Filed Pursuant to Rule 424(b)(5)
Registraion No. 333-75068
PROSPECTUS SUPPLEMENT
(To Prospectus dated February 11, 2002)
$100,000,000
[LOGO]
IRON MOUNTAIN INCORPORATED
7 3/4% SENIOR SUBORDINATED NOTES DUE 2015
WE ARE OFFERING THE NOTES AT A TOTAL PURCHASE PRICE OF $100,000,000, OR 100.00%
OF THE PRINCIPAL AMOUNT OF THE NOTES. WE WILL RECEIVE $99,000,000, OR 99.00% OF
THE GROSS PROCEEDS FROM THE SALE OF THE NOTES, AFTER PAYING THE UNDERWRITERS'
DISCOUNTS AND COMMISSIONS OF $1,000,000, OR 1.00% OF THE GROSS PROCEEDS FROM THE
SALE OF THE NOTES, AND BEFORE PAYING EXPENSES ESTIMATED AT $600,000. SET FORTH
BELOW IS A SUMMARY OF THE TERMS OF THE NOTES OFFERED HEREBY. FOR MORE DETAILS,
SEE "DESCRIPTION OF THE NOTES."
/ / INTEREST
The notes have a fixed annual interest rate
of 7 3/4%, which will be paid every six
months on January 15 and July 15 commencing
July 15, 2003.
/ / MATURITY
January 15, 2015.
/ / GUARANTEES
If we cannot make payments on the notes when
they are due, our subsidiary guarantors must
make them instead. Not all of our
subsidiaries will be guarantors.
/ / RANKING
The notes and the guarantees are subordinated
to some of our current and future debts that
we are permitted to incur under the indenture
governing the notes. The notes will rank
equally with our and our subsidiary
guarantors' other senior subordinated
indebtedness.
If we or any guarantor goes into bankruptcy,
payments on the notes and the guarantees will
only be made after our senior debts or the
senior debts of such guarantor have been paid
in full.
/ / MANDATORY OFFER TO REPURCHASE
If we sell certain assets or experience
specific kinds of changes in control, we must
offer to repurchase the notes.
/ / OPTIONAL REDEMPTION
We may, at our option, redeem the notes at
any time prior to January 15, 2008 at the
make-whole price set forth in this prospectus
supplement. We may, at our option, redeem the
notes at any time after January 15, 2008 at
the prices set forth under "Description of
the Notes."
Prior to January 15, 2006 we may redeem up to
35% of the notes with the proceeds of certain
types of offerings of our equity.
THIS INVESTMENT INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING ON PAGE S-7 OF THIS
PROSPECTUS SUPPLEMENT AND ON PAGE 2 OF THE ACCOMPANYING PROSPECTUS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY REGULATORY BODY HAS
APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR
ACCURACY OF THIS PROSPECTUS SUPPLEMENT. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
BEAR, STEARNS & CO. INC. EXPECTS TO DELIVER THE NOTES TO PURCHASERS ON
DECEMBER 30, 2002.
------------------------
BEAR, STEARNS & CO. INC.
THE DATE OF THIS PROSPECTUS SUPPLEMENT IS DECEMBER 16, 2002.
PROSPECTUS SUPPLEMENT SUMMARY
THIS SUMMARY HIGHLIGHTS INFORMATION CONTAINED ELSEWHERE IN THIS PROSPECTUS
SUPPLEMENT. THIS SUMMARY IS NOT COMPLETE AND DOES NOT CONTAIN ALL OF THE
INFORMATION THAT YOU SHOULD CONSIDER BEFORE INVESTING IN THE NOTES.
IRON MOUNTAIN
We are the leader in records and information management services. We are an
international, full-service provider of records and information management and
related services, enabling customers to outsource these functions. We have a
diversified customer base, which includes more than half of the Fortune 500 and
numerous commercial, legal, banking, healthcare, accounting, insurance,
entertainment and government organizations. We provide storage for all major
media, including paper, which is the dominant form of records storage; magnetic
media, including computer tapes, microfilm and microfiche; master audio and
video tapes; film and optical disks; X-rays and blueprints. We provide
storage-related services to our storage customers including courier pick-up and
delivery, filing, retrieval and destruction of records, database management,
customized reporting and disaster recovery support. We also sell storage
materials, including cardboard boxes and magnetic media, and provide
confidential destruction, consulting, facilities management, fulfillment and
other outsourcing services.
Iron Mountain was founded in 1951 in an underground facility near Hudson,
New York. Now in our 51st year, we have experienced tremendous growth and
organizational change, particularly since successfully completing the initial
public offering of our common stock in February 1996. Over the period of time
from 1996, we have built ourself from a regional business with limited product
offerings and revenues of $104 million in 1995 into the global leader in records
and information management services. For the year ended December 31, 2001 and
the nine months ended September 30, 2002, we had total revenues of $1.2 billion
and $1.0 billion, respectively. As of September 30, 2002, we provided services
to over 150,000 customer accounts in 81 markets in the United States and 44
markets outside of the United States. We employ over 11,000 people and operate
more than 650 records management facilities in the United States, Canada, Europe
and Latin America.
FINANCIAL CHARACTERISTICS OF OUR BUSINESS
Our financial model is based on the recurring nature of our revenues. The
historical predictability of this revenue stream and the resulting EBITDA
(earnings from continuing operations before interest, taxes, depreciation and
amortization) and Adjusted EBITDA(1) allow us to operate with a high degree of
financial leverage. Our primary financial goal has always been, and continues to
be, to increase consolidated Adjusted EBITDA in relation to capital invested,
even as our focus has shifted from growth through acquisitions to internal
revenue growth. Adjusted EBITDA is a source of funds for investment in continued
growth and for servicing indebtedness.
------------------------
1 We define Adjusted EBITDA as EBITDA adjusted for extraordinary items, other
income (expense), merger- related expenses, stock option compensation
expense and minority interest. Merger-related expenses are primarily those
expenses directly related to our merger with Pierce Leahy Corp. that cannot
be capitalized and include severance and pay-to-stay payments, costs of
exiting certain facilities, system conversion costs and other
transaction-related costs. Stock option compensation expense represents a
non-cash charge resulting from the acceleration and extension of previously
granted stock options as part of separation agreements with certain
executives.
Adjusted EBITDA and Adjusted EBITDA-based calculations are used by the
holders of our publicly issued debt as important criteria for evaluating our
business and, as a result, all of our bond indentures contain covenants in
which Adjusted EBITDA-based calculations are used as the primary measure of
financial performance. In addition, we use Adjusted EBITDA as the basis for
evaluating the performance of and allocating resources to our internal
operating segments. However, neither EBITDA nor Adjusted EBITDA are
measurements of financial performance under generally accepted accounting
principles and you should not consider EBITDA or Adjusted EBITDA to be
substitutes for operating or net income (as determined in accordance with
generally accepted accounting principles, or GAAP) as indicators of our
performance or to cash flow from operations (as determined in accordance
with GAAP) as measures of liquidity.
S-1
Our business has the following financial characteristics:
- RECURRING REVENUES. We derive a majority of our consolidated revenues from
fixed periodic, usually monthly, fees charged to customers based on the
volume of records stored. Our revenues from these fixed periodic fees have
grown for 55 consecutive quarters. Once a customer places paper records in
storage with us and until those records are destroyed or permanently
removed, for which we typically receive a service fee, we receive
recurring payments for storage fees without incurring additional labor or
marketing expenses or significant capital costs. Similarly, contracts for
the storage of electronic back-up media consist primarily of fixed monthly
payments. Over each of the last five years, storage revenues, which are
stable and recurring, have accounted for approximately 60% of our total
revenues. This stable and growing storage base also provides the
foundation for increases in revenues, EBITDA and Adjusted EBITDA.
- HISTORICALLY NON-CYCLICAL BUSINESS. We have not experienced any
significant reductions in our storage business as a result of past general
economic downturns, although we can give no assurance that this would be
the case in the future. During this most recent economic slowdown some
customers delayed or postponed expenditures for certain complementary
records management projects. Additionally, the rate at which customers
added new cartons to their inventory with us slowed somewhat, which may be
a result of current economic conditions. We believe that companies that
have outsourced records and information management services are less
likely during economic downturns to incur the move-out costs and other
expenses associated with switching vendors or moving records and
information management services in-house. However, some customers may
cancel or delay certain non-recurring service projects as a means of
reducing their short-term costs.
- INHERENT GROWTH FROM EXISTING PAPER RECORDS CUSTOMERS. Our paper records
customers have on average generated additional Cartons(2) at a faster rate
than stored Cartons have been destroyed or permanently removed. From
January 1, 1996 through December 31, 2001, our annual Net Carton Growth
From Existing Customers(3) ranged from approximately 4% to approximately
6%. For the twelve months ended September 30, 2002, Net Carton Growth from
Existing Customers was between 3% and 4%. We believe the consistent growth
of our paper storage revenues is the result of a number of factors,
including: (1) the trend toward increased records retention; (2) customer
satisfaction with our services; and (3) the costs and inconvenience of
moving storage operations in-house or to another provider of records and
information management services.
- DIVERSIFIED AND STABLE CUSTOMER BASE. As of September 30, 2002, we had
over 150,000 customer accounts in a variety of industries. We currently
provide services to more than half of the Fortune 500 and numerous
commercial, legal, banking, healthcare, accounting, insurance,
entertainment and government organizations. No customer accounted for more
than 2% of our consolidated revenues for the year ended December 31, 2001.
From January 1, 1996 through December 31, 2001, average annual permanent
removals of Cartons, not including destructions, represented approximately
4% of total Cartons stored.
- CAPITAL EXPENDITURES RELATED PRIMARILY TO GROWTH. Our records and
information management services business requires limited annual capital
expenditures in order to maintain our current revenue stream. From
January 1, 1996 through December 31, 2001, approximately 90% of our
aggregate capital expenditures were growth-related investments, primarily
in storage systems,
------------------------
2 We define "Carton" as a measurement of volume equal to a single standard
storage carton, approximately 1.2 cubic feet.
3 We define "Net Carton Growth From Existing Customers" as the increase in net
Cartons attributable to existing customers without giving effect to the loss
of approximately 1.0 million Cartons in fires attributed to arson in
March 1997 in two of our facilities in South Brunswick Township, New Jersey.
This calculation also excludes our Latin American and European operations as
well as a portion of our medical records operations.
S-2
management information systems, new buildings and improvements to existing
facilities. These growth-related capital expenditures are primarily
discretionary and create additional capacity for increases in revenues,
EBITDA and Adjusted EBITDA.
GROWTH STRATEGY
Our objective is to maintain our position as the leader in records and
information management services. Domestically, we seek to be one of the largest
records and information management services providers in each of our geographic
markets. Internationally, our objectives are to continue to capitalize on our
expertise in the records and information management services industry and to
make additional acquisitions and investments in selected international markets.
Our primary avenues of growth are: (1) increased business with existing
customers; (2) addition of new customers; (3) the introduction of new products
and services such as e-Vaulting, digital archiving and confidential destruction;
and (4) selective acquisitions in new and existing markets.
GROWTH FROM EXISTING CUSTOMERS
Our existing customers storing paper records contribute to storage and
services revenues growth because on average they generate additional Cartons at
a faster rate than old Cartons are destroyed or permanently removed. In order to
maximize growth opportunities from existing customers, we seek to maintain high
levels of customer retention by providing premium customer service through our
local management staff.
Through our local account management staff, we leverage existing business
relationships with our customers by selling complementary services and products.
Services include records tracking, indexing, customized reporting, vital records
management and consulting services.
ADDITION OF NEW CUSTOMERS
Our sales force is dedicated to two primary objectives: establishing new
customer account relationships and expanding new and existing customer
relationships by offering a wide array of complementary services and products.
In order to accomplish these objectives, our sales force draws on our national
marketing organization and senior management. As a result of acquisitions and
our decision to recruit additional qualified sales professionals, we have
increased the size of our sales force to over 400 such professionals.
INTRODUCTION OF NEW PRODUCTS AND SERVICES
We continue to expand our menu of products and services. We have
significantly increased our presence in the confidential destruction industry
and are in the process of launching new e-Vaulting and digital archiving
services. These new products and services allow us to further penetrate our
existing customer accounts and attract new customers in previously untapped
markets.
GROWTH THROUGH DOMESTIC ACQUISITIONS
Our acquisition strategy includes both expanding geographically, as
necessary, and increasing our presence and scale within existing markets through
"fold-in" acquisitions. We have a successful record of acquiring and integrating
records and information management services companies. We intend to continue our
domestic acquisition program. However, given the small number of large
acquisition prospects and our increased revenue base, future acquisitions are
expected to be less significant to overall domestic revenue growth than they
have been historically.
S-3
INTERNATIONAL GROWTH STRATEGY
We also intend to continue to make acquisitions and investments in records
and information management services businesses outside the United States. We
have acquired and invested in, and seek to acquire and invest in, records and
information management services companies in countries, and, more specifically,
markets within such countries, where we believe there is sufficient demand from
existing multinational customers or the potential for growth. Since beginning
our international expansion program in January 1999, we, directly and through
joint ventures, have expanded our operations into Canada, Europe and Latin
America. These transactions have taken, and may continue to take, the form of
acquisitions of the entire business or controlling or minority investments, with
a long-term goal of full ownership. In addition to the criteria we use to
evaluate domestic acquisition candidates, we also evaluate the presence in the
potential market of existing Iron Mountain clients as well as the risks uniquely
associated with an international investment, including those risks described
below.
The experience, depth and strength of local management are particularly
important in our international acquisition strategy. As a result, we have formed
joint ventures with, or acquired significant interests from, target businesses
throughout Europe and Latin America. We believe this strategy, rather than an
outright acquisition, may, in certain markets, better position us to expand the
existing business, although our long-term goal is to acquire full ownership of
each such business. The local partner will benefit from our expertise in the
records and information management services industry and, in certain cases, our
technology, and we will benefit from our local partner's knowledge of the
market, relationships with customers and their presence in the community.
Our international investments are subject to risks and uncertainties
relating to the indigenous political, social, regulatory, tax and economic
structures of other countries, as well as fluctuations in currency valuation,
exchange controls, expropriation and governmental policies limiting returns to
foreign investors. At this time, we can give no assurance as to whether any
international investment will be successful in achieving our objectives.
The amount of our revenues derived from international operations and other
relevant financial data for fiscal years 1999, 2000 and 2001 is set forth in
Note 12 of Notes to Consolidated Financial Statements contained in our Annual
Report on Form 10-K for the year ended December 31, 2001, which is incorporated
by reference in this prospectus supplement. For the year ended December 31, 2001
and the nine months ended September 30, 2002, our international operations
provided 13.4% and 13.8% of our total revenues, respectively.
ADDRESS AND TELEPHONE NUMBER
Iron Mountain was incorporated in 1990 but our operations date from 1951. We
are currently organized as a Pennsylvania corporation. Our principal place of
business is located at 745 Atlantic Avenue, Boston, Massachusetts 02111, and our
telephone number is (617) 535-4766.
S-4
THE OFFERING
NOTES OFFERED.......................... We are offering a total of $100,000,000 in principal
amount of 7 3/4% Senior Subordinated Notes due 2015.
MATURITY DATE.......................... January 15, 2015.
ISSUE PRICE............................ We are offering the notes at a price of 100.00% of par.
INTEREST............................... We will pay interest on the notes at a fixed annual
interest rate of 7 3/4%. We will pay the interest due on
the notes every six months on January 15 and July 15. We
will make our first interest payment on July 15, 2003.
SUBSIDIARY GUARANTORS.................. Each guarantor is one of our domestic wholly owned
subsidiaries. However, not all of our subsidiaries are
guarantors. If we cannot make payments on the notes when
they are due, the subsidiary guarantors must make them
instead.
