directors, if
there be one, the President or by the directors (either by written instrument
signed by a majority or by resolution adopted by a vote of the majority), and
special meetings shall be called by the President or the Secretary whenever
stockholders owning at least a majority of the capital stock issued, outstanding
and entitled to vote so
<PAGE>
By-laws of Iron Mountain Records Managment of Maryland, Inc.
A Delaware Corporation
Page 2
request in writing. Such request of stockholders shall state the
purpose or purposes of the proposed meeting.
SECTION 4. Notice. Written or printed notice of every meeting of
stockholders, annual or special, stating the hour, date and place thereof, and
the purpose or purposes in general terms for which the meeting is called shall,
not less than ten (10) days, or such longer period as shall be provided by law,
the Certificate of Incorporation, these By-Laws, or otherwise, and not more than
sixty (60) days before such meeting, be served upon or mailed to each
stockholder entitled to vote thereat, at the address of such stockholder as it
appears upon the stock records of the Corporation or, if such stockholder shall
have filed with the Secretary of the Corporation a written request that notices
be mailed to some other address, then to the address designated in such request.
Notice of the hour, date, place and purpose of any meeting of stockholders
may be dispensed with if every stockholder entitled to vote thereat shall attend
either in person or by proxy and shall not, at the beginning of the meeting,
object to the holding of such meeting because the meeting has not been lawfully
called or convened, or if every absent stockholder entitled to such notice shall
in writing, filed with the records of the meeting, either before or after the
holding thereof, waive such notice.
SECTION 5. Quorum and Adjournments. Except as otherwise provided by law or
by the Certificate of Incorporation, the presence in person or by proxy at any
meeting of stockholders of the holders of a majority of the shares of the
capital stock of the Corporation issued and outstanding and entitled to vote
thereat, shall be requisite and shall constitute a quorum. If two or more
classes of stock are entitled to vote as separate classes upon any question,
then, in the case of each such class, a quorum for the consideration of such
question shall, except as otherwise provided by law or by the Certificate of
Incorporation, consist of *** of all stock of that class issued, outstanding and
entitled to vote. If a majority of the shares of capital stock of the
Corporation issued and outstanding and entitled to vote thereat or, where a
larger quorum is required, such quorum, shall not be represented at any meeting
of the stockholders regularly called, the holders of *** of the shares present
or represented by proxy and entitled to vote thereat shall have power to adjourn
the meeting to another time, or to another time and place, without notice other
than announcement of adjournment at the meeting, and there may be successive
adjournments for like cause and in like manner until the requisite amount of
shares entitled to vote at such meeting shall be represented; provided, however,
that if the adjournment is for more than thirty (30) days, notice of the hour,
date and place of the adjourned meeting shall be given to each stockholder
entitled to vote thereat. Subject to the requirements of law and the Certificate
of Incorporation, on
<PAGE>
By-laws of Iron Mountain Records Managment of Maryland, Inc.
A Delaware Corporation
Page 3
any issue on which two or more classes of stock are entitled to vote separately,
no adjournment shall be taken with respect to any class for which a quorum is
present unless the Chairman of the meeting otherwise directs. At any meeting
held to consider matters which were subject to adjournment for want of a quorum
at which the requisite amount of shares entitled to vote thereat shall be
represented, any business may be transated which might have been transacted at
the meeting as originally noticed.
SECTION 6. Votes; Proxies. Except as otherwise provided in the Certificate
of Incorporation, at each meeting of stockholders, every stockholder of record
at the closing of the transfer books, if closed, or on the date set by the Board
of Directors for the determination of stockholders entitled to vote at such
meeting, shall have one vote for each share of stock entitled to vote which is
registered in such stockholder's name on the books of the Corporation, and, in
the election of directors, may vote cumulatively to the extent, if any, and in
the manner authorized in the Certificate of Incorporation.
At each such meeting every stockholder entitled to vote shall be entitled
to do so in person, or by proxy appointed by an instrument in writing or as
otherwise permitted by law subscribed by such stockholder and bearing a date not
more than three (3) years prior to the meeting in question, unless said
instrument provides for a longer period during which it is to remain in force. A
duly executed proxy shall be irrevocable if it states that it is irrevocable and
if, and only as long as, it is coupled with an interest sufficient in law to
support an irrevocable power. A proxy may be made irrevocable regardless of
whether the interest with which it is coupled is an interest in the stock itself
or any interest in the Corporation generally. A stockholder may revoke any proxy
which is not irrevocable by attending the meeting and voting in person or by
filing with the Secretary of the Corporation an instrument in writing or as
otherwise permitted by law revoking the proxy or another duly executed proxy
bearing a later date.
Voting at meetings of stockholders need not be by written ballot and,
except as otherwise provided by law, need not be conducted by inspectors of
election unless so determined by the Chairman of the meeting or by the holders
of shares of stock having a majority of the votes which could be cast by the
holders of all outstanding shares of stock entitled to vote thereon which are
present in person or represented by proxy at such meeting. If it is required or
determined that inspectors of election be appointed, the Chairman shall appoint
two inspectors of election, who shall first take and subscribe an oath or
affirmation faithfully to execute the duties of inspectors at such meeting with
strict impartiality and according to the best of their ability. The inspectors
so appointed shall take charge of the polls and, after the balloting, shall make
a certificate of the
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result of the vote taken. No director or candidate for the
office of director shall be appointed as such inspector.
At any meeting at which a quorum is present, a plurality of the votes
properly cast for election to fill any vacancy on the Board of Directors shall
be sufficient to elect a candidate to fill such vacancy, and a majority of the
votes properly cast upon any other question shall decide the question, except in
any case where a larger vote is required by law, the Certificate of
Incorporation, these By-Laws, or otherwise.
SECTION 7. Organization. The Chairman of the Board, if there be one, or in
his or her absence the Vice Chairman, or in the absence of a Vice Chairman, the
President, or in the absence of the President, a Vice President, shall call
meetings of the stockholders to order and shall act as chairman thereof. The
Secretary of the Corporation, if present, shall act as secretary of all meetings
of stockholders, and, in his or her absence, the presiding officer may appoint a
secretary.
SECTION 8. Consent of Stockholders in Lieu of Meeting. Unless otherwise
restricted by the Certificate of Incorporation, any action required or permitted
by the Delaware General Corporation Law to be taken at any annual or special
meeting of the stockholders of the Corporation, may be taken without a meeting,
without prior notice and without a vote, if a consent or consents in writing,
setting forth the action so taken, shall be signed by the holders of outstanding
stock having not less than the minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voted and shall be delivered to the Corporation by
delivery to its registered office in Delaware, its principal place of business,
or an officer or agent of the Corporation having custody of the book in which
proceedings of meetings of stockholders are recorded. Delivery made to the
Corporation's registered office shall be by hand or by certified or registered
mail, return receipt requested.
Every written consent shall bear the date of signature of each stockholder
who signs the consent and no written consent shall be effective to take the
corporate action referred to therein unless, within sixty (60) days of the
earliest dated consent delivered in the manner required by this section to the
Corporation, written consents signed by a sufficient number of stockholders to
take action are delivered to the corporation by delivery to its registered
office in Delaware, its principal place of business, or an officer or agent of
the Corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Delivery made to the Corporation's registered office
shall be by hand or by certified or registered mail, return receipt requested.
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Prompt notice of the taking of the corporate action without a meeting by
less than unanimous written consent shall be given to those stockholders who
have not consented in writing. In the event that the action which is consented
to is such as would have required the filing of a certificate under any section
of the Delaware General Corporation Law other than Section 228 thereof, if such
action had been voted on by stockholders at a meeting thereof, the certificate
filed under such other section shall state, in lieu of any statement required by
such section concerning any vote of stockholders, that written consent has been
given in accordance with Section 228 of the Delaware General Corporation Law,
and that written notice has been given as provided in such Section 228.
ARTICLE IV DIRECTORS
---------------------
SECTION 1. Number. The business and affairs of the Corporation shall be
conducted and managed by a Board of Directors consisting of not less than one
director, none of whom needs to be a stockholder. The number of directors for
each year shall be fixed at each annual meeting of stockholders, but if the
number is not so fixed, the number shall remain as it stood immediately prior to
such meeting.
At each annual meeting of stockholders, the stockholders shall elect
directors. Each director so elected shall hold office, subject to the provisions
of law, the Certificate of Incorporation, these By-Laws, or otherwise, until the
next annual meeting of stockholders or until his or her successor is elected and
qualified.
At any time during any year, except as otherwise provided by law, the
Certificate of Incorporation, these By-Laws, or otherwise, the number of
directors may be increased or reduced, in each case by vote of a majority of the
stock issued and outstanding and present in person or represented by proxy and
entitled to vote for the election of directors or a majority of the directors in
office at the time of such increase or decrease, regardless of whether such
majority constitutes a quorum.
SECTION 2. Term of Office. Each director shall hold office until the next
annual meeting of stockholders and until his or her successor is duly elected
and qualified or until his or her earlier death or resignation, subject to the
right of the stockholders at any time to remove any director or directors as
provided in Section 4 of this Article.
SECTION 3. Vacancies. If any vacancy shall occur among the directors, or if
the number of directors shall at any time be increased, the directors then in
office, although less than a quorum, by a majority vote may fill the vacancies
or newly-
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created directorships, or any such vacancies or newly-created directorships may
be filled by the stockholders at any meeting.
SECTION 4. Removal by Stockholders. Except as otherwise provided by law,
the Certificate of Incorporation or otherwise, the holders of record of the
capital stock of the Corporation entitled to vote for the election of directors
may, by a majority vote, remove any director or directors, with or without
cause, and, in their discretion, elect a new director or directors in place
thereof.
SECTION 5. Meetings. Meetings of the Board of Directors shall be held at
such place, within or without the State of Delaware, as may from time to time be
fixed by resolution of the Board of Directors or by the Chairman of the Board,
if there be one, or by the President, and as may be specified in the notice or
waiver of notice of any meeting. Meetings may be held at any time upon the call
of the Chairman of the Board, if there be one, or the President or any two (2)
of the directors in office by oral, telegraphic, telex, telecopy or other form
of electronic transmission, or written notice, duly served or sent or mailed to
each director not less than twenty-four (24) hours before such meeting, except
that, if mailed, not less than *** (***) hours before such meeting.
Meetings may be held at any time and place without notice if all the
directors are present and do not object to the holding of such meeting for lack
of proper notice or if those not present shall, in writing or by telegram,
telex, telecopy or other form of electronic transmission, waive notice thereof.
A regular meeting of the Board may be held without notice immediately following
the annual meeting of stockholders at the place where such meeting is held.
Regular meetings of the Board may also be held without notice at such time and
place as shall from time to time be determined by resolution of the Board.
Except as otherwise provided by law, the Certificate of Incorporation or
otherwise, neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the Board of Directors or any committee thereof
need be specified in any written waiver of notice.
Members of the Board of Directors or any committee thereof may participate
in a meeting of such Board or committee by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other and participation in a meeting pursuant to the
foregoing provisions shall constitute presence in person at the meeting.
SECTION 6. Votes. Except as otherwise provided by law,
the Certificate of Incorporation or otherwise, the vote of the
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majority of the directors present at a meeting at which a quorum is present
shall be the act of the Board of Directors.
SECTION 7. Quorum and Adjournment. Except as otherwise provided by law, the
Certificate of Incorporation or otherwise, a majority of the directors shall
constitute a quorum for the transaction of business. If at any meeting of the
Board there shall be less than a quorum present, a majority of those present may
adjourn the meeting from time to time without notice other than announcement of
the adjournment at the meeting, and at such adjourned meeting at which a quorum
is present any business may be transacted which might have been transacted at
the meeting as originally noticed.
SECTION 8. Compensation. Directors shall receive compensation for their
services, as such, and for service on any Committee of the Board of Directors,
as fixed by resolution of the Board of Directors and for expenses of attendance
at each regular or special meeting of the Board or any Committee thereof.
Nothing in this Section shall be construed to preclude a director from serving
the Corporation in any other capacity and receiving compensation therefor.
SECTION 9. Action By Consent of Directors. Any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting if all members of the Board or committee, as the
case may be, consent thereto in writing, and the writing or writings are filed
with the minutes of proceedings of the Board or committee. Such consent shall be
treated as a vote adopted at a meeting for all purposes. Such consents may be
executed in one or more counterparts and not every Director or committee member
need sign the same counterpart.
ARTICLE V COMMITTEES OF DIRECTORS
-----------------------------------
SECTION 1. Executive Committee. The Board of Directors may, by resolution
passed by a majority of the whole Board, appoint an Executive Committee of one
(1) or more members, to serve during the pleasure of the Board, to consist of
such directors as the Board may from time to time designate. The Board of
Directors shall designate the Chairman of the Executive Committee.
a. Procedure. The Executive Committee shall, by a vote of a majority of
its members, fix its own times and places of meeting, determine the
number of its members constituting a quorum for the transaction of
business, and prescribe its own rules of procedure, no change in
which shall be made save by a majority vote of its members.
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b. Responsibilities. During the intervals between the
----------------
meetings of the Board of Directors, except as otherwise
provided by the Board of Directors in establishing such
Committee or otherwise, the Executive Committee shall
possess and may exercise all the powers of the Board in
the management and direction of the business and affairs
of the Corporation; provided, however, that the
Executive Committee shall not, except to the extent the
Certificate of Incorporation or the resolution providing
for the issuance of shares of stock adopted by the Board
of Directors as provided in Section 151(a) of the
Delaware General Business Corporation Law, have the
power:
(1) to amend or authorize the amendment of the
Certificate of Incorporation or these By-Laws;
(2) to authorize the issuance of stock;
(3) to authorize the payment of any dividend;
(4) to adopt an agreement of merger or consolidation of the
Corporation or to recommend to the stockholders the sale, lease or
exchange of all or substantially all the property and business of the
Corporation;
(5) to recommend to the stockholders a dissolution, or
a revocation of a dissolution, of the Corporation; or
(6) to adopt a certificate of ownership and merger pursuant to
Section 253 of the Delaware Business Corporation Law.
c. Reports. The Executive Committee shall keep regular minutes of its
proceedings, and all action by the Executive Committee shall be
reported promptly to the Board of Directors. Such action shall be
subject to review, amendment and repeal by the Board, provided that
no rights of third parties shall be adversely affected by such
review, amendment or repeal.
d. Appointment of Additional Members. In the absence or disqualification
of any member of the Executive Committee, the member or members
thereof present at any meeting and not disqualified from voting,
whether or not constituting a quorum, may unanimously appoint another
member of the Board of Directors to act at the meeting in place of
any such absent or disqualified member.
SECTION 2. Audit Committee. The Board of Directors may, by resolution
passed by a majority of the whole Board, appoint an Audit Committee of *** (***)
or more members to serve during the
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pleasure of the Board. The Board of Directors shall designate
the Chairman of the Audit Committee.
a. Procedure. The Audit Committee, by a vote of a majority of its
members, shall fix its own times and places of meeting, shall
determine the number of its members constituting a quorum for the
transaction of business, and shall prescribe its own rules of
procedure, no change in which shall be made save by a majority vote
of its members.
b. Responsibilities. The Audit Committee shall review the
annual financial statements of the Corporation prior to
their submission to the Board of Directors, shall
consult with the Corporation's independent auditors, and
may examine and consider such other matters in relation
to the internal and external audit of the Corporation's
accounts and in relation to the financial affairs of the
Corporation and its accounts, including the selection
and retention of independent auditors, as the Audit
Committee may, in its discretion, determine to be
desirable.
c. Reports. The Audit Committee shall keep regular minutes of its
proceedings, and all action by the Audit Committee shall, from time
to time, be reported to the Board of Directors as it shall direct.
Such action shall be subject to review, amendment and repeal by the
Board, provided that no rights of third parties shall be adversely
affected by such review, amendment or repeal.
d. Appointment of Additional Members. In the absence or disqualification
of any member of the Audit Committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or
not constituting a quorum, may unanimously appoint another member of
the Board of Directors to act at the meeting in place of any such
absent or disqualified member.
SECTION 3. Other Committees. The Board of Directors may, by resolution
passed by a majority of the whole Board, at any time appoint one or more other
committees from and outside of its own number. Every such committee must include
at least one member of the Board of Directors. The Board may from time to time
designate or alter, within the limits permitted by law, the Certificate of
Incorporation and this Article, if applicable, the duties, powers and number of
members of such other committees or change their membership, and may at any time
abolish such other committees or any of them.
a. Procedure. Each committee, appointed pursuant to this
Section, shall, by a vote of a majority of its members,
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fix its own times and places of meeting, determine the number of its
members constituting a quorum for the transaction of business, and
prescribe its own rules of procedure, no change in which shall be
made save by a majority vote of its members.
b. Responsibilities. Each committee, appointed pursuant to
this Section, shall exercise the powers assigned to it
by the Board of Directors in its discretion.
c. Reports. Each committee appointed pursuant to this
Section shall keep regular minutes of proceedings, and
all action by each such committee shall, from time to
time, be reported to the Board of Directors as it shall
direct. Such action shall be subject to review,
amendment and repeal by the Board, provided that no
rights of third parties shall be adversely affected by
such review, amendment or repeal.
d. Appointment of Additional Members. In the absence or
disqualification of any member of each committee,
appointed pursuant to this Section, the member or
members thereof present at any meeting and not
disqualified from voting, whether or not constituting a
quorum, may unanimously appoint another member of the
Board of Directors (or, to the extent permitted, another
person) to act at the meeting in place of any such
absent or disqualified member.
SECTION 4. Term of Office. Each member of a committee shall hold office
until the first meeting of the Board of Directors following the annual meeting
of stockholders (or until such other time as the Board of Directors may
determine, either in the vote establishing the committee or at the election of
such member or otherwise) and until his or her successor is elected and
qualified, or until he or she sooner dies, resigns, is removed, is replaced by
change of membership or becomes disqualified by ceasing to be a director (where
membership on the Board is required), or until the committee is sooner abolished
by the Board of Directors.
ARTICLE VI OFFICERS
---------------------
SECTION 1. Officers. The Board of Directors shall elect a President, a
Secretary and a Treasurer, and, in their discretion, may elect a Chairman of the
Board, a Vice Chairman of the Board, a Controller, and one or more Executive
Vice Presidents, Vice Presidents, Assistant Secretaries, Assistant Treasurers
and Assistant Controllers as deemed necessary or appropriate. Such officers
shall be elected annually by the Board of Directors at its first meeting
following the annual
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meeting of stockholders (or at such other meeting as the Board of Directors
determines), and each shall hold office for the term provided by the vote of the
Board, except that each will be subject to removal from office in the discretion
of the Board as provided herein. The powers and duties of more than one office
may be exercised and performed by the same person.
SECTION 2. Vacancies. Any vacancy in any office may be filled for the
unexpired portion of the term by the Board of Directors, at any regular or
special meeting.
SECTION 3. Chairman of the Board. The Chairman of the Board of Directors,
if elected, shall be a member of the Board of Directors and shall preside at its
meetings. The Chairman, if other than the President, shall advise and counsel
with the President, and shall perform such duties as from time to time may be
assigned to him or her by the Board of Directors.
SECTION 4. President. The President shall be the chief executive officer of
the Corporation. Subject to the directions of the Board of Directors, the
President shall have and exercise direct charge of and general supervision over
the business and affairs of the Corporation and shall perform all duties
incident to the office of the chief executive officer of a corporation and such
other duties as from time to time may be assigned to him or her by the Board of
Directors. The President may but need not be a member of the Board of Directors.
SECTION 5. Executive Vice Presidents and Vice Presidents. Each Executive
Vice President and Vice President shall have and exercise such powers and shall
perform such duties as from time to time may be assigned to him or to her by the
Board of Directors or the President.
SECTION 6. Secretary. The Secretary shall keep the minutes of all meetings
of the stockholders and of the Board of Directors in books provided for the
purpose; shall see that all notices are duly given in accordance with the
provisions of law and these By-Laws; the Secretary shall be custodian of the
records and of the corporate seal or seals of the Corporation; shall see that
the corporate seal is affixed to all documents the execution of which, on behalf
of the Corporation under its seal, is duly authorized, and, when the seal is so
affixed, he or she may attest the same; the Secretary may sign, with the
President, an Executive Vice President or a Vice President, certificates of
stock of the Corporation; and, in general, the Secretary shall perform all
duties incident to the office of secretary of a corporation, and such other
duties as from time to time may be assigned to him or her by the Board of
Directors.
SECTION 7. Assistant Secretaries. The Assistant Secretaries in order of
their seniority shall, in the absence or
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disability of the Secretary, perform the duties and exercise the powers of the
Secretary and shall perform such other duties as the Board of Directors shall
prescribe or as from time to time may be assigned by the Secretary.
SECTION 8. Treasurer. The Treasurer shall have charge of and be responsible
for all funds, securities, receipts and disbursements of the Corporation, and
shall deposit, or cause to be deposited, in the name of the Corporation, all
monies or other valuable effects in such banks, trust companies or other
depositaries as shall, from time to time, be selected by the Board of Directors;
may endorse for collection on behalf of the Corporation checks, notes and other
obligations; may sign receipts and vouchers for payments made to the
Corporation; may sign checks of the Corporation, singly or jointly with another
person as the Board of Directors may authorize, and pay out and dispose of the
proceeds under the direction of the Board; the Treasurer shall render to the
President and to the Board of Directors, whenever requested, an account of the
financial condition of the Corporation; the Treasurer may sign, with the
President, or an Executive Vice President or a Vice President, certificates of
stock of the Corporation; and in general, shall perform all the duties incident
to the office of treasurer of a corporation, and such other duties as from time
to time may be assigned by the Board of Directors. Unless the Board of Directors
shall otherwise determine, the Treasurer shall be the chief financial officer of
the Corporation.
SECTION 9. Assistant Treasurers. The Assistant Treasurers in order of their
seniority shall, in the absence or disability of the Treasurer, perform the
duties and exercise the powers of the Treasurer and shall perform such other
duties as the Board of Directors shall prescribe or as from time to time may be
assigned by the Treasurer.
SECTION 10. Controller. The Controller, if elected, shall be the chief
accounting officer of the Corporation and shall perform all duties incident to
the office of a controller of a corporation, and, in the absence of or
disability of the Treasurer or any Assistant Treasurer, perform the duties and
exercise the powers of the Treasurer and shall perform such other duties as the
Board of Directors shall prescribe or as from time to time may be assigned by
the President or the Treasurer.
SECTION 11. Assistant Controllers. The Assistant Controllers in order of
their seniority shall, in the absence or disability of the Controller, perform
the duties and exercise the powers of the Controller and shall perform such
other duties as the Board of Directors shall prescribe or as from time to time
may be assigned by the Controller.
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SECTION 12. Subordinate Officers. The Board of Directors may appoint such
subordinate officers as it may deem desirable. Each such officer shall hold
office for such period, have such authority and perform such duties as the Board
of Directors may prescribe. The Board of Directors may, from time to time,
authorize any officer to appoint and remove subordinate officers and to
prescribe the powers and duties thereof.
SECTION 13. Compensation. The Board of Directors shall fix the
compensation of all officers of the Corporation. It may authorize any officer,
upon whom the power of appointing subordinate officers may have been conferred,
to fix the compensation of such subordinate officers.
SECTION 14. Removal. Any officer of the Corporation may be removed, with
or without cause, by action of the Board of Directors.
SECTION 15. Bonds. The Board of Directors may require any officer of the
Corporation to give a bond to the Corporation, conditional upon the faithful
performance of his or her duties, with one or more sureties and in such amount
as may be satisfactory to the Board of Directors.
ARTICLE VII CERTIFICATES OF STOCK
-----------------------------------
SECTION 1. Form and Execution of Certificates. The interest of each
stockholder of the Corporation shall be evidenced by a certificate or
certificates for shares of stock in such form as the Board of Directors may from
time to time prescribe. The certificates of stock of each class shall be
consecutively numbered and signed by the Chairman or Vice Chairman of the Board,
if any, the President, an Executive Vice President or a Vice President and by
the Secretary, an Assistant Secretary, the Treasurer or an Assistant Treasurer
of the Corporation, and may be countersigned and registered in such manner as
the Board of Directors may by resolution prescribe, and shall bear the corporate
seal or a printed or engraved facsimile thereof. Where any such certificate is
signed by a transfer agent or transfer clerk acting on behalf of the
Corporation, the signatures of any such Chairman, Vice Chairman, President,
Executive Vice President, Vice President, Treasurer, Assistant Treasurer,
Secretary or Assistant Secretary may be facsimiles, engraved or printed. In case
any officer or officers, who shall have signed, or whose facsimile signature or
signatures shall have been used on, any such certificate or certificates, shall
cease to be such officer or officers, whether because of death, resignation or
otherwise, before such certificate or certificates shall have been delivered by
the Corporation, such certificate or certificates may nevertheless be issued and
delivered by the Corporation as though the person or persons who signed such
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certificate or certificates or whose facsimile signature or signatures shall
have been used thereon had not ceased to be such officer or officers.
In case the corporate seal which has been affixed to, impressed on, or
reproduced in any such certificate or certificates shall cease to be the seal of
the Corporation before such certificate or certificates have been delivered by
the Corporation, such certificate or certificates may nevertheless be issued and
delivered by the Corporation as though the seal affixed thereto, impressed
thereon or reproduced therein had not ceased to be the seal of the Corporation.
Every certificate for shares of stock which are subject to any restriction
on transfer pursuant to law, the Certificate of Incorporation, these By-Laws, or
any agreement to which the Corporation is a party, shall have the restriction
noted conspicuously on the certificate, and shall also set forth, on the face or
back, either the full text of the restriction or a statement of the existence of
such restriction and (except if such restriction is imposed by law) a statement
that the Corporation will furnish a copy thereof to the holder of such
certificate upon written request and without charge.
Every certificate issued when the Corporation is authorized to issue more
than one class or series of stock shall set forth on its face or back either the
full text of the preferences, voting powers, qualifications, and special and
relative rights of the shares of each class and series authorized to be issued,
or a statement of the existence of such preferences, powers, qualifications and
rights, and a statement that the Corporation will furnish a copy thereof to the
holder of such certificate upon written request and without charge.
SECTION 2. Transfer of Shares. The shares of the stock of the Corporation
shall be transferred on the books of the Corporation by the holder thereof in
person or by his or her attorney lawfully constituted, upon surrender for
cancellation of certificates for the same number of shares, with an assignment
and power of transfer endorsed thereon or attached thereto, duly executed, with
such proof or guaranty of the authenticity of the signature as the Corporation
or its agents may reasonably require. The Corporation shall be entitled to treat
the holder of record of any share or shares of stock as the holder in fact
thereof and accordingly shall not be bound to recognize any equitable or other
claim to or interest in such share or shares on the part of any other person
whether or not it shall have express or other notice thereof, save as expressly
provided by law or by the Certificate of Incorporation. It shall be the duty of
each stockholder to notify the Corporation of his or her post office address.
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SECTION 3. Closing of Transfer Books. The stock transfer books of the
Corporation may, if deemed appropriate by the Board of Directors, be closed for
such length of time not exceeding fifty (50) days as the Board may determine,
preceding the date of any meeting of stockholders or the date for the payment of
any dividend or the date for the allotment of rights or the date when any
issuance, change, conversion or exchange of capital stock shall go into effect,
during which time no transfer of stock on the books of the Corporation may be
made.
SECTION 4. Fixing Date for Determination of Stockholders of Record. In
order that the Corporation may determine the stockholders entitled to notice of
or to vote at any meeting of stockholders or any adjournment thereof, or to
express consent to corporate action in writing without a meeting, or entitled to
receive payment of any dividend or other distribution or allotment of any
rights, or entitled to exercise any rights in respect of any change, conversion
or exchange of stock or for the purpose of any other lawful action, the Board of
Directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board of
directors and which record date: (a) in the case of determination of
stockholders entitled to vote at any meeting of stockholders or adjournment
thereof, shall, unless otherwise required by law, the Certificate of
Incorporation or otherwise, not be more than sixty (60) nor less than ten (10)
days before the date of such meeting; (b) in the case of determination of
stockholders entitled to express consent to corporate action in writing without
a meeting, shall, unless otherwise required by law, the Certificate of
Incorporation or otherwise, not be more than ten (10) days from the date upon
which the resolution fixing the record date is adopted by the Board of
Directors; and (c) in the case of any other action, shall not be more than sixty
(60) days prior to such other action. If no record date is fixed: (a) the record
date for determining stockholders entitled to notice of or to vote at a meeting
of stockholders shall be at the close of business on the day next preceding the
day on which notice is given, or, if notice is waived, at the close of business
on the day next preceding the day on which the meeting is held; (b) the record
date for determining stockholders entitled to express consent to corporate
action in writing without a meeting when no prior action of the Board of
Directors is required by law, shall be the first date on which a signed written
consent setting forth the action take or proposed to be taken is delivered to
the Corporation in accordance with applicable law, or, if prior action by the
Board of Directors is required by law, shall be at the close of business on the
day on which the Board of Directors adopts the resolution taking such prior
action; and (c) the record date for determining stockholders for any other
purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto. A determination of
stockholders of
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record entitled to notice of or to vote at a meeting of stockholders shall apply
to any adjournment of the meeting; provided, however, that the Board of
Directors may fix a new record date for the adjourned meeting.
SECTION 5. Lost or Destroyed Certificates. In case of the loss or
destruction of any certificate of stock, a new certificate may be issued under
the following conditions:
a. The owner of said certificate shall file with the
Secretary or any Assistant Secretary of the Corporation
an affidavit giving the facts in relation to the
ownership, and in relation to the loss or destruction of
said certificate, stating its number and the number of
shares represented thereby; such affidavit shall be in
such form and contain such statements as shall satisfy
the President, any Executive Vice President, Vice
President, the Secretary, any Assistant Secretary, the
Treasurer or any Assistant Treasurer, that said
certificate has been accidentally destroyed or lost, and
that a new certificate ought to be issued in lieu
thereof. Upon being so satisfied, any such officer may
require such owner to furnish the Corporation a bond in
such penal sum and in such form as he or she may deem
advisable, and with a surety or sureties approved by him
or her, to indemnify and save harmless the Corporation
from any claim, loss, damage or liability which may be
occasioned by the issuance of a new certificate in lieu
thereof. Upon such bond being so filed, if so required,
a new certificate for the same number of shares shall be
issued to the owner of the certificate so lost or
destroyed; and the transfer agent and registrar, if any,
of stock shall countersign and register such new
certificate upon receipt of a written order signed by
any such officer, and thereupon the Corporation will
save harmless said transfer agent and registrar in the
premises. In case of the surrender of the original
certificate, in lieu of which a new certificate has been
issued, or the surrender of such new certificate, for
cancellation, the bond of indemnity given as a condition
of the issue of such new certificate may be surrendered;
or
b. The Board of Directors of the Corporation may by
resolution authorize and direct any transfer agent or
registrar of stock of the Corporation to issue and
register respectively from time to time without further
action or approval by or on behalf of the Corporation
new certificates of stock to replace certificates
reported lost, stolen or destroyed upon receipt of an
affidavit of loss and bond of indemnity in form and
amount and with surety satisfactory to such transfer
<PAGE>
By-laws of Iron Mountain Records Managment of Maryland, Inc.
A Delaware Corporation
Page 17
agent or registrar in each instance or upon such terms and conditions
as the Board of Directors may determine.
SECTION 6. Uncertificated Shares. The Board of Directors of the Corporation
may by resolution provide that one or more of any or all classes or series of
the stock of the Corporation shall be uncertificated shares, subject to the
provisions of Section 158 of the Delaware General Corporation Law.
ARTICLE VIII EXECUTION OF DOCUMENTS
-------------------------------------
SECTION 1. Execution of Checks, Notes, etc. All checks and drafts on the
Corporation's bank accounts and all bills of exchange and promissory notes, and
all acceptances, obligations and other instruments for the payment of money,
shall be signed by such officer or officers, or agent or agents, as shall be
thereunto authorized from time to time by the Board of Directors, which may in
its discretion authorize any such signatures to be facsimile.
SECTION 2. Execution of Contracts, Assignments, etc. Unless the Board of
Directors shall have otherwise provided generally or in a specific instance, all
contracts, agreements, endorsements, assignments, transfers, stock powers, or
other instruments shall be signed by the President, any Executive Vice
President, any Vice President, the Secretary, any Assistant Secretary, the
Treasurer or any Assistant Treasurer. The Board of Directors may, however, in
its discretion, require any or all such instruments to be signed by any two or
more of such officers, or may permit any or all of such instruments to be signed
by such other officer or officers, agent or agents, as it shall be thereunto
authorize from time to time.
SECTION 3. Execution of Proxies. The President, any Executive Vice
President or any Vice President, and the Secretary, the Treasurer, any Assistant
Secretary or any Assistant Treasurer, or any other officer designated by the
Board of Directors, may sign on behalf of the Corporation proxies to vote upon
shares of stock of other companies standing in the name of the Corporation.
ARTICLE IX INSPECTION OF BOOKS
--------------------------------
The Board of Directors shall determine from time to time whether, and if
allowed, to what extent and at what time and places and under what conditions
and regulations, the accounts and books of the Corporation (except such as may
by law be specifically open to inspection) or any of them, shall be open to the
inspection of the stockholders, and no stockholder shall have any right to
inspect any account or book or document of the
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By-laws of Iron Mountain Records Managment of Maryland, Inc.
A Delaware Corporation
Page 18
Corporation, except as conferred by the laws of the State of Delaware, unless
and until authorized so to do by resolution of the Board of Directors or of the
stockholders of the Corporation.
ARTICLE X FISCAL YEAR
-----------------------
The fiscal year of the Corporation shall be determined from time to time by
vote of the Board of Directors.
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By-laws of Iron Mountain Records Managment of Maryland, Inc.
A Delaware Corporation
Page 19
ARTICLE XI AMENDMENTS
-----------------------
These By-Laws may be altered, amended, changed or repealed and new By-Laws
adopted by the stockholders or, to the extent provided in the Certificate of
Incorporation, by the Board of Directors, in either case at any meeting called
for that purpose at which a quorum shall be present. Any by-law, whether made,
altered, amended, changed or repealed by the stockholders or the Board of
Directors may be repealed, amended, changed, further amended, changed, repealed
or reinstated, as the case may be, either by the stockholders or by the Board of
Directors, as herein provided; except that this Article may be altered, amended,
changed or repealed only by vote of the stockholders.
ARTICLE XII INDEMNIFICATION
-----------------------------
SECTION 1. Indemnification.
a. Action By Third Party. The Corporation shall indemnify
and hold harmless, to the fullest extent permitted by
applicable law as it presently exists or may hereafter
be amended, any person who was or is a party or is
threatened to be made a party or is otherwise involved
in any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right
of the Corporation) by reason of the fact that he, or a
person for whom he or she is the legal representative,
is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the
Corporation as a director, officer, partner, member,
trustee, employee or agent of another corporation,
partnership, joint venture, limited liability company,
trust or other enterprise or non-profit entity against
all liability, losses, expenses (including attorneys'
fees), judgments, fines, and amounts paid in settlement
actually and reasonably incurred by him or her in
connection with such action, suit or proceeding if he or
she acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best
interest of the Corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause
to believe his conduct was unlawful. The termination of
any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself,
create a presumption that the person did not act in good
faith and in a manner which he or she reasonably
believed to be in or not opposed to the best interest of
the Corporation, and, with respect to any criminal
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By-laws of Iron Mountain Records Managment of Maryland, Inc.
A Delaware Corporation
Page 20
action or proceeding, had reasonable cause to believe
that his or her conduct was unlawful.
b. Action By Corporation. The Corporation shall indemnify
any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed
action or suit by or in the right of the Corporation to
procure a judgment in its favor by reason of the fact
that he or she is or was a director, trustee, partner,
officer, employee or agent of the Corporation, or is or
was serving at the request of the Corporation as a
director, officer, partner, member, trustee, employee or
agent of another corporation, partnership, joint
venture, limited liability company, trust or other
enterprise or non-profit entity against expenses
(including attorneys' fees) actually and reasonably
incurred by him or her in connection with the defense or
settlement of such action or suit if he or she acted in
good faith and in a manner he or she reasonably believed
to be in or not opposed to the best interests of the
Corporation; except that no indemnification shall be
made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable
for negligence or misconduct in the performance of his
or her duty to the Corporation unless and only to the
extent that the Court of Chancery of the State of
Delaware or the court in which such action or suit was
brought shall determine upon application that despite
the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which
the Court of Chancery of the State of Delaware or such
other court shall deem proper.
c. To the extent that any person referred to in paragraphs
a. or b. above has been successful on the merits or
otherwise in defense of any action, suit or proceeding
referred to therein, or in defense of any claim, issue
or matter therein, he or she shall be indemnified
against expenses (including attorneys' fees) actually
and reasonably incurred by him or her in connection
therewith.
SECTION 2. Authorization. Any indemnification under Section 1 of this
Article (unless ordered by a court) shall be made by the Corporation only as
authorized in the specific case upon a determination that indemnification of the
director, officer, partner, member, trustee, employee or agent is proper in the
circumstances because such person has met the applicable standard of conduct set
forth in Section 1 of this Article. Such determination shall be made: a. by the
Board of Directors by a majority vote of a quorum consisting of directors who
were not
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By-laws of Iron Mountain Records Managment of Maryland, Inc.
A Delaware Corporation
Page 21
parties to such action, suit or proceeding, or b. if such a quorum is not
obtainable, or, even if obtainable, a quorum of disinterested directors so
directs, by independent legal counsel in written opinion, or c. by the
stockholders.
SECTION 3. Expense Advance. Expenses (including attorneys' fees) incurred
by an officer or director of the Corporation in defending any civil, criminal,
administrative or investigative action, suit or proceeding may be paid by the
Corporation in advance of the final disposition of such action, suit or
proceeding as authorized by the Board of Directors in the manner provided in
Section 2 of this Article upon receipt of an undertaking by or on behalf of such
officer or director to repay such amount, unless it shall ultimately be
determined that such person is entitled to be indemnified by the Corporation as
authorized in this Article. Such expenses (including attorneys' fees) incurred
by other employees or agents of the Corporation may be so paid upon such terms
and conditions, if any, as the Board of Directors deems appropriate.
SECTION 4. Nonexclusivity. The indemnification and advancement of expenses
provided by, or granted pursuant to, the other Sections of this Article shall
not be deemed exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under any statute,
by-law, agreement, vote of stockholders or disinterested directors or otherwise,
both as to action in an official capacity and as to action in another capacity
while holding such office, and shall continue as to a person who has ceased to
be a director, officer, partner, member, trustee, employee or agent and shall
inure to the benefit of the heirs, executors and administrators of such a
person.
SECTION 5. Insurance. The Corporation shall have power to purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, partner, member, trustee, employee or agent
of another corporation, partnership, joint venture, limited liability company,
trust or other enterprise or non-profit entity against any liability asserted
against and incurred by him or her in any such capacity, or arising out of his
or her status as such, whether or not the Corporation would have the power to
indemnify such person against such liability under the provisions of this
Article or Section 145 of Title 8 of the Delaware Code relating to the General
Corporation Law of the State of Delaware.
SECTION 6. "The Corporation". For the purposes of this Article, references
to "the Corporation" shall include the resulting corporation and, to the extent
that the Board of Directors of the resulting corporation so decides, all
constituent corporations (including any constituent of a
<PAGE>
By-laws of Iron Mountain Records Managment of Maryland, Inc.
A Delaware Corporation
Page 22
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers and employees or agents so that any person who is or was a
director, officer, employee or agent of such a constituent corporation or is or
was serving at the request of such constituent corporation as director, officer,
partner, member, trustee, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise or non-profit entity shall stand in the
same position under the provisions of this Article with respect to the resulting
or surviving corporation if its separate existence had continued.
SECTION 7. Other Indemnification. The Corporation's obligation, if any, to
indemnify any person who was or is serving at its request as a director,
trustee, partner, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise or non-profit entity shall
be reduced by any amount such person may collect as indemnification from such
other corporation, partnership, joint venture, trust or other enterprise or
non-profit entity or from insurance.
SECTION 8. Other Definitions. For purposes of this Article, references to
"other enterprises" shall include employee benefit plans; references to "fines"
shall include any excise taxes assessed on a person with respect to an employee
benefit plan; and references to "serving at the request of the Corporation"
shall include any service as a director, trustee, officer, employee or agent of
the Corporation which imposes duties on, or involves services by, such director,
trustee, officer, employee, or agent with respect to an employee benefit plan,
its participants, or beneficiaries; and a person who acted in good faith and in
a manner he or she reasonably believed to be in the interest of the participants
and beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interests of the Corporation" as referred to in
this Article.
SECTION 9. Continuation of Indemnification. The indemnification and
advancement of expenses provided by, or granted pursuant to, this Article shall,
unless otherwise provided when authorized or ratified, continue as to a person
who has ceased to be a director, trustee, partner, officer, employee or agent
and shall inure to the benefit of the heirs, executors and administrators of
such a person.
SECTION 10. Amendment or Repeal. Neither the amendment nor repeal of this
Article nor the adoption of any provision of these By-Laws inconsistent with
this Article shall reduce, eliminate or adversely affect any right or protection
hereunder of any person in respect of any act or omission occurring prior to the
effectiveness of such amendment, repeal or adoption.
BY - LAWS
of
IRON MOUNTAIN RECORDS MANAGEMENT OF OHIO, INC.
(a Delaware Corporation)
<PAGE>
IRON MOUNTAIN RECORDS MANAGEMENT OF OHIO, INC.
(a Delaware Corporation)
BY-LAWS
TABLE OF CONTENTS
ARTICLE I OFFICES...........................................................1
SECTION 1. Registered Office.....................................1
ARTICLE II SEAL.............................................................1
ARTICLE III MEETING OF STOCKHOLDERS.........................................1
SECTION 1. Place of Meeting......................................1
SECTION 3. Special Meetings......................................1
SECTION 4. Notice................................................2
SECTION 5. Quorum and Adjournments...............................2
SECTION 6. Votes; Proxies........................................3
SECTION 7. Organization..........................................4
SECTION 8. Consent of Stockholders in Lieu of Meeting............4
ARTICLE IV DIRECTORS........................................................5
SECTION 1. Number................................................5
SECTION 2. Term of Office........................................5
SECTION 3. Vacancies.............................................5
SECTION 4. Removal by Stockholders...............................6
SECTION 5. Meetings..............................................6
SECTION 6. Votes.................................................6
SECTION 7. Quorum and Adjournment................................7
SECTION 8. Compensation..........................................7
SECTION 9. Action By Consent of Directors........................7
ARTICLE V COMMITTEES OF DIRECTORS...........................................7
SECTION 1. Executive Committee...................................7
SECTION 2. Audit Committee.......................................8
SECTION 3. Other Committees......................................9
SECTION 4. Term of Office.......................................10
ARTICLE VI OFFICERS........................................................10
SECTION 1. Officers.............................................10
SECTION 2. Vacancies............................................11
SECTION 3. Chairman of the Board................................11
SECTION 4. President............................................11
SECTION 5. Executive Vice Presidents and Vice Presidents
.....................................................11
SECTION 6. Secretary............................................11
SECTION 7. Assistant Secretaries................................11
SECTION 8. Treasurer............................................12
SECTION 9. Assistant Treasurers.................................12
SECTION 10. Controller...........................................12
SECTION 11. Assistant Controllers................................12
SECTION 12. Subordinate Officers.................................13
SECTION 13. Compensation.........................................13
<PAGE>
SECTION 14. Removal..............................................13
SECTION 15. Bonds................................................13
ARTICLE VII CERTIFICATES OF STOCK..........................................13
SECTION 1. Form and Execution of Certificates...................13
SECTION 2. Transfer of Shares...................................14
SECTION 3. Closing of Transfer Books............................15
SECTION 4. Fixing Date for Determination of Stockholders
of Record............................................15
SECTION 5. Lost or Destroyed Certificates.......................16
SECTION 6. Uncertificated Shares................................17
ARTICLE VIII EXECUTION OF DOCUMENTS........................................17
SECTION 1. Execution of Checks, Notes, etc......................17
SECTION 2. Execution of Contracts, Assignments, etc.............17
SECTION 3. Execution of Proxies.................................17
ARTICLE IX INSPECTION OF BOOKS.............................................17
ARTICLE X FISCAL YEAR......................................................18
ARTICLE XI AMENDMENTS......................................................18
ARTICLE XII INDEMNIFICATION................................................18
SECTION 1. Indemnification......................................18
SECTION 2. Authorization........................................20
SECTION 3. Expense Advance......................................21
SECTION 4. Nonexclusivity.......................................21
SECTION 5. Insurance............................................21
SECTION 6. "The Corporation"....................................21
SECTION 7. Other Indemnification................................22
SECTION 8. Other Definitions....................................22
SECTION 9. Continuation of Indemnification......................22
SECTION 10. Amendment or Repeal..................................22
<PAGE>
IRON MOUNTAIN RECORDS MANAGEMENT OF OHIO, INC.
(a Delaware Corporation)
BY-LAWS
ARTICLE I OFFICES
-------------------
SECTION 1. Registered Office. The registered office of the Corporation
shall be located in Wilmington, County of New Castle, State of Delaware, and the
name of the resident agent in charge thereof shall be Corporation Service
Company.
SECTION 2. Other Offices. The Corporation may also have offices at such
other places, within or without the State of Delaware, as the Board of Directors
may from time to time appoint or the business of the Corporation may require.
ARTICLE II SEAL
-----------------
The seal of the Corporation shall, subject to alteration by the Board of
Directors, consist of a flat-faced circular die with the word "Delaware",
together with the name of the Corporation and the year of incorporation, cut or
engraved thereon.
ARTICLE III MEETING OF STOCKHOLDERS
-------------------------------------
SECTION 1. Place of Meeting. Meetings of the stockholders shall be held
either within or without the State of Delaware at such place as the Board of
Directors may fix from time to time.
SECTION 2. Annual Meetings. The annual meeting of stockholders shall be
held for the election of directors on such date and at such time as the Board of
Directors may fix from time to time. Any other proper business may be transacted
at the annual meeting.
SECTION 3. Special Meetings. Special meetings of the stockholders for any
purpose or purposes may be called by the Chairman of the Board of Directors, if
there be one, the President or by the directors (either by written instrument
signed by a majority or by resolution adopted by a vote of the majority), and
special meetings shall be called by the President or the Secretary whenever
stockholders owning at least a majority of the capital stock issued, outstanding
and entitled to vote so
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By-laws of Iron Mountain Records Managment of Ohio, Inc.
A Delaware Corporation
Page 2
request in writing. Such request of stockholders shall state the
purpose or purposes of the proposed meeting.
SECTION 4. Notice. Written or printed notice of every meeting of
stockholders, annual or special, stating the hour, date and place thereof, and
the purpose or purposes in general terms for which the meeting is called shall,
not less than ten (10) days, or such longer period as shall be provided by law,
the Certificate of Incorporation, these By-Laws, or otherwise, and not more than
sixty (60) days before such meeting, be served upon or mailed to each
stockholder entitled to vote thereat, at the address of such stockholder as it
appears upon the stock records of the Corporation or, if such stockholder shall
have filed with the Secretary of the Corporation a written request that notices
be mailed to some other address, then to the address designated in such request.
Notice of the hour, date, place and purpose of any meeting of stockholders
may be dispensed with if every stockholder entitled to vote thereat shall attend
either in person or by proxy and shall not, at the beginning of the meeting,
object to the holding of such meeting because the meeting has not been lawfully
called or convened, or if every absent stockholder entitled to such notice shall
in writing, filed with the records of the meeting, either before or after the
holding thereof, waive such notice.
SECTION 5. Quorum and Adjournments. Except as otherwise provided by law or
by the Certificate of Incorporation, the presence in person or by proxy at any
meeting of stockholders of the holders of a majority of the shares of the
capital stock of the Corporation issued and outstanding and entitled to vote
thereat, shall be requisite and shall constitute a quorum. If two or more
classes of stock are entitled to vote as separate classes upon any question,
then, in the case of each such class, a quorum for the consideration of such
question shall, except as otherwise provided by law or by the Certificate of
Incorporation, consist of *** of all stock of that class issued, outstanding and
entitled to vote. If a majority of the shares of capital stock of the
Corporation issued and outstanding and entitled to vote thereat or, where a
larger quorum is required, such quorum, shall not be represented at any meeting
of the stockholders regularly called, the holders of *** of the shares present
or represented by proxy and entitled to vote thereat shall have power to adjourn
the meeting to another time, or to another time and place, without notice other
than announcement of adjournment at the meeting, and there may be successive
adjournments for like cause and in like manner until the requisite amount of
shares entitled to vote at such meeting shall be represented; provided, however,
that if the adjournment is for more than thirty (30) days, notice of the hour,
date and place of the adjourned meeting shall be given to each stockholder
entitled to vote thereat. Subject to the requirements of law and the Certificate
of Incorporation, on
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By-laws of Iron Mountain Records Managment of Ohio, Inc.
A Delaware Corporation
Page 3
any issue on which two or more classes of stock are entitled to vote separately,
no adjournment shall be taken with respect to any class for which a quorum is
present unless the Chairman of the meeting otherwise directs. At any meeting
held to consider matters which were subject to adjournment for want of a quorum
at which the requisite amount of shares entitled to vote thereat shall be
represented, any business may be transated which might have been transacted at
the meeting as originally noticed.
SECTION 6. Votes; Proxies. Except as otherwise provided in the Certificate
of Incorporation, at each meeting of stockholders, every stockholder of record
at the closing of the transfer books, if closed, or on the date set by the Board
of Directors for the determination of stockholders entitled to vote at such
meeting, shall have one vote for each share of stock entitled to vote which is
registered in such stockholder's name on the books of the Corporation, and, in
the election of directors, may vote cumulatively to the extent, if any, and in
the manner authorized in the Certificate of Incorporation.
At each such meeting every stockholder entitled to vote shall be entitled
to do so in person, or by proxy appointed by an instrument in writing or as
otherwise permitted by law subscribed by such stockholder and bearing a date not
more than three (3) years prior to the meeting in question, unless said
instrument provides for a longer period during which it is to remain in force. A
duly executed proxy shall be irrevocable if it states that it is irrevocable and
if, and only as long as, it is coupled with an interest sufficient in law to
support an irrevocable power. A proxy may be made irrevocable regardless of
whether the interest with which it is coupled is an interest in the stock itself
or any interest in the Corporation generally. A stockholder may revoke any proxy
which is not irrevocable by attending the meeting and voting in person or by
filing with the Secretary of the Corporation an instrument in writing or as
otherwise permitted by law revoking the proxy or another duly executed proxy
bearing a later date.
Voting at meetings of stockholders need not be by written ballot and,
except as otherwise provided by law, need not be conducted by inspectors of
election unless so determined by the Chairman of the meeting or by the holders
of shares of stock having a majority of the votes which could be cast by the
holders of all outstanding shares of stock entitled to vote thereon which are
present in person or represented by proxy at such meeting. If it is required or
determined that inspectors of election be appointed, the Chairman shall appoint
two inspectors of election, who shall first take and subscribe an oath or
affirmation faithfully to execute the duties of inspectors at such meeting with
strict impartiality and according to the best of their ability. The inspectors
so appointed shall take charge of the polls and, after the balloting, shall make
a certificate of the
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By-laws of Iron Mountain Records Managment of Ohio, Inc.
A Delaware Corporation
Page 4
result of the vote taken. No director or candidate for the
office of director shall be appointed as such inspector.
At any meeting at which a quorum is present, a plurality of the votes
properly cast for election to fill any vacancy on the Board of Directors shall
be sufficient to elect a candidate to fill such vacancy, and a majority of the
votes properly cast upon any other question shall decide the question, except in
any case where a larger vote is required by law, the Certificate of
Incorporation, these By-Laws, or otherwise.
SECTION 7. Organization. The Chairman of the Board, if there be one, or in
his or her absence the Vice Chairman, or in the absence of a Vice Chairman, the
President, or in the absence of the President, a Vice President, shall call
meetings of the stockholders to order and shall act as chairman thereof. The
Secretary of the Corporation, if present, shall act as secretary of all meetings
of stockholders, and, in his or her absence, the presiding officer may appoint a
secretary.
SECTION 8. Consent of Stockholders in Lieu of Meeting. Unless otherwise
restricted by the Certificate of Incorporation, any action required or permitted
by the Delaware General Corporation Law to be taken at any annual or special
meeting of the stockholders of the Corporation, may be taken without a meeting,
without prior notice and without a vote, if a consent or consents in writing,
setting forth the action so taken, shall be signed by the holders of outstanding
stock having not less than the minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voted and shall be delivered to the Corporation by
delivery to its registered office in Delaware, its principal place of business,
or an officer or agent of the Corporation having custody of the book in which
proceedings of meetings of stockholders are recorded. Delivery made to the
Corporation's registered office shall be by hand or by certified or registered
mail, return receipt requested.
Every written consent shall bear the date of signature of each stockholder
who signs the consent and no written consent shall be effective to take the
corporate action referred to therein unless, within sixty (60) days of the
earliest dated consent delivered in the manner required by this section to the
Corporation, written consents signed by a sufficient number of stockholders to
take action are delivered to the corporation by delivery to its registered
office in Delaware, its principal place of business, or an officer or agent of
the Corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Delivery made to the Corporation's registered office
shall be by hand or by certified or registered mail, return receipt requested.
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By-laws of Iron Mountain Records Managment of Ohio, Inc.
A Delaware Corporation
Page 5
Prompt notice of the taking of the corporate action without a meeting by
less than unanimous written consent shall be given to those stockholders who
have not consented in writing. In the event that the action which is consented
to is such as would have required the filing of a certificate under any section
of the Delaware General Corporation Law other than Section 228 thereof, if such
action had been voted on by stockholders at a meeting thereof, the certificate
filed under such other section shall state, in lieu of any statement required by
such section concerning any vote of stockholders, that written consent has been
given in accordance with Section 228 of the Delaware General Corporation Law,
and that written notice has been given as provided in such Section 228.
ARTICLE IV DIRECTORS
---------------------
SECTION 1. Number. The business and affairs of the Corporation shall be
conducted and managed by a Board of Directors consisting of not less than one
director, none of whom needs to be a stockholder. The number of directors for
each year shall be fixed at each annual meeting of stockholders, but if the
number is not so fixed, the number shall remain as it stood immediately prior to
such meeting.
At each annual meeting of stockholders, the stockholders shall elect
directors. Each director so elected shall hold office, subject to the provisions
of law, the Certificate of Incorporation, these By-Laws, or otherwise, until the
next annual meeting of stockholders or until his or her successor is elected and
qualified.
At any time during any year, except as otherwise provided by law, the
Certificate of Incorporation, these By-Laws, or otherwise, the number of
directors may be increased or reduced, in each case by vote of a majority of the
stock issued and outstanding and present in person or represented by proxy and
entitled to vote for the election of directors or a majority of the directors in
office at the time of such increase or decrease, regardless of whether such
majority constitutes a quorum.
SECTION 2. Term of Office. Each director shall hold office until the next
annual meeting of stockholders and until his or her successor is duly elected
and qualified or until his or her earlier death or resignation, subject to the
right of the stockholders at any time to remove any director or directors as
provided in Section 4 of this Article.
SECTION 3. Vacancies. If any vacancy shall occur among the directors, or if
the number of directors shall at any time be increased, the directors then in
office, although less than a quorum, by a majority vote may fill the vacancies
or newly-
<PAGE>
By-laws of Iron Mountain Records Managment of Ohio, Inc.
A Delaware Corporation
Page 6
created directorships, or any such vacancies or newly-created directorships may
be filled by the stockholders at any meeting.
SECTION 4. Removal by Stockholders. Except as otherwise provided by law,
the Certificate of Incorporation or otherwise, the holders of record of the
capital stock of the Corporation entitled to vote for the election of directors
may, by a majority vote, remove any director or directors, with or without
cause, and, in their discretion, elect a new director or directors in place
thereof.
SECTION 5. Meetings. Meetings of the Board of Directors shall be held at
such place, within or without the State of Delaware, as may from time to time be
fixed by resolution of the Board of Directors or by the Chairman of the Board,
if there be one, or by the President, and as may be specified in the notice or
waiver of notice of any meeting. Meetings may be held at any time upon the call
of the Chairman of the Board, if there be one, or the President or any two (2)
of the directors in office by oral, telegraphic, telex, telecopy or other form
of electronic transmission, or written notice, duly served or sent or mailed to
each director not less than twenty-four (24) hours before such meeting, except
that, if mailed, not less than *** (***) hours before such meeting.
Meetings may be held at any time and place without notice if all the
directors are present and do not object to the holding of such meeting for lack
of proper notice or if those not present shall, in writing or by telegram,
telex, telecopy or other form of electronic transmission, waive notice thereof.
A regular meeting of the Board may be held without notice immediately following
the annual meeting of stockholders at the place where such meeting is held.
Regular meetings of the Board may also be held without notice at such time and
place as shall from time to time be determined by resolution of the Board.
Except as otherwise provided by law, the Certificate of Incorporation or
otherwise, neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the Board of Directors or any committee thereof
need be specified in any written waiver of notice.
Members of the Board of Directors or any committee thereof may participate
in a meeting of such Board or committee by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other and participation in a meeting pursuant to the
foregoing provisions shall constitute presence in person at the meeting.
SECTION 6. Votes. Except as otherwise provided by law, the Certificate of
Incorporation or otherwise, the vote of the
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majority of the directors present at a meeting at which a quorum is present
shall be the act of the Board of Directors.
SECTION 7. Quorum and Adjournment. Except as otherwise provided by law, the
Certificate of Incorporation or otherwise, a majority of the directors shall
constitute a quorum for the transaction of business. If at any meeting of the
Board there shall be less than a quorum present, a majority of those present may
adjourn the meeting from time to time without notice other than announcement of
the adjournment at the meeting, and at such adjourned meeting at which a quorum
is present any business may be transacted which might have been transacted at
the meeting as originally noticed.
SECTION 8. Compensation. Directors shall receive compensation for their
services, as such, and for service on any Committee of the Board of Directors,
as fixed by resolution of the Board of Directors and for expenses of attendance
at each regular or special meeting of the Board or any Committee thereof.
Nothing in this Section shall be construed to preclude a director from serving
the Corporation in any other capacity and receiving compensation therefor.
SECTION 9. Action By Consent of Directors. Any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting if all members of the Board or committee, as the
case may be, consent thereto in writing, and the writing or writings are filed
with the minutes of proceedings of the Board or committee. Such consent shall be
treated as a vote adopted at a meeting for all purposes. Such consents may be
executed in one or more counterparts and not every Director or committee member
need sign the same counterpart.
ARTICLE V COMMITTEES OF DIRECTORS
-----------------------------------
SECTION 1. Executive Committee. The Board of Directors may, by resolution
passed by a majority of the whole Board, appoint an Executive Committee of one
(1) or more members, to serve during the pleasure of the Board, to consist of
such directors as the Board may from time to time designate. The Board of
Directors shall designate the Chairman of the Executive Committee.
a. Procedure. The Executive Committee shall, by a vote of a majority of
its members, fix its own times and places of meeting, determine the
number of its members constituting a quorum for the transaction of
business, and prescribe its own rules of procedure, no change in
which shall be made save by a majority vote of its members.
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b. Responsibilities. During the intervals between the
meetings of the Board of Directors, except as otherwise
provided by the Board of Directors in establishing such
Committee or otherwise, the Executive Committee shall
possess and may exercise all the powers of the Board in
the management and direction of the business and affairs
of the Corporation; provided, however, that the
Executive Committee shall not, except to the extent the
Certificate of Incorporation or the resolution providing
for the issuance of shares of stock adopted by the Board
of Directors as provided in Section 151(a) of the
Delaware General Business Corporation Law, have the
power:
(1) to amend or authorize the amendment of the
Certificate of Incorporation or these By-Laws;
(2) to authorize the issuance of stock;
(3) to authorize the payment of any dividend;
(4) to adopt an agreement of merger or consolidation of the
Corporation or to recommend to the stockholders the sale, lease or
exchange of all or substantially all the property and business of the
Corporation;
(5) to recommend to the stockholders a dissolution, or
a revocation of a dissolution, of the Corporation; or
(6) to adopt a certificate of ownership and merger pursuant to
Section 253 of the Delaware Business Corporation Law.
c. Reports. The Executive Committee shall keep regular minutes of its
proceedings, and all action by the Executive Committee shall be
reported promptly to the Board of Directors. Such action shall be
subject to review, amendment and repeal by the Board, provided that
no rights of third parties shall be adversely affected by such
review, amendment or repeal.
d. Appointment of Additional Members. In the absence or disqualification
of any member of the Executive Committee, the member or members
thereof present at any meeting and not disqualified from voting,
whether or not constituting a quorum, may unanimously appoint another
member of the Board of Directors to act at the meeting in place of
any such absent or disqualified member.
SECTION 2. Audit Committee. The Board of Directors may, by resolution
passed by a majority of the whole Board, appoint an Audit Committee of *** (***)
or more members to serve during the
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pleasure of the Board. The Board of Directors shall designate
the Chairman of the Audit Committee.
a. Procedure. The Audit Committee, by a vote of a majority of its
members, shall fix its own times and places of meeting, shall
determine the number of its members constituting a quorum for the
transaction of business, and shall prescribe its own rules of
procedure, no change in which shall be made save by a majority vote
of its members.
b. Responsibilities. The Audit Committee shall review the
annual financial statements of the Corporation prior to
their submission to the Board of Directors, shall
consult with the Corporation's independent auditors, and
may examine and consider such other matters in relation
to the internal and external audit of the Corporation's
accounts and in relation to the financial affairs of the
Corporation and its accounts, including the selection
and retention of independent auditors, as the Audit
Committee may, in its discretion, determine to be
desirable.
c. Reports. The Audit Committee shall keep regular minutes of its
proceedings, and all action by the Audit Committee shall, from time
to time, be reported to the Board of Directors as it shall direct.
Such action shall be subject to review, amendment and repeal by the
Board, provided that no rights of third parties shall be adversely
affected by such review, amendment or repeal.
d. Appointment of Additional Members. In the absence or disqualification
of any member of the Audit Committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or
not constituting a quorum, may unanimously appoint another member of
the Board of Directors to act at the meeting in place of any such
absent or disqualified member.
SECTION 3. Other Committees. The Board of Directors may, by resolution
passed by a majority of the whole Board, at any time appoint one or more other
committees from and outside of its own number. Every such committee must include
at least one member of the Board of Directors. The Board may from time to time
designate or alter, within the limits permitted by law, the Certificate of
Incorporation and this Article, if applicable, the duties, powers and number of
members of such other committees or change their membership, and may at any time
abolish such other committees or any of them.
a. Procedure. Each committee, appointed pursuant to this
Section, shall, by a vote of a majority of its members,
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fix its own times and places of meeting, determine the number of its
members constituting a quorum for the transaction of business, and
prescribe its own rules of procedure, no change in which shall be
made save by a majority vote of its members.
b. Responsibilities. Each committee, appointed pursuant to
this Section, shall exercise the powers assigned to it
by the Board of Directors in its discretion.
c. Reports. Each committee appointed pursuant to this
Section shall keep regular minutes of proceedings, and
all action by each such committee shall, from time to
time, be reported to the Board of Directors as it shall
direct. Such action shall be subject to review,
amendment and repeal by the Board, provided that no
rights of third parties shall be adversely affected by
such review, amendment or repeal.
d. Appointment of Additional Members. In the absence or
disqualification of any member of each committee,
appointed pursuant to this Section, the member or
members thereof present at any meeting and not
disqualified from voting, whether or not constituting a
quorum, may unanimously appoint another member of the
Board of Directors (or, to the extent permitted, another
person) to act at the meeting in place of any such
absent or disqualified member.
SECTION 4. Term of Office. Each member of a committee shall hold office
until the first meeting of the Board of Directors following the annual meeting
of stockholders (or until such other time as the Board of Directors may
determine, either in the vote establishing the committee or at the election of
such member or otherwise) and until his or her successor is elected and
qualified, or until he or she sooner dies, resigns, is removed, is replaced by
change of membership or becomes disqualified by ceasing to be a director (where
membership on the Board is required), or until the committee is sooner abolished
by the Board of Directors.
ARTICLE VI OFFICERS
---------------------
SECTION 1. Officers. The Board of Directors shall elect a President, a
Secretary and a Treasurer, and, in their discretion, may elect a Chairman of the
Board, a Vice Chairman of the Board, a Controller, and one or more Executive
Vice Presidents, Vice Presidents, Assistant Secretaries, Assistant Treasurers
and Assistant Controllers as deemed necessary or appropriate. Such officers
shall be elected annually by the Board of Directors at its first meeting
following the annual
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meeting of stockholders (or at such other meeting as the Board of Directors
determines), and each shall hold office for the term provided by the vote of the
Board, except that each will be subject to removal from office in the discretion
of the Board as provided herein. The powers and duties of more than one office
may be exercised and performed by the same person.
SECTION 2. Vacancies. Any vacancy in any office may be filled for the
unexpired portion of the term by the Board of Directors, at any regular or
special meeting.
SECTION 3. Chairman of the Board. The Chairman of the Board of Directors,
if elected, shall be a member of the Board of Directors and shall preside at its
meetings. The Chairman, if other than the President, shall advise and counsel
with the President, and shall perform such duties as from time to time may be
assigned to him or her by the Board of Directors.
SECTION 4. President. The President shall be the chief executive officer of
the Corporation. Subject to the directions of the Board of Directors, the
President shall have and exercise direct charge of and general supervision over
the business and affairs of the Corporation and shall perform all duties
incident to the office of the chief executive officer of a corporation and such
other duties as from time to time may be assigned to him or her by the Board of
Directors. The President may but need not be a member of the Board of Directors.
SECTION 5. Executive Vice Presidents and Vice Presidents. Each Executive
Vice President and Vice President shall have and exercise such powers and shall
perform such duties as from time to time may be assigned to him or to her by the
Board of Directors or the President.
SECTION 6. Secretary. The Secretary shall keep the minutes of all meetings
of the stockholders and of the Board of Directors in books provided for the
purpose; shall see that all notices are duly given in accordance with the
provisions of law and these By-Laws; the Secretary shall be custodian of the
records and of the corporate seal or seals of the Corporation; shall see that
the corporate seal is affixed to all documents the execution of which, on behalf
of the Corporation under its seal, is duly authorized, and, when the seal is so
affixed, he or she may attest the same; the Secretary may sign, with the
President, an Executive Vice President or a Vice President, certificates of
stock of the Corporation; and, in general, the Secretary shall perform all
duties incident to the office of secretary of a corporation, and such other
duties as from time to time may be assigned to him or her by the Board of
Directors.
SECTION 7. Assistant Secretaries. The Assistant Secretaries in order of
their seniority shall, in the absence or
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disability of the Secretary, perform the duties and exercise the powers of the
Secretary and shall perform such other duties as the Board of Directors shall
prescribe or as from time to time may be assigned by the Secretary.
SECTION 8. Treasurer. The Treasurer shall have charge of and be responsible
for all funds, securities, receipts and disbursements of the Corporation, and
shall deposit, or cause to be deposited, in the name of the Corporation, all
monies or other valuable effects in such banks, trust companies or other
depositaries as shall, from time to time, be selected by the Board of Directors;
may endorse for collection on behalf of the Corporation checks, notes and other
obligations; may sign receipts and vouchers for payments made to the
Corporation; may sign checks of the Corporation, singly or jointly with another
person as the Board of Directors may authorize, and pay out and dispose of the
proceeds under the direction of the Board; the Treasurer shall render to the
President and to the Board of Directors, whenever requested, an account of the
financial condition of the Corporation; the Treasurer may sign, with the
President, or an Executive Vice President or a Vice President, certificates of
stock of the Corporation; and in general, shall perform all the duties incident
to the office of treasurer of a corporation, and such other duties as from time
to time may be assigned by the Board of Directors. Unless the Board of Directors
shall otherwise determine, the Treasurer shall be the chief financial officer of
the Corporation.
SECTION 9. Assistant Treasurers. The Assistant Treasurers in order of their
seniority shall, in the absence or disability of the Treasurer, perform the
duties and exercise the powers of the Treasurer and shall perform such other
duties as the Board of Directors shall prescribe or as from time to time may be
assigned by the Treasurer.
SECTION 10. Controller. The Controller, if elected, shall be the chief
accounting officer of the Corporation and shall perform all duties incident to
the office of a controller of a corporation, and, in the absence of or
disability of the Treasurer or any Assistant Treasurer, perform the duties and
exercise the powers of the Treasurer and shall perform such other duties as the
Board of Directors shall prescribe or as from time to time may be assigned by
the President or the Treasurer.
SECTION 11. Assistant Controllers. The Assistant Controllers in order of
their seniority shall, in the absence or disability of the Controller, perform
the duties and exercise the powers of the Controller and shall perform such
other duties as the Board of Directors shall prescribe or as from time to time
may be assigned by the Controller.
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SECTION 12. Subordinate Officers. The Board of Directors may appoint such
subordinate officers as it may deem desirable. Each such officer shall hold
office for such period, have such authority and perform such duties as the Board
of Directors may prescribe. The Board of Directors may, from time to time,
authorize any officer to appoint and remove subordinate officers and to
prescribe the powers and duties thereof.
SECTION 13. Compensation. The Board of Directors shall fix the compensation
of all officers of the Corporation. It may authorize any officer, upon whom the
power of appointing subordinate officers may have been conferred, to fix the
compensation of such subordinate officers.