RANKING................................ The notes and the subsidiary guarantees are unsecured
senior subordinated debts. They rank behind all of our and
our subsidiary guarantors' current and future indebtedness
other than trade payables, except indebtedness that
expressly provides that it is not senior to these notes
and the guarantees. Assuming we had completed this
offering on September 30, 2002 and applied the net
proceeds as intended, these notes and the subsidiary
guarantees:
- would have been subordinated to $447.8 million of our
and our subsidiary guarantors' senior debt and
- would have ranked equally with $1,055.4 million (net of
discounts and premiums totaling $11.2 million) of our
and our subsidiary guarantors' other senior subordinated
debt and trade payables.
MANDATORY OFFER TO REPURCHASE.......... If we sell certain assets or experience specific kinds of
changes of control, we must offer to repurchase the notes
at the prices listed in this prospectus supplement in the
section captioned "Description of the Notes" under the
subheading "Repurchase at the Option of Holders."
OPTIONAL REDEMPTION.................... We may, at our option, redeem some or all of the notes at
any time prior to January 15, 2008 at the make-whole price
set forth in this prospectus supplement. At our option, we
may also redeem some or all of the notes at any time after
January 15, 2008 at the redemption prices listed in this
prospectus supplement in the section captioned
"Description of the Notes" under the subheading "Optional
Redemption."
Before January 15, 2006 we may, at our option, redeem up
to 35% of the notes with the proceeds of certain types of
offerings of our equity at the redemption price set forth
in this prospectus supplement in the section captioned
"Description of the Notes" under the subheading "Optional
Redemption."
S-5
CERTAIN COVENANTS...................... We will issue the notes under an indenture with The Bank
of New York. The indenture will, among other things,
restrict our ability and the ability of our restricted
subsidiaries to:
- borrow money;
- pay dividends on stock or purchase stock;
- make investments;
- use assets as security in other transactions;
- enter into transactions with affiliates; and
- sell certain assets or merge with or into other
companies.
For more details, see the section captioned "Description
of the Notes" under the subheading "Certain Covenants."
USE OF PROCEEDS........................ We will use the net proceeds of the notes to fund our
offer to purchase and consent solicitation relating to our
outstanding 9 1/8% Senior Subordinated Notes due 2007, or
to otherwise redeem the 9 1/8% notes, to repay outstanding
borrowings under our revolving credit facility and for
general corporate purposes, including future acquisitions.
RISK FACTORS
You should carefully consider all of the information in this prospectus
supplement and the accompanying prospectus including the information
incorporated by reference. In particular, you should evaluate the specific risks
set forth under the sections captioned "Risk Factors" beginning on page S-7 of
this prospectus supplement and page 2 of the accompanying prospectus for a
discussion of certain risks in making an investment in the notes.
S-6
RISK FACTORS
YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING FACTORS AND OTHER INFORMATION IN
THIS PROSPECTUS SUPPLEMENT AND ACCOMPANYING PROSPECTUS BEFORE DECIDING TO INVEST
IN OUR NOTES.
OUR SUBSTANTIAL INDEBTEDNESS COULD ADVERSELY AFFECT OUR FINANCIAL HEALTH AND
PREVENT US FROM FULFILLING OUR OBLIGATIONS UNDER THE NOTES.
We have now and, after the offering, will continue to have a significant
amount of indebtedness. The following chart shows important credit statistics
and assumes that this offering was completed on September 30, 2002 and the net
proceeds of this offering were applied as intended:
AS ADJUSTED
AT SEPTEMBER 30, 2002
----------------------
(DOLLARS IN
THOUSANDS)
Total long-term debt........................................ $1,596,595
Shareholders' equity........................................ $ 928,497
Debt to equity ratio........................................ 1.7x
Our substantial indebtedness could have important consequences to you. Our
indebtedness may increase as we continue to borrow under existing and future
credit arrangements in order to finance future acquisitions and for general
corporate purposes, which would increase the associated risks. These risks
include:
- inability to satisfy our obligations with respect to the notes;
- inability to adjust to adverse economic conditions;
- inability to fund future working capital, acquisitions, capital
expenditures and other general corporate requirements, including possible
required repurchases of the notes;
- limits on our flexibility in planning for, or reacting to, changes in our
business and the records and information management services industry;
- limits on future borrowings under our existing or future credit
arrangements, which could affect our ability to pay our indebtedness,
including the notes, or to fund our other liquidity needs;
- inability to generate sufficient funds to cover required interest
payments, including on the notes; and
- restrictions on our ability to refinance our indebtedness on commercially
reasonable terms.
See "Description of the Notes--Repurchase at the Option of Holders--Change
of Control" herein.
DESPITE CURRENT INDEBTEDNESS LEVELS, WE AND OUR SUBSIDIARIES MAY STILL BE ABLE
TO INCUR SUBSTANTIALLY MORE DEBT.
The terms of the indenture generally do not prohibit us or our subsidiaries
from borrowing additional funds under our revolving credit facility and possible
future credit arrangements. Our credit agreement would permit additional
borrowings of up to $292.2 million as of September 30, 2002, subject to
customary borrowing conditions, after giving effect to this offering, and all of
those borrowings would be senior to the notes and the subsidiary guarantees.
S-7
OUR ABILITY TO GENERATE SUFFICIENT CASH TO SERVICE OUR INDEBTEDNESS DEPENDS ON
MANY FACTORS BEYOND OUR CONTROL.
Our ability to make payments on and to refinance our indebtedness, including
the notes, and to fund future acquisitions and capital expenditures will depend
on our ability to generate cash in the future. This, to some extent, is subject
to general economic, financial, competitive, legislative, regulatory and other
factors that are beyond our control. We believe our cash flow from operations
and available borrowings under our existing and future credit arrangements will
be adequate to meet our foreseeable future liquidity needs.
We cannot assure you, however, that our business will generate sufficient
cash flow from operations, that currently anticipated cost savings will be
realized on schedule or at all, or that future borrowings will be available to
us under our existing and future credit arrangements in an amount sufficient to
enable us to pay our indebtedness, including the notes, or to fund our other
liquidity needs. We may need to refinance all or a portion of our indebtedness,
including the notes, on or before maturity. We cannot assure you that we will be
able to refinance any of our indebtedness, including our revolving credit
facility and the notes, on commercially reasonable terms or at all.
THE NOTES AND THE SUBSIDIARY GUARANTEES ARE JUNIOR TO ALL OF OUR AND THE
GUARANTORS' EXISTING SENIOR INDEBTEDNESS AND POSSIBLY TO ALL OF OUR AND THEIR
FUTURE BORROWINGS, AND IN SOME SITUATIONS, THIS MAY REDUCE OUR ABILITY TO
FULFILL OUR FULL OBLIGATIONS UNDER THE NOTES.
The notes and the subsidiary guarantees rank behind all of our and the
subsidiary guarantors' existing senior indebtedness and all of our and their
future borrowings, other than trade payables, except any future indebtedness
that expressly provides that it ranks equal with, or is subordinated in right of
payment to, the notes and the guarantees. As a result, upon any distribution to
our creditors or the creditors of the guarantors in a bankruptcy, liquidation or
reorganization or similar proceeding relating to us or the guarantors or our or
their property, the holders of our and the guarantors' senior debt will be
entitled to be paid in full in cash before any payment may be made with respect
to the notes or the subsidiary guarantees.
In addition, all payments on the notes and the guarantees will be blocked in
the event of a payment default on senior debt and may be blocked for up to 179
of 360 consecutive days in the event of certain non-payment defaults on senior
debt.
If we or the guarantors are subject to a bankruptcy, liquidation or
reorganization or similar proceeding, holders of the notes will participate with
trade creditors and all other holders of our and the guarantors' subordinated
indebtedness in the assets remaining after we and the guarantors have paid all
of the senior debt. However, because the indenture requires that amounts
otherwise payable to holders of the notes in a bankruptcy or similar proceeding
be paid to holders of senior debt instead, holders of the notes may receive
less, ratably, than holders of trade payables in any such proceeding. In any of
these cases, we and the guarantors may not have sufficient funds to pay all of
our creditors and holders of the notes may receive less, ratably, than the
holders of senior debt.
Assuming we had completed this offering on September 30, 2002 and applied
the net proceeds from this offering as intended, the notes and the subsidiary
guarantees would have been subordinated to $447.8 million of our and our
subsidiary guarantors' senior debt and would have ranked equally with
$1,055.4 million (net of discounts and premiums totaling $11.2 million) of our
and our subsidiary guarantors' other senior subordinated debt and trade
payables. We will be permitted to incur substantial additional indebtedness,
including senior debt, in the future under the terms of the indenture.
S-8
YOUR RIGHT TO RECEIVE PAYMENTS ON THESE NOTES COULD BE ADVERSELY AFFECTED IF ANY
OF OUR NON-GUARANTOR SUBSIDIARIES DECLARE BANKRUPTCY, LIQUIDATE OR REORGANIZE.
Substantially all of our direct and indirect wholly owned domestic
subsidiaries will guarantee the notes. Iron Mountain Canada Corporation ("Canada
Company"), Iron Mountain Europe Limited, their respective subsidiaries and our
other existing international subsidiaries do not, and we anticipate that our
future international subsidiaries will not, guarantee the notes. In the event of
a bankruptcy, liquidation or reorganization of any of the non-guarantor
subsidiaries, holders of their indebtedness and their trade creditors will
generally be entitled to payment of their claims from the assets of those
subsidiaries before any assets are made available for distribution to us. At
September 30, 2002, the notes were effectively junior to $191.8 million (net of
discounts of $10.8 million) of indebtedness and other liabilities (including
trade payables) of our non-guarantor subsidiaries. Included in this amount is
$135 million in aggregate principal amount of senior notes that Canada Company,
our principal Canadian subsidiary, has issued. Canada Company's notes are
guaranteed on a senior basis by our other Canadian subsidiaries and on a senior
subordinated basis by us and our subsidiary guarantors. Canada Company and our
other Canadian subsidiaries will not guarantee the notes and have not guaranteed
our other senior subordinated notes. Our non-guarantor subsidiaries, including
Canada Company, generated 13.6% of our consolidated revenues from continuing
operations in the twelve-month period ended December 31, 2001, and 14.0% of such
revenues for the nine-month period ended September 30, 2002 and held 17.4% of
our consolidated assets as of September 30, 2002, in each case without reduction
for the minority interests in Iron Mountain Europe Limited and certain of our
other international subsidiaries.
Our condensed consolidating financial information, which we have
incorporated by reference from our Annual Report on Form 10-K for the year ended
December 31, 2001 and our Quarterly Reports on Form 10-Q for the quarters ended
March 31, 2002, June 30, 2002 and September 30, 2002 includes information for
Iron Mountain Incorporated, the subsidiary guarantors on a combined basis,
Canada Company and our other Canadian subsidiaries on a combined basis and our
non-guarantor subsidiaries on a combined basis.
WE MAY NOT HAVE THE ABILITY TO RAISE THE FUNDS NECESSARY TO FINANCE THE
REPURCHASE OF OUTSTANDING SENIOR SUBORDINATED INDEBTEDNESS, INCLUDING THE NOTES,
UPON A CHANGE OF CONTROL EVENT AS REQUIRED BY THE INDENTURE.
Upon the occurrence of a Change of Control, we will be required to offer to
repurchase all outstanding notes and our other existing senior subordinated
indebtedness. However, it is possible that we will not have sufficient funds at
the time of the change of control to make the required repurchase of the notes
or that restrictions in our revolving credit facility will not allow such
repurchases. In addition, certain important corporate events, such as leveraged
recapitalizations that would increase the level of our indebtedness, would not
constitute a "Change of Control" under the indenture. See "Description of the
Notes--Repurchase at the Option of Holders--Change of Control."
FEDERAL AND STATE STATUTES COULD ALLOW COURTS, UNDER SPECIFIC CIRCUMSTANCES, TO
VOID GUARANTEES AND REQUIRE HOLDERS OF THE NOTES TO RETURN PAYMENTS RECEIVED
FROM GUARANTORS.
Under federal bankruptcy laws and comparable provisions of state fraudulent
transfer laws, a guarantee could be voided, or claims in respect of a guarantee
could be subordinated to all other debts of that guarantor, if, among other
things, the guarantor, at the time it incurred the indebtedness evidenced by its
guarantee:
- received less than reasonably equivalent value or fair consideration for
the incurrence of such guarantee; and
- was insolvent or rendered insolvent by reason of such incurrence; or
S-9
- was engaged in a business or transaction for which the guarantor's
remaining assets constituted unreasonably small capital; or
- intended to incur, or believed that it would incur, debts beyond its
ability to pay such debts as they mature.
In addition, any payment by that guarantor pursuant to its guarantee could be
voided and required to be returned to the guarantor, or to a fund for the
benefit of the creditors of the guarantor.
The measures of insolvency for purposes of these fraudulent transfer laws
will vary depending upon the law applied in any proceeding to determine whether
a fraudulent transfer has occurred. Generally, however, a guarantor would be
considered insolvent if:
- the sum of its debts, including contingent liabilities, were greater than
the fair saleable value of all of its assets; or
- if the present fair saleable value of its assets were less than the amount
that would be required to pay its probable liability on its existing
debts, including contingent liabilities, as they become absolute and
mature; or
- it could not pay its debts as they become due.
On the basis of historical financial information, recent operating history
and other factors, we believe that each guarantor, after giving effect to its
guarantee of the notes, will not be insolvent, will not have unreasonably small
capital for the business or any transaction in which it is engaged and will not
have incurred debts beyond its ability to pay such debts as they mature. There
can be no assurance, however, as to what standard a court would apply in making
such determinations or that a court would agree with our conclusions in this
regard.
A guarantor may be released from its guarantee at any time upon a sale,
exchange or transfer in compliance with the provisions of the indenture by Iron
Mountain of the capital stock of such guarantor or substantially all of the
assets of such guarantor. In addition, in some other circumstances, a guarantor
may be released from its subsidiary guarantee in connection with our designation
of such guarantor as an unrestricted subsidiary or excluded restricted
subsidiary. See "Description of the Notes--Certain Covenants--Additional
Subsidiary Guarantees."
OUR FORMER USE OF ARTHUR ANDERSEN LLP AS OUR INDEPENDENT AUDITOR MAY POSE RISKS
TO US AND WILL LIMIT YOUR ABILITY TO SEEK POTENTIAL RECOVERIES FROM THEM RELATED
TO THEIR WORK.
On June 15, 2002, Arthur Andersen LLP, or Andersen, our former independent
auditor, was convicted on a federal obstruction of justice charge. Effective
June 19, 2002, we dismissed Andersen and appointed Deloitte & Touche LLP to
succeed Andersen as our independent auditors. Our audited consolidated financial
statements that are incorporated by reference in this prospectus supplement were
audited by Andersen. While Andersen has previously consented to the inclusion of
its audit report for such periods in the registration statement pursuant to
which this offering is being made, Andersen is no longer able to reissue a
consent to including or incorporating by reference its audit reports relating to
such financial statements in our SEC filings as may be required under SEC rules.
The SEC recently has provided certain regulatory relief designed to allow
companies that file reports with the SEC to dispense with the requirement of
filing a consent of Andersen in certain circumstances. Notwithstanding the SEC's
regulatory relief, an investor's ability to seek potential recoveries from
Andersen related to any claims that an investor may assert as a result of the
work performed by Andersen may be limited significantly by the lack of such
consent and the diminished amount of assets of Andersen that are or may be
available to satisfy any such claims. Additionally, these events may delay our
access to the capital markets after completion of this offering of the notes.
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SINCE IRON MOUNTAIN IS A HOLDING COMPANY, OUR ABILITY TO MAKE PAYMENTS ON THE
NOTES DEPENDS IN PART ON THE OPERATIONS OF OUR SUBSIDIARIES.
Iron Mountain is a holding company, and substantially all of our assets
consist of the stock of our subsidiaries and substantially all of our operations
are conducted by our direct and indirect wholly owned subsidiaries. As a result,
our ability to make payments on the notes will be dependent upon the receipt of
sufficient funds from our subsidiaries. However, the notes will be guaranteed,
on a joint and several basis, by most, but not all, of our direct and indirect
wholly owned domestic subsidiaries.
WE CANNOT GUARANTEE THAT THERE WILL BE A TRADING MARKET FOR THE NOTES.
The notes are a new issue of securities for which no trading market
currently exists. We do not intend to list the notes on any national or regional
securities exchange or to seek approval for quotation through any automated
quotation system. We cannot give any assurance that a trading market will exist
in the future for the notes. Even if a market does develop, the liquidity of the
trading market in the notes, and the market price quoted for the notes, may be
adversely affected by changes in the overall market for high yield securities
and by changes in our financial performance or prospects or in the prospects for
companies in our industry generally.
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USE OF PROCEEDS
The net proceeds to us from the offering of the notes are estimated to be
$98.4 million, after deducting discounts to the underwriters and estimated
offering expenses. We expect to use the net proceeds of the notes to fund our
offer to purchase and consent solicitation relating to our outstanding 9 1/8%
Senior Subordinated Notes due 2007, or to otherwise redeem the 9 1/8% notes, to
repay outstanding borrowings under our revolving credit facility and for general
corporate purposes, including future acquisitions. Pending this utilization, we
intend to invest the net proceeds from the sale of the notes in short-term,
dividend-paying or interest-bearing investment grade securities. We intend to
redeem any 9 1/8% Senior Subordinated Notes not properly tendered and accepted
by us as part of the tender offer at a redemption price (expressed as a
percentage of principal amount) of 104.563%, plus accrued and unpaid interest to
the redemption date. We used borrowings under our revolving credit facility
during the most recent twelve months to finance acquisitions and for working
capital. Our revolving credit facility has a maturity date of January 31, 2005.
The weighted average interest rate as of December 11, 2002 on indebtedness
outstanding under our revolving credit facility was 5.0%.
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CAPITALIZATION
(IN THOUSANDS)
The following table sets forth at September 30, 2002 our: (a) actual cash
and cash equivalents and capitalization and (b) cash and cash equivalents and
capitalization as adjusted to give effect to:
- an exchange of our newly issued 8 5/8% Senior Subordinated Notes due 2013
for 9 1/8% Senior Subordinated Notes due 2007 in a privately-negotiated
transaction, which took place after September 30, 2002 and which resulted
in the issuance of approximately $46 million in face value of our 8 5/8%
notes and the retirement of approximately $45 million in face value of our
9 1/8% notes (the "Exchange"), and
- this offering and the application of the net proceeds from this offering
as described in "Use of Proceeds."
This table should be read in conjunction with the section captioned "Use of
Proceeds" in this prospectus supplement and our Consolidated Financial
Statements and the footnotes thereto incorporated herein by reference.
AS OF SEPTEMBER 30, 2002
-------------------------
ACTUAL AS ADJUSTED
------ -----------
Cash and Cash Equivalents................................... $ 27,597 $ 27,597
========== ==========
Long-term Debt (Including Current Maturities):
Revolving Credit Facility............................... $ 100,229 $ 81,879
Term Loan............................................... 250,000 250,000
9 1/8% Senior Subordinated Notes due 2007............... 115,773 --(1)(2)
8 1/8% Senior Subordinated Notes due 2008............... 124,189 124,189
8 3/4% Senior Subordinated Notes due 2009............... 249,717 249,717
8 1/4% Senior Subordinated Notes due 2011............... 149,614 149,614
8 5/8% Senior Subordinated Notes due 2013............... 437,855 481,123(2)
7 3/4% Senior Subordinated Notes due 2015............... -- 100,000
Real Estate Mortgages and Other......................... 30,798 30,798
Capital Leases and Other................................ 129,275 129,275
---------- ----------
Total Long-term Debt................................ 1,587,450 1,596,595
Total Shareholders' Equity.................................. 932,451 928,497
---------- ----------
Total Capitalization................................ $2,519,901 $2,525,092
========== ==========
------------------------
(1) Assumes we successfully redeem all of the remaining outstanding 9 1/8% notes
after taking into account the Exchange.
(2) Reflects recording the Exchange at the carrying amount of the 9 1/8% notes
at the date of the transaction in the amount of approximately $43 million.
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DESCRIPTION OF THE NOTES
The following description of the particular terms of the notes supplements,
and to the extent inconsistent therewith, replaces the description of the
general terms and provisions of debt securities set forth under "Description of
our Debt Securities" in the accompanying prospectus to which reference is hereby
made. You can find the definitions of certain terms used in this description
under the subheading "Certain Definitions." Other terms are defined in the
accompanying prospectus. Certain defined terms used in this description but not
defined below under the subheading "Certain Definitions" have the meanings
assigned to them in the Indenture described below. In this description, the word
"Company" refers only to Iron Mountain and not to any of its subsidiaries.
GENERAL
The Company will issue the notes under an indenture (the "Base Indenture"),
as supplemented by a First Supplemental Indenture (the "Supplemental
Indenture"), among the Company, the guarantors and The Bank of New York, as
trustee (the "Trustee"). For convenience, the Base Indenture as supplemented by
the Supplemental Indenture is referred to collectively as the "Indenture." 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, as amended (the
"Trust Indenture Act").
The following description is a summary of the material provisions of the
Indenture. It does not restate the Indenture in its entirety. We urge you to
read the Indenture because it, and not this description, defines your rights as
a holder of the notes. If you would like more information on these provisions,
review the copy of the Indenture that we have filed with the Securities and
Exchange Commission (the "Commission"). See "Documents Incorporated By
Reference" and "Where You Can Find More Information" in this prospectus
supplement and in the accompanying prospectus for information about how to
locate these documents. You may also review the Indenture at the Trustee's
corporate trust office at 101 Barclay Street, Floor 21 West, New York, New York
10286.
The Indenture permits the issuance of additional notes from time to time
having identical terms and conditions to the notes offered in this offering. Any
offering of additional notes is subject to the covenant described below under
the caption "--Certain Covenants--Incurrence of Indebtedness and Issuance of
Preferred Stock." The notes and any additional notes subsequently issued under
the Indenture will be treated as a single class for all purposes under the
Indenture, including, without limitation, waivers, amendments, redemptions and
offers to purchase.
As used herein, the term "notes" refers to the $100,000,000 in aggregate
principal amount of notes offered herein. The notes will be general unsecured
obligations of the Company and will mature on January 15, 2015. The notes will
be issued in registered form, without coupons, and in denominations of $1,000
and integral multiples thereof. The notes will be evidenced by a global note in
book-entry form, except under the limited circumstances described below under
"--Book-Entry, Delivery and Form." The registered holder of a note ("Holder")
will be treated as the owner of it for all purposes. Only registered Holders
will have rights under the Indenture.
The notes:
- are general unsecured obligations of the Company;
- are subordinated in right of payment to all existing and future Senior
Debt of the Company;
- are PARI PASSU in right of payment with existing and any future senior
subordinated Indebtedness of the Company; and
- are unconditionally guaranteed by the guarantors.
The notes are guaranteed by the guarantors. Each subsidiary guarantee of the
notes:
- is a general unsecured obligation of the guarantor;
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- is subordinated in right of payment to all existing and future Senior Debt
of the guarantor; and
- is PARI PASSU in right of payment with any existing and future senior
subordinated Indebtedness of the guarantor.
Assuming we had completed this offering on September 30, 2002 and applied
the net proceeds as intended, these notes and the subsidiary guarantees would
have been subordinated to $447.8 million of Iron Mountain's and the guarantors'
Senior Debt and would have ranked equally with $1,055.4 million (net of
discounts and premiums totaling $11.2 million) of Iron Mountain's and the
guarantors' other senior subordinated debt and trade payables. As indicated
above and as discussed in detail below under the caption "--Subordination,"
payments on the notes and under the subsidiary guarantees will be subordinated
to the payment of Senior Debt. The Indenture permits Iron Mountain and the
guarantors to incur additional Senior Debt.
Not all of our subsidiaries will guarantee the notes. Substantially all of
our direct and indirect wholly owned domestic subsidiaries will guarantee the
notes. Canada Company, Iron Mountain Europe Limited, their respective
subsidiaries and our other existing international subsidiaries will not be
guarantors. In the event of a bankruptcy, liquidation or reorganization of any
of these non-guarantor subsidiaries, these non-guarantor subsidiaries will pay
the holders of their debts and their trade creditors before they will be able to
distribute any of their assets to us. Our non-guarantor subsidiaries, including
Canada Company, generated 13.6% of our consolidated revenues in the twelve-month
period ended December 31, 2001 and 14.0% of such revenues for the nine-month
period ended September 30, 2002 and held 17.4% of our consolidated assets as of
September 30, 2002, in each case without reduction for minority interests in
Iron Mountain Europe Limited and certain of our other international
subsidiaries. See our Consolidated Financial Statements incorporated by
reference in this Prospectus Supplement from Iron Mountain's Annual Report on
Form 10-K for the year ended December 31, 2001 and our Quarterly Reports on
Form 10-Q for the quarters ended March 31, 2002, June 30, 2002 and
September 30, 2002 for more detail about the division of Iron Mountain's
consolidated revenues and assets between Iron Mountain's guarantor and
non-guarantor subsidiaries.
INTEREST
Interest on the notes will accrue at the rate of 7 3/4% per annum and will
be payable semi-annually in arrears on January 15 and July 15, commencing on
July 15, 2003 to Holders of record on the immediately preceding January 2 and
July 1. 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.
METHODS OF RECEIVING PAYMENTS ON THE NOTES
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.
PAYING AGENT AND REGISTRAR FOR THE NOTES
The Trustee will initially act as paying agent and registrar. The Company
may change the paying agent or registrar without prior notice to the Holders,
and the Company or any of its Subsidiaries may act as paying agent or registrar.
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
S-15
documents. The Company may require a Holder to pay any taxes and fees required
by law or permitted by the Indenture. The 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 the mailing of a
notice of redemption of notes to be redeemed.
SUBSIDIARY GUARANTEES
The Company's payment obligations under the notes will be jointly and
severally guaranteed pursuant to the subsidiary guarantees on an unsecured
senior subordinated basis by all of the Company's Restricted Subsidiaries other
than the Excluded Restricted Subsidiaries (as defined below). 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
guarantor, which on a pro forma basis, giving effect to this offering and the
application of the net proceeds as intended, was $447.8 million at
September 30, 2002 for all guarantors. Notwithstanding the subordination
provisions contained in the Indenture, the obligations of a guarantor under its
subsidiary guarantee will be unconditional, but will contain language intended
to prevent that subsidiary guarantee from constituting a fraudulent conveyance
under applicable law. See "Risk Factors--Federal and state statutes could allow
courts, under specific circumstances, to void guarantees and require holders of
the notes to return payments received from guarantors."
The subsidiary guarantee of a guarantor will be released under the
circumstances described under "--Certain Covenants--Additional Subsidiary
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.
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. 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,
upon any payment or distribution to creditors of the Company or any guarantor:
(1) in a liquidation or dissolution of the Company or such guarantor; or
(2) in a bankruptcy, reorganization, insolvency, receivership or similar
proceeding relating to the Company or any guarantor or its property; or
(3) in an assignment for the benefit of creditors; or
(4) in any marshaling of the assets and liabilities of the Company or any
guarantor.
Neither the Company nor any 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:
(1) a default in the payment of any Obligation in respect of any Senior Debt
occurs and is continuing or
(2) 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 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.
S-16
Payments on the notes may and shall be resumed:
(1) in the case of a payment default, on the date on which such default is
cured or waived and
(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, unless
the maturity of any Senior Debt has been accelerated.
Any number of Payment Blockage Notices may be given, provided, however,
that:
(1) not more than one Payment Blockage Notice may be commenced during any
period of 360 consecutive days and
(2) 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 Company must promptly notify holders of Senior Debt if payment of the
notes is accelerated because of an Event of Default (as described below).
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. After giving effect to
the offering of the notes and the intended use of the net proceeds, the
principal amount of Senior Debt of the Company and the guarantors outstanding at
September 30, 2002 would have been $447.8 million. The Indenture will not limit
the amount of additional Indebtedness, including Senior Debt, that the Company
and its Restricted Subsidiaries can incur if certain financial tests are met.
See "--Certain Covenants--Incurrence of Indebtedness and Issuance of Preferred
Stock."
OPTIONAL REDEMPTION
Prior to January 15, 2008, the notes will be subject to redemption at any
time at the option of the Company, in whole or in part, upon not less than 30
nor more than 60 days' notice, at the Make-Whole Price, plus accrued and unpaid
interest to but excluding the applicable redemption date. On and after
January 15, 2008, the notes will be subject to redemption at any time 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 price (expressed as percentages of principal
amount) set forth below, plus accrued and unpaid interest to but excluding the
applicable redemption date, if redeemed during the twelve-month period beginning
on January 15 of the years indicated below:
YEAR PERCENTAGE
---- ----------
2008........................................................ 103.875%
2009........................................................ 102.583
2010........................................................ 101.292
2011 and thereafter......................................... 100.000%
Notwithstanding the foregoing, at any time prior to January 15, 2006, 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 107.750% of the principal amount of
such notes, plus accrued and unpaid interest to but excluding the redemption
date; 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.
S-17
MANDATORY REDEMPTION
The Company is not required to make mandatory redemption or sinking fund
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 to but excluding the date of repurchase (the "Change
of Control Payment").
Within 30 calendar days following any Change of Control, the Company will
mail a notice to each Holder stating:
(1) 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;
(2) 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");
(3) that any note not tendered will continue to accrue interest;
(4) 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;
(5) 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;
(6) 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, 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 its election to have such notes purchased; and
(7) that Holders whose notes are being purchased only in part will be issued
new notes equal in principal amount to the unpurchased portion of the
notes surrendered, 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
Securities Exchange Act of 1934, as amended (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. To the extent that the provisions of any securities laws or
regulations conflict with the Change of Control provisions of the Indenture, the
Company will comply with the applicable securities laws and regulations and will
not be deemed to have breached its obligations under the Change of Control
provisions of the Indenture by virtue of such conflict.
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On the Change of Control Payment Date, the Company will, to the extent
lawful:
(1) accept for payment notes or portions thereof tendered pursuant to the
Change of Control Offer;
(2) 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
(3) 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 limits the right of the Company to purchase
any notes prior to their scheduled maturity and also provides that a Change of
Control with respect to the Company is a default thereunder. Any future credit
agreements or other 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 a waiver of the default under the
Credit Agreement, 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 waiver and consent or repay such borrowings, the
Company would remain prohibited from purchasing notes and will be in default
under the Credit Agreement. In such case, the Company's failure to purchase
tendered notes would, in turn, constitute an Event of Default under the
Indenture. In such circumstances, the subordination provisions in the Indenture
would likely restrict payments to the Holders of notes.
The Company will not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in the Indenture applicable to a Change of Control Offer made by the Company and
purchases all notes properly tendered and not withdrawn under the Change of
Control Offer.
The definition of Change of Control includes a phrase relating to the direct
or indirect sale, lease, transfer, conveyance or other disposition of "all or
substantially all" of the properties or assets of the Company. Although there is
a limited body of case law interpreting the phrase "substantially all," there is
no precise established definition of the phrase under applicable law.
Accordingly, the ability of a Holder of notes to require the Company to
repurchase its notes as a result of a sale, lease, transfer, conveyance or other
disposition of less than all of the assets of the Company to another Person or
group may be uncertain.
ASSET SALES. The Company will not, and will not permit any of its
Restricted Subsidiaries to:
(1) 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
S-19
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 "Certain
Covenants--Merger, Consolidation, or Sale of Assets" and not by the
provisions of this covenant); or
(2) issue or sell Equity Interests of any of its Restricted Subsidiaries
that in the case of either clause (1) or (2) above, whether in a single
transaction or a series of related transactions:
(i) have a fair market value in excess of $2.0 million; or
(ii) result in Net Proceeds in excess of $2.0 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 $10.0 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
delivered to 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 (ii)
(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:
(1) to permanently reduce Senior Debt; or
(2) 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 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
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first sentence of this paragraph will be deemed to constitute "Excess Proceeds."