SECTION 14. Removal. Any officer of the Corporation may be removed, with or
without cause, by action of the Board of Directors.
SECTION 15. Bonds. The Board of Directors may require any officer of the
Corporation to give a bond to the Corporation, conditional upon the faithful
performance of his or her duties, with one or more sureties and in such amount
as may be satisfactory to the Board of Directors.
ARTICLE VII CERTIFICATES OF STOCK
-----------------------------------
SECTION 1. Form and Execution of Certificates. The interest of each
stockholder of the Corporation shall be evidenced by a certificate or
certificates for shares of stock in such form as the Board of Directors may from
time to time prescribe. The certificates of stock of each class shall be
consecutively numbered and signed by the Chairman or Vice Chairman of the Board,
if any, the President, an Executive Vice President or a Vice President and by
the Secretary, an Assistant Secretary, the Treasurer or an Assistant Treasurer
of the Corporation, and may be countersigned and registered in such manner as
the Board of Directors may by resolution prescribe, and shall bear the corporate
seal or a printed or engraved facsimile thereof. Where any such certificate is
signed by a transfer agent or transfer clerk acting on behalf of the
Corporation, the signatures of any such Chairman, Vice Chairman, President,
Executive Vice President, Vice President, Treasurer, Assistant Treasurer,
Secretary or Assistant Secretary may be facsimiles, engraved or printed. In case
any officer or officers, who shall have signed, or whose facsimile signature or
signatures shall have been used on, any such certificate or certificates, shall
cease to be such officer or officers, whether because of death, resignation or
otherwise, before such certificate or certificates shall have been delivered by
the Corporation, such certificate or certificates may nevertheless be issued and
delivered by the Corporation as though the person or persons who signed such
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certificate or certificates or whose facsimile signature or signatures shall
have been used thereon had not ceased to be such officer or officers.
In case the corporate seal which has been affixed to, impressed on, or
reproduced in any such certificate or certificates shall cease to be the seal of
the Corporation before such certificate or certificates have been delivered by
the Corporation, such certificate or certificates may nevertheless be issued and
delivered by the Corporation as though the seal affixed thereto, impressed
thereon or reproduced therein had not ceased to be the seal of the Corporation.
Every certificate for shares of stock which are subject to any restriction
on transfer pursuant to law, the Certificate of Incorporation, these By-Laws, or
any agreement to which the Corporation is a party, shall have the restriction
noted conspicuously on the certificate, and shall also set forth, on the face or
back, either the full text of the restriction or a statement of the existence of
such restriction and (except if such restriction is imposed by law) a statement
that the Corporation will furnish a copy thereof to the holder of such
certificate upon written request and without charge.
Every certificate issued when the Corporation is authorized to issue more
than one class or series of stock shall set forth on its face or back either the
full text of the preferences, voting powers, qualifications, and special and
relative rights of the shares of each class and series authorized to be issued,
or a statement of the existence of such preferences, powers, qualifications and
rights, and a statement that the Corporation will furnish a copy thereof to the
holder of such certificate upon written request and without charge.
SECTION 2. Transfer of Shares. The shares of the stock of the Corporation
shall be transferred on the books of the Corporation by the holder thereof in
person or by his or her attorney lawfully constituted, upon surrender for
cancellation of certificates for the same number of shares, with an assignment
and power of transfer endorsed thereon or attached thereto, duly executed, with
such proof or guaranty of the authenticity of the signature as the Corporation
or its agents may reasonably require. The Corporation shall be entitled to treat
the holder of record of any share or shares of stock as the holder in fact
thereof and accordingly shall not be bound to recognize any equitable or other
claim to or interest in such share or shares on the part of any other person
whether or not it shall have express or other notice thereof, save as expressly
provided by law or by the Certificate of Incorporation. It shall be the duty of
each stockholder to notify the Corporation of his or her post office address.
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SECTION 3. Closing of Transfer Books. The stock transfer books of the
Corporation may, if deemed appropriate by the Board of Directors, be closed for
such length of time not exceeding fifty (50) days as the Board may determine,
preceding the date of any meeting of stockholders or the date for the payment of
any dividend or the date for the allotment of rights or the date when any
issuance, change, conversion or exchange of capital stock shall go into effect,
during which time no transfer of stock on the books of the Corporation may be
made.
SECTION 4. Fixing Date for Determination of Stockholders of Record. In
order that the Corporation may determine the stockholders entitled to notice of
or to vote at any meeting of stockholders or any adjournment thereof, or to
express consent to corporate action in writing without a meeting, or entitled to
receive payment of any dividend or other distribution or allotment of any
rights, or entitled to exercise any rights in respect of any change, conversion
or exchange of stock or for the purpose of any other lawful action, the Board of
Directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board of
directors and which record date: (a) in the case of determination of
stockholders entitled to vote at any meeting of stockholders or adjournment
thereof, shall, unless otherwise required by law, the Certificate of
Incorporation or otherwise, not be more than sixty (60) nor less than ten (10)
days before the date of such meeting; (b) in the case of determination of
stockholders entitled to express consent to corporate action in writing without
a meeting, shall, unless otherwise required by law, the Certificate of
Incorporation or otherwise, not be more than ten (10) days from the date upon
which the resolution fixing the record date is adopted by the Board of
Directors; and (c) in the case of any other action, shall not be more than sixty
(60) days prior to such other action. If no record date is fixed: (a) the record
date for determining stockholders entitled to notice of or to vote at a meeting
of stockholders shall be at the close of business on the day next preceding the
day on which notice is given, or, if notice is waived, at the close of business
on the day next preceding the day on which the meeting is held; (b) the record
date for determining stockholders entitled to express consent to corporate
action in writing without a meeting when no prior action of the Board of
Directors is required by law, shall be the first date on which a signed written
consent setting forth the action take or proposed to be taken is delivered to
the Corporation in accordance with applicable law, or, if prior action by the
Board of Directors is required by law, shall be at the close of business on the
day on which the Board of Directors adopts the resolution taking such prior
action; and (c) the record date for determining stockholders for any other
purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto. A determination of
stockholders of
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record entitled to notice of or to vote at a meeting of stockholders shall apply
to any adjournment of the meeting; provided, however, that the Board of
Directors may fix a new record date for the adjourned meeting.
SECTION 5. Lost or Destroyed Certificates. In case of the loss or
destruction of any certificate of stock, a new certificate may be issued under
the following conditions:
a. The owner of said certificate shall file with the
Secretary or any Assistant Secretary of the Corporation
an affidavit giving the facts in relation to the
ownership, and in relation to the loss or destruction of
said certificate, stating its number and the number of
shares represented thereby; such affidavit shall be in
such form and contain such statements as shall satisfy
the President, any Executive Vice President, Vice
President, the Secretary, any Assistant Secretary, the
Treasurer or any Assistant Treasurer, that said
certificate has been accidentally destroyed or lost, and
that a new certificate ought to be issued in lieu
thereof. Upon being so satisfied, any such officer may
require such owner to furnish the Corporation a bond in
such penal sum and in such form as he or she may deem
advisable, and with a surety or sureties approved by him
or her, to indemnify and save harmless the Corporation
from any claim, loss, damage or liability which may be
occasioned by the issuance of a new certificate in lieu
thereof. Upon such bond being so filed, if so required,
a new certificate for the same number of shares shall be
issued to the owner of the certificate so lost or
destroyed; and the transfer agent and registrar, if any,
of stock shall countersign and register such new
certificate upon receipt of a written order signed by
any such officer, and thereupon the Corporation will
save harmless said transfer agent and registrar in the
premises. In case of the surrender of the original
certificate, in lieu of which a new certificate has been
issued, or the surrender of such new certificate, for
cancellation, the bond of indemnity given as a condition
of the issue of such new certificate may be surrendered;
or
b. The Board of Directors of the Corporation may by
resolution authorize and direct any transfer agent or
registrar of stock of the Corporation to issue and
register respectively from time to time without further
action or approval by or on behalf of the Corporation
new certificates of stock to replace certificates
reported lost, stolen or destroyed upon receipt of an
affidavit of loss and bond of indemnity in form and
amount and with surety satisfactory to such transfer
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agent or registrar in each instance or upon such terms and conditions
as the Board of Directors may determine.
SECTION 6. Uncertificated Shares. The Board of Directors of the Corporation
may by resolution provide that one or more of any or all classes or series of
the stock of the Corporation shall be uncertificated shares, subject to the
provisions of Section 158 of the Delaware General Corporation Law.
ARTICLE VIII EXECUTION OF DOCUMENTS
-------------------------------------
SECTION 1. Execution of Checks, Notes, etc. All checks and drafts on the
Corporation's bank accounts and all bills of exchange and promissory notes, and
all acceptances, obligations and other instruments for the payment of money,
shall be signed by such officer or officers, or agent or agents, as shall be
thereunto authorized from time to time by the Board of Directors, which may in
its discretion authorize any such signatures to be facsimile.
SECTION 2. Execution of Contracts, Assignments, etc. Unless the Board of
Directors shall have otherwise provided generally or in a specific instance, all
contracts, agreements, endorsements, assignments, transfers, stock powers, or
other instruments shall be signed by the President, any Executive Vice
President, any Vice President, the Secretary, any Assistant Secretary, the
Treasurer or any Assistant Treasurer. The Board of Directors may, however, in
its discretion, require any or all such instruments to be signed by any two or
more of such officers, or may permit any or all of such instruments to be signed
by such other officer or officers, agent or agents, as it shall be thereunto
authorize from time to time.
SECTION 3. Execution of Proxies. The President, any Executive Vice
President or any Vice President, and the Secretary, the Treasurer, any Assistant
Secretary or any Assistant Treasurer, or any other officer designated by the
Board of Directors, may sign on behalf of the Corporation proxies to vote upon
shares of stock of other companies standing in the name of the Corporation.
ARTICLE IX INSPECTION OF BOOKS
--------------------------------
The Board of Directors shall determine from time to time whether, and if
allowed, to what extent and at what time and places and under what conditions
and regulations, the accounts and books of the Corporation (except such as may
by law be specifically open to inspection) or any of them, shall be open to the
inspection of the stockholders, and no stockholder shall have any right to
inspect any account or book or document of the
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Corporation, except as conferred by the laws of the State of Delaware, unless
and until authorized so to do by resolution of the Board of Directors or of the
stockholders of the Corporation.
ARTICLE X FISCAL YEAR
-----------------------
The fiscal year of the Corporation shall be determined from time to time by
vote of the Board of Directors.
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ARTICLE XI AMENDMENTS
-----------------------
These By-Laws may be altered, amended, changed or repealed and new By-Laws
adopted by the stockholders or, to the extent provided in the Certificate of
Incorporation, by the Board of Directors, in either case at any meeting called
for that purpose at which a quorum shall be present. Any by-law, whether made,
altered, amended, changed or repealed by the stockholders or the Board of
Directors may be repealed, amended, changed, further amended, changed, repealed
or reinstated, as the case may be, either by the stockholders or by the Board of
Directors, as herein provided; except that this Article may be altered, amended,
changed or repealed only by vote of the stockholders.
ARTICLE XII INDEMNIFICATION
-----------------------------
SECTION 1. Indemnification.
a. Action By Third Party. The Corporation shall indemnify
and hold harmless, to the fullest extent permitted by
applicable law as it presently exists or may hereafter
be amended, any person who was or is a party or is
threatened to be made a party or is otherwise involved
in any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right
of the Corporation) by reason of the fact that he, or a
person for whom he or she is the legal representative,
is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the
Corporation as a director, officer, partner, member,
trustee, employee or agent of another corporation,
partnership, joint venture, limited liability company,
trust or other enterprise or non-profit entity against
all liability, losses, expenses (including attorneys'
fees), judgments, fines, and amounts paid in settlement
actually and reasonably incurred by him or her in
connection with such action, suit or proceeding if he or
she acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best
interest of the Corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause
to believe his conduct was unlawful. The termination of
any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself,
create a presumption that the person did not act in good
faith and in a manner which he or she reasonably
believed to be in or not opposed to the best interest of
the Corporation, and, with respect to any criminal
<PAGE>
By-laws of Iron Mountain Records Managment of Ohio, Inc.
A Delaware Corporation
Page 20
action or proceeding, had reasonable cause to believe
that his or her conduct was unlawful.
b. Action By Corporation. The Corporation shall indemnify
any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed
action or suit by or in the right of the Corporation to
procure a judgment in its favor by reason of the fact
that he or she is or was a director, trustee, partner,
officer, employee or agent of the Corporation, or is or
was serving at the request of the Corporation as a
director, officer, partner, member, trustee, employee or
agent of another corporation, partnership, joint
venture, limited liability company, trust or other
enterprise or non-profit entity against expenses
(including attorneys' fees) actually and reasonably
incurred by him or her in connection with the defense or
settlement of such action or suit if he or she acted in
good faith and in a manner he or she reasonably believed
to be in or not opposed to the best interests of the
Corporation; except that no indemnification shall be
made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable
for negligence or misconduct in the performance of his
or her duty to the Corporation unless and only to the
extent that the Court of Chancery of the State of
Delaware or the court in which such action or suit was
brought shall determine upon application that despite
the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which
the Court of Chancery of the State of Delaware or such
other court shall deem proper.
c. To the extent that any person referred to in paragraphs
a. or b. above has been successful on the merits or
otherwise in defense of any action, suit or proceeding
referred to therein, or in defense of any claim, issue
or matter therein, he or she shall be indemnified
against expenses (including attorneys' fees) actually
and reasonably incurred by him or her in connection
therewith.
SECTION 2. Authorization. Any indemnification under Section 1 of this
Article (unless ordered by a court) shall be made by the Corporation only as
authorized in the specific case upon a determination that indemnification of the
director, officer, partner, member, trustee, employee or agent is proper in the
circumstances because such person has met the applicable standard of conduct set
forth in Section 1 of this Article. Such determination shall be made: a. by the
Board of Directors by a majority vote of a quorum consisting of directors who
were not
<PAGE>
By-laws of Iron Mountain Records Managment of Ohio, Inc.
A Delaware Corporation
Page 21
parties to such action, suit or proceeding, or b. if such a quorum is not
obtainable, or, even if obtainable, a quorum of disinterested directors so
directs, by independent legal counsel in written opinion, or c. by the
stockholders.
SECTION 3. Expense Advance. Expenses (including attorneys' fees) incurred
by an officer or director of the Corporation in defending any civil, criminal,
administrative or investigative action, suit or proceeding may be paid by the
Corporation in advance of the final disposition of such action, suit or
proceeding as authorized by the Board of Directors in the manner provided in
Section 2 of this Article upon receipt of an undertaking by or on behalf of such
officer or director to repay such amount, unless it shall ultimately be
determined that such person is entitled to be indemnified by the Corporation as
authorized in this Article. Such expenses (including attorneys' fees) incurred
by other employees or agents of the Corporation may be so paid upon such terms
and conditions, if any, as the Board of Directors deems appropriate.
SECTION 4. Nonexclusivity. The indemnification and advancement of expenses
provided by, or granted pursuant to, the other Sections of this Article shall
not be deemed exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under any statute,
by-law, agreement, vote of stockholders or disinterested directors or otherwise,
both as to action in an official capacity and as to action in another capacity
while holding such office, and shall continue as to a person who has ceased to
be a director, officer, partner, member, trustee, employee or agent and shall
inure to the benefit of the heirs, executors and administrators of such a
person.
SECTION 5. Insurance. The Corporation shall have power to purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, partner, member, trustee, employee or agent
of another corporation, partnership, joint venture, limited liability company,
trust or other enterprise or non-profit entity against any liability asserted
against and incurred by him or her in any such capacity, or arising out of his
or her status as such, whether or not the Corporation would have the power to
indemnify such person against such liability under the provisions of this
Article or Section 145 of Title 8 of the Delaware Code relating to the General
Corporation Law of the State of Delaware.
SECTION 6. "The Corporation". For the purposes of this Article, references
to "the Corporation" shall include the resulting corporation and, to the extent
that the Board of Directors of the resulting corporation so decides, all
constituent corporations (including any constituent of a
<PAGE>
By-laws of Iron Mountain Records Managment of Ohio, Inc.
A Delaware Corporation
Page 22
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers and employees or agents so that any person who is or was a
director, officer, employee or agent of such a constituent corporation or is or
was serving at the request of such constituent corporation as director, officer,
partner, member, trustee, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise or non-profit entity shall stand in the
same position under the provisions of this Article with respect to the resulting
or surviving corporation if its separate existence had continued.
SECTION 7. Other Indemnification. The Corporation's obligation, if any, to
indemnify any person who was or is serving at its request as a director,
trustee, partner, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise or non-profit entity shall
be reduced by any amount such person may collect as indemnification from such
other corporation, partnership, joint venture, trust or other enterprise or
non-profit entity or from insurance.
SECTION 8. Other Definitions. For purposes of this Article, references to
"other enterprises" shall include employee benefit plans; references to "fines"
shall include any excise taxes assessed on a person with respect to an employee
benefit plan; and references to "serving at the request of the Corporation"
shall include any service as a director, trustee, officer, employee or agent of
the Corporation which imposes duties on, or involves services by, such director,
trustee, officer, employee, or agent with respect to an employee benefit plan,
its participants, or beneficiaries; and a person who acted in good faith and in
a manner he or she reasonably believed to be in the interest of the participants
and beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interests of the Corporation" as referred to in
this Article.
SECTION 9. Continuation of Indemnification. The indemnification and
advancement of expenses provided by, or granted pursuant to, this Article shall,
unless otherwise provided when authorized or ratified, continue as to a person
who has ceased to be a director, trustee, partner, officer, employee or agent
and shall inure to the benefit of the heirs, executors and administrators of
such a person.
SECTION 10. Amendment or Repeal. Neither the amendment nor repeal of this
Article nor the adoption of any provision of these By-Laws inconsistent with
this Article shall reduce, eliminate or adversely affect any right or protection
hereunder of any person in respect of any act or omission occurring prior to the
effectiveness of such amendment, repeal or adoption.
BY - LAWS
of
DATA STORAGE SYSTEMS, INC.
(a Delaware Corporation)
<PAGE>
DATA STORAGE SYSTEMS, INC.
(a Delaware Corporation)
BY-LAWS
TABLE OF CONTENTS
ARTICLE I OFFICES...........................................................1
SECTION 1. Registered Office.....................................1
ARTICLE II SEAL.............................................................1
ARTICLE III MEETING OF STOCKHOLDERS.........................................1
SECTION 1. Place of Meeting......................................1
SECTION 3. Special Meetings......................................1
SECTION 4. Notice................................................2
SECTION 5. Quorum and Adjournments...............................2
SECTION 6. Votes; Proxies........................................3
SECTION 7. Organization..........................................4
SECTION 8. Consent of Stockholders in Lieu of Meeting............4
ARTICLE IV DIRECTORS........................................................5
SECTION 1. Number................................................5
SECTION 2. Term of Office........................................5
SECTION 3. Vacancies.............................................5
SECTION 4. Removal by Stockholders...............................6
SECTION 5. Meetings..............................................6
SECTION 6. Votes.................................................6
SECTION 7. Quorum and Adjournment................................7
SECTION 8. Compensation..........................................7
SECTION 9. Action By Consent of Directors........................7
ARTICLE V COMMITTEES OF DIRECTORS...........................................7
SECTION 1. Executive Committee...................................7
SECTION 2. Audit Committee.......................................8
SECTION 3. Other Committees......................................9
SECTION 4. Term of Office.......................................10
ARTICLE VI OFFICERS........................................................10
SECTION 1. Officers.............................................10
SECTION 2. Vacancies............................................11
SECTION 3. Chairman of the Board................................11
SECTION 4. President............................................11
SECTION 5. Executive Vice Presidents and Vice Presidents
.....................................................11
SECTION 6. Secretary............................................11
SECTION 7. Assistant Secretaries................................11
SECTION 8. Treasurer............................................12
SECTION 9. Assistant Treasurers.................................12
SECTION 10. Controller...........................................12
SECTION 11. Assistant Controllers................................12
SECTION 12. Subordinate Officers.................................13
SECTION 13. Compensation.........................................13
<PAGE>
SECTION 14. Removal..............................................13
SECTION 15. Bonds................................................13
ARTICLE VII CERTIFICATES OF STOCK..........................................13
SECTION 1. Form and Execution of Certificates...................13
SECTION 2. Transfer of Shares...................................14
SECTION 3. Closing of Transfer Books............................15
SECTION 4. Fixing Date for Determination of Stockholders
of Record............................................15
SECTION 5. Lost or Destroyed Certificates.......................16
SECTION 6. Uncertificated Shares................................17
ARTICLE VIII EXECUTION OF DOCUMENTS........................................17
SECTION 1. Execution of Checks, Notes, etc......................17
SECTION 2. Execution of Contracts, Assignments, etc.............17
SECTION 3. Execution of Proxies.................................17
ARTICLE IX INSPECTION OF BOOKS.............................................17
ARTICLE X FISCAL YEAR......................................................18
ARTICLE XI AMENDMENTS......................................................18
ARTICLE XII INDEMNIFICATION................................................18
SECTION 1. Indemnification......................................18
SECTION 2. Authorization........................................20
SECTION 3. Expense Advance......................................21
SECTION 4. Nonexclusivity.......................................21
SECTION 5. Insurance............................................21
SECTION 6. "The Corporation"....................................21
SECTION 7. Other Indemnification................................22
SECTION 8. Other Definitions....................................22
SECTION 9. Continuation of Indemnification......................22
SECTION 10. Amendment or Repeal..................................22
<PAGE>
DATA STORAGE SYSTEMS, INC.
(a Delaware Corporation)
BY-LAWS
ARTICLE I OFFICES
-------------------
SECTION 1. Registered Office. The registered office of the Corporation
shall be located in Wilmington, County of New Castle, State of Delaware, and the
name of the resident agent in charge thereof shall be Corporation Service
Company.
SECTION 2. Other Offices. The Corporation may also have offices at such
other places, within or without the State of Delaware, as the Board of Directors
may from time to time appoint or the business of the Corporation may require.
ARTICLE II SEAL
-----------------
The seal of the Corporation shall, subject to alteration by the Board of
Directors, consist of a flat-faced circular die with the word "Delaware",
together with the name of the Corporation and the year of incorporation, cut or
engraved thereon.
ARTICLE III MEETING OF STOCKHOLDERS
-------------------------------------
SECTION 1. Place of Meeting. Meetings of the
stockholders shall be held either within or without the State of
Delaware at such place as the Board of Directors may fix from
time to time.
SECTION 2. Annual Meetings. The annual meeting of
stockholders shall be held for the election of directors on such
date and at such time as the Board of Directors may fix from time
to time. Any other proper business may be transacted at the
annual meeting.
SECTION 3. Special Meetings. Special meetings of the stockholders for any
purpose or purposes may be called by the Chairman of the Board of Directors, if
there be one, the President or by the directors (either by written instrument
signed by a majority or by resolution adopted by a vote of the majority), and
special meetings shall be called by the President or the Secretary whenever
stockholders owning at least a majority of the capital stock issued, outstanding
and entitled to vote so
<PAGE>
By-laws of Data Storage Systems, Inc.
A Delaware Corporation
Page 2
request in writing. Such request of stockholders shall state the
purpose or purposes of the proposed meeting.
SECTION 4. Notice. Written or printed notice of every meeting of
stockholders, annual or special, stating the hour, date and place thereof, and
the purpose or purposes in general terms for which the meeting is called shall,
not less than ten (10) days, or such longer period as shall be provided by law,
the Certificate of Incorporation, these By-Laws, or otherwise, and not more than
sixty (60) days before such meeting, be served upon or mailed to each
stockholder entitled to vote thereat, at the address of such stockholder as it
appears upon the stock records of the Corporation or, if such stockholder shall
have filed with the Secretary of the Corporation a written request that notices
be mailed to some other address, then to the address designated in such request.
Notice of the hour, date, place and purpose of any meeting of stockholders
may be dispensed with if every stockholder entitled to vote thereat shall attend
either in person or by proxy and shall not, at the beginning of the meeting,
object to the holding of such meeting because the meeting has not been lawfully
called or convened, or if every absent stockholder entitled to such notice shall
in writing, filed with the records of the meeting, either before or after the
holding thereof, waive such notice.
SECTION 5. Quorum and Adjournments. Except as otherwise provided by law or
by the Certificate of Incorporation, the presence in person or by proxy at any
meeting of stockholders of the holders of a majority of the shares of the
capital stock of the Corporation issued and outstanding and entitled to vote
thereat, shall be requisite and shall constitute a quorum. If two or more
classes of stock are entitled to vote as separate classes upon any question,
then, in the case of each such class, a quorum for the consideration of such
question shall, except as otherwise provided by law or by the Certificate of
Incorporation, consist of *** of all stock of that class issued, outstanding and
entitled to vote. If a majority of the shares of capital stock of the
Corporation issued and outstanding and entitled to vote thereat or, where a
larger quorum is required, such quorum, shall not be represented at any meeting
of the stockholders regularly called, the holders of *** of the shares present
or represented by proxy and entitled to vote thereat shall have power to adjourn
the meeting to another time, or to another time and place, without notice other
than announcement of adjournment at the meeting, and there may be successive
adjournments for like cause and in like manner until the requisite amount of
shares entitled to vote at such meeting shall be represented; provided, however,
that if the adjournment is for more than thirty (30) days, notice of the hour,
date and place of the adjourned meeting shall be given to each stockholder
entitled to vote thereat. Subject to the requirements of law and the Certificate
of Incorporation, on
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By-laws of Data Storage Systems, Inc.
A Delaware Corporation
Page 3
any issue on which two or more classes of stock are entitled to vote separately,
no adjournment shall be taken with respect to any class for which a quorum is
present unless the Chairman of the meeting otherwise directs. At any meeting
held to consider matters which were subject to adjournment for want of a quorum
at which the requisite amount of shares entitled to vote thereat shall be
represented, any business may be transated which might have been transacted at
the meeting as originally noticed.
SECTION 6. Votes; Proxies. Except as otherwise provided in the Certificate
of Incorporation, at each meeting of stockholders, every stockholder of record
at the closing of the transfer books, if closed, or on the date set by the Board
of Directors for the determination of stockholders entitled to vote at such
meeting, shall have one vote for each share of stock entitled to vote which is
registered in such stockholder's name on the books of the Corporation, and, in
the election of directors, may vote cumulatively to the extent, if any, and in
the manner authorized in the Certificate of Incorporation.
At each such meeting every stockholder entitled to vote shall be entitled
to do so in person, or by proxy appointed by an instrument in writing or as
otherwise permitted by law subscribed by such stockholder and bearing a date not
more than three (3) years prior to the meeting in question, unless said
instrument provides for a longer period during which it is to remain in force. A
duly executed proxy shall be irrevocable if it states that it is irrevocable and
if, and only as long as, it is coupled with an interest sufficient in law to
support an irrevocable power. A proxy may be made irrevocable regardless of
whether the interest with which it is coupled is an interest in the stock itself
or any interest in the Corporation generally. A stockholder may revoke any proxy
which is not irrevocable by attending the meeting and voting in person or by
filing with the Secretary of the Corporation an instrument in writing or as
otherwise permitted by law revoking the proxy or another duly executed proxy
bearing a later date.
Voting at meetings of stockholders need not be by written ballot and,
except as otherwise provided by law, need not be conducted by inspectors of
election unless so determined by the Chairman of the meeting or by the holders
of shares of stock having a majority of the votes which could be cast by the
holders of all outstanding shares of stock entitled to vote thereon which are
present in person or represented by proxy at such meeting. If it is required or
determined that inspectors of election be appointed, the Chairman shall appoint
two inspectors of election, who shall first take and subscribe an oath or
affirmation faithfully to execute the duties of inspectors at such meeting with
strict impartiality and according to the best of their ability. The inspectors
so appointed shall take charge of the polls and, after the balloting, shall make
a certificate of the
<PAGE>
By-laws of Data Storage Systems, Inc.
A Delaware Corporation
Page 4
result of the vote taken. No director or candidate for the office of director
shall be appointed as such inspector.
At any meeting at which a quorum is present, a plurality of the votes
properly cast for election to fill any vacancy on the Board of Directors shall
be sufficient to elect a candidate to fill such vacancy, and a majority of the
votes properly cast upon any other question shall decide the question, except in
any case where a larger vote is required by law, the Certificate of
Incorporation, these By-Laws, or otherwise.
SECTION 7. Organization. The Chairman of the Board, if there be one, or in
his or her absence the Vice Chairman, or in the absence of a Vice Chairman, the
President, or in the absence of the President, a Vice President, shall call
meetings of the stockholders to order and shall act as chairman thereof. The
Secretary of the Corporation, if present, shall act as secretary of all meetings
of stockholders, and, in his or her absence, the presiding officer may appoint a
secretary.
SECTION 8. Consent of Stockholders in Lieu of Meeting. Unless otherwise
restricted by the Certificate of Incorporation, any action required or permitted
by the Delaware General Corporation Law to be taken at any annual or special
meeting of the stockholders of the Corporation, may be taken without a meeting,
without prior notice and without a vote, if a consent or consents in writing,
setting forth the action so taken, shall be signed by the holders of outstanding
stock having not less than the minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voted and shall be delivered to the Corporation by
delivery to its registered office in Delaware, its principal place of business,
or an officer or agent of the Corporation having custody of the book in which
proceedings of meetings of stockholders are recorded. Delivery made to the
Corporation's registered office shall be by hand or by certified or registered
mail, return receipt requested.
Every written consent shall bear the date of signature of each stockholder
who signs the consent and no written consent shall be effective to take the
corporate action referred to therein unless, within sixty (60) days of the
earliest dated consent delivered in the manner required by this section to the
Corporation, written consents signed by a sufficient number of stockholders to
take action are delivered to the corporation by delivery to its registered
office in Delaware, its principal place of business, or an officer or agent of
the Corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Delivery made to the Corporation's registered office
shall be by hand or by certified or registered mail, return receipt requested.
<PAGE>
By-laws of Data Storage Systems, Inc.
A Delaware Corporation
Page 5
Prompt notice of the taking of the corporate action without a meeting by
less than unanimous written consent shall be given to those stockholders who
have not consented in writing. In the event that the action which is consented
to is such as would have required the filing of a certificate under any section
of the Delaware General Corporation Law other than Section 228 thereof, if such
action had been voted on by stockholders at a meeting thereof, the certificate
filed under such other section shall state, in lieu of any statement required by
such section concerning any vote of stockholders, that written consent has been
given in accordance with Section 228 of the Delaware General Corporation Law,
and that written notice has been given as provided in such Section 228.
ARTICLE IV DIRECTORS
---------------------
SECTION 1. Number. The business and affairs of the Corporation shall be
conducted and managed by a Board of Directors consisting of not less than one
director, none of whom needs to be a stockholder. The number of directors for
each year shall be fixed at each annual meeting of stockholders, but if the
number is not so fixed, the number shall remain as it stood immediately prior to
such meeting.
At each annual meeting of stockholders, the stockholders shall elect
directors. Each director so elected shall hold office, subject to the provisions
of law, the Certificate of Incorporation, these By-Laws, or otherwise, until the
next annual meeting of stockholders or until his or her successor is elected and
qualified.
At any time during any year, except as otherwise provided by law, the
Certificate of Incorporation, these By-Laws, or otherwise, the number of
directors may be increased or reduced, in each case by vote of a majority of the
stock issued and outstanding and present in person or represented by proxy and
entitled to vote for the election of directors or a majority of the directors in
office at the time of such increase or decrease, regardless of whether such
majority constitutes a quorum.
SECTION 2. Term of Office. Each director shall hold office until the next
annual meeting of stockholders and until his or her successor is duly elected
and qualified or until his or her earlier death or resignation, subject to the
right of the stockholders at any time to remove any director or directors as
provided in Section 4 of this Article.
SECTION 3. Vacancies. If any vacancy shall occur among the directors, or if
the number of directors shall at any time be increased, the directors then in
office, although less than a quorum, by a majority vote may fill the vacancies
or newly-
<PAGE>
By-laws of Data Storage Systems, Inc.
A Delaware Corporation
Page 6
created directorships, or any such vacancies or newly-created directorships may
be filled by the stockholders at any meeting.
SECTION 4. Removal by Stockholders. Except as otherwise provided by law,
the Certificate of Incorporation or otherwise, the holders of record of the
capital stock of the Corporation entitled to vote for the election of directors
may, by a majority vote, remove any director or directors, with or without
cause, and, in their discretion, elect a new director or directors in place
thereof.
SECTION 5. Meetings. Meetings of the Board of Directors shall be held at
such place, within or without the State of Delaware, as may from time to time be
fixed by resolution of the Board of Directors or by the Chairman of the Board,
if there be one, or by the President, and as may be specified in the notice or
waiver of notice of any meeting. Meetings may be held at any time upon the call
of the Chairman of the Board, if there be one, or the President or any two (2)
of the directors in office by oral, telegraphic, telex, telecopy or other form
of electronic transmission, or written notice, duly served or sent or mailed to
each director not less than twenty-four (24) hours before such meeting, except
that, if mailed, not less than *** (***) hours before such meeting.
Meetings may be held at any time and place without notice if all the
directors are present and do not object to the holding of such meeting for lack
of proper notice or if those not present shall, in writing or by telegram,
telex, telecopy or other form of electronic transmission, waive notice thereof.
A regular meeting of the Board may be held without notice immediately following
the annual meeting of stockholders at the place where such meeting is held.
Regular meetings of the Board may also be held without notice at such time and
place as shall from time to time be determined by resolution of the Board.
Except as otherwise provided by law, the Certificate of Incorporation or
otherwise, neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the Board of Directors or any committee thereof
need be specified in any written waiver of notice.
Members of the Board of Directors or any committee thereof may participate
in a meeting of such Board or committee by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other and participation in a meeting pursuant to the
foregoing provisions shall constitute presence in person at the meeting.
SECTION 6. Votes. Except as otherwise provided by law,
the Certificate of Incorporation or otherwise, the vote of the
<PAGE>
By-laws of Data Storage Systems, Inc.
A Delaware Corporation
Page 7
majority of the directors present at a meeting at which a quorum is present
shall be the act of the Board of Directors.
SECTION 7. Quorum and Adjournment. Except as otherwise provided by law, the
Certificate of Incorporation or otherwise, a majority of the directors shall
constitute a quorum for the transaction of business. If at any meeting of the
Board there shall be less than a quorum present, a majority of those present may
adjourn the meeting from time to time without notice other than announcement of
the adjournment at the meeting, and at such adjourned meeting at which a quorum
is present any business may be transacted which might have been transacted at
the meeting as originally noticed.
SECTION 8. Compensation. Directors shall receive compensation for their
services, as such, and for service on any Committee of the Board of Directors,
as fixed by resolution of the Board of Directors and for expenses of attendance
at each regular or special meeting of the Board or any Committee thereof.
Nothing in this Section shall be construed to preclude a director from serving
the Corporation in any other capacity and receiving compensation therefor.
SECTION 9. Action By Consent of Directors. Any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting if all members of the Board or committee, as the
case may be, consent thereto in writing, and the writing or writings are filed
with the minutes of proceedings of the Board or committee. Such consent shall be
treated as a vote adopted at a meeting for all purposes. Such consents may be
executed in one or more counterparts and not every Director or committee member
need sign the same counterpart.
ARTICLE V COMMITTEES OF DIRECTORS
-----------------------------------
SECTION 1. Executive Committee. The Board of Directors may, by resolution
passed by a majority of the whole Board, appoint an Executive Committee of one
(1) or more members, to serve during the pleasure of the Board, to consist of
such directors as the Board may from time to time designate. The Board of
Directors shall designate the Chairman of the Executive Committee.
a. Procedure. The Executive Committee shall, by a vote of a majority of
its members, fix its own times and places of meeting, determine the
number of its members constituting a quorum for the transaction of
business, and prescribe its own rules of procedure, no change in
which shall be made save by a majority vote of its members.
<PAGE>
By-laws of Data Storage Systems, Inc.
A Delaware Corporation
Page 8
b. Responsibilities. During the intervals between the
meetings of the Board of Directors, except as otherwise
provided by the Board of Directors in establishing such
Committee or otherwise, the Executive Committee shall
possess and may exercise all the powers of the Board in
the management and direction of the business and affairs
of the Corporation; provided, however, that the
Executive Committee shall not, except to the extent the
Certificate of Incorporation or the resolution providing
for the issuance of shares of stock adopted by the Board
of Directors as provided in Section 151(a) of the
Delaware General Business Corporation Law, have the
power:
(1) to amend or authorize the amendment of the
Certificate of Incorporation or these By-Laws;
(2) to authorize the issuance of stock;
(3) to authorize the payment of any dividend;
(4) to adopt an agreement of merger or consolidation of the
Corporation or to recommend to the stockholders the sale, lease or
exchange of all or substantially all the property and business of the
Corporation;
(5) to recommend to the stockholders a dissolution, or
a revocation of a dissolution, of the Corporation; or
(6) to adopt a certificate of ownership and merger pursuant to
Section 253 of the Delaware Business Corporation Law.
c. Reports. The Executive Committee shall keep regular minutes of its
proceedings, and all action by the Executive Committee shall be
reported promptly to the Board of Directors. Such action shall be
subject to review, amendment and repeal by the Board, provided that
no rights of third parties shall be adversely affected by such
review, amendment or repeal.
d. Appointment of Additional Members. In the absence or disqualification
of any member of the Executive Committee, the member or members
thereof present at any meeting and not disqualified from voting,
whether or not constituting a quorum, may unanimously appoint another
member of the Board of Directors to act at the meeting in place of
any such absent or disqualified member.
SECTION 2. Audit Committee. The Board of Directors may,
by resolution passed by a majority of the whole Board, appoint an
Audit Committee of *** (***) or more members to serve during the
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A Delaware Corporation
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pleasure of the Board. The Board of Directors shall designate the Chairman of
the Audit Committee.
a. Procedure. The Audit Committee, by a vote of a majority of its
members, shall fix its own times and places of meeting, shall
determine the number of its members constituting a quorum for the
transaction of business, and shall prescribe its own rules of
procedure, no change in which shall be made save by a majority vote
of its members.
b. Responsibilities. The Audit Committee shall review the
annual financial statements of the Corporation prior to
their submission to the Board of Directors, shall
consult with the Corporation's independent auditors, and
may examine and consider such other matters in relation
to the internal and external audit of the Corporation's
accounts and in relation to the financial affairs of the
Corporation and its accounts, including the selection
and retention of independent auditors, as the Audit
Committee may, in its discretion, determine to be
desirable.
c. Reports. The Audit Committee shall keep regular minutes of its
proceedings, and all action by the Audit Committee shall, from time
to time, be reported to the Board of Directors as it shall direct.
Such action shall be subject to review, amendment and repeal by the
Board, provided that no rights of third parties shall be adversely
affected by such review, amendment or repeal.
d. Appointment of Additional Members. In the absence or disqualification
of any member of the Audit Committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or
not constituting a quorum, may unanimously appoint another member of
the Board of Directors to act at the meeting in place of any such
absent or disqualified member.
SECTION 3. Other Committees. The Board of Directors may, by resolution
passed by a majority of the whole Board, at any time appoint one or more other
committees from and outside of its own number. Every such committee must include
at least one member of the Board of Directors. The Board may from time to time
designate or alter, within the limits permitted by law, the Certificate of
Incorporation and this Article, if applicable, the duties, powers and number of
members of such other committees or change their membership, and may at any time
abolish such other committees or any of them.
a. Procedure. Each committee, appointed pursuant to this
Section, shall, by a vote of a majority of its members,
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A Delaware Corporation
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fix its own times and places of meeting, determine the number of its
members constituting a quorum for the transaction of business, and
prescribe its own rules of procedure, no change in which shall be
made save by a majority vote of its members.
b. Responsibilities. Each committee, appointed pursuant to
this Section, shall exercise the powers assigned to it
by the Board of Directors in its discretion.
c. Reports. Each committee appointed pursuant to this
Section shall keep regular minutes of proceedings, and
all action by each such committee shall, from time to
time, be reported to the Board of Directors as it shall
direct. Such action shall be subject to review,
amendment and repeal by the Board, provided that no
rights of third parties shall be adversely affected by
such review, amendment or repeal.
d. Appointment of Additional Members. In the absence or
disqualification of any member of each committee,
appointed pursuant to this Section, the member or
members thereof present at any meeting and not
disqualified from voting, whether or not constituting a
quorum, may unanimously appoint another member of the
Board of Directors (or, to the extent permitted, another
person) to act at the meeting in place of any such
absent or disqualified member.
SECTION 4. Term of Office. Each member of a committee shall hold office
until the first meeting of the Board of Directors following the annual meeting
of stockholders (or until such other time as the Board of Directors may
determine, either in the vote establishing the committee or at the election of
such member or otherwise) and until his or her successor is elected and
qualified, or until he or she sooner dies, resigns, is removed, is replaced by
change of membership or becomes disqualified by ceasing to be a director (where
membership on the Board is required), or until the committee is sooner abolished
by the Board of Directors.
ARTICLE VI OFFICERS
---------------------
SECTION 1. Officers. The Board of Directors shall elect a President, a
Secretary and a Treasurer, and, in their discretion, may elect a Chairman of the
Board, a Vice Chairman of the Board, a Controller, and one or more Executive
Vice Presidents, Vice Presidents, Assistant Secretaries, Assistant Treasurers
and Assistant Controllers as deemed necessary or appropriate. Such officers
shall be elected annually by the Board of Directors at its first meeting
following the annual
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A Delaware Corporation
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meeting of stockholders (or at such other meeting as the Board of Directors
determines), and each shall hold office for the term provided by the vote of the
Board, except that each will be subject to removal from office in the discretion
of the Board as provided herein. The powers and duties of more than one office
may be exercised and performed by the same person.
SECTION 2. Vacancies. Any vacancy in any office may be filled for the
unexpired portion of the term by the Board of Directors, at any regular or
special meeting.
SECTION 3. Chairman of the Board. The Chairman of the Board of Directors,
if elected, shall be a member of the Board of Directors and shall preside at its
meetings. The Chairman, if other than the President, shall advise and counsel
with the President, and shall perform such duties as from time to time may be
assigned to him or her by the Board of Directors.
SECTION 4. President. The President shall be the chief executive officer of
the Corporation. Subject to the directions of the Board of Directors, the
President shall have and exercise direct charge of and general supervision over
the business and affairs of the Corporation and shall perform all duties
incident to the office of the chief executive officer of a corporation and such
other duties as from time to time may be assigned to him or her by the Board of
Directors. The President may but need not be a member of the Board of Directors.
SECTION 5. Executive Vice Presidents and Vice Presidents. Each Executive
Vice President and Vice President shall have and exercise such powers and shall
perform such duties as from time to time may be assigned to him or to her by the
Board of Directors or the President.
SECTION 6. Secretary. The Secretary shall keep the minutes of all meetings
of the stockholders and of the Board of Directors in books provided for the
purpose; shall see that all notices are duly given in accordance with the
provisions of law and these By-Laws; the Secretary shall be custodian of the
records and of the corporate seal or seals of the Corporation; shall see that
the corporate seal is affixed to all documents the execution of which, on behalf
of the Corporation under its seal, is duly authorized, and, when the seal is so
affixed, he or she may attest the same; the Secretary may sign, with the
President, an Executive Vice President or a Vice President, certificates of
stock of the Corporation; and, in general, the Secretary shall perform all
duties incident to the office of secretary of a corporation, and such other
duties as from time to time may be assigned to him or her by the Board of
Directors.
SECTION 7. Assistant Secretaries. The Assistant Secretaries in order of
their seniority shall, in the absence or
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A Delaware Corporation
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disability of the Secretary, perform the duties and exercise the powers of the
Secretary and shall perform such other duties as the Board of Directors shall
prescribe or as from time to time may be assigned by the Secretary.
SECTION 8. Treasurer. The Treasurer shall have charge of and be responsible
for all funds, securities, receipts and disbursements of the Corporation, and
shall deposit, or cause to be deposited, in the name of the Corporation, all
monies or other valuable effects in such banks, trust companies or other
depositaries as shall, from time to time, be selected by the Board of Directors;
may endorse for collection on behalf of the Corporation checks, notes and other
obligations; may sign receipts and vouchers for payments made to the
Corporation; may sign checks of the Corporation, singly or jointly with another
person as the Board of Directors may authorize, and pay out and dispose of the
proceeds under the direction of the Board; the Treasurer shall render to the
President and to the Board of Directors, whenever requested, an account of the
financial condition of the Corporation; the Treasurer may sign, with the
President, or an Executive Vice President or a Vice President, certificates of
stock of the Corporation; and in general, shall perform all the duties incident
to the office of treasurer of a corporation, and such other duties as from time
to time may be assigned by the Board of Directors. Unless the Board of Directors
shall otherwise determine, the Treasurer shall be the chief financial officer of
the Corporation.
SECTION 9. Assistant Treasurers. The Assistant Treasurers in order of their
seniority shall, in the absence or disability of the Treasurer, perform the
duties and exercise the powers of the Treasurer and shall perform such other
duties as the Board of Directors shall prescribe or as from time to time may be
assigned by the Treasurer.
SECTION 10. Controller. The Controller, if elected, shall be the chief
accounting officer of the Corporation and shall perform all duties incident to
the office of a controller of a corporation, and, in the absence of or
disability of the Treasurer or any Assistant Treasurer, perform the duties and
exercise the powers of the Treasurer and shall perform such other duties as the
Board of Directors shall prescribe or as from time to time may be assigned by
the President or the Treasurer.
SECTION 11. Assistant Controllers. The Assistant Controllers in order of
their seniority shall, in the absence or disability of the Controller, perform
the duties and exercise the powers of the Controller and shall perform such
other duties as the Board of Directors shall prescribe or as from time to time
may be assigned by the Controller.
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A Delaware Corporation
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SECTION 12. Subordinate Officers. The Board of Directors may appoint such
subordinate officers as it may deem desirable. Each such officer shall hold
office for such period, have such authority and perform such duties as the Board
of Directors may prescribe. The Board of Directors may, from time to time,
authorize any officer to appoint and remove subordinate officers and to
prescribe the powers and duties thereof.
SECTION 13. Compensation. The Board of Directors shall fix the compensation
of all officers of the Corporation. It may authorize any officer, upon whom the
power of appointing subordinate officers may have been conferred, to fix the
compensation of such subordinate officers.
SECTION 14. Removal. Any officer of the Corporation may be removed, with or
without cause, by action of the Board of Directors.
SECTION 15. Bonds. The Board of Directors may require any officer of the
Corporation to give a bond to the Corporation, conditional upon the faithful
performance of his or her duties, with one or more sureties and in such amount
as may be satisfactory to the Board of Directors.
ARTICLE VII CERTIFICATES OF STOCK
-----------------------------------
SECTION 1. Form and Execution of Certificates. The interest of each
stockholder of the Corporation shall be evidenced by a certificate or
certificates for shares of stock in such form as the Board of Directors may from
time to time prescribe. The certificates of stock of each class shall be
consecutively numbered and signed by the Chairman or Vice Chairman of the Board,
if any, the President, an Executive Vice President or a Vice President and by
the Secretary, an Assistant Secretary, the Treasurer or an Assistant Treasurer
of the Corporation, and may be countersigned and registered in such manner as
the Board of Directors may by resolution prescribe, and shall bear the corporate
seal or a printed or engraved facsimile thereof. Where any such certificate is
signed by a transfer agent or transfer clerk acting on behalf of the
Corporation, the signatures of any such Chairman, Vice Chairman, President,
Executive Vice President, Vice President, Treasurer, Assistant Treasurer,
Secretary or Assistant Secretary may be facsimiles, engraved or printed. In case
any officer or officers, who shall have signed, or whose facsimile signature or
signatures shall have been used on, any such certificate or certificates, shall
cease to be such officer or officers, whether because of death, resignation or
otherwise, before such certificate or certificates shall have been delivered by
the Corporation, such certificate or certificates may nevertheless be issued and
delivered by the Corporation as though the person or persons who signed such
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A Delaware Corporation
Page 14
certificate or certificates or whose facsimile signature or signatures shall
have been used thereon had not ceased to be such officer or officers.
In case the corporate seal which has been affixed to, impressed on, or
reproduced in any such certificate or certificates shall cease to be the seal of
the Corporation before such certificate or certificates have been delivered by
the Corporation, such certificate or certificates may nevertheless be issued and
delivered by the Corporation as though the seal affixed thereto, impressed
thereon or reproduced therein had not ceased to be the seal of the Corporation.
Every certificate for shares of stock which are subject to any restriction
on transfer pursuant to law, the Certificate of Incorporation, these By-Laws, or
any agreement to which the Corporation is a party, shall have the restriction
noted conspicuously on the certificate, and shall also set forth, on the face or
back, either the full text of the restriction or a statement of the existence of
such restriction and (except if such restriction is imposed by law) a statement
that the Corporation will furnish a copy thereof to the holder of such
certificate upon written request and without charge.
Every certificate issued when the Corporation is authorized to issue more
than one class or series of stock shall set forth on its face or back either the
full text of the preferences, voting powers, qualifications, and special and
relative rights of the shares of each class and series authorized to be issued,
or a statement of the existence of such preferences, powers, qualifications and
rights, and a statement that the Corporation will furnish a copy thereof to the
holder of such certificate upon written request and without charge.
SECTION 2. Transfer of Shares. The shares of the stock of the Corporation
shall be transferred on the books of the Corporation by the holder thereof in
person or by his or her attorney lawfully constituted, upon surrender for
cancellation of certificates for the same number of shares, with an assignment
and power of transfer endorsed thereon or attached thereto, duly executed, with
such proof or guaranty of the authenticity of the signature as the Corporation
or its agents may reasonably require. The Corporation shall be entitled to treat
the holder of record of any share or shares of stock as the holder in fact
thereof and accordingly shall not be bound to recognize any equitable or other
claim to or interest in such share or shares on the part of any other person
whether or not it shall have express or other notice thereof, save as expressly
provided by law or by the Certificate of Incorporation. It shall be the duty of
each stockholder to notify the Corporation of his or her post office address.
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A Delaware Corporation
Page 15
SECTION 3. Closing of Transfer Books. The stock transfer books of the
Corporation may, if deemed appropriate by the Board of Directors, be closed for
such length of time not exceeding fifty (50) days as the Board may determine,
preceding the date of any meeting of stockholders or the date for the payment of
any dividend or the date for the allotment of rights or the date when any
issuance, change, conversion or exchange of capital stock shall go into effect,
during which time no transfer of stock on the books of the Corporation may be
made.
SECTION 4. Fixing Date for Determination of Stockholders of Record. In
order that the Corporation may determine the stockholders entitled to notice of
or to vote at any meeting of stockholders or any adjournment thereof, or to
express consent to corporate action in writing without a meeting, or entitled to
receive payment of any dividend or other distribution or allotment of any
rights, or entitled to exercise any rights in respect of any change, conversion
or exchange of stock or for the purpose of any other lawful action, the Board of
Directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board of
directors and which record date: (a) in the case of determination of
stockholders entitled to vote at any meeting of stockholders or adjournment
thereof, shall, unless otherwise required by law, the Certificate of
Incorporation or otherwise, not be more than sixty (60) nor less than ten (10)
days before the date of such meeting; (b) in the case of determination of
stockholders entitled to express consent to corporate action in writing without
a meeting, shall, unless otherwise required by law, the Certificate of
Incorporation or otherwise, not be more than ten (10) days from the date upon
which the resolution fixing the record date is adopted by the Board of
Directors; and (c) in the case of any other action, shall not be more than sixty
(60) days prior to such other action. If no record date is fixed: (a) the record
date for determining stockholders entitled to notice of or to vote at a meeting
of stockholders shall be at the close of business on the day next preceding the
day on which notice is given, or, if notice is waived, at the close of business
on the day next preceding the day on which the meeting is held; (b) the record
date for determining stockholders entitled to express consent to corporate
action in writing without a meeting when no prior action of the Board of
Directors is required by law, shall be the first date on which a signed written
consent setting forth the action take or proposed to be taken is delivered to
the Corporation in accordance with applicable law, or, if prior action by the
Board of Directors is required by law, shall be at the close of business on the
day on which the Board of Directors adopts the resolution taking such prior
action; and (c) the record date for determining stockholders for any other
purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto. A determination of
stockholders of
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A Delaware Corporation
Page 16
record entitled to notice of or to vote at a meeting of stockholders shall apply
to any adjournment of the meeting; provided, however, that the Board of
Directors may fix a new record date for the adjourned meeting.
SECTION 5. Lost or Destroyed Certificates. In case of the loss or
destruction of any certificate of stock, a new certificate may be issued under
the following conditions:
a. The owner of said certificate shall file with the
Secretary or any Assistant Secretary of the Corporation
an affidavit giving the facts in relation to the
ownership, and in relation to the loss or destruction of
said certificate, stating its number and the number of
shares represented thereby; such affidavit shall be in
such form and contain such statements as shall satisfy
the President, any Executive Vice President, Vice
President, the Secretary, any Assistant Secretary, the
Treasurer or any Assistant Treasurer, that said
certificate has been accidentally destroyed or lost, and
that a new certificate ought to be issued in lieu
thereof. Upon being so satisfied, any such officer may
require such owner to furnish the Corporation a bond in
such penal sum and in such form as he or she may deem
advisable, and with a surety or sureties approved by him
or her, to indemnify and save harmless the Corporation
from any claim, loss, damage or liability which may be
occasioned by the issuance of a new certificate in lieu
thereof. Upon such bond being so filed, if so required,
a new certificate for the same number of shares shall be
issued to the owner of the certificate so lost or
destroyed; and the transfer agent and registrar, if any,
of stock shall countersign and register such new
certificate upon receipt of a written order signed by
any such officer, and thereupon the Corporation will
save harmless said transfer agent and registrar in the
premises. In case of the surrender of the original
certificate, in lieu of which a new certificate has been
issued, or the surrender of such new certificate, for
cancellation, the bond of indemnity given as a condition
of the issue of such new certificate may be surrendered;
or
b. The Board of Directors of the Corporation may by
resolution authorize and direct any transfer agent or
registrar of stock of the Corporation to issue and
register respectively from time to time without further
action or approval by or on behalf of the Corporation
new certificates of stock to replace certificates
reported lost, stolen or destroyed upon receipt of an
affidavit of loss and bond of indemnity in form and
amount and with surety satisfactory to such transfer
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By-laws of Data Storage Systems, Inc.
A Delaware Corporation
Page 17
agent or registrar in each instance or upon such terms and conditions
as the Board of Directors may determine.
SECTION 6. Uncertificated Shares. The Board of Directors of the Corporation
may by resolution provide that one or more of any or all classes or series of
the stock of the Corporation shall be uncertificated shares, subject to the
provisions of Section 158 of the Delaware General Corporation Law.
ARTICLE VIII EXECUTION OF DOCUMENTS
-------------------------------------
SECTION 1. Execution of Checks, Notes, etc. All checks and drafts on the
Corporation's bank accounts and all bills of exchange and promissory notes, and
all acceptances, obligations and other instruments for the payment of money,
shall be signed by such officer or officers, or agent or agents, as shall be
thereunto authorized from time to time by the Board of Directors, which may in
its discretion authorize any such signatures to be facsimile.
SECTION 2. Execution of Contracts, Assignments, etc. Unless the Board of
Directors shall have otherwise provided generally or in a specific instance, all
contracts, agreements, endorsements, assignments, transfers, stock powers, or
other instruments shall be signed by the President, any Executive Vice
President, any Vice President, the Secretary, any Assistant Secretary, the
Treasurer or any Assistant Treasurer. The Board of Directors may, however, in
its discretion, require any or all such instruments to be signed by any two or
more of such officers, or may permit any or all of such instruments to be signed
by such other officer or officers, agent or agents, as it shall be thereunto
authorize from time to time.
SECTION 3. Execution of Proxies. The President, any Executive Vice
President or any Vice President, and the Secretary, the Treasurer, any Assistant
Secretary or any Assistant Treasurer, or any other officer designated by the
Board of Directors, may sign on behalf of the Corporation proxies to vote upon
shares of stock of other companies standing in the name of the Corporation.
ARTICLE IX INSPECTION OF BOOKS
--------------------------------
The Board of Directors shall determine from time to time whether, and if
allowed, to what extent and at what time and places and under what conditions
and regulations, the accounts and books of the Corporation (except such as may
by law be specifically open to inspection) or any of them, shall be open to the
inspection of the stockholders, and no stockholder shall have any right to
inspect any account or book or document of the
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A Delaware Corporation
Page 18
Corporation, except as conferred by the laws of the State of Delaware, unless
and until authorized so to do by resolution of the Board of Directors or of the
stockholders of the Corporation.
ARTICLE X FISCAL YEAR
-----------------------
The fiscal year of the Corporation shall be determined from time to time by
vote of the Board of Directors.
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A Delaware Corporation
Page 19
ARTICLE XI AMENDMENTS
-----------------------
These By-Laws may be altered, amended, changed or repealed and new By-Laws
adopted by the stockholders or, to the extent provided in the Certificate of
Incorporation, by the Board of Directors, in either case at any meeting called
for that purpose at which a quorum shall be present. Any by-law, whether made,
altered, amended, changed or repealed by the stockholders or the Board of
Directors may be repealed, amended, changed, further amended, changed, repealed
or reinstated, as the case may be, either by the stockholders or by the Board of
Directors, as herein provided; except that this Article may be altered, amended,
changed or repealed only by vote of the stockholders.
ARTICLE XII INDEMNIFICATION
-----------------------------
SECTION 1. Indemnification.
a. Action By Third Party. The Corporation shall indemnify
and hold harmless, to the fullest extent permitted by
applicable law as it presently exists or may hereafter
be amended, any person who was or is a party or is
threatened to be made a party or is otherwise involved
in any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right
of the Corporation) by reason of the fact that he, or a
person for whom he or she is the legal representative,
is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the
Corporation as a director, officer, partner, member,
trustee, employee or agent of another corporation,
partnership, joint venture, limited liability company,
trust or other enterprise or non-profit entity against
all liability, losses, expenses (including attorneys'
fees), judgments, fines, and amounts paid in settlement
actually and reasonably incurred by him or her in
connection with such action, suit or proceeding if he or
she acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best
interest of the Corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause
to believe his conduct was unlawful. The termination of
any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself,
create a presumption that the person did not act in good
faith and in a manner which he or she reasonably
believed to be in or not opposed to the best interest of
the Corporation, and, with respect to any criminal
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By-laws of Data Storage Systems, Inc.
A Delaware Corporation
Page 20
action or proceeding, had reasonable cause to believe
that his or her conduct was unlawful.
b. Action By Corporation. The Corporation shall indemnify
any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed
action or suit by or in the right of the Corporation to
procure a judgment in its favor by reason of the fact
that he or she is or was a director, trustee, partner,
officer, employee or agent of the Corporation, or is or
was serving at the request of the Corporation as a
director, officer, partner, member, trustee, employee or
agent of another corporation, partnership, joint
venture, limited liability company, trust or other
enterprise or non-profit entity against expenses
(including attorneys' fees) actually and reasonably
incurred by him or her in connection with the defense or
settlement of such action or suit if he or she acted in
good faith and in a manner he or she reasonably believed
to be in or not opposed to the best interests of the
Corporation; except that no indemnification shall be
made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable
for negligence or misconduct in the performance of his
or her duty to the Corporation unless and only to the
extent that the Court of Chancery of the State of
Delaware or the court in which such action or suit was
brought shall determine upon application that despite
the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which
the Court of Chancery of the State of Delaware or such
other court shall deem proper.
c. To the extent that any person referred to in paragraphs
a. or b. above has been successful on the merits or
otherwise in defense of any action, suit or proceeding
referred to therein, or in defense of any claim, issue
or matter therein, he or she shall be indemnified
against expenses (including attorneys' fees) actually
and reasonably incurred by him or her in connection
therewith.
SECTION 2. Authorization. Any indemnification under Section 1 of this
Article (unless ordered by a court) shall be made by the Corporation only as
authorized in the specific case upon a determination that indemnification of the
director, officer, partner, member, trustee, employee or agent is proper in the
circumstances because such person has met the applicable standard of conduct set
forth in Section 1 of this Article. Such determination shall be made: a. by the
Board of Directors by a majority vote of a quorum consisting of directors who
were not
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By-laws of Data Storage Systems, Inc.
A Delaware Corporation
Page 21
parties to such action, suit or proceeding, or b. if such a quorum is not
obtainable, or, even if obtainable, a quorum of disinterested directors so
directs, by independent legal counsel in written opinion, or c. by the
stockholders.
SECTION 3. Expense Advance. Expenses (including attorneys' fees) incurred
by an officer or director of the Corporation in defending any civil, criminal,
administrative or investigative action, suit or proceeding may be paid by the
Corporation in advance of the final disposition of such action, suit or
proceeding as authorized by the Board of Directors in the manner provided in
Section 2 of this Article upon receipt of an undertaking by or on behalf of such
officer or director to repay such amount, unless it shall ultimately be
determined that such person is entitled to be indemnified by the Corporation as
authorized in this Article. Such expenses (including attorneys' fees) incurred
by other employees or agents of the Corporation may be so paid upon such terms
and conditions, if any, as the Board of Directors deems appropriate.
SECTION 4. Nonexclusivity. The indemnification and advancement of expenses
provided by, or granted pursuant to, the other Sections of this Article shall
not be deemed exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under any statute,
by-law, agreement, vote of stockholders or disinterested directors or otherwise,
both as to action in an official capacity and as to action in another capacity
while holding such office, and shall continue as to a person who has ceased to
be a director, officer, partner, member, trustee, employee or agent and shall
inure to the benefit of the heirs, executors and administrators of such a
person.
SECTION 5. Insurance. The Corporation shall have power to purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, partner, member, trustee, employee or agent
of another corporation, partnership, joint venture, limited liability company,
trust or other enterprise or non-profit entity against any liability asserted
against and incurred by him or her in any such capacity, or arising out of his
or her status as such, whether or not the Corporation would have the power to
indemnify such person against such liability under the provisions of this
Article or Section 145 of Title 8 of the Delaware Code relating to the General
Corporation Law of the State of Delaware.
SECTION 6. "The Corporation". For the purposes of this Article, references
to "the Corporation" shall include the resulting corporation and, to the extent
that the Board of Directors of the resulting corporation so decides, all
constituent corporations (including any constituent of a
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By-laws of Data Storage Systems, Inc.
A Delaware Corporation
Page 22
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers and employees or agents so that any person who is or was a
director, officer, employee or agent of such a constituent corporation or is or
was serving at the request of such constituent corporation as director, officer,
partner, member, trustee, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise or non-profit entity shall stand in the
same position under the provisions of this Article with respect to the resulting
or surviving corporation if its separate existence had continued.
SECTION 7. Other Indemnification. The Corporation's obligation, if any, to
indemnify any person who was or is serving at its request as a director,
trustee, partner, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise or non-profit entity shall
be reduced by any amount such person may collect as indemnification from such
other corporation, partnership, joint venture, trust or other enterprise or
non-profit entity or from insurance.
SECTION 8. Other Definitions. For purposes of this Article, references to
"other enterprises" shall include employee benefit plans; references to "fines"
shall include any excise taxes assessed on a person with respect to an employee
benefit plan; and references to "serving at the request of the Corporation"
shall include any service as a director, trustee, officer, employee or agent of
the Corporation which imposes duties on, or involves services by, such director,
trustee, officer, employee, or agent with respect to an employee benefit plan,
its participants, or beneficiaries; and a person who acted in good faith and in
a manner he or she reasonably believed to be in the interest of the participants
and beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interests of the Corporation" as referred to in
this Article.
SECTION 9. Continuation of Indemnification. The indemnification and
advancement of expenses provided by, or granted pursuant to, this Article shall,
unless otherwise provided when authorized or ratified, continue as to a person
who has ceased to be a director, trustee, partner, officer, employee or agent
and shall inure to the benefit of the heirs, executors and administrators of
such a person.
SECTION 10. Amendment or Repeal. Neither the amendment nor repeal of this
Article nor the adoption of any provision of these By-Laws inconsistent with
this Article shall reduce, eliminate or adversely affect any right or protection
hereunder of any person in respect of any act or omission occurring prior to the
effectiveness of such amendment, repeal or adoption.
BY - LAWS
of
DATA ARCHIVE SERVICES, INC.
(a Delaware Corporation)
<PAGE>
DATA ARCHIVE SERVICES, INC.
(a Delaware Corporation)
BY-LAWS
TABLE OF CONTENTS
ARTICLE I OFFICES...........................................................1
SECTION 1. Registered Office.....................................1
ARTICLE II SEAL.............................................................1
ARTICLE III MEETING OF STOCKHOLDERS.........................................1
SECTION 1. Place of Meeting......................................1
SECTION 3. Special Meetings......................................1
SECTION 4. Notice................................................2
SECTION 5. Quorum and Adjournments...............................2
SECTION 6. Votes; Proxies........................................3
SECTION 7. Organization..........................................4
SECTION 8. Consent of Stockholders in Lieu of Meeting............4
ARTICLE IV DIRECTORS........................................................5
SECTION 1. Number................................................5
SECTION 2. Term of Office........................................5
SECTION 3. Vacancies.............................................5
SECTION 4. Removal by Stockholders...............................6
SECTION 5. Meetings..............................................6
SECTION 6. Votes.................................................6
SECTION 7. Quorum and Adjournment................................7
SECTION 8. Compensation..........................................7
SECTION 9. Action By Consent of Directors........................7
ARTICLE V COMMITTEES OF DIRECTORS...........................................7
SECTION 1. Executive Committee...................................7
SECTION 2. Audit Committee.......................................8
SECTION 3. Other Committees......................................9
SECTION 4. Term of Office.......................................10
ARTICLE VI OFFICERS........................................................10
SECTION 1. Officers.............................................10
SECTION 2. Vacancies............................................11
SECTION 3. Chairman of the Board................................11
SECTION 4. President............................................11
SECTION 5. Executive Vice Presidents and Vice Presidents
.....................................................11
SECTION 6. Secretary............................................11
SECTION 7. Assistant Secretaries................................11
SECTION 8. Treasurer............................................12
SECTION 9. Assistant Treasurers.................................12
SECTION 10. Controller...........................................12
SECTION 11. Assistant Controllers................................12
SECTION 12. Subordinate Officers.................................13
SECTION 13. Compensation.........................................13
<PAGE>
SECTION 14. Removal..............................................13
SECTION 15. Bonds................................................13
ARTICLE VII CERTIFICATES OF STOCK..........................................13
SECTION 1. Form and Execution of Certificates...................13
SECTION 2. Transfer of Shares...................................14
SECTION 3. Closing of Transfer Books............................15
SECTION 4. Fixing Date for Determination of Stockholders
of Record............................................15
SECTION 5. Lost or Destroyed Certificates.......................16
SECTION 6. Uncertificated Shares................................17
ARTICLE VIII EXECUTION OF DOCUMENTS........................................17
SECTION 1. Execution of Checks, Notes, etc......................17
SECTION 2. Execution of Contracts, Assignments, etc.............17
SECTION 3. Execution of Proxies.................................17
ARTICLE IX INSPECTION OF BOOKS.............................................17
ARTICLE X FISCAL YEAR......................................................18
ARTICLE XI AMENDMENTS......................................................18
ARTICLE XII INDEMNIFICATION................................................18
SECTION 1. Indemnification......................................18
SECTION 2. Authorization........................................20
SECTION 3. Expense Advance......................................21
SECTION 4. Nonexclusivity.......................................21
SECTION 5. Insurance............................................21
SECTION 6. "The Corporation"....................................21
SECTION 7. Other Indemnification................................22
SECTION 8. Other Definitions....................................22
SECTION 9. Continuation of Indemnification......................22
SECTION 10. Amendment or Repeal..................................22
<PAGE>
DATA ARCHIVE SERVICES, INC.
(a Delaware Corporation)
BY-LAWS
ARTICLE I OFFICES
-------------------
SECTION 1. Registered Office. The registered office of the Corporation
shall be located in Wilmington, County of New Castle, State of Delaware, and the
name of the resident agent in charge thereof shall be Corporation Service
Company.
SECTION 2. Other Offices. The Corporation may also have offices at such
other places, within or without the State of Delaware, as the Board of Directors
may from time to time appoint or the business of the Corporation may require.
ARTICLE II SEAL
-----------------
The seal of the Corporation shall, subject to alteration by the Board of
Directors, consist of a flat-faced circular die with the word "Delaware",
together with the name of the Corporation and the year of incorporation, cut or
engraved thereon.
ARTICLE III MEETING OF STOCKHOLDERS
-------------------------------------
SECTION 1. Place of Meeting. Meetings of the
stockholders shall be held either within or without the State of
Delaware at such place as the Board of Directors may fix from
time to time.
SECTION 2. Annual Meetings. The annual meeting of
stockholders shall be held for the election of directors on such
date and at such time as the Board of Directors may fix from time
to time. Any other proper business may be transacted at the
annual meeting.
SECTION 3. Special Meetings. Special meetings of the stockholders for any
purpose or purposes may be called by the Chairman of the Board of Directors, if
there be one, the President or by the directors (either by written instrument
signed by a majority or by resolution adopted by a vote of the majority), and
special meetings shall be called by the President or the Secretary whenever
stockholders owning at least a majority of the capital stock issued, outstanding
and entitled to vote so
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By-laws of Data Archive Services, Inc.