When the aggregate amount of Excess Proceeds exceeds $10.0 million, the Company
shall make an offer to all Holders of the notes, all holders of the 9 1/8%
notes, the 8 1/4% notes, the 8 1/8% notes, the 8 3/4% notes and the 8 5/8% notes
and the holders of any future Indebtedness ranking PARI PASSU with the notes,
which Indebtedness contains similar provisions requiring the Company to
repurchase such Indebtedness (an "Asset Sale Offer"), to purchase the maximum
principal amount of notes and such other Indebtedness 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 and other PARI PASSU
Indebtedness (including the 9 1/8% notes, the 8 1/4% notes, the 8 1/8% notes,
the 8 3/4% notes and the 8 5/8% 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 and such other Indebtedness surrendered by Holders thereof exceeds the
amount of Excess Proceeds, the Trustee shall select the notes and such other
Indebtedness 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.
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 those laws and regulations are applicable in connection with each
repurchase of notes pursuant to an Asset Sale Offer. To the extent that the
provisions of any securities laws or regulations conflict with the Asset Sale
provisions of the Indenture, the Company will comply with the applicable
securities laws and regulations and will not be deemed to have breached its
obligations under the Asset Sale provisions of the Indenture by virtue of such
conflict. The agreements governing the Company's outstanding Senior Debt
currently restrict the Company from purchasing any notes prior to scheduled
maturity, and also provide that certain asset sale events with respect to the
Company would constitute a default under these agreements. Any future credit
agreements or other agreements relating to Senior Debt to which the Company
becomes a party may contain similar restrictions and provisions. In the event an
Asset Sale occurs at a time when the Company is prohibited from purchasing
notes, the Company could seek the consent of its senior 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 would 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
such Senior Debt. In such circumstances, the subordination provisions in the
Indenture would likely restrict payments to the Holders of notes.
SELECTION AND NOTICE
If less than all of the notes are to be redeemed at any time, the Trustee
will select notes for redemption as follows:
(1) if the notes are listed, in compliance with the requirements of the
principal national securities exchange on which the notes are listed or
(2) 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.
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 a principal amount equal to the unredeemed portion
thereof will be issued in the name of the Holder thereof upon
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cancellation of the original note. On and after the redemption date, interest
will cease to accrue on notes or portions thereof called for redemption.
CERTAIN COVENANTS
RESTRICTED PAYMENTS. The Company will not, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly:
(1) 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);
(2) 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);
(3) 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
(4) make any Investment other than a Permitted Investment (all such payments
and other actions set forth in clauses (1) through (4) 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 October 1, 1996 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 1996
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.
As of September 30, 2002, the amount that would have been available to the
Company for Restricted Payments pursuant to this clause (iii) would have been
approximately $900 million. The Company has similar (and more restrictive)
covenants in its Credit Agreement and other agreements to which it is a party.
The amount of Restricted Payments that the Company could make without violating
these covenants is substantially less than the amount that would be permitted
under the Indenture.
The foregoing provisions will not prohibit:
(1) 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;
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(2) 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);
(3) the defeasance, redemption, repurchase, retirement or other acquisition
or retirement for value of Indebtedness that is subordinated 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);
(4) the defeasance, redemption, repurchase, retirement or other acquisition
or retirement for value of Indebtedness that is subordinated 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;
(5) the repurchase of any Indebtedness subordinated 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; and
(6) 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 (6) does not exceed $0.5 million in any year and
$2.0 million in the aggregate.
The Restricted Payments described in clauses (2), (3), (5) and (6) 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 (1) and (4) 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.
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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:
(1) 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;
(2) 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
(3) 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 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 6.5 to 1.0.
The foregoing limitations will not apply to:
(1) the incurrence by the Company or any Restricted Subsidiary of Senior
Bank Debt in an aggregate amount not to exceed $100.0 million at any one
time outstanding;
(2) the issuance by the Restricted Subsidiaries of subsidiary guarantees;
(3) the incurrence by the Company and its Restricted Subsidiaries of the
Existing Indebtedness;
(4) the issuance by the Company of the notes;
(5) 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 $5.0 million at any one time
outstanding, provided that the Liens securing such Indebtedness
constitute Permitted Liens;
(6) the incurrence of Indebtedness between (i) the Company and its
Restricted Subsidiaries and (ii) the Restricted Subsidiaries;
(7) 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;
S-24
(8) 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 $5.0 million at any one time outstanding;
(9) 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
(10) 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 (2) through (5) above, and
this clause (10) or that was otherwise permitted to be incurred pursuant
to the test set forth in the first paragraph of this covenant.
There are additional limitations on the ability of some Excluded Restricted
Subsidiaries to incur Indebtedness as provided in the covenant described under
the caption "Dividend and Other Payment Restrictions Affecting Restricted
Subsidiaries."
LIENS. 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 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 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:
(1) (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;
(2) make loans or advances to the Company or any of its Restricted
Subsidiaries; or
(3) transfer any of its properties or assets to the Company or any of its
Restricted Subsidiaries.
However, the preceding restrictions will not apply to 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;
S-25
(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
obligations or Capital Lease Obligations otherwise permitted by
clause (5) of the covenant entitled "Incurrence of Indebtedness and
Issuance of Preferred Stock;"
(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; or
(9) any agreement or instrument governing Indebtedness of an Excluded
Restricted Subsidiary provided that (i) at the time such agreement or
instrument is entered into, such Excluded Restricted Subsidiary and its
Restricted Subsidiaries have a Leverage Ratio of less than 6.5 to 1.0 and
(ii) neither such Excluded Restricted Subsidiary nor any of its
Restricted Subsidiaries shall, directly or indirectly, incur any
Indebtedness (including Acquired Debt) unless at the time of such
incurrence and after giving effect thereto, the Leverage Ratio for such
Excluded Restricted Subsidiary and its Restricted Subsidiaries would be
less than 6.5 to 1.0. For purposes of determining the Leverage Ratio
under this clause (9) only, all references to the "Company" and its
"Restricted Subsidiaries" or similar references in the definition of
"Leverage Ratio" and other defined terms necessary to determine the
Leverage Ratio shall be deemed to refer to such Excluded Restricted
Subsidiary and its Restricted Subsidiaries, respectively.
MERGER, CONSOLIDATION, OR SALE OF ASSETS. The Company may not consolidate
or merge with or into (whether or not the Company is the surviving corporation),
or sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of its properties or assets in one or more related
transactions, to another Person unless:
(1) 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;
(2) 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);
(3) immediately after such transaction no Default or Event of Default
exists; and
(4) 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
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the first paragraph of the covenant entitled "Incurrence of Indebtedness
and Issuance of Preferred Stock."
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 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 $5.0 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 $10.0 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.
The following items shall not be deemed Affiliate Transactions and
therefore, will not be subject to the provisions of the prior paragraph:
(1) 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;
(2) transactions between or among the Company and/or its Restricted
Subsidiaries;
(3) transactions permitted by the provisions of the Indenture described
above under the covenant entitled "Restricted Payments;" and
(4) the grant of stock, stock options or other equity interests to employees
and directors of the Company and any Restricted Subsidiary in accordance
with duly adopted Company stock grant, stock option and similar plans.
The provisions set forth in clause (b) above shall not apply to sales of
inventory by the Company or any Restricted Subsidiary to any Affiliate in the
ordinary course of business. The provisions of clause (b) (ii) above 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 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.
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. 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.
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No Restricted Subsidiary (including any Excluded 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:
(1) 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 guarantee (except in the case of an
Excluded Restricted Subsidiary) pursuant to a supplemental indenture in
form and substance reasonably satisfactory to the Trustee;
(2) immediately after giving effect to such transaction, no Default or Event
of Default exists; and
(3) 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."
In the event of:
(1) a sale or other disposition of all of the assets of any Restricted
Subsidiary, by way of merger, consolidation or otherwise;
(2) a sale or other disposition of all of the capital stock of any
Restricted Subsidiary; or
(3) the designation of a Restricted Subsidiary as an Unrestricted Subsidiary
in accordance with the terms of the covenant entitled "Unrestricted
Subsidiaries,"
then such Restricted 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 Person 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 "Repurchase at the Option of Holders--Asset Sales."
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:
(1) neither the Company nor any Restricted Subsidiary is directly or
indirectly liable for any Indebtedness of such Subsidiary;
(2) 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;
(3) 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;"
(4) 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
S-28
(5) 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 for
the 8 1/4% notes, was 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, in
each case other than Iron Mountain Global, Inc. and its Subsidiaries (including
without limitation Iron Mountain Europe Limited and its Subsidiaries).
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:
(1) such Indebtedness is permitted under the "Incurrence of Indebtedness and
Issuance of Preferred Stock" covenant and
(2) 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:
(1) 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
(2) the Company or such Restricted Subsidiary could incur 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
Commission, so long as any notes are outstanding, the Company will furnish to
the Holders of notes:
(1) 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
(2) 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
Each of the following constitutes an "Event of Default:"
(1) 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);
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(2) 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);
(3) failure by the Company to comply with the provisions described under
"Repurchase at the Option of Holders--Change of Control;"
(4) failure by the Company or any 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;
(5) 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 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 $10.0 million;
(6) failure by the Company or any of its Restricted Subsidiaries to pay
final judgments aggregating in excess of $10.0 million, which judgments
remain unpaid, undischarged or unstayed for a period of 60 days;
(7) certain events of bankruptcy or insolvency with respect to the Company
or any of its Restricted Subsidiaries that are Significant Subsidiaries;
and
(8) 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:
(1) the day which is five business days after written notice of acceleration
is received by the Company and the Credit Agent; or
(2) 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 (5) of the preceding
paragraph, the declaration of acceleration of the notes shall be automatically
annulled if
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the holders of any Indebtedness described in clause (5) have rescinded the
declaration of acceleration in respect of such Indebtedness within 30 days from
the date of such declaration and if:
(1) the annulment of the acceleration of the notes would not conflict with
any judgment or decree of a competent jurisdiction; and
(2) 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 Make-Whole Price or premium, as
applicable, 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, the applicable Make-Whole Price, or an equivalent premium, as the
case may be, shall become and be 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 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:
(1) 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;
(2) 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;
(3) the rights, powers, trusts, duties and immunities of the Trustee, and
the Company's obligations in connection therewith; and
(4) the Legal Defeasance provisions of the Indenture.
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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:
(1) 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;
(2) 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;
(3) 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;
(4) no Default or Event of Default shall have occurred and be continuing on
the date of the deposit described in clause (i) above, 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;
(5) 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;
(6) 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;
(7) 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
(8) the Company shall have delivered to the Trustee an Officers' Certificate
and an opinion of counsel, each stating that all conditions precedent
relating to the Legal Defeasance or the Covenant Defeasance have been
complied with.
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BOOK-ENTRY, DELIVERY AND FORM
The notes initially will be issued in book-entry form and represented by one
or more global notes. The global notes will be deposited with, or on behalf of,
The Depository Trust Company ("DTC"), New York, New York, as depositary, and
registered in the name of Cede & Co., the nominee of DTC. Unless and until it is
exchanged for individual certificates evidencing notes under the limited
circumstances described below, a global note may not be transferred except as a
whole by the depositary to its nominee or by the nominee to the depositary, or
by the depositary or its nominee to a successor depositary or to a nominee of
the successor depositary.
DTC has advised us that it is:
- a limited-purpose trust company organized under the New York Banking Law;
- a "banking organization" within the meaning of the New York Banking Law;
- a member of the Federal Reserve System;
- a "clearing corporation" within the meaning of the New York Uniform
Commercial Code; and
- a "clearing agency" registered pursuant to the provisions of Section 17A
of the Exchange Act.
DTC holds securities that its participants deposit with DTC. DTC also
facilitates the settlement among its participants of securities transactions,
including transfers and pledges, in deposited securities through electronic
computerized book-entry changes in participants' accounts, which eliminates the
need for physical movement of securities certificates. "Direct participants" in
DTC include securities brokers and dealers, including underwriters, banks, trust
companies, clearing corporations and other organizations. DTC is owned by a
number of its direct participants and by the New York Stock Exchange, Inc., the
American Stock Exchange, Inc. and the National Association of Securities
Dealers, Inc. Access to the DTC system is also available to others, which we
sometimes refer to as "indirect participants," that clear transactions through
or maintain a custodial relationship with a direct participant either directly
or indirectly. The rules applicable to DTC and its participants are on file with
the Commission.
Purchases of notes within the DTC system must be made by or through direct
participants, which will receive a credit for those notes on DTC's records. The
ownership interest of the actual purchaser of the notes, which we sometimes
refer to as a "beneficial owner," is in turn recorded on the direct and indirect
participants' records. Beneficial owners of notes will not receive written
confirmation from DTC of their purchases. However, beneficial owners are
expected to receive written confirmations providing details of their
transactions, as well as periodic statements of their holdings, from the direct
or indirect participants through which they purchased notes. Transfer of
ownership interests in global notes are to be accomplished by entries made on
the books of participants acting on behalf of beneficial owners. Beneficial
owners will not receive certificates representing their ownership interests in
the global notes except under the limited circumstances described below.
To facilitate subsequent transfers, all global notes deposited with DTC will
be registered in the name of DTC's nominee, Cede & Co. The deposit of notes with
DTC and their registration in the name of Cede & Co. will not change the
beneficial ownership of the notes. DTC has no knowledge of the actual beneficial
owners of the notes. DTC's records reflect only the identity of the direct
participants to whose accounts the notes are credited, which may or may not be
the beneficial owners. The participants are responsible for keeping account of
their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to direct
participants, by direct participants to indirect participants and by direct
participants and indirect participants to beneficial owners will be governed by
arrangements among them, subject to any legal requirements in effect from time
to time.
Redemption notices will be sent to DTC or its nominee. If less than all of
the notes are being redeemed, DTC will determine the amount of the interest of
each direct participant in the notes to be redeemed in accordance with DTC's
procedures.
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In any case where a vote may be required with respect to the notes neither
DTC or Cede & Co. will give consent for or vote the global notes. Under its
usual procedures, DTC will mail an omnibus proxy to us as soon as possible after
the record date. The omnibus proxy assigns the consenting or voting rights of
Cede & Co. to those direct participants to whose accounts the notes are credited
on the record date identified in a listing attached to the omnibus proxy.
Principal, premium, if any, and interest payments on the notes will be made
to Cede & Co., as nominee of DTC.
DTC's practice is to credit direct participants' accounts on the relevant
payment date unless DTC has reason to believe that it will not receive payment
on the payment date. Payments by direct or indirect participants to beneficial
owners will be governed by standing instructions and customary practices, as is
the case with securities held for the account of customers in bearer form or
registered in "street name." Those payments will be the responsibility of
participants and not of DTC or us, subject to any legal requirements in effect
from time to time. Payment of principal and interest to Cede & Co. is our
responsibility, disbursement of payments to direct participants is the
responsibility of DTC, and disbursement of payments to the beneficial owners is
the responsibility of direct and indirect participants.
Except under limited circumstances described below, purchasers of notes will
not be entitled to have notes registered in their names and will not receive
physical delivery of notes. Accordingly, each beneficial owner must rely on the
procedures of DTC and its participants to exercise any rights under the notes
and Indenture.
The laws of some jurisdictions may require that some purchasers of
securities take physical delivery of securities in definite form. Those laws may
impair the ability to transfer or pledge beneficial interests in notes.
DTC is under no obligation to provide its services as depositary for the
notes and may discontinue providing its services at any time. Neither we nor the
Trustee will have any responsibility for the performance by DTC or its direct
participants or indirect participants under the rules and procedures governing
DTC.
As noted above, beneficial owners of notes generally will not receive
certificates representing their ownership interests in the notes. However, if:
- DTC notifies us that it is unwilling or unable to continue as a depositary
for the global notes or if DTC ceases to be a clearing agency registered
under the Exchange Act at a time when it is required to be registered and
a successor depositary is not appointed within 90 days of the notification
to us or of our becoming aware of DTC's ceasing to be so registered, as
the case may be;
- we determine, in our sole discretion, not to have the notes represented by
one or more global notes; or
- an Event of Default under the Indenture has occurred and is continuing
with respect to the notes;
we will prepare and deliver certificates for the notes in exchange for
beneficial interests in the global notes. Any beneficial interests in a global
note that is exchangeable under the circumstances described in the preceding
sentence will be exchangeable for notes in definitive certificated form
registered in the names that the depositary directs. It is expected that these
directions will be based upon directions received by the depositary from its
participants with respect to ownership of beneficial interests in the global
notes.
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We obtained the information in this section and elsewhere in this prospectus
supplement concerning DTC and DTC's book-entry system from sources that we
believe to be reliable, but we take no responsibility for the accuracy of this
information.
SAME-DAY SETTLEMENT AND PAYMENT
The Underwriters will make settlement for the notes in immediately available
funds. We will make all payments of principal and interest in respect of the
notes in immediately available funds.
The notes will trade in DTC's Same-Day Funds Settlement System until
maturity or until the notes are issued in certificated form, and secondary
market trading activity in the notes will therefore be required by DTC to settle
in immediately available funds. We expect that secondary trading in the
certificated securities, if any, will also be settled in immediately available
funds. No assurance can be given as to the effect, if any, of settlement in
immediately available funds on trading activity in the notes.
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):
(1) reduce the principal amount of notes whose Holders must consent to an
amendment, supplement or waiver;
(2) 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;
(3) reduce the rate of or change the time for payment of interest on any
note;
(4) 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);
(5) make any note payable in money other than that stated in the notes;
(6) 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;
(7) 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");
(8) 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
(9) make any change in the foregoing amendment and waiver provisions.
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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 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, resign or apply to the Commission for permission
to continue.
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 Supplement 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:
(1) 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
(2) 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:
(1) EBITDA of such Acquisition EBITDA Entity for its last fiscal quarter for
which financial statements are available at such date of determination
(adjusted to give pro forma effect to any acquisition or disposition of a
business or Person by such Acquisition EBITDA Entity consummated during
the period covered by, or after the date of, such quarterly financial
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statements), 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
(2) 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:
(1) 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
(2) 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:
(1) 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
(2) Acquisition EBITDA of each business or Person that is an Acquisition
EBITDA Entity as of such date of determination, multiplied by a fraction,
(i) 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 (1)
above, and (ii) the denominator of which is three. The effects of unusual
items, including merger-related expenses permitted to be shown as a
separate line item on a statement of operations in accordance with GAAP,
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:
(1) the fair market value of the property subject to such arrangement (as
determined by the Board of Directors of the Company) and
(2) 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).
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"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:
(1) 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;
(2) 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;
(3) 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;
(4) money market accounts or funds with or issued by Qualified Issuers; and
(5) 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 (1) through (3) above.
"CHANGE OF CONTROL" means the occurrence of any of the following events:
(1) 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;
(2) the Company consolidates with, or merges with or into, another Person
(as defined below) 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;
(3) 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
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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
(4) 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."
"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:
(1) any net after-tax extraordinary gains or losses (less all fees and
expenses relating thereto);
(2) any net after-tax gains or losses (less all fees and expenses relating
thereto) attributable to Asset Sales;
(3) 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
(4) 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:
(1) 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
(2) 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 (including without
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limitation any minority interest) reducing Consolidated Adjusted Net Income for
such period, determined on a consolidated basis in accordance with GAAP
(excluding any such non-cash charge to the extent that it requires an accrual of
or reserve for cash charges for any future period).
"CREDIT AGENT" means JPMorgan Chase 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 Fifth Amended and Restated Credit
Agreement, dated as of March 15, 2002, as amended, among the Company, Canada
Company, the lenders party thereto and the Credit Agent, 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:
(1) Senior Bank Debt; and
(2) 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.
Senior Debt designated as Designated Senior Debt pursuant to clause (2)
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:
(1) Consolidated Interest Expense for such period; plus
(2) Consolidated Income Tax Expense for such period; plus
(3) 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:
(1) 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
(2) 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 Restricted Subsidiary organized
under the laws of a jurisdiction other than the United States (as defined in
Regulation S under the Securities Act) and that has not delivered a subsidiary
guarantee.
"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.
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"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:
(1) 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
(2) 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:
(1) interest rate swap agreements, interest rate cap agreements and interest
rate collar agreements; and
(2) 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:
(1) every obligation of such Person for money borrowed;
(2) every obligation of such Person evidenced by bonds, debentures, notes or
other similar instruments;
(3) every reimbursement obligation of such Person with respect to letters of
credit, bankers' acceptances or similar facilities issued for the account
of such Person;
(4) every obligation of such Person issued or assumed as the deferred
purchase price of property or services;
(5) 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;
(6) 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);
(7) 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
(8) every obligation of the type referred to in clauses (1) through (7) 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,
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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:
(1) 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
(2) 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).
"MAKE-WHOLE AMOUNT" means, with respect to any note, an amount equal to the
excess, if any, of:
(1) the present value of the remaining principal, premium and interest
payments that would be payable with respect to such note if such note
were redeemed on January 15, 2008, computed using a discount rate equal
to the Treasury Rate plus 75 basis points, over
(2) the outstanding principal amount of such note.
"MAKE-WHOLE AVERAGE LIFE" means, with respect to any date of redemption of
notes, the number of years (calculated to the nearest one-twelfth) from such
redemption date to January 15, 2008.
"MAKE-WHOLE PRICE" means, with respect to any note, the greater of:
(1) the sum of the principal amount of and Make-Whole Amount with respect to
such notes; and
(2) the redemption price of such note on January 15, 2008.
"MARKET PRICE" means:
(1) 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
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or sale of such converted debt securities, as determined reasonably and
in good faith by the board of directors; and
(2) 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:
(1) 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 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
(2) 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:
(1) 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
(2) 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
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(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:
(1) 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;"
(2) any Investments in Cash Equivalents;
(3) 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;
(4) Investments in assets (including accounts and notes receivable) owned or
used in the ordinary course of business;
(5) Investments for any purpose related to the Company's records and
information management business (including, without limitation, the
Company's confidential destruction and fulfillment businesses) in an
aggregate outstanding amount not to exceed $10.0 million; and
(6) 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:
(1) Liens existing as of the date of issuance of the notes;
(2) Liens on property or assets of the Company or any Restricted Subsidiary
securing Senior Debt;
(3) Liens on any property or assets of a Restricted Subsidiary granted in
favor of the Company or any Wholly Owned Restricted Subsidiary;
(4) Liens securing the notes or the Guarantees;
S-44
(5) 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;"
(6) 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;
(7) Liens securing Hedging Obligations permitted to be incurred pursuant to
clause (7) of the covenant entitled "Incurrence of Indebtedness and
Issuance of Preferred Stock;"
(8) 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;
(9) 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;
(10) 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;
(11) 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);
(12) 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;
(13) 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;
(14) Liens arising under options or agreements to sell assets;
(15) other Liens securing obligations incurred in the ordinary course of
business, which obligations do not exceed $10.0 million in the aggregate
at any one time outstanding; and
(16) any extension, renewal or replacement, in whole or in part, of any Lien
described in the foregoing clauses (1) through (15); provided that any
such extension, renewal or replacement shall not extend to any additional
property or assets.
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"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
LLC, C. Richard Reese, Kent P. Dauten, B. Thomas Golisano and their respective
Affiliates.
"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 of 1933, as amended.
"QUALIFIED ISSUER" means:
(1) any lender party to the Credit Agreement; or
(2) 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:
(1) 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);
(2) 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 the maturity date of
the notes;
(3) to the extent such Refinancing Indebtedness refinances Indebtedness that
has a final maturity date occurring after the initial scheduled maturity
date of the notes, 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;
(4) 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
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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
(5) 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:
(1) each direct or indirect Subsidiary of the Company existing on the date
of the Indenture (other than Iron Mountain (Netherlands) B.V. and its
subsidiaries (including Iron Mountain Europe Limited), Iron Mountain
Cayman Ltd. and its subsidiaries, Iron Mountain Mexico, S.A. de R.L. de
C.V and its subsidiaries, Iron Mountain Assurance Corporation and Upper
Providence Venture I, L.P.) and
(2) any other direct or indirect Subsidiary of the Company formed, acquired
or existing after the date of the Indenture (including an Excluded
Restricted Subsidiary),
which, in the case of (1) or (2), is not designated by the board of
directors as an "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:
(1) the Senior Bank Debt; and
(2) 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:
(1) any liability for federal, state, local or other taxes owed or owing by
the Company;
(2) any Indebtedness of the Company to any of its Subsidiaries or other
Affiliates;
(3) any trade payables; or
(4) 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 Indenture for purposes of this clause (4) 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.
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"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 Exchange 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.
"TREASURY RATE" means, at any time of computation, the yield to maturity at
such time (as compiled by and published in the most recent Federal Reserve
Statistical Release H.15(519), which has become publicly available at least two
business days prior to the date of the redemption notice or, if such Statistical
Release is no longer published, any publicly available source of similar market
data) of United States Treasury securities with a constant maturity most nearly
equal to the Make-Whole Average Life; provided, however, that if the Make-Whole
Average Life is not equal to the constant maturity of the United States Treasury
security for which a weekly average yield is given, the Treasury Rate shall be
obtained by linear interpolation (calculated to the nearest one-twelfth of a
year) from the weekly average yields of United States Treasury securities for
which such yields are given, except that if the Make-Whole Average Life is less
than one year, the weekly average yield on actually traded United States
Treasury securities adjusted to a constant maturity of one year shall be used.
"UNRESTRICTED SUBSIDIARY" means:
(1) any Subsidiary that is designated by the board of directors as an
Unrestricted Subsidiary in accordance with the "Unrestricted
Subsidiaries" covenant; and
(2) 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:
(1) 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
(2) 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.
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MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following summary of federal income tax considerations is based upon the
Internal Revenue Code of 1986, as amended, Treasury regulations and rulings and
decisions now in effect, all of which are subject to change, possibly with
retroactive effect, or possible differing interpretations. We have not sought
any ruling from the Internal Revenue Service with respect to any matter
described in this summary, and we cannot provide any assurance that the IRS or a
court will agree with the statements made in this summary. The summary applies
to you only if you hold the notes as a capital asset, which generally is an
asset held for investment rather than as inventory or as property used in a
trade or business. The summary also does not discuss the particular tax
consequences that might be relevant to you if you are subject to special rules
under the federal income tax law, for example, if you are:
- a bank, life insurance company, regulated investment company or other
financial institution;
- a broker or dealer in securities or foreign currency;
- a person that has a functional currency other than the U.S. dollar;
- a person who acquires our notes in connection with employment or other
performance of services;
- a person subject to alternative minimum tax;
- a person who owns our notes as part of a straddle, hedging transaction,
conversion transaction or constructive sale transaction;
- a tax-exempt entity; or
- an expatriate.
In addition, the following summary does not address all possible tax
considerations, and in particular does not discuss any estate, gift,
generation-skipping transfer, state, local or foreign tax considerations. For
all these reasons, we urge you to consult with your tax advisor about the
federal income tax and other tax consequences of your acquisition, ownership and
disposition of our notes.
For purposes of this summary, you are a "U.S. holder" if you are a
beneficial owner of our notes and for federal income tax purposes are:
- a citizen or resident of the United States, including an alien individual
who is a lawful permanent resident of the United States or meets the
substantial presence residency test under the federal income tax laws;
- a corporation, partnership or other entity treated as a corporation or
partnership for federal income tax purposes, that is created or organized
in or under the laws of the United States, any state thereof or the
District of Columbia, unless otherwise provided by Treasury regulations;
- an estate the income of which is subject to federal income taxation
regardless of its source; or
- a trust if a court within the United States is able to exercise primary
supervision over the administration of the trust and one or more United
States persons have the authority to control all substantial decisions of
the trust, or electing trusts in existence on August 20, 1996 to the
extent provided in Treasury regulations;
and if your status as a U.S. holder is not overridden pursuant to the provisions
of an applicable tax treaty. Conversely, you are a "non-U.S. holder" if you are
a beneficial owner of our notes and are not a U.S. holder.
TAX CONSEQUENCES FOR U.S. HOLDERS
If you are a U.S. holder:
PAYMENTS OF INTEREST. You must generally include interest on a note in your
gross income as ordinary interest income:
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- when you receive it, if you use the cash method of accounting for federal
income tax purposes, or
- when it accrues, if you use the accrual method of accounting for federal
income tax purposes.
Purchase price for a note that is allocable to prior accrued interest may be
treated as offsetting a portion of the interest income from the next scheduled
interest payment on the note. Any interest income so offset is not taxable.
MARKET DISCOUNT. If you acquire a note and your adjusted tax basis in it
upon acquisition is less than its principal amount, you will be treated as
having acquired the note at a "market discount" unless the amount of this market
discount is less than the DE MINIMIS amount specified under the Internal Revenue
Code. Under the market discount rules, you will be required to treat any gain on
the sale, exchange, redemption, retirement, or other taxable disposition of a
note, or any appreciation in a note in the case of some nontaxable dispositions
such as a gift, as ordinary income to the extent of the market discount which
has not previously been included in your income and which is treated as having
accrued on the note at the time of the disposition. In addition, you may be
required to defer, until the maturity of the note or earlier taxable
disposition, the deduction of all or a portion of the interest expense on any
indebtedness incurred or continued to purchase or carry the note. Any market
discount will be considered to accrue ratably during the period from the date of
your acquisition to the maturity date of the note, unless you elect to accrue
the market discount on a constant yield method. In addition, you may elect to
include market discount in income currently as it accrues, on either a ratable
or constant yield method, in which case the rule described above regarding
deferral of interest deductions will not apply. This election to include market
discount in income currently, once made, applies to all market discount
obligations acquired during or after the first taxable year to which the
election applies and may not be revoked without the consent of the IRS. You
should consult with your tax advisor regarding these elections.
AMORTIZABLE BOND PREMIUM. If you acquire a note and your adjusted tax basis
in it upon acquisition is greater than its principal amount, you will be treated
as having acquired the note with "bond premium." You generally may elect to
amortize this bond premium over the remaining term of the note on a constant
yield method, and the amount amortized in any year will be treated as a
reduction of your interest income from the note for that year. If the amount of
your bond premium amortization would be lower if calculated based on an earlier
optional redemption date and price than the amount of amortization calculated
through that date based on the note's maturity date and its stated principal
amount, then you must calculate the amount and timing of your bond premium
amortization deductions assuming that the note will be redeemed on the optional
redemption date at the optional redemption price. You may generally recalculate
your bond premium amortization amount and schedule of deductions to the extent
your note is not actually redeemed at that earlier optional redemption date. If
you do not make an election to amortize bond premium, your bond premium on a
note will decrease the gain or increase the loss that you otherwise recognize on
a disposition of that note. Any election to amortize bond premium applies to all
debt obligations, other than debt obligations the interest on which is
excludable from gross income, that you hold at the beginning of the first
taxable year to which the election applies and that you thereafter acquire. You
may not revoke an election to amortize bond premium without the consent of the
IRS. You should consult with your tax advisor regarding this election.
DISPOSITION OF A NOTE. Upon the sale, exchange, redemption, retirement or
other disposition of a note, you generally will recognize taxable gain or loss
in an amount equal to the difference, if any, between (1) the amount you receive
in cash or in property, valued at its fair market value, upon this sale,
exchange, redemption, retirement or other disposition, other than amounts
representing accrued and unpaid interest which will be taxable as interest
income, and (2) your adjusted tax basis in the note. Your adjusted tax basis in
the note will, in general, equal your acquisition cost for the note, exclusive
of any amount paid allocable to prior accrued interest, as increased by any
market discount
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you have included in income in respect of the note, and as decreased by any
amortized bond premium on the note. Except with respect to accrued market
discount, your gain or loss will be capital gain or loss, and will be long-term
capital gain or loss if you have held the note for more than one year at the
time of disposition. For noncorporate U.S. holders, preferential rates of tax
may apply to long-term capital gains.