A Delaware Corporation
Page 2
request in writing. Such request of stockholders shall state the purpose or
purposes of the proposed meeting.
SECTION 4. Notice. Written or printed notice of every meeting of
stockholders, annual or special, stating the hour, date and place thereof, and
the purpose or purposes in general terms for which the meeting is called shall,
not less than ten (10) days, or such longer period as shall be provided by law,
the Certificate of Incorporation, these By-Laws, or otherwise, and not more than
sixty (60) days before such meeting, be served upon or mailed to each
stockholder entitled to vote thereat, at the address of such stockholder as it
appears upon the stock records of the Corporation or, if such stockholder shall
have filed with the Secretary of the Corporation a written request that notices
be mailed to some other address, then to the address designated in such request.
Notice of the hour, date, place and purpose of any meeting of stockholders
may be dispensed with if every stockholder entitled to vote thereat shall attend
either in person or by proxy and shall not, at the beginning of the meeting,
object to the holding of such meeting because the meeting has not been lawfully
called or convened, or if every absent stockholder entitled to such notice shall
in writing, filed with the records of the meeting, either before or after the
holding thereof, waive such notice.
SECTION 5. Quorum and Adjournments. Except as otherwise provided by law or
by the Certificate of Incorporation, the presence in person or by proxy at any
meeting of stockholders of the holders of a majority of the shares of the
capital stock of the Corporation issued and outstanding and entitled to vote
thereat, shall be requisite and shall constitute a quorum. If two or more
classes of stock are entitled to vote as separate classes upon any question,
then, in the case of each such class, a quorum for the consideration of such
question shall, except as otherwise provided by law or by the Certificate of
Incorporation, consist of *** of all stock of that class issued, outstanding and
entitled to vote. If a majority of the shares of capital stock of the
Corporation issued and outstanding and entitled to vote thereat or, where a
larger quorum is required, such quorum, shall not be represented at any meeting
of the stockholders regularly called, the holders of *** of the shares present
or represented by proxy and entitled to vote thereat shall have power to adjourn
the meeting to another time, or to another time and place, without notice other
than announcement of adjournment at the meeting, and there may be successive
adjournments for like cause and in like manner until the requisite amount of
shares entitled to vote at such meeting shall be represented; provided, however,
that if the adjournment is for more than thirty (30) days, notice of the hour,
date and place of the adjourned meeting shall be given to each stockholder
entitled to vote thereat. Subject to the requirements of law and the Certificate
of Incorporation, on
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Page 3
any issue on which two or more classes of stock are entitled to vote separately,
no adjournment shall be taken with respect to any class for which a quorum is
present unless the Chairman of the meeting otherwise directs. At any meeting
held to consider matters which were subject to adjournment for want of a quorum
at which the requisite amount of shares entitled to vote thereat shall be
represented, any business may be transated which might have been transacted at
the meeting as originally noticed.
SECTION 6. Votes; Proxies. Except as otherwise provided in the Certificate
of Incorporation, at each meeting of stockholders, every stockholder of record
at the closing of the transfer books, if closed, or on the date set by the Board
of Directors for the determination of stockholders entitled to vote at such
meeting, shall have one vote for each share of stock entitled to vote which is
registered in such stockholder's name on the books of the Corporation, and, in
the election of directors, may vote cumulatively to the extent, if any, and in
the manner authorized in the Certificate of Incorporation.
At each such meeting every stockholder entitled to vote shall be entitled
to do so in person, or by proxy appointed by an instrument in writing or as
otherwise permitted by law subscribed by such stockholder and bearing a date not
more than three (3) years prior to the meeting in question, unless said
instrument provides for a longer period during which it is to remain in force. A
duly executed proxy shall be irrevocable if it states that it is irrevocable and
if, and only as long as, it is coupled with an interest sufficient in law to
support an irrevocable power. A proxy may be made irrevocable regardless of
whether the interest with which it is coupled is an interest in the stock itself
or any interest in the Corporation generally. A stockholder may revoke any proxy
which is not irrevocable by attending the meeting and voting in person or by
filing with the Secretary of the Corporation an instrument in writing or as
otherwise permitted by law revoking the proxy or another duly executed proxy
bearing a later date.
Voting at meetings of stockholders need not be by written ballot and,
except as otherwise provided by law, need not be conducted by inspectors of
election unless so determined by the Chairman of the meeting or by the holders
of shares of stock having a majority of the votes which could be cast by the
holders of all outstanding shares of stock entitled to vote thereon which are
present in person or represented by proxy at such meeting. If it is required or
determined that inspectors of election be appointed, the Chairman shall appoint
two inspectors of election, who shall first take and subscribe an oath or
affirmation faithfully to execute the duties of inspectors at such meeting with
strict impartiality and according to the best of their ability. The inspectors
so appointed shall take charge of the polls and, after the balloting, shall make
a certificate of the
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A Delaware Corporation
Page 4
result of the vote taken. No director or candidate for the office of director
shall be appointed as such inspector.
At any meeting at which a quorum is present, a plurality of the votes
properly cast for election to fill any vacancy on the Board of Directors shall
be sufficient to elect a candidate to fill such vacancy, and a majority of the
votes properly cast upon any other question shall decide the question, except in
any case where a larger vote is required by law, the Certificate of
Incorporation, these By-Laws, or otherwise.
SECTION 7. Organization. The Chairman of the Board, if there be one, or in
his or her absence the Vice Chairman, or in the absence of a Vice Chairman, the
President, or in the absence of the President, a Vice President, shall call
meetings of the stockholders to order and shall act as chairman thereof. The
Secretary of the Corporation, if present, shall act as secretary of all meetings
of stockholders, and, in his or her absence, the presiding officer may appoint a
secretary.
SECTION 8. Consent of Stockholders in Lieu of Meeting. Unless otherwise
restricted by the Certificate of Incorporation, any action required or permitted
by the Delaware General Corporation Law to be taken at any annual or special
meeting of the stockholders of the Corporation, may be taken without a meeting,
without prior notice and without a vote, if a consent or consents in writing,
setting forth the action so taken, shall be signed by the holders of outstanding
stock having not less than the minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voted and shall be delivered to the Corporation by
delivery to its registered office in Delaware, its principal place of business,
or an officer or agent of the Corporation having custody of the book in which
proceedings of meetings of stockholders are recorded. Delivery made to the
Corporation's registered office shall be by hand or by certified or registered
mail, return receipt requested.
Every written consent shall bear the date of signature of each stockholder
who signs the consent and no written consent shall be effective to take the
corporate action referred to therein unless, within sixty (60) days of the
earliest dated consent delivered in the manner required by this section to the
Corporation, written consents signed by a sufficient number of stockholders to
take action are delivered to the corporation by delivery to its registered
office in Delaware, its principal place of business, or an officer or agent of
the Corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Delivery made to the Corporation's registered office
shall be by hand or by certified or registered mail, return receipt requested.
<PAGE>
By-laws of Data Archive Services, Inc.
A Delaware Corporation
Page 5
Prompt notice of the taking of the corporate action without a meeting by
less than unanimous written consent shall be given to those stockholders who
have not consented in writing. In the event that the action which is consented
to is such as would have required the filing of a certificate under any section
of the Delaware General Corporation Law other than Section 228 thereof, if such
action had been voted on by stockholders at a meeting thereof, the certificate
filed under such other section shall state, in lieu of any statement required by
such section concerning any vote of stockholders, that written consent has been
given in accordance with Section 228 of the Delaware General Corporation Law,
and that written notice has been given as provided in such Section 228.
ARTICLE IV DIRECTORS
---------------------
SECTION 1. Number. The business and affairs of the Corporation shall be
conducted and managed by a Board of Directors consisting of not less than one
director, none of whom needs to be a stockholder. The number of directors for
each year shall be fixed at each annual meeting of stockholders, but if the
number is not so fixed, the number shall remain as it stood immediately prior to
such meeting.
At each annual meeting of stockholders, the stockholders shall elect
directors. Each director so elected shall hold office, subject to the provisions
of law, the Certificate of Incorporation, these By-Laws, or otherwise, until the
next annual meeting of stockholders or until his or her successor is elected and
qualified.
At any time during any year, except as otherwise provided by law, the
Certificate of Incorporation, these By-Laws, or otherwise, the number of
directors may be increased or reduced, in each case by vote of a majority of the
stock issued and outstanding and present in person or represented by proxy and
entitled to vote for the election of directors or a majority of the directors in
office at the time of such increase or decrease, regardless of whether such
majority constitutes a quorum.
SECTION 2. Term of Office. Each director shall hold office until the next
annual meeting of stockholders and until his or her successor is duly elected
and qualified or until his or her earlier death or resignation, subject to the
right of the stockholders at any time to remove any director or directors as
provided in Section 4 of this Article.
SECTION 3. Vacancies. If any vacancy shall occur among the directors, or if
the number of directors shall at any time be increased, the directors then in
office, although less than a quorum, by a majority vote may fill the vacancies
or newly-
<PAGE>
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Page 6
created directorships, or any such vacancies or newly-created directorships may
be filled by the stockholders at any meeting.
SECTION 4. Removal by Stockholders. Except as otherwise provided by law,
the Certificate of Incorporation or otherwise, the holders of record of the
capital stock of the Corporation entitled to vote for the election of directors
may, by a majority vote, remove any director or directors, with or without
cause, and, in their discretion, elect a new director or directors in place
thereof.
SECTION 5. Meetings. Meetings of the Board of Directors shall be held at
such place, within or without the State of Delaware, as may from time to time be
fixed by resolution of the Board of Directors or by the Chairman of the Board,
if there be one, or by the President, and as may be specified in the notice or
waiver of notice of any meeting. Meetings may be held at any time upon the call
of the Chairman of the Board, if there be one, or the President or any two (2)
of the directors in office by oral, telegraphic, telex, telecopy or other form
of electronic transmission, or written notice, duly served or sent or mailed to
each director not less than twenty-four (24) hours before such meeting, except
that, if mailed, not less than *** (***) hours before such meeting.
Meetings may be held at any time and place without notice if all the
directors are present and do not object to the holding of such meeting for lack
of proper notice or if those not present shall, in writing or by telegram,
telex, telecopy or other form of electronic transmission, waive notice thereof.
A regular meeting of the Board may be held without notice immediately following
the annual meeting of stockholders at the place where such meeting is held.
Regular meetings of the Board may also be held without notice at such time and
place as shall from time to time be determined by resolution of the Board.
Except as otherwise provided by law, the Certificate of Incorporation or
otherwise, neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the Board of Directors or any committee thereof
need be specified in any written waiver of notice.
Members of the Board of Directors or any committee thereof may participate
in a meeting of such Board or committee by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other and participation in a meeting pursuant to the
foregoing provisions shall constitute presence in person at the meeting.
SECTION 6. Votes. Except as otherwise provided by law,
the Certificate of Incorporation or otherwise, the vote of the
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By-laws of Data Archive Services, Inc.
A Delaware Corporation
Page 7
majority of the directors present at a meeting at which a quorum is present
shall be the act of the Board of Directors.
SECTION 7. Quorum and Adjournment. Except as otherwise provided by law, the
Certificate of Incorporation or otherwise, a majority of the directors shall
constitute a quorum for the transaction of business. If at any meeting of the
Board there shall be less than a quorum present, a majority of those present may
adjourn the meeting from time to time without notice other than announcement of
the adjournment at the meeting, and at such adjourned meeting at which a quorum
is present any business may be transacted which might have been transacted at
the meeting as originally noticed.
SECTION 8. Compensation. Directors shall receive compensation for their
services, as such, and for service on any Committee of the Board of Directors,
as fixed by resolution of the Board of Directors and for expenses of attendance
at each regular or special meeting of the Board or any Committee thereof.
Nothing in this Section shall be construed to preclude a director from serving
the Corporation in any other capacity and receiving compensation therefor.
SECTION 9. Action By Consent of Directors. Any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting if all members of the Board or committee, as the
case may be, consent thereto in writing, and the writing or writings are filed
with the minutes of proceedings of the Board or committee. Such consent shall be
treated as a vote adopted at a meeting for all purposes. Such consents may be
executed in one or more counterparts and not every Director or committee member
need sign the same counterpart.
ARTICLE V COMMITTEES OF DIRECTORS
-----------------------------------
SECTION 1. Executive Committee. The Board of Directors may, by resolution
passed by a majority of the whole Board, appoint an Executive Committee of one
(1) or more members, to serve during the pleasure of the Board, to consist of
such directors as the Board may from time to time designate. The Board of
Directors shall designate the Chairman of the Executive Committee.
a. Procedure. The Executive Committee shall, by a vote of a majority of
its members, fix its own times and places of meeting, determine the
number of its members constituting a quorum for the transaction of
business, and prescribe its own rules of procedure, no change in
which shall be made save by a majority vote of its members.
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Page 8
b. Responsibilities. During the intervals between the
meetings of the Board of Directors, except as otherwise
provided by the Board of Directors in establishing such
Committee or otherwise, the Executive Committee shall
possess and may exercise all the powers of the Board in
the management and direction of the business and affairs
of the Corporation; provided, however, that the
Executive Committee shall not, except to the extent the
Certificate of Incorporation or the resolution providing
for the issuance of shares of stock adopted by the Board
of Directors as provided in Section 151(a) of the
Delaware General Business Corporation Law, have the
power:
(1) to amend or authorize the amendment of the
Certificate of Incorporation or these By-Laws;
(2) to authorize the issuance of stock;
(3) to authorize the payment of any dividend;
(4) to adopt an agreement of merger or consolidation of the
Corporation or to recommend to the stockholders the sale, lease or
exchange of all or substantially all the property and business of the
Corporation;
(5) to recommend to the stockholders a dissolution, or
a revocation of a dissolution, of the Corporation; or
(6) to adopt a certificate of ownership and merger pursuant to
Section 253 of the Delaware Business Corporation Law.
c. Reports. The Executive Committee shall keep regular minutes of its
proceedings, and all action by the Executive Committee shall be
reported promptly to the Board of Directors. Such action shall be
subject to review, amendment and repeal by the Board, provided that
no rights of third parties shall be adversely affected by such
review, amendment or repeal.
d. Appointment of Additional Members. In the absence or disqualification
of any member of the Executive Committee, the member or members
thereof present at any meeting and not disqualified from voting,
whether or not constituting a quorum, may unanimously appoint another
member of the Board of Directors to act at the meeting in place of
any such absent or disqualified member.
SECTION 2. Audit Committee. The Board of Directors may,
by resolution passed by a majority of the whole Board, appoint an
Audit Committee of *** (***) or more members to serve during the
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By-laws of Data Archive Services, Inc.
A Delaware Corporation
Page 9
pleasure of the Board. The Board of Directors shall designate
the Chairman of the Audit Committee.
a. Procedure. The Audit Committee, by a vote of a majority of its
members, shall fix its own times and places of meeting, shall
determine the number of its members constituting a quorum for the
transaction of business, and shall prescribe its own rules of
procedure, no change in which shall be made save by a majority vote
of its members.
b. Responsibilities. The Audit Committee shall review the
annual financial statements of the Corporation prior to
their submission to the Board of Directors, shall
consult with the Corporation's independent auditors, and
may examine and consider such other matters in relation
to the internal and external audit of the Corporation's
accounts and in relation to the financial affairs of the
Corporation and its accounts, including the selection
and retention of independent auditors, as the Audit
Committee may, in its discretion, determine to be
desirable.
c. Reports. The Audit Committee shall keep regular minutes of its
proceedings, and all action by the Audit Committee shall, from time
to time, be reported to the Board of Directors as it shall direct.
Such action shall be subject to review, amendment and repeal by the
Board, provided that no rights of third parties shall be adversely
affected by such review, amendment or repeal.
d. Appointment of Additional Members. In the absence or disqualification
of any member of the Audit Committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or
not constituting a quorum, may unanimously appoint another member of
the Board of Directors to act at the meeting in place of any such
absent or disqualified member.
SECTION 3. Other Committees. The Board of Directors may, by resolution
passed by a majority of the whole Board, at any time appoint one or more other
committees from and outside of its own number. Every such committee must include
at least one member of the Board of Directors. The Board may from time to time
designate or alter, within the limits permitted by law, the Certificate of
Incorporation and this Article, if applicable, the duties, powers and number of
members of such other committees or change their membership, and may at any time
abolish such other committees or any of them.
a. Procedure. Each committee, appointed pursuant to this
Section, shall, by a vote of a majority of its members,
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A Delaware Corporation
Page 10
fix its own times and places of meeting, determine the number of its
members constituting a quorum for the transaction of business, and
prescribe its own rules of procedure, no change in which shall be
made save by a majority vote of its members.
b. Responsibilities. Each committee, appointed pursuant to
this Section, shall exercise the powers assigned to it
by the Board of Directors in its discretion.
c. Reports. Each committee appointed pursuant to this
-------
Section shall keep regular minutes of proceedings, and
all action by each such committee shall, from time to
time, be reported to the Board of Directors as it shall
direct. Such action shall be subject to review,
amendment and repeal by the Board, provided that no
rights of third parties shall be adversely affected by
such review, amendment or repeal.
d. Appointment of Additional Members. In the absence or
---------------------------------
disqualification of any member of each committee,
appointed pursuant to this Section, the member or
members thereof present at any meeting and not
disqualified from voting, whether or not constituting a
quorum, may unanimously appoint another member of the
Board of Directors (or, to the extent permitted, another
person) to act at the meeting in place of any such
absent or disqualified member.
SECTION 4. Term of Office. Each member of a committee shall hold office
until the first meeting of the Board of Directors following the annual meeting
of stockholders (or until such other time as the Board of Directors may
determine, either in the vote establishing the committee or at the election of
such member or otherwise) and until his or her successor is elected and
qualified, or until he or she sooner dies, resigns, is removed, is replaced by
change of membership or becomes disqualified by ceasing to be a director (where
membership on the Board is required), or until the committee is sooner abolished
by the Board of Directors.
ARTICLE VI OFFICERS
---------------------
SECTION 1. Officers. The Board of Directors shall elect a President, a
Secretary and a Treasurer, and, in their discretion, may elect a Chairman of the
Board, a Vice Chairman of the Board, a Controller, and one or more Executive
Vice Presidents, Vice Presidents, Assistant Secretaries, Assistant Treasurers
and Assistant Controllers as deemed necessary or appropriate. Such officers
shall be elected annually by the Board of Directors at its first meeting
following the annual
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A Delaware Corporation
Page 11
meeting of stockholders (or at such other meeting as the Board of Directors
determines), and each shall hold office for the term provided by the vote of the
Board, except that each will be subject to removal from office in the discretion
of the Board as provided herein. The powers and duties of more than one office
may be exercised and performed by the same person.
SECTION 2. Vacancies. Any vacancy in any office may be
filled for the unexpired portion of the term by the Board of
Directors, at any regular or special meeting.
SECTION 3. Chairman of the Board. The Chairman of the Board of Directors,
if elected, shall be a member of the Board of Directors and shall preside at its
meetings. The Chairman, if other than the President, shall advise and counsel
with the President, and shall perform such duties as from time to time may be
assigned to him or her by the Board of Directors.
SECTION 4. President. The President shall be the chief executive officer of
the Corporation. Subject to the directions of the Board of Directors, the
President shall have and exercise direct charge of and general supervision over
the business and affairs of the Corporation and shall perform all duties
incident to the office of the chief executive officer of a corporation and such
other duties as from time to time may be assigned to him or her by the Board of
Directors. The President may but need not be a member of the Board of Directors.
SECTION 5. Executive Vice Presidents and Vice Presidents. Each Executive
Vice President and Vice President shall have and exercise such powers and shall
perform such duties as from time to time may be assigned to him or to her by the
Board of Directors or the President.
SECTION 6. Secretary. The Secretary shall keep the minutes of all meetings
of the stockholders and of the Board of Directors in books provided for the
purpose; shall see that all notices are duly given in accordance with the
provisions of law and these By-Laws; the Secretary shall be custodian of the
records and of the corporate seal or seals of the Corporation; shall see that
the corporate seal is affixed to all documents the execution of which, on behalf
of the Corporation under its seal, is duly authorized, and, when the seal is so
affixed, he or she may attest the same; the Secretary may sign, with the
President, an Executive Vice President or a Vice President, certificates of
stock of the Corporation; and, in general, the Secretary shall perform all
duties incident to the office of secretary of a corporation, and such other
duties as from time to time may be assigned to him or her by the Board of
Directors.
SECTION 7. Assistant Secretaries. The Assistant
Secretaries in order of their seniority shall, in the absence or
<PAGE>
By-laws of Data Archive Services, Inc.
A Delaware Corporation
Page 12
disability of the Secretary, perform the duties and exercise the powers of the
Secretary and shall perform such other duties as the Board of Directors shall
prescribe or as from time to time may be assigned by the Secretary.
SECTION 8. Treasurer. The Treasurer shall have charge of and be responsible
for all funds, securities, receipts and disbursements of the Corporation, and
shall deposit, or cause to be deposited, in the name of the Corporation, all
monies or other valuable effects in such banks, trust companies or other
depositaries as shall, from time to time, be selected by the Board of Directors;
may endorse for collection on behalf of the Corporation checks, notes and other
obligations; may sign receipts and vouchers for payments made to the
Corporation; may sign checks of the Corporation, singly or jointly with another
person as the Board of Directors may authorize, and pay out and dispose of the
proceeds under the direction of the Board; the Treasurer shall render to the
President and to the Board of Directors, whenever requested, an account of the
financial condition of the Corporation; the Treasurer may sign, with the
President, or an Executive Vice President or a Vice President, certificates of
stock of the Corporation; and in general, shall perform all the duties incident
to the office of treasurer of a corporation, and such other duties as from time
to time may be assigned by the Board of Directors. Unless the Board of Directors
shall otherwise determine, the Treasurer shall be the chief financial officer of
the Corporation.
SECTION 9. Assistant Treasurers. The Assistant Treasurers in order of their
seniority shall, in the absence or disability of the Treasurer, perform the
duties and exercise the powers of the Treasurer and shall perform such other
duties as the Board of Directors shall prescribe or as from time to time may be
assigned by the Treasurer.
SECTION 10. Controller. The Controller, if elected, shall be the chief
accounting officer of the Corporation and shall perform all duties incident to
the office of a controller of a corporation, and, in the absence of or
disability of the Treasurer or any Assistant Treasurer, perform the duties and
exercise the powers of the Treasurer and shall perform such other duties as the
Board of Directors shall prescribe or as from time to time may be assigned by
the President or the Treasurer.
SECTION 11. Assistant Controllers. The Assistant Controllers in order of
their seniority shall, in the absence or disability of the Controller, perform
the duties and exercise the powers of the Controller and shall perform such
other duties as the Board of Directors shall prescribe or as from time to time
may be assigned by the Controller.
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A Delaware Corporation
Page 13
SECTION 12. Subordinate Officers. The Board of Directors may appoint such
subordinate officers as it may deem desirable. Each such officer shall hold
office for such period, have such authority and perform such duties as the Board
of Directors may prescribe. The Board of Directors may, from time to time,
authorize any officer to appoint and remove subordinate officers and to
prescribe the powers and duties thereof.
SECTION 13. Compensation. The Board of Directors shall
fix the compensation of all officers of the Corporation. It may
authorize any officer, upon whom the power of appointing
subordinate officers may have been conferred, to fix the
compensation of such subordinate officers.
SECTION 14. Removal. Any officer of the Corporation may
be removed, with or without cause, by action of the Board of
Directors.
SECTION 15. Bonds. The Board of Directors may require any officer of the
Corporation to give a bond to the Corporation, conditional upon the faithful
performance of his or her duties, with one or more sureties and in such amount
as may be satisfactory to the Board of Directors.
ARTICLE VII CERTIFICATES OF STOCK
-----------------------------------
SECTION 1. Form and Execution of Certificates. The interest of each
stockholder of the Corporation shall be evidenced by a certificate or
certificates for shares of stock in such form as the Board of Directors may from
time to time prescribe. The certificates of stock of each class shall be
consecutively numbered and signed by the Chairman or Vice Chairman of the Board,
if any, the President, an Executive Vice President or a Vice President and by
the Secretary, an Assistant Secretary, the Treasurer or an Assistant Treasurer
of the Corporation, and may be countersigned and registered in such manner as
the Board of Directors may by resolution prescribe, and shall bear the corporate
seal or a printed or engraved facsimile thereof. Where any such certificate is
signed by a transfer agent or transfer clerk acting on behalf of the
Corporation, the signatures of any such Chairman, Vice Chairman, President,
Executive Vice President, Vice President, Treasurer, Assistant Treasurer,
Secretary or Assistant Secretary may be facsimiles, engraved or printed. In case
any officer or officers, who shall have signed, or whose facsimile signature or
signatures shall have been used on, any such certificate or certificates, shall
cease to be such officer or officers, whether because of death, resignation or
otherwise, before such certificate or certificates shall have been delivered by
the Corporation, such certificate or certificates may nevertheless be issued and
delivered by the Corporation as though the person or persons who signed such
<PAGE>
By-laws of Data Archive Services, Inc.
A Delaware Corporation
Page 14
certificate or certificates or whose facsimile signature or signatures shall
have been used thereon had not ceased to be such officer or officers.
In case the corporate seal which has been affixed to, impressed on, or
reproduced in any such certificate or certificates shall cease to be the seal of
the Corporation before such certificate or certificates have been delivered by
the Corporation, such certificate or certificates may nevertheless be issued and
delivered by the Corporation as though the seal affixed thereto, impressed
thereon or reproduced therein had not ceased to be the seal of the Corporation.
Every certificate for shares of stock which are subject to any restriction
on transfer pursuant to law, the Certificate of Incorporation, these By-Laws, or
any agreement to which the Corporation is a party, shall have the restriction
noted conspicuously on the certificate, and shall also set forth, on the face or
back, either the full text of the restriction or a statement of the existence of
such restriction and (except if such restriction is imposed by law) a statement
that the Corporation will furnish a copy thereof to the holder of such
certificate upon written request and without charge.
Every certificate issued when the Corporation is authorized to issue more
than one class or series of stock shall set forth on its face or back either the
full text of the preferences, voting powers, qualifications, and special and
relative rights of the shares of each class and series authorized to be issued,
or a statement of the existence of such preferences, powers, qualifications and
rights, and a statement that the Corporation will furnish a copy thereof to the
holder of such certificate upon written request and without charge.
SECTION 2. Transfer of Shares. The shares of the stock of the Corporation
shall be transferred on the books of the Corporation by the holder thereof in
person or by his or her attorney lawfully constituted, upon surrender for
cancellation of certificates for the same number of shares, with an assignment
and power of transfer endorsed thereon or attached thereto, duly executed, with
such proof or guaranty of the authenticity of the signature as the Corporation
or its agents may reasonably require. The Corporation shall be entitled to treat
the holder of record of any share or shares of stock as the holder in fact
thereof and accordingly shall not be bound to recognize any equitable or other
claim to or interest in such share or shares on the part of any other person
whether or not it shall have express or other notice thereof, save as expressly
provided by law or by the Certificate of Incorporation. It shall be the duty of
each stockholder to notify the Corporation of his or her post office address.
<PAGE>
By-laws of Data Archive Services, Inc.
A Delaware Corporation
Page 15
SECTION 3. Closing of Transfer Books. The stock transfer books of the
Corporation may, if deemed appropriate by the Board of Directors, be closed for
such length of time not exceeding fifty (50) days as the Board may determine,
preceding the date of any meeting of stockholders or the date for the payment of
any dividend or the date for the allotment of rights or the date when any
issuance, change, conversion or exchange of capital stock shall go into effect,
during which time no transfer of stock on the books of the Corporation may be
made.
SECTION 4. Fixing Date for Determination of Stockholders of Record. In
order that the Corporation may determine the stockholders entitled to notice of
or to vote at any meeting of stockholders or any adjournment thereof, or to
express consent to corporate action in writing without a meeting, or entitled to
receive payment of any dividend or other distribution or allotment of any
rights, or entitled to exercise any rights in respect of any change, conversion
or exchange of stock or for the purpose of any other lawful action, the Board of
Directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board of
directors and which record date: (a) in the case of determination of
stockholders entitled to vote at any meeting of stockholders or adjournment
thereof, shall, unless otherwise required by law, the Certificate of
Incorporation or otherwise, not be more than sixty (60) nor less than ten (10)
days before the date of such meeting; (b) in the case of determination of
stockholders entitled to express consent to corporate action in writing without
a meeting, shall, unless otherwise required by law, the Certificate of
Incorporation or otherwise, not be more than ten (10) days from the date upon
which the resolution fixing the record date is adopted by the Board of
Directors; and (c) in the case of any other action, shall not be more than sixty
(60) days prior to such other action. If no record date is fixed: (a) the record
date for determining stockholders entitled to notice of or to vote at a meeting
of stockholders shall be at the close of business on the day next preceding the
day on which notice is given, or, if notice is waived, at the close of business
on the day next preceding the day on which the meeting is held; (b) the record
date for determining stockholders entitled to express consent to corporate
action in writing without a meeting when no prior action of the Board of
Directors is required by law, shall be the first date on which a signed written
consent setting forth the action take or proposed to be taken is delivered to
the Corporation in accordance with applicable law, or, if prior action by the
Board of Directors is required by law, shall be at the close of business on the
day on which the Board of Directors adopts the resolution taking such prior
action; and (c) the record date for determining stockholders for any other
purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto. A determination of
stockholders of
<PAGE>
By-laws of Data Archive Services, Inc.
A Delaware Corporation
Page 16
record entitled to notice of or to vote at a meeting of stockholders shall apply
to any adjournment of the meeting; provided, however, that the Board of
Directors may fix a new record date for the adjourned meeting.
SECTION 5. Lost or Destroyed Certificates. In case of
the loss or destruction of any certificate of stock, a new
certificate may be issued under the following conditions:
a. The owner of said certificate shall file with the
Secretary or any Assistant Secretary of the Corporation
an affidavit giving the facts in relation to the
ownership, and in relation to the loss or destruction of
said certificate, stating its number and the number of
shares represented thereby; such affidavit shall be in
such form and contain such statements as shall satisfy
the President, any Executive Vice President, Vice
President, the Secretary, any Assistant Secretary, the
Treasurer or any Assistant Treasurer, that said
certificate has been accidentally destroyed or lost, and
that a new certificate ought to be issued in lieu
thereof. Upon being so satisfied, any such officer may
require such owner to furnish the Corporation a bond in
such penal sum and in such form as he or she may deem
advisable, and with a surety or sureties approved by him
or her, to indemnify and save harmless the Corporation
from any claim, loss, damage or liability which may be
occasioned by the issuance of a new certificate in lieu
thereof. Upon such bond being so filed, if so required,
a new certificate for the same number of shares shall be
issued to the owner of the certificate so lost or
destroyed; and the transfer agent and registrar, if any,
of stock shall countersign and register such new
certificate upon receipt of a written order signed by
any such officer, and thereupon the Corporation will
save harmless said transfer agent and registrar in the
premises. In case of the surrender of the original
certificate, in lieu of which a new certificate has been
issued, or the surrender of such new certificate, for
cancellation, the bond of indemnity given as a condition
of the issue of such new certificate may be surrendered;
or
b. The Board of Directors of the Corporation may by
resolution authorize and direct any transfer agent or
registrar of stock of the Corporation to issue and
register respectively from time to time without further
action or approval by or on behalf of the Corporation
new certificates of stock to replace certificates
reported lost, stolen or destroyed upon receipt of an
affidavit of loss and bond of indemnity in form and
amount and with surety satisfactory to such transfer
<PAGE>
By-laws of Data Archive Services, Inc.
A Delaware Corporation
Page 17
agent or registrar in each instance or upon such terms and conditions
as the Board of Directors may determine.
SECTION 6. Uncertificated Shares. The Board of Directors of the Corporation
may by resolution provide that one or more of any or all classes or series of
the stock of the Corporation shall be uncertificated shares, subject to the
provisions of Section 158 of the Delaware General Corporation Law.
ARTICLE VIII EXECUTION OF DOCUMENTS
-------------------------------------
SECTION 1. Execution of Checks, Notes, etc. All checks and drafts on the
Corporation's bank accounts and all bills of exchange and promissory notes, and
all acceptances, obligations and other instruments for the payment of money,
shall be signed by such officer or officers, or agent or agents, as shall be
thereunto authorized from time to time by the Board of Directors, which may in
its discretion authorize any such signatures to be facsimile.
SECTION 2. Execution of Contracts, Assignments, etc. Unless the Board of
Directors shall have otherwise provided generally or in a specific instance, all
contracts, agreements, endorsements, assignments, transfers, stock powers, or
other instruments shall be signed by the President, any Executive Vice
President, any Vice President, the Secretary, any Assistant Secretary, the
Treasurer or any Assistant Treasurer. The Board of Directors may, however, in
its discretion, require any or all such instruments to be signed by any two or
more of such officers, or may permit any or all of such instruments to be signed
by such other officer or officers, agent or agents, as it shall be thereunto
authorize from time to time.
SECTION 3. Execution of Proxies. The President, any Executive Vice
President or any Vice President, and the Secretary, the Treasurer, any Assistant
Secretary or any Assistant Treasurer, or any other officer designated by the
Board of Directors, may sign on behalf of the Corporation proxies to vote upon
shares of stock of other companies standing in the name of the Corporation.
ARTICLE IX INSPECTION OF BOOKS
--------------------------------
The Board of Directors shall determine from time to time whether, and if
allowed, to what extent and at what time and places and under what conditions
and regulations, the accounts and books of the Corporation (except such as may
by law be specifically open to inspection) or any of them, shall be open to the
inspection of the stockholders, and no stockholder shall have any right to
inspect any account or book or document of the
<PAGE>
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A Delaware Corporation
Page 18
Corporation, except as conferred by the laws of the State of Delaware, unless
and until authorized so to do by resolution of the Board of Directors or of the
stockholders of the Corporation.
ARTICLE X FISCAL YEAR
-----------------------
The fiscal year of the Corporation shall be determined from time to time by
vote of the Board of Directors.
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By-laws of Data Archive Services, Inc.
A Delaware Corporation
Page 19
ARTICLE XI AMENDMENTS
-----------------------
These By-Laws may be altered, amended, changed or repealed and new By-Laws
adopted by the stockholders or, to the extent provided in the Certificate of
Incorporation, by the Board of Directors, in either case at any meeting called
for that purpose at which a quorum shall be present. Any by-law, whether made,
altered, amended, changed or repealed by the stockholders or the Board of
Directors may be repealed, amended, changed, further amended, changed, repealed
or reinstated, as the case may be, either by the stockholders or by the Board of
Directors, as herein provided; except that this Article may be altered, amended,
changed or repealed only by vote of the stockholders.
ARTICLE XII INDEMNIFICATION
-----------------------------
SECTION 1. Indemnification.
a. Action By Third Party. The Corporation shall indemnify
and hold harmless, to the fullest extent permitted by
applicable law as it presently exists or may hereafter
be amended, any person who was or is a party or is
threatened to be made a party or is otherwise involved
in any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right
of the Corporation) by reason of the fact that he, or a
person for whom he or she is the legal representative,
is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the
Corporation as a director, officer, partner, member,
trustee, employee or agent of another corporation,
partnership, joint venture, limited liability company,
trust or other enterprise or non-profit entity against
all liability, losses, expenses (including attorneys'
fees), judgments, fines, and amounts paid in settlement
actually and reasonably incurred by him or her in
connection with such action, suit or proceeding if he or
she acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best
interest of the Corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause
to believe his conduct was unlawful. The termination of
any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself,
create a presumption that the person did not act in good
faith and in a manner which he or she reasonably
believed to be in or not opposed to the best interest of
the Corporation, and, with respect to any criminal
<PAGE>
By-laws of Data Archive Services, Inc.
A Delaware Corporation
Page 20
action or proceeding, had reasonable cause to believe
that his or her conduct was unlawful.
b. Action By Corporation. The Corporation shall indemnify
any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed
action or suit by or in the right of the Corporation to
procure a judgment in its favor by reason of the fact
that he or she is or was a director, trustee, partner,
officer, employee or agent of the Corporation, or is or
was serving at the request of the Corporation as a
director, officer, partner, member, trustee, employee or
agent of another corporation, partnership, joint
venture, limited liability company, trust or other
enterprise or non-profit entity against expenses
(including attorneys' fees) actually and reasonably
incurred by him or her in connection with the defense or
settlement of such action or suit if he or she acted in
good faith and in a manner he or she reasonably believed
to be in or not opposed to the best interests of the
Corporation; except that no indemnification shall be
made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable
for negligence or misconduct in the performance of his
or her duty to the Corporation unless and only to the
extent that the Court of Chancery of the State of
Delaware or the court in which such action or suit was
brought shall determine upon application that despite
the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which
the Court of Chancery of the State of Delaware or such
other court shall deem proper.
c. To the extent that any person referred to in paragraphs
a. or b. above has been successful on the merits or
otherwise in defense of any action, suit or proceeding
referred to therein, or in defense of any claim, issue
or matter therein, he or she shall be indemnified
against expenses (including attorneys' fees) actually
and reasonably incurred by him or her in connection
therewith.
SECTION 2. Authorization. Any indemnification under
Section 1 of this Article (unless ordered by a court) shall be
made by the Corporation only as authorized in the specific case
upon a determination that indemnification of the director,
officer, partner, member, trustee, employee or agent is proper in
the circumstances because such person has met the applicable
standard of conduct set forth in Section 1 of this Article. Such
determination shall be made: a. by the Board of Directors by a
majority vote of a quorum consisting of directors who were not
<PAGE>
By-laws of Data Archive Services, Inc.
A Delaware Corporation
Page 21
parties to such action, suit or proceeding, or b. if such a
quorum is not obtainable, or, even if obtainable, a quorum of
disinterested directors so directs, by independent legal counsel
in written opinion, or c. by the stockholders.
SECTION 3. Expense Advance. Expenses (including attorneys' fees) incurred
by an officer or director of the Corporation in defending any civil, criminal,
administrative or investigative action, suit or proceeding may be paid by the
Corporation in advance of the final disposition of such action, suit or
proceeding as authorized by the Board of Directors in the manner provided in
Section 2 of this Article upon receipt of an undertaking by or on behalf of such
officer or director to repay such amount, unless it shall ultimately be
determined that such person is entitled to be indemnified by the Corporation as
authorized in this Article. Such expenses (including attorneys' fees) incurred
by other employees or agents of the Corporation may be so paid upon such terms
and conditions, if any, as the Board of Directors deems appropriate.
SECTION 4. Nonexclusivity. The indemnification and advancement of expenses
provided by, or granted pursuant to, the other Sections of this Article shall
not be deemed exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under any statute,
by-law, agreement, vote of stockholders or disinterested directors or otherwise,
both as to action in an official capacity and as to action in another capacity
while holding such office, and shall continue as to a person who has ceased to
be a director, officer, partner, member, trustee, employee or agent and shall
inure to the benefit of the heirs, executors and administrators of such a
person.
SECTION 5. Insurance. The Corporation shall have power to purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, partner, member, trustee, employee or agent
of another corporation, partnership, joint venture, limited liability company,
trust or other enterprise or non-profit entity against any liability asserted
against and incurred by him or her in any such capacity, or arising out of his
or her status as such, whether or not the Corporation would have the power to
indemnify such person against such liability under the provisions of this
Article or Section 145 of Title 8 of the Delaware Code relating to the General
Corporation Law of the State of Delaware.
SECTION 6. "The Corporation". For the purposes of this
Article, references to "the Corporation" shall include the
resulting corporation and, to the extent that the Board of
Directors of the resulting corporation so decides, all
constituent corporations (including any constituent of a
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By-laws of Data Archive Services, Inc.
A Delaware Corporation
Page 22
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers and employees or agents so that any person who is or was a
director, officer, employee or agent of such a constituent corporation or is or
was serving at the request of such constituent corporation as director, officer,
partner, member, trustee, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise or non-profit entity shall stand in the
same position under the provisions of this Article with respect to the resulting
or surviving corporation if its separate existence had continued.
SECTION 7. Other Indemnification. The Corporation's obligation, if any, to
indemnify any person who was or is serving at its request as a director,
trustee, partner, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise or non-profit entity shall
be reduced by any amount such person may collect as indemnification from such
other corporation, partnership, joint venture, trust or other enterprise or
non-profit entity or from insurance.
SECTION 8. Other Definitions. For purposes of this Article, references to
"other enterprises" shall include employee benefit plans; references to "fines"
shall include any excise taxes assessed on a person with respect to an employee
benefit plan; and references to "serving at the request of the Corporation"
shall include any service as a director, trustee, officer, employee or agent of
the Corporation which imposes duties on, or involves services by, such director,
trustee, officer, employee, or agent with respect to an employee benefit plan,
its participants, or beneficiaries; and a person who acted in good faith and in
a manner he or she reasonably believed to be in the interest of the participants
and beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interests of the Corporation" as referred to in
this Article.
SECTION 9. Continuation of Indemnification. The indemnification and
advancement of expenses provided by, or granted pursuant to, this Article shall,
unless otherwise provided when authorized or ratified, continue as to a person
who has ceased to be a director, trustee, partner, officer, employee or agent
and shall inure to the benefit of the heirs, executors and administrators of
such a person.
SECTION 10. Amendment or Repeal. Neither the amendment nor repeal of this
Article nor the adoption of any provision of these By-Laws inconsistent with
this Article shall reduce, eliminate or adversely affect any right or protection
hereunder of any person in respect of any act or omission occurring prior to the
effectiveness of such amendment, repeal or adoption.
Draft of September 10, 1996
===============================================================================
IRON MOUNTAIN INCORPORATED
and the Restricted Subsidiaries
signatory hereto
__% SENIOR SUBORDINATED NOTES DUE 2006
_________________
INDENTURE
Dated as of _________, 1996
_________________
____________________________________________
Trustee
===============================================================================
NYMAIN01 Doc: 159158_2
<PAGE>
CROSS-REFERENCE TABLE*
Trust Indenture
Act Section Indenture Section
310 (a)(1)............................................. 7.10
(a)(2)............................................. 7.10
(a)(3) ............................................ N.A.
(a)(4)............................................. N.A.
(a)(5)............................................. 7.10
(b) ............................................... 7.10
(c) ............................................... N.A.
311 (a) ............................................... 7.11
(b) ............................................... 7.11
(c) ............................................... N.A.
312 (a)................................................ 2.05
(b)................................................ 12.03
(c) ............................................... 12.03
313 (a) ............................................... 7.06
(b)(1) ............................................ N.A.
(b)(2) ............................................ 7.06;7.07
(c) ............................................... 7.06;12.02
(d)................................................ 7.06
314 (a) ............................................... 4.03;12.02
(b) ............................................... N.A.
(c)(1) ............................................ 12.04
(c)(2) ............................................ 12.04
(c)(3) ............................................ N.A.
(d)................................................ N.A.
(e) .............................................. 12.05
(f)................................................ N.A.
315 (a)................................................ 7.01
(b)................................................ 7.05,12.02
(c) .............................................. 7.01
(d)................................................ 7.01
(e)................................................ 6.11
316 (a)(last sentence) ................................ 2.09
(a)(1)(A).......................................... 6.05
(a)(1)(B) ......................................... 6.04
(a)(2) ............................................ N.A.
(b) ............................................... 6.07
(c) ............................................... 2.13
317 (a)(1) ............................................ 6.08
(a)(2)............................................. 6.09
(b) ............................................... 2.04
318 (a)................................................ 12.01
(b)................................................ N.A.
(c)................................................ 12.01
N.A. means not applicable.
*This Cross-Reference Table is not part of this Indenture.
NYMAIN01 Doc: 159158_2
-i-
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE...................................................... 1
Section 1.01. Definitions........................................ 1
Section 1.02. Other Definitions.................................. 14
Section 1.03. Incorporation by Reference of Trust Indenture Act.. 15
Section 1.04. Rules of Construction.............................. 16
ARTICLE 2
THE NOTES......................................................... 16
Section 2.01. Form and Dating.................................... 16
Section 2.02. Execution and Authentication....................... 16
Section 2.03. Registrar and Paying Agent......................... 17
Section 2.04. Paying Agent to Hold Money in Trust................ 18
Section 2.05. Lists of Holders of the Notes...................... 18
Section 2.06. Transfer and Exchange.............................. 18
Section 2.07. Replacement Notes.................................. 19
Section 2.08. Outstanding Notes.................................. 20
Section 2.09. Treasury Notes..................................... 20
Section 2.10. Temporary Notes.................................... 20
Section 2.11. Cancellation....................................... 21
Section 2.12. Defaulted Interest................................. 21
Section 2.13. Record Date........................................ 21
Section 2.14. CUSIP Number....................................... 21
Section 2.15. Computation of Interest............................ 22
ARTICLE 3
REDEMPTION AND OFFERS TO PURCHASE................................. 22
Section 3.01. Notices to Trustee................................. 22
Section 3.02. Selection of Notes to Be Redeemed.................. 22
Section 3.03. Notice of Redemption............................... 22
Section 3.04. Effect of Notice of Redemption..................... 23
Section 3.05. Deposit of Redemption Price........................ 23
Section 3.06. Notes Redeemed in Part............................. 24
Section 3.07. Optional Redemption................................ 24
Section 3.08. Mandatory Redemption............................... 24
Section 3.09. Asset Sale Offers.................................. 25
ARTICLE 4
COVENANTS......................................................... 27
Section 4.01. Payment of Notes................................... 27
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TABLE OF CONTENTS (cont.)
Page
Section 4.02. Maintenance of Office or Agency.................... 27
Section 4.03. Reports............................................ 28
Section 4.04. Compliance Certificate............................. 28
Section 4.05. Taxes.............................................. 29
Section 4.06. Stay, Extension and Usury Laws..................... 29
Section 4.07. Restricted Payments................................ 29
Section 4.08. Dividend and Other Payment Restrictions Affecting
Restricted Subsidiaries............................ 31
Section 4.09. Incurrence of Indebtedness and Issuance of
Preferred Stock.................................... 32
Section 4.10. Asset Sales........................................ 33
Section 4.11. Transactions with Affiliates....................... 34
Section 4.12. Liens.............................................. 35
Section 4.13. Additional Subsidiary Guarantees................... 35
Section 4.14. Offer to Purchase Upon Change of Control........... 36
Section 4.15. Corporate Existence................................ 37
Section 4.16. Certain Senior Subordinated Debt................... 38
Section 4.17. Designation of unrestricted subsidiaries........... 38
ARTICLE 5
SUCCESSORS........................................................ 39
Section 5.01. Merger, Consolidation, or Sale of Assets........... 39
Section 5.02. Successor Corporation Substituted.................. 39
ARTICLE 6
CERTAIN DEFAULT PROVISIONS........................................ 40
Section 6.01. Events of Default.................................. 40
Section 6.02. Acceleration....................................... 42
Section 6.03. Other Remedies..................................... 43
Section 6.04. Waiver of Past Defaults............................ 43
Section 6.05. Control by Majority................................ 43
Section 6.06. Limitation on Suits................................ 43
Section 6.07. Rights of Holders of Notes to Receive Payment...... 44
Section 6.08. Collection Suit by Trustee......................... 44
Section 6.09. Trustee May File Proofs of Claim................... 44
Section 6.10. Priorities......................................... 45
Section 6.11. Undertaking for Costs.............................. 45
ARTICLE 7
TRUSTEE .......................................................... 46
Section 7.01. Duties of Trustee.................................. 46
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TABLE OF CONTENTS (cont.)
Page
Section 7.02. Rights of Trustee.................................... 47
Section 7.03. Individual Rights of Trustee......................... 48
Section 7.04. Trustee's Disclaimer................................. 48
Section 7.05. Notice of Defaults................................... 48
Section 7.06. Reports by Trustee to Holders of the Notes........... 48
Section 7.07. Compensation and Indemnity........................... 49
Section 7.08. Replacement of Trustee............................... 50
Section 7.09. Successor Trustee by Merger, etc..................... 51
Section 7.10. Eligibility; Disqualification........................ 51
Section 7.11. Preferential Collection of Claims Against Company.... 51
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE............................ 51
Section 8.01. Option to Effect Legal Defeasance or Covenant
Defeasance........................................... 51
Section 8.02. Legal Defeasance and Discharge....................... 51
Section 8.03. Covenant Defeasance.................................. 52
Section 8.04. Conditions to Legal or Covenant Defeasance........... 52
Section 8.05. Deposited Money and Government Securities to be Held
in Trust; Other Miscellaneous Provisions............. 54
Section 8.06. Repayment to Company................................. 54
Section 8.07. Reinstatement........................................ 55
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER ................................... 55
Section 9.01. Without Consent of Holders of Notes.................. 55
Section 9.02. With Consent of Holders of Notes..................... 56
Section 9.03. Compliance with Trust Indenture Act.................. 57
Section 9.04. Revocation and Effect of Consents.................... 57
Section 9.05. Notation on or Exchange of Notes..................... 58
Section 9.06. Trustee to Sign Amendments, etc...................... 58
ARTICLE 10
SUBORDINATION....................................................... 58
Section 10.01. Agreement to Subordinate............................. 58
Section 10.02. Liquidation; Dissolution; Bankruptcy................. 58
Section 10.03. Default on Designated Senior Debt.................... 59
Section 10.04. Acceleration of Notes................................ 60
Section 10.05. When Distribution Must be Paid Over.................. 60
Section 10.06. Notice By Company.................................... 60
Section 10.07. Subrogation.......................................... 61
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TABLE OF CONTENTS (cont.)
Page
Section 10.08. Relative Rights.................................... 61
Section 10.09. Subordination May Not Be Impaired by Company....... 61
Section 10.10. Distribution or Notice to Representative........... 61
Section 10.11. Rights of Trustee and Paying Agent................. 62
Section 10.12. Authorization to Effect Subordination.............. 62
Section 10.13. Amendments......................................... 62
ARTICLE 11
SUBSIDIARY GUARANTEES............................................. 62
Section 11.01. Subsidiary Guarantee............................... 62
Section 11.02. Subordination...................................... 64
Section 11.03. Liquidation; Dissolution; Bankruptcy............... 64
Section 11.04. Default on Senior Debt of the Guarantor............ 65
Section 11.05. Acceleration of Notes.............................. 66
Section 11.06. When Distribution Must Be Paid Over................ 66
Section 11.07. Notice by a Guarantor.............................. 66
Section 11.08. Subrogation........................................ 66
Section 11.09. Relative Rights.................................... 67
Section 11.10. Subordination May Not Be Impaired By Any Guarantor. 67
Section 11.11. Distribution or Notice to Representative........... 67
Section 11.12. Rights of Trustee and Paying Agent................. 68
Section 11.13. Authorization to Effect Subordination.............. 68
Section 11.14. Amendments......................................... 68
Section 11.15. Limitation of Guarantor's Liability................ 68
Section 11.16. Restricted Subsidiaries May Consolidate, etc.,
on Certain Term.................................... 69
Section 11.17. Releases Following Sale of Assets or Designation
as Unrestricted Subsidiary......................... 69
ARTICLE 12
MISCELLANEOUS..................................................... 70
Section 12.01. Trust Indenture Act Controls...................... 70
Section 12.02. Notices........................................... 70
Section 12.03. Communication by Holders of Notes with Other
Holders of Notes.................................. 71
Section 12.04. Certificate and Opinion as to Conditions Precedent 71
Section 12.05. Statements Required in Certificate or Opinion..... 71
Section 12.06. Rules by Trustee and Agents....................... 72
Section 12.07. No Personal Liability of Directors, Officers,
Employees and Stockholders........................ 72
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TABLE OF CONTENTS (cont.)
Page
Section 12.08. Governing Law....................................... 72
Section 12.09. No Adverse Interpretation of Other Agreements....... 72
Section 12.10. Successors.......................................... 72
Section 12.11. Severability........................................ 73
Section 12.12. Counterpart Originals............................... 73
Section 12.13. Table of Contents, Headings, etc.................... 73
EXHIBITS
Exhibit A FORM OF NOTE
Exhibit B FORM OF SUPPLEMENTAL INDENTURE
Exhibit C FORM OF NOTATION ON NOTE RELATING TO
GUARANTEE
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INDENTURE dated as of ________, 1996 among Iron Mountain
Incorporated, a Delaware corporation (the "Company"), the Restricted
Subsidiaries signatory hereto and First Bank National Association, as trustee
(the "Trustee").
The Company the Restricted Subsidiaries signatory hereto and
the Trustee agree as follows for the benefit of each other and for the equal and
ratable benefit of the Holders of the __% Senior Subordinated Notes due 2006:
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
SECTION 1.01. DEFINITIONS.
"Acquired Debt" means, with respect to any specified Person,
(a) Indebtedness of any other Person existing at the time such other Person
merged with or into or became a Subsidiary of such specified Person, including
Indebtedness incurred in connection with, or in contemplation of, such other
Person merging with or into or becoming a Subsidiary of such specified Person
and (b) Indebtedness encumbering any asset acquired by such specified Person.
"Acquisition EBITDA" means, as of any date of determination,
with respect to an Acquisition EBITDA Entity, the sum of (a) EBITDA of such
Acquisition EBITDA Entity for its last fiscal quarter for which financial
statements are available at such date of determination, multiplied by four (or
if such quarterly statements are not available, EBITDA for the most recent
fiscal year for which financial statements are available), plus (b) projected
quantifiable improvements in operating results (on an annualized basis) due to
cost reductions calculated in good faith by the Company or one of its Restricted
Subsidiaries, as certified by an Officers' Certificate filed with the Trustee,
without giving effect to any operating losses of the acquired Person.
"Acquisition EBITDA Entity" means, as of any date of
determination, a business or Person (a) which has been acquired by the Company
or one of its Restricted Subsidiaries and with respect to which financial
results on a consolidated basis with the Company have not been made available
for an entire fiscal quarter or (b) which is to be acquired in whole or in part
with Indebtedness, the incurrence of which will require the calculation on such
date of the Acquisition EBITDA of such Acquisition EBITDA Entity for purposes of
Section 4.09 hereof.
"Adjusted EBITDA" means, as of any date of determination and
without duplication, the sum of (a) EBITDA of the Company and its Restricted
Subsidiaries for the most recent fiscal quarter for which internal financial
statements are available at such date of determination, multiplied by four, and
(b) Acquisition EBITDA of each business or Person that is an Acquisition EBITDA
Entity as of such date of determination, multiplied by a fraction, the numerator
of which is three minus the number of months (and/or any portion thereof ) in
such most recent fiscal quarter for which the financial results of such
Acquisition EBITDA Entity are included in the EBITDA of the Company and its
Restricted Subsidiaries under clause (a) above, and (ii) the
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denominator of which is three. The effects of unusual or non-recurring items in
respect of the Company, a Restricted Subsidiary or an Acquisition EBITDA Entity
occurring in any period shall be excluded in the calculation of Adjusted EBITDA.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For purposes of this definition,
"control" (including, with correlative meanings, the terms "controlling,"
"controlled by" and "under common control with"), as used with respect to any
Person, will mean the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of such Person, whether
through the ownership of voting securities, by agreement or otherwise; provided,
however, that beneficial ownership of 10% or more of the voting securities of a
Person shall be deemed to be control.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Attributable Indebtedness" in respect of a Sale and Leaseback
Transaction means as of the time of determination, the greater of (a) the fair
market value of the property subject to such arrangement (as determined by the
Board of Directors) and (b) the present value (discounted at the rate of
interest implicit in such transaction) of the total obligations of the lessee
for rental payments during the remaining terms of the lease included in such
Sale and Leaseback Transaction (including any period for which such lease has
been extended).
"Bankruptcy Law" means Title 11, U.S. Code or any similar
federal or state law for the relief of debtors.
"Board of Directors" means the Board of Directors of the
Company, or any authorized committee of the Board of Directors.
"Business Day" means any day other than a Legal Holiday.
"Capital Lease Obligation" means, at the time any
determination thereof is to be made, the amount of the liability in respect of a
capital lease that would at such time be so required to be capitalized on the
balance sheet in accordance with GAAP.
"Capital Stock" means any and all shares, interests,
participations, rights or other equivalents (however designated) of corporate
stock, including, without limitation, with respect to partnerships, partnership
interests (whether general or limited) and any other interest or participation
that confers on a Person the right to receive a share of the profits and losses
of, or distributions of assets of, such partnership.
"Cash Equivalents" means (a) securities with maturities of one
year or less from the date of acquisition, issued, fully guaranteed or insured
by the United States Government or any agency thereof, (b) certificates of
deposit, time deposits, overnight bank deposits, bankers acceptances and
repurchase agreements issued by a Qualified Issuer having maturities of 270 days
or less from the date of acquisition, (c) commercial paper of an issuer rated at
least A-2 by Standard & Poor's Rating Group, a division of McGraw Hill, Inc., or
P-2 by Moody's Investors Service, or carrying an equivalent rating by a
nationally recognized rating agency if both of the two named rating agencies
cease publishing ratings of investments and having maturities of 270 days or
less from the date of acquisition, (d) money market accounts or funds with or
issued by Qualified Issuers and (e) Investments in money market funds
substantially all of the assets of which are comprised of securities and other
obligations of the types described in clauses (a) through (c) above.
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"Change of Control" means the occurrence of any of the
following events:
(a) any "person" or "group" (as such terms are used
in Sections 13(d) and 14(d) of the Exchange Act), other than
the Principal Stockholders (or any of them), is or becomes the
"beneficial owner" (as defined in Rules 13d-3 and 13d-5 under
the Exchange Act), directly or indirectly, of more than a
majority of the voting power of all classes of Voting Stock of
the Company;
(b) the Company consolidates with, or merges with or
into, another Person or conveys, transfers, leases or
otherwise disposes of all or substantially all of its assets
to any Person, or any Person consolidates with, or merges with
or into, the Company, in any such event pursuant to a
transaction in which the outstanding Voting Stock of the
Company is converted into or exchanged for cash, securities or
other property, other than any such transaction where (i) the
outstanding Voting Stock of the Company is not converted or
exchanged at all (except to the extent necessary to reflect a
change in the jurisdiction of incorporation) or is converted
into or exchanged for (A) Voting Stock (other than
Disqualified Stock) of the surviving or transferee Person or
(B) cash, securities and other property (other than Capital
Stock described in the foregoing clause (A)) of the surviving
or transferee Person in an amount that could be paid as a
Restricted Payment pursuant to Section 4.07 hereof and (ii)
immediately after such transaction, no "person" or "group" (as
such terms are used in Sections 13(d) and 14(d) of the
Exchange Act), other than the Principal Stockholders (or any
of them), is the "beneficial owner" (as defined in Rules 13d-3
and 13d-5 under the Exchange Act), directly or indirectly, of
more than a majority of the total outstanding Voting Stock of
the surviving or transferee Person;
(c) during any consecutive two-year period,
individuals who at the beginning of such period constituted
the Board of Directors (together with any new directors whose
election to such Board of Directors, or whose nomination for
election by the stockholders of the Company, was approved by a
vote of 662/3% of the directors then still in office who were
either directors at the beginning of such period or whose
election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the
Board of Directors then in office; or
(d) the Company is liquidated or dissolved or adopts
a plan of liquidation or dissolution other than in a
transaction which complies with the provisions described under
"Consolidation, Merger and Sale of Assets."
"Chrysler Notes" means the 13.42% Senior Subordinated Notes
due December 41, 2000 in the original principal amount of $15.0 million issued
by Iron Mountain Information Services, Inc. to Chrysler Capital Corporation.
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"Company" means the party named as such in this Indenture
until a successor replaces it pursuant to this Indenture and thereafter means
the successor.
"Consolidated Adjusted Net Income" means, for any period, the
net income (or net loss) of the Company and its Restricted Subsidiaries for such
period as determined on a consolidated basis in accordance with GAAP, adjusted
to the extent included in calculating such net income or loss by excluding (a)
any net after-tax extraordinary gains or losses (less all fees and expenses
relating thereto), (b) any net after-tax gains or losses (less all fees and
expenses relating thereto) attributable to Asset Sales, (c) the portion of net
income (or loss) of any Person (other than the Company or a Restricted
Subsidiary), including Unrestricted Subsidiaries, in which the Company or any
Restricted Subsidiary has an ownership interest, except to the extent of the
amount of dividends or other distributions actually paid to the Company or any
Restricted Subsidiary in cash dividends or distributions by such Person during
such period, and (d) the net income (or loss) of any Person combined with the
Company or any Restricted Subsidiary on a "pooling of interests" basis
attributable to any period prior to the date of combination.
"Consolidated Income Tax Expense" means, for any period, the
provision for federal, state, local and foreign income taxes of the Company and
its Restricted Subsidiaries for such period as determined on a consolidated
basis in accordance with GAAP.
"Consolidated Interest Expense" means, for any period, without
duplication, the sum of (a) the amount which, in conformity with GAAP, would be
set forth opposite the caption "interest expense" (or any like caption) on a
consolidated statement of operations of the Company and its Restricted
Subsidiaries for such period, including, without limitation, (i) amortization of
debt discount, (ii) the net cost of interest rate contracts (including
amortization of discounts), (iii) the interest portion of any deferred payment
obligation, (iv) amortization of debt issuance costs and (v) the interest
component of Capital Lease Obligations of the Company and its Restricted
Subsidiaries, plus (b) all interest on any Indebtedness of any other Person
guaranteed and paid by the Company or any of its Restricted Subsidiaries;
provided, however, that Consolidated Interest Expense will not include any gain
or loss from extinguishment of debt, including write-off of debt issuance costs.
"Consolidated Non-Cash Charges" means, for any period, the
aggregate depreciation, amortization and other non-cash expenses of the Company
and its Restricted Subsidiaries reducing Consolidated Adjusted Net Income for
such period, determined on a consolidated basis in accordance with GAAP
(excluding any such non-cash charge that requires an accrual of or reserve for
cash charges for any future period).
"Corporate Trust Office of the Trustee" will be at the address
of the Trustee specified in Section 12.02 hereof or such other address as to
which the Trustee may give notice to the Company.
"Credit Agent" means The Chase Manhattan Bank, in its capacity
as administrative agent for the lenders party to the Credit Agreement, or any
successor or successors party thereto.
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"Credit Agreement" means the Credit Agreement dated as of
September 30, 1996 among the Company, the lenders from time to time party
thereto and the Credit Agent, as amended, restated, supplemented, modified,
renewed, refunded, increased, extended, replaced or refinanced from time to
time.
"Custodian" means any receiver, trustee, assignee, liquidator
or similar official under any Bankruptcy Law.
"Default" means any event that is or with the passage of time
or the giving of notice or both would be an Event of Default.
"Depositary" means, with respect to Notes issuable in whole or
in part in the form of one or more Global Notes, a clearing agency registered
under the Exchange Act that is designated to act as Depositary for such Notes as
contemplated by Section 2.01.
"Designated Senior Debt" means (a) Senior Bank Debt and (b)
other Senior Debt the principal amount of which is $50.0 million or more at the
date of designation by the Company in a written instrument delivered to the
Trustee; provided that Senior Debt designated as Designated Senior Debt pursuant
to clause (b) shall cease to be Designated Senior Debt at any time that the
aggregate principal amount thereof outstanding is $10.0 million or less.
"Disqualified Stock" means any Capital Stock which, by its
terms (or by the terms of any security into which it is convertible or for which
it is exchangeable), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the option of the Holder thereof, in whole or in part, in each
case on or prior to the stated maturity of the Notes.
"distribution" means, for purposes of Articles 10 and 11, a
distribution consisting of cash, securities or other property, by set-off or
otherwise.
"Dollars" and "$" mean lawful money of the United States of
America.
"EBITDA" means for any period Consolidated Adjusted Net Income
for such period increased by (a) Consolidated Interest Expense for such period,
plus (b) Consolidated Income Tax Expense for such period, plus (c) Consolidated
Non-Cash Charges for such period.
"Equity Interests" means Capital Stock and all warrants,
options or other rights to acquire Capital Stock (but excluding any debt
security that is convertible into, or exchangeable for, Capital Stock).
"Equity Proceeds" means (a) with respect to Equity Interests
(or debt securities converted into Equity Interests) issued or sold for cash
Dollars, the aggregate amount of such cash Dollars and (b) with respect to
Equity Interests (or debt securities converted into Equity Interests)
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<PAGE>
issued or sold for any consideration other than cash Dollars, the aggregate
Market Price thereof computed on the date of the issuance or sale thereof.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Excluded Restricted Subsidiary" means any Wholly Owned
Restricted Subsidiary principally engaged in the records management business
domiciled outside the United States of America if the issuance of a Subsidiary
Guarantee by such Subsidiary would, as determined in a resolution of the Board
of Directors set forth in an Officers' Certificate delivered to the Trustee,
create a tax disadvantage that is material in relation to the aggregate amount
of the Company's and any Restricted Subsidiary's Investment or proposed
Investment therein.
"Existing Indebtedness" means Indebtedness of the Company and
its Subsidiaries (other than under the Credit Agreement) in existence on the
date of this Indenture, until such amounts are repaid.
"GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as have been approved by a significant segment
of the accounting profession, which are in effect on the date of this Indenture.
"Global Note" means a Note that evidences all or part of the
Notes and is authenticated and delivered to, and registered in the name of, the
Depositary for the Notes or a nominee thereof.
"Government Securities" means direct obligations of, or
obligations guaranteed by, the United States of America for the payment of which
guarantee or obligations the full faith and credit of the United States of
America is pledged.
"Guarantee" means, as applied to any obligation, (a) a
guarantee (other than by endorsement of negotiable instruments for collection in
the ordinary course of business), direct or indirect, in any manner, of any part
or all of such obligation and (b) an agreement, direct or indirect, contingent
or otherwise, the practical effect of which is to assure in any way the payment
or performance (or payment of damages in the event of non-performance) of all or
any part of such obligation, including, without limiting the foregoing, the
obligation to reimburse amounts drawn down under letters of credit securing such
obligations.
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (a) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements and (b) other agreements
or arrangements designed to protect such Person against fluctuations in interest
rates.
"Holder" means a Person in whose name a Note is registered.
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"Indebtedness" means (without duplication), with respect to
any Person, whether recourse is to all or a portion of the assets of such
Person, and whether or not contingent, (a) every obligation of such Person for
money borrowed, (b) every obligation of such Person evidenced by bonds,
debentures, notes or other similar instruments, (c) every reimbursement
obligation of such Person with respect to letters of credit, bankers'
acceptances or similar facilities issued for the account of such Person, (d)
every obligation of such Person issued or assumed as the deferred purchase price
of property or services, (e) every Capital Lease Obligation and every obligation
of such Person in respect of Sale and Leaseback Transactions that would be
required to be capitalized on the balance sheet in accordance with GAAP, (f) all
Disqualified Stock of such Person valued at the greater of its voluntary or
involuntary maximum fixed repurchase price, plus accrued and unpaid dividends
(unless included in such maximum repurchase price), (g) all obligations of such
Person under or with respect to Hedging Obligations which would be required to
be reflected on the balance sheet as a liability of such Person in accordance
with GAAP and (h) every obligation of the type referred to in clauses (a)
through (g) of another Person and dividends of another Person the payment of
which, in either case, such Person has guaranteed. For purposes of this
definition, the "maximum fixed repurchase price" of any Disqualified Stock that
does not have a fixed repurchase price will be calculated in accordance with the
terms of such Disqualified Stock as if such Disqualified Stock were repurchased
on any date on which Indebtedness is required to be determined pursuant to this
Indenture, and if such price is based upon, or measured by, the fair market
value of such Disqualified Stock, such fair market value will be determined in
good faith by the board of directors of the issuer of such Disqualified Stock.
Notwithstanding the foregoing, trade accounts payable and accrued liabilities
arising in the ordinary course of business and any liability for federal, state
or local taxes or other taxes owed by such Person will not be considered
Indebtedness for purposes of this definition. The amount outstanding at any time
of any Indebtedness issued with original issue discount is the aggregate
principal amount at maturity of such Indebtedness, less the remaining
unamortized portion of the original issue discount of such Indebtedness at such
time, as determined in accordance with GAAP.
"Indenture" means this Indenture, as amended or supplemented
from time to time.
"Investments" means, with respect to any Person, all
investments by such Person in other Persons (including Affiliates) in the forms
of loans (including Guarantees), advances or capital contributions (excluding
commission, travel and similar advances to officers and employees made in the
ordinary course of business), purchases or other acquisitions for consideration
of Indebtedness, Equity Interests or other securities and all other items that
are or would be classified as investments on a balance sheet prepared in
accordance with GAAP.
"Issuance Date" means the closing date for the sale and
original issuance of the Notes.
"Legal Holiday" means a Saturday, a Sunday or a day on which
banking institutions in the City of New York or at a place of payment are
authorized by law, regulation or executive order to remain closed. If a payment
date is a Legal Holiday at a place of payment, payment may be made at that place
on the next succeeding day that is not a Legal Holiday, and no interest will
accrue for the intervening period.
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"Leverage Ratio" means, at any date, the ratio of (a) the
aggregate principal amount of Indebtedness of the Company and its Restricted
Subsidiaries outstanding as of the most recent available quarterly or annual
balance sheet to (b) Adjusted EBITDA, after giving pro forma effect, without
duplication, to (i) the incurrence, repayment or retirement of any Indebtedness
by the Company or its Restricted Subsidiaries since the last day of the most
recent full fiscal quarter of the Company, (ii) if the Leverage Ratio is being
determined in connection with the incurrence of Indebtedness by the Company or a
Restricted Subsidiary, such Indebtedness to be incurred, and (iii) the
Indebtedness to be incurred in connection with the acquisition of any
Acquisition EBITDA Entity.
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
asset, whether or not filed, recorded or otherwise perfected under applicable
law (including any conditional sale or other title retention agreement, any
lease in the nature thereof, any option or other agreement to sell or give a
security interest in and any filing of or agreement to give any financing
statement under the Uniform Commercial Code, or equivalent statutes, of any
jurisdiction).
"Market Price" means, (a) with respect to the calculation of
Equity Proceeds from the issuance or sale of debt securities which have been
converted into Equity Interests, the value received upon the original issuance
or sale of such converted debt securities, as determined reasonably and in good
faith by the Board of Directors, and (b) with respect to the calculation of
Equity Proceeds from the issuance or sale of Equity Interests, the average of
the daily closing prices for such Equity Interests for the 20 consecutive
trading days preceding the date of such computation. The closing price for each
day will be (a) if such Equity Interests are then listed or admitted to trading
on the New York Stock Exchange, the closing price on the NYSE Consolidated Tape
(or any successor consolidated tape reporting transactions on the New York Stock
Exchange) or, if such composite tape is not in use or does not report
transactions in such Equity Interests, or if such Equity Interests are listed on
a stock exchange other than the New York Stock Exchange (including for this
purpose the Nasdaq National Market), the last reported sale price regular way
for such day, or in case no such reported sale takes place on such day, the
average of the closing bid and asked prices regular way for such day, in each
case on the principal national securities exchange on which such Equity
Interests are listed or admitted to trading (which will be the national
securities exchange on which the greatest number of such Equity Interests have
been traded during such 20 consecutive trading days), or (b) if such Equity
Interests are not listed or admitted to trading on any such exchange, the
average of the closing bid and asked prices thereof in the over-the-counter
market as reported by the National Association of Securities Dealers Automated
Quotation System or any successor system, or if not included therein, the
average of the closing bid and asked prices thereof furnished by two members of
the National Association of Securities Dealers selected reasonably and in good
faith by the Board of Directors for that purpose. In the absence of one or more
such quotations, the Market Price for such Equity Interests will be determined
reasonably and in good faith by the Board of Directors.
"Net Proceeds" means the aggregate cash proceeds received by
the Company or any of its Restricted Subsidiaries in respect of any Asset Sale,
which amount is equal to the excess, if any, of (a) the cash received by the
Company or such Restricted Subsidiary (including any cash
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payments received by way of deferred payment pursuant to, or monetization of, a
note or installment receivable or otherwise, but only as and when received) in
connection with such disposition over (b) the sum of (i) the amount of any
Indebtedness which is secured by such asset and which is required to be repaid
in connection with the disposition thereof, plus (ii) the reasonable
out-of-pocket expenses incurred by the Company or such Restricted Subsidiary, as
the case may be, in connection with such disposition or in connection with the
transfer of such amount from such Restricted Subsidiary to the Company, plus
(iii) provisions for taxes, including income taxes, attributable to the
disposition of such asset or attributable to required prepayments or repayments
of Indebtedness with the proceeds thereof, plus (iv) if the Company does not
first receive a transfer of such amount from the relevant Restricted Subsidiary
with respect to the disposition of an asset by such Restricted Subsidiary and
such Restricted Subsidiary intends to make such transfer as soon as practicable,
the out-of-pocket expenses and taxes that the Company reasonably estimates will
be incurred by the Company or such Restricted Subsidiary in connection with such
transfer at the time such transfer is expected to be received by the Company
(including, without limitation, withholding taxes on the remittance of such
amount).
"Notes" means the __% Senior Subordinated Notes due 2006, as
amended or supplemented from time to time pursuant to the terms hereof, that are
issued under this Indenture.
"Obligations" means any principal, interest (including
post-petition interest, whether or not allowed as a claim in any proceeding),
penalties, fees, costs, expenses, indemnifications, reimbursements, damages and
other liabilities payable under or in connection with any Indebtedness.
"Officer" means, with respect to any Person, the Chairman of
the Board, the Chief Executive Officer, the President, the Chief Operating
Officer, the Chief Financial Officer, the Treasurer, any Assistant Treasurer,
the Controller, the Secretary or any Vice-President of such Person.
"Officers' Certificate" means a certificate signed, unless
otherwise specified, by any two of the Chairman of the Board, a Vice Chairman of
the Board, the President, the Chief Financial Officer, the Controller or an
Executive Vice President of the Company, and delivered to the Trustee, that
meets the requirements of Section 12.05 hereof.
"Opinion of Counsel" means an opinion from legal counsel who
is reasonably acceptable to the Trustee, that meets the requirements of Section
12.05 hereof. The counsel may be an employee of or counsel to the Company, any
Subsidiary of the Company or the Trustee.
"Permitted Investments" means (a) any Investments in the
Company or in a Restricted Subsidiary (other than an Excluded Restricted
Subsidiary) of the Company, including without limitation the Guarantee of
Indebtedness permitted under Section 4.09 hereof; (b) any Investments in Cash
Equivalents; (c) Investments by the Company or any Restricted Subsidiary of the
Company in a Person, if as a result of such Investment (i) such Person becomes a
Restricted Subsidiary (other than an Excluded Restricted Subsidiary) of the
Company or (ii) such Person is merged, consolidated or amalgamated with or into,
or transfers or conveys substantially all of its
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assets to, or is liquidated into, the Company or a Restricted Subsidiary (other
than an Excluded Restricted Subsidiary) of the Company; (d) Investments in
assets (including accounts and notes receivable) owned or used in the ordinary
course of business; (e) Investments for any purpose related to the Company's
records management business in an aggregate outstanding principal amount not to
exceed $10.0 million; and (f) Investments by the Company or a Restricted
Subsidiary (other than an Excluded Restricted Subsidiary) in one or more
Excluded Restricted Subsidiaries, the aggregate outstanding amount of which does
not exceed 10% of the consolidated assets of the Company and its Restricted
Subsidiaries.
"Permitted Liens" means:
(a) Liens existing as of the Issuance Date;
(b) Liens on property or assets of the Company or
any Restricted Subsidiary securing Senior Debt;
(c) Liens on any property or assets of a Restricted
Subsidiary granted in favor of the Company or any Wholly
Owned Restricted Subsidiary;
(d) Liens securing the Notes or the Subsidiary
Guarantees;
(e) any interest or title of a lessor under any
Capital Lease Obligation or Sale and Leaseback Transaction so
long as the Indebtedness, if any, secured by such Lien does
not exceed the principal amount of Indebtedness permitted
under Section 4.09 hereof;
(f) Liens securing Acquired Debt created prior to
(and not in connection with or in contemplation of) the
incurrence of such Indebtedness by the Company or any
Restricted Subsidiary; provided that such Lien does not extend
to any property or assets of the Company or any Restricted
Subsidiary other than the assets acquired in connection with
the incurrence of such Acquired Debt;
(g) Liens securing Hedging Obligations permitted to
be incurred pursuant to clause (g) of Section 4.09 hereof;
(h) Liens arising from purchase money mortgages and
purchase money security interests, or in respect of the
construction of property or assets, incurred in the ordinary
course of the business of the Company or a Restricted
Subsidiary; provided that (i) the related Indebtedness is not
secured by any property or assets of the Company or any
Restricted Subsidiary other than the property and assets so
acquired or constructed and (ii) the Lien securing such
Indebtedness is created within 60 days of such acquisition or
construction;
(i) statutory Liens or landlords' and carriers',
warehousemen's, mechanics', suppliers', materialmen's,
repairmen's or other like Liens arising in
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the ordinary course of business and with respect to amounts
not yet delinquent or being contested in good faith by
appropriate proceedings, if a reserve or other appropriate
provision, if any, as is then required in conformity with GAAP
has been made therefor;
(j) Liens for taxes, assessments, government charges
or claims with respect to amounts not yet delinquent or that
are being contested in good faith by appropriate proceedings
diligently conducted, if a reserve or other appropriate
provision, if any, as is required in conformity with GAAP has
been made therefor;
(k) Liens incurred or deposits made to secure the
performance of tenders, bids, leases, statutory obligations,
surety and appeal bonds, government contracts, performance
bonds and other obligations of a like nature incurred in the
ordinary course of business (other than contracts for the
payment of money);
(l) easements, rights-of-way, restrictions and other
similar charges or encumbrances not interfering in any
material respect with the business of the Company or any
Restricted Subsidiary incurred in the ordinary course of
business;
(m) Liens arising by reason of any judgment, decree
or order of any court so long as such Lien is adequately
bonded and any appropriate legal proceedings that may have
been duly initiated for the review of such judgment, decree or
order shall not have been finally terminated or the period
within which such proceedings may be initiated shall not have
expired;
(n) Liens arising under options or agreements to
sell assets;
(o) other Liens securing obligations incurred in the
ordinary course of business, which obligations do not exceed
$1.0 million in the aggregate at any one time outstanding;
and
(p) any extension, renewal or replacement, in whole
or in part, of any Lien described in the foregoing clauses (a)
through (o); provided that any such extension, renewal or
replacement does not extend to any additional property or
assets.
"Person" means any individual, corporation, limited liability
company, partnership, joint venture, association, joint-stock company, trust,
unincorporated organization, or any government or any agency or political
subdivision thereof.
"Principal Stockholders" means each of Vincent J. Ryan,
Schooner Capital Corporation, C. Richard Reese, Eugene B. Doggett, and their
respective Affiliates.
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"Qualified Equity Offering" means an offering of Capital
Stock, other than Disqualified Stock, of the Company for Dollars, whether
registered or exempt from registration under the Securities Act.
"Qualified Issuer" means (a) any lender party to the Credit
Agreement or (b) any commercial bank (i) which has capital and surplus in excess
of $500,000,000 and (ii) the outstanding short-term debt securities of which are
rated at least A-2 by Standard & Poor's Rating Group, a division of McGraw-Hill,
Inc. or at least P-2 by Moody's Investors Service, or carry an equivalent rating
by a nationally recognized rating agency if both of the two named rating
agencies cease publishing ratings of investments.
"Qualifying Sale and Leaseback Transaction" means any Sale and
Leaseback Transaction between the Company or any of its Restricted Subsidiaries
and any bank, insurance company or other lender or investor providing for the
leasing to the Company or such Restricted Subsidiary of any property (real or
personal) which has been or is to be sold or transferred by the Company or such
Restricted Subsidiary to such lender or investor or to any Person to whom funds
have been or are to be advanced by such lender or investor and where the
property in question has been constructed or acquired after the date of this
Indenture.
"Refinancing Indebtedness" means new Indebtedness incurred or
given in exchange for, or the proceeds of which are used to repay, redeem,
defease, extend, refinance, renew, replace or refund, other Indebtedness;
provided, however, that (a) the principal amount of such new Indebtedness shall
not exceed the principal amount of Indebtedness so repaid, redeemed, defeased,
extended, refinanced, renewed, replaced or refunded (plus the amount of fees,
premiums, consent fees, prepayment penalties and expenses incurred in connection
therewith); (b) such Refinancing Indebtedness shall have a Weighted Average Life
to Maturity equal to or greater than the Weighted Average Life to Maturity of
the Indebtedness so repaid, redeemed, defeased, extended, refinanced, renewed,
replaced or refunded or shall mature after _______, 2006; (c) to the extent such
Refinancing Indebtedness refinances Indebtedness that has a final maturity date
occurring after ________, 2006, such new Indebtedness shall have a final
scheduled maturity not earlier than the final scheduled maturity of the
Indebtedness so repaid, redeemed, defeased, extended, refinanced, renewed,
replaced or refunded and shall not permit redemption at the option of the holder
earlier than the earliest date of redemption at the option of the holder of the
Indebtedness so repaid, redeemed, defeased, extended, refinanced, renewed,
replaced or refunded; (d) to the extent such Refinancing Indebtedness refinances
Indebtedness subordinate to the Notes, such Refinancing Indebtedness shall be
subordinated in right of payment to the Notes and to the extent such Refinancing
Indebtedness refinances Notes or Indebtedness pari passu with the Notes, such
Refinancing Indebtedness shall be pari passu with or subordinated in right of
payment to the Notes, in each case on terms at least as favorable to the holders
of Notes as those contained in the documentation governing the Indebtedness so
repaid, redeemed, defeased, extended, refinanced, renewed, replaced or refunded;
and (e) with respect to Refinancing Indebtedness incurred by a Restricted
Subsidiary, such Refinancing Indebtedness shall rank no more senior, and shall
be at least as subordinated, in right of payment to the Subsidiary Guarantee of
such Restricted Subsidiary as the Indebtedness being extended, refinanced,
renewed, replaced or refunded.
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"Representative" means, for purposes of Articles 10 and 11,
the Credit Agent or other agent, trustee or representative for any Senior Debt
of the Company or, with respect to any Restricted Subsidiary, for any Senior
Debt of such Restricted Subsidiary.
"Responsible Officer" when used with respect to the Trustee,
means any officer within the Corporate Trust Administration of the Trustee (or
any successor group of the Trustee) or any other officer of the Trustee
customarily performing functions similar to those performed by any of the above
designated officers and also means, with respect to a particular corporate trust
matter, any other officer to whom such matter is referred because of his
knowledge of and familiarity with the particular subject.
"Restricted Subsidiary" means (a) each direct or indirect
Subsidiary of the Company existing on the date of this Indenture and (b) any
other direct or indirect Subsidiary of the Company formed, acquired or existing
after the date of this Indenture, in each case which is not designated by the
Board of Directors as an "Unrestricted Subsidiary."
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Sale and Leaseback Transaction" means any transaction or
series of related transactions pursuant to which a Person sells or transfers any
property or asset in connection with the leasing, or the resale against
installment payments, of such property or asset to the seller or transferor.
"Senior Bank Debt" means all Obligations outstanding under or
in connection with the Credit Agreement (including Guarantees of such
Obligations by Subsidiaries of the Company).
"Senior Debt" means (a) the Senior Bank Debt and (b) any other
Indebtedness permitted to be incurred by the Company or any Restricted
Subsidiary, as the case may be, under the terms of this Indenture, unless the
instrument under which such Indebtedness is incurred expressly provides that it
is on a parity with or subordinated in right of payment to the Notes.
Notwithstanding anything to the contrary in the foregoing, Senior Debt shall not
include (i) any liability for federal, state, local or other taxes owed or owing
by the Company, (ii) any Indebtedness of the Company to any of its Subsidiaries
or other Affiliates, (iii) any trade payables or (iv) any Indebtedness that is
incurred in violation of this Indenture; provided, however, that such
Indebtedness shall be deemed not to have been incurred in violation of this
Indenture for purpooses of this clause (iv) if, in the case of any obligations
under the Credit Agreement, the holders of such obligations or their agent or
representative shall have received a written representation from the Company to
the effect that the incurrence of such Indebtedness does not violate the
provisions of this Indenture.
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date hereof.
"Subsidiary" means, with respect to any Person, any
corporation, association or other business entity of which more than 50% of the
total voting power of shares of Capital Stock entitled (without regard to the
occurrence of any contingency) to vote in the election of directors,
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managers or trustees thereof is at the time owned or controlled, directly or
indirectly, by such Person or one or more of the other Subsidiaries of such
Person or a combination thereof.
"Subsidiary Guarantee" means a Guarantee of a Guarantor
pursuant to Article 11 hereof.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C.
ss.ss. 77aaa-77bbbb) as in effect on the date on which this Indenture is
qualified under the TIA.
"Trustee" means the party named as such above until a
successor replaces it in accordance with the applicable provisions of this
Indenture and thereafter means the successor serving hereunder.
"Unrestricted Subsidiary" means (a) any Subsidiary that is
designated by the Board of Directors as an Unrestricted Subsidiary in accordance
with Section 4.17 hereof and (b) any Subsidiary of an Unrestricted Subsidiary.
"Voting Stock" means any class or classes of Capital Stock
pursuant to which the holders thereof have the general voting power under
ordinary circumstances to elect at least a majority of the board of directors,
managers or trustees of any Person (irrespective of whether or not, at the time,
stock of any other class or classes has, or might have, voting power by reason
of the happening of any contingency).
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the sum
of the products obtained by multiplying (x) the amount of each then remaining
installment, sinking fund, serial maturity or other required payment of
principal, including payment at final maturity, in respect thereof, by (y) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (b) the then outstanding principal
amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" means any Restricted
Subsidiary of the Company all of the outstanding Capital Stock or other
ownership interests of which (other than director's qualifying shares) shall at
the time be owned by the Company or by one of more Wholly Owned Restricted
Subsidiaries of the Company.
SECTION 1.02. OTHER DEFINITIONS.
Defined in
Term Section
"Affiliate Transaction"....................................... 4.11
"Asset Sale".................................................. 4.10
"Asset Sale Offer"............................................ 4.10
"Benefitted Party"............................................ 11.01
"Change of Control Offer"..................................... 4.14
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"Change of Control Payment"................................... 4.14
"Change of Control Payment Date".............................. 4.14
"Covenant Defeasance"......................................... 8.03
"Commencement Date"........................................... 4.10
"Event of Default"............................................ 6.01
"Excess Proceeds"............................................. 4.10
"Guarantor"................................................... 11.01
"incur"....................................................... 4.09
"Legal Defeasance" ........................................... 8.02
"Non-Monetary Default"........................................ 10.03
"Offer Amount"................................................ 3.09
"Offer Period"................................................ 3.09
"Paying Agent"................................................ 2.03
"Payment Blockage Notice"..................................... 10.03
"Payment Default"............................................. 10.03
"Purchase Date"............................................... 3.09
"Registrar"................................................... 2.03
"Restricted Payments"......................................... 4.07
"Separation Date"............................................. 2.06
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture,
other than those provisions of the TIA that may be excluded herein, which
provision shall be excluded to the extent specifically excluded in this
Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Notes and the Subsidiary Guarantees,
if any;
"indenture security holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
"obligor" on the Notes means the Company, the Guarantors and any
successor obligor upon the Notes or any Subsidiary Guarantee, as the case may
be.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by a rule or regulation
promulgated by the SEC under the TIA have the meanings so assigned to them.
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SECTION 1.04. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural
include the singular;
(5) provisions apply to successive events and transactions; and
(6) references to sections of or rules under the Securities Act or
the Exchange Act shall be deemed to include substitute, replacement or
successor sections or rules adopted by the SEC from time to time.
ARTICLE 2
THE NOTES
SECTION 2.01. FORM AND DATING.
The Notes and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A hereto, the terms of which are
incorporated in and made a part of this Indenture. The notation on each Note
relating to the Subsidiary Guarantees shall be substantially in the form set
forth on Exhibit C, which is part of this Indenture. The Notes may have
notations, legends or endorsements approved as to form by the Company and
required by law, stock exchange rule, agreements to which the Company or each
Restricted Subsidiary is subject, or usage. Each Note shall be dated the date of
its authentication. The Notes shall be issuable only in denominations of $1,000
and integral multiples thereof.
The Notes may, at the option of the Company, be issuable in whole or
in part in the form of one or more Global Notes and, in such case, the
Depositary or Depositaries for such Global Note or Global Notes shall be
designated by the Company in an Officers' Certificate delivered to the Trustee
on or prior to the Issuance Date. Every Global Note authenticated and delivered
hereunder will bear a legend substantially in the form thereof set forth on
Exhibit A hereto.
SECTION 2.02. EXECUTION AND AUTHENTICATION.
Two Officers of the Company shall sign the Notes for the Company by
manual or facsimile signature. The Company's seal shall be reproduced on the
Notes and may be in
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facsimile form. An Officer of each Guarantor shall sign the Subsidiary Guarantee
for such Guarantor by manual or facsimile signature.
If an Officer of the Company or a Guarantor whose signature is on a
Note or a Subsidiary Guarantee, as the case may be, no longer holds that office
at the time the Note is authenticated, the Note or the Subsidiary Guarantee, as
the case may be, shall nevertheless be valid.
A Note shall not be valid until authenticated by the manual signature
of the Trustee. The signature of the Trustee shall be conclusive evidence that
the Note has been authenticated under this Indenture. The form of Trustee's
certificate of authentication to be borne by the Notes shall be substantially as
set forth in Exhibit A hereto.
The Trustee shall, upon a written order of the Company signed by two
Officers of the Company, authenticate Notes for original issue up to an
aggregate principal amount stated in paragraph 4 of the Notes. The aggregate
principal amount of Notes outstanding at any time shall not exceed $__,000,000
except as provided in Section 2.07 hereof.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Notes. Unless limited by the terms of such appointment,
an authenticating agent may authenticate Notes whenever the Trustee may do so.
Each reference in this Indenture to authentication by the Trustee includes
authentication by such agent. An authenticating agent has the same rights as an
Agent to deal with the Company or any Guarantor or an Affiliate of the Company
or any Guarantor.
SECTION 2.03. REGISTRAR AND PAYING AGENT.
The Company shall maintain (i) an office or agency where Notes may be
presented for registration of transfer or for exchange (including any
co-registrar, the "Registrar") and (ii) an office or agency where Notes may be
presented for payment ("Paying Agent"). The Registrar shall keep a register of
the Notes and of their transfer and exchange. The Company may appoint one or
more co-registrars and one or more additional paying agents. The term "Paying
Agent" includes any additional paying agent. The Company may change any Paying
Agent, Registrar or co-registrar without prior notice to any Holder of a Note.
The Company shall notify the Trustee and the Trustee shall notify the Holders of
the Notes of the name and address of any Agent not a party to this Indenture.
The Company or any Guarantor may act as Paying Agent, Registrar or co-registrar.
The Company shall enter into an appropriate agency agreement with any Agent not
a party to this Indenture, which shall be subject to any obligations imposed by
the provisions of the TIA. The agreement shall implement the provisions of this
Indenture that relate to such Agent. The Company shall notify the Trustee of the
name and address of any such Agent. If the Company fails to maintain a Registrar
or Paying Agent, or fails to give the foregoing notice, the Trustee shall act as
such, and shall be entitled to appropriate compensation in accordance with
Section 7.07 hereof.
The Company initially appoints the Trustee as Registrar, Paying Agent
and agent for service of notices and demands in connection with the Notes.
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SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST.
The Company shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent shall hold in trust for the benefit of
the Holders of the Notes or the Trustee all money held by the Paying Agent for
the payment of principal of, premium, if any, and interest on the Notes, and
shall notify the Trustee of any Default by the Company or the Guarantors in
making any such payment. While any such Default continues, the Trustee may
require a Paying Agent to pay all money held by it to the Trustee. The Company
at any time may require a Paying Agent to pay all money held by it to the
Trustee. Upon payment over to the Trustee, the Paying Agent (if other than the
Company or a Guarantor) shall have no further liability for the money delivered
to the Trustee. If the Company or a Guarantor acts as Paying Agent, it shall
segregate and hold in a separate trust fund for the benefit of the Holders of
the Notes, subject to Article 10 hereof, all money held by it as Paying Agent.
Upon any bankruptcy or reorganization proceeding relating to the Company or a
Guarantor, the Trustee shall serve as Paying Agent for the Notes.
SECTION 2.05. LISTS OF HOLDERS OF THE NOTES.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Holders of the Notes and shall otherwise comply with TIA ss. 312(a). If the
Trustee is not the Registrar, the Company and/or the Guarantors shall furnish to
the Trustee at least seven Business Days before each interest payment date and
at such other times as the Trustee may request in writing a list in such form
and as of such date as the Trustee may reasonably require of the names and
addresses of Holders of the Notes, including the aggregate principal amount of
the Notes held by each thereof, and the Company and each Guarantor shall
otherwise comply with TIA ss. 312(a).
SECTION 2.06. TRANSFER AND EXCHANGE.
When Notes are presented to the Registrar with a request to register
the transfer or to exchange them for an equal principal amount of Notes of other
denominations, the Registrar shall register the transfer or make the exchange if
its requirements for such transactions are met; provided, however, that any Note
presented or surrendered for registration of transfer or exchange shall be duly
endorsed or accompanied by a written instruction of transfer in form
satisfactory to the Registrar and the Trustee duly executed by the Holder
thereof or by his attorney duly authorized in writing. To permit registrations
of transfer and exchanges, the Company shall issue and the Trustee shall
authenticate Notes at the Registrar's request, subject to such rules as the
Trustee may reasonably require.
Neither the Company nor the Registrar shall be required to (a) issue,
register the transfer of or exchange Notes during a period beginning at the
opening of business on a Business Day 15 days before the day of any selection of
Notes for redemption under Section 3.02 hereof and ending at the close of
business on the day of selection or (b) register the transfer of or exchange any
Note so selected for redemption in whole or in part, except the unredeemed
portion of any Note being redeemed in part.
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No service fee shall be charged to any Holder of a Note for any
registration of transfer or exchange (except as otherwise expressly permitted
herein), but the Company may require payment of a sum sufficient to cover any
transfer tax or similar governmental charge payable in connection therewith
(other than such transfer tax or similar governmental charge payable upon
exchanges pursuant to Sections 2.10, 3.06 or 9.05 hereof, which shall be paid by
the Company).
Prior to due presentment to the Trustee for registration of the
transfer of any Note, the Trustee, any Agent, the Company and each Guarantor may
deem and treat the Person in whose name any Note is registered as the absolute
owner of such Note for the purpose of receiving payment of principal of,
premium, if any, and interest on such Note and for all other purposes
whatsoever, whether or not such Note is overdue, and none of the Trustee, any
Agent, the Company or any Guarantor shall be affected by notice to the contrary.
Notwithstanding any other provision in this Indenture, no Global Note
may be transferred to, or registered or exchanged for Notes registered in the
name of, any Person other than the Depositary for such Global Note or any
nominee thereof, and no such transfer may be registered, unless (a) such
Depositary (i) notifies the Company that it is unwilling or unable to continue
as Depositary for such Global Note or (ii) ceases to be a clearing agency
registered under the Exchange Act, (b) the Company delivers to the Trustee an
Officers' Certificate stating that such Global Note shall be so transferable,
registrable, and exchangeable, and such transfers shall be registrable, or (c)
there shall have occurred and be continuing an Event of Default with respect to
the Notes evidenced by such Global Note. Notwithstanding any other provision in
this Indenture, a Global Note to which the restriction set forth in the
preceding sentence shall have ceased to apply may be transferred only to, and
may be registered and exchanged for Notes registered only in the name or names
of, such Person or Persons as the Depositary for such Global Note shall have
directed and no transfer thereof other than such a transfer may be registered.
Every Note authenticated and delivered upon registration of transfer of, or in
exchange for or in lieu of, a Global Note to which the restriction set forth in
the first sentence of this paragraph shall apply, whether pursuant to this
Section 2.06 or otherwise, shall be authenticated and delivered in the form of,
and shall be, a Global Note.
SECTION 2.07. REPLACEMENT NOTES.
If any mutilated Note is surrendered to the Trustee, or the Company
and the Trustee receive evidence to their satisfaction of the destruction, loss
or theft of any Note, the Company shall issue and the Trustee, upon the written
order of the Company signed by two Officers of the Company, shall authenticate a
replacement Note (accompanied by a notation of the Subsidiary Guarantees duly
endorsed by each Guarantor) if the Trustee's requirements for replacements of
Notes are met. If required by the Trustee, the Company or the Guarantors, an
indemnity bond must be supplied by the Holder that is sufficient in the judgment
of the Trustee, the Company and the Guarantors to protect the Company, the
Guarantors, the Trustee, any Agent or any authenticating agent from any loss
which any of them may suffer if a Note is replaced. Each of the Company, the
Guarantors and the Trustee may charge for its expenses in replacing a Note.
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Every replacement Note is an additional obligation of the Company and
the Guarantors and shall be entitled to all of the benefits of this Indenture
equally and ratably with all other Notes duly issued hereunder.
SECTION 2.08. OUTSTANDING NOTES.
The Notes outstanding at any time are all the Notes authenticated by
the Trustee except for those canceled by it, those delivered to it for
cancellation and those described in this Section 2.08 as not outstanding. If a
Note is replaced pursuant to Section 2.07 hereof, it ceases to be outstanding
unless the Trustee receives proof satisfactory to it that the replaced Note is
held by a bona fide purchaser. If the principal amount of any Note is considered
paid under Section 4.01 hereof, it ceases to be outstanding and interest on it
ceases to accrue. Subject to Section 2.09 hereof, a Note does not cease to be
outstanding because the Company, a Guarantor, a Subsidiary of the Company or a
Guarantor or an Affiliate of the Company or a Guarantor holds the Note.
SECTION 2.09. TREASURY NOTES.
In determining whether the Holders of the required principal amount
of Notes have concurred in any direction, waiver or consent, Notes owned by the
Company, any Guarantor, any of their respective Subsidiaries or any Affiliate of
the Company or any Guarantor shall be considered as though not outstanding,
except that for purposes of determining whether the Trustee shall be protected
in relying on any such direction, waiver or consent, only Notes which the
Trustee knows to be so owned shall be so considered. Notwithstanding the
foregoing, Notes that are to be acquired by the Company, any Guarantor, any
Subsidiary of the Company or any Guarantor or an Affiliate of the Company or any
Guarantor pursuant to an exchange offer, tender offer or other agreement shall
not be deemed to be owned by the Company, such Guarantor, a Subsidiary of the
Company or such Guarantor or an Affiliate of the Company or such Guarantor until
legal title to such Notes passes to the Company, such Guarantor, such Subsidiary
or such Affiliate, as the case may be.
SECTION 2.10. TEMPORARY NOTES.
Until definitive Notes are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Notes (accompanied by a
notation of the Subsidiary Guarantees duly endorsed by each Guarantor).
Temporary Notes shall be substantially in the form of definitive Notes but may
have variations that the Company and the Trustee consider appropriate for
temporary Notes. Without unreasonable delay, the Company shall prepare and the
Trustee, upon receipt of the written order of the Company signed by two Officers
of the Company, shall authenticate definitive Notes (accompanied by a notation
of the Subsidiary Guarantees duly endorsed by each Guarantor) in exchange for
temporary Notes. Until such exchange, temporary Notes shall be entitled to the
same rights, benefits and privileges as definitive Notes.
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SECTION 2.11. CANCELLATION.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment. The
Trustee shall cancel all Notes surrendered for registration of transfer,
exchange, payment, replacement or cancellation and shall destroy canceled Notes
(subject to the record retention requirement of the Exchange Act), unless the
Company directs canceled Notes to be returned to it. The Company may not issue
new Notes to replace Notes that it has redeemed or paid or that have been
delivered to the Trustee for cancellation. All canceled Notes held by the
Trustee shall be destroyed and certification of their destruction delivered to
the Company, unless by a written order, signed by two Officers of the Company,
the Company shall direct that canceled Notes be returned to it.
SECTION 2.12. DEFAULTED INTEREST.
If the Company and the Guarantors default in a payment of interest on
the Notes, the Company or any such Guarantor (to the extent of its obligations
under its Subsidiary Guarantee) shall pay the defaulted interest in any lawful
manner plus, to the extent lawful, interest payable on the defaulted interest,
to the Persons who are Holders of the Notes on a subsequent special record date,
which date shall be at the earliest practicable date but in all events at least
five Business Days prior to the payment date, in each case at the rate provided
in the Notes and in Section 4.01 hereof. The Company shall fix or cause to be
fixed each such special record date and payment date, and shall, promptly
thereafter, notify the Trustee of any such date. At least 15 days before the
special record date, the Company (or the Trustee, in the name of and at the
expense of the Company) shall mail to Holders of the Notes a notice that states
the special record date, the related payment date and the amount of such
interest to be paid.
SECTION 2.13. RECORD DATE.
The record date for purposes of determining the identity of Holders
of the Notes entitled to vote or consent to any action by vote or consent
authorized or permitted under this Indenture shall be determined as provided for
in TIA ss. 316(c).
SECTION 2.14. CUSIP NUMBER.
The Company in issuing the Notes may use a "CUSIP" number and, if it
does so, the Trustee shall use the CUSIP number in notices of redemption or
exchange as a convenience to Holders; provided that any such notice may state
that no representation is made as to the correctness or accuracy of the CUSIP
number printed in the notice or on the Notes and that reliance may be placed
only on the other identification numbers printed on the Notes. The Company will
promptly notify the Trustee of any change in the CUSIP number.
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SECTION 2.15. COMPUTATION OF INTEREST.
Interest will be computed on the basis of a 360-day year consisting
of twelve 30-day months.
ARTICLE 3
REDEMPTION AND OFFERS TO PURCHASE
SECTION 3.01. NOTICES TO TRUSTEE.
If the Company elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.07 hereof, it shall furnish to the Trustee,
at least 45 days but not more than 60 days before a redemption date, an
Officers' Certificate setting forth (i) the Section of this Indenture pursuant
to which the redemption shall occur, (ii) the redemption date, (iii) the
principal amount of Notes to be redeemed and (iv) the redemption price.
SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED.
If less than all of the Notes are to be redeemed at any time, the
Trustee shall select the Notes to be redeemed among the applicable Holders of
the Notes in compliance with the requirements of the principal national
securities exchange, if any, on which the Notes are listed or, if the Notes are
not so listed, on a pro rata basis, by lot or in accordance with any other
method the Trustee considers fair and appropriate, provided that no Notes of
$1,000 or less shall be redeemed in part. In the event of partial redemption by
lot, the particular Notes to be redeemed shall be selected, unless otherwise
provided herein, not less than 30 nor more than 60 days prior to the redemption
date by the Trustee from the outstanding Notes not previously called for
redemption.
The Trustee shall promptly notify the Company in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes and portions of
Notes selected shall be in amounts of $1,000 or whole multiples of $1,000;
except that if all of the Notes of a Holder are to be redeemed, the entire
outstanding amount of Notes held by such Holder, even if not a multiple of
$1,000, shall be redeemed. Except as provided in the preceding sentence,
provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.
SECTION 3.03. NOTICE OF REDEMPTION.
At least 30 days but not more than 60 days before a redemption date,
the Company shall mail or cause to be mailed, by first class mail, a notice of
redemption to each Holder whose Notes are to be redeemed at its registered
address.
The notice shall identify the Notes to be redeemed and shall state:
(a) the redemption date;
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(b) the redemption price (including accrued interest to the
redemption date);
(c) if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the
redemption date upon surrender of such Note, a new Note or Notes in
principal amount equal to the unredeemed portion shall be issued upon
cancellation of the original Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to
the Paying Agent to collect the redemption price;
(f) that, unless the Company defaults in making such redemption
payment, interest on Notes called for redemption shall cease to accrue on
and after the redemption date;
(g) the paragraph of the Notes and/or Section of this
Indenture pursuant to which the Notes called for redemption are being
redeemed; and
(h) that no representation is made as to the correctness or
accuracy of the CUSIP number, if any, listed in such notice or printed on
the Notes.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; provided, however, that the
Company shall have delivered to the Trustee, at least 45 days prior to the
redemption date, an Officers' Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in such notice as provided
in the preceding paragraph.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed in accordance with Section 3.03
hereof, Notes called for redemption become irrevocably due and payable on the
redemption date at the redemption price. A notice of redemption may not be
conditional. On and after the redemption date, unless the Company defaults in
the payment of the redemption price, interest will cease to accrue on the Notes
or portions thereof called for redemption and all rights of Holders with respect
to such Notes will terminate except for the right to receive payment of the
redemption price upon surrender for redemption.
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE.
One Business Day prior to the redemption date, the Company shall
deposit with the Trustee or with the Paying Agent money sufficient to pay the
redemption price of and accrued interest on all Notes to be redeemed on that
date. The Trustee or the Paying Agent shall promptly return to the Company any
money deposited with the Trustee or the Paying Agent by the Company in excess of
the amounts necessary to pay the redemption price of, and accrued interest on,
all Notes to be redeemed.
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If the Company complies with the provisions of the preceding
paragraph, on and after the redemption date, interest shall cease to accrue on
the Notes or the portions of Notes called for redemption, whether or not such
Notes are presented for payment. If a Note is redeemed on or after an interest
record date but on or prior to the related interest payment date, then any
accrued and unpaid interest shall be paid to the Person in whose name such Note
was registered at the close of business on such record date. If any Note called
for redemption shall not be so paid upon surrender for redemption because of the
failure of the Company to comply with the preceding paragraph, interest shall be
paid on the unpaid principal, from the redemption date until such principal is
paid, and to the extent lawful on any interest not paid on such unpaid
principal, in each case at the rate provided in the Notes and in Section 4.01
hereof.
SECTION 3.06. NOTES REDEEMED IN PART.
Upon surrender of a Note that is redeemed in part, the Company shall
issue and, upon the Company's written request, the Trustee shall authenticate
for the Holder at the expense of the Company a new Note (accompanied by a
notation of the Subsidiary Guarantees duly endorsed by each Guarantor) equal in
principal amount to the unredeemed portion of the Note surrendered.
SECTION 3.07. OPTIONAL REDEMPTION.
The Notes shall not be redeemable at the Company's option prior to
______, 2001. Thereafter, the Notes shall be subject to redemption at the option
of the Company, in whole or in part, upon not less than 30 nor more than 60
days' notice, at the redemption prices (expressed as percentages of principal
amount) set forth below plus accrued and unpaid interest thereon to the
applicable redemption date, if redeemed during the twelve-month period beginning
on ______ of the years indicated below:
Year Percentage
2001..................................................... ___.__%
2002..................................................... ___.__%
2003..................................................... ___.__%
2004 and thereafter...................................... 100.00%
Notwithstanding the foregoing, at any time prior to ______, 1999, the
Company may redeem up to 35% of the initial principal amount of the Notes
originally issued with the net proceeds of one or more Qualified Equity
Offerings at a redemption price equal to ___% of the principal amount of such
Notes, plus accrued and unpaid interest, if any, to the date of redemption;
provided, that at least 65% of the principal amount of Notes originally issued
remains outstanding immediately after the occurrence of any such redemption and
that such redemption occurs within 60 days following the closing of any such
Qualified Equity Offering.
SECTION 3.08. MANDATORY REDEMPTION.
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Except as set forth below under Section 4.10 and Section 4.14 hereof,
the Company shall not be required to make sinking fund or redemption payments
with respect to the Notes.
SECTION 3.09. ASSET SALE OFFERS.
In the event that the Company shall commence an Asset Sale Offer
pursuant to Section 4.10 hereof, it shall follow the procedures specified below:
The Asset Sale Offer shall remain open for 20 Business Days after the
Commencement Date relating to such Asset Sale Offer, except to the extent
required to be extended by applicable law (as so extended, the "Offer Period").
No later than one Business Day after the termination of the Offer Period (the
"Purchase Date"), the Company shall purchase the principal amount (the "Offer
Amount") of Notes required to be purchased in such Asset Sale Offer pursuant to
Sections 3.02 and 4.10 hereof or, if less than the Offer Amount has been
tendered, all Notes tendered in response to the Asset Sale Offer.
If the Purchase Date is on or after an interest payment record date
and on or before the related interest payment date, any interest accrued to such
Purchase Date shall be paid to the Person in whose name a Note is registered at
the close of business on such record date, and no additional interest shall be
payable to Holders who tender Notes pursuant to the Asset Sale Offer.
On the Commencement Date of any Asset Sale Offer, the Company shall
send or cause to be sent, by first class mail, a notice to each of the Holders,
with a copy to the Trustee. Such notice, which shall govern the terms of the
Asset Sale Offer, shall contain all instructions and materials necessary to
enable the Holders to tender Notes pursuant to the Asset Sale Offer and shall
state:
(1) that the Asset Sale Offer is being made pursuant to this Section
3.09 and Section 4.10 hereof and the length of time the Asset
Sale Offer shall remain open;
(2) the Offer Amount, the Purchase Price and the Purchase Date;
(3) that any Note not tendered or accepted for payment shall
continue to accrue interest;
(4) that, unless the Company defaults in the payment of the Purchase
Price, any Note accepted for payment pursuant to the Asset Sale
Offer shall cease to accrue interest after the Purchase Date;
(5) that Holders electing to have a Note purchased pursuant to any
Asset Sale Offer shall be required to surrender the Note, with
the form entitled "Option of Holder to Elect Purchase" on the
reverse of the Note completed, to the Company, a depositary, if
appointed by the Company, or a Paying Agent at the address
specified in the notice prior to the close of business on the
Business Day preceding the Purchase Date;
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(6) that Holders shall be entitled to withdraw their election if the
Company, depositary or Paying Agent, as the case may be,
receives, not later than the close of business on the Business
Day preceding the termination of the Offer Period, a telegram,
telex, facsimile transmission or letter setting forth the name
of the Holder, the principal amount of the Note the Holder
delivered for purchase and a statement that such Holder is
withdrawing his election to have the Note purchased;
(7) that, if the aggregate principal amount of Notes surrendered by
Holders exceeds the Offer Amount, the Trustee shall select the
Notes to be purchased on a pro rata basis (with such adjustments
as may be deemed appropriate by the Company so that only Notes
in denominations of $1,000, or integral multiples thereof, shall
be purchased); and
(8) that Holders whose Notes were purchased only in part shall be
issued new Notes equal in principal amount to the unpurchased
portion of the Notes surrendered.
On or before 12:00 p.m. on each Purchase Date, the Company shall
irrevocably deposit with the Trustee or Paying Agent in immediately available
funds the aggregate Purchase Price with respect to a principal amount of Notes
equal to the Offer Amount, together with accrued interest thereon, if any, to be
held for payment in accordance with the terms of this Section 3.09. On the
Purchase Date, the Company shall, to the extent lawful, (i) accept for payment,
on a pro rata basis to the extent necessary, an aggregate principal amount equal
to the Offer Amount of Notes tendered pursuant to the Asset Sale Offer, or if
less than the Offer Amount has been tendered, all Notes or portions thereof
tendered, (ii) deliver or cause the Paying Agent or depositary, as the case may
be, to deliver to the Trustee Notes so accepted and (iii) deliver to the Trustee
an Officers' Certificate stating that such Notes or portions thereof were
accepted for payment by the Company in accordance with the terms of this Section
3.09. The Company, depositary or Paying Agent, as the case may be, shall
promptly (but in any case not later than three Business Days after the Purchase
Date) mail or deliver to each tendering Holder an amount equal to the Purchase
Price with respect to the Notes tendered by such Holder and accepted by the
Company for purchase, and the Company shall promptly issue a new Note, and the
Trustee shall authenticate and mail or deliver such new Note, to such Holder,
equal in principal amount to any unpurchased portion of such Holder's Notes
surrendered. Any Note not accepted in the Asset Sale Offer shall be promptly
mailed or delivered by the Company to the Holder thereof. The Company shall
publicly announce in a newspaper of general circulation the results of the Asset
Sale Offer on the Purchase Date.
The Asset Sale Offer shall be made by the Company in compliance with
all applicable laws, including, without limitation, Regulation 14E of the
Exchange Act and the rules thereunder, to the extent applicable, and all other
applicable federal and state securities laws.
Each purchase pursuant to this Section 3.09 shall be made pursuant to
the provisions of the second paragraph of Section 3.05 hereof to the extent
applicable.
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In the event the amount of Excess Proceeds to be applied to an Asset
Sale Offer would result in the purchase of a principal amount of Notes which is
not evenly divisible by $1,000, the Trustee shall promptly refund to the Company
the portion of such Excess Proceeds that is not necessary to purchase the
immediately lesser principal amount of Notes that is so divisible.
ARTICLE 4
COVENANTS
SECTION 4.01. PAYMENT OF NOTES.
The Company shall pay or cause to be paid the principal of, premium,
if any, and interest on the Notes on the dates and in the manner provided in the
Notes. Principal, premium, if any, and interest shall be considered paid on the
date due if the Paying Agent, if other than the Company or a Restricted
Subsidiary, holds as of 10:00 a.m. Eastern Time on the due date money deposited
by the Company in immediately available funds and designated for and sufficient
to pay all principal, premium, if any, and interest then due.
The Company shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue principal at the rate equal
to 1% per annum in excess of the then applicable interest rate on the Notes to
the extent lawful; it shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue installments of interest
(without regard to any applicable grace period) at the same rate to the extent
lawful.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain in the Borough of Manhattan, the City of
New York, an office or agency (which may be an office of the Trustee or an
affiliate of the Trustee, Registrar or co-registrar) where Notes may be
surrendered for registration of transfer or for exchange and where notices and
demands to or upon the Company or any Restricted Subsidiary in respect of the
Notes and this Indenture may be served. The Company shall give prompt written
notice to the Trustee of the location, and any change in the location, of such
office or agency. If at any time the Company shall fail to maintain any such
required office or agency or shall fail to furnish the Trustee with the address
thereof, such presentations, surrenders, notices and demands may be made or
served at the Corporate Trust Office of the Trustee.
The Company may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, the City of New York for such purposes. The Company shall give prompt
written notice to the Trustee of any such designation or rescission and of any
change in the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of the
Trustee as one such office or agency of the Company in accordance with Section
2.03 hereof.
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SECTION 4.03. REPORTS.
Whether or not required by the rules and regulations of the SEC, so
long as any Notes are outstanding, the Company will furnish to the Holders of
Notes (i) all quarterly and annual financial information that would be required
to be contained in a filing with the SEC 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 (ii) all financial information that would be
required to be included in a Form 8-K filed with the SEC if the Company were
required to file such reports. In addition, whether or not required by the rules
and regulations of the SEC, the Company will file a copy of all such information
and reports with the SEC for public availability (unless the SEC will not accept
such a filing) and make such information available to investors who request it
in writing. Notwithstanding anything to the contrary contained herein, the
Trustee shall have no duty to review such documents for purposes of determining
compliance with any provisions of this Indenture.
SECTION 4.04. COMPLIANCE CERTIFICATE.
(a) The Company shall deliver to the Trustee, within 90 days after
the end of each fiscal year, an Officers' Certificate stating that a review of
the activities of the Company and its Subsidiaries during the preceding fiscal
year has been made under the supervision of the signing Officers with a view to
determining whether the Company and each Restricted Subsidiary has kept,
observed, performed and fulfilled its obligations under this Indenture
(including with respect to any Restricted Payments made during such year, the
basis upon which the calculations required by Section 4.07 hereof were computed,
which calculations may be based on the Company's latest available financial
statements), and further stating, as to each such Officer signing such
certificate, that to the best of his or her knowledge, the Company and each
Restricted Subsidiary has kept, observed, performed and fulfilled each and every
covenant contained in this Indenture and is not in default in the performance or
observance of any of the terms, provisions and conditions of this Indenture (or,
if a Default or Event of Default shall have occurred, describing all such
Defaults or Events of Default of which he or she may have knowledge and what
action the Company and each Restricted Subsidiary, as the case may be, is taking
or proposes to take with respect thereto) and that to the best of his or her
knowledge no event has occurred and remains in existence by reason of which
payments on account of the principal of or interest, if any, on the Notes is
prohibited or if such event has occurred, a description of the event and what
action the Company and each Restricted Subsidiary, as the case may be, is taking
or proposes to take with respect thereto.
(b) So long as not contrary to the then current recommendations of
the American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03 hereof shall be accompanied by a
written statement of the Company's independent public accountants (who shall be
a firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention that would lead them to believe that the Company has violated
any provisions of Article 4 or Article 5 hereof or, if any such violation has
occurred, specifying the nature and period of
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existence thereof, it being understood that such accountants shall not be liable
directly or indirectly to any Person for any failure to obtain knowledge of any
such violation.
(c) The Company shall, so long as any of the Notes are outstanding,
deliver to the Trustee, forthwith upon any Officer becoming aware of any Default
or Event of Default, an Officers' Certificate specifying such Default or Event
of Default and what action the Company is taking or proposes to take with
respect thereto.
SECTION 4.05. TAXES.
The Company shall pay, and shall cause each of its Subsidiaries to
pay, prior to delinquency, all material taxes, assessments, and governmental
levies except (i) such as are contested in good faith and by appropriate
proceedings or (ii) the nonpayment of which would not materially adversely
affect the business, condition (financial or otherwise), operations, performance
or properties of the Company and its Subsidiaries, taken as a whole.
SECTION 4.06. STAY, EXTENSION AND USURY LAWS.
Each of the Company and the Guarantors covenants (to the extent that
it may lawfully do so) that it shall not at any time insist upon, plead, or in
any manner whatsoever claim or take the benefit or advantage of, any stay,
extension or usury law wherever enacted, now or at any time hereafter in force,
that may affect the covenants or the performance of this Indenture; and each of
the Company and the Guarantors (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
shall not, by resort to any such law, hinder, delay or impede the execution of
any power herein granted to the Trustee, but shall suffer and permit the
execution of every such power as though no such law has been enacted.
SECTION 4.07. RESTRICTED PAYMENTS.
The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly: (a) declare or pay any dividend or make
any distribution on account of the Company's or any of its Restricted
Subsidiaries' Equity Interests (other than dividends or distributions payable in
Equity Interests (other than Disqualified Stock) of the Company or such
Restricted Subsidiary or dividends or distributions payable to the Company or
any Restricted Subsidiary); (b) purchase, redeem or otherwise acquire or retire
for value any Equity Interests of the Company or any Restricted Subsidiary or
other Affiliate of the Company (other than any such Equity Interests owned by
the Company or any Restricted Subsidiary); (c) purchase, redeem or otherwise
acquire or retire prior to scheduled maturity for value any Indebtedness that is
subordinated in right of payment to the Notes; or (d) make any Investment other
than a Permitted Investment (all such payments and other actions set forth in
clauses (a) through (d) above being collectively referred to as "Restricted
Payments"), unless, at the time of such Restricted Payment:
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(i) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; and
(ii) the Company would, at the time of such Restricted Payment and
after giving pro forma effect thereto, have been permitted to incur at
least $1.00 of additional Indebtedness pursuant to the test set forth in
the first paragraph of Section 4.09 hereof; and
(iii)such Restricted Payment, together with the aggregate of all
other Restricted Payments made by the Company and its Restricted
Subsidiaries after the date of this Indenture is less than (x) the
cumulative EBITDA of the Company, minus 1.75 times the cumulative
Consolidated Interest Expense of the Company, in each case for the period
(taken as one accounting period) from June 30, 1996, to the end of the
Company's most recently ended fiscal quarter for which internal financial
statements are available at the time of such Restricted Payment, plus (y)
the aggregate net Equity Proceeds received by the Company from the
issuance or sale since the date of this Indenture of Equity Interests of
the Company or of debt securities of the Company that have been converted
into such Equity Interests (other than Equity Interests or convertible
debt securities sold to a Restricted Subsidiary of the Company and other
than Disqualified Stock or debt securities that have been converted into
Disqualified Stock), plus (z) $2.0 million.
The foregoing provisions will not prohibit (A) the payment of any
dividend within 60 days after the date of declaration thereof, if at said date
of declaration such payment would have complied with the provisions of this
Indenture; (B) the redemption, repurchase, retirement or other acquisition or
retirement for value of any Equity Interests of the Company in exchange for, or
with the net cash proceeds of, the substantially concurrent sale (other than to
a Restricted Subsidiary of the Company) of other Equity Interests of the Company
(other than any Disqualified Stock); (C) the defeasance, redemption, repurchase,
retirement or other acquisition or retirement for value of Indebtedness that is
subordinated or pari passu in right of payment to the Notes in exchange for, or
with the net cash proceeds of, a substantially concurrent issuance and sale
(other than to a Restricted Subsidiary of the Company) of Equity Interests of
the Company (other than Disqualified Stock); (D) the defeasance, redemption,
repurchase, retirement or other acquisition or retirement for value of
Indebtedness that is subordinated or pari passu in right of payment to the Notes
in exchange for, or with the net cash proceeds of, a substantially concurrent
issue and sale (other than to the Company or any of its Restricted Subsidiaries)
of Refinancing Indebtedness; (E) the repurchase of any Indebtedness subordinated
or pari passu in right of payment to the Notes at a purchase price not greater
than 101% of the principal amount of such Indebtedness in the event of a Change
of Control in accordance with provisions similar to the covenant set forth in
Section 4.14 hereof, provided that prior to or contemporaneously with such
repurchase the Company has made the Change of Control Offer as provided in such
covenant with respect to the Notes and has repurchased all Notes validly
tendered for payment in connection with such Change of Control Offer; (F) the
prepayment of the Chrysler Notes, together with premium and interest thereon;
(G) the prepayment of $450,000 of junior subordinated notes originally issued by
the Company to First Document Storage, Inc. in connection with a 1990
acquisition, together with interest thereon; and (H) additional payments to
current or former employees or directors of the Company for repurchases of
stock, stock options or other equity interests, provided that the
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aggregate amount of all such payments under this clause (H) does not exceed
$500,000 in any year and $2.0 million in the aggregate.
The Restricted Payments described in clauses (B), (C), (E) and (H) of
the immediately preceding paragraph will be Restricted Payments that will be
permitted to be taken in accordance with such paragraph but will reduce the
amount that would otherwise be available for Restricted Payments under clause
(iii) of the first paragraph of this section, and the Restricted Payments
described in clauses (A), (D), (F) and (G) of the immediately preceding
paragraph will be Restricted Payments that will be permitted to be taken in
accordance with such paragraph and will not reduce the amount that would
otherwise be available for Restricted Payments under clause (iii) of the first
paragraph of this section.
If an Investment results in the making of a Restricted Payment, the
aggregate amount of all Restricted Payments deemed to have been made as
calculated under the foregoing provision will be reduced by the amount of any
net reduction in such Investment (resulting from the payment of interest or
dividends, loan repayment, transfer of assets or otherwise) to the extent such
net reduction is not included in the Company's EBITDA; provided, however, that
the total amount by which the aggregate amount of all Restricted Payments may be
reduced may not exceed the lesser of (a) the cash proceeds received by the
Company and its Restricted Subsidiaries in connection with such net reduction
and (b) the initial amount of such Investment.
If the aggregate amount of all Restricted Payments calculated under
the foregoing provision includes an Investment in an Unrestricted Subsidiary or
other Person that thereafter becomes a Restricted Subsidiary, such Investment
will no longer be counted as a Restricted Payment for purposes of calculating
the aggregate amount of Restricted Payments. For the purpose of making any
calculations under this Indenture, (a) an Investment will include the fair
market value of the net assets of any Restricted Subsidiary at the time that
such Restricted Subsidiary is designated an Unrestricted Subsidiary and will
exclude the fair market value of the net assets of any Unrestricted Subsidiary
that is designated as a Restricted Subsidiary, (b) any property transferred to
or from an Unrestricted Subsidiary will be valued at fair market value at the
time of such transfer, provided that, in each case, the fair market value of an
asset or property is as determined by the Board of Directors in good faith, and
(c) subject to the foregoing, the amount of any Restricted Payment, if other
than cash, will be determined by the Board of Directors, whose good faith
determination will be conclusive.
The Board of Directors may designate a Restricted Subsidiary to be an
Unrestricted Subsidiary in compliance with Section 4.17 hereof. Upon such
designation, all outstanding Investments by the Company and its Restricted
Subsidiaries (except to the extent repaid in cash) in the Subsidiary so
designated will be deemed to be Restricted Payments made at the time of such
designation and will reduce the amount available for Restricted Payments under
the first paragraph of this Section 4.07. Such designation will only be
permitted if such Restricted Payment would be permitted at such time and if such
Restricted Subsidiary otherwise meets the definition of an Unrestricted
Subsidiary.
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SECTION 4.08. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED
SUBSIDIARIES.
The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to (a) (i) pay dividends or make any other distributions
to the Company or any of its Restricted Subsidiaries (A) on its Capital Stock or
(B) with respect to any other interest or participation in, or measured by, its
profits, or (ii) pay any Indebtedness owed to the Company or any of its
Restricted Subsidiaries, (b) make loans or advances to the Company or any of its
Restricted Subsidiaries or (c) transfer any of its properties or assets to the
Company or any of its Restricted Subsidiaries, except for such encumbrances or
restrictions existing under or by reason of (1) Existing Indebtedness as in
effect on the date of this Indenture, (2) the Credit Agreement as in effect as
of the date of this Indenture, and any amendments, modifications, restatements,
renewals, increases, supplements, refundings, replacements or refinancing
thereof, provided that such amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacements or refinancings are no more
restrictive in the aggregate with respect to such dividend and other payment
restrictions than those contained in the Credit Agreement as in effect on the
date of this Indenture, (3) this Indenture and the Notes, (4) applicable law,
(5) any instrument governing Indebtedness or Capital Stock of a Person acquired
by the Company or any of its Restricted Subsidiaries as in effect at the time of
such acquisition (except to the extent such Indebtedness was incurred in
connection with or in contemplation of such acquisition), which encumbrance or
restriction is not applicable to any Person, or the properties or assets of any
Person, other than the Person, or the property or assets of the Person, so
acquired, provided that the EBITDA of such Person is not taken into account in
determining whether such acquisition was permitted by the terms of this
Indenture, (6) customary non-assignment provisions in leases entered into in the
ordinary course of business and consistent with past practices, (7) restrictions
on the transfer of property subject to purchase money or capitalized lease
obligations otherwise permitted by clause (e) of Section 4.09 hereof, or (8)
permitted Refinancing Indebtedness, provided that the restrictions contained in
the agreements governing such Refinancing Indebtedness are no more restrictive
in the aggregate than those contained in the agreements governing the
Indebtedness being refinanced.
SECTION 4.09. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK.
The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, issue, assume, guaranty
or otherwise become directly or indirectly liable with respect to (collectively,
"incur") any Indebtedness (including Acquired Debt) and the Company will not
permit any of its Restricted Subsidiaries to issue any shares of preferred
stock; provided, however, that the Company may incur Indebtedness and may permit
a Restricted Subsidiary to incur Indebtedness if at the time of such incurrence
and after giving effect thereto the Leverage Ratio would be less than 6.0 to
1.0.
The foregoing limitations will not apply to (a) the incurrence by the
Company or any Restricted Subsidiary of Senior Bank Debt in an aggregate amount
not to exceed $25.0 million at any one time outstanding, (b) the issuance by the
Restricted Subsidiaries of Subsidiary Guarantees,
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(c) the incurrence by the Company and its Restricted Subsidiaries of the
Existing Indebtedness, (d) the issuance by the Company of the Notes, (e) the
incurrence by the Company and its Restricted Subsidiaries of Capital Lease
Obligations and/or additional Indebtedness constituting purchase money
obligations up to an aggregate of $2.5 million at any one time outstanding,
provided that the Liens securing such Indebtedness constitute Permitted Liens,
(f) the incurrence of Indebtedness between (i) the Company and its Restricted
Subsidiaries and (ii) the Restricted Subsidiaries, (g) Hedging Obligations that
are incurred for the purpose of fixing or hedging interest rate risk with
respect to any floating rate Indebtedness that is permitted by the terms of this
Indenture to be outstanding, (h) the incurrence by the Company and its
Restricted Subsidiaries of Indebtedness arising out of letters of credit,
performance bonds, surety bonds and bankers' acceptances incurred in the
ordinary course of business up to an aggregate of $2.0 million at any one time
outstanding, (i) the incurrence by the Company and its Restricted Subsidiaries
of Indebtedness consisting of guarantees, indemnities or obligations in respect
of purchase price adjustments in connection with the acquisition or disposition
of assets, including, without limitation, shares of Capital Stock, and (j) the
incurrence by the Company and its Restricted Subsidiaries of Refinancing
Indebtedness issued in exchange for, or the proceeds of which are used to repay,
redeem, defease, extend, refinance, renew, replace or refund, Indebtedness
referred to in clauses (b) through (e) above, and this clause (j).
SECTION 4.10. ASSET SALES.
The Company will not, and will not permit any of its Restricted
Subsidiaries to, (a) sell, lease, convey or otherwise dispose of any assets
(including by way of a Sale and Leaseback Transaction, but excluding a
Qualifying Sale and Leaseback Transaction) other than sales of inventory in the
ordinary course of business (provided that the sale, lease, conveyance or other
disposition of all or substantially all of the assets of the Company will be
governed by the provisions of Section 4.14 hereof and/or the provisions of
Section 5.01 hereof, and not by the provisions of this Section 4.10), or (b)
issue or sell Equity Interests of any of its Restricted Subsidiaries, that, in
the case of either clause (a) or (b) above, whether in a single transaction or a
series of related transactions, (i) have a fair market value in excess of $1.0
million, or (ii) result in Net Proceeds in excess of $1.0 million (each of the
foregoing, an "Asset Sale"), unless (x) the Company (or the Restricted
Subsidiary, as the case may be) receives consideration at the time of such Asset
Sale at least equal to the fair market value (evidenced by an Officers'
Certificate delivered to the Trustee, and for Asset Sales having a fair market
value or resulting in net proceeds in excess of $5.0 million, evidenced by a
resolution of the Board of Directors set forth in an Officers' Certificate
delivered to the Trustee) of the assets sold or otherwise disposed of and (y) at
least 75% of the consideration therefor received by the Company or such
Restricted Subsidiary is in the form of cash or like-kind assets (in each case
as determined in good faith by the Company, evidenced by a resolution of the
Board of Directors and certified by an Officers' Certificate filed with the
Trustee); provided, however, that the amount of (A) any liabilities (as shown on
the Company's or such Restricted Subsidiary's most recent balance sheet or in
the notes thereto) of the Company or such Restricted Subsidiary (other than
liabilities that are by their terms subordinated to the Notes or any Subsidiary
Guarantee) that are assumed by the transferee of any such assets and (B) any
notes or other obligations received by the Company or such Restricted Subsidiary
from such transferee that are immediately converted by the Company or such
Restricted
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Subsidiary into cash (to the extent of the cash received) or Cash Equivalents,
shall be deemed to be cash for purposes of this provision; and provided,
further, that the 75% limitation referred to in the foregoing clause (y) shall
not apply to any Asset Sale in which the cash portion of theconsideration
received therefrom is equal to or greater than what the after-tax proceeds would
have been had such Asset Sale complied with the aforementioned 75% limitation. A
transfer of assets or issuance of Equity Interests by the Company to a Wholly
Owned Restricted Subsidiary or by a Wholly Owned Restricted Subsidiary to the
Company or to another Wholly Owned Restricted Subsidiary will not be deemed to
be an Asset Sale.
Within 360 days of any Asset Sale, the Company may, at its option,
apply an amount equal to the Net Proceeds from such Asset Sale either (a) to
permanently reduce Senior Debt, or (b) to an investment in a Restricted
Subsidiary or in another business or capital expenditure or other
long-term/tangible assets, in each case, in the same or a similar line of
business as the Company or any of its Restricted Subsidiaries was engaged in on
the date of this Indenture or in businesses similar or reasonably related
thereto. Pending the final application of any such Net Proceeds, the Company may
temporarily reduce Senior Bank Debt or otherwise invest such Net Proceeds in any
manner that is not prohibited by this Indenture. Any Net Proceeds from such
Asset Sale that are not applied or invested as provided in the first sentence of
this paragraph will be deemed to constitute "Excess Proceeds." When the
aggregate amount of Excess Proceeds exceeds $5.0 million, the Company shall make
an offer to all Holders of Notes (an "Asset Sale Offer") to purchase the maximum
principal amount of Notes that may be purchased out of the Excess Proceeds, at
an offer price in cash in an amount equal to 100% of the principal amount
thereof plus accrued and unpaid interest, if any, to the date of purchase, in
accordance with the procedures set forth in this Indenture. To the extent that
the aggregate amount of Notes tendered pursuant to an Asset Sale Offer is less
than the Excess Proceeds, the Company may use any remaining Excess Proceeds for
general corporate purposes. If the aggregate principal amount of Notes
surrendered by Holders thereof exceeds the amount of Excess Proceeds, the
Trustee shall select the Notes to be purchased on a pro rata basis. Upon
completion of such offer to purchase, the amount of Excess Proceeds shall be
reset at zero.
An Asset Sale Offer shall be made pursuant to the provisions of
Section 3.09 hereof. No later than the date which is five Business Days after
the date on which the aggregate amount of Excess Proceeds exceeds $5 million,
the Company shall notify the Trustee of such Asset Sale Offer and provide the
Trustee with an Officers' Certificate setting forth the calculations used in
determining the amount of Net Proceeds to be applied to the purchase of
Securities. The Company shall commence or cause to be commenced the Asset Sale
Offer on a date no later than 15 Business Days after such notice (the
"Commencement Date").
SECTION 4.11. TRANSACTIONS WITH AFFILIATES.
The Company will not, and will not permit any of its Restricted
Subsidiaries to, sell, lease, transfer or otherwise dispose of any of its
properties or assets to, or purchase any property or assets from, or enter into
any contract, agreement, understanding, loan, advance or guarantee with, or for
the benefit of, any Affiliate (each of the foregoing, an "Affiliate
Transaction"), unless (a) such Affiliate Transaction is on terms that are no
less favorable to the Company or the relevant
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Restricted Subsidiary than those that would have been obtained in a comparable
transaction by the Company or such Restricted Subsidiary with a non-Affiliated
Person and (b) the Company delivers to the Trustee (i) with respect to any
Affiliate Transaction involving aggregate payments in excessof $1.0 million, a
resolution of the Board of Directors set forth in an Officers' Certificate
certifying that such Affiliate Transaction complies with clause (a) above and
such Affiliate Transaction is approved by a majority of the disinterested
members of the Board of Directors and (ii) with respect to any Affiliate
Transaction involving aggregate payments in excess of $5.0 million, an opinion
as to the fairness to the Company or such Restricted Subsidiary from a financial
point of view issued by an investment banking firm of national standing;
provided, however, that (A) any employment agreement entered into by the Company
or any of its Restricted Subsidiaries in the ordinary course of business and
consistent with the past practice of the Company or such Restricted Subsidiary,
(B) transactions between or among the Company and/or its Restricted
Subsidiaries, (C) transactions permitted by the provisions of Section 4.07
hereof and (D) the grant of stock, stock options or other equity interests to
employees and directors of the Company in accordance with duly adopted Company
stock grant, stock option and similar plans, in each case, shall not be deemed
Affiliate Transactions; and further provided that (1) the provisions of clause
(b) shall not apply to sales of inventory by the Company or any Restricted
Subsidiary to any Affiliate in the ordinary course of business and (2) the
provisions of clause (b)(ii) shall not apply to loans or advances to the Company
or any Restricted Subsidiary from, or equity investments in the Company or any
Restricted Subsidiary by, any Affiliate to the extent permitted by Section 4.09
hereof.
SECTION 4.12. LIENS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume or suffer to
exist any Lien (other than a Permitted Lien) upon any property or assets now
owned or hereafter acquired, or any income, profits or proceeds therefrom, or
assign or otherwise convey any right to receive income therefrom, unless (a) in
the case of any Lien securing any Indebtedness that is subordinate to the Notes,
the Notes are secured by a Lien on such property, assets or proceeds that is
senior in priority to such Lien and (b) in the case of any other Lien, the Notes
are equally and ratably secured with the obligation or liability secured by such
Lien.
SECTION 4.13. ADDITIONAL SUBSIDIARY GUARANTEES.
If any entity (other than an Excluded Restricted Subsidiary) shall
become a Restricted Subsidiary after the date of this Indenture, then such
Restricted Subsidiary shall execute a Subsidiary Guarantee and deliver an
opinion of counsel with respect thereto, in accordance with the terms of this
Indenture.
No Restricted Subsidiary shall consolidate with or merge with or into
(whether or not such Restricted Subsidiary is the surviving Person), another
Person (other than the Company) whether or not affiliated with such Restricted
Subsidiary unless (a) subject to the provisions of the following paragraph, the
Person formed by or surviving any such consolidation or merger (if other than
such Restricted Subsidiary) assumes all the obligations of such Restricted
Subsidiary under
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its Subsidiary Guarantee, if any, pursuant to a supplemental indenture in form
and substance reasonably satisfactory to the Trustee; (b) immediately after
giving effect to such transaction, no Default or Event of Default exists; and
(c) such Restricted Subsidiary, or any Person formed byor surviving any such
consolidation or merger, would be permitted to incur, immediately after giving
effect to such transaction, at least $1.00 of additional Indebtedness pursuant
to Section 4.09 hereof.
In the event of (a) a sale or other disposition of all of the assets
of any Guarantor by way of merger, consolidation or otherwise, (b) a sale or
other disposition of all of the capital stock of any Guarantor, or (c) the
designation of a Guarantor as an Unrestricted Subsidiary in accordance with the
terms of Section 4.17, then such Guarantor (in the event of a sale or other
disposition, by way of such a merger, consolidation or otherwise, of all of the
capital stock of such Guarantor, or in the event of the designation of such
Guarantor as an Unrestricted Subsidiary) or the corporation acquiring the
property (in the event of a sale or other disposition of all of the assets of
such Guarantor) shall be released and relieved of any obligations under its
Subsidiary Guarantee; provided that the Net Proceeds of such sale or other
disposition are applied in accordance with the applicable provisions of this
Indenture.
SECTION 4.14. OFFER TO PURCHASE UPON CHANGE OF CONTROL.