TAX CONSEQUENCES FOR NON-U.S. HOLDERS
If you are a non-U.S. holder:
GENERALLY. You will not be subject to federal income taxes on payments of
principal, premium, if any, or interest on a note, or upon the sale, exchange,
redemption, retirement or other disposition of a note, if:
- you do not own directly or indirectly 10% or more of the total voting
power of all classes of our voting stock;
- your income and gain in respect of the note are not effectively connected
with the conduct of a United States trade or business;
- you are not a controlled foreign corporation that is related to or under
common control with us;
- we or the applicable paying agent (the "Withholding Agent") have received
from you a properly executed, applicable IRS Form W-8 or substantially
similar form in the year in which a payment of interest, principal or
premium occurs, or in a previous calendar year to the extent provided for
in the instructions to the applicable IRS Form W-8; and
- in the case of gain upon the sale, exchange, redemption, retirement or
other disposition of a note recognized by an individual non-U.S. holder,
you were present in the United States for less than 183 days during the
taxable year in which the gain was recognized.
The IRS Form W-8 or a substantially similar form must be signed by you under
penalties of perjury certifying that you are a non-U.S. holder and providing
your name and address, and you must inform the Withholding Agent of any change
in the information on the statement within 30 days of the change. If you hold a
note through a securities clearing organization or other qualified financial
institution, the organization or institution may provide a signed statement to
the Withholding Agent. However, in that case, the signed statement must
generally be accompanied by a statement containing the relevant information from
the executed IRS Form W-8 or substantially similar form that you provided to the
organization or institution. If you are a partner in a partnership holding our
notes, the partnership as well as you must comply with applicable certification
requirements. There are also special rules applicable to intermediaries.
Except in the case of income or gain in respect of a note that is
effectively connected with the conduct of a United States trade or business,
discussed below, interest received or gain recognized by you which does not
qualify for exemption from taxation will be subject to federal income tax and
withholding at a rate of 30% unless reduced or eliminated by an applicable tax
treaty. You must generally use an applicable IRS Form W-8, or a substantially
similar form, to claim tax treaty benefits. If you are a non-U.S. holder
claiming benefits under an income tax treaty, you should be aware that you may
be required to obtain a taxpayer identification number and to certify your
eligibility under the applicable treaty's limitations on benefits article in
order to comply with the applicable certification requirements of the Treasury
regulations.
EFFECTIVELY CONNECTED INCOME AND GAIN. If you are a non-U.S. holder whose
income and gain in respect of a note is effectively connected with the conduct
of a United States trade or business, you will be subject to regular federal
income tax on this income and gain in generally the same manner as U.S. holders,
and general federal income tax return filing requirements will apply. In
addition, if you are a corporation, you may be subject to a branch profits tax
equal to 30% of your effectively connected
S-51
adjusted earnings and profits for the taxable year, unless you qualify for a
lower rate under an applicable tax treaty. To obtain an exemption from
withholding on interest on the notes, you must generally supply to the
Withholding Agent an applicable IRS Form W-8, or a substantially similar form.
INFORMATION REPORTING AND BACKUP WITHHOLDING
Information reporting and backup withholding may apply to interest and other
payments to you under the circumstances discussed below. Amounts withheld under
backup withholding are generally not an additional tax and may be refunded or
credited against your federal income tax liability, provided that you furnish
the required information to the IRS.
IF YOU ARE A U.S. HOLDER. You may be subject to backup withholding,
currently at a rate of 30%, when you receive interest payments on a note or
proceeds upon the sale, exchange, redemption, retirement or other disposition of
a note. This backup withholding tax rate will be reduced to 28% over the next
several years. In general, you can avoid this backup withholding if you properly
execute under penalties of perjury an IRS Form W-9 or a substantially similar
form on which you:
- provide your correct taxpayer identification number; and
- certify that you are exempt from backup withholding because (a) you are a
corporation or come within another enumerated exempt category, (b) you
have not been notified by the IRS that you are subject to backup
withholding; or (c) you have been notified by the IRS that you are no
longer subject to backup withholding.
If you do not provide your correct taxpayer identification number on the IRS
Form W-9 or a substantially similar form, you may be subject to penalties
imposed by the IRS.
Unless you have established on a properly executed IRS Form W-9 or a
substantially similar form that you are a corporation or come within another
enumerated exempt category, interest and other payments on the notes paid to you
during the calendar year, and the amount of tax withheld, if any, will be
reported to you and to the IRS.
IF YOU ARE A NON-U.S. HOLDER. The amount of interest paid to you on a note
during each calendar year, and the amount of tax withheld, if any, will
generally be reported to you and to the IRS. This information reporting
requirement applies regardless of whether you were subject to withholding or
whether withholding was reduced or eliminated by an applicable tax treaty. Also,
interest paid to you on a note may be subject to backup withholding at a 30%
rate, or subsequent reduced rate, unless you properly certify your non-U.S.
holder status on an IRS Form W-8 or a substantially similar form in the manner
described above, under "Tax Consequences for Non-U.S. Holders." Similarly,
information reporting and backup withholding will not apply to proceeds you
receive upon the sale, exchange, redemption, retirement or other disposition of
a note, if you properly certify that you are a non-U.S. holder on an IRS
Form W-8 or a substantially similar form. Even without having executed an IRS
Form W-8 or a substantially similar form, however, in some cases information
reporting and backup withholding may not apply to proceeds you receive upon the
sale, exchange, redemption, retirement or other disposition of a note, if you
receive those proceeds through a broker's foreign office.
S-52
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement
between Bear, Stearns & Co. Inc. (the "Underwriter"), the subsidiary guarantors
and us (the "Underwriting Agreement"), the Underwriter has agreed to purchase
from us all of the notes.
The Underwriting Agreement provides that the obligations of the Underwriter
thereunder are subject to approval of certain legal matters by counsel and to
various other conditions. The Underwriter is obligated to purchase and accept
delivery of all of the notes if it purchases any of the notes.
The Underwriter proposes to offer the notes directly to the public at the
public offering price set forth on the cover page of this prospectus supplement
and at such price less a concession not in excess of 0.25% per note. The
Underwriter may allow, and such dealers may re-allow, concessions not in excess
of 0.25% per note on sales to other dealers. After the offering of notes, the
public offering price, concessions and other selling terms may be changed by the
Underwriter. The notes are offered subject to receipt and acceptance by the
Underwriter and to certain other conditions, including the right to reject
orders in whole or in part.
The Company and the subsidiary guarantors have agreed to indemnify the
Underwriter against certain liabilities under the Securities Act of 1933, as
amended, or to contribute to payments that the Underwriter may be required to
make in respect thereof.
In order to facilitate the offering, certain persons participating in the
offering may engage in transactions that stabilize, maintain or otherwise affect
the price of the notes during and after the offering. Specifically, the
Underwriter may over-allot or otherwise create a short position in the notes for
its own account by selling more notes than have been sold to it by us. The
Underwriter may elect to cover any such short position by purchasing notes in
the open market. In addition, the Underwriter may stabilize or maintain the
price of the notes by bidding for or purchasing notes in the open market and may
impose penalty bids, under which selling concessions allowed to other
broker-dealers participating in the offering are reclaimed if notes previously
distributed in the offering are repurchased in connection with stabilization
transactions or otherwise. The effect of these transactions may be to stabilize
or maintain the market price of the notes at a level above that which might
otherwise prevail in the open market. The imposition of a penalty bid may also
affect the price of the notes to the extent that it discourages resales thereof.
From time to time, the Underwriter or its affiliates have provided, and may
continue to provide in the future, investment banking, general financing and
banking services to us and our affiliates, for which they have received, and
expect to receive, customary compensation.
NOTICE TO UNITED KINGDOM RESIDENTS
We have not authorized the notes to be offered to the public in the United
Kingdom, within the meaning of the U.K. Public Offers of Securities Regulations
1995, and neither this prospectus supplement, the prospectus included herein nor
any other document issued in connection with this offering may be passed on to
any person in the United Kingdom unless that person is of a kind described in
Article 11(3) of the Financial Services Act 1986 (Investment Advertisements)
(Exemptions) Order 1996, as amended, or is a person to whom the document may
otherwise lawfully be issued or passed on. All applicable provisions of the
Financial Services Act 1986 must be complied with in respect of anything done in
relation to the notes in, from or otherwise involving the United Kingdom.
S-53
NOTICE TO CANADIAN RESIDENTS
RESALE RESTRICTIONS
The distribution of the notes in Canada is being made only on a private
placement basis exempt from the requirement that we prepare and file a
prospectus with the securities regulatory authorities in each province where
trades of notes are made. Any resale of the notes in Canada must be made under
applicable securities laws, which will vary depending on the relevant
jurisdiction, and which may require resales to be made under available statutory
exemptions or under a discretionary exemption granted by the applicable Canadian
securities regulatory authority. Purchasers are advised to seek legal advice
prior to any resale of the notes.
REPRESENTATIONS OF PURCHASERS
By purchasing notes in Canada and accepting a purchase confirmation, a
purchaser is representing to us and the dealer from whom the purchase
confirmation is received that:
- the purchaser is entitled under applicable provincial securities laws to
purchase the notes without the benefit of a prospectus qualified under
those securities laws;
- where required by law, that the purchaser is purchasing as principal and
not as agent; and
- the purchaser has reviewed the text above under Resale Restrictions.
RIGHTS OF ACTION--ONTARIO PURCHASERS
The securities being offered are those of a foreign issuer and Ontario
purchasers will not receive the contractual right of action prescribed by
Ontario securities law. As a result, Ontario purchasers must rely on other
remedies that may be available, including common law rights of action for
damages or rescission or rights of action under the civil liability provisions
of the U.S. federal securities laws. Following a decision of the U.S. Supreme
Court, it is possible that Ontario purchasers will not be able to rely upon the
remedies set out in Section 12(a)(2) of the Securities Act where securities are
being offered under a U.S. private placement memorandum such as this document.
ENFORCEMENT OF LEGAL RIGHTS
All of our directors and officers as well as the experts named herein may be
located outside of Canada and, as a result, it may not be possible for Canadian
purchasers to effect service of process within Canada upon the Company or these
persons. All or a substantial portion of the assets of the Company and these
persons may be located outside of Canada and, as a result, it may not be
possible to satisfy a judgment against the Company or these persons in Canada or
to enforce a judgment obtained in Canadian courts against the Company or these
persons outside of Canada.
NOTICE TO BRITISH COLUMBIA RESIDENTS
A purchaser of notes to whom the SECURITIES ACT (British Columbia) applies
is advised that the purchaser is required to file with the British Columbia
Securities Commission a report within ten days of the sale of any notes acquired
by the purchaser in this offering. The report must be in the form attached to
British Columbia Securities Commission Blanket Order BOR #95/17, a copy of which
may be obtained from us. Only one report must be filed for notes acquired on the
same date and under the same prospectus exemption.
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TAXATION AND ELIGIBILITY FOR INVESTMENT
Canadian purchasers of notes should consult their own legal and tax advisers
with respect to the tax consequences of an investment in the notes in their
particular circumstances and about the eligibility of the notes for investment
by the purchaser under relevant Canadian legislation.
S-55
LEGAL MATTERS
Certain legal matters with respect to the validity of the notes and the
guarantees will be passed upon for Iron Mountain by Sullivan & Worcester LLP,
Boston, Massachusetts. Certain legal matters relating to this offering will be
passed upon for the underwriters by Latham & Watkins, New York, New York.
Certain matters of Pennsylvania law will be passed upon for Iron Mountain by
Ballard Spahr Andrews & Ingersoll, LLP, Philadelphia, Pennsylvania. Jas. Murray
Howe is of counsel to Sullivan & Worcester LLP and beneficially owns 45,000
shares of our common stock.
NOTICE REGARDING ARTHUR ANDERSEN LLP
Arthur Andersen LLP, or Andersen, our former independent auditor, audited
our consolidated financial statements for the three years in the period ended
December 31, 2001, which are incorporated by reference in this prospectus
supplement and the accompanying prospectus. On June 15, 2002, Andersen was
convicted on a federal obstruction of justice charge. Effective June 19, 2002,
we dismissed Andersen and appointed Deloitte & Touche LLP to succeed Andersen as
our independent auditors. Our audited consolidated financial statements that are
incorporated by reference in this prospectus supplement were audited by
Andersen. While Andersen has previously consented to the inclusion of its audit
report for such periods in the registration statement pursuant to which this
offering is being made, Andersen is no longer able to reissue a consent to
including or incorporating by reference its audit reports relating to such
financial statements in our SEC filings as may be required under SEC rules. The
SEC recently has provided certain regulatory relief designed to allow companies
that file reports with the SEC to dispense with the requirement of filing a
consent of Andersen in certain circumstances. Notwithstanding the SEC's
regulatory relief, an investor's ability to seek potential recoveries from
Andersen related to any claims that an investor may assert as a result of the
work performed by Andersen may be limited significantly by the lack of such
consent and the diminished amount of assets of Andersen that are or may be
available to satisfy any such claims.
EXPERTS
THE FOLLOWING AMENDS AND SUPERSEDES IN ITS ENTIRETY THE INFORMATION UNDER
THE CAPTION "EXPERTS" IN THE ACCOMPANYING PROSPECTUS.
The consolidated financial statements of Iron Mountain Incorporated and its
subsidiaries for the three years ended December 31, 2001, and its supplemental
schedule, Valuation and Qualifying Accounts, included in its Annual Report on
Form 10-K for the year ended December 31, 2001, filed with the Securities and
Exchange Commission on March 21, 2002 and incorporated by reference into this
registration statement, have been audited by Arthur Andersen LLP, independent
public accountants, as set forth in their report dated February 22, 2002 (except
with respect to Note 17, as to which the date is March 15, 2002). In their
report on Iron Mountain's consolidated financial statements, that firm states
that, with respect to certain subsidiaries, its opinion is based on the report
of RSM Robson Rhodes, independent public accountants. The consolidated financial
statements and supporting schedule referred to above have been incorporated by
reference herein in reliance upon the authority of those two firms as experts in
giving said reports.
The consolidated financial statements of Iron Mountain Incorporated (f/k/a
Pierce Leahy Corp.), and its subsidiaries for the three years ended
December 31, 1999, and its supplemental schedule, Valuation and Qualifying
Accounts, included in its Annual Report on Form 10-K for the year ended
December 31, 1999, dated March 30, 2000, have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their reports with respect
thereto, and are incorporated by reference herein in reliance upon the authority
of said firm as experts in giving said reports.
S-56
DOCUMENTS INCORPORATED BY REFERENCE
The Commission allows us to "incorporate by reference" the information we
file with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus supplement. Later information filed
with the Commission will update and supersede information we have included or
incorporated by reference in this prospectus supplement. In addition to the
documents incorporated by reference or deemed incorporated by reference into the
accompanying prospectus, which prospectus is supplemented by this prospectus
supplement, we incorporate by reference the documents listed below and any
filings made after the date of this prospectus supplement with the Commission
under 13(a), 13(c), 14 of 15(d) of the Exchange Act, until our offering is
completed or terminated.
The following documents were filed by us under File No. 1-13045 and are
incorporated by reference:
- Annual Report on Form 10-K for the fiscal year ended December 31, 2001;
- Quarterly Reports on Form 10-Q and Form 10-Q/A for the quarters ended
March 31, 2002, June 30, 2002 and September 30, 2002;
- Definitive Proxy on Schedule 14A filed April 25, 2002; and
- Current Reports on Form 8-K filed June 20, 2002 and December 16, 2002.