Upon the occurrence of a Change of Control, each Holder of Notes will
have the right to require the Company to repurchase all or any part (equal to
$1,000 or an integral multiple thereof) of such Holder's Notes pursuant to the
offer described below (the "Change of Control Offer") at an offer price in cash
equal to 101% of the aggregate principal amount thereof plus accrued and unpaid
interest, if any, to but excluding the date of purchase (the "Change of Control
Payment"). Within 30 calendar days following any Change of Control, the Company
will mail a notice to each Holder stating:
(a) that the Change of Control Offer is being made pursuant to
this Section 4.14 and that all Notes tendered will be accepted for
payment;
(b) the purchase price and the purchase date, which will be no
earlier than 30 calendar days nor later than 60 calendar days from the
date such notice is mailed (the "Change of Control Payment Date");
(c) that any Note not tendered will continue to accrue
interest;
(d) that, unless the Company defaults in the payment of the
Change of Control Payment, all Notes accepted for payment pursuant to the
Change of Control Offer will cease to accrue interest on and after the
Change of Control Payment Date;
(e) that Holders electing to have any Notes purchased pursuant
to a Change of Control Offer will be required to surrender the Notes, with
the form entitled "Option of Holder to Elect Purchase" on the reverse of
the Notes completed, to the Paying Agent at the
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address specified in such notice prior to the close of business on the fifth
Business Day preceding the Change of Control Payment Date;
(f) that Holders will be entitled to withdraw their election if
the Paying Agent receives, not later than the close of business on the
second Business Day preceding the Change of Control Payment Date, a
telegram, telex, facsimile transmission or letter setting forth the name
of the Holder, the principal amount of Notes delivered for purchase, and a
statement that such Holder is withdrawing his election to have such Notes
purchased; and
(g) that Holders whose Notes are being purchased only in part
will be issued new Notes equal in principal amount to the unpurchased
portion of the Notes surrendered, which unpurchased portion must be equal
to $1,000 in principal amount or an integral multiple thereof.
The Company will comply with the requirements of Rule 14e-1 under the Exchange
Act and any other securities laws and regulations thereunder to the extent such
laws and regulations are applicable to the repurchase of the Notes in connection
with a Change of Control.
On the Change of Control Payment Date, the Company will, to the
extent lawful, (a) accept for payment Notes or portions thereof tendered
pursuant to the Change of Control Offer, (b) deposit with the Paying Agent an
amount equal to the Change of Control Payment in respect of all Notes or
portions thereof so tendered and (c) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers' Certificate stating the
Notes or portions thereof tendered to the Company. The Paying Agent will
promptly mail to each Holder of Notes so accepted the Change of Control Payment
for such Notes, and the Trustee will promptly authenticate and mail to each
Holder a new Note equal in principal amount to any unpurchased portion of the
Notes surrendered, if any; provided that each such new Note will be in a
principal amount of $1,000 or an integral multiple thereof. Prior to complying
with the provisions of this Section 4.14, but in any event within 90 calendar
days following a Change of Control, the Company shall either repay all
outstanding Senior Debt or obtain the requisite consents, if any, under all
agreements governing outstanding Senior Debt to permit the repurchase of Notes
required by this Section 4.14. The Company shall publicly announce in The Wall
Street Journal, or if no longer published, a national newspaper of general
circulation the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Payment Date.
SECTION 4.15. CORPORATE EXISTENCE.
Subject to Article 5 and Article 11 hereof, as the case may be, the
Company and each of the Restricted Subsidiaries shall do or cause to be done all
things necessary to preserve and keep in full force and effect (i) its corporate
existence, and the corporate, partnership or other existence of each of their
Subsidiaries, in accordance with the respective organizational documents (as the
same may be amended from time to time) of the Company, any such Restricted
Subsidiary or any such Subsidiary, as the case may be, and (ii) the rights
(charter and statutory), licenses and franchises of the Company, the Restricted
Subsidiaries and their respective Subsidiaries; provided, however, that the
Company and the Restricted Subsidiaries shall not be required to preserve any
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such right, license or franchise, or the corporate, partnership or other
existence of any of their respective Subsidiaries, if an officer of the Company
shall determine that the preservation thereof is no longer desirable in the
conduct of the business of the Company, the Restricted Subsidiaries and their
Subsidiaries, taken as a whole and that the loss thereof is not adverse in any
material respect to the Holders of the Notes.
SECTION 4.16. CERTAIN SENIOR SUBORDINATED DEBT.
Notwithstanding the provisions of Section 4.09 hereof, (a) the
Company shall not incur any Indebtedness that is subordinated or junior in right
of payment to any Senior Debt of the Company and senior in any respect in right
of payment to the Notes, and (b) the Company shall not permit any Restricted
Subsidiary to incur any Indebtedness that is subordinated or junior in right of
payment to its Senior Debt and senior in any respect in right of payment to its
Subsidiary Guarantee.
SECTION 4.17. DESIGNATION OF UNRESTRICTED SUBSIDIARIES.
The Board of Directors may designate any Subsidiary (including any
Restricted Subsidiary or any newly acquired or newly formed Subsidiary) to be an
Unrestricted Subsidiary so long as: (i) neither the Company nor any Restricted
Subsidiary is directly or indirectly liable for any Indebtedness of such
Subsidiary; (ii) no default with respect to any Indebtedness of such Subsidiary
would permit (upon notice, lapse of time or otherwise) any holder of any other
Indebtedness of the Company or any Restricted Subsidiary to declare a default on
such other Indebtedness or cause the payment thereof to be accelerated or
payable prior to its stated maturity; (iii) any Investment in such Subsidiary
deemed to be made as a result of designating such Subsidiary an Unrestricted
Subsidiary will not violate the provisions of Section 4.07 hereof; (iv) neither
the Company nor any Restricted Subsidiary has a contract, agreement,
arrangement, understanding or obligation of any kind, whether written or oral,
with such Subsidiary other than (A) those that might be obtained at the time
from Persons who are not Affiliates of the Company or (B) administrative, tax
sharing and other ordinary course contracts, agreements, arrangements and
understandings or obligations entered into in the ordinary course of business;
and (v) neither the Company nor any Restricted Subsidiary has any obligation to
subscribe for additional shares of Capital Stock or other Equity Interests in
such Subsidiary, or to maintain or preserve such Subsidiary's financial
condition or to cause such Subsidiary to achieve certain levels of operating
results, other than as permitted under Section 4.07 hereof. Notwithstanding the
foregoing, the Company may not designate as an Unrestricted Subsidiary any
Subsidiary which, on the date of this Indenture, is a Significant Subsidiary,
and may not sell, transfer or otherwise dispose of any properties or assets of
any such Significant Subsidiary to an Unrestricted Subsidiary, other than in the
ordinary course of business.
The Board of Directors may designate any Unrestricted Subsidiary as a
Restricted Subsidiary; provided that such designation will be deemed to be an
incurrence of Indebtedness by a Restricted Subsidiary of any outstanding
Indebtedness of such Unrestricted Subsidiary and such designation will only be
permitted if (i) such Indebtedness is permitted under Section 4.09 hereof and
(ii) no Default or Event of Default would occur as a result of such designation.
SECTION 4.18 LIMITATION ON SALE AND LEASEBACK TRANSACTIONS
The Company shall not, and shall not permit any Restricted Subsidiary
to, enter into any Sale and Leaseback Transaction unless (a) the consideration
received in such Sale and Leaseback Transaction is at least equal to the fair
market value of the property sold, as determined by a resolution of the Board of
Directors, and (b) the Company or such Restricted Subsidiary could incur the
Attributable Indebtedness in respect of such Sale and Leaseback Transaction in
compliance with Section 4.09 hereof.
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ARTICLE 5
SUCCESSORS
SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ASSETS.
The Company shall not consolidate or merge with or into (whether or
not the Company is the surviving corporation), or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its properties or
assets in one or more related transactions, to another Person unless (a) the
Company is the surviving corporation or the entity or the Person formed by or
surviving any such consolidation or merger (if other than the Company) or to
which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made is a corporation organized or existing under the laws of
the United States, any state thereof or the District of Columbia; (b) the Person
formed by or surviving any such consolidation or merger (if other than the
Company) or the Person to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made assumes all the obligations
of the Company under the Notes and this Indenture pursuant to a supplemental
indenture in a form reasonably satisfactory to the Trustee; (c) immediately
after such transaction no Default or Event of Default exists; and (d) the
Company or any Person formed by or surviving any such consolidation or merger,
or to which such sale, assignment, transfer, lease, conveyance or other
disposition shall have been made will, at the time of such transaction and after
giving pro forma effect thereto, be permitted to incur at least $1.00 of
additional Indebtedness pursuant to the first paragraph of Section 4.09 hereof.
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the assets
of the Company or the Company and its Subsidiaries on a consolidated basis in
accordance with Section 5.01 hereof, the successor corporation formed by such
consolidation or into or with which the Company is merged or to which such sale,
assignment, transfer, lease, conveyance or other disposition is made shall
succeed to, and be substituted for (so that from and after the date of such
consolidation, merger, sale, lease, conveyance or other disposition, the
provisions of this Indenture referring to the "Company" shall refer instead to
the successor corporation and not to the Company), and may exercise every right
and power of the Company under this Indenture with the same effect as if such
successor Person had been named as the Company herein; provided, however, that
the predecessor Company shall not be relieved from the obligation to pay the
principal of and interest on the Notes except in the case of a sale of all of
the Company's assets that meets the requirements of Section 5.01 hereof.
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ARTICLE 6
CERTAIN DEFAULT PROVISIONS
SECTION 6.01. EVENTS OF DEFAULT.
An "Event of Default" occurs if:
(a) the Company and the Guarantors default in the payment of
interest on the Notes (whether or not prohibited by the subordination
provisions of Article 10 or Article 11 hereof, as the case may be) when
the same becomes due and payable and such default continues for a period
of 30 days;
(b) the Company and the Guarantors default in the payment of
principal of or premium, if any, on the Notes (whether or not prohibited
by the subordination provisions of Article 10 or Article 11 hereof, as the
case may be) when the same becomes due and payable at maturity, upon
redemption (including in connection with an offer to purchase) or
otherwise;
(c) the Company fails to comply with the provisions of
Section 4.14 hereof;
(d) the Company or the Guarantors fail to comply with any of
their other respective agreements or covenants in, or provisions of, the
Notes, the Subsidiary Guarantees or this Indenture and the Default
continues for the period and after the notice specified below;
(e) a default occurs under any mortgage, indenture or instrument
under which there may be issued or by which there may be secured or
evidenced any Indebtedness for money borrowed by the Company or any of its
Restricted Subsidiaries (or the payment of which is Guaranteed by the
Company or any of its Restricted Subsidiaries), whether such Indebtedness
or Guarantee now exists or shall be created hereafter if (i) such default
results in the acceleration of such Indebtedness prior to its express
maturity or shall constitute a default in the payment of such Indebtedness
at final maturity of such Indebtedness and (ii) the principal amount of
such Indebtedness that has been accelerated or not paid at maturity,
together with the principal amount of any other Indebtedness that has been
accelerated or not paid at maturity, exceeds $5.0 million;
(f) a final judgment or final judgments for the payment of money
are entered by a court or courts of competent jurisdiction against the
Company or any of its Restricted Subsidiaries and such judgments remain
unpaid, undischarged or unstayed for a period of 60 days, provided that
the aggregate of all such unpaid, undischarged or unstayed judgments
exceeds $5.0 million;
(g) except as otherwise permitted hereunder, any Subsidiary
Guarantee issued by a Guarantor shall be held in any judicial proceeding
to be unenforceable or invalid or shall cease for any reason to be in full
force and effect or any Guarantor (or its successors or
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assigns), or any Person acting on behalf of any Guarantor (or its
successors or assigns), shall deny or disaffirm its obligations in writing
under its Subsidiary Guarantee;
(h) the Company or any of its Restricted Subsidiaries that is
a Significant Subsidiary:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against
it in an involuntary case,
(iii) consents to the appointment of a Custodian of it or
for all or substantially all of its property,
(iv) makes a general assignment for the benefit of its
creditors, or
(v) admits in writing its inability generally to pay its
debts as the same become due, in each case, pursuant to or within
the meaning of any Bankruptcy Law; or
(i) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(i) is for relief against the Company or any Restricted
Subsidiary that is a Significant Subsidiary of the Company in an
involuntary case,
(ii) appoints a Custodian of the Company or any Restricted
Subsidiary that is a Significant Subsidiary of the Company or for all
or substantially all of the property of the Company or any Restricted
Subsidiary that is a Significant Subsidiary of the Company, or
(iii)orders the liquidation of the Company or any
Restricted Subsidiary that is a Significant Subsidiary of the
Company, and such order or decree remains unstayed and in effect for
60 consecutive days.
A Default under clause (d) is not an Event of Default until the
Trustee notifies the Company, or the Holders of at least 25% in principal amount
of the then outstanding Notes notify the Company and the Trustee, of the Default
and the Company does not cure the Default within 60 days after receipt of the
notice. The notice must specify the Default, demand that it be remedied and
state that the notice is a "Notice of Default."
In the case of any Event of Default pursuant to the provisions of
this Section 6.01 occurring by reason of any willful action (or inaction) taken
(or not taken) by or on behalf of the Company with the intention of avoiding
payment of the premium that the Company would have
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had to pay if the Company then had elected to redeem the Notes pursuant to
Section 3.07 hereof,an equivalent premium shall also become and be immediately
due and payable to the extent permitted by law upon acceleration of the Notes as
provided below, anything in this Indenture or in the Notes to the contrary
notwithstanding. If an Event of Default occurs prior to ______, [2004] by reason
of any willful action (or inaction) taken (or not taken) by or on behalf of the
Company with the intention of avoiding the prohibition on redemption of the
Notes prior to ______, [2004] pursuant to Section 3.07 hereof, then the premium
payable for purposes of this paragraph for each of the years beginning on ______
of the years set forth below shall be as set forth in the following table
expressed as a percentage of the amount that would otherwise be due but for the
provisions of this sentence, plus accrued interest, if any, to the date of
payment:
Year Percentage
1996...................................... ___%
1997...................................... ___%
1998...................................... ___%
1999...................................... ___%
2000...................................... ___%
2001...................................... ___%
2002...................................... ___%
2003...................................... ___%
2004...................................... ___%
SECTION 6.02. ACCELERATION.
If an Event of Default (other than an Event of Default specified in
clauses (h)(i) through (h)(iv) and (i) of Section 6.01 hereof relating to the
Company or any Significant Subsidiary) occurs and is continuing, the Trustee by
notice to the Company, or the Holders of at least 25% in principal amount of the
then outstanding Notes by notice to the Company and the Trustee may declare the
unpaid principal of and any accrued interest on all the Notes to be due and
payable. Upon such declaration the principal and interest shall be due and
payable immediately (together with the premium referred to in Section 6.01
hereof, if applicable); provided, however, that if any Obligation with respect
to Senior Bank Debt is outstanding pursuant to the Credit Agreement upon a
declaration of acceleration of the Notes, the principal, premium, if any, and
interest on the Notes will not be payable until the earlier of (1) the day which
is five Business Days after written notice of acceleration is received by the
Company and the Credit Agent, and (2) the date of acceleration of the
Indebtedness under the Credit Agreement. If an Event of Default specified in
clauses (h)(i) through (h)(iv) or (i) of Section 6.01 hereof relating to the
Company or any Significant Subsidiary occurs, such an amount shall ipso facto
become and be immediately due and payable without any declaration or other act
on the part of the Trustee or any Holder. In the event of a declaration of
acceleration of the Notes because an Event of Default has occurred and is
continuing as a result of the acceleration of any Indebtedness described in
Section 6.01(e) hereof, the declaration of acceleration of the Notes shall be
automatically annulled if the holders of any Indebtedness described in Section
6.01(e) have rescinded the declaration of acceleration in respect of such
Indebtedness within 30 days of the date of such declaration and if (a) the
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annulment of the acceleration of the Notes would not conflict with any judgment
or decree of a competent jurisdiction, and (b) all existing Events of Default,
except non-payment of principal or interest on the Notes that became due solely
because of the acceleration of the Notes, have been cured or waived.
SECTION 6.03. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy to collect the payment of principal, premium, if
any, and interest on the Notes or to enforce the performance of any provision of
the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder of a Note in exercising any right or
remedy upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.
SECTION 6.04. WAIVER OF PAST DEFAULTS.
Holders of not less than a majority in aggregate principal amount of
the Notes then outstanding by notice to the Trustee may on behalf of the Holders
of all of the Notes waive an existing Default or Event of Default and its
consequences hereunder, except a continuing Default or Event of Default in the
payment of the principal of, premium, if any, or interest on, the Notes
(including in connection with an offer to purchase) (provided, however, that the
Holders of a majority in aggregate principal amount of the then outstanding
Notes may rescind an acceleration and its consequences, including any related
payment default that resulted from such acceleration). Upon any such waiver,
such Default shall cease to exist, and any Event of Default arising therefrom
shall be deemed to have been cured for every purpose of this Indenture; but no
such waiver shall extend to any subsequent or other Default or impair any right
consequent thereon.
SECTION 6.05. CONTROL BY MAJORITY.
Holders of a majority in principal amount of the then outstanding
Notes may direct the time, method and place of conducting any proceeding for
exercising any remedy available to the Trustee or exercising any trust or power
conferred on it. However, the Trustee may refuse to follow any direction that
conflicts with law or this Indenture that the Trustee determines may be unduly
prejudicial to the rights of other Holders of Notes or that may involve the
Trustee in personal liability.
SECTION 6.06. LIMITATION ON SUITS.
A Holder of a Note may pursue a remedy with respect to this Indenture
or the Notes if, and only if:
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(a) the Holder of a Note gives to the Trustee written notice of
a continuing Event of Default or the Trustee receives such notice from the
Company;
(b) the Holders of at least 25% in principal amount of the then
outstanding Notes make a written request to the Trustee to pursue the
remedy;
(c) such Holder of a Note or Holders of Notes offer and, if
requested, provide to the Trustee indemnity satisfactory to the Trustee
against any loss, liability or expense;
(d) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer and, if requested, the
provision of indemnity; and
(e) during such 60-day period the Holders of a majority in
principal amount of the then outstanding Notes do not give the Trustee a
direction inconsistent with the request.
A Holder of a Note may not use this Indenture to prejudice the rights of another
Holder of a Note or to obtain a preference or priority over another Holder of a
Note. Nothing contained in this Section 6.06 shall affect the right of a Holder
of a Note to sue for enforcement of any overdue payment thereon.
SECTION 6.07. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT.
Subject to Articles 10 and 11 hereof, notwithstanding any other
provision of this Indenture, the right of any Holder of a Note to receive
payment of principal of, premium, if any, and interest on the Note, on or after
the respective due dates expressed in the Note (including in connection with a
Purchase Offer), or to bring suit for the enforcement of any such payment on or
after such respective dates, shall not be impaired or affected without the
consent of such Holder.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.01(a) or (b) hereof
occurs and is continuing, the Trustee is authorized to recover judgment in its
own name and as trustee of an express trust against the Company for the whole
amount of principal of, premium, if any, and interest remaining unpaid on the
Notes and interest on overdue principal and, to the extent lawful, interest and
such further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee is authorized to file such proofs of claim and other
papers or documents as may be necessary or advisable in order to have the claims
of the Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to the Company
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(or any other obligor upon the Notes, including the Guarantors), its creditors
or its property and shall be entitled and empowered to collect, receive and
distribute any money or other property payable or deliverable on any such claims
and any custodian in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee, and in the event that the Trustee
shall consent to the making of such payments directly to the Holders, to pay to
the Trustee any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 7.07 hereof. To the extent that the
payment of any such compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof out of the estate in any such proceeding, shall be denied
for any reason, payment of the same shall be secured by a Lien on, and shall be
paid out of, any and all distributions, dividends, money, securities and other
properties that the Holders may be entitled to receive in such proceeding
whether in liquidation or under any plan of reorganization or arrangement or
otherwise. Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder, or to authorize the Trustee to vote in respect of the
claim of any Holder in any such proceeding.
SECTION 6.10. PRIORITIES.
If the Trustee collects any money pursuant to this Article, it shall
pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts
due under Section 7.07 hereof, including payment of all compensation,
expense and liabilities incurred, and all advances made, by the Trustee
and the costs and expenses of collection;
Second: to the holders of Senior Debt of the Company or the
Restricted Subsidiaries, as the case may be, to the extent required by
Article 10 or Article 11 hereof, as applicable;
Third: to Holders of Notes for amounts due and unpaid on the
Notes for principal, premium, if any, and interest, ratably, without
preference or priority of any kind, according to the amounts due and
payable on the Notes for principal, premium, if any, and interest,
respectively; and
Fourth: to the Company or to such party as a court of
competent jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders of Notes pursuant to this Section 6.10.
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SECTION 6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section does not apply to a suit by the Trustee, a suit by a Holder of a
Note pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in
principal amount of the then outstanding Notes.
ARTICLE 7
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in its exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by the
express provisions of this Indenture and the Trustee need perform only
those duties that are specifically set forth in this Indenture and no
others, and no implied covenants or obligations shall be read into this
Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions furnished
to the Trustee and conforming to the requirements of this Indenture.
However, the Trustee shall examine the certificates and opinions to
determine whether or not they conform to the requirements of this
Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b)
of this Section;
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
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(iii) the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to paragraphs
(a), (b), and (c) of this Section.
(e) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or incur any liability. The Trustee shall be
under no obligation to exercise any of its rights and powers under this
Indenture at the request of any Holders, unless such Holder shall have offered
to the Trustee security and indemnity satisfactory to it against any loss,
liability or expense.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
(g) Except with respect to Sections 4.01 and 4.04 herein, the Trustee
shall have no duty to inquire as to the performance of the Company's covenants
in Article 4 hereof. In addition, the Trustee shall not be deemed to have
knowledge of any Default or Event of Default except (i) any Event of Default
occurring pursuant to Sections 6.01(a), 6.01(b), 4.01 and 4.04 herein or (ii)
any Default or Event of Default of which the Trustee shall have received written
notification or obtained actual knowledge.
SECTION 7.02. RIGHTS OF TRUSTEE.
(a) The Trustee may conclusively rely upon any document believed by
it to be genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require
an Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. The Trustee may consult with
counsel and the written advice of such counsel or any Opinion of Counsel shall
be full and complete authorization and protection from liability in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon.
(c) The Trustee may act through its attorneys and agents and shall
not be responsible for the misconduct or negligence of any agent appointed with
due care.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.
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(f) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders unless such Holders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
that might be incurred by it in compliance with such request or direction.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Company, any
Restricted Subsidiary or any Affiliate of the Company or any Restricted
Subsidiary with the same rights it would have if it were not Trustee. However,
in the event that the Trustee acquires any conflicting interest it must
eliminate such conflict within 90 days, apply to the SEC for permission to
continue as trustee or resign. Any Agent may do the same with like rights and
duties. The Trustee is also subject to Sections 7.10 and 7.11 hereof.
SECTION 7.04. TRUSTEE'S DISCLAIMER.
The Trustee shall not be responsible for and makes no representation
as to the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Company's use of the proceeds from the Notes or any money
paid to the Company or upon the Company's direction under any provision of this
Indenture, it shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any statement in the Notes or
any other document in connection with the sale of the Notes or pursuant to this
Indenture other than its certificate of authentication.
SECTION 7.05. NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing and if it
is known to the Trustee, the Trustee shall mail to the Holders of the Notes a
notice of the Default or Event of Default within 90 days after it occurs. Except
in the case of a Default or Event of Default in payment of principal of,
premium, if any, or interest on any Note, the Trustee may withhold the notice if
and so long as a committee of its Responsible Officers in good faith determines
that withholding the notice is in the interests of the Holders of the Notes.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES.
Within 60 days after each May 15 beginning with the May 15 following
the date of this Indenture, and for so long as Notes remain outstanding, the
Trustee shall mail to the Holders of the Notes a brief report dated as of such
reporting date that complies with TIA ss. 313(a) (but if no event described in
TIA ss. 313(a) has occurred within the twelve months preceding the reporting
date, no report need be transmitted). The Trustee also shall comply with TIA ss.
313(b)(2). The Trustee shall also transmit by mail all reports as required by
TIA ss. 313(c).
A copy of each report at the time of its mailing to the Holders of
Notes shall be mailed to the Company and filed with the SEC and each stock
exchange on which the Notes are listed in
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accordance with TIA ss. 313(d). The Company shall promptly notify the Trustee
when the Notes are listed on any stock exchange.
SECTION 7.07. COMPENSATION AND INDEMNITY.
The Company and the Restricted Subsidiaries shall pay to the Trustee
from time to time reasonable compensation for its acceptance of this Indenture
and services hereunder. The Trustee's compensation shall not be limited by any
law on compensation of a trustee of an express trust. The Company and the
Restricted Subsidiaries shall reimburse the Trustee promptly upon request for
all reasonable disbursements, advances and expenses incurred or made by it in
addition to the compensation for its services. Such expenses shall include the
reasonable compensation, disbursements and expenses of the Trustee's agents and
counsel.
The Company and the Restricted Subsidiaries shall indemnify the
Trustee against any and all losses, liabilities or expenses incurred by it
arising out of or in connection with the acceptance or administration of its
duties under this Indenture, including the costs and expenses of enforcing this
Indenture against the Company and the Restricted Subsidiaries (including this
Section 7.07), and defending itself against any claim (whether asserted by the
Company, any Restricted Subsidiary or any Holder or any other person) or
liability in connection with the exercise or performance of any of its powers or
duties hereunder, except to the extent any such loss, liability or expense may
be attributable to its negligence or bad faith. The Trustee shall notify the
Company promptly of any claim for which it may seek indemnity. Failure by the
Trustee to so notify the Company shall not relieve the Company and the
Restricted Subsidiaries of their obligations hereunder. The Company and the
Restricted Subsidiaries shall defend the claim and the Trustee shall cooperate
in the defense. The Trustee may have separate counsel and the Company and the
Restricted Subsidiaries shall pay the reasonable fees and expenses of such
counsel. The Company and the Restricted Subsidiaries need not pay for any
settlement made without their consent, which consent shall not be unreasonably
withheld.
The obligations of the Company and the Restricted Subsidiaries under
this Section 7.07 shall survive the satisfaction and discharge of this
Indenture.
To secure the Company's and the Restricted Subsidiaries' payment
obligations in this Section, the Trustee shall have a Lien prior to the Notes on
all money or property held or collected by the Trustee, except that held in
trust to pay principal and interest on particular Notes. Such Lien shall survive
the satisfaction and discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event
of Default specified in Section 6.01(h) or (i) hereof occurs, the expenses and
the compensation for the services (including the fees and expenses of its agents
and counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
The Trustee shall comply with the provisions of TIA ss. 313(b)(2) to
the extent applicable.
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SECTION 7.08. REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section.
The Trustee may resign in writing at any time and be discharged from
the trust hereby created by so notifying the Company. The Holders of Notes of a
majority in principal amount of the then outstanding Notes may remove the
Trustee by so notifying the Trustee and the Company in writing. The Company may
remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an
order for relief is entered with respect to the Trustee under any
Bankruptcy Law;
(c) a Custodian or public officer takes charge of the Trustee
or its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, any
Restricted Subsidiary, or the Holders of Notes of at least 10% in principal
amount of the then outstanding Notes may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
If the Trustee, after written request by any Holder of a Note who has
been a Holder of a Note for at least six months, fails to comply with Section
7.10 hereof, such Holder of a Note may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders of the Notes. The retiring Trustee shall promptly transfer
all property held by it as Trustee to the successor Trustee, provided all sums
owing to the Trustee hereunder have been paid and subject to the Lien provided
for in Section 7.07 hereof. Notwithstanding replacement of the Trustee pursuant
to this Section 7.08, the Company's and the Restricted Subsidiaries' obligations
under Section 7.07 hereof shall continue for the benefit of the retiring
Trustee.
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SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or transfers
all or substantially all of its corporate trust business to, another
corporation, the successor corporation without any further act shall be the
successor Trustee.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by federal or state
authorities and that has a combined capital and surplus of at least $50 million
as set forth in its most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA ss. 310(a)(1), (2) and (5). The Trustee is subject to TIA
ss. 310(b).
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee is subject to TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated therein.
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.
The Company may, at the option of its Board of Directors evidenced by
a resolution set forth in an Officers' Certificate, at any time, elect to have
either Section 8.02 or 8.03 hereof be applied to all outstanding Notes upon
compliance with the conditions set forth below in this Article Eight.
SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, each of the Company and the Guarantors, if any,
shall, subject to the satisfaction of the conditions set forth in Section 8.04
hereof, be deemed to have been discharged from its obligations with respect to
all outstanding Notes and Subsidiary Guarantees on the date the conditions set
forth below are satisfied (hereinafter, "Legal Defeasance"). For this purpose,
Legal Defeasance means that the Company shall be deemed to have paid and
discharged the entire Indebtedness represented by the outstanding Notes, which
shall thereafter be deemed to be "outstanding" only for the purposes of Section
8.05 hereof and the other Sections of this Indenture referred to in (a) and (b)
below, and to have satisfied all its other obligations under such Notes
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and this Indenture (and the Trustee, on demand of and at the expense of the
Company, shall execute proper instruments acknowledging the same), except for
the following provisions which shall survive until otherwise terminated or
discharged hereunder: (a) the rights of Holders of outstanding Notes to receive
solely from the trust fund described in Section 8.04 hereof, and as more fully
set forth in such Section, payments in respect of the principal of, premium, if
any, and interest on such Notes when such payments are due, (b) the Company's
and Guarantors' obligations with respect to such Notes under Article 2 and
Section 4.02 hereof, (c) the rights, powers, trusts, duties and immunities of
the Trustee hereunder and the Company's and the Guarantors' obligations in
connection therewith and (d) this Article Eight. Subject to compliance with this
Article Eight, the Company may exercise its option under this Section 8.02
notwithstanding the prior exercise of its option under Section 8.03 hereof.
SECTION 8.03. COVENANT DEFEASANCE.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, each of the Company and the Guarantors, if any,
shall, subject to the satisfaction of the conditions set forth in Section 8.04
hereof, be released from its obligations under the covenants contained in
Sections 4.05, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.14, 4.15, 4.16, 4.17
and Article V hereof with respect to the outstanding Notes and Subsidiary
Guarantees on and after the date the conditions set forth below are satisfied
(hereinafter, "Covenant Defeasance"), and the Notes shall thereafter be deemed
not "outstanding" for the purposes of any direction, waiver, consent or
declaration or act of Holders (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed "outstanding"
for all other purposes hereunder (it being understood that such Notes shall not
be deemed outstanding for accounting purposes). For this purpose, Covenant
Defeasance means that, with respect to the outstanding Notes, the Company may
omit to comply with and shall have no liability in respect of any term,
condition or limitation set forth in any such covenant, whether directly or
indirectly, by reason of any reference elsewhere herein to any such covenant or
by reason of any reference in any such covenant to any other provision herein or
in any other document and such omission to comply shall not constitute a Default
or an Event of Default under Section 6.01 hereof, but, except as specified
above, the remainder of this Indenture, such Notes and the Subsidiary
Guarantees, if any, shall be unaffected thereby. In addition, upon the Company's
exercise under Section 8.01 hereof of the option applicable to this Section 8.03
hereof, subject to the satisfaction of the conditions set forth in Section 8.04
hereof, Sections 6.01(c) through 6.01(f) and Section 6.01(h) and 6.01(i) hereof
shall not constitute Events of Default.
SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.
The following shall be the conditions to the application of either Section
8.02 or 8.03 hereof to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Company must irrevocably deposit with the Trustee, in
trust, for the benefit of the Holders, cash in United States dollars,
non-callable Government Securities, or a
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combination thereof, in such amounts as will be sufficient, in the opinion
of a nationally recognized firm of independent public accountants, to pay
the principal of, premium, if any, and interest on the outstanding Notes
on the stated date for payment thereof or on the applicable redemption
date, as the case may be, of such principal or installment of principal
of, premium, if any, or interest on the outstanding Notes;
(b) in the case of an election under Section 8.02 hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel in the
United States (which counsel may be an employee of the Company or any
Subsidiary of the Company) reasonably acceptable to the Trustee confirming
that (A) the Company has received from, or there has been published by,
the Internal Revenue Service a ruling or (B) since the Issuance Date,
there has been a change in the applicable federal income tax law, in
either case to the effect that, and based thereon such Opinion of Counsel
shall confirm that, the Holders of the outstanding Notes will not
recognize income, gain or loss for federal income tax purposes as a result
of such Legal Defeasance and will be subject to federal income tax on the
same amounts, in the same manner and at the same times as would have been
the case if such Legal Defeasance had not occurred;
(c) in the case of an election under Section 8.03 hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel in the
United States (which counsel may be an employee of the Company or any
Subsidiary of the Company) reasonably acceptable to the Trustee confirming
that the Holders of the outstanding Notes will not recognize income, gain
or loss for federal income tax purposes as a result of such Covenant
Defeasance and will be subject to federal income tax on the same amounts,
in the same manner and at the same times as would have been the case if
such Covenant Defeasance had not occurred;
(d) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit or, insofar as Sections 6.01(h) and
6.01(i) hereof are concerned, at any time in the period ending on the 91st
day after the date of deposit (or greater period of time in which any such
deposit of trust funds may remain subject to Bankruptcy Law insofar as
those apply to the deposit by the Company);
(e) such Legal Defeasance or Covenant Defeasance shall not
result in a breach or violation of, or constitute a default under, any
material agreement or instrument (other than this Indenture) to which the
Company or any of its Subsidiaries is a party or by which the Company or
any of its Subsidiaries is bound;
(f) the Company shall have delivered to the Trustee an Opinion
of Counsel to the effect that after the 91st day following the deposit,
the trust funds will not be subject to the effect of any applicable
bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally;
(g) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the
intent of preferring the Holders of
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Notes over any other creditors of the Company with the intent of
defeating, hindering, delaying or defrauding creditors of the Company or
others; and
(h) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for or relating to the Legal Defeasance or the Covenant
Defeasance have been complied with.
SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST;
OTHER MISCELLANEOUS PROVISIONS.
Subject to Section 8.06 hereof, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee, collectively for purposes of this Section 8.05, the
"Trustee") pursuant to Section 8.04 hereof in respect of the outstanding Notes
shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Notes and this Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as Paying Agent) as the
Trustee may determine, to the Holders of such Notes of all sums due and to
become due thereon in respect of principal, premium, if any, and interest, but
such money need not be segregated from other funds except to the extent required
by law.
The Company and the Guarantors shall pay and indemnify the Trustee
against any tax, fee or other charge imposed on or assessed against the cash or
non-callable Government Securities deposited pursuant to Section 8.04 hereof or
the principal and interest received in respect thereof other than any such tax,
fee or other charge which by law is for the account of the Holders of the
outstanding Notes.
Anything in this Article Eight to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the request
of the Company any money or non-callable Government Securities held by it as
provided in Section 8.04 hereof which, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee (which may be the opinion delivered under
Section 8.04(a) hereof), are in excess of the amount thereof that would then be
required to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.
SECTION 8.06. REPAYMENT TO COMPANY.
Any money deposited with the Trustee or any Paying Agent, or then
held by the Company, in trust for the payment of the principal of, premium, if
any, or interest, if any, on any Note and remaining unclaimed for two years
after such principal, and premium, if any, or interest, if any, have become due
and payable shall be paid to the Company on its request or (if then held by the
Company) shall be discharged from such trust; and the Holder of such Note shall
thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease; provided, however, that the Trustee or such
Paying Agent, before being required to make any such repayment, may at the
expense of the
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Company cause to be published once, in The New York Times and The Wall Street
Journal (national edition), notice that such money remains unclaimed and that,
after a date specified therein, which shall not be less than 30 days from the
date of such notification or publication, any unclaimed balance of such money
then remaining will be repaid to the Company.
SECTION 8.07. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any United States
dollars or non-callable Government Securities in accordance with Section 8.02 or
8.03 hereof, as the case may be, by reason of any order or judgment of any court
or governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's and the Restricted Subsidiaries' obligations
under this Indenture, the Notes and the Subsidiary Guarantees shall be revived
and reinstated as though no deposit had occurred pursuant to Section 8.02 or
8.03 hereof until such time as the Trustee or Paying Agent is permitted to apply
all such money in accordance with Section 8.02 or 8.03 hereof, as the case may
be; provided, however, that, if the Company and the Restricted Subsidiaries make
any payment of principal of, premium, if any, or interest, if any, on any Note
following the reinstatement of its obligations, the Company and the Restricted
Subsidiaries shall be subrogated to the rights of the Holders of such Notes to
receive such payment from the money held by the Trustee or Paying Agent.
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF NOTES.
Notwithstanding Section 9.02 of this Indenture, the Company, the
Guarantors and the Trustee may amend or supplement this Indenture or the Notes
without the consent of any Holder of a Note:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in
place of certificated Notes;
(c) to provide for the assumption of the Company's or any
Guarantor's obligations to the Holders of the Notes in the case of a
merger or consolidation pursuant to Article Five or Article 11 hereof, as
the case may be;
(d) to make any change that would provide any additional rights
or benefits to the Holders of the Notes (including providing for
additional Subsidiary Guarantees pursuant to Section 4.13 hereof) or that
does not materially adversely affect the legal rights hereunder of any
Holder of the Note; or
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(e) to comply with requirements of the SEC in order to effect or
maintain the qualification of this Indenture under the TIA.
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon receipt by the Trustee of the documents described in Section
7.02 hereof, the Trustee shall join with the Company and the Guarantors in the
execution of any amended or supplemental Indenture authorized or permitted by
the terms of this Indenture and to make any further appropriate agreements and
stipulations that may be therein contained, but the Trustee shall not be
obligated to enter into such amended or supplemental Indenture that affects its
own rights, duties or immunities under this Indenture or otherwise.
SECTION 9.02. WITH CONSENT OF HOLDERS OF NOTES.
Except as provided below in this Section 9.02, the Company, the
Guarantors and the Trustee may amend or supplement this Indenture or the Notes
with the consent of the Holders of at least a majority in principal amount of
the Notes then outstanding (including consents obtained in connection with a
tender offer or exchange offer for the Notes), and, subject to Sections 6.04 and
6.07 hereof, any existing Default or Event of Default (other than a Default or
Event of Default in the payment of the principal of, premium, if any, or
interest on the Notes, except a payment default resulting from an acceleration
that has been rescinded) or compliance with any provision of this Indenture or
the Notes may be waived with the consent of the Holders of a majority in
principal amount of the then outstanding Notes (including consents obtained in
connection with a tender offer or exchange offer for the Notes).
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon the filing with the Trustee of evidence reasonably
satisfactory to the Trustee of the consent of the Holders of Notes as aforesaid,
and upon receipt by the Trustee of the documents described in Section 7.02
hereof, the Trustee shall join with the Company and the Guarantors in the
execution of such amended or supplemental Indenture unless such amended or
supplemental Indenture affects the Trustee's own rights, duties or immunities
under this Indenture or otherwise, in which case the Trustee may in its
discretion, but shall not be obligated to, enter into such amended or
supplemental Indenture.
It shall not be necessary for the consent of the Holders of Notes
under this Section 9.02 to approve the particular form of any proposed amendment
or waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders of Notes affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amended or supplemental
Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a
majority in aggregate principal amount of the Notes then outstanding may waive
compliance in
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a particular instance by the Company or any Guarantor with any provision of this
Indenture, the Note or the Subsidiary Guarantees. However, without the consent
of each Holder affected, an amendment or waiver may not (with respect to any
Notes held by a non-consenting Holder):
(a) reduce the principal amount of Notes whose Holders must
consent to an amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of any
Note or alter any of the provisions with respect to the redemption of the
Notes in a manner adverse to the Holders of the Notes;
(c) reduce the rate of or change the time for payment of
interest, including default interest, on any Note;
(d) waive a Default or Event of Default in the payment of
principal of or premium, if any, or interest on the Notes (except a
rescission of acceleration of the Notes by the Holders of at least a
majority in aggregate principal amount of the then outstanding Notes and a
waiver of the payment default that resulted from such acceleration);
(e) make any Note payable in money other than that stated in
the Notes;
(f) make any change in the provisions of this Indenture relating
to waivers of past Defaults or the rights of Holders of Notes to receive
payments of principal of or premium, if any, or interest on the Notes;
(g) waive a redemption payment with respect to any Note (other
than a payment required by Section 4.10 or Section 4.14 hereof);
(h) except pursuant to Article 4, Article 8 and Article 11
hereof, release any Guarantor from its obligations under its Subsidiary
Guarantee, or change any Subsidiary Guarantee in any manner that would
materially adversely affect the Holders; or
(i) make any change in Section 6.04 or 6.07 hereof or in the
foregoing amendment and waiver provisions.
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment or supplement to this Indenture or the Notes shall be
set forth in a amended or supplemental Indenture that complies with the TIA as
then in effect.
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a consent
to it by a Holder of a Note is a continuing consent by the Holder of a Note and
every subsequent Holder of a Note or portion of a Note that evidences the same
debt as the consenting Holder's Note, even if notation
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of the consent is not made on any Note. However, any such Holder of a Note or
subsequent Holder of a Note may revoke the consent as to its Note if the Trustee
receives written notice of revocation before the date the waiver, supplement or
amendment becomes effective. An amendment, supplement or waiver becomes
effective in accordance with its terms and thereafter binds every Holder.
SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Company in
exchange for all Notes may issue and the Trustee shall authenticate new Notes
(accompanied by a notation of the Subsidiary Guarantees duly endorsed by the
Restricted Subsidiaries) that reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall
not affect the validity and effect of such amendment, supplement or waiver.
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amended or supplemental Indenture
authorized pursuant to this Article Nine if the amendment or supplement does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
The Company and the Guarantors may not sign an amendment or supplemental
Indenture until the Board of Directors of the Company and each of the Guarantors
approves it. In executing any amended or supplemental indenture, the Trustee
shall be entitled to receive and (subject to Section 7.01 hereof) shall be fully
protected in relying upon, an Officer's Certificate and an Opinion of Counsel
stating that the execution of such amended or supplemental indenture is
authorized or permitted by this Indenture.
ARTICLE 10
SUBORDINATION
SECTION 10.01. AGREEMENT TO SUBORDINATE.
The Company, the Trustee and each Holder by accepting a Note agrees,
that the indebtedness and obligations evidenced by the Note are subordinated in
right of payment, to the extent and in the manner provided in this Article, to
the prior payment in full, in cash, of all Obligations with respect to Senior
Debt of the Company (whether outstanding on the date hereof or hereafter
created, incurred, assumed or guaranteed), and that the subordination is for the
benefit of the holders of Senior Debt of the Company.
SECTION 10.02. LIQUIDATION; DISSOLUTION; BANKRUPTCY.
Upon any payment or distribution to creditors of the Company in a
liquidation or dissolution of the Company or in a bankruptcy, reorganization,
insolvency, receivership or similar
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proceeding relating to the Company or its property, in an assignment for the
benefit of creditors or any marshaling of the Company's assets and liabilities:
(1) holders of Senior Debt of the Company shall be entitled to
receive payment in full in cash of all Obligations due in respect of such
Senior Debt of the Company (including interest after the commencement of
any such proceeding at the rate specified in the applicable Senior Debt of
the Company, whether or not allowed as a claim in such proceeding) before
Holders shall be entitled to receive any payment or distribution from the
Company with respect to the Notes; and
(2) until all Obligations with respect to Senior Debt of the
Company (as provided in subsection (1) above) are paid in full in cash,
any payment or distribution to which the Trustee or any Holder would be
entitled but for this Article shall be made to holders of Senior Debt of
the Company, as their interests may appear.
SECTION 10.03. DEFAULT ON DESIGNATED SENIOR DEBT.
The Company may not make any payment or distribution upon or in
respect of the Notes, including, without limitation, by way of set-off or
otherwise, or redeem (or make a deposit in redemption of), defease or acquire
any of the Notes, for cash, properties or securities if:
(i) a default in the payment of any principal, premium, if any,
or interest or other Obligations (a "Payment Default") with respect to
Senior Debt of the Company occurs and is continuing; or
(ii) a default (other than a Payment Default) or any event that,
after notice or passage of time would become a default (a "Non-Monetary
Default"), on Senior Debt of the Company occurs and is continuing that
then permits holders of the Senior Debt of the Company to accelerate its
maturity and the Trustee receives a notice of the default (a "Payment
Blockage Notice") from a Person who may give it pursuant to Section 10.11
hereof. Any number of such Payment Blockage Notices may be given,
provided, however, that (i) not more than one Payment Blockage Notice may
be commenced during any period of 360 consecutive days and (ii) any
Non-Monetary Default that existed or was continuing on the date of
delivery of any such notice to the Trustee (to the extent the holder of
Designated Senior Debt, or such trustee or agent, giving such Payment
Blockage Notice had knowledge of the same) shall not be the basis for a
subsequent Payment Blockage Notice, unless such default has been cured or
waived for a period of not less than 90 days.
The Company may and shall resume payments on and distributions in
respect of the Notes and all Obligations with respect thereto, and may acquire
such Notes or Obligations upon the earlier of:
(1) in the case of a Payment Default, the date upon which
such default is cured or waived, or
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(2) in the case of a Non-Monetary Default, on the earlier of the
date on which such Non-Monetary Default is cured or waived or 179 days
after the date on which the applicable Payment Blockage Notice is
received, if the maturity of such Senior Debt of the Company has not been
accelerated,
if this Article 10 otherwise permits the payment, distribution or acquisition at
the time thereof.
SECTION 10.04. ACCELERATION OF NOTES.
If payment of the Notes is accelerated because of an Event of
Default, the Company shall promptly notify Representatives of the holders of
Senior Debt of the Company of the acceleration.
SECTION 10.05. WHEN DISTRIBUTION MUST BE PAID OVER.
In the event that the Trustee or any Holder receives from the Company
any payment of any Obligations with respect to the Notes at a time when the
Trustee or such Holder, as applicable, has actual knowledge that such payment is
prohibited by Section 10.02 or 10.03 hereof, such payment shall be held by the
Trustee or such Holder in trust for the benefit of, and shall be paid forthwith
over and delivered upon written request to, the holders of Senior Debt of the
Company, as their interests may appear, or their Representative under the
indenture or other agreement (if any) pursuant to which Senior Debt of the
Company may have been issued, as their respective interests may appear, for
application to the payment of all Obligations with respect to Senior Debt of the
Company remaining unpaid to the extent necessary to pay such Obligations in full
in accordance with their terms, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Debt of the Company.
With respect to the holders of Senior Debt of the Company, the
Trustee undertakes to perform only such obligations on the part of the Trustee
as are specifically set forth in this Article 10, and no implied covenants or
obligations with respect to the holders of Senior Debt of the Company shall be
read into this Indenture against the Trustee. The Trustee shall not be deemed to
owe any fiduciary duty to the holders of Senior Debt of the Company, and shall
not be liable to any such holders if the Trustee shall pay over or distribute to
or on behalf of Holders or the Company or any other Person money or assets to
which any holders of Senior Debt of the Company shall be entitled by virtue of
this Article 10, except if such payment is made as a result of the willful
misconduct or gross negligence of the Trustee.
SECTION 10.06. NOTICE BY COMPANY.
The Company shall promptly notify the Trustee and the Paying Agent of
any facts known to the Company that would cause a payment of any Obligations
with respect to the Notes to violate this Article, but failure to give such
notice shall not affect the subordination of the Notes to the Senior Debt of the
Company as provided in this Article.
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SECTION 10.07. SUBROGATION.
After all Obligations with respect to Senior Debt of the Company are
paid in full, in cash, and until the Notes are paid in full, Holders shall be
subrogated (equally and ratably with all other Indebtedness pari passu with the
Notes) to the rights of holders of Senior Debt of the Company to receive
distributions applicable to Senior Debt of the Company to the extent that
distributions otherwise payable to the Holders have been applied to the payment
of Senior Debt of the Company. A distribution made under this Article to holders
of Senior Debt of the Company that otherwise would have been made to Holders is
not, as between the Company and Holders, a payment by the Company on the Notes.
SECTION 10.08. RELATIVE RIGHTS.
This Article defines the relative rights of Holders and holders of
Senior Debt of the Company. Nothing in this Indenture shall:
(1) impair, as between the Company and Holders, the obligation
of the Company, which is absolute and unconditional, to pay principal of
and interest on the Notes in accordance with their terms;
(2) affect the relative rights of Holders and creditors of the
Company other than their rights in relation to holders of Senior Debt of
the Company; or
(3) prevent the Trustee or any Holder from exercising its
available remedies upon a Default or Event of Default, subject to the
rights of holders and owners of Senior Debt of the Company to receive
distributions and payments otherwise payable to Holders.
If the Company fails because of this Article 10 to pay principal of,
premium or interest on a Note on the due date, the failure is still a Default or
Event of Default.
SECTION 10.09. SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY.
No right of any holder of Senior Debt of the Company to enforce the
subordination of the Indebtedness evidenced by the Notes shall be impaired by
any act or failure to act by the Company or any Holder or by the failure of the
Company or any Holder to comply with this Indenture.
SECTION 10.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.
Whenever a distribution is to be made or a notice given to holders of
Senior Debt of the Company, the distribution may be made and the notice given to
their Representative.
Upon any payment or distribution of assets of the Company referred to
in this Article 10, the Trustee and the Holders shall be entitled to rely upon
any order or decree made by any court of competent jurisdiction or upon any
certificate of such Representative or of the liquidating
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trustee or agent or other Person making any distribution to the Trustee or to
the Holders for the purpose of ascertaining the Persons entitled to participate
in such distribution, the holders of the Senior Debt of the Company and other
Indebtedness of the Company, the amount or amounts thereof or payable thereon,
the amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article 10.
SECTION 10.11. RIGHTS OF TRUSTEE AND PAYING AGENT.
Notwithstanding the provisions of this Article 10 or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts that would prohibit the making of any payment or
distribution by the Trustee, and the Trustee and the Paying Agent may continue
to make payments on the Notes, unless the Trustee shall have received at its
Corporate Trust Office at least one Business Day prior to the date of such
payment a Payment Blockage Notice. Only the holders or the Representative of
holders of Designated Senior Debt of the Company may give a Payment Blockage
Notice. Nothing in this Article 10 shall impair the claims of, or payments to,
the Trustee under or pursuant to Section 7.07 hereof.
The Trustee in its individual or any other capacity may hold Senior
Debt of the Company with the same rights it would have if it were not Trustee.
Any Agent may do the same with like rights.
SECTION 10.12. AUTHORIZATION TO EFFECT SUBORDINATION.
Each Holder of a Note by the Holder's acceptance thereof authorizes
and directs the Trustee on the Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article 10, and appoints the Trustee to act as the Holder's attorney-in-fact for
any and all such purposes. If the Trustee does not file a proper proof of claim
or proof of debt in the form required in any proceeding referred to in Section
6.09 hereof at least 30 days before the expiration of the time to file such
claim, the Representatives of the Senior Debt of the Company are hereby
authorized to file an appropriate claim for and on behalf of the Holders of the
Notes.
SECTION 10.13. AMENDMENTS.
The provisions of this Article 10 shall not be amended or modified
without the written consent of the holders of all Senior Debt of the Company.
ARTICLE 11
SUBSIDIARY GUARANTEES
SECTION 11.01. SUBSIDIARY GUARANTEE.
Each Subsidiary that is a signatory hereto and each Restricted
Subsidiary of the Company which in accordance with Section 4.13 hereof is
required to guarantee the obligations of the
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Company under the Notes (each, a "Guarantor"), upon execution of a counterpart
of this Indenture, hereby jointly and severally unconditionally guarantees to
each Holder of a Note authenticated and delivered by the Trustee irrespective of
the validity or enforceability of this Indenture, the Notes or the obligations
of the Company under this Indenture or the Notes, that: (i) the principal of and
interest on the Notes will be paid in full when due, whether at the maturity or
interest payment or mandatory redemption date, by acceleration, call for
redemption or otherwise, and interest on the overdue principal of and interest,
if any, on the Notes and all other obligations of the Company to the Holders or
the Trustee under this Indenture or the Notes will be promptly paid in full or
performed, all in accordance with the terms of this Indenture and the Notes; and
(ii) in case of any extension of time of payment or renewal of any Notes or any
of such other obligations, they will be paid in full when due or performed in
accordance with the terms of the extension or renewal, whether at maturity, by
acceleration or otherwise. Failing payment when due of any amount so guaranteed
for whatever reason, each Guarantor will be obligated to pay the same whether or
not such failure to pay has become an Event of Default which could cause
acceleration pursuant to Section 6.02 hereof. Each Guarantor agrees that this is
a guarantee of payment not a guarantee of collection.
Each Guarantor hereby agrees that its obligations with regard to this
Subsidiary Guarantee shall be joint and several, unconditional, irrespective of
the validity or enforceability of the Notes or the obligations of the Company
under this Indenture, the absence of any action to enforce the same, the
recovery of any judgment against the Company or any other obligor with respect
to this Indenture, the Notes or the obligations of the Company under this
Indenture or the Notes, any action to enforce the same or any other
circumstances (other than complete performance) which might otherwise constitute
a legal or equitable discharge or defense of a Guarantor. Each Guarantor
further, to the extent permitted by law, waives and relinquishes all claims,
rights and remedies accorded by applicable law to guarantors and agrees not to
assert or take advantage of any such claims, rights or remedies, including but
not limited to: (a) any right to require the Trustee, the Holders or the Company
(each, a "Benefitted Party") to proceed against the Company or any other Person
or to proceed against or exhaust any security held by a Benefitted Party at any
time or to pursue any other remedy in any Benefitted Party's power before
proceeding against such Guarantor; (b) the defense of the statute of limitations
in any action hereunder or in any action for the collection of any Indebtedness
or the performance of any obligation hereby guaranteed; (c) any defense that may
arise by reason of the incapacity, lack of authority, death or disability of any
other Person or the failure of a Benefitted Party to file or enforce a claim
against the estate (in administration, bankruptcy or any other proceeding) of
any other Person; (d) demand, protest and notice of any kind including but not
limited to notice of the existence, creation or incurring of any new or
additional Indebtedness or obligation or of any action or non-action on the part
of such Guarantor, the Company, any Benefitted Party, any creditor of such
Guarantor, the Company or on the part of any other Person whomsoever in
connection with any Indebtedness or obligations hereby guaranteed; (e) any
defense based upon an election of remedies by a Benefitted Party, including but
not limited to an election to proceed against such Guarantor for reimbursement;
(f) any defense based upon any statute or rule of law which provides that the
obligation of a surety must be neither larger in amount nor in other respects
more burdensome than that of the principal; (g) any defense arising because of a
Benefitted Party's election, in any proceeding instituted under Bankruptcy Law,
of the application of 11 U.S.C. Section 1111(b)(2); or (h) any defense based on
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any borrowing or grant of a security interest under 11 U.S.C. Section 364. Each
Guarantor hereby covenants that its Subsidiary Guarantee will not be discharged
except by complete performance of the obligations contained in its Subsidiary
Guarantee and this Indenture.
If any Holder or the Trustee is required by any court or otherwise to
return to either the Company or any Guarantor, or any Custodian acting in
relation to either the Company or such Guarantor, any amount paid by the Company
or such Guarantor to the Trustee or such Holder, the applicable Subsidiary
Guarantees, to the extent theretofore discharged, shall be reinstated and be in
full force and effect. Each Guarantor agrees that it will not be entitled to any
right of subrogation in relation to the Holders in respect of any obligations
guaranteed hereby until payment in full of all obligations guaranteed hereby.
Each Guarantor further agrees that, as between such Guarantor, on the
one hand, and the Holders and the Trustee, on the other hand, (i) the maturity
of the obligations guaranteed hereby may be accelerated as provided in Section
6.02 hereof for the purposes of this Subsidiary Guarantee, notwithstanding any
stay, injunction or other prohibition preventing such acceleration as to the
Company or any other obligor on the Notes of the obligations guaranteed hereby,
and (ii) in the event of any declaration of acceleration of those obligations as
provided in Section 6.02 hereof, those obligations (whether or not due and
payable) will forthwith become due and payable by such Guarantor for the purpose
of this Subsidiary Guarantee.
SECTION 11.02. SUBORDINATION.
Each Guarantor, the Trustee, and each Holder by accepting a Note
agrees, that the Indebtedness evidenced by the Subsidiary Guarantees is
subordinated in right of payment, to the extent and in the manner provided in
this Article 11, to the prior payment in full, in cash, of all Obligations with
respect to Senior Debt of such Guarantor (whether outstanding on the date hereof
or hereafter created, incurred, assumed or guaranteed), and that the
subordination is for the benefit of the holders of Senior Debt of such
Guarantor.
SECTION 11.03. LIQUIDATION; DISSOLUTION; BANKRUPTCY.
Upon any payment or distribution to creditors of any Guarantor in a
liquidation or dissolution of such Guarantor or in a bankruptcy, reorganization,
insolvency, receivership or similar proceeding relating to such Guarantor or its
property, in an assignment for the benefit of creditors or any marshaling of
such Guarantor's assets and liabilities:
(1) holders of Senior Debt of such Guarantor shall be entitled
to receive payment in full in cash of all Obligations due in respect of
such Senior Debt of such Guarantor (including interest after the
commencement of any such proceeding at the rate specified in the
applicable Senior Debt of such Guarantor, whether or not allowed as a
claim in such proceeding) before the Holders shall be entitled to receive
any payment or distribution from the Guarantor with respect to such
Guarantor's Subsidiary Guarantee; and
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(2) until all Obligations with respect to Senior Debt of such
Guarantor (as provided in subsection (1) above) are paid in full in cash,
any payment or distribution to which the Trustee or any Holder would be
entitled but for this Article shall be made to holders of Senior Debt of
such Guarantor, as their interests may appear.
SECTION 11.04. DEFAULT ON SENIOR DEBT OF THE GUARANTOR.
No Guarantor shall make any payment or distribution upon or in
respect of the Notes or its Subsidiary Guarantee, including, without limitation,
by way of set-off or otherwise, or redeem (or make a deposit in redemption of),
defease or acquire any of the Notes, for cash, properties or securities if:
(i) a Payment Default with respect to Senior Debt of such
Guarantor occurs and is continuing; or
(ii) a Non-Monetary Default on Senior Debt of such Guarantor
occurs and is continuing that then permits holders of the Senior Debt of
such Guarantor to accelerate its maturity and the Trustee receives a
Payment Blockage Notice from a Person who may give it pursuant to Section
11.12 hereof. Any number of such Payment Blockage Notices may be given,
provided, however, that (i) not more than one Payment Blockage Notice may
be commenced during any period of 360 consecutive days and (ii) any
default or event of default that existed or was continuing on the date of
delivery of any Payment Blockage Notice to the Trustee (to the extent the
holder of Designated Senior Debt, or such trustee or agent, giving such
Payment Blockage Notice had knowledge of the same) shall not be the basis
for a subsequent Payment Blockage Notice pursuant to Section 11.12 herein,
unless such default has been cured or waived for a period of not less than
90 consecutive days.
Each Guarantor may and shall resume payments on and distributions in
respect of its Subsidiary Guarantee, the Notes and all Obligations with respect
thereto, and may acquire such Notes or Obligations upon the earlier of:
(1) in the case of a payment default, the date upon which
such default is cured or waived, or
(2) in the case of a Non-Monetary Default, on the earlier of the
date on which such Non-Monetary Default is cured or waived or 179 days
after the date on which the applicable Payment Blockage Notice is
received, if the maturity of such Senior Debt of such Guarantor has not
been accelerated,
if this Article 11 otherwise permits the payment, distribution or acquisition at
the time thereof.
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SECTION 11.05. ACCELERATION OF NOTES.
If payment of the Notes is accelerated because of an Event of
Default, each Guarantor shall promptly notify the Representative of the holders
of Senior Debt of such Guarantor of the acceleration.
SECTION 11.06. WHEN DISTRIBUTION MUST BE PAID OVER.
In the event that the Trustee or any Holder receives from a Guarantor
any payment of any Obligations with respect to the Notes or the Subsidiary
Guarantees at a time when the Trustee or such Holder, as applicable, has actual
knowledge that such payment is prohibited by Section 11.03 or 11.04 hereof, such
payment shall be held by the Trustee or such Holder, in trust for the benefit
of, and shall be paid forthwith over and delivered upon written request to, the
holders of Senior Debt of such Guarantor, as their interests may appear, or
their Representative under the indenture or other agreement (if any) pursuant to
which Senior Debt of such Guarantor may have been issued, as their respective
interests may appear, for application to the payment of all Obligations with
respect to Senior Debt of such Guarantor remaining unpaid to the extent
necessary to pay such Obligations in full in accordance with their terms, after
giving effect to any concurrent payment or distribution to or for the holders of
Senior Debt of such Guarantor.
With respect to the holders of Senior Debt of any Guarantor, the
Trustee undertakes to perform only such obligations on the part of the Trustee
as are specifically set forth in this Article 11, and no implied covenants or
obligations with respect to the holders of Senior Debt of such Guarantor shall
be read into this Indenture against the Trustee. The Trustee shall not be deemed
to owe any fiduciary duty to the holders of Senior Debt of such Guarantor, and
shall not be liable to any such holders if the Trustee shall pay over or
distribute to or on behalf of Holders or the Company or any other Person money
or assets to which any holders of Senior Debt of such Guarantor shall be
entitled by virtue of this Article 11, except if such payment is made as a
result of the willful misconduct or gross negligence of the Trustee.
SECTION 11.07. NOTICE BY A GUARANTOR.
Each Guarantor shall promptly notify the Trustee and the Paying Agent
of any facts known to such Guarantor that would cause a payment of any
Obligations with respect to the Notes or its Subsidiary Guarantee to violate
this Article, but failure to give such notice shall not affect the subordination
of its Subsidiary Guarantee or of the Notes to the Senior Debt of such Guarantor
as provided in this Article.
SECTION 11.08. SUBROGATION.
With respect to any Guarantor, after all Obligations with respect to
Senior Debt of such Guarantor is paid in full, in cash, and until the Notes are
paid in full, Holders shall be subrogated (equally and ratably with all other
Indebtedness pari passu with such Guarantor's Subsidiary Guarantee) to the
rights of holders of Senior Debt of such Guarantor to receive distributions
applicable to Senior Debt of such Guarantor to the extent that distributions
otherwise payable to
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the Holders have been applied to the payment of Senior Debt of such Guarantor. A
distribution made under this Article to holders of Senior Debt of such Guarantor
that otherwise would have been made to Holders is not, as between such Guarantor
and Holders, a payment by such Guarantor on the Notes or the Subsidiary
Guarantee.
SECTION 11.09. RELATIVE RIGHTS.
This Article defines the relative rights of Holders and holders of
Senior Debt of such Guarantor. Nothing in this Indenture shall:
(1) impair, as between such Guarantor and the Holders, the
obligation of such Guarantor, which is absolute and unconditional, to pay
principal of and interest on the Notes in accordance with the terms of the
Subsidiary Guarantee;
(2) affect the relative rights of Holders and creditors of such
Guarantor other than their rights in relation to holders of Senior Debt of
such Guarantor; or
(3) prevent the Trustee or any Holder from exercising its
available remedies upon a Default or Event of Default, subject to the
rights of holders of Senior Debt of such Guarantor set forth herein to
receive distributions and payments otherwise payable to Holders.
If any Guarantor fails because of this Article 11 to pay principal
of, premium or interest on a Note on the due date, the failure is still a
Default or Event of Default.
SECTION 11.10. SUBORDINATION MAY NOT BE IMPAIRED BY ANY GUARANTOR.
With respect to any Guarantor, no right of any holder of Senior Debt
of such Guarantor to enforce the subordination of the Indebtedness evidenced by
the Subsidiary Guarantee shall be impaired by any act or failure to act by such
Guarantor or any Holder or by failure of such Guarantor or any Holder to comply
with this Indenture.
SECTION 11.11. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.
With respect to any Guarantor, whenever a distribution is to be made
or a notice given to holders of Senior Debt of such Guarantor, the distribution
may be made and the notice given to their Representative.
Upon any payment or distribution of assets of any Guarantor referred
to in this Article 11, the Trustee and the Holders shall be entitled to rely
upon any order or decree made by any court of competent jurisdiction or upon any
certificate of such Representative or of the liquidating trustee or agent or
other Person making any distribution to the Trustee or to the Holders for the
purpose of ascertaining the Persons entitled to participate in such
distribution, the holders of the Senior Debt of such Guarantor and other
Indebtedness of such Guarantor, the amount or amounts thereof
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or payable thereon, the amount or amounts paid or distributed thereon and all
other facts pertinent thereto or to this Article 11.
SECTION 11.12. RIGHTS OF TRUSTEE AND PAYING AGENT.
Notwithstanding the provisions of this Article 11 or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts that would prohibit the making of any payment or
distribution by the Trustee, and the Trustee and the Paying Agent may continue
to make payments on the Notes, unless the Trustee shall have received at its
Corporate Trust Office at least one Business Day prior to the date of such
payment a Payment Blockage Notice. Only the Representative of holders of
Designated Senior Debt may give a Payment Blockage Notice. Nothing in this
Article 11 shall impair the claims of, or payments to, the Trustee under or
pursuant to Section 7.07 hereof.
With respect to any Guarantor, the Trustee in its individual or any
other capacity may hold Senior Debt of such Guarantor with the same rights it
would have if it were not Trustee. Any Agent may do the same with like rights.
SECTION 11.13. AUTHORIZATION TO EFFECT SUBORDINATION.
Each Holder of a Note by the Holder's acceptance thereof authorizes
and directs the Trustee on the Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article 11, and appoints the Trustee to act as the Holder's attorney-in-fact for
any and all such purposes. If the Trustee does not file a proper proof of claim
or proof of debt in the form required in any proceeding relative to any
Guarantor referred to in Section 6.09 hereof at least 30 days before the
expiration of the time to file such claim, the Representatives of Senior Debt of
such Guarantor are hereby authorized to file an appropriate claim for and on
behalf of the Holders of the Notes.
SECTION 11.14. AMENDMENTS.
With respect to any Guarantor, the provisions of Section 11.02
through 11.14 hereof shall not be amended or modified without the written
consent of the holders of all Senior Debt of such Guarantor.
SECTION 11.15. LIMITATION OF GUARANTOR'S LIABILITY.
Each Guarantor and, by its acceptance hereof, the Trustee and each
Holder hereby confirm that it is its intention that the Subsidiary Guarantee of
such Guarantor not constitute a fraudulent transfer or conveyance for purposes
of the Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform
Fraudulent Transfer Act or any similar federal or state law to the extent
applicable to any Subsidiary Guarantee. To effectuate the foregoing intention,
each such person hereby irrevocably agrees that the obligation of such Guarantor
under its Subsidiary Guarantee under this Article 11 shall be limited to the
maximum amount as will, after giving effect to such maximum amount and all other
(contingent or other) liabilities of such Guarantor that are relevant
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under such laws, and after giving effect to any collections from, rights to
receive contribution from or payments made by or on behalf of any other
Guarantor in respect of the obligations of such other Guarantor under this
Article 11, result in the obligations of such Guarantor in respect of such
maximum amount not constituting a fraudulent transfer or conveyance under said
laws. The Trustee and each Holder by accepting the benefits hereof, confirms its
intention that, in the event of a bankruptcy, reorganization or other similar
proceeding of the Company or any Guarantor in which concurrent claims are made
upon such Guarantor hereunder, to the extent such claims will not be fully
satisfied, each such claimant with a valid claim against the Company shall be
entitled to a ratable share of all payments by such Guarantor in respect of such
concurrent claims. For all purposes of this Section 11.15, Senior Debt shall be
deemed to have been incurred prior to the incurrence of the obligations in
respect of the Subsidiary Gaurantees.
SECTION 11.16. RESTRICTED SUBSIDIARIES MAY CONSOLIDATE, ETC., ON CERTAIN TERMS.
No Guarantor shall consolidate with or merge with or into (whether or
not such Guarantor is the surviving Person), another Person whether or not it is
affiliated with such Guarantor unless (i) subject to the provisions of Section
11.17 hereof, the Person formed by or surviving any such consolidation or merger
(if other than such Guarantor) assumes all the obligations of such Guarantor
pursuant to a supplemental indenture in form reasonably satisfactory to the
Trustee, under its Subsidiary Guarantee, the Notes and this Indenture, (ii)
immediately after giving effect to such transaction, no Default or Event of
Default exists, and (iii) such Guarantor, or any Person formed by or surviving
any such consolidation or merger, will be permitted to incur, immediately after
giving effect to such transaction, at least $1.00 of additional Indebtedness
pursuant to the first paragraph of Section 4.09 hereof. In case of any such
consolidation, merger, sale or conveyance and upon the assumption by the
successor corporation, by supplemental indenture, executed and delivered to the
Trustee and satisfactory in form to the Trustee, of the Subsidiary Guarantee in
this Indenture and the due and punctual performance and observance of all of the
covenants and conditions of this Indenture to be performed by the Guarantor,
such successor corporation shall succeed to and be substituted for the Guarantor
with the same effect as if it had been named herein as a Guarantor.
SECTION 11.17. RELEASES FOLLOWING SALE OF ASSETS OR DESIGNATION AS
UNRESTRICTED SUBSIDIARY.
In the event of (a) a sale or other disposition of all or
substantially all of the assets of any Guarantor, by way of merger,
consolidation or otherwise, or (b) a sale or other disposition of all of the
capital stock of any Guarantor, or (c) the designation of a Restricted
Subsidiary as an Unrestricted Subsidiary in accordance with the terms of Section
4.17 hereof, then such Guarantor (in the event of a sale or other disposition,
by way of such a merger, consolidation or otherwise, of all of the capital stock
of such Guarantor, or in the event of the designation of such Guarantor as an
Unrestricted Subsidiary) or the corporation acquiring the property (in the event
of a sale or other disposition of all or substantially all of the assets of such
Guarantor) shall be released and relieved of its obligations under its
Subsidiary Guarantee; provided that the Net Proceeds of such sale or other
disposition are applied in accordance with Section 4.10 hereof.
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ARTICLE 12
MISCELLANEOUS
SECTION 12.01. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or conflicts
with the duties imposed by TIA ss.318(c), the imposed duties shall control.
SECTION 12.02. NOTICES.
Any notice or communication by the Company, the Restricted
Subsidiaries or the Trustee to the others is duly given if in writing and
delivered in Person or mailed by first class mail (registered or certified,
return receipt requested), telex, telecopier or overnight air courier
guaranteeing next day delivery, to the others' address:
If to the Company or any Restricted Subsidiary:
Iron Mountain Incorporated
745 Atlantic Avenue
Boston, MA 02111
Attention: President
Telecopier No.: (617) 350-7881
With a copy to:
Sullivan & Worcester LLP
One Post Office Square
Boston, MA 02109
Telecopier No.: (617) 338-2880
Attention: William J. Curry, Esq.
If to the Trustee:
First Bank National Association
c/o First Trust National Association
180 East Fifth Street
St. Paul, MN 55101
Telecopier No.: (612) 244-0711
Attention: Richard Prokosch, 2nd Floor
The Company, the Restricted Subsidiaries or the Trustee, by notice to
the others may designate additional or different addresses for subsequent
notices or communications.
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All notices and communications (other than those sent to Holders)
shall be deemed to have been duly given: at the time delivered by hand, if
personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telexed; when receipt
acknowledged, if telecopied; and the next Business Day after timely delivery to
the courier, if sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first
class mail, certified or registered, return receipt requested, or by overnight
air courier guaranteeing next day delivery to its address shown on the register
kept by the Registrar. Any notice or communication shall also be so mailed to
any Person described in TIA ss. 313(c), to the extent required by the TIA.
Failure to mail a notice or communication to a Holder or any defect in it shall
not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company or any Restricted Subsidiary mails a notice or
communication to Holders, it shall mail a copy to the Trustee and each Agent at
the same time.
SECTION 12.03. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES.
Holders may communicate pursuant to TIA ss. 312(b) with other Holders
with respect to their rights under this Indenture or the Notes. The Company, the
Restricted Subsidiaries, the Trustee, the Registrar and anyone else shall have
the protection of TIA ss. 312(c).
SECTION 12.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company or the Restricted
Subsidiaries to the Trustee to take any action under this Indenture, the Company
or the Restricted Subsidiaries shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth
in Section 12.05 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants provided for in this Indenture relating
to the proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth
in Section 12.05 hereof) stating that, in the opinion of such counsel, all
such conditions precedent and covenants have been satisfied.
SECTION 12.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA ss. 314(a)(4)) shall comply with the provisions of TIA
ss. 314(e) and shall include:
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(a) a statement that the Person making such certificate or
opinion has read such covenant or condition;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or she
has made such examination or investigation as is necessary to enable him
to express an informed opinion as to whether or not such covenant or
condition has been satisfied; and
(d) a statement as to whether or not, in the opinion of such
Person, such condition or covenant has been satisfied.
SECTION 12.06. RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or at a meeting
of Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
SECTION 12.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND
STOCKHOLDERS.
No past, present or future director, officer, employee, incorporator
or stockholder of the Company or any Restricted Subsidiary, as such, shall have
any liability for any obligations of the Company or any Restricted Subsidiary
under the Notes, the Subsidiary Guarantees, this Indenture or for any claim
based on, in respect of, or by reason of, such obligations or their creation.
Each Holder of Notes by accepting a Note and the related Subsidiary Guarantees
waives and releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes and the Subsidiary Guarantees.
SECTION 12.08. GOVERNING LAW.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE
USED TO CONSTRUE THIS INDENTURE, THE NOTES AND THE SUBSIDIARY
GUARANTEES.
SECTION 12.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret any other indenture, loan
or debt agreement of the Company or its Subsidiaries or of any other Person. Any
such indenture, loan or debt agreement may not be used to interpret this
Indenture.
SECTION 12.10. SUCCESSORS.
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All agreements of the Company and the Restricted Subsidiaries in this
Indenture and the Notes and the Subsidiary Guarantees, as the case may be, shall
bind their respective successors. All agreements of the Trustee in this
Indenture shall bind its successors.
SECTION 12.11. SEVERABILITY.
In case any provision in this Indenture, in the Notes or in the
Subsidiary Guarantees shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
SECTION 12.12. COUNTERPART ORIGINALS.
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
SECTION 12.13. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof.
[Signatures on following page]
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SIGNATURES
Dated as of _________, 1996 IRON MOUNTAIN INCORPORATED
By:
--------------------------------
Name:
Title:
Dated as of _________, 1996 IRON MOUNTAIN RECORDS MANAGEMENT, INC.
By:
---------------------------------
Name:
Title:
Dated as of _________, 1996 CRITERION PROPERTY, INC.
By:
---------------------------------
Name:
Title:
Dated as of _________, 1996 CRITERION ATLANTIC PROPERTY, INC.
By:
---------------------------------
Name:
Title:
Dated as of _________, 1996 HOLLYWOOD PROPERTY, INC.
By:
---------------------------------
Name:
Title:
Dated as of _________, 1996 IRON MOUNTAIN DATA PROTECTION SERVICES, INC.
By:
---------------------------------
Name:
Title:
Dated as of _________, 1996 IRON MOUNTAIN INFORMATION PARTNERS, INC.
By:
---------------------------------
Name:
Title:
Dated as of _________, 1996 IRON MOUNTAIN RECORDS MANAGEMENT OF
OHIO, INC.
By:
---------------------------------
Name:
Title:
Dated as of _________, 1996 METRO BUSINESS ARCHIVES, INC.
By:
---------------------------------
Name:
Title:
Dated as of _________, 1996 IM SAN DIEGO, INC.
By:
---------------------------------
Name:
Title:
Dated as of _________, 1996 IRON MOUNTAIN RECORDS MANAGEMENT OF
MARYLAND, INC.
By:
---------------------------------
Name:
Title:
Dated as of _________, 1996 DATA STORAGE SYSTEMS, INC.
By:
---------------------------------
Name:
Title:
Dated as of _________, 1996 DATA ARCHIVE SERVICES, INC.
By:
---------------------------------
Name:
Title:
Dated as of _________, 1996 IRON MOUNTAIN RECORDS MANAGEMENT
OF MISSOURI LLC
By:
---------------------------------
Name:
Title:
Dated as of _________, 1996 IRON MOUNTAIN RECORDS MANAGEMENT
OF BOSTON, INC.
By:
---------------------------------
Name:
Title:
Dated as of _________, 1996 IRON MOUNTAIN WILMINGTON, INC.
By:
---------------------------------
Name:
Title:
Dated as of _________, 1996 FIRST BANK NATIONAL ASSOCIATION
as Trustee
By:
---------------------------------
Name:
Title:
By:
---------------------------------
Name:
Title:
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<PAGE>
EXHIBIT A
(Face of Note)
__% Senior Subordinated Notes due 2006
No. $__________
IRON MOUNTAIN INCORPORATED
promises to pay to ____________________________________ or registered assigns,
the principal sum of ________________________________ Dollars on ______, 2006.
Interest Payment Dates: ________ and ________.
Record Dates: ________ and ________.
Dated: _______________ __, 1996
[Every Global Note authenticated and delivered hereunder will bear a legend in
substantially the following form:]
[This Note is a Global Note within the meaning of the
Indenture hereinafter referred to and is registered in the name of a Depositary
or a nominee thereof. This Note may not be transferred to, or registered or
exchanged for Notes registered in the name of, any Person other than the
Depositary or a nominee thereof, and no such transfer may be registered, except
in the limited circumstances described in the Indenture. Every Note
authenticated and delivered upon registration of transfer of, or in exchange
for, or in lieu of, this Note will be a Global Note subject to the foregoing,
except in such limited circumstances.]
IRON MOUNTAIN INCORPORATED
By:____________________________________
Name:
CUSIP No. __________ Title:
By:____________________________________
Name:
Title:
This is one of the Notes
referred to in the
within-mentioned Indenture:
First Bank National Association, as Trustee
By: _______________________
Authorized Signatory
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<PAGE>
(Back of Note)
__% SENIOR SUBORDINATED NOTE
DUE 2006
Capitalized terms used herein have the meanings assigned to
them in the Indenture (as defined below) unless otherwise indicated.
1. Interest. Iron Mountain Incorporated, a Delaware
corporation (the "Company"), promises to pay interest on the principal amount of
this Note at the rate and in the manner specified below.
The Company shall pay in cash interest on the principal amount
of this Note at the rate per annum of __%. The Company will pay interest
semi-annually in arrears on ________ and ________ of each year, commencing on
________, 1997 or if any such day is not a Business Day (as defined in the
Indenture), on the next succeeding Business Day (each an "Interest Payment
Date"), to Holders of record on the immediately preceding ________ and
_________.
Interest will be computed on the basis of a 360-day year
consisting of twelve 30-day months. Interest shall accrue from the most recent
date to which interest has been paid or, if no interest has been paid, from the
date of the original issuance of the Notes. To the extent lawful, the Company
shall pay interest on overdue principal at the rate of 1% per annum in excess of
the then applicable interest rate on the Notes; it shall pay interest on overdue
installments of interest (without regard to any applicable grace periods) at the
same rate to the extent lawful.
2. Method of Payment. The Company will pay interest on the
Notes (except defaulted interest) to the Persons who are registered Holders of
Notes at the close of business on the record date next preceding the Interest
Payment Date, even if such Notes are canceled after such record date and on or
before such Interest Payment Date. The Company will pay principal and interest
in money of the United States that at the time of payment is legal tender for
payment of public and private debts. The Company, however, may pay principal,
premium, if any, and interest by check payable in such money. It may mail an
interest check to a Holder's registered address.
3. Paying Agent and Registrar. Initially, the Trustee
will act as Paying Agent and Registrar. The Company may change any Paying Agent,
Registrar or co-registrar without notice to any Holder. The Company or any
Restricted Subsidiary may act in any such capacity.
4. Indenture. The Company issued the Notes under an Indenture
dated as of ________, 1996 (the "Indenture") between the Company, the Restricted
Subsidiaries named therein and the Trustee. The terms of the Notes include those
stated in the Indenture and those made part of the Indenture by reference to the
Trust Indenture Act of 1939 (15 U.S. Code ss.ss. 77aaa-77bbbb) as in effect on
the date of the Indenture. The Notes are subject to all such terms, and Holders
of
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<PAGE>
the Notes are referred to the Indenture and such act for a statement of such
terms. The terms of the Indenture shall govern any inconsistencies between the
Indenture and the Notes. The Notes are unsecured general obligations of the
Company limited to $___,000,000 in aggregate principal amount.
5. Optional Redemption. The Company shall not have the option
to redeem the Notes pursuant to Section 3.07 of the Indenture prior to
_________, 2001. Thereafter, the Company shall have the option to redeem the
Notes, in whole or in part, upon not less than 30 nor more than 60 days' notice,
at the redemption prices (expressed as percentages of the principal amount) set
forth below, plus accrued and unpaid interest thereon to the applicable
redemption date, if redeemed during the 12 month period beginning on ________ 15
of the years indicated below:
Year Percentage
2001..................................................... ___.__%
2002..................................................... ___.__%
2003..................................................... ___.__%
2004 and thereafter...................................... 100.00%
Notwithstanding the foregoing, at any time prior to ________,
1999, the Company may redeem up to 35% of the initial principal amount of the
Notes originally issued with the net proceeds of one or more Qualified Equity
Offerings at a redemption price equal to ___% of the principal amount of such
Notes, plus accrued and unpaid interest, if any, to the date of redemption;
provided, that at least 65% of the principal amount of Notes originally issued
remains outstanding immediately after the occurrence of any such redemption and
that such redemption occurs within 60 days following the closing of any such
Qualified Equity Offering.
6. Mandatory Redemption. Except as described in paragraph 7
below, the Company shall not be required to make sinking fund or redemption
payments with respect to the Notes.
7. Redemption or Repurchase at Option of Holder. This Note
is subject to purchase at the option of the Holder upon the circumstances set
forth in Section 3.09 and 4.14 of the Indenture.
8. Notice of Redemption. Notice of redemption shall be mailed
at least 30 days but not more than 60 days before the redemption date to each
Holder of Notes to be redeemed at its registered address. Notes may be redeemed
in part but only in whole multiples of $1,000, unless all of the Notes held by a
Holder are to be redeemed. On and after the redemption date, interest ceases to
accrue on Notes or portions of them called for redemption.
9. Subordination. The Notes are subordinated to Senior Debt
(as defined in the Indenture) (whether outstanding on the date of the Indenture
or thereafter created, incurred,
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assumed or guaranteed) and all Obligations (as defined in the Indenture) with
respect thereto. To the extent provided in the Indenture, Senior Debt must be
paid in full in cash before the Notes may be paid. The Company agrees, and each
Holder by accepting a Note agrees, to the subordination and authorizes the
Trustee to give it effect.
10. Denominations, Transfer, Exchange. The Notes are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. The transfer of Notes may be registered and Notes may be
exchanged as provided in the Indenture. The Registrar and the Trustee may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and to pay any taxes and fees required by law or permitted by
the Indenture. The Registrar need not exchange or register the transfer of any
Note or portion of a Note selected for redemption. Also, it need not exchange or
register the transfer of any Notes for a period of 15 days before a selection of
Notes to be redeemed, or during the period between a record date and the
corresponding Interest Payment Date.
11. Persons Deemed Owners. Prior to due presentment to the
Trustee for registration of the transfer of this Note, the Trustee, any Agent,
the Company and the Guarantors may deem and treat the Person in whose name this
Note is registered as its absolute owner for the purpose of receiving payment of
principal of, premium, if any, and interest on this Note and for all other
purposes whatsoever, whether or not this Note is overdue, and none of the
Trustee, any Agent, the Company or any Guarantor shall be affected by notice to
the contrary. The registered holder of a Note shall be treated as its owner for
all purposes.
12. Amendments and Waivers. Subject to certain exceptions, the
Indenture or the Notes may be amended with the consent of the Holders of at
least a majority in principal amount of the then outstanding Notes (including
consents obtained in connection with a tender offer or exchange offer for
Notes), and any existing default or compliance with any provision of the
Indenture or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes (including consents
obtained in connection with a tender offer or exchange offer for Notes). Without
the consent of any Holder, the Indenture or the Notes may be amended to cure any
ambiguity, defect or inconsistency, to provide for uncertificated Notes in
addition to or in place of certificated Notes, to provide for assumption of the
Company's or any Restricted Subsidiary's obligations to Holders in the case of a
merger or consolidation or to make any change that would provide any additional
rights or benefits to the Holders or that does not adversely affect the rights
of any Holder under the Indenture or to comply with the requirements of the
Commission in order to effect or maintain the qualification of the Indenture
under the Trust Indenture Act.
13. Defaults and Remedies. Events of Default include: default
for 30 days in the payment when due of interest on the Notes (whether or not
prohibited by the subordination provisions of the Indenture); default in payment
when due of principal of or premium, if any, on the Notes (whether or not
prohibited by the subordination provisions of the Indenture); failure by the
Company to comply with Section 4.14 of the Indenture; failure by the Company or
the Restricted Subsidiaries for 60 days after notice from the Trustee or the
Holders of not less than
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<PAGE>
25% of the aggregate principal amount of the Notes outstanding to comply with
any of its other agreements in the Indenture or the Notes; default under any
mortgage, indenture or instrument under which there may be issued or by which
there may be secured or evidenced any Indebtedness for money borrowed by the
Company or any of its Restricted Subsidiaries (or the payment of which is
guaranteed by the Company or any of its Restricted Subsidiaries) whether such
Indebtedness or Guarantee now exists, or is created after the date of the
Indenture, if (a) such default results in the acceleration of such Indebtedness
prior to its express maturity or shall constitute a default in the payment of
such Indebtedness at final maturity of such Indebtedness and (b) the principal
amount of such Indebtedness that has been accelerated or not paid at maturity,
together with the principal amount of any other Indebtedness that has been
accelerated or not paid at maturity, exceeds $5.0 million; failure by the
Company or any of its Subsidiaries to pay final judgments aggregating in excess
of $5.0 million, which judgments remain unpaid, undischarged or unstayed for a
period of 60 days; except as permitted by the Indenture, any Subsidiary
Guarantee issued by a Restricted Subsidiary shall be held in any judicial
proceeding to be unenforceable or invalid or shall cease for any reason to be in
full force and effect or any Restricted Subsidiary, or any Person acting on
behalf of any Restricted Subsidiary, shall deny or disaffirm its obligations
under its Subsidiary Guarantees; and certain events of bankruptcy or insolvency
with respect to the Company or any of its Subsidiaries. If any Event of Default
occurs and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the then outstanding Notes may declare all the Notes to be
due and payable immediately, except that in the case of an Event of Default
arising from certain events of bankruptcy or insolvency, relating to the Company
or any Significant Subsidiary, all outstanding Notes will become due and payable
without further action or notice; provided, however, that if any Obligation with
respect to Senior Bank Debt is outstanding pursuant to the Credit Agreement upon
a declaration of acceleration of the Notes, the principal, premium, if any, and
interest on the Notes will not be payable until the earlier of (1) the day which
is five Business Days after written notice of acceleration is received by the
Company and the Credit Agent, and (2) the date of acceleration of the
Indebtedness under the Credit Agreement. Holders of the Notes may not enforce
the Indenture or the Notes except as provided in the Indenture. Subject to
certain limitations, Holders of a majority in principal amount of the then
outstanding Notes may direct the Trustee in its exercise of any trust or power.
The Trustee may withhold from Holders of the Notes notice of any continuing
Default or Event of Default (except a Default or Event of Default relating to
the payment of principal or interest) if it determines that withholding notice
is in their interest. The Company must furnish an annual compliance certificate
to the Trustee.
14. Subsidiary Guarantees. Payment of principal of, premium,
if any, and interest (including interest on overdue principal, premium, if any,
and interest, if lawful) on the Notes is guaranteed on an unsecured, senior
subordinated basis by the Guarantors pursuant to Article 11 of the Indenture.
15. Trustee Dealings with Company. The Trustee under the
Indenture, in its individual or any other capacity, may make loans to, accept
deposits from, and perform services for the Company, any Restricted Subsidiary
or their respective Affiliates, and may otherwise deal with the Company, any
Restricted Subsidiary or their respective Affiliates, as if it were not Trustee.
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16. No Recourse Against Others. No past, present or future
director, officer, employee, incorporator or stockholder, as such, of the
Company or any Restricted Subsidiary shall have any liability for any
obligations of the Company or any Restricted Subsidiary under the Notes, the
Subsidiary Guarantees or the Indenture or for any claim based on, in respect of
or by reason of such obligations or their creation. Each Holder by accepting a
Note and the related Subsidiary Guarantees, if any, waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Notes.
17. Authentication. This Note shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating agent.
18. Abbreviations. Customary abbreviations may be used in the
name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT
(= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (=
Uniform Gifts to Minors Act).
19. CUSIP Numbers. Pursuant to a recommendation promulgated by
the Committee on Uniform Security Identification Procedures, the Company has
caused CUSIP numbers to be printed on the Notes and has directed the Trustee to
use CUSIP numbers in notices of redemption as a convenience to Holders. No
representation is made as to the accuracy of such numbers either as printed on
the Notes or as contained in any notice of redemption and reliance may be placed
only on the other identification numbers placed thereon.
20. Governing Law. THE INTERNAL LAW OF THE STATE OF NEW YORK
SHALL GOVERN AND BE USED TO CONSTRUE THE INDENTURE, THE NOTES AND
THE GUARANTEES, IF ANY.
The Company will furnish to any Holder upon written request
and without charge a copy of the Indenture. Request may be made to:
Iron Mountain Incorporated
745 Atlantic Avenue
Boston, MA 602111
Telecopier No.: (617) 350-7881
Attention: Chief Financial Officer
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<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and
transfer this Note to
_______________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint _______________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
_______________________________________________________________________________
Date: ____________________________
Your Signature: ___________________________
(Sign exactly as your name appears
on the face of this Note)
Signature Guarantee.
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<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.10 or 4.14 of the Indenture, check the box below:
[ ] Section 4.10 [ ] Section 4.14
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.14 of the Indenture, state the
amount you elect to have purchased:
$____________
Date: __________________ Your Signature: _______________________
(Sign exactly as your name
appears on the Note)
Tax Identification No.: _______________
Signature Guarantee.
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<PAGE>
EXHIBIT B
FORM OF SUPPLEMENTAL INDENTURE TO BE DELIVERED BY FUTURE RESTRICTED SUBSIDIARIES
SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated as of
________________, between __________________ (the "Restricted Subsidiary"), a
subsidiary of Iron Mountain Incorporated (or its successor), a Delaware
corporation (the "Company"), and ______________________________, a national
banking association, as trustee under the indenture referred to below (the
"Trustee").
W I T N E S S E T H
WHEREAS, Iron Mountain Incorporated, a Delaware corporation has
heretofore executed and delivered to the Trustee an indenture (the "Indenture"),
dated as of ________, 1996, providing for the issuance of an aggregate principal
amount of $___,000,000 of __% Senior Subordinated Notes due 2006 (the "Notes");
WHEREAS, Section 4.13 of the Indenture provides that under certain
circumstances the Company is required to cause the Restricted Subsidiary to
execute and deliver to the Trustee a supplemental indenture pursuant to which
the Restricted Subsidiary shall unconditionally guarantee all of the Company's
obligations under the Notes pursuant to a Subsidiary Guarantee on the terms and
conditions set forth herein; and
WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is
authorized to execute and deliver this Supplemental Indenture.
NOW THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt of which is hereby acknowledged, the
Restricted Subsidiary and the Trustee mutually covenant and agree for the equal
and ratable benefit of the Holders of the Notes as follows:
1. CAPITALIZED TERMS. Capitalized terms used herein without definition
shall have the meanings assigned to them in the Indenture.
2. AGREEMENT TO GUARANTEE. The Restricted Subsidiary hereby agrees that
its obligations to the Holder and the Trustee pursuant to this Subsidiary
Guarantee shall be as expressly set forth in Article 11 of the Indenture and in
such other provisions of the Indenture as are applicable to Restricted
Subsidiaries, and reference is made to the Indenture for the precise terms of
this Supplemental Indenture. The terms of Article 11 of the Indenture and such
other provisions of the Indenture as are applicable to Restricted Subsidiaries
are incorporated herein by reference.
3. EXECUTION AND DELIVERY OF SUBSIDIARY GUARANTEES.
(a) To evidence its Subsidiary Guarantee set forth in this
Supplemental Indenture, the Restricted Subsidiary hereby agrees that a
notation of such Subsidiary Guarantee substantially
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in the form of Exhibit C to the Indenture shall be endorsed by an Officer
of such Restricted Subsidiary on each Note authenticated and delivered by
the Trustee after the date hereof.
(b) Notwithstanding the foregoing, the Restricted Subsidiary hereby
agrees that its Subsidiary Guarantee set forth herein shall remain in full
force and effect notwithstanding any failure to endorse on each Note a
notation of such Subsidiary Guarantee.
(c) If an Officer whose signature is on this Supplemental Indenture
or on the Subsidiary Guarantee no longer holds that office at the time the
Trustee authenticates the Note on which a Subsidiary Guarantee is
endorsed, the Subsidiary Guarantee shall be valid nevertheless.
(d) The delivery of any Note by the Trustee, after the authentication
thereof under the Indenture, shall constitute due delivery of the
Subsidiary Guarantee set forth in this Supplemental Indenture on behalf of
the Restricted Subsidiary.
4. NO RECOURSE AGAINST OTHERS. No past, present or future director,
officer, employee, incorporator, stockholder of the Restricted Subsidiary, as
such, shall have any liability for any obligations of the Company or any
Restricted Subsidiary under the Notes, any Subsidiary Guarantee, the Indenture
or this Supplemental Indenture or for any claim based on, in respect of, or by
reason of, such obligations or their creation. Each Holder of the Notes by
accepting a Note waives and releases all such liability. The waiver and release
are part of the consideration for issuance of the Notes.
5. NEW YORK LAW TO GOVERN. The internal law of the State of New York
shall govern and be used to construe this Supplemental Indenture and the
Subsidiary Guarantee.
6. COUNTERPARTS The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
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7. EFFECT OF HEADINGS. The Section headings herein are for convenience
only and shall not affect the construction hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed and attested, all as of the date first above
written.
Dated: ____________, ____ [Restricted Subsidiary]
By: ___________________________
Name:
Title:
Dated: ____________, ____ ____________________________,
as Trustee
By: ___________________________
Name:
Title:
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<PAGE>
EXHIBIT C
FORM OF NOTATION ON SENIOR SUBORDINATED NOTE
RELATING TO SUBSIDIARY GUARANTEE
Each Guarantor set forth below and each Restricted Subsidiary of the
Company which in accordance with Section 4.13 of the Indenture is required to
guarantee the obligations of the Company under the Notes, upon execution of a
counterpart of the Indenture, jointly and severally unconditionally guarantees
(i) the due and punctual payment of the principal of and interest on the Notes,
whether at the maturity or interest payment or mandatory redemption date, by
acceleration, call for redemption or otherwise, and of interest on the overdue
principal of and interest, if any, on the Notes and all other obligations of the
Company to the Holders or the Trustee under the Indenture or the Notes and (ii)
in case of any extension of time of payment or renewal of any Notes or any of
such other obligations, that the same will be promptly paid in full when due or
performed in accordance with the terms of the extension or renewal, whether at
maturity, by acceleration or otherwise.
The obligations of each Guarantor to the Holder and to the Trustee
pursuant to this Subsidiary Guarantee and the Indenture are as expressly set
forth in Article 11 of the Indenture and in such other provisions of the
Indenture as are applicable to Guarantors, and reference is hereby made to such
Indenture for the precise terms of this Subsidiary Guarantee. The terms of
Article 11 of the Indenture and such other provisions of the Indenture as are
applicable to Guarantors are incorporated herein by reference. This Subsidiary
Guaranty is subject to release as described in Sections 4.13 and 11.17 of the
Indenture, and the obligations of each Guarantor under this Subsidiary Guaranty
and the Indenture are limited as provided in Section 11.15 of the Indenture.
This is a continuing guarantee and shall remain in full force and
effect and shall be binding upon each Guarantor and its successors and assigns
until full and final payment of all of the Company's obligations under the Notes
and the Indenture and shall inure to the benefit of the successors and assigns
of the Trustee and the Holders and, in the event of any transfer or assignment
of rights by any Holder or the Trustee, the rights and privileges herein
conferred upon that party shall automatically extend to and be vested in such
transferee or assignee, all subject to the terms and conditions hereof. This is
a guarantee of payment and not a guarantee of collection.
This Subsidiary Guarantee shall not be valid or obligatory for any
purpose until the certificate of authentication on the Note upon which this
Subsidiary Guarantee is noted shall have been executed by the Trustee under the
Indenture by the manual signature of one of its authorized officers.
[RESTRICTED SUBSIDIARY]
By:________________________________________
Name:
Title:
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EXHIBIT 5
September 25, 1996
Iron Mountain Incorporated
745 Atlantic Avenue
Boston, Massachusetts 02111
Re: Registration Statement on Form S-1
$150,000,000 of Senior Subordinated Notes due 2006
Ladies and Gentlemen:
The following opinion is furnished to you in connection with the
registration pursuant to a registration statement on Form S-1 (File No.
333-10359) (the "Registration Statement") under the Securities Act of 1933, as
amended (the "Securities Act"), by Iron Mountain Incorporated, a Delaware
corporation (the "Company"), of $150,000,000 of Senior Subordinated Notes due
2006 (the "Notes"), which Notes will initally be guaranteed (the "Guarantees")
by each of the Company's direct and indirect wholly owned subsidiaries
(collectively, the "Subsidiary Guarantors") and issued under an indenture
relating to the Notes (the "Indenture") by and among the Company, the Subsidiary
Guarantors and First Bank National Association, as Trustee (the "Trustee").
We have acted as counsel to the Company in connection with the preparation
of the Registration Statement, and we have examined originals or copies,
certified or otherwise identified to our satisfaction, of corporate records,
certificates and statements of officers and accountants of the Company, of
public officials, and such other documents as we have considered necessary in
order to furnish the opinion hereinafter set forth. We express no opinion herein
as to any laws other than the General Corporation Law of the State of Delaware
and the Laws of the Commonwealth of Massachusetts and the State of New York.
Insofar as the opinions herein pertain to matters of California law relating to
Hollywood Property, Inc., a California corporation and a Subsidiary Guarantor
("HPI"), we have with your consent relied upon the opinion of Nossaman, Guthner,
Knox & Elliott, California counsel to HPI.
<PAGE>
Iron Mountain Incorporated
September 25, 1996
Page 2
Based upon and subject to the foregoing, we are of the opinion that the
Company and the Subsidiary Guarantors have taken all necessary action to approve
the Indenture and the terms of the Notes and Guarantees, and when (i) the
Registration Statement has become effective under the Securities Act, (ii) the
Indenture has been duly executed and delivered by the Company, the Subsidiary
Guarantors and the Trustee and the Notes have been duly executed by the Company
and authenticated by the Trustee and the Guarantees have been duly executed by
the Subsidiary Guarantors in accordance with the provisions of the Indenture,
(iii) the Indenture has been qualified under the Trust Indenture Act of 1939, as
amended, and (iv) the Notes with the Guarantees affixed thereto have been
delivered to the purchasers thereof against payment of the purchase price
therefor as described in the Registration Statement, the Notes and the
Guarantees will be validly issued and binding obligations of the Company and the
Subsidiary Guarantors, respectively, subject in each case to the effect of (a)
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights and remedies of creditors and the
obligations of debtors generally and (b) the application of general principles
of equity (regardless of whether enforcement is considered in proceedings at law
or in equity).
We express no opinion as to the applicability (and, if applicable, the
effect) of Section 548 of the United States Bankruptcy Code or any comparable
provision of state law to the conclusions expressed above.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm made therein under the
caption "Validity of Securities." In giving such consent, we do not thereby
admit that we come within the category of persons whose consent is required
under Section 7 of the Securities Act or the Rules and Regulations of the
Securities and Exchange Commission promulgated thereunder.
Very truly yours,
/s/Sullivan & Worcester LLP
SULLIVAN & WORCESTER LLP
================================================================================
IRON MOUNTAIN INCORPORATED
CREDIT AGREEMENT
Dated as of September [__], 1996
$100,000,000
THE CHASE MANHATTAN BANK,
as Administrative Agent
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
RECITALS............................................................. 1
Section 1. Definitions and Accounting Matters........................ 1
1.01 Certain Defined Terms................................. 1
1.02 Accounting Terms and Determinations................... 23
1.03 Types of Loans........................................ 24
Section 2. Loans, Etc................................................ 24
2.01 Loans................................................. 24
2.02 Reductions of Commitments............................. 24
2.03 Fees ................................................. 25
2.04 Lending Offices....................................... 25
2.05 Several Obligations; Remedies Independent............. 25
2.06 Notes................................................. 26
2.07 Use of Proceeds....................................... 26
2.08 Letters of Credit..................................... 26
Section 3. Borrowings, Conversions and Prepayments................... 31
3.01 Borrowings............................................ 31
3.02 Prepayments and Conversions........................... 32
Section 4. Payments of Principal and Interest........................ 33
4.01 Repayment of Loans.................................... 33
4.02 Interest.............................................. 33
Section 5. Payments; Pro Rata Treatment; Computations; Etc........... 35
5.01 Payments.............................................. 35
5.02 Pro Rata Treatment.................................... 36
5.03 Computations.......................................... 36
5.04 Minimum and Maximum Amounts; Types.................... 36
5.05 Certain Notices....................................... 37
5.06 Non-Receipt of Funds by the Administrative Agent...... 38
5.07 Sharing of Payments; Waiver of Enforcement
Without Consent, Etc............................. 38
5.08 Withholding Tax Exemption............................. 39
Section 6. Yield Protection and Illegality........................... 40
6.01 Additional Costs...................................... 40
6.02 Limitation on Types of Loans.......................... 42
6.03 Illegality............................................ 42
6.04 Substitute ABR Loans.................................. 42
6.05 Compensation.......................................... 43
6.06 Capital Adequacy...................................... 43
6.07 Substitution of Lender................................ 44
6.08 Additional Costs in Respect of Letters of Credit...... 44
Section 7. Conditions Precedent...................................... 45
7.01 Initial Extension of Credit........................... 45
7.02 Initial and Subsequent Loans.......................... 48
<PAGE>
Section 8. Representations and Warranties............................ 48
8.01 Corporate Existence................................... 48
8.02 Information........................................... 49
8.03 Litigation............................................ 50
8.04 No Breach............................................. 50
8.05 Corporate Action...................................... 51
8.06 Approvals............................................. 51
8.07 Regulations U and X................................... 51
8.08 ERISA................................................. 51
8.09 Taxes................................................. 51
8.10 Subsidiaries; Agreements; Etc......................... 52
8.11 Investment Company Act................................ 52
8.12 Public Utility Holding Company Act.................... 53
8.13 Ownership and Use of Properties....................... 53
8.14 Environmental Compliance.............................. 53
8.15 Solvency.............................................. 55
8.16 Capitalization........................................ 55
8.17 Senior Debt........................................... 55
Section 9. Covenants................................................. 55
9.01 Financial Statements and Other Information............ 55
9.02 Taxes and Claims...................................... 58
9.03 Insurance............................................. 58
9.04 Maintenance of Existence; Conduct of Business......... 59
9.05 Maintenance of and Access to Properties............... 60
9.06 Compliance with Applicable Laws....................... 60
9.07 Litigation............................................ 60
9.08 Indebtedness.......................................... 60
9.09 Leverage Ratio........................................ 61
9.10 Interest Coverage Ratio............................... 61
9.11 Fixed Charges Coverage Ratio.......................... 62
9.12 Mergers, Asset Dispositions, Etc...................... 63
9.13 Liens................................................. 64
9.14 Investments........................................... 65
9.15 Restricted Payments................................... 67
9.16 Transactions with Affiliates.......................... 68
9.17 Subordinated Indebtedness............................. 68
9.18 Lines of Businesses................................... 69
9.19 Capital Expenditures.................................. 69
9.20 Modification of Other Agreements...................... 69
9.21 Interest Rate Protection.............................. 69
9.22 Certain Obligations Respecting Subsidiaries........... 69
9.23 Environmental Matters................................. 71
9.24 Residual Assurances................................... 71
Section 10. Defaults................................................. 72
10.01 Events of Default.................................... 72
Section 11. The Administrative Agent................................. 75
11.01 Appointment, Powers and Immunities................... 75
11.02 Reliance by Administrative Agent..................... 76
11.03 Defaults............................................. 76
11.04 Rights as a Lender................................... 77
11.05 Indemnification...................................... 77
ii
<PAGE>
11.06 Non-Reliance on Administrative Agent and Other
Lenders......................................... 78
11.07 Failure to Act....................................... 78
11.08 Resignation or Removal of Administrative Agent....... 78
11.09 Consents under Basic Documents....................... 79
11.10 Collateral Sub-Agents................................ 79
Section 12. Miscellaneous............................................ 79
12.01 Waiver............................................... 79
12.02 Notices.............................................. 80
12.03 Expenses, Etc........................................ 80
12.04 Indemnification...................................... 80
12.05 Amendments, Etc...................................... 81
12.06 Successors and Assigns............................... 81
12.07 Confidentiality...................................... 82
12.08 Survival............................................. 83
12.09 Captions............................................. 83
12.10 Counterparts; Integration............................ 83
12.11 Additional Lenders................................... 83
12.12 GOVERNING LAW; SUBMISSION TO JURISDICTION;
WAIVER OF JURY TRIAL............................ 84
iii
<PAGE>
Schedules
SCHEDULE I - Commitments
SCHEDULE II - Lending Offices; Addresses for Notices
SCHEDULE III - Subsidiaries; Investments in Joint Ventures
and Other Persons
SCHEDULE IV - Credit Agreements, Indentures, Leases
SCHEDULE V - Capitalization; Equity Rights
SCHEDULE VI - Existing Letters of Credit
Exhibits
EXHIBIT A - Form of Note
EXHIBIT B - Form of Subsidiary Guaranty
EXHIBIT C - Form of Company Pledge Agreement
EXHIBIT D - Form of Subsidiary Pledge Agreement
EXHIBIT E - Form of Opinion of Special New York Counsel
to the Company
EXHIBIT F - Form of Opinion of Special New York Counsel
to the Administrative Agent
iv
<PAGE>
CREDIT AGREEMENT dated as of September [__], 1996, among: IRON
MOUNTAIN INCORPORATED, a corporation duly organized and validly existing under
the laws of the State of Delaware (together with its successors, the "Company");
each of the lenders which is or which may from time to time become a signatory
hereto (individually, together with its successors, a "Lender" and,
collectively, together with their respective successors, the "Lenders"); and THE
CHASE MANHATTAN BANK, as agent for the Lenders (in such capacity, together with
its successors in such capacity, the "Administrative Agent").
The Company has requested that the Lenders extend credit to
the Company (to be made available by the Company to the Subsidiary Guarantors,
as defined below) in an aggregate principal or face amount at any one time
outstanding not exceeding $100,000,000 to finance the operations of the Company
and such Subsidiary Guarantors, to refinance certain of their existing
indebtedness and to enable certain acquisitions and capital expenditures by
them, and for other purposes permitted hereunder.
Accordingly, the parties hereto agree as follows:
Section 1. Definitions and Accounting Matters.
1.01 Certain Defined Terms. As used herein, the following
terms shall have the following meanings (all terms defined in this Section 1.01
or in other provisions of this Agreement in the singular to have the same
meanings when used in the plural and vice versa):
"ABR Loans" shall mean Loans which bear interest at a rate
based upon the Alternate Base Rate.
"Acquisition" shall mean an acquisition of assets of, or all
or substantially all of the Capital Stock of, another business by the Company
and/or one or more of its Subsidiaries.
"Acquisition Consideration" shall mean, with respect to any
Acquisition, the aggregate amount of consideration paid by the Company and its
Subsidiaries in connection therewith, inclusive of (a) Stock Consideration and
(b) other consideration on account of (i) any expenses incurred in connection
with such Acquisition, (ii) liabilities under agreements not to compete incurred
in connection with such Acquisition, (iii) the principal amount of Indebtedness
assumed in connection with such Acquisition and (iv) Additional Expenditures
related to such Acquisition.
Credit Agreement
<PAGE>
- 2 -
"Additional Expenditures" shall mean, with respect to any
Acquisition, amounts expended or to be expended by the Company and its
Subsidiaries within twelve months after the date of such Acquisition to acquire
or construct facilities and equipment that are not part of the assets acquired
pursuant to such Acquisition but which are deemed by the Company to be essential
for the integration or restructuring of the assets so acquired.
"Additional Subordinated Indebtedness" shall mean Indebtedness
payable to sellers in connection with Permitted Acquisitions that by its terms
is subordinated to the payment of the principal of and interest on the Loans.
"Adjusted EBITDA" shall mean, for any period, EBITDA for such
period, minus the tax provision for such period currently payable.
"Affiliate" shall mean, as to any Person, any other Person
which directly or indirectly controls, or is under common control with, or is
controlled by, such Person and, if such Person is an individual, any member of
the immediate family (including parents, siblings, spouse, children,
stepchildren, nephews, nieces and grandchildren) of such individual and any
trust whose principal beneficiary is such individual or one or more members of
such immediate family and any Person who is controlled by any such member or
trust. As used in this definition, "control" (including, with correlative
meanings, "controlled by" and "under common control with") shall mean
possession, directly or indirectly, of power to direct or cause the direction of
management or policies (whether through ownership of securities or partnership
or other ownership interests, by contract or otherwise), provided that, in any
event, any Person which owns directly or indirectly more than 5% of the
securities having ordinary voting power for the election of directors or other
governing body of a corporation or more than 5% of the partnership or other
ownership interests of any other Person (other than as a limited partner of such
other Person) will be deemed to control such corporation or other Person.
Notwithstanding the foregoing, (a) no individual shall be deemed to be an
Affiliate of a corporation solely by reason of his or her being an officer or
director of such corporation and (b) Subsidiary Guarantors shall be deemed not
to be Affiliates of the Company or any of the Subsidiary Guarantors.
"Alternate Base Rate" shall mean, for any day, a rate per
annum equal to the greatest of (a) the Prime Rate in effect on such day, (b) the
Base CD Rate in effect on such day plus 1% and (c) the Federal Funds Effective
Rate in effect on such day plus 1/2 of 1%. Any change in the Alternate Base Rate
due to a change in the Prime Rate, the Base CD Rate or the Federal Funds
Credit Agreement
<PAGE>
- 3 -
Effective Rate shall be effective from and including the effective date of such
change in the Prime Rate, the Base CD Rate or the Federal Funds Effective Rate,
respectively.
"Applicable Commitment Fee Rate" shall mean, at any time, the
percentage per annum set forth in the schedule below opposite the Pricing Level
in effect at such time:
- -----------------------------------------------------------------------------
Applicable Commitment
Pricing Level Fee Rate
- -----------------------------------------------------------------------------
Level 6 0.500%
- -----------------------------------------------------------------------------
Level 5 0.500%
- -----------------------------------------------------------------------------
Level 4 0.375%
- -----------------------------------------------------------------------------
Level 3 0.250%
- -----------------------------------------------------------------------------
Level 2 0.150%
- -----------------------------------------------------------------------------
Level 1 0.100%
- -----------------------------------------------------------------------------
For purposes of this definition, the "Pricing Level" in effect at any time shall
be (i) during the Initial Period, Level 4, and (ii) at any time thereafter, the
level (either Level 1, Level 2, Level 3, Level 4, Level 5 or Level 6) indicated
in the schedule set forth in the definition of "Applicable Margin" in this
Section 1.01 corresponding to the Applicable Leverage Ratio in effect at such
time.
"Applicable L/C Percentage" shall mean, at any time, the
Applicable Margin in effect at such time with respect to Eurodollar Loans
(irrespective of whether at the time any Eurodollar Loan is outstanding).
Credit Agreement
<PAGE>
- 4 -
"Applicable Lending Office" shall mean, for each Lender and
for each Type of Loan, the Lending Office of such Lender (or of an affiliate of
such Lender) designated for such Type of Loan below its name on Schedule II
hereto or such other office of such Lender (or of an affiliate of such Lender)
as such Lender may from time to time specify to the Administrative Agent and the
Company as the office by which its Loans of such Type are to be made.
"Applicable Leverage Ratio" shall mean, at any time, the
Leverage Ratio as at the end of the most recent fiscal quarter of the Company in
respect of which financial statements have been delivered by the Company
pursuant to either Section 9.01(a) or 9.01(b) hereof; provided that no change in
the Applicable Leverage Ratio will take effect until the date five Business Days
following receipt by the Administrative Agent of the applicable financial
statements.
"Applicable Margin" shall mean:
(a) during the Initial Period, (i) with respect to ABR Loans,
1.25% per annum; and (ii) with respect to Eurodollar Loans, 2.25% per
annum; and
(b) at any time thereafter, the rate for the respective Type
of Loan set forth below opposite the level (either Level 1, Level 2,
Level 3, Level 4, Level 5 or Level 6) indicated in the schedule set
forth below corresponding to the Applicable Leverage Ratio in effect at
such time:
- ------------------------------------------------------------------------------
Applicable Margin
Range of Applicable
Leverage Ratio
ABR Eurodollar
Loans Loans
- ------------------------------------------------------------------------------
Level 6
Greater than 4.25 to 1.00 1.75% 2.75%
- ------------------------------------------------------------------------------
Level 5
Less than or equal to 4.25 to 1.00 and 1.50% 2.50%
greater than 3.75 to 1.00
Credit Agreement
<PAGE>
- 5 -
- --------------------------------------------------------------------------------
Level 4
Less than or equal to 3.75 to 1.00 and 1.25% 2.25%
greater than 3.25 to 1.00
- --------------------------------------------------------------------------------
Level 3
Less than or equal to 3.25 to 1.00 and 1.00% 2.00%
greater than 2.75 to 1.00
- --------------------------------------------------------------------------------
Level 2
Less than or equal to 2.75 to 1.00 and 0.75% 1.75%
greater than 2.25 to 1.00
- --------------------------------------------------------------------------------
Level 1
Less than or equal to 2.25 to 1.00 0.50% 1.50%
- --------------------------------------------------------------------------------
"Assessment Rate" shall mean, for any day, the annual
assessment rate in effect on such day that is payable by a member of the Bank
Insurance Fund classified as "well-capitalized" and within supervisory subgroup
"B" (or a comparable successor risk classification) within the meaning of 12
C.F.R. Part 327 (or any successor provision) to the Federal Deposit Insurance
Corporation for insurance by such Corporation of time deposits made in Dollars
at the offices of such member in the United States; provided that if, as a
result of any change in any law, rule or regulation, it is no longer possible to
determine the Assessment Rate as aforesaid, then the Assessment Rate shall be
such annual rate as shall be determined by the Administrative Agent to be
representative of the cost of such insurance to the Lenders.
"Bankruptcy Code" shall mean the United States Bankruptcy
Code, as now or hereafter in effect, or any successor statute.
"Base CD Rate" shall mean the sum of (a) the ThreeMonth
Secondary CD Rate multiplied by the Statutory Reserve Rate plus (b) the
Assessment Rate.
Credit Agreement
<PAGE>
- 6 -
"Basic Documents" shall mean this Agreement, the Notes, the
Letter of Credit Documents, the Subsidiary Guaranty, the Security Documents, the
Senior Subordinated Debt Documents and any instruments evidencing or agreements
providing for the issuance of Additional Subordinated Indebtedness.
"Board" means the Board of Governors of the Federal
Reserve System of the United States of America.
"Business Day" shall mean any day other than a day on which
commercial banks are authorized or required to close in New York City or Boston,
Massachusetts and, where such term is used in the definition of "Quarterly Date"
in this Section 1.01 or if such day relates to a borrowing of, a payment or
prepayment of principal of or interest on, a conversion of or into, or an
Interest Period for, a Eurodollar Loan or a notice by the Company with respect
to any such borrowing, payment, prepayment, conversion or Interest Period, which
is also a day on which dealings in Dollar deposits are carried out in the London
interbank market.
"Calculation Period" shall mean (a) initially, the
twelve-month period commencing on October 1, 1996 and (b) thereafter, each
successive twelve-month period.
"Capital Expenditures" shall mean expenditures in respect of
fixed assets by the Company or any of its Subsidiaries, including the
capitalized amount of Capital Lease Obligations incurred during the relevant
period, other than (i) expenditures for the restoration or replacement of fixed
assets to the extent financed by the proceeds of an insurance policy described
in clause (1) of Section 9.03 hereof or through a condemnation award, (ii)
Permitted Acquisitions, (iii) Qualifying Sale-Leaseback Transactions (except to
the extent any lease of Property by the Company or any of its Subsidiaries in
connection therewith would constitute a capital lease), (iv) Additional
Expenditures related to Permitted Acquisitions and (v) Large Volume Account
Capitalized Expenditures.
"Capital Lease Obligations" shall mean, as to any Person, the
obligations of such Person to pay rent or other amounts under a lease of (or
other agreement conveying the right to use) real and/or personal property which
obligations are required to be classified and accounted for as a capital lease
on a balance sheet of such Person under GAAP (including Statement of Financial
Accounting Standards No. 13 of the Financial Accounting Standards Board) and,
for purposes of this Agreement, the amount of such obligations shall be the
capitalized amount thereof, determined in accordance with GAAP (including such
Statement No. 13).
Credit Agreement
<PAGE>
- 7 -
"Capital Stock" shall mean, with respect to any Person, any
and all shares, interests, participations or other equivalents (however
designated, whether voting or non-voting) of such Person's capital stock or
other ownership interests, including, without limitation, all common stock and
all preferred stock.
"Casualty Event" shall mean, with respect to any property of
any Person, any loss of or damage to, or any condemnation or other taking of,
such property for which such Person or any of its Subsidiaries receives
insurance proceeds, or proceeds of a condemnation award or other compensation.
"Chase" shall mean The Chase Manhattan Bank and its
successors.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended.
"Change of Control" shall mean that:
(a) any "person" or "group" (as such terms are used in
Sections 13(d) and 14(d) of the Exchange Act), other than the Principal
Stockholders (or any of them), is or becomes the "beneficial owner" (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or
indirectly, of more than 50% of the voting power of all classes of
Voting Stock of the Company; or
(b) during any consecutive 25-month period, individuals who at
the beginning of such period constituted the Board of Directors of the
Company (together with any new directors whose election to such Board
of Directors, or whose nomination for election by the stockholders of
the Company, was approved by a vote of at least 66-2/3% of the
directors still in office who were either directors at the beginning of
such period or whose election or nomination for election was previously
so approved) cease for any reason to constitute a majority of the Board
of Directors then in office; or
(c) the Company shall be required pursuant to the provisions
of the Senior Subordinated Debt Documents (or any other agreement or
instrument relating to or providing for any other Subordinated
Indebtedness) to redeem or repurchase, or make an offer to redeem or
repurchase, all or any portion of the Senior Subordinated Debt (or such
Subordinated Indebtedness, as the case may be) as a result of a change
of control (however defined).
Credit Agreement
<PAGE>
- 8 -
"Closing Date" shall mean the date upon which the initial
extension of credit hereunder is made.
"Code" shall mean the Internal Revenue Code of 1986, as
amended, or any successor statute.
"Collateral Account" shall mean a cash collateral account in
the name and under the control of the Administrative Agent maintained in
accordance with the terms of the Security Documents.
"Commitment" shall mean, as to each Lender, the obligation of
such Lender to make Loans, and to issue or participate in Letters of Credit
pursuant to Section 2.08 hereof, in an aggregate principal or face amount at any
one time outstanding up to but not exceeding the amount set opposite the name of
such Lender on Schedule I hereto under the caption "Commitment" or, in the case
of a Person that becomes a Lender pursuant to an assignment permitted under
Section 12.06 hereof, as specified in the respective instrument of assignment
pursuant to which such assignment is effected (as the same may be reduced at any
time or from time to time pursuant to Section 2.02 or 3.02 hereof).
"Commitment Percentage" shall mean, with respect to any Lender
at any time, the ratio of (a) the amount of the Commitment of such Lender at
such time to (b) the aggregate amount of the Commitments of all of the Lenders
at such time.
"Commitment Termination Date" shall mean September 30, 2001
(or, if such day is not a Business Day, the next preceding Business Day).
"Company Pledge Agreement" shall mean a Pledge Agreement
substantially in the form of Exhibit C hereto between the Company and the
Administrative Agent, as the same shall be modified and supplemented and in
effect from time to time.
"Controlled Group" shall mean all members of a controlled
group of corporations and all trades or businesses (whether or not incorporated)
under common control which, together with the Company, are treated as a single
employer under Section 414 of the Code.
"Default" shall mean an Event of Default or an event which
with notice or lapse of time or both would, unless cured or waived, become an
Event of Default.
"Dollars" and "$" shall mean lawful money of the United
States of America.
Credit Agreement
<PAGE>
- 9 -
"EBITDA" shall mean, for any period, the sum (without
duplication), determined on a consolidated basis for the Company and its
Subsidiaries, of (a) net income for such period plus (b) to the extent deducted
in determining net income for such period, the sum of (i) depreciation and
amortization (including deferred financing costs, organization costs, goodwill
and non-compete amortization) for such period, (ii) other non-cash expenses for
such period, (iii) interest expense for such period, (iv) provision for income
taxes for such period, (v) extraordinary losses (including without limitation
losses arising from any natural disasters) for such period, (vi) non-compete
expenses for such period to the extent not capitalized in accordance with GAAP
and (vii) losses on sales of fixed assets not in the ordinary course of business
for such period after giving effect to any related charges for, reductions of or
provisions for taxes thereon minus (c) to the extent included in the calculation
of net income for such period, the sum of (i) other income (including interest
income) for such period, (ii) extraordinary gains for such period and (iii)
gains on sales of fixed assets not in the ordinary course of business for such
period after giving effect to any related charges for, reductions of or
provisions for taxes thereon.
For the purposes of calculating the ratios set forth in
Sections 9.09, 9.10 and 9.11 there may, at the Company's option, be included in
EBITDA for any relevant period, on a pro forma basis (adjusted to give effect to
expenses that will not be ongoing), the net income (and the additions and
subtractions thereto referred to above) for such period of any Person (or
assets) acquired after the commencement of such period in connection with any
Permitted Acquisition having Acquisition Consideration of more than $750,000.
The net income (and the related additions and substractions) of the Person or
assets acquired pursuant to such Acquisition for such period shall be calculated
by reference to the most recent available quarterly financial statements of the
acquired business, annualized.
"Environmental Laws" shall mean any and all federal, state,
local and foreign statutes, laws, regulations, ordinances, rules, judgments,
orders, decrees, codes, plans, injunctions, permits, concessions, grants,
franchises, licenses or other governmental restrictions, contracts, indemnities,
assumptions of liability or agreements relating to the environment or to
emissions, discharges or releases of pollutants, contaminants, petroleum or
petroleum products, chemicals or industrial, toxic or hazardous substances or
wastes into the environment including, without limitation, ambient air, surface
water, ground water or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants, petroleum or petroleum
Credit Agreement
<PAGE>
- 10 -
products, chemicals or industrial, toxic or hazardous substances or wastes or
the clean-up or other remediation thereof.
"Environmental Liabilities" shall mean all liabilities of the
Company and each Subsidiary, whether vested or unvested, contingent or fixed,
actual or potential which arise under or relate to Environmental Laws.
"Equity Rights" shall mean, with respect to any Person, any
subscriptions, options, warrants, commitments, preemptive rights or agreements
of any kind (including, without limitation, any stockholders' or voting trust
agreements) for the issuance, sale, registration or voting of, or securities
convertible into, any additional shares of Capital Stock of any class, or
partnership or other ownership interests of any type in, such Person.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time.
"Eurodollar Base Rate" shall mean, with respect to any
Eurodollar Loans, the rate per annum determined by the Administrative Agent to
be the average of the rates quoted by the Reference Lenders at approximately
11:00 a.m. London time (or as soon thereafter as practicable) on the day two
Business Days prior to the first day of the Interest Period for such Loans for
the offering by the Reference Lenders to leading banks in the London interbank
market of Dollar deposits having a term comparable to such Interest Period and
in an amount comparable to the principal amount of the respective Eurodollar
Loans of the Reference Lenders to which such Interest Period relates. If any
Reference Lender is not participating in any Eurodollar Loans during the
Interest Period therefor (pursuant to Section 6.04 hereof or for any other
reason), the Eurodollar Base Rate for such Loans for such Interest Period shall
be determined by reference to the amount of the Loan which such Reference Lender
would have made had it been participating in such Loans. If any Reference Lender
does not furnish a timely quotation, the Administrative Agent shall determine
the relevant interest rate on the basis of the quotation or quotations furnished
by the remaining Reference Lender or Lenders or, if none of such quotations is
available on a timely basis, the provisions of Section 6.02 shall apply.
"Eurodollar Loans" shall mean Loans the interest on which is
determined on the basis of rates referred to in the definition of "Eurodollar
Base Rate" in this Section 1.01.
"Eurodollar Rate" shall mean, for any Eurodollar Loans, a rate
per annum (rounded upwards, if necessary, to the nearest 1/16 of 1%) determined
by the Administrative Agent to be equal to
Credit Agreement
<PAGE>
- 11 -
(i) the Eurodollar Base Rate for such Loans for the Interest Period for such
Loans divided by (ii) 1 minus the Reserve Requirement for such Loans for such
Interest Period.
"Events of Default" shall have the meaning assigned to such
term in Section 10.01 hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended from time to time.
"Excluded Subsidiary" shall mean any Subsidiary of the Company
principally engaged in the records management business domiciled (within the
meaning of the Code) outside the United States of America.
"Existing Letters of Credit" shall mean, collectively, all
letters of credit identified on Schedule VI hereto and outstanding on the
Closing Date.
"Federal Funds Effective Rate" shall mean, for any day, the
weighted average (rounded upwards, if necessary, to the next 1/100 of l%) of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for
such day for such transactions received by the Administrative Agent from three
Federal funds brokers of recognized standing selected by it.
"Fixed Charges" shall mean for any period the sum of (i)
Scheduled Amortization for such period plus (ii) Interest Expense for such
period plus (iii) the aggregate amount of Maintenance Capital Expenditures for
such period plus (iv) the aggregate amount of non-compete expenses for such
period to the extent not capitalized in accordance with GAAP.
"Funded Indebtedness" shall mean, without duplication, (a)
Indebtedness that matures or otherwise becomes due more than one year after the
incurrence thereof or is extendible, renewable or refundable, at the option of
the obligor, to a date more than one year after the incurrence thereof
(including the current portion thereof) and (b) Indebtedness outstanding
hereunder.
"GAAP" shall mean generally accepted accounting principles as
in effect from time to time consistently applied.
"Guaranty" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Indebtedness
of any other Person and, without
Credit Agreement
<PAGE>
- 12 -
limiting the generality of the foregoing, any obligation, direct or indirect,
contingent or otherwise, of such Person (i) to purchase or pay (or advance or
supply funds for the purchase or payment of) such Indebtedness (whether arising
by virtue of partnership arrangements, by agreement to keep-well, to purchase
assets, goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise, other than agreements to purchase goods at an
arm's length price in the ordinary course of business) or (ii) entered into for
the purpose of assuring in any other manner the holder of such Indebtedness of
the payment thereof or to protect such holder against loss in respect thereof
(in whole or in part), provided that the term Guaranty shall not include
endorsements for collection or deposit in the ordinary course of business. The
term "Guarantee" used as a verb has a corresponding meaning.
"Hazardous Substances" shall mean any toxic, caustic or
otherwise hazardous substance, including petroleum, its derivatives, by-products
and other hydrocarbons, including any substance regulated under Environmental
Laws.
"Indebtedness" shall mean, as to any Person (determined
without duplication):
(i) indebtedness of such Person for borrowed money (whether by
loan or the issuance and sale of debt securities) or for the deferred
purchase or acquisition price of property or services (including
amounts payable under agreements not to compete and other similar
arrangements), other than accounts payable (other than for borrowed
money) incurred in the ordinary course of business and accrued expenses
incurred in the ordinary course of business;
(ii) obligations of such Person in respect of letters of
credit or similar instruments issued or accepted by banks and other
financial institutions for the account of such Person;
(iii) Capital Lease Obligations of such Person;
(iv) obligations of such Person to redeem or otherwise
retire shares of Capital Stock of such Person;
(v) indebtedness of others of the type described in clauses
(i) through (iv) above secured by a Lien on the property of such
Person, whether or not the respective obligation so secured has been
assumed by such Person; and
(vi) indebtedness of others of the type described in clauses
(i) through (v) above Guaranteed by such Person.
Credit Agreement
<PAGE>
- 13 -
Notwithstanding anything to the contrary contained in clause (i) of the
preceding sentence, indebtedness of any Person in respect of amounts payable
under an agreement not to compete shall be the amount carried on the balance
sheet of such Person in respect of such agreement in accordance with GAAP.
"Initial Period" shall mean the period from and including the
Closing Date to but excluding the date five Business Days after the date on
which the Company first delivers financial statements to the Administrative
Agent pursuant to Section 9.01(b) hereof.
"Interest Expense" shall mean, for any period, the sum
(determined without duplication) of the aggregate amount of interest accruing
during such period on Indebtedness of the Company and its Subsidiaries (on a
consolidated basis), including the interest portion of payments under Capital
Lease Obligations and any capitalized interest, and excluding amortization of
debt discount and expense and interest paid in kind.
"Interest Period" shall mean, with respect to any Eurodollar
Loans, the period commencing on the date such Loans are made or converted from
ABR Loans or the last day of the next preceding Interest Period with respect to
such Loans and ending on the numerically corresponding day in the first, second,
third, sixth or (if acceptable to all Lenders) twelfth calendar month
thereafter, as the Company may select as provided in Section 5.05 hereof, except
that each such Interest Period which commences on the last Business Day of a
calendar month (or on any day for which there is no numerically corresponding
day in the appropriate subsequent calendar month) shall end on the last Business
Day of the appropriate subsequent calendar month.
Notwithstanding the foregoing:
(i) if any Interest Period would otherwise end after
the Commitment Termination Date, such Interest Period shall
end on the Commitment Termination Date;
(ii) each Interest Period that would otherwise end on a day
that is not a Business Day shall end on the next succeeding Business
Day (or, if such next succeeding Business Day falls in the next
succeeding calendar month, on the next preceding Business Day); and
(iii) notwithstanding clause (i) above, no Interest Period
shall have a duration of less than one month and, if the Interest
Period for any Eurodollar Loan would otherwise be a shorter period,
such Loans shall not be available hereunder for such period.
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"Interest Rate Agreement" shall mean (i) an interest rate swap
agreement, interest rate cap agreement or similar arrangement between the
Company and one or more of the Lenders or (ii) an interest rate swap agreement,
interest rate cap agreement or similar arrangement between the Company and one
or more financial institutions (other than a Lender) approved by the
Administrative Agent (which approval shall not be unreasonably withheld)
pursuant to which the Company is not required in the absence of default to make
any payments other than initial fees.
"Investments" shall have the meaning assigned to such term in
Section 9.14 hereof.
"Issuing Bank" shall mean Chase, as the issuer of Letters of
Credit under Section 2.08 hereof, together with its successors and assigns in
such capacity.
"Large Volume Account Capitalized Expenditures" shall mean any
expenditures incurred by the Company or its Subsidiaries in connection with new
customers initially storing with the Company or its Subsidiaries in excess of
10,000 boxes, to the extent that such expenditures are capitalized in accordance
with GAAP.
"Letter of Credit Documents" shall mean, with respect to any
Letter of Credit, collectively, any application therefor and any other
agreements, instruments, guarantees or other documents (whether general in
application or applicable only to such Letter of Credit) governing or providing
for (a) the rights and obligations of the parties concerned or at risk with
respect to such Letter of Credit or (b) any collateral security for any of such
obligations, each as the same may be modified and supplemented and in effect
from time to time.
"Letter of Credit Liability" shall mean, without duplication,
at any time and in respect of any Letter of Credit, the sum of (a) the undrawn
face amount of such Letter of Credit plus (b) the aggregate unpaid principal
amount of all Reimbursement Obligations of the Company at such time due and
payable in respect of all drawings made under such Letter of Credit. For
purposes of this Agreement, a Lender (other than the Issuing Bank) shall be
deemed to hold a Letter of Credit Liability in an amount equal to its
participation interest in the related Letter of Credit under Section 2.08
hereof, and the Issuing Bank shall be deemed to hold a Letter of Credit
Liability in an amount equal to its retained interest in the related Letter of
Credit after giving effect to the acquisition by the Lenders other than the
Issuing Bank of their participation interests under said Section 2.08.
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"Letters of Credit" shall have the meaning assigned to such
term in Section 2.08 hereof.
"Leverage Ratio" shall have the meaning assigned to such term
in Section 9.09 hereof.
"Lien" shall mean, with respect to any asset, any mortgage,
lien, pledge, charge, security interest or encumbrance of any kind in respect of
such asset. For the purposes of this Agreement, the Company and each of its
Subsidiaries shall be deemed to own subject to a Lien any asset which it has
acquired or holds subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention agreement
relating to such asset.
"Liquid Investments" shall mean:
(i) certificates of deposit maturing within 90 days of the
acquisition thereof denominated in Dollars and issued by (X) a Lender
or (Y) a bank or trust company having combined capital and surplus of
at least $500,000,000 and which has (or which is a Subsidiary of a bank
holding company which has) publicly traded debt securities rated A or
higher by Standard & Poor's Ratings Services or A-2 or higher by
Moody's Investors Service, Inc.;
(ii) repurchase obligations with a term of not more than seven
days for underlying securities of the types described in clause (i)
above entered into with (x) any Lender or (y) any bank or trust company
meeting the qualifications specified in clause (i)(Y) above;
(iii) obligations issued or guaranteed by the United States of
America, with maturities not more than one year after the date of
issue;
(iv) commercial paper with maturities of not more than 90 days
and a published rating of not less than A-2 and P-2 (or the equivalent
rating); and
(v) investments in money market funds substantially all of
whose assets are comprised of securities and other obligations of the
types described in clauses (i) through (iv) above.
"Loans" shall mean the loans provided for in Section 2.01
hereof, which may be ABR Loans and/or Eurodollar Loans.
"Maintenance Capital Expenditures" shall mean Capital
Expenditures required to maintain, reconfigure, or replace
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existing assets (as distinguished from Capital Expenditures relating to growth
and as distinguished from Additional Expenditures), as certified pursuant to
Section 9.01(i) hereof.
"Majority Lenders" shall mean Lenders having at least 51% of
the aggregate amount of the Commitments (or, if the Commitments shall have
terminated, the aggregate unpaid principal amount of Loans and Letter of Credit
Liabilities).
"Material Adverse Effect" shall mean a material adverse effect
on (a) the business, assets, property, condition (financial or otherwise) or
prospects of the Company and its Subsidiaries taken as a whole, (b) the validity
or enforceability of any of the Basic Documents, (c) the rights and remedies of
the Lenders and the Administrative Agent under any of the Basic Documents or (d)
the timely payment of the principal of or interest on the Loans or the
Reimbursement Obligations or other amounts payable in connection therewith.
"Multiemployer Plan" shall mean at any time an employee
pension benefit plan within the meaning of Section 4001(a)(3) of ERISA to which
the Company or any member of the Controlled Group is then making or accruing an
obligation to make contributions or has within the preceding five plan years
made contributions, including for these purposes any Person which ceased to be a
member of the Controlled Group during such five year period.
"Net Cash Proceeds" shall mean, in each case as set forth in a
statement in reasonable detail delivered to the Administrative Agent:
(a) with respect to the disposition of any asset by the
Company or any of its Subsidiaries, the excess, if any, of (i) the cash
received in connection with such disposition over (ii) the sum of (A)
the principal amount of any Indebtedness which is secured by such asset
and which is required to be repaid in connection with the disposition
thereof, plus (B) the reasonable out-of-pocket expenses incurred by the
Company or such Subsidiary, as the case may be, in connection with such
disposition, plus (C) provision for taxes, including income taxes,
attributable to the disposition of such asset;
(b) with respect to the issuance of any Indebtedness of the
Company or any its Subsidiaries the gross proceeds received by the
Company or such Subsidiary from such issuance less all reasonable legal
expenses, discounts and commissions and other fees and expenses
incurred or to be incurred and all federal, state, local and foreign
taxes assessed or to be assessed in connection therewith; and
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(c) in the case of any Casualty Event, the aggregate amount of
proceeds of insurance, condemnation awards and other compensation
received by the Company and its Subsidiaries in respect of such
Casualty Event net of (i) reasonable expenses incurred by the Company
and its Subsidiaries in connection therewith and (ii) contractually
required repayments of Indebtedness to the extent secured by a Lien on
such property and any income and transfer taxes payable by the Company
or any of its Subsidiaries in respect of such Casualty Event.
"Notes" shall mean the promissory notes provided for by
Section 2.06 hereof and all promissory notes delivered in substitution or
exchange therefor, in each case as the same shall be modified and supplemented
and in effect from time to time.
"Obligor" shall mean, collectively, the Company and
each of the Subsidiary Guarantors.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or
any entity succeeding to any or all of its functions under ERISA.
"Permitted Acquisition" has the meaning set forth in
Section 9.12.
"Permitted Indebtedness" shall mean, without
duplication:
(i) Additional Subordinated Indebtedness;
(ii) Indebtedness secured by Permitted Mortgages;
(iii) Indebtedness in respect of agreements not to
compete;
(iv) Capitalized Lease Obligations;
(v) Indebtedness consisting of reimbursement obligations in
respect of letters of credit issued by any bank for the account of the
Company or any of its Subsidiaries, the aggregate amount available to
be drawn under which may not exceed $1,500,000 at any time;
(vi) Indebtedness in respect of any Interest Rate
Agreement;
(vii) unsecured Indebtedness of the Company in an
aggregate outstanding principal amount not at any time
exceeding $3,000,000;
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(viii) Indebtedness of Excluded Subsidiaries in an aggregate
outstanding principal amount not at any time exceeding $5,000,000 (and
any guaranty by the Company of such Indebtedness to the extent
constituting an Investment permitted under Section 9.14(vii) hereof);
and
(ix) any guaranty by the Company of Indebtedness
incurred pursuant to the foregoing clauses (ii), (iii), (iv)
or (v) by a Subsidiary of the Company;
provided that (A) Permitted Indebtedness incurred pursuant to the foregoing
clauses (i) and (iii) may be incurred only in connection with Permitted
Acquisitions; and (B) Permitted Indebtedness incurred pursuant to the foregoing
clauses (i), (ii), (iii) and (viii) shall be incurred on terms and pursuant to
documentation in all respects reasonably satisfactory to the Administrative
Agent.
"Permitted Mortgage" means any mortgage subjecting property of
any Subsidiary of the Company to a Lien where (i) the outstanding Capital Stock
of such Subsidiary has been pledged to the Administrative Agent for the benefit
of the Lenders pursuant to the Company Pledge Agreement, the Subsidiary Pledge
Agreement or another pledge agreement that is in form and substance reasonably
acceptable to the Administrative Agent, (ii) the Company shall agree, for the
benefit of the Administrative Agent and the Lenders, not to permit any
Subsidiary owning any interest in such property to create, incur or suffer to
exist any Indebtedness other than Indebtedness permitted hereunder (determined
without giving effect to clause (ii) of the definition of "Permitted
Indebtedness" in this Section 1.01) and other Indebtedness secured by such
mortgage, (iii) such mortgage (and the other documentation, if any, relating
thereto) does not contain any cross-default provisions referring to any other
indebtedness of the Company or its Subsidiaries and (iv) such mortgage (and the
other documentation, if any, relating thereto) does not contain any covenants
subjecting the Company or its Subsidiaries to financial tests of any nature.