We will provide you with a copy of the information we have incorporated by
reference, excluding exhibits other than those to which we specifically refer.
You may obtain this information at no cost by writing or telephoning us at: 745
Atlantic Avenue, Boston, Massachusetts 02111, (617) 535-4766, Attention:
Investor Relations.
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Filed Pursuant to Rule 424(b)(3)
Registration No. 333-75068
PROSPECTUS
$500,000,000
IRON MOUNTAIN INCORPORATED
DEBT SECURITIES, PREFERRED STOCK, DEPOSITARY SHARES,
COMMON STOCK AND WARRANTS
----------------
We may from time to time offer:
- debt securities;
- shares of our preferred stock;
- fractional shares of our preferred stock in
the form of depositary shares;
- shares of our common stock;
- warrants to purchase any of these
securities; or
- stock purchase contracts.
The securities we offer will have an aggregate public offering price of up
to $500,000,000. These securities may be offered and sold separately or together
in units with other securities described in this prospectus.
In connection with the debt securities, substantially all of our present and
future wholly owned domestic subsidiaries may, on a joint and several basis,
offer full and unconditional guarantees of our obligations under the debt
securities.
IM Capital Trust I may, from time to time, offer trust preferred securities
which will be fully and unconditionally guaranteed by us. Our guarantees may be
senior or subordinated. The trust preferred securities may be offered and sold
separately or together in units with other securities described in this
prospectus.
We and IM Capital Trust I will indicate the particular securities we offer
and their specific terms in a supplement to this prospectus. In each case we
would describe the type and amount of securities we are offering, the initial
public offering price and the other terms of the offering.
Our common stock is listed on the New York Stock Exchange under the symbol
"IRM." We will make applications to list any shares of common stock sold
pursuant to a supplement to this prospectus on the NYSE. We have not determined
whether we will list any of the other securities we may offer on any exchange or
over-the-counter market. If we decide to seek listing of any securities, the
supplement will disclose the exchange or market.
INVESTING IN OUR SECURITIES INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING ON
PAGE 2.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Our and IM Capital Trust I's principal place of business is 745 Atlantic
Avenue, Boston, Massachusetts 02111 and our and IM Capital Trust I's telephone
number is (617) 535-4766.
THE DATE OF THIS PROSPECTUS IS FEBRUARY 11, 2002.
TABLE OF CONTENTS
PAGE
--------
About This Prospectus....................................... (i)
Cautionary Note Regarding Forward-Looking Statements........ (ii)
Our Company................................................. 1
IM Capital Trust............................................ 1
Risk Factors................................................ 2
Ratio of Earnings to Fixed Charges.......................... 7
Use of Proceeds............................................. 8
Description of Our Debt Securities.......................... 8
Description of Our Capital Stock............................ 16
Description of Our Depositary Shares........................ 18
Description of Our Warrants................................. 21
Description of the Stock Purchase Contracts and the Stock
Purchase Units............................................ 22
Description of the Trust Preferred Securities............... 23
Description of the Trust Preferred Securities Guarantee..... 24
Relationship Among the Debt Securities, the Trust Preferred
Securities and the Trust Preferred Securities Guarantee... 28
Description of Certain Provisions of Pennsylvania Law and
Our Articles of Incorporation and Bylaws.................. 30
Plan of Distribution........................................ 31
Validity of the Offered Securities.......................... 32
Experts..................................................... 33
Where You Can Find More Information......................... 33
Documents Incorporated By Reference......................... 33
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement we filed with the
Securities and Exchange Commission, or the SEC, using a "shelf" registration
process. Under this shelf process, we may sell any combination of the securities
described in this prospectus in one or more offerings up to a total dollar
amount of proceeds of $500,000,000 or the equivalent denominated in foreign
currency. This prospectus provides you with a general description of the
securities we may offer. Each time we sell securities, we will provide a
prospectus supplement containing specific information about the terms of that
offering. The prospectus supplement may also add, update, or change information
contained in this prospectus. You should read both this prospectus and any
prospectus supplement, together with additional information described under the
heading "Where You Can Find More Information" and "Documents Incorporated By
Reference."
We have not included, or incorporated by reference, separate financial
statements of IM Capital Trust I in this prospectus. Neither we nor IM Capital
Trust I consider these financial statements material to holders of the trust
preferred securities because:
- IM Capital Trust is a special purpose entity;
- IM Capital Trust does not have any operating history or independent
operations; and
- IM Capital Trust is not engaged in, nor will it engage in, any activity
other than issuing trust preferred and trust common securities, investing
in and holding our debt securities and engaging in related activities.
(i)
Furthermore, the combination of our obligations under our debt securities,
the associated indentures, IM Capital Trust's declaration of trust and our
related guarantees provide a full and unconditional guarantee of payments of
distributions and other amounts due on the trust preferred securities. In
addition, we do not expect that IM Capital Trust will file reports with the SEC
under the Securities Exchange Act of 1934, as amended.
YOU SHOULD RELY ONLY ON THE INFORMATION INCORPORATED BY REFERENCE OR
PROVIDED IN THIS DOCUMENT AND ANY PROSPECTUS SUPPLEMENT. NEITHER WE NOR IM
CAPITAL TRUST HAVE AUTHORIZED ANYONE ELSE TO PROVIDE YOU WITH DIFFERENT
INFORMATION. NEITHER WE NOR IM CAPITAL TRUST ARE MAKING AN OFFER OF THESE
SECURITIES IN ANY JURISDICTION WHERE IT IS UNLAWFUL. IF ANYONE PROVIDES YOU WITH
DIFFERENT OR INCONSISTENT INFORMATION, YOU SHOULD NOT RELY ON IT. YOU SHOULD NOT
ASSUME THAT THE INFORMATION IN THIS PROSPECTUS IS ACCURATE AS OF ANY DATE OTHER
THAN THE DATE ON THE FRONT OF THIS DOCUMENT.
REFERENCES IN THIS PROSPECTUS TO THE TERMS "WE," "OUR" OR "US" OR OTHER
SIMILAR TERMS MEAN IRON MOUNTAIN INCORPORATED AND ITS CONSOLIDATED SUBSIDIARIES,
UNLESS WE STATE OTHERWISE OR THE CONTEXT INDICATES OTHERWISE. REFERENCES IN THIS
PROSPECTUS TO "IM CAPITAL TRUST" MEANS IM CAPITAL TRUST I.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
We have made and incorporated by reference statements in this document that
constitute "forward-looking statements" as that term is defined in the federal
securities laws. These forward-looking statements concern our operations,
economic performance and financial condition. The forward-looking statements are
subject to various known and unknown risks, uncertainties and other factors.
When we use words such as "believes," "expects," "anticipates," "estimates" or
similar expressions, we are making forward-looking statements.
Although we believe that our forward-looking statements are based on
reasonable assumptions, our expected results may not be achieved and actual
results may differ materially from our expectations. Important factors that
could cause actual results to differ from expectations include, among others,
those set forth below. For a more detailed discussion of some of these factors,
please read carefully the information under "Risk Factors" beginning on page 2.
- difficulties related to the integration of acquisitions generally and,
more specifically, the integration of our operations and those of Pierce
Leahy Corp.;
- unanticipated costs as a result of our acquisition of Pierce Leahy;
- the uncertainties related to international expansion and operations;
- the uncertainties related to expansion into digital businesses, including
the timing of introduction and market acceptance of our products and
services;
- rapid and significant changes in technology;
- the cost and availability of appropriate storage facilities;
- changes in customer preferences and demand for our services;
- our significant indebtedness and the cost and availability of financing
for contemplated growth; and
- other general economic and business conditions.
These cautionary statements should not be construed by you to be exhaustive
and they are made only as of the date of this prospectus. You should read these
cautionary statements as being applicable to all forward-looking statements
wherever they appear. We assume no obligation to update or revise the
forward-looking statements or to update the reasons why actual results could
differ from those projected in the forward-looking statements.
(ii)
OUR COMPANY
We are the leader in records and information management services. We are an
international, full-service provider of records and information management and
related services, enabling customers to outsource these functions. We have a
diversified customer base, which includes more than half of the Fortune 500 and
numerous commercial, legal, banking, healthcare, accounting, insurance,
entertainment and government organizations. We provide storage for all major
media, including paper, which is the dominant form of records storage, magnetic
media, including computer tapes, microfilm and microfiche, master audio and
video tapes, film and optical disks, X-rays and blueprints. Our principal
services provided to our storage customers include courier pick-up and delivery,
filing, retrieval and destruction of records, database management, customized
reporting and disaster recovery support. We also sell storage materials,
including cardboard boxes and magnetic media, and provide confidential
destruction, consulting, facilities management, fulfillment and other
outsourcing services.
As of December 31, 2001, we provided services to over 125,000 customer
accounts in 80 markets in the United States and 44 markets outside of the United
States. We employ over 10,000 people and operate more than 650 records
management facilities in the United States, Canada, Europe and Latin America.
IM CAPITAL TRUST
IM Capital Trust is a subsidiary of ours. IM Capital Trust was created under
the Delaware Business Trust Act and is governed by a declaration of trust, as it
may be amended and restated from time to time, among the trustees of IM Capital
Trust and us.
When IM Capital Trust issues its trust preferred securities, the holders of
the trust preferred securities will own all of the issued and outstanding trust
preferred securities of IM Capital Trust. We will acquire all of the issued and
outstanding trust common securities of IM Capital Trust, representing an
undivided beneficial interest in the assets of IM Capital Trust of at least 3%.
IM Capital Trust will exist primarily for the purposes of:
- issuing its trust preferred and trust common securities;
- investing the proceeds from the sale of its trust preferred and trust
common securities in our debt securities; and
- engaging in other activities only as are necessary or incidental to
issuing its securities and purchasing and holding our debt securities.
The debt securities IM Capital Trust purchases from us may be subordinated
debt securities or senior debt securities, and may be fully and unconditionally
guaranteed by substantially all of our present and future wholly owned domestic
subsidiaries. We will specify the type of debt security in a prospectus
supplement.
IM Capital Trust has three trustees. One of the trustees, referred to as the
regular trustee, is an individual who is an officer and employee of Iron
Mountain. Additional regular trustees may be appointed in the future. The second
trustee is The Bank of New York, which serves as the property trustee under the
declaration of trust for purposes of the Trust Indenture Act of 1939. The third
trustee is The Bank of New York (Delaware), which has its principal place of
business in the State of Delaware, and serves as the Delaware trustee of IM
Capital Trust.
The Bank of New York, acting in its capacity as guarantee trustee, will hold
for the benefit of the holders of trust preferred securities a trust preferred
securities guarantee, which will be separately qualified under the Trust
Indenture Act of 1939.
-1-
Unless otherwise provided in the applicable prospectus supplement, because
we will own all of the trust common securities of IM Capital Trust, we will have
the exclusive right to appoint, remove or replace trustees and to increase or
decrease the number of trustees. In most cases, there will be at least three
trustees. The term of IM Capital Trust will be described in the applicable
prospectus supplement, but may dissolve earlier, as provided in IM Capital
Trust's declaration of trust, as it may be amended and restated from time to
time.
The rights of the holders of the trust preferred securities of IM Capital
Trust, including economic rights, rights to information and voting rights and
the duties and obligations of the trustees of IM Capital Trust, will be
contained in and governed by the declaration of trust of IM Capital Trust, as it
may be amended and restated from time to time, the Delaware Business Trust Act
and the Trust Indenture Act of 1939.
RISK FACTORS
YOU SHOULD CONSIDER CAREFULLY THE FOLLOWING FACTORS AND OTHER INFORMATION IN
THIS PROSPECTUS BEFORE DECIDING TO INVEST IN OUR SECURITIES.
ACQUISITION AND INTERNATIONAL EXPANSION RISKS
FAILURE TO SUCCESSFULLY INTEGRATE ACQUIRED OPERATIONS COULD REDUCE OUR FUTURE
RESULTS OF OPERATIONS.
The success of any acquisition depends in part on our ability to integrate
the acquired company. The process of integrating acquired businesses may involve
unforeseen difficulties and may require a disproportionate amount of our
management's attention and our financial and other resources.
In particular, the integration of our operations and the operations formerly
conducted under the name Pierce Leahy has presented and will continue to present
a significant challenge to our management. We began integrating the cultures,
operating systems, procedures and information technologies of Iron Mountain and
Pierce Leahy approximately two years ago. The integration process is continuing
and will proceed for up to one more year.
We can give no assurance that we will ultimately be able to effectively
integrate and manage the operations of any acquired business, in general, and
Pierce Leahy, in particular. Nor can we assure you that we will be able to
maintain or improve the historical financial performance of Iron Mountain,
Pierce Leahy or our other acquisitions. The failure to successfully integrate
these cultures, operating systems, procedures and information technologies could
have a material adverse effect on our results of operations.
FAILURE TO ACHIEVE EXPECTED COST SAVINGS AND UNANTICIPATED COSTS RELATED TO
INTEGRATING ACQUIRED COMPANIES COULD ADVERSELY AFFECT OUR RESULTS OF OPERATIONS.
Our estimates of annual operating cost savings for acquired companies are a
function of the nature and timing of individual acquisition integration plans.
These savings result primarily from the elimination of redundant corporate
expenses and more efficient operations and utilization of real estate. However,
unanticipated future operating expenses or acquisition related expenses, or
other adverse developments, could reduce or delay realization of these cost
savings and materially affect our results of operations. The integration of
Pierce Leahy poses a particular risk due to the size and complexity of the
integration plan.
Our operating results may fluctuate from quarter to quarter due to the
integration of current and future acquisitions. It is difficult to precisely
forecast the magnitude and timing of integration and merger-related expenses.
These expenses may be material to the financial results of a given quarter.
-2-
Therefore, operating results for any fiscal quarter may not be indicative of the
results that may be achieved for any subsequent quarter or for a full fiscal
year.
WE MAY BE UNABLE TO CONTINUE OUR INTERNATIONAL EXPANSION.
Our growth strategy involves expanding operations into international
markets, and we expect to continue this expansion. Europe and Latin America have
been our primary areas of focus for international expansion. We have entered
into joint ventures and have acquired all or a majority of the equity in records
and information management services businesses operating in these areas and are
actively pursuing additional opportunities. This growth strategy involves risks.
We may be unable to pursue this strategy in the future. For example, we may be
unable to:
- identify suitable companies to acquire;
- complete acquisitions on satisfactory terms;
- incur additional debt necessary to acquire suitable companies if we are
unable to pay the purchase price out of working capital, common stock or
other equity securities; or
- enter into successful business arrangements for technical assistance or
management and acquisition expertise outside of the United States.
We also compete with other records and information management services
providers for companies to acquire. Some of our competitors may possess greater
financial and other resources than we do. If any such competitor were to devote
additional resources to such acquisition candidates or focus its strategy on our
international markets, our results of operations could be adversely affected.
WE MAY NOT BE ABLE TO EFFECTIVELY EXPAND OUR DIGITAL BUSINESSES.
We have implemented the early stages of our planned expansion into various
digital businesses. Our entrance into these markets poses certain unique risks.
For example, we may be unable to:
- raise the amount of capital necessary to effectively participate in these
businesses;
- develop, hire or otherwise obtain the necessary technical expertise;
- accurately predict the size of the markets for any of these services; or
- compete effectively against other companies who possess greater technical
expertise, capital or other necessary resources.
In addition, the business partners upon whom we depend for technical and
management expertise, as well as the hardware and software products we need to
complement our services, may not perform as expected.
OPERATIONAL RISKS
WE HAVE A HISTORY OF NET LOSSES.
Our net losses are primarily attributable to significant non-cash charges
and interest expense associated with our acquisition and growth strategies. The
non-cash charges consist primarily of:
- depreciation expenses associated with the expansion of storage capacity;
and
- goodwill amortization associated with acquisitions accounted for under the
purchase method.