"Person" shall mean an individual, a corporation, a company, a
voluntary association, a partnership, a limited liability company, a trust, an
unincorporated organization or a government or any agency, instrumentality or
political subdivision thereof.
"Plan" shall mean an employee pension benefit plan which is
covered by Title IV of ERISA or subject to the minimum funding standards under
Section 412 of the Code and is either (a) maintained by the Company or any
member of the Controlled Group for employees of the Company or any member of the
Controlled Group or (b) maintained pursuant to a collective
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bargaining agreement or any other arrangement under which more than one employer
makes contributions and to which the Company or any member of the Controlled
Group is then making or accruing an obligation to make contributions or has
within the preceding five plan years made contributions.
"Post-Default Rate" shall mean a rate equal to the sum of 2%
plus the higher of (i) the rate of interest applicable to ABR Loans and (ii) in
the case of any Loan, the rate of interest (if any) otherwise applicable to such
Loan.
"Prime Rate" shall mean the rate of interest per annum
publicly announced from time to time by The Chase Manhattan Bank as its prime
rate in effect at its principal office in New York City; each change in the
Prime Rate shall be effective from and including the date such change is
publicly announced as being effective.
"Principal Stockholders" shall mean each of Vincent J.
Ryan, Schooner Capital Corporation, C. Richard Reese, Eugene B.
Doggett, and their respective Affiliates.
"Qualifying Sale-Leaseback Transaction" shall mean any
arrangement by which the Company or any of its Subsidiaries enters into an
arrangement with any bank, insurance company or other lender or investor
providing for the leasing to the Company or a Subsidiary thereof of any real
property which has been or is to be sold or transferred by the Company or such
Subsidiary to such lender or investor or to any Person to whom funds have been
or are to be advanced by such lender or investor and where the real property in
question has been constructed after the Closing Date.
"Quarterly Dates" shall mean the last Business Day of
each March, June, September and December.
"RCRA" means the Resource Conservation and Recovery
Act, as amended.
"Reference Lenders" shall mean each of Chase and such other
Lenders as the Administrative Agent may designate with the consent of the
Company, such consent not to be unreasonably withheld.
"Regulation D" shall mean Regulation D of the Board of
Governors of the Federal Reserve System as the same may be amended or
supplemented from time to time.
"Regulatory Change" shall mean, with respect to any Lender,
any change on or after the date of this Agreement in United States federal,
state or foreign laws or regulations,
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including Regulation D, or the adoption or making on or after such date of any
interpretations, directives or requests applying to a class of lenders including
such Lender of or under any United States federal or state, or any foreign, laws
or regulations (whether or not having the force of law) by any court or
governmental or monetary authority charged with the interpretation or
administration thereof.
"Reimbursement Obligations" shall mean, at any time, the
obligations of the Company then outstanding to reimburse amounts paid by the
Issuing Bank in respect of any drawings under a Letter of Credit.
"Release" shall have the meaning set forth in 42 U.S.C.
Section 9601(22), but shall not include any "federally permitted release" as
defined in 42 U.S.C. Section 9601(10). The term "Released" shall have a
corresponding meaning.
"Reserve Requirement shall mean, for any Eurodollar Loans for
any Interest Period therefor, the average maximum rate at which reserves
(including any marginal, supplemental or emergency reserves) are required to be
maintained during such Interest Period under Regulation D by member banks of the
Federal Reserve System in New York City with deposits exceeding one billion
Dollars against "Eurocurrency liabilities" (as such term is used in Regulation
D). Without limiting the effect of the foregoing, the Reserve Requirement shall
reflect any other reserves required to be maintained by such member banks by
reason of any Regulatory Change against (i) any category of liabilities which
includes deposits by reference to which the Eurodollar Rate is to be determined
as provided in the definition of "Eurodollar Base Rate" in this Section 1.01 or
(ii) any category of extensions of credit or other assets which include
Eurodollar Loans.
"Residual Assurances" shall mean any commitment or undertaking
by the Company required as a condition to any financing made available by any
Person to an Affiliate of the Company to finance the costs of construction or
acquisition by such Affiliate of records management facilities (including the
acquisition of real estate for development purposes), where such facility is
intended to be leased to the Company or a Subsidiary of the Company, which
commitment or undertaking is intended to provide such Person with an additional
assurance that it will receive a minimum return under such financing (and which
does not constitute a Guaranty of the principal amount of such financing);
provided that no payment under any such commitment or undertaking may be made
prior to July 31, 2002, and that such commitment or undertaking shall be entered
into on terms and pursuant to documentation in all respects reasonably
satisfactory to the Administrative Agent.
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"Restricted Payment" shall mean dividends (in cash, property
or obligations) on, or other payments or distributions on account of, or the
setting apart of money for a sinking or other analogous fund for the purchase,
redemption, retirement or other acquisition of, any shares of any class of
Capital Stock of the Company, or any payment in respect of any option or warrant
to purchase any shares of any class of Capital Stock of the Company or the
exchange or conversion of any shares of any class of Capital Stock of the
Company for or into any obligations of or shares of any other class of Capital
Stock of the Company or any other property, but excluding dividends payable
solely in, or exchanges or conversions for or into, shares of common stock of
the Company.
"Scheduled Amortization" shall mean, for any period, the sum
(calculated without duplication) of all payments of principal of Indebtedness of
the Company (other than Indebtedness hereunder) scheduled to be made during such
period.
"Security Documents" shall mean, collectively, the Company
Pledge Agreement, the Subsidiary Pledge Agreement and all Uniform Commercial
Code financing statements required by said agreements to be filed with respect
to the security interests in
personal Property created pursuant thereto.
"Senior Subordinated Debt" shall mean the Indebtedness of the
Company in respect of the ____% Senior Subordinated Notes of the Company due
________, 2006 issued pursuant to Senior Subordinated Debt Indenture.
"Senior Subordinated Debt Documents" shall mean all documents
and agreements executed and delivered in connection with the original issuance
of the Senior Subordinated Debt, including the Senior Subordinated Debt
Indenture and the promissory notes evidencing Indebtedness thereunder, in each
case as the same may be amended or modified, without prejudice to the provisions
of Section 9.20 hereof.
"Senior Subordinated Debt Indenture" shall mean the Indenture
dated as of _________, 1996 among the Company and First Bank National
Association, as Trustee, as the same may be amended or modified, without
prejudice to the provisions of Section 9.20 hereof.
"Statutory Reserve Rate" shall mean a fraction (expressed as a
decimal), the numerator of which is the number one and the denominator of which
is the number one minus the aggregate of the maximum reserve percentages
(including any marginal, special, emergency or supplemental reserves) expressed
as a decimal established by the Board to which Chase is subject for new
negotiable nonpersonal time deposits in dollars of over
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$100,000 with maturities approximately equal to three months. The Statutory
Reserve Rate shall be adjusted automatically on and as of the effective date of
any change in any reserve percentage.
"Stock Consideration" shall mean, with respect to any
Acquisition, the aggregate amount of consideration paid by the Company and its
Subsidiaries in connection therewith consisting of the Company's common stock or
with proceeds of the issuance of the Company's common stock within twelve months
prior to the date of such Acquisition. For purposes hereof, the amount of Stock
Consideration paid by the Company in respect of any Acquisition shall be deemed
to be equal to the fair market value of the Company's common stock so paid,
determined in good faith by the Company at the time of such Acquisition.
"Subordinated Indebtedness" shall mean, collectively,
(a) Senior Subordinated Debt and (b) Additional Subordinated
Indebtedness.
"Subsidiary" shall mean, with respect to any Person, any
corporation, partnership, limited liability company or other entity of which at
least a majority of the securities or other ownership interests having by the
terms thereof ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions of such corporation,
partnership, limited liability company or other entity (irrespective of whether
or not at the time securities or other ownership interests of any other class or
classes of such corporation, partnership, limited liability company or other
entity shall have or might have voting power by reason of the happening of any
contingency) is at the time directly or indirectly owned or controlled by such
Person or one or more Subsidiaries of such Person or by such Person and one or
more Subsidiaries of such Person.
"Subsidiary Guarantor" shall mean (i) each of the Subsidiaries
of the Company listed in Part 1 of Schedule III hereto other than those
Subsidiaries identified in Part 1 of Schedule III as not being a Subsidiary
Guarantor and (ii) each other Subsidiary of the Company that from time to time
becomes a party to the Subsidiary Guaranty or otherwise guarantees the
obligations of the Company hereunder pursuant to Section 9.22.
"Subsidiary Guaranty" shall mean the Subsidiary Guaranty dated
as of the Closing Date, in substantially the form of Exhibit B hereto, as said
agreement shall be modified and supplemented and in effect from time to time.
"Subsidiary Pledge Agreement" shall mean a Pledge Agreement
substantially in the form of Exhibit D hereto between the Subsidiary Guarantors
and the Administrative Agent, as the
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same shall be modified and supplemented and in effect from time
to time.
"Three-Month Secondary CD Rate" shall mean, for any day, the
secondary market rate for three-month certificates of deposit reported as being
in effect on such day (or, if such day is not a Business Day, the next preceding
Business Day) by the Board through the public information telephone line of the
Federal Reserve Bank of New York (which rate will, under the current practices
of the Board, be published in Federal Reserve Statistical Release H.15(519)
during the week following such day) or, if such rate is not so reported on such
day or such next preceding Business Day, the average of the secondary market
quotations for three-month certificates of deposit of major money center banks
in New York City received at approximately 10:00 a.m., New York City time, on
such day (or, if such day is not a Business Day, on the next preceding Business
Day) by the Administrative Agent from three negotiable certificate of deposit
dealers of recognized standing selected by it.
"Type" shall have the meaning assigned to such term in Section
1.03 hereof.
"Unfunded Liabilities" shall mean, with respect to any Plan,
at any time, the amount (if any) by which (a) the present value of all benefits
under such Plan exceeds (b) the fair market value of all Plan assets allocable
to such benefits, all determined as of the then most recent valuation date for
such Plan, but only to the extent that such excess represents a potential
liability of the Company or any member of the Controlled Group to the PBGC or
such Plan under Title IV of ERISA.
"Voting Stock" shall mean, with respect to any Person, any
class or classes of Capital Stock pursuant to which the holders thereof have the
general voting power under ordinary circumstances to elect at least a majority
of the board of directors, managers or trustees of such Person (irrespective of
whether or not, at the time, stock of any other class or classes has, or might
have, voting power by reason of the happening of any contingency).
"Wholly-Owned Subsidiary" shall mean as to any Person, a
Subsidiary of such Person all of whose outstanding shares of Capital Stock
(except directors' qualifying shares) are directly or indirectly owned by such
Person.
1.02 Accounting Terms and Determinations. Unless
otherwise specified herein, all accounting terms used herein
shall be interpreted, all determinations with respect to
accounting matters hereunder shall be made, and all financial
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statements and certificates and reports as to financial matters required to be
delivered hereunder shall be prepared, in accordance with GAAP; provided that if
any change in GAAP proposed after the Closing Date in itself materially affects
the calculation of any financial covenant in Section 9, the Company may by
notice to the Administrative Agent, or the Administrative Agent (at the request
of the Majority Lenders) may by notice to the Company, require that such
covenant thereafter be calculated in accordance with GAAP as in effect, and
applied by the Company, immediately before such change in GAAP occurs. If such
notice is given, the compliance certificates delivered pursuant to Section 9.01
after such change occurs shall be accompanied by reconciliations of the
difference between the calculation set forth therein and a calculation made in
accordance with GAAP as in effect from time to time after such change occurs. To
enable the ready determination of compliance with the covenants set forth in
Section 9 hereof, the Company will not change from December 31 in each year the
date on which its fiscal year ends, nor from March 31, June 30 and September 30
the dates on which the first three fiscal quarters in each fiscal year end.
1.03 Types of Loans. Loans hereunder are distinguished by
"Type". The "Type" of a Loan refers to the determination whether such Loan is a
Eurodollar Loan or an ABR Loan.
Section 2. Loans, Etc.
2.01 Loans. Each Lender severally agrees, on the terms and
conditions of this Agreement, to make loans to the Company in Dollars during the
period from and including the Closing Date to but not including the Commitment
Termination Date in an aggregate principal amount at any one time outstanding up
to but not exceeding the amount of the Commitment of such Lender as in effect
from time to time, provided that in no event shall the aggregate principal
amount of all Loans, together with the aggregate amount of all Letter of Credit
Liabilities, exceed the aggregate amount of the Commitments as in effect from
time to time. Subject to the terms and conditions of this Agreement, during such
period the Company may borrow, repay and reborrow the amount of the Commitments
by means of ABR Loans and Eurodollar Loans and may convert Loans of one Type
into Loans of the other Type (as provided in Section 3.02(a) hereof) or continue
Eurodollar Loans for subsequent Interest Periods.
2.02 Reductions of Commitments.
(a) Mandatory. The Commitments shall terminate on the
Commitment Termination Date. In addition, the Commitments shall
be reduced in the amount and on the date of each prepayment
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applied to the Loans (or to reduce Commitments) pursuant to
Section 3.02(b).
(b) Optional. The Company shall have the right to terminate or
reduce the unused Commitments (for which purpose use of the Commitments shall be
deemed to include the aggregate amount of Letter of Credit Liabilities) at any
time or from time to time, provided that (i) the Company shall give notice of
each such termination or reduction to the Administrative Agent as provided in
Section 5.05 hereof and (ii) each partial reduction shall be in an aggregate
amount at least equal to $1,000,000.
(c) No Reinstatement. Commitments once terminated or
reduced may not be reinstated.
2.03 Fees. The Company shall pay to the Administrative Agent
for the account of each Lender commitment fees on the daily average unused
amount of such Lender's Commitment (for which purpose the aggregate amount of
any Letter of Credit Liabilities shall be deemed to be a pro rata (based on the
Commitments) use of each Lender's Commitment) for the period from the Closing
Date to and including the earlier of the date the Commitments are terminated and
the Commitment Termination Date, at a rate per annum equal to the Applicable
Commitment Fee Rate in effect from time to time. Accrued commitment fees under
this Section 2.03 shall be payable on the Quarterly Dates and on the earlier of
the date the Commitments are terminated and the Commitment Termination Date. The
Company shall pay to Chase on the Closing Date syndication, agency and
additional commitment fees in the amounts heretofore mutually agreed in writing.
The Company shall pay to the Administrative Agent on the Closing Date and on
each anniversary thereof, so long as any of the Commitments are in effect and
until payment in full of all Loans hereunder, all interest thereon and all other
amounts payable hereunder, an annual agency fee in the amount heretofore
mutually agreed in writing.
2.04 Lending Offices. The Loans of each Type made by
each Lender shall be made and maintained at such Lender's
Applicable Lending Office for Loans of such Type.
2.05 Several Obligations; Remedies Independent. The
-----------------------------------------
failure of any Lender to make any Loan to be made by it on the
date specified therefor shall not relieve any other Lender of its
obligation to make its Loan on such date, but neither the
Administrative Agent nor any Lender shall be responsible for the
failure of any other Lender to make a Loan to be made by such
other Lender. The amounts payable by the Company at any time
hereunder and under the Notes to each Lender shall be a separate
and independent debt and each Lender shall be entitled to protect
and enforce its rights arising out of this Agreement and the
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Notes, and it shall not be necessary for any other Lender or the Administrative
Agent to consent to, or be joined as an additional party in, any proceedings for
such purposes.
2.06 Notes. The Loans made by each Lender shall be evidenced
by a single promissory note of the Company (each, a "Note") in substantially the
form of Exhibit A hereto, dated the Closing Date, payable to such Lender in a
principal amount equal to such Lender's Commitment as in effect on the Closing
Date and otherwise duly completed. Each Lender is hereby authorized by the
Company to endorse on the schedule (or a continuation thereof) attached to each
Note of such Lender, to the extent applicable, the date, amount and Type of and
the Interest Period (if any) for each Loan made by such Lender to the Company
hereunder, and the date and amount of each payment or prepayment of principal of
such Loan received by such Lender, provided that any failure by such Lender to
make any such endorsement shall not affect the obligations of the Company under
such Note or hereunder in respect of such Loan.
2.07 Use of Proceeds. The proceeds of the Loans shall be used
for the general corporate purposes of the Company and its Subsidiaries,
including, without limitation, the making of Permitted Acquisitions and the
refinancing of existing Indebtedness of the Company and its Subsidiaries.
Neither the Administrative Agent nor any Lender shall have any responsibility as
to the use of any of the proceeds of any of the Loans or Letters of Credit.
2.08 Letters of Credit. Subject to the terms and conditions of
this Agreement, the Commitments may be utilized, upon the request of the
Company, in addition to the Loans provided for by Section 2.01 hereof, by the
issuance by the Issuing Bank of standby letters of credit (collectively with the
Existing Letters of Credit, "Letters of Credit") for account of the Company or
any of its Subsidiaries (as specified by the Company), provided that in no event
shall (i) the aggregate amount of all Letter of Credit Liabilities, together
with the aggregate outstanding principal amount of the Loans, exceed the
aggregate amount of the Commitments as in effect from time to time, (ii) the
aggregate outstanding amount of all Letter of Credit Liabilities exceed
$2,000,000 and (iii) the expiration date of any Letter of Credit extend beyond
the earlier of the Commitment Termination Date and the date twelve months
following the issuance of such Letter of Credit (provided that any Letter of
Credit with a twelve-month tenor may provide for the renewal thereof for
additional twelve-month periods, which periods shall in any event not extend
beyond the Commitment Termination Date). On the Closing Date, all Existing
Letters of Credit shall automatically, without any action on the part of any
Person, be deemed to be Letters of Credit issued and outstanding hereunder.
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The following additional provisions shall apply to Letters of
Credit:
(a) The Company shall give the Administrative Agent at least
three Business Days' irrevocable prior notice (effective upon receipt)
specifying the Business Day (which shall be no later than 30 days
preceding the Commitment Termination Date) on which each Letter of
Credit is to be issued and the account party or parties therefor and
describing in reasonable detail the proposed terms of such Letter of
Credit (including the beneficiary thereof) and the nature of the
transactions or obligations proposed to be supported thereby (including
whether such Letter of Credit is to be a commercial letter of credit or
a standby letter of credit). Upon receipt of any such notice, the
Administrative Agent shall advise the Issuing Bank of the contents
thereof.
(b) On each day during the period commencing with the issuance
by the Issuing Bank of any Letter of Credit and until such Letter of
Credit shall have expired or been terminated, the Commitment of each
Lender shall be deemed to be utilized for all purposes of this
Agreement in an amount equal to such Lender's Commitment Percentage of
the then undrawn face amount of such Letter of Credit. Each Lender
(other than the Issuing Bank) agrees that, upon the issuance of any
Letter of Credit hereunder, it shall automatically acquire a
participation in the Issuing Bank's liability under such Letter of
Credit in an amount equal to such Lender's Commitment Percentage of
such liability, and each Lender (other than the Issuing Bank) thereby
shall automatically absolutely, unconditionally and irrevocably assume,
as primary obligor and not as surety, and be unconditionally obligated
to the Issuing Bank to pay and discharge when due, its Commitment
Percentage of the Issuing Bank's liability under such Letter of Credit.
(c) Upon receipt from the beneficiary of any Letter of Credit
of any demand for payment under such Letter of Credit, the Issuing Bank
shall promptly notify the Company (through the Administrative Agent) of
the amount to be paid by the Issuing Bank as a result of such demand
and the date on which payment is to be made by the Issuing Bank to such
beneficiary in respect of such demand. Notwithstanding the identity of
the account party of any Letter of Credit, the Company hereby
unconditionally agrees to pay and reimburse the Administrative Agent
for account of the Issuing Bank for the amount of each demand for
payment under such Letter of Credit that is in substantial compliance
with the provisions of such Letter of Credit at or prior to the date on
which payment is to be made by the Issuing Bank to the beneficiary
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thereunder, without presentment, demand, protest or other
formalities of any kind.
(d) Forthwith upon its receipt of a notice referred to in
paragraph (c) of this Section 2.08, the Company shall advise the
Administrative Agent whether or not the Company intends to borrow
hereunder to finance its obligation to reimburse the Issuing Bank for
the amount of the related demand for payment and, if it does, submit a
notice of such borrowing as provided in Section 4.05 hereof.
(e) Each Lender (other than the Issuing Bank) shall pay to the
Administrative Agent for account of the Issuing Bank at an account in
New York, New York specified by the Administrative Agent in Dollars and
in immediately available funds the amount of such Lender's Commitment
Percentage of any payment under a Letter of Credit upon notice by the
Issuing Bank (through the Administrative Agent) to such Lender
requesting such payment and specifying such amount. Each such Lender's
obligation to make such payment to the Administrative Agent for account
of the Issuing Bank under this paragraph (e), and the Issuing Bank's
right to receive the same, shall be absolute and unconditional and
shall not be affected by any circumstance whatsoever, including,
without limitation, the failure of any other Lender to make its payment
under this paragraph (e), the financial condition of the Company (or
any other account party), any failure to satisfy any condition
precedent to any Loan, the existence of any Default or the termination
of the Commitments. Each such payment to the Issuing Bank shall be made
without any offset, abatement, withholding or reduction whatsoever. If
any Lender shall default in its obligation to make any such payment to
the Administrative Agent for account of the Issuing Bank, for so long
as such default shall continue the Administrative Agent may at the
request of the Issuing Bank withhold from any payments received by the
Administrative Agent under this Agreement or any Note for account of
such Lender the amount so in default and, to the extent so withheld,
pay the same to the Issuing Bank in satisfaction of such defaulted
obligation.
(f) Upon the making of each payment by a Lender to the Issuing
Bank pursuant to paragraph (e) above in respect of any Letter of
Credit, such Lender shall, automatically and without any further action
on the part of the Administrative Agent, the Issuing Bank or such
Lender, acquire (i) a participation in an amount equal to such payment
in the Reimbursement Obligation owing to the Issuing Bank by the
Company hereunder and under the Letter of Credit Documents relating to
such Letter of Credit and (ii) a participation in a percentage equal to
such Lender's Commitment Percentage
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in any interest or other amounts payable by the Company hereunder and
under such Letter of Credit Documents in respect of such Reimbursement
Obligation (other than the commissions, charges, costs and expenses
payable to the Issuing Bank pursuant to paragraph (g) of this Section
2.08). Upon receipt by the Issuing Bank from or for account of the
Company of any payment in respect of any Reimbursement Obligation or
any such interest or other amount (including by way of setoff or
application of proceeds of any collateral security) the Issuing Bank
shall promptly pay to the Administrative Agent for account of each
Lender entitled thereto such Lender's Commitment Percentage of such
payment, each such payment by the Issuing Bank to be made in the same
money and funds in which received by the Issuing Bank. In the event any
payment received by the Issuing Bank and so paid to the Lenders
hereunder is rescinded or must otherwise be returned by the Issuing
Bank, each Lender shall, upon the request of the Issuing Bank (through
the Administrative Agent), repay to the Issuing Bank (through the
Administrative Agent) the amount of such payment paid to such Lender,
with interest at the rate specified in paragraph (j) of this Section
2.08.
(g) The Company shall pay to the Administrative Agent for
account of each Lender (ratably in accordance with their respective
Commitment Percentages) a letter of credit fee in respect of each
Letter of Credit in an amount equal to the Applicable L/C Percentage of
the daily average undrawn face amount of such Letter of Credit for the
period from and including the date of issuance of such Letter of Credit
(i) in the case of a Letter of Credit that expires in accordance with
its terms, to and including such expiration date and (ii) in the case
of a Letter of Credit that is drawn in full or is otherwise terminated
other than on the stated expiration date of such Letter of Credit, to
but excluding the date such Letter of Credit is drawn in full or is
terminated (such fee to be non-refundable, to be paid in arrears on
each Quarterly Date and on the Commitment Termination Date and on the
date of expiry or termination or full utilization of such Letter of
Credit and to be calculated for any day after giving effect to any
payments made under such Letter of Credit on such day). In addition,
the Company shall pay to the Administrative Agent for account of the
Issuing Bank a fronting fee in respect of each Letter of Credit in an
amount equal to 0.25% per annum of the daily average undrawn face
amount of such Letter of Credit for the period from and including the
date of issuance of such Letter of Credit (i) in the case of a Letter
of Credit that expires in accordance with its terms, to and including
such expiration date and (ii) in the case of a Letter of Credit that is
drawn in full or is otherwise
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terminated other than on the stated expiration date of such Letter of
Credit, to but excluding the date such Letter of Credit is drawn in
full or is terminated (such fee to be non-refundable, to be paid in
arrears on each Quarterly Date and on the Commitment Termination Date
and to be calculated for any day after giving effect to any payments
made under such Letter of Credit on such day) plus all commissions,
charges, costs and expenses in the amounts customarily charged by the
Issuing Bank from time to time in like circumstances with respect to
the issuance of each Letter of Credit and drawings and other
transactions relating thereto.
(h) Promptly following the end of each calendar month, the
Issuing Bank shall deliver (through the Administrative Agent) to each
Lender and the Company a notice describing the aggregate amount of all
Letters of Credit outstanding at the end of such month. Upon the
request of any Lender from time to time, the Issuing Bank shall deliver
any other information reasonably requested by such Lender with respect
to each Letter of Credit then outstanding.
(i) The issuance by the Issuing Bank of each Letter of Credit
shall, in addition to the conditions precedent set forth in Section 7
hereof, be subject to the conditions precedent that (i) such Letter of
Credit shall be in such form, contain such terms and support such
transactions as shall be satisfactory to the Issuing Bank consistent
with its then current practices and procedures with respect to letters
of credit of the same type and (ii) the Company shall have executed and
delivered such applications, agreements and other instruments relating
to such Letter of Credit as the Issuing Bank shall have reasonably
requested consistent with its then current practices and procedures
with respect to letters of credit of the same type, provided that in
the event of any conflict between any such application, agreement or
other instrument and the provisions of this Agreement or any Security
Document, the provisions of this Agreement and the Security Documents
shall control.
(j) To the extent that any Lender shall fail to pay any amount
required to be paid pursuant to paragraph (e) or (f) of this Section
2.08 on the due date therefor, such Lender shall pay interest to the
Issuing Bank (through the Administrative Agent) on such amount from and
including such due date to but excluding the date such payment is made
at a rate per annum equal to the Federal Funds Effective Rate, provided
that if such Lender shall fail to make such payment to the Issuing Bank
within three Business Days of such due date, then, retroactively to the
due date, such Lender shall
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be obligated to pay interest on such amount at the
Post-Default Rate.
(k) The issuance by the Issuing Bank of any modification or
supplement to any Letter of Credit hereunder shall be subject to the
same conditions as are applicable under this Section 2.08 to the
issuance of new Letters of Credit, and no such modification or
supplement shall be issued hereunder unless either (i) the respective
Letter of Credit affected thereby would have complied with such
conditions had it originally been issued hereunder in such modified or
supplemented form or (ii) each Lender shall have consented thereto.
The Company hereby indemnifies and holds harmless each Lender (including the
Issuing Bank) and the Administrative Agent from and against any and all claims
and damages, losses, liabilities, costs or expenses that such Lender or the
Administrative Agent may incur (or that may be claimed against such Lender or
the Administrative Agent by any Person whatsoever) by reason of or in connection
with the execution and delivery or transfer of or payment or refusal to pay by
the Issuing Bank under any Letter of Credit; provided that the Company shall not
be required to indemnify any Lender or the Administrative Agent for any claims,
damages, losses, liabilities, costs or expenses to the extent, but only to the
extent, caused by (x) the willful misconduct or gross negligence of the Issuing
Bank in determining whether a request presented under any Letter of Credit
complied with the terms of such Letter of Credit or (y) in the case of the
Issuing Bank, such Lender's failure to pay under any Letter of Credit after the
presentation to it of a request strictly complying with the terms and conditions
of such Letter of Credit. Nothing in this Section 2.08 is intended to limit the
other obligations of the Company, any Lender or the Administrative Agent under
this Agreement.
Section 3. Borrowings, Conversions and Prepayments.
3.01 Borrowings. The Company shall give the Administrative
Agent notice of each Loan to be made hereunder as provided in Section 5.05
hereof. Not later than 11:00 a.m. New York time on the date specified for each
such borrowing hereunder, each Lender shall make available the amount of the
Loan to be made by it on such date to the Administrative Agent, at an account in
New York, New York specified by the Administrative Agent, in immediately
available funds, for account of the Company. The amount so received by the
Administrative Agent shall, subject to the terms and conditions of this
Agreement, be made available to the Company by depositing the same, in
immediately available funds, in an account of the
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Company designated by the Company and maintained with Chase in New York, New
York.
3.02 Prepayments and Conversions.
(a) Optional Prepayments and Conversions. The Company shall
have the right to prepay Loans and to convert Loans of one Type into Loans of
the other Type, at any time or from time to time, provided that: (i) the Company
shall give the Administrative Agent notice of each such prepayment as provided
in Section 5.05 hereof and (ii) except to the extent required pursuant to
Section 3.02(b) hereof, Eurodollar Loans may be prepaid or converted only on the
last day of an Interest Period for such Loans.
(b) Mandatory Prepayments.
(1) Casualty Events; Condemnation Awards. On the date twelve
months following the receipt by the Company or any of its Subsidiaries
of any proceeds of insurance, condemnation award or other compensation
in respect of any Casualty Event affecting any property of the Company
or any of its Subsidiaries (or upon such earlier date as the Company or
such Subsidiary, as the case may be, shall have determined not to
repair or replace the property affected by such Casualty Event), the
Company shall prepay the Loans (and/or provide cover for Letter of
Credit Liabilities as specified in paragraph (c) below), and the
Commitments shall be subject to automatic reduction, in an aggregate
amount, if any, equal to 100% of the Net Cash Proceeds of such Casualty
Event not theretofore applied to the repair or replacement of such
property.
(2) Issuance of Indebtedness. The Company shall prepay the
Loans (and/or provide cover for Letter of Credit Liabilities as
specified in paragraph (c) below) in the amount of and on the date of
each receipt by the Company or any Subsidiary of the Company of Net
Cash Proceeds from issuance subsequent to the Closing Date of
Indebtedness other than Indebtedness incurred pursuant to Section 9.08
(it being understood that this Section 3.02(b)(2) shall not constitute
a waiver of any provision of Section 9.08).
(3) Asset Dispositions. During each fiscal year of the
Company, the Company shall prepay the Loans (and/or provide cover for
Letter of Credit Liabilities as specified in paragraph (c) below), in
an amount equal to the excess of (a) the sum of (x) the Net Cash
Proceeds received by the Company or any Subsidiary of the Company from
any disposition by such Person of any assets during such fiscal year,
other than a disposition permitted by clause (i) or
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(ii) of Section 9.12 plus (y) any payments with respect to receivables
retained by such Person arising from the sale of goods or services at
facilities disposed of in asset dispositions during such fiscal year
over (b) $1,000,000. Such prepayments shall be made from time to time
on the first Business Day that the excess amount referred to above
(less all amounts previously applied to the prepayment of the Loans
pursuant to this paragraph (3) during such fiscal year) is $100,000 or
more.
Any prepayment pursuant to paragraphs (1) through (3) above shall automatically
reduce the Commitments in an amount equal to the amount specified in such
paragraphs (and to the extent that, after giving effect to such reduction, the
aggregate principal amount of Loans and the aggregate amount of Letter of Credit
Liabilities would exceed the Commitments, the Company shall, first, prepay Loans
and, second, provide cover for Letter of Credit Liabilities as specified in
paragraph (c) below, in an aggregate amount equal to such excess). The Company
shall notify the Administrative Agent promptly upon the occurrence of any event
giving rise to a prepayment or Commitment reduction under this Section 3.02(b).
(c) Cover for Letter of Credit Liabilities. In the event that
the Loans have been repaid in full, amounts payable under Section 3.02(b) shall
be applied to provide cash cover for outstanding Letters of Credit, in which
event the Company shall effect the same by paying to the Administrative Agent
immediately available funds in an amount equal to the required amount, which
funds shall be retained by the Administrative Agent in the Collateral Account as
collateral security in the first instance for the Letter of Credit Liabilities
until such time as the Letters of Credit shall have been terminated and all of
the Letter of Credit Liabilities paid in full.
Section 4. Payments of Principal and Interest.
4.01 Repayment of Loans. The Company hereby promises to pay to
the Administrative Agent for account of each Lender the entire outstanding
principal amount of such Lender's Loans, and each Loan shall mature, on the
Commitment Termination Date.
4.02 Interest. The Company will pay to the Administrative
Agent for the account of each Lender interest on the unpaid principal amount of
each Loan made by such Lender for the period commencing on the date of such Loan
to but excluding the date such Loan shall be paid in full, at the following
rates per annum:
(a) if such Loan is an ABR Loan, the Alternate Base
Rate plus the Applicable Margin; and
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(b) if such Loan is a Eurodollar Loan, the Eurodollar
Rate plus the Applicable Margin.
Notwithstanding the foregoing, the Company hereby promises to pay to the
Administrative Agent for account of each Lender interest at the applicable
Post-Default Rate
(x) on any principal of any Loan made by such Lender, on any
Reimbursement Obligation held by such Lender and on any other amount
payable by the Company hereunder or under the Note held by such Lender
to or for account of such Lender (but, if such amount is interest, only
to the extent legally enforceable), that shall not be paid in full when
due (whether at stated maturity, by acceleration, by mandatory
prepayment or otherwise), for the period from and including the due
date thereof to but excluding the date the same is paid in full and
(y) on any principal of any Loan made by such Lender during
any period when an Event of Default shall have occurred under Section
10.01(a) hereof and for so long as such Event of Default shall be
continuing.
Accrued interest on each Loan shall be payable (i) if such Loan is an ABR Loan,
on each Quarterly Date, (ii) if such Loan is a Eurodollar Loan, on the last day
of each Interest Period for such Loan (and, if such Interest Period exceeds
three months' duration, quarterly, commencing on the first quarterly anniversary
of the first day of such Interest Period), and (iii) in any event, upon the
payment, prepayment or conversion thereof, but only on the principal so paid or
prepaid or converted; provided that interest payable at the Post-Default Rate
shall be payable from time to time on demand of the Administrative Agent or the
Majority Lenders. Promptly after the determination of any interest rate provided
for herein or any change therein, the Administrative Agent shall notify the
Lenders and the Company thereof.
Notwithstanding the foregoing provisions of this Section 4.02,
if at any time the rate of interest set forth above on any Loan of any Lender
(the "Stated Rate" for such Loan) exceeds the maximum non-usurious interest rate
permissible for such Lender to charge commercial borrowers under applicable law
(the "Maximum Rate" for such Lender), the rate of interest charged on such Loan
of such Lender hereunder shall be limited to the Maximum Rate for such Lender.
In the event the Stated Rate for any Loan of a Lender that has
theretofore been subject to the preceding paragraph at any time is less than the
Maximum Rate for such Lender, the principal amount of such Loan shall bear
interest at the Maximum
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Rate for such Lender until the total amount of interest paid to such Lender or
accrued on its Loans hereunder equals the amount of interest which would have
been paid to such Lender or accrued on such Lender's Loans hereunder if the
Stated Rate had at all times been in effect.
In the event, upon payment in full of all amounts payable
hereunder, the total amount of interest paid to any Lender or accrued on such
Lender's Loans under the terms of this Agreement is less than the total amount
of interest which would have been paid to such Lender or accrued on such
Lender's Loans if the Stated Rate had, at all times, been in effect, then the
Company shall, to the extent permitted by applicable law, pay to the
Administrative Agent for the account of such Lender an amount equal to the
difference between (a) the lesser of (i) the amount of interest which would have
accrued on such Lender's Loans if the Maximum Rate for such Lender had at all
times been in effect or (ii) the amount of interest which would have accrued on
such Lender's Loans if the Stated Rate had at all times been in effect and (b)
the amount of interest actually paid to such Lender or accrued on its Loans
under this Agreement.
In the event any Lender ever receives, collects or applies as
interest any sum in excess of the Maximum Rate for such Lender, such excess
amount shall be applied to the reduction of the principal balance of its Loans
or to other amounts (other than interest) payable hereunder, and if no such
principal is then outstanding, such excess or part thereof remaining shall be
paid to the Company.
Section 5. Payments; Pro Rata Treatment; Computations;
Etc.
5.01 Payments. Except to the extent otherwise provided herein,
all payments of principal, interest, Reimbursement Obligations and other amounts
to be made by the Company hereunder and under the Notes shall be made in
Dollars, in immediately available funds, to the Administrative Agent at an
account in New York, New York specified by the Administrative Agent, not later
than 11:00 a.m. New York time on the date on which such payment shall become due
(each such payment made after such time on such due date to be deemed to have
been made on the next succeeding Business Day). The Administrative Agent, or any
Lender for whose account any such payment is made, may (but shall not be
obligated to) debit the amount of any such payment which is not made by such
time to any ordinary deposit account of the Company with the Administrative
Agent or such Lender, as the case may be. The Company shall, at the time of
making each payment hereunder or under any Note, specify to the Administrative
Agent the Loans or other amounts payable by the Company hereunder to which such
payment is to be applied (and in the event that it
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fails to so specify, or if an Event of Default has occurred and is continuing,
the Administrative Agent may apply such payment for the benefit of the Lenders
as it may elect in its sole discretion, but subject to the other terms and
conditions of this Agreement, including without limitation, Section 5.02
hereof). Each payment received by the Administrative Agent hereunder or under
any Note for the account of a Lender shall be paid promptly to such Lender, in
immediately available funds, for the account of such Lender's Applicable Lending
Office. If the due date of any payment hereunder or under any Note would
otherwise fall on a day which is not a Business Day such date shall be extended
to the next succeeding Business Day and interest shall be payable for any
principal so extended for the period of such extension.
5.02 Pro Rata Treatment. Except to the extent otherwise
provided herein: (a) each borrowing from the Lenders under Section 2.01 hereof
shall be made from the Lenders, each payment of commitment fees under Section
2.03 hereof shall be made for the account of the Lenders, and each termination
or reduction of the Commitments under Section 2.02 hereof shall be applied to
the Commitments of the Lenders, pro rata according to the Lenders' respective
percentages of the Commitments, (b) each payment by the Company of principal of
or interest on Loans of a particular Type (other than payments in respect of
Loans of individual Lenders provided for by Section 6 hereof) shall be made to
the Administrative Agent for the account of the Lenders pro rata in accordance
with the respective unpaid principal amounts of such Loans held by the Lenders
and (c) each conversion of Loans of a particular Type (other than conversions of
Loans of individual Lenders pursuant to Section 6.04 hereof) shall be made pro
rata among the Lenders in accordance with the respective principal amounts of
such Loans held by the Lenders.
5.03 Computations. Interest and fees shall be computed on the
basis of a year of 360 days (or 365 or 366 days, as the case may be, in the case
of ABR Loans the interest rate payable on which is then based on the Prime Rate)
and actual days elapsed (including the first day but excluding the last day)
occurring in the period for which payable.
5.04 Minimum and Maximum Amounts; Types. Except for
prepayments made pursuant to Section 3.02(b) hereof, each borrowing, conversion
and prepayment of principal of Loans shall be in an aggregate principal amount
equal to (a) in the case of Eurodollar Loans, $1,000,000 or a larger multiple of
$100,000, and (b) in the case of ABR Loans, $500,000 or a larger multiple of
$100,000 (borrowings, conversions or prepayments of Loans of different Types or,
in the case of Eurodollar Loans, having different Interest Periods, at the same
time hereunder to be deemed separate borrowings, conversions and prepayments for
purposes of the foregoing, one for Type or Interest Period);
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provided that (i) any Loan may be in the aggregate amount of the unused portion
of the relevant Commitments, (ii) Loans may be prepaid in full and (ii) any
borrowing or prepayment of Loans that are ABR Loans may be in an aggregate
principal amount equal to $100,000 or a larger multiple of $100,000.
5.05 Certain Notices. Notices to the Administrative Agent of
terminations or reductions of Commitments, of borrowings, conversions and
prepayments of Loans and of the duration of Interest Periods shall be
irrevocable and shall be effective only if received by the Administrative Agent
not later than 1:00 p.m. New York time on the number of Business Days prior to
the date of the relevant termination, reduction, borrowing, conversion and/or
prepayment specified below:
Number of
Business
Notice Days Prior
Termination or reduction of
Commitments 3
Borrowing or prepayment of
ABR Loans 1
Borrowing or prepayment of,
conversion of or into, or
duration of Interest Period
for, Eurodollar Loans 3
Prepayments required pursuant
to Section 3.02(b) 1
Each such notice of termination or reduction shall specify the amount thereof to
be terminated or reduced. Each such notice of borrowing, conversion or
prepayment shall specify the amount and Type of the Loans to be borrowed,
converted or prepaid (subject to Sections 3.02(a) and 5.04 hereof), the date of
borrowing, conversion or prepayment (which shall be a Business Day) and, in the
case of Eurodollar Loans, the duration of the Interest Period therefor (subject
to the definition of Interest Period). Each such notice of duration of an
Interest Period shall specify the Loans to which such Interest Period is to
relate. The Administrative Agent shall promptly notify the affected Lenders of
the contents of each such notice. In the event that the Company fails to select
the duration of any Interest Period for any Eurodollar Loans within the time
period and otherwise as provided in this Section 5.05, such Loans (if
outstanding as Eurodollar Loans) will be automatically converted into ABR Loans
on the last day of the then current Interest Period for such
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Loans or (if outstanding as ABR Loans) will remain as, or (if not then
outstanding) will be made as, ABR Loans.
5.06 Non-Receipt of Funds by the Administrative Agent. Unless
the Administrative Agent shall have been notified by a Lender or the Company
(the "Payor") prior to the date on which such Lender is to make payment to the
Administrative Agent of the proceeds of a Loan to be made by it hereunder or the
Company is to make a payment to the Administrative Agent for the account of one
or more of the Lenders, as the case may be (such payment being herein called the
"Required Payment"), which notice shall be effective upon receipt, that the
Payor does not intend to make the Required Payment to the Administrative Agent,
the Administrative Agent may assume that the Required Payment has been made and
may, in reliance upon such assumption (but shall not be required to), make the
amount thereof available to the intended recipient on such date and, if the
Payor has not in fact made the Required Payment to the Administrative Agent, the
recipient of such payment shall, on demand, pay to the Administrative Agent the
amount made available to it together with interest thereon in respect of the
period commencing on the date such amount was so made available by the
Administrative Agent until the date the Administrative Agent recovers such
amount at a rate per annum equal to the Federal Funds Effective Rate for such
period.
5.07 Sharing of Payments; Waiver of Enforcement Without
Consent, Etc. (a) The Company agrees that, in addition to (and without
limitation of) any right of set-off, banker's lien or counterclaim a Lender may
otherwise have, each Lender shall be entitled, at its option, to offset balances
held by it for the account of the Company at any of its offices, in Dollars or
in any other currency, against any principal of or interest on any of such
Lender's Loans or Reimbursement Obligations to the Company hereunder, or any
other obligation of the Company hereunder, which is not paid when due
(regardless of whether such balances are then due to the Company), in which case
it shall promptly notify the Company and the Administrative Agent thereof,
provided that such Lender's failure to give such notice shall not affect the
validity thereof. The Company agrees, to the fullest extent it may effectively
do so under applicable law, that any Person purchasing a participation in the
Loans made, or other obligations held, by another Person, whether or not
acquired pursuant to the foregoing arrangements, may exercise all rights of
set-off, banker's lien, counterclaim or similar rights with respect to such
participation as fully as if such Lender were a direct holder of Loans or other
obligations in the amount of such participation.
(b) If a Lender shall obtain payment of any principal
of or interest on any Loan made by it under this Agreement, or on
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any other obligation then due to such Lender hereunder, through the exercise of
any right of set-off, banker's lien, counterclaim or similar right, or
otherwise, it shall promptly notify the Administrative Agent and purchase from
the other Lenders participations in the Loans made, or other obligations held,
by the other Lenders in such amounts, and make such other adjustments from time
to time as shall be equitable to the end that all the Lenders shall share the
benefit of such payment (net of any expenses which may be incurred by such
Lender in obtaining or preserving such benefit) pro rata in accordance with the
unpaid principal and interest on the Loans or other obligations then due to each
of them. To such end all the Lenders shall make appropriate adjustments among
themselves (by the resale of participations sold or otherwise) if such payment
is rescinded or must otherwise be restored (including the payment of interest to
the extent that the Lender obligated to return such funds is obligated to return
interest).
(c) Nothing contained herein shall require any Lender to
exercise any right of set-off, banker's lien, counterclaim or similar right or
shall affect the right of any Lender to exercise, and retain the benefits of
exercising, any such right with respect to any other indebtedness or obligation
of the Company.
(d) This Section 5.07 is for the benefit of the Lenders only
and does not constitute a waiver of any rights against the Company or any of its
Subsidiaries or against any property held as security for any obligations
hereunder or under any other Basic Document.
5.08 Withholding Tax Exemption. At least five Business Days
prior to the first date on which interest or fees are payable hereunder for the
account of any Lender, each Lender that is not incorporated under the laws of
the United States of America or a state thereof agrees that it will deliver to
each of the Company and the Administrative Agent two duly completed copies of
United States Internal Revenue Service Form 1001 or 4224, certifying in either
case that such Lender is entitled to receive payments under this Agreement and
the Notes without deduction or withholding of any United States federal income
taxes. Each Lender which so delivers a Form 1001 or 4224 further undertakes to
deliver to each of the Company and the Administrative Agent two additional
copies of such form (or a successor form) on or before the date that such form
expires or becomes obsolete or after the occurrence of any event requiring a
change in the most recent form so delivered by it, and such amendments thereto
or extensions or renewals thereof as may be reasonably requested by the Company
or the Administrative Agent, in each case certifying that such Lender is
entitled to receive payments under this Agreement and the Notes without
deduction or
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withholding of any United States federal income taxes, unless an event
(including without limitation any change in treaty, law or regulation) has
occurred prior to the date on which any such delivery would otherwise be
required which renders all such forms inapplicable or which would prevent such
Lender from duly completing and delivering any such form with respect to it and
such Lender advises the Company and the Administrative Agent that it is not
capable of receiving payments without any deduction or withholding of United
States federal income tax.
Section 6. Yield Protection and Illegality.
6.01 Additional Costs.
(a) The Company shall pay to the Administrative Agent for the
account of each Lender from time to time such amounts as such Lender may
determine to be necessary to compensate it for any costs incurred by such Lender
which such Lender determines are attributable to its making or maintaining of
any Eurodollar Loans hereunder or its obligation to make any of such Loans
hereunder, or any reduction in any amount receivable by such Lender in respect
of any of such Loans or such obligation (such increases in costs and reductions
in amounts receivable being herein called "Additional Costs"), in each case
resulting from any Regulatory Change which:
(i) changes the basis of taxation of any amounts payable to such
Lender under this Agreement or its Notes in respect of any of such
Loans (other than changes which affect taxes measured by or imposed on
the overall net income of such Lender or of its Applicable Lending
Office for any of such Loans by the jurisdiction in which such Lender
has its principal office or such Applicable Lending Office); or
(ii) imposes or modifies any reserve, special deposit or similar
requirements relating to any extensions of credit or other assets of,
or any deposits with or other liabilities of, such Lender (including
any of such Loans or any deposits referred to in the definition of
"Eurodollar Base Rate" in Section 1.01 hereof); or
(iii) imposes any other condition affecting this Agreement (or any
of such extensions of credit or liabilities).
Each Lender will notify the Company through the Administrative Agent of any
event occurring after the date of this Agreement which will entitle such Lender
to compensation pursuant to this Section 6.01(a) as promptly as practicable
after it obtains knowledge thereof and determines to request such compensation,
and (if so requested by the Company through the Administrative Agent) will
designate a different Applicable Lending Office for
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the Eurodollar Loans of such Lender if such designation will avoid the need for,
or reduce the amount of, such compensation and will not, in the sole opinion of
such Lender, be disadvantageous to such Lender (provided that such Lender shall
have no obligation to so designate an Applicable Lending Office located in the
United States of America). Each Lender will furnish the Company with a statement
setting forth the basis and amount of each request by such Lender for
compensation under this Section 6.01(a). If any Lender requests compensation
from the Company under this Section 6.01(a), the Company may, by notice to such
Lender through the Administrative Agent, suspend the obligation of such Lender
to make additional Eurodollar Loans to the Company until the Regulatory Change
giving rise to such request ceases to be in effect (in which case the provisions
of Section 6.04 hereof shall be applicable).
(b) Without limiting the effect of the foregoing provisions of
this Section 6.01, in the event that, by reason of any Regulatory Change, any
Lender either (i) incurs Additional Costs based on or measured by the excess
above a specified level of the amount of a category of deposits or other
liabilities of such Lender which includes deposits by reference to which the
interest rate on Eurodollar Loans is determined as provided in this Agreement or
a category of extensions of credit or other assets of such Lender which includes
Eurodollar Loans or (ii) becomes subject to restrictions on the amount of such a
category of liabilities or assets which it may hold, then, if such Lender so
elects by notice to the Company (with a copy to the Administrative Agent), the
obligation of such Lender to make Eurodollar Loans hereunder shall be suspended
until the date such Regulatory Change ceases to be in effect (in which case the
provisions of Section 6.04 hereof shall be applicable).
(c) Determinations and allocations by any Lender for purposes
of this Section 6.01 of the effect of any Regulatory Change on its costs of
maintaining its obligations to make Loans or of making or maintaining Loans or
on amounts receivable by it in respect of Loans, and of the additional amounts
required to compensate such Lender in respect of any Additional Costs, shall be
conclusive absent manifest error, provided that such determinations and
allocations are made on a reasonable basis.
(d) If any Lender demands compensation under this Section, the
Company may, at any time upon at least three (3) Business Days' prior notice to
such Lender through the Administrative Agent, convert in full the then
outstanding Eurodollar Loans of such Lender (in which case the Company shall be
obligated, if such conversion is made on a day that is not the last day of the
then current Interest Period applicable to such affected Eurodollar Loan, to
reimburse such Lender, in accordance
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with Section 6.05, for any resulting loss or expense incurred by
it) to an ABR Loan.
6.02 Limitation on Types of Loans. Anything herein to
the contrary notwithstanding, if, with respect to any Eurodollar
Loans:
(a) the Administrative Agent determines (which determination
shall be conclusive) that quotations of interest rates for the relevant
deposits referred to in the definition of "Eurodollar Base Rate" in
Section 1.01 hereof are not being provided by the Reference Lenders in
the relevant amounts or for the relevant maturities for purposes of
determining the rate of interest for such Loans for Interest Periods
therefor as provided in this Agreement; or
(b) the Majority Lenders determine (which determination shall
be conclusive) and notify the Administrative Agent that the relevant
rates of interest referred to in the definition of "Eurodollar Base
Rate" in Section 1.01 thereof upon the basis of which the rates of
interest for such Loans are to be determined do not accurately reflect
the cost to such Lenders of making or maintaining such Loans for
Interest Periods therefor;
then the Administrative Agent shall promptly notify the Company and each Lender
thereof, and so long as such condition remains in effect, the Lenders shall be
under no obligation to make Eurodollar Loans or to convert ABR Loans into
Eurodollar Loans and the Company shall, on the last day(s) of the then current
Interest Period(s) for the outstanding Eurodollar Loans, either prepay such
Loans or convert such Loans into ABR Loans in accordance with Section 3.02
hereof.
6.03 Illegality. Notwithstanding any other provision of this
Agreement to the contrary, in the event that it becomes unlawful for any Lender
or its Applicable Lending Office to (a) honor its obligation to make Eurodollar
Loans hereunder, or (b) maintain Eurodollar Loans hereunder, then such Lender
shall promptly notify the Company thereof through the Administrative Agent and
such Lender's obligation to make Eurodollar Loans hereunder shall be suspended
until such time as such Lender may again make and maintain Eurodollar Loans (in
which case the provisions of Section 6.04 hereof shall be applicable).
6.04 Substitute ABR Loans. If the obligation of any Lender to
make Eurodollar Loans shall be suspended pursuant to Section 6.01, 6.02 or 6.03
hereof, all Loans which would otherwise be made by such Lender as Eurodollar
Loans shall be made instead as ABR Loans (and, if an event referred to in
Section 6.01(b) or 6.03 hereof has occurred and such Lender so
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requests by notice to the Company with a copy to the Administrative Agent, each
Eurodollar Loan of such Lender then outstanding shall be automatically converted
into an ABR Loan on the date specified by such Lender in such notice) and, to
the extent that Eurodollar Loans are so made as (or converted into) ABR Loans,
all payments of principal which would otherwise be applied to such Eurodollar
Loans shall be applied instead to such ABR Loans.
6.05 Compensation. The Company shall pay to the Administrative
Agent for the account of each Lender, upon the request of such Lender through
the Administrative Agent, such amount or amounts as shall be sufficient (in the
reasonable opinion of such Lender) to compensate it for any loss, cost or
expense incurred by it as a result of:
(a) any payment, prepayment or conversion of a Eurodollar Loan
made by such Lender on a date other than the last day of an Interest
Period for such Loan; or
(b) any failure by the Company to borrow a Eurodollar Loan to
be made by such Lender on the date for such borrowing specified in the
relevant notice of borrowing under Section 5.05 hereof
but excluding, in any event, loss of margin for the period after any such
payment, prepayment or conversion or failure to borrow; provided that such
Lender shall have delivered to the Company a certificate as to the amount of
such loss and expense along with the basis for calculation thereof.
6.06 Capital Adequacy. If any Lender shall determine
that the adoption or implementation of any applicable law, rule,
regulation or treaty regarding capital adequacy, or any change
therein, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof,
or compliance by any Lender (or its Applicable Lending Office)
with any request or directive regarding capital adequacy (whether
or not having the force of law) of any such authority, central
bank or comparable agency, has or would have the effect of
reducing the rate of return on capital of such Lender or any
Person controlling such Lender (a "Parent") as a consequence of
its obligations hereunder to a level below that which such Lender
(or its Parent) could have achieved but for such adoption, change
or compliance (taking into consideration its policies with
respect to capital adequacy) by an amount deemed by such Lender
to be material, then from time to time, within 15 days after
demand by such Lender (with a copy to the Administrative Agent),
the Company shall pay to such Lender such additional amount or
amounts as will compensate such Lender for such reduction. A
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statement of any Lender claiming compensation under this Section and setting
forth the additional amount or amounts to be paid to it hereunder shall be
conclusive absent manifest error; provided that the determination thereof is
made on a reasonable basis; and provided further that the Company shall not be
obligated to compensate such Lender for any such reduction occurring more than
180 days prior to the time such Lender first notifies the Company of such
adoption, implementation, change or compliance. In determining such amount, such
Lender may use any reasonable averaging and attribution methods.
6.07 Substitution of Lender. If (i) the obligation of any
Lender to make Eurodollar Loans or the right of the Company to convert ABR Loans
of any Lender to Eurodollar Loans has been suspended pursuant to Section 6.03,
or (ii) any Lender has demanded compensation under Section 6.01 or 6.06, the
Company shall have the right, with the assistance of the Administrative Agent,
to seek a substitute bank or banks (which may be one or more of the Lenders)
satisfactory to the Company and the Administrative Agent to purchase the Notes
and assume the Commitments of such Lender. Any such Lender shall be obligated to
sell the Notes for cash without recourse to such substitute bank or banks and to
execute and deliver an appropriately completed assignment and assumption
agreement reasonably satisfactory to the Administrative Agent and the Company
and any other document or perform any act reasonably necessary to effect the
assumption of the rights and obligations of such substitute bank or banks.
6.08 Additional Costs in Respect of Letters of Credit. Without
limiting the obligations of the Company under Section 6.01 hereof (but without
duplication), if as a result of any Regulatory Change or any risk-based capital
guideline or other requirement heretofore or hereafter issued by any government
or governmental or supervisory authority implementing at the national level the
Basle Accord there shall be imposed, modified or deemed applicable any tax,
reserve, special deposit, capital adequacy or similar requirement against or
with respect to or measured by reference to Letters of Credit issued or to be
issued hereunder and the result shall be to increase the cost to any Lender or
Lenders of issuing (or purchasing participations in) or maintaining its
obligation hereunder to issue (or purchase participations in) any Letter of
Credit hereunder or reduce any amount receivable by any Lender hereunder in
respect of any Letter of Credit (which increases in cost, or reductions in
amount receivable, shall be the result of such Lender's or Lenders' reasonable
allocation of the aggregate of such increases or reductions resulting from such
event), then, upon demand by such Lender or Lenders (through the Administrative
Agent), the Company shall pay immediately to the Administrative Agent for
account of such Lender or Lenders, from time to time as specified
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by such Lender or Lenders (through the Administrative Agent), such additional
amounts as shall be sufficient to compensate such Lender or Lenders (through the
Administrative Agent) for such increased costs or reductions in amount. A
statement as to such increased costs or reductions in amount incurred by any
such Lender or Lenders, submitted by such Lender or Lenders to the Company,
shall be conclusive in the absence of manifest error as to the amount thereof.
Section 7. Conditions Precedent.
7.01 Initial Extension of Credit. The obligation of any Lender
to make its initial extension of credit hereunder (whether by making a Loan or
issuing a Letter of Credit) is subject to the conditions precedent that (i) such
extension of credit shall be made on or before October 31, 1996, and (ii) the
Administrative Agent shall have received the following documents and other
evidence (with, in the case of clauses (a), (b), (c) and (d) below, sufficient
copies for each Lender), each of which shall be satisfactory to the
Administrative Agent (and to the extent specified below, to each Lender) in form
and substance (delivery to the Administrative Agent by a Lender of a signature
page hereto constituting conclusive evidence of such Lender's satisfaction as to
the fulfillment of the conditions precedent hereto):
(a) Corporate Documents. Certified copies of the charter and
by-laws (or equivalent documents) of each Obligor and of all corporate
authority for each Obligor (including, without limitation, board of
director resolutions and evidence of the incumbency, including specimen
signatures, of officers) with respect to the execution, delivery and
performance of such of the Basic Documents to which such Obligor is
intended to be a party and each other document to be delivered by such
Obligor from time to time in connection herewith and the extensions of
credit hereunder (and the Administrative Agent and each Lender may
conclusively rely on such certificate until it receives notice in
writing from such Obligor to the contrary).
(b) Officer's Certificate. A certificate of a senior
officer of the Company, dated the Closing Date, to the
effect set forth in the first sentence of Section 7.02
hereof.
(c) Opinion of Special New York Counsel to the
Obligors. An opinion, dated the Closing Date, of Sullivan &
Worcester, special New York counsel to the Obligors,
substantially in the form of Exhibit E hereto and covering
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such other matters as the Administrative Agent or any Lender
may reasonably request.
(d) Opinion of Special New York Counsel to the
Administrative Agent. An opinion, dated the Closing Date,
of Milbank, Tweed, Hadley & McCloy, special New York counsel
to the Administrative Agent, substantially in the form of
Exhibit F hereto.
(e) Notes. The Notes, duly completed and executed for
each Lender.
(f) Counterparts. This Agreement, duly executed and
delivered by the Company and each of the Lenders.
(g) Subsidiary Guaranty. The Subsidiary Guaranty,
duly executed and delivered by each Subsidiary Guarantor and
the Administrative Agent.
(h) Security Documents.
(i) The Company Pledge Agreement, duly executed and
delivered by the Company and the Administrative Agent,
together with the certificates identified in Annex I thereto,
accompanied by undated stock powers executed in blank.
(ii) The Subsidiary Pledge Agreement duly executed
and delivered by each Subsidiary Guarantor and the
Administrative Agent, in each case together with the
certificates identified in Annex I thereto under the names of
the respective Subsidiary Guarantor, in each case accompanied
by undated stock powers executed in blank.
In addition, each of the Obligors shall have taken such other action
(including, without limitation, delivering to the Administrative Agent,
for filing, appropriately completed and duly executed copies of Uniform
Commercial Code financing statements) as the Administrative Agent shall
have requested in order to perfect the security interests created
pursuant to the Company Pledge Agreement and the Subsidiary Pledge
Agreement.
(i) Senior Subordinated Debt. Evidence that the Senior
Subordinated Debt Documents shall have been duly authorized, executed
and delivered, and that the Notes evidencing the Senior Subordinated
Debt shall have been duly issued at par, in each case containing terms
in form and substance satisfactory to each Lender, and the
Administrative Agent shall have received copies of each of
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the Senior Subordinated Debt Documents certified by a senior financial
officer of the Company. In addition, the Administrative Agent shall
have received a certificate of a senior financial officer of the
Company to the effect that the Company has received net cash proceeds
(prior to the payment of any transaction expenses) from the issuance of
the Senior Subordinated Debt pursuant to the Senior Subordinated Debt
Documents in an aggregate amount at least equal to $125,000,000.
(j) Repayment of Existing Indebtedness. Evidence that the
principal of and interest on, and all other amounts owing in respect
of, the Indebtedness (including, without limitation, any contingent or
other amounts payable in respect of letters of credit, but excluding
Existing Letters of Credit) indicated on Schedule IV hereto that is to
be repaid on the Closing Date shall have been (or shall be
simultaneously) paid in full, that any commitments to extend credit
under the agreements or instruments relating to such Indebtedness shall
have been canceled or terminated and that all Guarantees in respect of,
and all Liens securing, any such Indebtedness shall have been released
(or arrangements for such release satisfactory to the Majority Lenders
shall have been made); in addition, the Administrative Agent shall have
received from any Person holding any Lien securing any such
Indebtedness, such Uniform Commercial Code termination statements,
mortgage releases and other instruments, in each case in proper form
for recording, as the Administrative Agent shall have requested to
release and terminate of record the Liens securing such Indebtedness
(or arrangements for such release and termination satisfactory to the
Majority Lenders shall have been made).
(k) Insurance. Certificates of insurance evidencing the
existence of all insurance required to be maintained by the Company
pursuant to Section 9.03 hereof, such certificates to be in such form
and contain such information as is specified in said Section 9.03. In
addition, the Company shall have delivered a certificate of a senior
financial officer of the Company setting forth the insurance obtained
by it in accordance with the requirements of said Section 9.03 and
stating that such insurance is in full force and effect and that all
premiums then due and payable thereon have been paid.
(l) Other Documents. Such other documents as the
Administrative Agent or any Lender or special New York
counsel to the Administrative Agent may reasonably request.
The obligation of any Lender to make its initial extension of credit hereunder
is also subject to the payment by the Company of
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such fees as the Company shall have agreed to pay or deliver to any Lender or
the Administrative Agent in connection herewith, including, without limitation,
the reasonable fees and expenses of Milbank, Tweed, Hadley & McCloy, special New
York counsel to the Administrative Agent, in connection with the negotiation,
preparation, execution and delivery of this Agreement and the Notes and the
other Basic Documents and the extensions of credit hereunder (to the extent that
statements for such fees and expenses have been delivered to the Company).
7.02 Initial and Subsequent Loans. The obligation of each
Lender to make any Loan to be made by it hereunder, and the obligation of the
Issuing Bank to issue any Letter of Credit hereunder, is subject to the
conditions precedent that, as of the date of such Loan or such issuance, and
before and after giving effect thereto:
(a) no Default shall have occurred and be continuing;
(b) the representations and warranties made by each of the
Company and the Subsidiary Guarantors in each Basic Document to which
it is a party shall be true on and as of the date of the making of such
Loan or such issuance, with the same force and effect as if made on and
as of such date; provided that the representations and warranties set
forth in Section 8.10 hereof need only be true as of the Closing Date;
and
(c) the borrowing of such Loan by the Company hereunder or the
issuance of such Letter of Credit, as the case may be, and the related
incurrence of obligations by the Company, does not violate the
provisions of the Senior Subordinated Debt Indenture or any other
Senior Subordinated
Debt Document.
Each notice of borrowing by the Company hereunder shall constitute a
certification by the Company to the effect set forth in the preceding sentence
(both as of the date of such notice and, unless the Company otherwise notifies
the Administrative Agent prior to the date of such borrowing or issuance, as of
the date of such borrowing or issuance).
Section 8. Representations and Warranties. The
Company represents and warrants to the Lenders and the
Administrative Agent as follows:
8.01 Corporate Existence. Each of the Company and its
Subsidiaries: (a) is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction
of its incorporation; (b) has all requisite corporate power, and
has all governmental licenses, authorizations, consents, permits
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and approvals (including any license, authorization, consent, permit and
approval required under any Environmental Law) necessary to own its assets and
carry on its business as now being or as proposed to be conducted (except such
licenses, authorizations, consents and approvals the lack of which, in the
aggregate, will not have a Material Adverse Effect); and (c) is qualified to do
business in all jurisdictions in which the nature of the business conducted by
it makes such qualification necessary and where failure so to qualify would have
a Material Adverse Effect.
8.02 Information.
(a) The Company has heretofore furnished to each of the
Lenders consolidated balance sheets of the Company and its Subsidiaries as at
December 31, 1994 and December 31, 1995 and the related consolidated statements
of income, retained earnings and cash flows of the Company and its Subsidiaries
for the fiscal years respectively ended on said dates, with the opinion thereon
of Arthur Andersen L.L.P., and the unaudited consolidated balance sheets of the
Company and its Subsidiaries as at March 31, 1996 and June 30, 1996 and the
related consolidated statements of income, retained earnings and cash flows of
the Company and its Subsidiaries for the three and six month periods
respectively ended on such dates. All such financial statements are complete and
correct and fairly present the consolidated financial condition of the Company
and its Subsidiaries as at said dates and the consolidated results of their
operations for the fiscal years and three and six month periods ended on said
dates (subject, in the case of such financial statements as at March 31, 1996
and June 30, 1996, to normal year-end audit adjustments), all in accordance with
generally accepted accounting principles and practices applied on a consistent
basis.
(b) The Company has disclosed to the Lenders in writing any
and all facts (other than general economic conditions) which materially and
adversely affect or may materially and adversely affect (to the extent it can
reasonably foresee) the business, assets, property, condition (financial or
otherwise) or prospects of the Company and its Subsidiaries taken as a whole, or
the ability of the Company or any of the Subsidiary Guarantors to perform its
obligations under each Basic Document to which it is a party or the ability of
the Company or any Subsidiary of the Company to conduct its activities or
operations in the normal course of business at any of its owned or leased
properties. The information, reports, financial statements, exhibits and
schedules furnished in writing by or on behalf of the Obligors to the
Administrative Agent or any Lender in connection with the negotiation,
preparation or delivery of this Agreement and the other Basic Documents or
included herein
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or therein or delivered pursuant hereto or thereto, when taken as a whole do not
contain any untrue statement of material fact or omit to state any material fact
necessary to make the statements herein or therein, in light of the
circumstances under which they were made, not misleading. All written
information furnished after the date hereof by the Company and its Subsidiaries
to the Administrative Agent and the Lenders in connection with this Agreement
and the other Basic Documents and the transactions contemplated hereby and
thereby will be true, complete and accurate in every material respect, or (in
the case of projections) based on reasonable estimates, on the date as of which
such information is stated or certified.
(c) Since December 31, 1995, there has been no material
adverse change in the business, assets, property, condition (financial or
otherwise) or prospects of the Company and its Subsidiaries taken as a whole or,
to the knowledge of the Company, in the ability of the Company or any of the
Subsidiary Guarantors to perform its obligations under each Basic Document to
which it is a party.
8.03 Litigation. There are no legal or arbitral proceedings or
any proceedings by or before any governmental or regulatory authority or agency,
now pending or, to the knowledge of the Company, threatened against or affecting
the Company or any of its Subsidiaries in which there is a reasonable
possibility of an adverse decision which could have a Material Adverse Effect
or, to the knowledge of the Company, which could have a material adverse effect
on the ability of the Company or any of the Subsidiary Guarantors to perform its
obligations under each Basic Document to which it is a party.
8.04 No Breach. None of the execution and delivery of the
Basic Documents, the consummation of the transactions therein contemplated or
compliance with the terms and provisions thereof will conflict with or result in
a breach of, or require any consent under, the certificate of incorporation or
by-laws of the Company or any of its Subsidiaries, or any applicable law or
regulation, or any order, writ, injunction or decree of any court or
governmental authority or agency, or any Basic Document, any other material
agreement or instrument to which the Company or any of its Subsidiaries is a
party or by which it is bound or to which it is subject, or constitute a default
under any such lease, agreement or instrument, or (except for the Liens created
pursuant to, or permitted by, this Agreement and the Security Documents) result
in the creation or imposition of any Lien upon any of the revenues or assets of
the Company or any of its Subsidiaries pursuant to the terms of any such
agreement or instrument.
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8.05 Corporate Action. Each of the Company and the Subsidiary
Guarantors has all necessary corporate power and authority to execute, deliver
and perform its obligations under the Basic Documents to which it is a party;
the execution, delivery and performance by the Company and the Subsidiary
Guarantors of the Basic Documents to which they are parties have been duly
authorized by all necessary corporate action; and this Agreement has been duly
and validly executed and delivered by the Company and constitutes the legal,
valid and binding obligation of the Company and each of the other Basic
Documents to which the Company or any of the Subsidiary Guarantors is to be a
party constitute its legal, valid and binding obligation, in each case
enforceable in accordance with its terms, except as the enforceability thereof
may be limited by bankruptcy, insolvency, reorganization or moratorium or other
similar laws relating to the enforcement of creditors' rights generally and by
general equitable principles.
8.06 Approvals. Each of the Company and the Subsidiary
Guarantors has obtained all authorizations, approvals and consents of, and has
made all filings and registrations with, any governmental or regulatory
authority or agency necessary for the execution, delivery or performance by it
of any Basic Document to which it is a party, or for the validity or
enforceability thereof, except for filings and recordings of the Liens created
pursuant to, or permitted by, the Security Documents.
8.07 Regulations U and X. None of the Company or any of its
Subsidiaries is engaged principally, or as one of its important activities, in
the business of extending credit for the purpose of purchasing or carrying
margin stock (within the meaning of Regulation U or X of the Board of Governors
of the Federal Reserve System) and no part of the proceeds of any Loan hereunder
will be used to purchase or carry any such margin stock.
8.08 ERISA. The Company and each member of the Controlled
Group have fulfilled their obligations under the minimum funding standards of
ERISA and the Code with respect to each Plan and are in compliance in all
material respects with the presently applicable provisions of ERISA and the
Code, and have not incurred any liability to the PBGC or a Plan under Title IV
of ERISA (other than to make contributions or premium payments in the ordinary
course).
8.09 Taxes. Each of the Company and its Subsidiaries has filed
all United States Federal income tax returns and all other material tax returns
which are required to be filed by it and has paid all taxes due pursuant to such
returns or pursuant to any assessment received by it, except to the extent the
same
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may be contested as permitted by Section 9.02 hereof. The charges, accruals and
reserves on the books of such Persons in respect of taxes and other governmental
charges are, in the opinion of the Company, adequate.
8.10 Subsidiaries; Agreements; Etc.
(a) Schedule III hereto is a complete and correct list of all
Subsidiaries of the Company and of all Investments held by the Company or any of
its Subsidiaries in any joint venture or other Person. Except for the Liens
created by the Security Documents, the Company owns, free and clear of Liens,
all outstanding shares of such Subsidiaries and all such shares are validly
issued, fully paid and non-assessable and the Company (or the respective
Subsidiary of the Company) also owns, free and clear of Liens, all such
Investments.
(b) Schedule IV hereto is a complete and correct list of all
credit agreements, indentures, capitalized leases, obligations in respect of
letters of credit, guaranties, joint venture agreements, and other material
instruments in effect as of the date hereof providing for, evidencing, securing
or otherwise relating to any Indebtedness or any Material Lease Obligations (as
hereinafter defined) of the Company or any of its Subsidiaries, and all
obligations of the Company or any of its Subsidiaries to issuers of surety or
appeal bonds issued for account of the Company or any of its Subsidiaries, and
such list correctly sets forth the names of the debtor or lessee and creditor or
lessor with respect to the Indebtedness or Material Lease Obligations
outstanding or to be outstanding and the property subject to any Lien securing
such Indebtedness or Material Lease Obligation. The Company has heretofore
delivered to the Administrative Agent a complete and correct copy of all such
credit agreements, indentures, capitalized leases, letter of credit obligations,
guaranties, joint venture agreements and other material instruments, including
any modifications or supplements thereto, as in effect on the date hereof. As
used herein, the term "Material Lease Obligations" shall mean any operating
lease which requires aggregate annual rentals during any period of twelve months
during the term of such lease in an amount in excess of $100,000.
(c) None of the Subsidiaries of the Company is, on the date
hereof, subject to any indenture, agreement, instrument or other arrangement of
the type described in Section 9.22(d) hereof (other than the Senior Subordinated
Debt Indenture).
8.11 Investment Company Act. None of the Company or
its Subsidiaries is an investment company within the meaning of
the Investment Company Act of 1940, as amended, or, directly or
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indirectly, controlled by or acting on behalf of any Person which is an
investment company, within the meaning of said Act.
8.12 Public Utility Holding Company Act. None of the Company
or its Subsidiaries is a "holding company", or an "affiliate" of a "holding
company" or a "subsidiary company" of a "holding company", within the meaning of
the Public Utility Holding Company Act of 1935, as amended.
8.13 Ownership and Use of Properties. Each of the Company and
its Subsidiaries will at all times have legal title to or ownership of, or the
right to use pursuant to enforceable and valid agreements or arrangements, all
tangible property, both real and personal, and all franchises, licenses,
copyrights, patents and know-how which are material to the operation of its
business as proposed to be conducted.
8.14 Environmental Compliance.
(i) No notice, notification, demand, request for information,
citation, summons, complaint or order has been issued, no complaint has
been filed, no penalty has been assessed and no investigation or review
is pending or, to the Company's knowledge, threatened by any
governmental or other entity with respect to any (A) alleged violation
by the Company or any Subsidiary of any Environmental Law, (B) alleged
failure by the Company or any Subsidiary to have any environmental
permit, certificate, license, approval, registration or authorization
required in connection with the conduct of its business or (C)
generation, treatment, storage, recycling, transportation or disposal
or Release (each a "Regulated Activity") of any Hazardous Substances;
(ii) neither the Company nor any Subsidiary has engaged in any
Regulated Activity other than as a generator (as such term is used in
RCRA) in compliance with all applicable Environmental Laws, and no
Regulated Activity, other than generation by the Company or any
Subsidiary in compliance with all applicable Environmental Laws, has
occurred on any property now or previously owned or leased by the
Company or any Subsidiary. No polychlorinated biphenyls, urea
formaldehyde, lead, asbestos or asbestos-containing material is or has
been present at any property now or previously owned or leased by the
Company or any other Subsidiary. There are no underground storage tanks
for Hazardous Substances, active or abandoned, at any property now or
previously owned or leased by the Company or any Subsidiary. No
Hazardous Substance has been Released at, on or under any property now
or previously owned or leased by the Company or any Subsidiary. No
Hazardous Substance is present in a reportable or threshold planning
quantity where such a
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quantity has been established by any Environmental Law at,
on or under, any property now or previously owned or leased
by the Company or any Subsidiary;
(iii) no real property now or previously owned or leased by the
Company or any Subsidiary is listed or, to the Company's knowledge,
proposed for listing, on the National Priorities List promulgated
pursuant to CERCLA, on CERCLIS, as defined in CERCLA, or on any similar
state list of sites requiring investigation or clean-up;
(iv) neither the Company nor any Subsidiary has transported or
arranged for the transportation (directly or indirectly) of any
Hazardous Substance to any location which is listed or to the Company's
knowledge, proposed for listing, under CERCLA (including on CERCLIS, as
defined in CERCLA) or on any similar state list or which is the subject
of federal, state or local enforcement actions or to the Company's
knowledge, other investigations which may lead to claims against the
Company or any Subsidiary for clean-up costs, remedial work, damages to
natural resources or for personal injury claims, including, but not
limited to, claims under CERCLA;
(v) there are no liens under Environmental Laws on any of the
real property or other assets owned or leased by the Company or any
Subsidiary, and no government actions have been taken or are in process
which could subject any of such properties or assets to such liens.
Neither the Company nor any Subsidiary would be required to place any
notice or restriction relating to Hazardous Substances at any property
owned by it in any deed to such property;
(vi) there has been no environmental investigation, study, audit,
test, review or other analysis conducted of which the Company has
knowledge in relation to the current or prior business of the Company
or any property or facility now or previously owned or leased by the
Company or any Subsidiary, which has not been delivered to the Lenders
prior to the date hereof; and
(vii) neither the Company nor any Subsidiary has assumed from any
third party, or indemnified any third party for, any Environmental
Liability,
except for Environmental Liabilities of the Company and its Subsidiaries
(without duplication) that relate to or result from any matter referred to in
clauses (i) through (vii) (without duplication), which do not exceed in the
aggregate, at any time, $6,000,000.
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8.15 Solvency. At the Closing Date and after giving effect to
the consummation of the transactions contemplated by this Agreement, the Company
will (i) have capital, cash flows and sources of working capital financing
sufficient to carry on its business and transactions and all business and
transactions in which it is about to engage, (ii) be able to pay its debts as
they mature, and (iii) have assets (tangible and intangible) whose fair salable
value exceeds its total liabilities (including contingent, subordinated,
unmatured and unliquidated liabilities).
8.16 Capitalization. The authorized Capital Stock of the
Company consists, on the date hereof, of an aggregate of 16,000,000 shares
consisting of (i) 13,000,000 shares of Common Stock, par value $0.01 per share,
of which 9,627,141 shares are duly and validly issued and outstanding, (ii)
1,000,000 shares of Nonvoting Common Stock, par value $0.01 per share, of which
500,000 shares are duly and validly issued and outstanding and (iii) 2,000,000
shares of Preferred Stock, par value $0.01 per share, none of which is
outstanding. As of the date hereof, except as disclosed on Schedule V hereto,
(x) there are no outstanding Equity Rights with respect to the Company and (y)
there are no outstanding obligations of the Company or any of its Subsidiaries
to repurchase, redeem, or otherwise acquire any shares of Capital Stock of the
Company nor are there any outstanding obligations of the Company or any of its
Subsidiaries to make payments to any Person, such as "phantom stock" payments,
where the amount thereof is calculated with reference to the fair market value
or equity value of the Company or any of its Subsidiaries.
8.17 Senior Debt. The Indebtedness of the Company to the
Lenders hereunder and the Guarantees of such Indebtedness by the Subsidiaries of
the Company under the Subsidiary Guaranty constitute "Senior Debt" and "Senior
Bank Debt" (and, accordingly, "Designated Senior Debt") under and as defined in,
and for all purposes of, the Senior Subordinated Debt Indenture and the other
Senior Subordinated Debt Documents.
Section 9. Covenants. The Company agrees that, so long as any
of the Commitments are in effect and until payment in full of all Loans
hereunder, all interest thereon and all other amounts payable hereunder, unless
the Majority Lenders shall agree otherwise pursuant to Section 12.05 hereof:
9.01 Financial Statements and Other Information. The
Company shall deliver to each of the Lenders:
(a) as soon as available and in any event within 90
days after the end of each fiscal year of the Company,
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consolidated statements of income, retained earnings and cash flow of
the Company and its Subsidiaries for such year and the related
consolidated balance sheet as at the end of such year, setting forth in
each case in comparative form the corresponding figures for the
preceding fiscal year, and accompanied by an opinion thereon of Arthur
Andersen L.L.P. or other independent certified public accountants of
recognized national standing, which opinion shall state that said
consolidated financial statements fairly present the consolidated
financial condition and results of operations of the Company and its
Subsidiaries as at the end of, and for, such fiscal year, and stating
(or indicating in a footnote to such financial statements) that, in
making the examination necessary for their above-described opinion (but
without any special or additional procedures for that purpose), they
obtained no knowledge, except as specifically stated, of any Default;
(b) as soon as available and in any event within 45 days after
the end of each fiscal quarter of the Company (or, in the case of the
last fiscal quarter in each fiscal year, within 90 days) consolidated
statements of income, retained earnings and cash flow of the Company
and its Subsidiaries for such fiscal quarter and for the portion of the
fiscal year ended at the end of such fiscal quarter, and the related
consolidated balance sheet as at the end of such fiscal quarter,
setting forth in each case in comparative form the corresponding
figures from the Company's operating budget for such fiscal year and
accompanied, in each case, by a certificate of the chief financial
officer or vice president-treasurer of the Company which certificate
shall state that said consolidated financial statements fairly present
the consolidated financial condition and results of operations of the
Company in accordance with GAAP (except for the absence of footnotes)
consistently applied as at the end of, and for, such fiscal quarter
(subject to normal year-end audit adjustments);
(c) within 30 days after the beginning of each fiscal year of
the Company, a copy of the consolidated operating budget, including,
without limitation, projection of the anticipated cash flow, of the
Company and its Subsidiaries for such fiscal year, such budget to be
accompanied by a certificate of the chief financial officer or vice
president-treasurer of the Company specifying the assumptions on which
such budget was prepared, stating that such officer has no reason to
question the reasonableness of any material assumptions on which such
budget was prepared and providing such other details as the
Administrative Agent may reasonably request;
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(d) promptly upon the mailing thereof to the shareholders or
creditors of the Company generally, copies of all financial statements,
reports and proxy statements so mailed;
(e) promptly upon the filing thereof, copies of all
registration statements (other than any registration statements on Form
S-8 or its equivalent) and any reports which the Company shall have
filed with the Securities and Exchange Commission;
(f) if and when the Company or any member of the Controlled
Group (i) gives or is required to give notice to the PBGC of any
"reportable event" (as defined in Section 4043 of ERISA) with respect
to any Plan which might constitute grounds for a termination of such
Plan under Title IV of ERISA, or knows that the plan administrator of
any Plan has given or is required to give notice of any such reportable
event, a copy of the notice of such reportable event given or required
to be given to the PBGC; (ii) receives notice of complete or partial
withdrawal liability under Title IV of ERISA, a copy of such notice; or
(iii) receives notice from the PBGC under Title IV of ERISA of an
intent to terminate or appoint a trustee to administer the Plan, a copy
of such notice;
(g) promptly following the delivery thereof to the Company or
to the Board of Directors or management of the Company, a copy of any
management letter or similar written report by independent public
accountants with respect to the financial condition, operations,
business or prospects of the Company;
(h) promptly after management of the Company knows or has
reason to know that any Default has occurred and is continuing, a
notice of such Default, describing the same in reasonable detail;
(i) within 45 days after the end of each fiscal quarter of the
Company, a report, certified by the Chief Financial Officer of the
Company, specifying the Capital Expenditures made by the Company during
the previous fiscal quarter (broken down to identify Maintenance
Capital Expenditures and other Capital Expenditures) and the Additional
Expenditures made by the Company during the previous fiscal quarter;
and
(j) from time to time such other information regarding the
financial condition, operations, prospects or business of the Company
as the Administrative Agent or any Lender through the Administrative
Agent may reasonably request.
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The Company will furnish to each Lender, at the time it furnishes each set of
financial statements pursuant to paragraph (a) or (b) above, a certificate of
its chief executive officer, chief financial officer or vice president-treasurer
(i) to the effect that, to the best of such Person's knowledge after due
inquiry, no Default has occurred and is continuing (or, if any Default has
occurred and is continuing, describing the same in reasonable detail) and (ii)
setting forth in reasonable detail the computations necessary to determine the
Applicable Leverage Ratio and to determine whether it was in compliance with
Sections 9.08 through 9.15 and 9.19 hereof as of the end of the respective
fiscal quarter or fiscal year.
9.02 Taxes and Claims. The Company will pay and discharge, and
will cause each of its Subsidiaries to pay and discharge, all material taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits, or upon any property belonging to it, prior to the date on
which penalties attach thereto, and all lawful claims which, if unpaid, might
become a Lien upon the property of the Company or such Subsidiary, provided that
neither the Company nor such Subsidiary shall be required to pay any such tax,
assessment, charge, levy or claim the payment of which is being contested in
good faith and by proper proceedings if it maintains adequate reserves with
respect thereto.
9.03 Insurance. The Company will maintain, and will cause each
of its Subsidiaries to maintain, insurance with responsible companies in such
amounts and against such risks as is usually carried by owners of similar
businesses and properties in the same general areas in which the Company and its
Subsidiaries operate, provided that in any event the Company shall maintain or
cause to be maintained:
(1) Property Insurance -- insurance against loss or damage
covering all of the tangible real and personal property and
improvements of the Company and its Subsidiaries, by reason of any
Peril (as defined below), in amounts as shall be reasonable and
customary, but in no event less than the greater of (A) the functional
replacement cost of all such real and personal property and
improvements and (B) the amounts necessary to avoid the insured named
therein from becoming a co-insurer of any loss under such policy,
except that (x) the minimum annual aggregate limits for earthquake
perils shall be $5,000,000 in California, and $5,000,000 in all other
states and (y) the minimum aggregate limit for flood perils shall be
$5,000,000. Such insurance shall be subject to the following maximum
deductibles: In the case of earthquake perils in California, the
greater of 10% of the insurable value of the property insured and
$500,000 per occurrence;
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in the case of earthquake perils outside California and flood perils in
all places, the greater of 3% of the insurable value of the property
insured and $350,000 per occurrence; and in all other cases $300,000
per occurrence.
(2) Business Interruption Insurance -- insurance against loss
of operating income earned from the operation of the business of the
Company and its Subsidiaries, by reason of any Peril affecting the
operation thereof, and insurance against any other insurable loss of
operating income by reason of any business interruption affecting the
Company to the extent covered by standard business interruption
policies in the States in which the Properties are located, but in any
event in an amount of at least $5,000,000 per policy period, which
insurance shall in each case cover gross earnings by reason of the
particular Peril or other insurable business interruption and with a
deductible (or self-insured amount) not in excess of $300,000 or, in
California, 5% of the insured value of the property.
Such insurance shall be written by financially responsible companies selected by
the Company, having an A.M. Best rating of "A-" or better and in a financial
size category acceptable to the Majority Lenders, or by other companies
acceptable to the Majority Lenders.
For purposes hereof, the term "Peril" shall mean,
collectively, (i) earthquake, (ii) fire, lightning, flood, windstorm, hail,
explosion, riot and civil commotion, vandalism and malicious mischief, damage
from aircraft, vehicles and smoke and (iii) all other perils covered by the
"all-risk" endorsement then in use in the States in which the Properties are
located.
9.04 Maintenance of Existence; Conduct of Business. The
Company will preserve and maintain, and will cause each of its Subsidiaries to
preserve and maintain, its corporate existence and all of its rights, privileges
and franchises necessary or desirable in the normal conduct of its business, and
will conduct its business in a regular manner; provided that nothing herein
shall prevent (i) the merger and dissolution of any Subsidiary of the Company
into the Company or any Wholly-Owned Subsidiary of the Company so long as the
Company or such Wholly-Owned Subsidiary is the surviving corporation or (ii) the
abandonment of any right, privilege or franchise (including any lease) not
material in the aggregate to the business of the Company and its Subsidiaries.
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9.05 Maintenance of and Access to Properties.
(a) The Company will keep, and will cause each of its
Subsidiaries to keep, all of its properties necessary in its business in good
working order and condition (having regard to the condition of such properties
at the time such properties were acquired by the Company or such Subsidiary),
ordinary wear and tear excepted, and will permit representatives of the Lenders
to inspect such properties and, upon reasonable notice and at reasonable times,
to examine and make extracts and copies from the books and records of the
Company and any such Subsidiary.
(b) The Company will, and will cause its Subsidiaries to, do
all things necessary to preserve and keep in full force and effect all
trademarks, patents, service marks, trade names, copyrights, franchises and
Licenses, and any rights with respect thereto, which are necessary for and
material to the conduct of the business of the Company and its Subsidiaries
taken as a whole.
9.06 Compliance with Applicable Laws. The Company will comply,
and will cause each of its Subsidiaries to comply, with the requirements of all
applicable laws, rules, regulations and orders of any governmental body or
regulatory authority (including, without limitation, ERISA and all Environmental
Laws), a breach of which would have a Material Adverse Effect, except where
contested in good faith and by proper proceedings.
9.07 Litigation. The Company will promptly give to the
Administrative Agent (which shall promptly notify each Lender) notice in writing
of (i) all judgments against it or any of its Subsidiaries (other than judgments
fully covered by insurance) which individually exceed $100,000 or in the
aggregate exceed $1,000,000 and (ii) all litigation and of all proceedings of
which it is aware before any courts, arbitrators or governmental or regulatory
agencies affecting the Company or any of its Subsidiaries except litigation or
proceedings which, if adversely determined, would not in the reasonable opinion
of the Company have a Material Adverse Effect.
9.08 Indebtedness. The Company will not, and will not permit
any of its Subsidiaries to, create, incur or suffer to exist any Indebtedness
except: (i) Indebtedness to the Lenders hereunder; (ii) the Indebtedness
existing on the Closing Date and set forth in Schedule IV hereto (including any
extensions, renewals or refunding of such Indebtedness, so long as the principal
amount of such Indebtedness is not increased); (iii) Senior Subordinated Debt in
an aggregate outstanding principal amount not exceeding $165,000,000; and (iv)
so long as no Default shall have occurred or be continuing hereunder at the time
of such creation or incurrence, Permitted Indebtedness.
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9.09 Leverage Ratio. The Company will not, as at the end of
any fiscal quarter, permit the ratio, calculated as at the end of such fiscal
quarter for the four fiscal quarters then ended, of (i) the excess of (x) the
aggregate outstanding principal amount of Funded Indebtedness of the Company and
its Subsidiaries at such date over (y) the aggregate amount of cash and Liquid
Investments of the Company and Subsidiaries as of such date to (ii) EBITDA for
such period (the "Leverage Ratio") to exceed the ratio set forth below for the
period in which such fiscal quarter ends:
Period Leverage Ratio
From the Closing Date
through December 31, 1996 5.00 to 1
From January 1, 1997
through December 31, 1997 5.00 to 1
From January 1, 1998
through December 31, 1998 4.75 to 1
From January 1, 1999
through December 31, 1999 4.50 to 1
From January 1, 2000
through December 31, 2000 4.00 to 1
From January 1, 2001
and at all times thereafter 3.50 to 1
9.10 Interest Coverage Ratio. The Company will not, as at the
end of any fiscal quarter, permit the ratio, calculated as at the end of such
fiscal quarter for the four fiscal quarters then ended, of (i) EBITDA for such
period to (ii) Interest Expense for such period to be less than the ratio set
forth below for the period in which such fiscal quarter ends:
Period Interest Coverage Ratio
From the Closing Date
through December 31, 1996 1.80 to 1
From January 1, 1997
through December 31, 1997 1.80 to 1
From January 1, 1998
through September 30, 1998 1.90 to 1
From October 1, 1998
through December 31, 1998 2.00 to 1
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From January 1, 1999
through June 30, 1999 2.00 to 1
From July 1, 1999
through December 31, 1999 2.25 to 1
From January 1, 2000
through June 30, 2000 2.35 to 1
From July 1, 2000
through December 31, 2000 2.50 to 1
From January 1, 2001
and at all times thereafter 2.50 to 1
For purposes of calculating any ratio set forth in this
Section, if the Company elects pursuant to the penultimate sentence of the
definition of EBITDA to include in EBITDA for the period to which such ratio
relates the pro forma amounts referred to in such sentence, there shall be
included in Interest Expense for such period, on a pro forma basis, interest
accruing during such period on Indebtedness (and the interest portion of
payments under Capitalized Lease Obligations) assumed or incurred by the Company
and its Subsidiaries (on a consolidated basis) in connection with any Permitted
Acquisition having Acquisition Consideration of more than $750,000 during such
period.
9.11 Fixed Charges Coverage Ratio. The Company will not, as at
the end of any fiscal quarter, permit the ratio, calculated as at the end of
such fiscal quarter for the four fiscal quarters then ended, of (i) Adjusted
EBITDA for such period to (ii) Fixed Charges for such period to be less than the
ratio set forth below for the period in which such fiscal quarter ends:
Fixed Charges
Period Coverage Ratio
From the Closing Date
through December 31, 1996 1.20 to 1
From January 1, 1997
through December 31, 1997 1.20 to 1
From January 1, 1998
through December 31, 1998 1.20 to 1
From January 1, 1999
through December 31, 1999 1.40 to 1
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From January 1, 2000
through December 31, 2000 1.75 to 1
From January 1, 2001
and at all times thereafter 1.75 to 1
For purposes of calculating any ratio set forth in this
Section, if the Company elects pursuant to the penultimate sentence of the
definition of EBITDA to include in EBITDA for the period to which such ratio
relates the pro forma amounts referred to in such sentence, there shall be
included in Fixed Charges for such period, on a pro forma basis, principal
payable and interest accruing during such period on Indebtedness (and the
interest portion of payments under Capitalized Lease Obligations) assumed or
incurred by the Company and its Subsidiaries (on a consolidated basis) in
connection with any Permitted Acquisition having Acquisition Consideration of
more than $750,000 during such period.
9.12 Mergers, Asset Dispositions, Etc. Except as expressly
permitted by Section 9.04, the Company will not, and will not permit any of its
Subsidiaries to, be a party to any merger or consolidation, or sell, lease,
assign, transfer or otherwise dispose of any assets, or acquire assets from any
Person, except:
(i) dispositions and acquisitions of inventory in
the ordinary course of business;
(ii) dispositions of worn out or obsolete tools or equipment
no longer used or useful in the business of the Company and its
Subsidiaries, provided that no single disposition of tools or equipment
shall have a fair market value (determined in good faith by the Company
at the time of such disposition) in excess of $1,000,000;
(iii) Capital Expenditures to the extent permitted
under Section 9.19 hereof;
(iv) acquisitions of Investments permitted under Section
9.14 hereof and dispositions thereof (other than (x) dispositions of
Investments in any Subsidiary of the Company not otherwise permitted
hereunder and (y) dispositions of Investments referred to in clause
(viii) of said Section 9.14);
(v) other dispositions of assets during any fiscal year
having an aggregate fair market value (determined in good faith at the
time of such disposition by the Board of Directors of the Company) not
exceeding $5,000,000 in
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respect of Qualifying Sale-Leaseback Transactions or
$5,000,000 in respect of all other dispositions;
(vi) subject to compliance with the provisions of Section
9.22(b) hereof, the sale, lease, assignment, transfer or other
disposition of any assets by any Subsidiary of the Company to the
Company or any Wholly-Owned Subsidiary thereof;
(vii) Large Volume Account Capitalized Expenditures;
and
(viii) so long as no Default shall have occurred or be
continuing hereunder at the time of such Acquisition, Permitted
Acquisitions and related Additional Expenditures.
For purposes of this Section 9.12, "Permitted Acquisition"
shall mean Acquisitions complying with the following:
(a) Maximum Periodic Consideration. Without the consent of the
Majority Lenders, the aggregate amount of Acquisition Consideration
paid in respect of Acquisitions shall not exceed $75,000,000 in any
Calculation Period (provided that the aggregate amount of Acquisition
Consideration (excluding, for purposes of this proviso, Stock
Consideration) paid in respect of Acquisitions shall not exceed
$50,000,000 in any Calculation Period).
(b) Maximum Individual Consideration. Without the
consent of the Majority Lenders, the Acquisition
Consideration payable in respect of any single Acquisition
or series of related Acquisitions shall not exceed
$30,000,000.
(c) Lines of Business, Etc. All such Acquisitions shall be of
assets relating to the records management business (or of 100% of the
stock of corporations whose assets consist substantially of such
assets) or through the merger of such a corporation into a Subsidiary
of the Company, which shall be the surviving corporation.
For purposes of this definition, any deferred non-contingent consideration
payable in respect of an Acquisition shall be discounted to net present value at
the rate of 10% per annum.
9.13 Liens. The Company will not, and will not permit any of
its Subsidiaries to, create or suffer to exist any Lien upon any property or
assets, now owned or hereafter acquired, securing any Indebtedness or other
obligation, except: (i) the Liens created pursuant to the Security Documents;
(ii) the Liens
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existing on the Closing Date set forth in Schedule IV and Liens arising out of
the refinancing, extension, renewal or refunding of any Indebtedness secured by
any Lien set forth on Schedule IV, provided that the principal amount of such
Indebtedness is not increased and is not secured by any additional assets; (iii)
Liens contemplated by clauses (ii), (iv) and (v) of the definition of Permitted
Indebtedness; (iv) attachment, judgment or other similar Liens arising in
connection with litigation or other legal proceedings, provided that either (A)
the claims in respect of such Liens are fully covered by insurance or (B) the
execution or other enforcement of such Liens is effectively stayed and the
claims secured thereby are in an amount not to exceed $1,000,000 in the
aggregate and are being contested in good faith by appropriate proceedings
diligently prosecuted; (v) Liens on properties or assets of an Excluded
Subsidiary securing Indebtedness of such Excluded Subsidiary permitted
hereunder; and (vi) other Liens arising in the ordinary course of the business
of the Company or such Subsidiary which are not incurred in connection with the
borrowing of money or the obtaining of advances or credit and which do not
materially detract from the value of its property or assets or materially impair
the use thereof in the operation of its business.
9.14 Investments. The Company will not, and will not permit
any of its Subsidiaries to, directly or indirectly, make or permit to remain
outstanding any advances, loans or other extensions of credit or capital
contributions (other than prepaid expenses in the ordinary course of business)
to (by means of transfers of property or assets or otherwise), or purchase or
own any stocks, bonds, notes, debentures or other securities of, any Person (all
such transactions being herein called "Investments"), except:
(i) operating deposit accounts with any bank or
financial institution;
(ii) Liquid Investments (including Liquid Investments in the
name and under the control of the Administrative Agent (or a collateral
sub-agent for the Administrative Agent) as contemplated by the Security
Documents);
(iii) subject to Section 9.16 hereof, Investments in accounts
and chattel paper as defined in the Uniform Commercial Code) and notes
receivable acquired in the ordinary course of business as presently
conducted;
(iv) Investments in an insurer required as a condition to the
provision by such insurer of insurance coverage contemplated by Section
9.03; provided that the aggregate amount of Investments outstanding
pursuant to this
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clause (iv) during the term of this Agreement shall not
exceed $1,500,000;
(v) (x) equity Investments in Wholly-Owned Subsidiaries of the
Company, (y) additional equity Investments in Subsidiaries of the
Company (other than Wholly-Owned Subsidiaries) with the prior written
consent of the Majority Lenders, and (z) Investments in the form of
loans, advances or other obligations owed by any Wholly-Owned
Subsidiary to the Company, and Investments in the form of loans,
advances or other obligations owed by the Company to any Wholly-Owned
Subsidiary; provided that the aggregate amount of Investments by the
Company permitted by subclauses (x) or (z) of this clause (v) in any
Subsidiary of the Company that is a mortgagor under any Permitted
Mortgage shall not exceed, in the aggregate for all such Subsidiaries,
$10,000,000 at any one time outstanding;
(vi) Investments consisting of loans or advances to officers
and directors of the Company and its Subsidiaries in an amount not to
exceed $350,000 in the aggregate during any fiscal year (and in any
event not to exceed $750,000 at any one time outstanding) and loans or
advances made to employees of the Company to permit such employees to
exercise options to purchase Capital Stock of the Company;
(vii) (x) Investments in Persons that are not Subsidiaries or
Affiliates of the Company, (y) Investments in Excluded Subsidiaries,
and guarantees by the Company of Indebtedness of Excluded Subsidiaries
to the extent such Indebtedness is permitted hereunder and (z) other
Investments in Subsidiaries of the Company (to the extent such
Investments are not permitted under clause (v) of this Section 9.14);
provided that the aggregate outstanding amount of Investments made
pursuant to this clause (vii) shall not at any time exceed $5,000,000;
(viii) Investments consisting of Permitted
Acquisitions under Section 9.12 hereof;
(ix) subject to Section 9.16 hereof and on terms and pursuant
to documentation in all respects reasonably satisfactory to the
Administrative Agent, Investments in Affiliates of the Company (which
are not Wholly-Owned Subsidiaries of the Company) to facilitate the
construction or acquisition of records management facilities including,
without limitation, the acquisition of real estate for development
purposes; and
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(x) subordinated Guarantees of Senior Subordinated
Debt by Subsidiaries of the Company pursuant to the Senior
Subordinated Debt Documents.
9.15 Restricted Payments. The Company will not, and
will not permit any of its Subsidiaries to, declare or make any
Restricted Payment, except that the Company may:
(i) provided that no Default has occurred and is continuing,
purchase shares of any class of Capital Stock, or options to purchase
such shares, of the Company from employees or former employees of the
Company or its Subsidiaries in amounts not to exceed $500,000 in any
fiscal year and $1,000,000 in the aggregate after the Closing Date;
(ii) make additional Restricted Payments constituting the
purchase, redemption, retirement or other acquisition of shares of any
class of Capital Stock of the Company (such Restricted Payments, "Stock
Repurchases"), subject to the satisfaction of each of the following
conditions on the date of such Stock Repurchase and after giving effect
thereto:
(a) no Default shall have occurred and be
continuing; and
(b) the aggregate amount of Stock Repurchases made
during each period set forth in the schedule below shall not
exceed the amount set forth below opposite such period:
Cumulative
Period Amount
From the Closing Date to and
including December 31, 1997 $ 5,000,000
From the Closing Date to and
including December 31, 1998 $10,000,000
From the Closing Date to and
including December 31, 1999 $15,000,000
In addition, the aggregate amount of all Stock Repurchases made after
the Closing Date shall not in any event exceed $20,000,000.
Nothing herein shall be deemed to prohibit the payment of dividends by any
Subsidiary of the Company to the Company or to any other Subsidiary of the
Company.
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9.16 Transactions with Affiliates. Except as otherwise
expressly permitted by this Agreement, the Company will not, and will not permit
any of its Subsidiaries to, directly or indirectly:
(i) make any Investment in an Affiliate of the
Company;
(ii) transfer, sell, lease, assign or otherwise
dispose of any assets to an Affiliate of the Company;
(iii) merge into or consolidate with or purchase or
acquire assets from an Affiliate of the Company; or
(iv) enter into any other transaction directly or indirectly
with or for the benefit of an Affiliate of the Company (including,
without limitation, guarantees and assumptions of obligations of an
Affiliate of the Company);
provided that (a) any Affiliate of the Company who is an individual may serve as
a director, officer or employee of the Company and receive reasonable
compensation or indemnification in connection with his or her services in such
capacity; (b) the Company or a Subsidiary of the Company may enter into any
transaction with an Affiliate of the Company providing for the leasing of
property, the rendering or receipt of services or the purchase or sale of
inventory and other assets in the ordinary course of business if the monetary or
business consideration arising therefrom would be substantially as advantageous
to the Company or such Subsidiary as the monetary or business consideration
which would obtain in a comparable arm's length transaction with a Person
similarly situated to the Company but not an Affiliate of the Company; and (c)
the Company may make Investments in Affiliates permitted by Section 9.14(ix)
hereof and may create Residual Assurances for the benefit of an Affiliate
permitted by Section 9.24 hereof in either case in connection with the
construction and/or acquisition of records management facilities to be leased to
the Company or a Subsidiary, so long as, taking such transaction as a whole
(giving effect to such Investment or Residual Assurance, and the lease of such
facility to the Company or such Subsidiary) such Affiliate is not
disproportionately benefitted.
9.17 Subordinated Indebtedness. The Company will not, nor will
it permit any of its Subsidiaries to, purchase, redeem, retire or otherwise
acquire for value, or set apart any money for a sinking, defeasance or other
analogous fund for the purchase, redemption, retirement or other acquisition of,
or make any voluntary payment or prepayment of the principal of or interest on,
or any other amount owing in respect of, any Subordinated Indebtedness, except
for:
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(i) regularly scheduled payments or prepayments of principal
and interest in respect thereof required pursuant to the instruments
evidencing such Subordinated Indebtedness; and
(ii) so long as no Default has occurred and is continuing,
scheduled payments of principal of (not to exceed $2,000,000 during
each fiscal year of the Company) and interest on, and expenses and
indemnities incurred in connection with, Additional Subordinated
Indebtedness.
9.18 Lines of Businesses. Neither the Company nor any of its
Subsidiaries shall engage to any substantial extent in any business activity
other than the records management business or activities related thereto.
9.19 Capital Expenditures. The Company will not permit the
aggregate amount of Capital Expenditures made in any fiscal year of the Company
to exceed $25,000,000. If the aggregate amount of Capital Expenditures for any
fiscal year shall be less than the amount permitted to be made in such fiscal
year, then the shortfall shall be added to the amount of Capital Expenditures
permitted for the immediately succeeding fiscal year.
9.20 Modification of Other Agreements. The Company will not
request or consent to any modification, supplement or waiver of any of the
provisions of any instrument or document evidencing or governing Subordinated
Indebtedness except on terms and pursuant to documentation in all respects
reasonably satisfactory to the Administrative Agent.
9.21 Interest Rate Protection. The Company shall at
all times maintain a program reasonably acceptable to the
Administrative Agent providing for the hedging or mitigation of
interest rate risk.
9.22 Certain Obligations Respecting Subsidiaries.
(a) The Company will, and will cause each of its Subsidiaries
to, take such action from time to time as shall be necessary to ensure that the
Company and each of its Subsidiaries at all times owns (subject only to the Lien
of the Security Documents) all of the issued and outstanding shares of each
class of Capital Stock of each of such Person's Subsidiaries (other than, in
each case, Capital Stock of Excluded Subsidiaries). Without limiting the
generality of the foregoing, the Company shall not, and shall not permit any of
its Subsidiaries to, sell, transfer or otherwise dispose of any shares of stock
in any Subsidiary (other than an Excluded Subsidiary) owned by them, nor permit
any Subsidiary of the Company (other than an Excluded
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Subsidiary) to issue any shares of Capital Stock of any class whatsoever to any
Person (other than to the Company or to another Wholly-Owned Subsidiary or
pursuant to Section 9.12 hereof). In the event that any such additional shares
of Capital Stock shall be issued by any Subsidiary of the Company, the Company
agrees forthwith to deliver to the Administrative Agent pursuant to the Security
Documents the certificates evidencing such shares of stock, accompanied by
undated stock powers executed in blank and shall take such other action as the
Administrative Agent shall request to perfect the security interest created
therein pursuant to the Security Documents.
(b) The Majority Lenders shall have the right from time to
time to require the Company, pursuant to a written request from the
Administrative Agent, to cause such Subsidiaries of the Company as may be
specified in such request to become parties to the Subsidiary Guaranty or to
execute and deliver such other guaranties, in form and substance satisfactory to
the Majority Lenders, guaranteeing payment of the Company's obligations
hereunder. Any such request shall be made by the Majority Lenders in the good
faith and reasonable exercise of their discretion. Within 30 days after any such
request, the Company shall, and shall cause the appropriate Subsidiaries of the
Company to, (i) execute and deliver to the Administrative Agent such number of
copies as the Administrative Agent may specify of documents creating such
guaranties and (ii) do all other things which may be necessary or which the
Administrative Agent may reasonably request in order to confer upon and confirm
to the Lenders the benefits of such security.
(c) Notwithstanding anything to the contrary in this
Section 9.22, if:
(x) the obligations of an Excluded Subsidiary under
the Subsidiary Guaranty; or
(y) the pledge by the Company or any of its
Subsidiaries of more than 66% of the aggregate Voting Stock
of an Excluded Subsidiary
would, as determined in a resolution of the Board of Directors of the Company
delivered to the Administrative Agent, create a tax disadvantage that is
material in relation to the aggregate amount of the Investment or proposed
Investment therein by the Company and its Subsidiaries, then:
(I) such Excluded Subsidiary shall not be required to be or
become a party to the Subsidiary Guaranty or otherwise Guarantee the
obligations of the Company hereunder; and
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(II) the Company and its Subsidiaries shall not be required to
pledge more than 66% of the aggregate Voting Stock of such Excluded
Subsidiary to the Administrative Agent under the Security Documents.
(d) The Company will not permit any of its Subsidiaries (other
than Excluded Subsidiaries) to enter into, after the date hereof, any indenture,
agreement, instrument or other arrangement (other than the Senior Subordinated
Debt Indenture) that, directly or indirectly, prohibits or restrains, or has the
effect of prohibiting or restraining, or imposes materially adverse conditions
upon, the incurrence or payment of Indebtedness, the granting of Liens, the
declaration or payment of dividends, the making of loans, advances or
Investments or the sale, assignment, transfer or other disposition of Property.
9.23 Environmental Matters. The Company will promptly give to
the Lenders notice in writing of any complaint, order, citation, notice or other
written communication from any Person with respect to, or if the Company becomes
aware after due inquiry of, (i) the existence or alleged existence of a
violation of any applicable Environmental Law or the incurrence of any
liability, obligation, remedial action, loss, damage, cost, expense, fine,
penalty or sanction resulting from any air emission, water discharge, noise
emission, asbestos, Hazardous Substance or any other environmental, health or
safety matter at, upon, under or within any property now or previously owned,
leased, operated or used by the Company or any of its Subsidiaries or any part
thereof, or due to the operations or activities of the Company, any Subsidiary
or any other Person on or in connection with such property or any part thereof
(including receipt by the Company or any Subsidiary of any notice of the
happening of any event involving the Release or cleanup of any Hazardous
Substance), (ii) any Release on such property or any part thereof in a quantity
that is reportable under any applicable Environmental Law, (iii) the
commencement of any cleanup pursuant to or in accordance with any applicable
Environmental Law of any Hazardous Substances on or about such property or any
part thereof and (iv) any pending or threatened proceeding for the termination,
suspension or non-renewal of any permit required under any applicable
Environmental Law, in each of the cases (i), (ii), (iii) and (iv), (x) which
could result in liability or expenses in excess of $1,000,000 or (y) which
individually or in the aggregate could have a Material Adverse Effect.
9.24 Residual Assurances. The Company will not, and will not
permit any of its Subsidiaries to, create, incur or suffer to exist any Residual
Assurances, except that (notwithstanding Sections 9.08 and 9.14) the Company may
create a Residual Assurance with respect of the construction or
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acquisition of any records management facility by any Affiliate of the Company
so long as (a) the maximum liability of the Company in respect of such Residual
Assurance does not exceed 15% of the fair market value (as determined in good
faith by the Board of Directors of the Company) of the completed records
management facility, and (b) the maximum liability of the Company in respect of
all Residual Assurances does not exceed $3,000,000 in the aggregate.
Section 10. Defaults.
10.01 Events of Default. If one or more of the following
events (herein called "Events of Default") shall occur and be continuing:
(a) default in the payment of any principal of or
interest on any Loan, any Reimbursement Obligation or any
other amount payable hereunder when due; or
(b) the Company or any of its Subsidiaries shall default in
the payment when due of any principal of or interest on any
Indebtedness having an outstanding principal amount of at least
$1,000,000 (other than the Loans); or any event or condition shall
occur which results in the acceleration of the maturity of any such
Indebtedness or enables (or, with the giving of notice or lapse of time
or both, would enable) the holder of any such Indebtedness or any
Person acting on such holder's behalf to accelerate the maturity
thereof; or
(c) any representation or warranty made or deemed made by the
Company or any Subsidiary Guarantor in any Basic Document, or in any
certificate or financial information furnished to any Lender or the
Administrative Agent pursuant to the provisions of any Basic Document,
shall prove to have been false or misleading in any material respect as
of the time made or furnished; or
(d) (i) the Company shall default in the performance of any of
its obligations under Sections 9.08 through 9.24 hereof; (ii) any
Subsidiary Guarantor shall default in the performance of any of its
obligations under the Subsidiary Guaranty beyond any applicable grace
period; (iii) the Company or any Subsidiary Guarantor shall default in
the performance of any of its other obligations in any Basic Document,
and such default described in this subclause (iii) shall continue
unremedied for a period of 25 days after notice thereof to the Company
by the Administrative Agent or the Majority Lenders (through the
Administrative Agent); or
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(e) the Company or any of its Subsidiaries shall admit
in writing its inability to, or be generally unable to, pay
its debts as such debts become due; or
(f) the Company or any of its Subsidiaries shall (i) apply for
or consent to the appointment of, or the taking of possession by, a
receiver, custodian, trustee or liquidator of itself or of all or a
substantial part of its property, (ii) make a general assignment for
the benefit of its creditors, (iii) commence a voluntary case under the
Bankruptcy Code, (iv) file a petition seeking to take advantage of any
other law relating to bankruptcy, insolvency, reorganization,
winding-up, or composition or readjustment of debts, (v) fail to
controvert in a timely and appropriate manner, or acquiesce in writing
to, any petition filed against it in an involuntary case under the
Bankruptcy Code, or (vi) take any corporate action for the purpose of
effecting any of the foregoing; or
(g) a proceeding or case shall be commenced, without the
application or consent of the Company or any of its Subsidiaries in any
court of competent jurisdiction, seeking (i) its liquidation,
reorganization, dissolution or winding-up, or the composition or
readjustment of its debts, (ii) the appointment of a trustee, receiver,
custodian, liquidator or the like of such Person or of all or any
substantial part of its assets, or (iii) similar relief in respect of
such Person under any law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or adjustment of debts, and
such proceeding or case shall continue undismissed, or an order,
judgment or decree approving or ordering any of the foregoing shall be
entered and continue unstayed and in effect, for a period of 60 days;
or an order for relief against such Person shall be entered in an
involuntary case under the Bankruptcy Code; or
(h) a final judgment or judgments for the payment of money
shall be rendered by a court or courts against the Company or any of
its Subsidiaries in excess of $500,000 in the aggregate, and the same
shall not be discharged (or provision shall not be made for such
discharge), or a stay of execution thereof shall not be procured,
within 30 days from the date of entry thereof, or the Company or such
Subsidiary shall not, within said period of 30 days, or such longer
period during which execution of the same shall have been stayed,
appeal therefrom and cause the execution thereof to be stayed during
such appeal; or
(i) the Company or any member of the Controlled Group shall
fail to pay when due an amount or amounts aggregating in excess of
$500,000 which it shall have become liable to
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pay to the PBGC or to a Plan under Title IV of ERISA; or notice of
intent to terminate a Plan or Plans having aggregate Unfunded
Liabilities in excess of $500,000 shall be filed under Title IV of
ERISA by the Company or any member of the Controlled Group, any plan
administrator or any combination of the foregoing; or the PBGC shall
institute proceedings under Title IV of ERISA to terminate or to cause
a trustee to be appointed to administer any such Plan or Plans or a
proceeding shall be instituted by a fiduciary of any such Plan or Plans
against the Company or any member of the Controlled Group to enforce
Section 515 or 4219(c)(5) of ERISA; or a condition shall exist by
reason of which the PBGC would be entitled to obtain a decree
adjudicating that any such Plan or Plans must be terminated; or there
shall occur a complete or partial withdrawal from, or a default, within
the meaning of Section 4219(c)(5) of ERISA, with respect to, one or
more Multiemployer Plans which could cause the Company or one or more
members of the Controlled Group to incur a current payment obligation
in excess of $500,000; or
(j) without limiting the generality of clause (d) above, any
of the insurance required to be maintained (or caused to be maintained)
by the Company under Section 9.03 hereof shall be terminated and not
simultaneously replaced with other insurance satisfactory to the
Majority Lenders; or
(k) any Change of Control shall occur; or
(l) (i) any Security Document or the Subsidiary Guaranty shall
cease, for any reason, to be in full force and effect (other than as
provided therein) or any party thereto (other than the Lenders) shall
so assert in writing; or (ii) any Security Document shall cease to be
effective to grant a Lien on the collateral described therein with the
priority purported to be created thereby; or
(m) the Company and/or any Subsidiary of the Company has
incurred or incurs Environmental Liabilities (without duplication) in
excess of $5,000,000 in the aggregate at any time, which Environmental
Liabilities would, under GAAP, be reflected in the financial statements
(or the footnotes thereto) of the Company.
THEREUPON: the Administrative Agent may (and, if directed by the Majority
Lenders, shall) (a) declare the Commitments terminated (whereupon the
Commitments shall be terminated) and/or (b) declare the principal amount then
outstanding of and the accrued interest on the Loans, the Reimbursement
Obligations, and commitment fees and all other amounts payable hereunder and
under
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the Notes to be forthwith due and payable, whereupon such amounts shall be and
become immediately due and payable, without notice (including, without
limitation, notice of intent to accelerate), presentment, demand, protest or
other formalities of any kind, all of which are hereby expressly waived by the
Company; provided that in the case of the occurrence of an Event of Default with
respect to the Company referred to in clause (f) or (g) of this Section 10.01,
the Commitments shall be automatically terminated and the principal amount then
outstanding of and the accrued interest on the Loans, the Reimbursement
Obligations, and commitment fees and all other amounts payable hereunder and
under the Notes shall be and become automatically and immediately due and
payable, without notice (including, without limitation, notice of intent to
accelerate), presentment, demand, protest or other formalities of any kind, all
of which are hereby expressly waived by the Company.
In addition, upon the occurrence and during the continuance of
any Event of Default (if the Administrative Agent has declared the principal
amount then outstanding of, and accrued interest on, the Loans and all other
amounts payable by the Company hereunder and under the Notes to be due and
payable), the Company agrees that it shall, if requested by the Administrative
Agent or the Majority Lenders through the Administrative Agent (and, in the case
of any Event of Default referred to in clause (f) or (g) of this Section 10.01
with respect to the Company, forthwith, without any demand or the taking of any
other action by the Administrative Agent or such Lenders) provide cover for the
Letter of Credit Liabilities by paying to the Administrative Agent immediately
available funds in an amount equal to the then aggregate undrawn face amount of
all Letters of Credit, which funds shall be held by the Administrative Agent in
the Collateral Account as collateral security in the first instance for the
Letter of Credit Liabilities.
Section 11. The Administrative Agent.
11.01 Appointment, Powers and Immunities. Each Lender hereby
irrevocably appoints and authorizes the Administrative Agent to act as its agent
hereunder and under the other Basic Documents with such powers as are
specifically delegated to the Administrative Agent by the terms hereof and
thereof, together with such other powers as are reasonably incidental thereto.
The Administrative Agent (which term as used in this Section 11 shall include
reference to its affiliates and its own and its affiliates' officers, directors,
employees and agents): (a) shall have no duties or responsibilities except those
expressly set forth in this Agreement and the other Basic Documents, and shall
not by reason of this Agreement or any other
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Basic Document be a trustee for any Lender; (b) shall not be responsible to the
Lenders for any recitals, statements, representations or warranties contained in
this Agreement or any other Basic Document, or in any certificate or other
document referred to or provided for in, or received by any of them under, this
Agreement or any other Basic Document, or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Basic Document or any other document referred to or provided for
herein or therein or for any failure by the Company or any of the Subsidiary
Guarantors or any other Person to perform any of its obligations hereunder or
thereunder; (c) shall not be required to initiate or conduct any litigation or
collection proceedings hereunder or under any other Basic Document except to the
extent requested by the Majority Lenders; and (d) shall not be responsible for
any action taken or omitted to be taken by it hereunder or under any other Basic
Document or any other document or instrument referred to or provided for herein
or therein or in connection herewith or therewith, except for its own gross
negligence or willful misconduct. The Administrative Agent may employ agents and
attorneys-in-fact and shall not be responsible for the negligence or misconduct
of any such agents or attorneys-in-fact selected by it with reasonable care.
11.02 Reliance by Administrative Agent. The Administrative
Agent shall be entitled to rely upon any certification, notice or other
communication (including any thereof by telephone, telex, telegram or cable)
believed by it to be genuine and correct and to have been signed or sent by or
on behalf of the proper Person or Persons, and upon advice and statements of
legal counsel, independent accountants and other experts selected by the
Administrative Agent. As to any matters not expressly provided for by this
Agreement or any other Basic Document, the Administrative Agent shall in all
cases be fully protected in acting, or in refraining from acting, hereunder and
thereunder in accordance with instructions signed by the Majority Lenders and
such instructions of the Majority Lenders and any action taken or failure to act
pursuant thereto shall be binding on all of the Lenders.
11.03 Defaults. The Administrative Agent shall not be deemed
to have knowledge of the occurrence of a Default unless the Administrative Agent
has received notice from a Lender or the Company specifying such Default and
stating that such notice is a "Notice of Default". In the event that the
Administrative Agent receives such a notice of the occurrence of a Default, the
Administrative Agent shall give prompt notice thereof to the Lenders. The
Administrative Agent shall (subject to Section 11.07 hereof) take such action
with respect to such Default as shall be directed by the Majority Lenders,
provided that, unless and until the Administrative Agent shall have
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received such directions, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default as it shall deem advisable in the best interests of the Lenders.
The Administrative Agent shall deliver to the Lenders a copy of any written
declaration made pursuant to the last paragraph of Section 10.01 hereof.
11.04 Rights as a Lender. With respect to its Commitments and
the Loans made by it, Chase in its capacity as a Lender hereunder shall have the
same rights and powers hereunder as any other Lender and may exercise the same
as though it were not acting as the Administrative Agent and the term "Lender"
or "Lenders" shall, unless the context otherwise indicates, include the
Administrative Agent in its individual capacity. The Administrative Agent may
(without having to account therefor to any Lender) accept deposits from, lend
money to and generally engage in any kind of banking, trust or other business
with the Company and the Subsidiary Guarantors (and their respective Affiliates)
as if it were not acting as the Administrative Agent, and the Administrative
Agent may accept fees and other consideration from the Company (in addition to
the agency fees and arrangement fees heretofore agreed to between the Company
and the Administrative Agent) for services in connection with this Agreement or
otherwise without having to account for the same to the Lenders.
11.05 Indemnification. The Lenders agree to indemnify the
Administrative Agent (to the extent not reimbursed under Section 12.03 or 12.04
hereof, but without limiting the obligations of the Company under said Sections
12.03 and 12.04), ratably in accordance with the principal amount of their
respective Loans and Reimbursement Obligations outstanding, or if no Loans or
Reimbursement Obligations are outstanding, ratably in accordance with their
respective Commitments, for any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind and nature whatsoever which may be imposed on, incurred by or
asserted against the Administrative Agent in any way relating to or arising out
of this Agreement or any other Basic Document or any other documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby (including, without limitation, the costs and
expenses which the Company is obligated to pay under Sections 12.03 and 12.04
hereof but excluding, unless a Default has occurred and is continuing, normal
administrative costs and expenses incident to the performance of its agency
duties hereunder) or the enforcement of any of the terms hereof or thereof or of
any such other documents, provided that no Lender shall be liable for any of the
foregoing to the extent they arise from the gross negligence or willful
misconduct of the party to be indemnified.
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11.06 Non-Reliance on Administrative Agent and Other Lenders.
Each Lender agrees that it has, independently and without reliance on the
Administrative Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own credit analysis of the
Company and decision to enter into this Agreement and that it will,
independently and without reliance upon the Administrative Agent or any other
Lender, and based on such documents and information as it shall deem appropriate
at the time, continue to make its own analysis and decisions in taking or not
taking action under this Agreement or any of the other Basic Documents. The
Administrative Agent shall not be required to keep itself informed as to the
performance or observance by the Company and the Subsidiary Guarantors of this
Agreement or any of the other Basic Documents or any other document referred to
or provided for herein or therein or to inspect the properties or books of the
Company or any of the Subsidiary Guarantors. Except for notices, reports and
other documents and information expressly required to be furnished to the
Lenders by the Administrative Agent hereunder or the other Basic Documents, the
Administrative Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the affairs, financial
condition or business of the Company or any of the Subsidiary Guarantors (or any
of their affiliates) which may come into the possession of the Administrative
Agent.
11.07 Failure to Act. Except for action expressly required of
the Administrative Agent hereunder and under the other Basic Documents, the
Administrative Agent shall in all cases be fully justified in failing or
refusing to act hereunder and thereunder unless it shall receive further
assurances to its satisfaction by the Lenders of their indemnification
obligations under Section 11.05 hereof against any and all liability and expense
which may be incurred by it by reason of taking or continuing to take any such
action.
11.08 Resignation or Removal of Administrative Agent. Subject
to the appointment and acceptance of a successor Administrative Agent as
provided below, the Administrative Agent may resign at any time by giving notice
thereof to the Lenders and the Company and the Administrative Agent may be
removed at any time with or without cause by the Majority Lenders. Upon any such
resignation or removal the Majority Lenders shall have the right to appoint a
successor Administrative Agent reasonably acceptable to the Company. Upon any
such resignation or removal, the Administrative Agent that resigned or was
removed shall, to the extent that its annual agency fee was paid in advance, pay
to the Company an amount equal to such fee multiplied by a fraction the
numerator of which shall be the number of days remaining on the date of such
resignation or removal until the next anniversary of the Closing Date, and the
denominator of which
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shall be 365. If no successor Administrative Agent shall have been so appointed
by the Majority Lenders and shall have accepted such appointment within 30 days
after the retiring Administrative Agent's giving of notice of resignation or the
Majority Lenders' removal of the retiring Administrative Agent (the "Notice
Date"), then the retiring Administrative Agent may, on behalf of the Lenders,
appoint a successor Administrative Agent reasonably acceptable to the Company.
Any successor Administrative Agent shall be (i) a Lender or (ii) if no Lender
has accepted such appointment within 30 days after the Notice Date, a bank which
has an office in New York, New York with a combined capital and surplus of at
least $250,000,000. Upon the acceptance of any appointment as Administrative
Agent hereunder by a successor Administrative Agent, such successor
Administrative Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Administrative Agent, and
the retiring Administrative Agent shall be discharged from its duties and
obligations hereunder. After any retiring Administrative Agent's resignation or
removal hereunder as Administrative Agent, the provisions of this Section 11
shall continue in effect for its benefit in respect of any actions taken or
omitted to be taken by it while it was acting as the Administrative Agent.
11.09 Consents under Basic Documents. Without the prior
written consent of the Majority Lenders, the Administrative Agent will not
consent to any modification, supplement or waiver under any of the Basic
Documents or any of the other documents described in Section 9.20 hereof.
11.10 Collateral Sub-Agents. Each Lender by its execution and
delivery of this Agreement agrees, as contemplated by the Security Documents,
that, in the event it shall hold any Liquid Investments referred to therein,
such Liquid Investments shall be held in the name and under the control of such
Lender and such Lender shall hold such Liquid Investments as a collateral
sub-agent for the Administrative Agent thereunder.
Section 12. Miscellaneous.
12.01 Waiver. No failure on the part of the Administrative
Agent or any Lender to exercise and no delay in exercising, and no course of
dealing with respect to, any right, power or privilege under any Basic Document
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, power or privilege thereunder preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The remedies
provided in the Basic Documents are cumulative and not exclusive of any remedies
provided by law.
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12.02 Notices. All notices and other communications provided
for herein (including, without limitation, any modifications of, or waivers or
consents under, this Agreement) shall be given or made by telecopy or other
writing and telecopied, mailed or delivered to the intended recipient at the
"Address for Notices" specified below its name on Schedule II hereto; or, as to
any party, at such other address as shall be designated by such party in a
notice to the Company and the Administrative Agent given in accordance with this
Section 12.02. Except as otherwise provided in this Agreement, all such
communications shall be deemed to have been duly given when transmitted by
telecopier (and receipt is electronically confirmed), personally delivered or,
in the case of a mailed notice, upon receipt, in each case given or addressed as
aforesaid.
12.03 Expenses, Etc. The Company agrees to pay or reimburse
each of the Lenders and the Administrative Agent for paying: (a) the reasonable
fees and expenses of Milbank, Tweed, Hadley & McCloy, special counsel to the
Administrative Agent, in connection with (i) the preparation, execution and
delivery of this Agreement (including the Exhibits hereto) and the Security
Documents and the making of the Loans hereunder and (ii) any modification,
supplement or waiver of any of the terms of this Agreement or any other Basic
Document (including, without limitation, the amendment and restatement evidenced
hereby); (b) all reasonable costs and expenses of the Lenders and the
Administrative Agent (including reasonable counsels' fees in connection with the
enforcement of this Agreement or any other Basic Document or any bankruptcy,
insolvency or other proceedings); (c) all mortgage, intangible, transfer, stamp,
documentary or other similar taxes, assessments or charges levied by any
governmental or revenue authority in respect of this Agreement or any other
Basic Document or any other document referred to herein or therein; and (d) all
costs, expenses, taxes, assessments and other charges incurred in connection
with any filing, registration, recording or perfection of any security interest
contemplated by this Agreement, any Security Document or any document referred
to herein or therein.
12.04 Indemnification. The Company shall indemnify the
Administrative Agent, the Lenders and each affiliate thereof and their
respective directors, officers, employees and agents from, and hold each of them
harmless against, any and all losses, liabilities, claims or damages to which
any of them may become subject, insofar as such losses, liabilities, claims or
damages arise out of, relate to or result from any (i) Loan by any Lender
hereunder or (ii) breach by the Company of this Agreement or any other Basic
Document or (iii) any Environmental Liabilities (whether known or unknown) or
(iv) any investigation, litigation or other proceeding (including any threatened
investigation or
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proceeding) relating to the foregoing, and the Company shall reimburse the
Administrative Agent and each Lender, and each affiliate thereof and their
respective directors, officers, employees and agents, upon demand for any
reasonable expenses (including legal fees) incurred in connection with any such
investigation or proceeding; but excluding any such losses, liabilities, claims,
damages or expenses incurred by reason of the gross negligence or willful
misconduct of the Person to be indemnified.
12.05 Amendments, Etc. No amendment or waiver of any provision
of this Agreement or the Notes, nor any consent to any departure by the Company
therefrom, shall in any event be effective unless the same shall be agreed or
consented to by the Majority Lenders and the Company, and each such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given; provided that no amendment, waiver or consent shall,
unless in writing and signed by all the Lenders, do any of the following: (i)
increase any Commitment of any of the Lenders or subject the Lenders to any
additional obligations; (ii) reduce the principal of, or interest on, any Loan
or fees hereunder; (iii) postpone any date fixed for any payment of principal
of, or interest on, any Loan, or fee hereunder pursuant to Sections 2.03, 2.08,
4.01 or 4.02 hereof; (iv) change the percentage of any of the Commitments or of
the aggregate unpaid principal amount of any of the Loans, or the number of
Lenders, which shall be required for the Lenders or any of them to take any
action under this Agreement; (v) change any provision contained in Sections
2.07, 6, 7.01, 12.03 or 12.04 hereof or this Section 12.05 or Section 12.08
hereof; (vi) change any provision of Section 3.02(b) hereof; (vii) release all
or substantially all of the security for the obligations of the Company under
this Agreement or any Note; or (viii) release all or substantially all of the
Subsidiary Guarantors from their obligations under the Subsidiary Guaranty.
Notwithstanding anything in this Section 12.05 to the contrary, no amendment,
waiver or consent shall be made with respect to Section 11 without the consent
of the Administrative Agent.
12.06 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns except that the Company may not assign its rights or
obligations hereunder or under the Notes without the prior written consent of
all of the Lenders. Each Lender may assign all or a portion of its rights and
obligations under this Agreement and the Notes (i) to any affiliate thereof,
(ii) to any other Lender, (iii) with the consent of the Administrative Agent, of
the Issuing Bank and of the Company, which consents shall not be unreasonably
withheld, to any other bank or financial institution (provided that any such
partial assignment shall not, unless the Company and the
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Administrative Agent otherwise agree, be less than $5,000,000) or (iv) to a
Federal Reserve Bank. Upon execution by the assignor and the assignee of an
instrument pursuant to which the assignee assumes such rights and obligations,
payment by such assignee to such assignor of an amount equal to the purchase
price agreed between such assignor and such assignee and delivery to the
Administrative Agent and the Company of an executed copy of such instrument
together with payment by such assignee to the Administrative Agent of a
processing fee of $2,500, such assignee shall have, to the extent of such
assignment (unless otherwise provided therein), the same rights and benefits as
it would have if it were a Lender hereunder and the assignor shall be, to the
extent of such assignment (unless otherwise provided therein), released from its
obligations under this Agreement. Each Lender may (without the consent of any
other party to this Agreement) sell participations in all or any part of any
Loan or Loans made by it to another bank or other entity, in which event the
participant shall not have any rights under this Agreement (except as provided
in the next succeeding sentence hereof), or in the case of a Loan, such Lender's
Note (the participant's rights against such Lender in respect of such
participation to be those set forth in the agreement executed by such Lender in
favor of the participant relating thereto, which agreement shall not give the
participant the right to consent to any modification, amendment or waiver other
than one described in clause (i), (ii), (iii) or (vi) of Section 12.05 hereof).
The Company agrees that each participant shall be entitled to the benefits of
Sections 5.07 and 6 with respect to its participation; provided that no
participant shall be entitled to receive any greater amount pursuant to such
Sections than the transferor Lender would have been entitled to receive in
respect of the amount of the participation transferred by such transferor Lender
to such participant had no such transfer occurred. Each Lender may furnish any
information concerning the Company and its Subsidiaries in the possession of
such Lender from time to time to assignees and participants (including
prospective assignees and participants) which have agreed in writing to be bound
by the provisions of Section 12.07 hereof. The Administrative Agent and the
Company may, for all purposes of this Agreement, treat any Lender as the holder
of any Note drawn to its order (and owner of the Loans evidenced thereby) until
written notice of assignment, participation or other transfer shall have been
received by them from such Lender.
12.07 Confidentiality. Each Lender agrees to exercise all
reasonable efforts to keep any information delivered or made available by the
Company to it which has not been publicly disclosed confidential from anyone
other than persons employed or retained by such Lender who are or are expected
to become engaged in evaluating, approving, structuring or administering the
Loans; provided that nothing herein shall prevent any Lender from
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disclosing such information (i) to any other Lender, (ii) to its officers,
directors, employees, agents, attorneys and accountants who have a need to know
such information in accordance with customary banking practices and who receive
such information having been made aware of the restrictions set forth in this
Section, (iii) upon the order of any court or administrative agency, (iv) upon
the request or demand of any regulatory agency or authority having jurisdiction
over such Lender, (v) to the extent reasonably required in connection with any
litigation to which the Administrative Agent, any Lender, the Company, any
Subsidiary Guarantor or their respective affiliates may be a party, (vi) to the
extent reasonably required in connection with the exercise of any remedy
hereunder, (vii) to such Lender's legal counsel and independent auditors, and
(viii) to any actual or proposed participant or assignee of all or part of its
rights hereunder which has agreed in writing to be bound by the provisions of
this Section 12.07.
12.08 Survival. The obligations of the Company under Sections
6.01, 6.05, 6.06, 6.08, 12.03 and 12.04 hereof and the obligations of the
Lenders under Section 11.05 shall survive the repayment of the Loans and the
termination of the Commitments.
12.09 Captions. Captions and section headings appearing herein
are included solely for convenience of reference and are not intended to affect
the interpretation of any provision of this Agreement.
12.10 Counterparts; Integration. This Agreement may be
executed in any number of counterparts, all of which taken together shall
constitute one and the same instrument, and any of the parties hereto may
execute this Agreement by signing any such counterpart. This Agreement
constitutes the entire agreement and understanding among the parties hereto and
supersedes any and all prior agreements and understandings, oral and written,
relating to the subject matter hereof.
12.11 Additional Lenders. The Company, each of the Lenders and
the Administrative Agent may at any time agree to add one or more lenders to
this Agreement pursuant to an instrument in writing specifying such new lender's
Commitments (and the reduction in Commitments of the existing Lenders as a
result thereof in such manner as the Company, each of the Lenders and the
Administrative Agent agree) and under which such new lender would agree to be
bound by the provisions of this Agreement. Upon the execution of such instrument
(and the satisfaction of such conditions and other terms as shall therein be
specified) such additional lender or lenders shall be deemed a "Lender" or
"Lenders" for the purposes of this Agreement and shall enjoy all rights and
assume all obligations on the part of the Lenders set forth in this Agreement
and the Lenders whose Commitments are
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then being reduced shall be released from their Commitments to the extent of
such reduction.
12.12 GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF
JURY TRIAL. THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. THE COMPANY HEREBY SUBMITS TO
THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN NEW
YORK CITY FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. THE COMPANY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN
SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH OF THE COMPANY, THE ADMINISTRATIVE
AGENT AND THE LENDERS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY
JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered as of the day and year first above
written.
IRON MOUNTAIN INCORPORATED
By___________________________________
Title:
Address for Notices:
745 Atlantic Avenue
Boston, Massachusetts 02111
Attention: Eugene B. Doggett,
Executive Vice President
and Chief Financial Officer
Telecopy Number: (617) 350-7881
Copy to:
Sullivan & Worcester
One Post Office Square
Boston, Massachusetts 02109
Attention: Harry E. Ekblom, Jr.
Telecopy Number: (617) 338-2880
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THE LENDERS
THE CHASE MANHATTAN BANK
By________________________
Title:
[OTHERS]
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THE ADMINISTRATIVE AGENT
THE CHASE MANHATTAN BANK,
as Administrative Agent
By________________________
Title:
Address for Notices:
The Chase Manhattan Bank
Agent Bank Services Group
140 East 45th Street, 29th Floor
New York, New York 10017
Attention: Sandra Miklave
Telecopier No.: (212) 622-0122
Telephone No.: (212) 622-0004
Credit Agreement
EXHIBIT 21
LIST OF SUBSIDIARIES OF REGISTRANT
Subsidiary of Registrant
1. Iron Mountain Records Management, Inc.
State of incorporation -- Delaware
In California, also does business as Metro Records Management
Subsidiaries of Iron Mountain Records Management, Inc.
1. Metro Business Archives, Inc.
State of incorporation -- New York
Doing business as Metro Business Archives
2. Criterion Atlantic Property, Inc.
State of incorporation -- Delaware
3. Criterion Property, Inc.
State of incorporation -- Delaware
4. Hollywood Property, Inc.
State of incorportion -- California
5. IM San Diego, Inc.
State of incorporation -- Delaware
6. Iron Mountain Information Partners, Inc.
State of incorporation -- Delaware
7. Iron Mountain Data Protection Services, Inc.
State of incorporation -- Massachusetts
8. Iron Mountain Records Management of Maryland, Inc.
State of incorporation -- Delaware
9. Iron Mountain Records Management of Ohio, Inc.
State of incorporation -- Delaware
10. Iron Mountain Wilmington, Inc.
State of incorporation -- Delaware
11. Data Storage Systems, Inc.
State of incorporation -- Delaware
12. Iron Mountain Records Management of Missouri LLC
State of organization -- Delaware
13. Iron Mountain Records Management of Boston, Inc.
State of incorporation -- Massachusetts
14. Data Archive Services, Inc.
State of incorporation -- Delaware