-3-
Our primary financial goal has been, and will continue to be, to increase
consolidated Adjusted EBITDA(1) in relation to capital invested, even as we
shift our focus from growth through acquisitions to internal revenue growth. We
define Adjusted EBITDA as EBITDA (earnings before interest, taxes, depreciation
and amortization) adjusted for other income (expense), merger-related expenses,
stock option compensation expense and minority interest. Adjusted EBITDA is a
source of funds for investment in continued growth and for servicing debt.
Having an objective of increasing consolidated Adjusted EBITDA may
negatively affect other measures of financial performance, such as net income.
In addition, execution of our growth strategy could result in future net losses
due to increased interest expense associated with borrowings and increased
depreciation and amortization expenses.
OUR CUSTOMERS MAY SHIFT FROM PAPER STORAGE TO ALTERNATIVE TECHNOLOGIES THAT
REQUIRE LESS PHYSICAL SPACE.
We derive most of our revenues from the storage of paper documents and
related services. This storage requires significant physical space. Alternative
storage technologies exist, many of which require significantly less space than
paper. These technologies include computer media, microform, CD-ROM and optical
disk. To date, none of these technologies has replaced paper as the principal
means for storing information. However, we can provide no assurance that our
customers will continue to store most of their records in paper format. A
significant shift by our customers to storage of data through non-paper based
technologies, whether now existing or developed in the future, could adversely
affect our business.
WE MAY BE SUBJECT TO CERTAIN COSTS AND POTENTIAL LIABILITIES ASSOCIATED WITH THE
REAL ESTATE REQUIRED FOR OUR BUSINESSES.
Because our businesses are heavily dependent on real estate, we face special
risks attributable to the real estate we own or operate. Such risks include:
- variable occupancy costs and difficulty locating suitable sites due to
fluctuations in the real estate market;
- uninsured losses or damage to our storage facilities due to an inability
to obtain full coverage on a cost-effective basis for some casualties,
such as earthquakes, or any coverage for certain losses, such as losses
from riots or terrorist activities;
- loss of our investment in, and anticipated profits and cash flow from,
damaged property that is uninsured;
- liability under certain environmental laws for the costs of investigation
and cleanup of contaminated real estate owned or leased by us, whether or
not we know of, or were responsible for, the contamination, or the
contamination occurred while we owned or leased the property;
------------------------
1 Adjusted EBITDA and Adjusted EBITDA-based calculations are used by the
holders of our publicly issued debt as important criteria for evaluating our
business and, as a result, all of our bond indentures contain covenants in
which Adjusted EBITDA-based calculations are used as the primary measure of
financial performance. In addition, we use Adjusted EBITDA as the basis for
evaluating the performance of and allocating resources to our internal
operating segments. However, you should not consider EBITDA or Adjusted
EBITDA to be substitutes for operating or net income (as determined in
accordance with generally accepted accounting principles, or GAAP) as
indicators of our performance or to cash flow from operations (as determined
in accordance with GAAP) as measures of liquidity.
-4-
- third party claims resulting from the off-site migration of contamination
initiating on real estate that we own or operate, or exposure to hazardous
substances, including asbestos-containing materials, located on our
property; and
- an inability to sell, rent, mortgage or use contaminated real estate owned
or leased by us.
Some of our current and formerly owned or operated properties were
previously used for industrial or other purposes that involved the use, storage,
generation and/or disposal of hazardous substances and wastes and petroleum
products. In some instances these properties included the operation of
underground storage tanks. Although we have from time to time conducted limited
environmental investigations and remedial activities at some of our former and
current facilities, we have not undertaken an in-depth environmental review of
all of our properties. We therefore may be potentially liable for environmental
costs like those discussed above.
INTERNATIONAL OPERATIONS MAY POSE UNIQUE RISKS.
As of December 31, 2001, we provided services in 44 markets outside the
United States. As part of our growth strategy, we expect to continue to acquire
records and information management services businesses in foreign markets.
International operations are subject to numerous risks, including:
- the risk that the business partners upon whom we depend for technical
assistance or management and acquisition expertise outside of the United
States will not perform as expected;
- the impact of foreign government regulations;
- the volatility of certain foreign economies in which we operate;
- political uncertainties;
- differences in business practices; and
- foreign currency fluctuations.
In particular, our net income can be significantly affected by fluctuations
in foreign currencies associated with the U.S. dollar denominated debt of some
of our foreign subsidiaries and certain intercompany balances between our
domestic entities and our foreign subsidiaries.
WE FACE COMPETITION FOR CUSTOMERS.
We compete with our current and potential customers' internal records and
information management services capabilities. We can provide no assurance that
these organizations will begin or continue to use an outside company, such as
our company, for their future records and information management services needs
or that they will use us to provide these services. We also compete with
multiple records and information management services providers in all geographic
areas where we operate.
INDEBTEDNESS AND OTHER RISKS
OUR SUBSTANTIAL INDEBTEDNESS COULD ADVERSELY AFFECT OUR FINANCIAL HEALTH.
We have substantial indebtedness, which could have important consequences to
you. The risks associated with our substantial indebtedness include:
- sensitivity to adverse economic conditions;
- inability to fund future working capital, acquisitions, capital
expenditures and other general corporate requirements;
-5-
- limits on our flexibility in planning for, or reacting to, changes in our
business and the records and information management services industry;
- limits on future borrowings under our existing or future credit
arrangements, which could affect our ability to pay our indebtedness or to
fund our other liquidity needs;
- inability to generate sufficient funds to cover required interest or
principal amortization payments; and
- restrictions on our ability to refinance our indebtedness on commercially
reasonably terms.
Our indebtedness may increase as we continue to borrow under existing and
future credit arrangements in order to finance future acquisitions and for
general corporate purposes, which would increase the associated risks.
RESTRICTIVE LOAN COVENANTS MAY LIMIT OUR ABILITY TO PURSUE OUR GROWTH STRATEGY.
Our credit facility and our indentures contain covenants restricting or
limiting our ability to, among other things:
- incur additional indebtedness;
- pay dividends or make other restricted payments;
- make asset dispositions;
- create or permit liens; and
- make capital expenditures and other investments.
These restrictions may adversely affect our ability to pursue our
acquisition and other growth strategies.
CERTAIN PROVISIONS IN OUR GOVERNING DOCUMENTS AND INDENTURES, AND THE
COMPOSITION OF OUR SHAREHOLDERS, MIGHT DISCOURAGE OR PREVENT THIRD PARTIES FROM
ACQUIRING CONTROL OF OUR OUTSTANDING CAPITAL STOCK.
Certain provisions of our articles of incorporation, our bylaws and existing
indentures might discourage or prevent a third party from acquiring actual or
potential control of us by:
- making it more difficult to consummate certain types of transactions such
as mergers, tender offers or proxy contests;
- limiting shareholders' ability to quickly change the composition of our
board of directors due to our classified board of directors;
- allowing existing management to exercise significant control over our
affairs during periods where we are threatened by a change in control;
- allowing our board of directors to issue shares of preferred stock in the
future without further shareholder approval and with full discretion as to
terms, conditions, rights, privileges and preferences; and
- requiring that we offer to purchase all or some of our outstanding senior
subordinated notes and other publicly issued notes in certain
circumstances that amount to a change of control under our indentures.
-6-
In addition, because relatively few large shareholders control a significant
percentage of our voting power, these shareholders may:
- prevent certain types of transactions involving an actual or potential
change of control of us, including transactions made at prices above the
prevailing market price of our common stock; and
- significantly affect the election of our directors who, in turn, control
our management and affairs.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth our consolidated ratio of earnings to fixed
charges for the periods indicated (dollars in thousands):
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
---------------------------------------------------- -----------------
1996 1997 1998 1999 2000 2001
-------- -------- -------- -------- -------- -----------------
Ratio of earnings to fixed charges......... 1.1x 0.9x(1) 1.1x 1.1x 0.9x(1) 0.9x(1)
------------------------
(1) We reported a loss from continuing operations before provision (benefit) for
income taxes and minority interest, for the years ended December 31, 1997
and December 31, 2000 and for the nine months ended September 30, 2001. We
would have needed to generate additional income from operations before
provision for income taxes and minority interest of $4,601, $18,032 and
$7,786 to cover our fixed charges of $37,489, $154,975 and $133,292,
respectively.
The ratios of earnings to fixed charges presented above were computed by
dividing our earnings by fixed charges. For this purpose, earnings have been
calculated by adding fixed charges to income (loss) from continuing operations
before provision (benefit) for income taxes and minority interest. Fixed charges
consist of interest costs, whether expensed or capitalized, the interest
component of rental expense, if any, amortization of debt discounts and deferred
financing costs, whether expensed or capitalized.
-7-
USE OF PROCEEDS
Unless otherwise described in a prospectus supplement, we intend to use the
net proceeds from the sale of the offered securities for general corporate
purposes, which may include acquisitions, investments and the repayment of
indebtedness outstanding at a particular time. Pending this utilization, the
proceeds from the sale of the offered securities will be invested in short-term,
dividend-paying or interest-bearing investment grade securities.
IM Capital Trust will use all net proceeds from the sale of its trust
preferred securities and its trust common securities to purchase our debt
securities.
DESCRIPTION OF OUR DEBT SECURITIES
The debt securities will be direct obligations of ours, which may be secured
or unsecured, and which may be senior or subordinated indebtedness. The debt
securities may be fully and unconditionally guaranteed on a secured or
unsecured, senior or subordinated basis, jointly and severally by substantially
all of our direct and indirect wholly owned domestic subsidiaries. The debt
securities will be issued under one or more indentures between us and a trustee.
Any indenture will be subject to, and governed by, the Trust Indenture Act of
1939, as amended. The statements made in this prospectus relating to any
indentures and the debt securities to be issued under the indentures are
summaries of certain anticipated provisions of the indentures and are not
complete.
We have filed copies of the forms of indentures as exhibits to the
registration statement of which this prospectus is part and will file any final
indentures and supplemental indentures if we issue debt securities. You should
refer to those indentures for the complete terms of the debt securities. See
"Where You Can Find More Information." In addition, you should consult the
applicable prospectus supplement for particular terms of our debt securities.
GENERAL
We may issue debt securities that rank "senior," "senior subordinated" or
"subordinated." The debt securities that we refer to as "senior securities" will
be direct obligations of ours and will rank equally and ratably in right of
payment with other indebtedness of ours that is not subordinated. We may issue
debt securities that will be subordinated in right of payment to the prior
payment in full of senior indebtedness, as defined in the applicable prospectus
supplement, and may rank equally and ratably with our outstanding senior
subordinated indebtedness and any other senior subordinated indebtedness. We
refer to these as "senior subordinated securities." We may also issue debt
securities that may be subordinated in right of payment to the senior
subordinated securities. These would be "subordinated securities." We have filed
with the registration statement of which this prospectus is part three separate
forms of indenture, one each for the senior securities, the senior subordinated
securities and the subordinated securities.
We may issue the debt securities without limit as to aggregate principal
amount, in one or more series, in each case as we establish in one or more
supplemental indentures. We need not issue all debt securities of one series at
the same time. Unless we otherwise provide, we may reopen a series, without the
consent of the holders of such series, for issuances of additional securities of
that series.
We anticipate that any indenture will provide that we may, but need not,
designate more than one trustee under an indenture, each with respect to one or
more series of debt securities. Any trustee under any indenture may resign or be
removed with respect to one or more series of debt securities and we may appoint
a successor trustee to act with respect to that series.
-8-
The applicable prospectus supplement will describe the specific terms
relating to the series of debt securities we will offer, including, where
applicable, the following:
- the title and series designation and whether they are senior securities,
senior subordinated securities or subordinated securities;
- the aggregate principal amount of the securities;
- the percentage of the principal amount at which we will issue the debt
securities and, if other than the principal amount of the debt securities,
the portion of the principal amount of the debt securities payable upon
maturity of the debt securities;
- if convertible, the initial conversion price, the conversion period and
any other terms governing such conversion;
- the stated maturity date;
- any fixed or variable interest rate or rates per annum;
- the place where principal, premium, if any, and interest will be payable
and where the debt securities can be surrendered for transfer, exchange or
conversion;
- the date from which interest may accrue and any interest payment dates;
- any sinking fund requirements;
- any provisions for redemption, including the redemption price and any
remarketing arrangements;
- whether the securities are denominated or payable in U.S. dollars or a
foreign currency or units of two or more foreign currencies;
- the events of default and covenants of such securities, to the extent
different from or in addition to those described in this prospectus;
- whether we will issue the debt securities in certificated or book-entry
form;
- whether the debt securities will be in registered or bearer form and, if
in registered form, the denominations if other than in even multiples of
$1,000 and, if in bearer form, the denominations and terms and conditions
relating thereto;
- whether we will issue any of the debt securities in permanent global form
and, if so, the terms and conditions, if any, upon which interests in the
global security may be exchanged, in whole or in part, for the individual
debt securities represented by the global security;
- the applicability, if any, of the defeasance and covenant defeasance
provisions described in this prospectus or any prospectus supplement;
- whether we will pay additional amounts on the securities in respect of any
tax, assessment or governmental charge and, if so, whether we will have
the option to redeem the debt securities instead of making this payment;
- the subordination provisions, if any, relating to the debt securities;
- if the debt securities are to be issued upon the exercise of debt
warrants, the time, manner and place for them to be authenticated and
delivered;
- whether any of our subsidiaries will be bound by the terms of the
indenture, in particular any restrictive covenants;
- the provisions relating to any security provided for the debt securities;
and
- the provisions relating to any guarantee of the debt securities.
-9-
We may issue debt securities at less than the principal amount payable upon
maturity. We refer to these securities as "original issue discount securities."
If material or applicable, we will describe in the applicable prospectus
supplement special U.S. federal income tax, accounting and other considerations
applicable to original issue discount securities.
Except as may be set forth in any prospectus supplement, an indenture will
not contain any other provisions that would limit our ability to incur
indebtedness or that would afford holders of the debt securities protection in
the event of a highly leveraged or similar transaction involving us or in the
event of a change of control. You should review carefully the applicable
prospectus supplement for information with respect to events of default and
covenants applicable to the securities being offered.
DENOMINATIONS, INTEREST, REGISTRATION AND TRANSFER
Unless otherwise described in the applicable prospectus supplement, we will
issue the debt securities of any series that are registered securities in
denominations that are even multiples of $1,000, other than global securities,
which may be of any denomination.
Unless otherwise specified in the applicable prospectus supplement, we will
pay the interest, principal and any premium at the corporate trust office of the
trustee. At our option, however, we may make payment of interest by check mailed
to the address of the person entitled to the payment as it appears in the
applicable register or by wire transfer of funds to that person at an account
maintained within the United States.
If we do not punctually pay or duly provide for interest on any interest
payment date, the defaulted interest will be paid either:
- to the person in whose name the debt security is registered at the close
of business on a special record date we will fix; or
- in any other lawful manner as the applicable indenture describes.
You may have your debt securities divided into more debt securities of
smaller denominations or combined into fewer debt securities of larger
denominations, as long as the total principal amount is not changed. We call
this an "exchange."
You may exchange or transfer debt securities at the office of the applicable
trustee. The trustee acts as our agent for registering debt securities in the
names of holders and transferring debt securities. We may change this
appointment to another entity or perform it ourselves. The entity performing the
role of maintaining the list of registered holders is called the "registrar." It
will also perform transfers.
You will not be required to pay a service charge to transfer or exchange
debt securities, but you may be required to pay for any tax or other
governmental charge associated with the exchange or transfer. The registrar will
make the transfer or exchange only if it is satisfied with your proof of
ownership.
MERGER, CONSOLIDATION OR SALE OF ASSETS
Under any indenture, we are generally permitted to consolidate or merge with
another company. We are also permitted to sell substantially all of our assets
to another company. However, we may not take any of these actions unless all of
the following conditions are met:
- If we merge out of existence or sell our assets, the other company must be
a corporation, partnership or other entity organized under the laws of a
State or the District of Columbia or under federal law. The other company
must agree to be legally responsible for the debt securities.
-10-
- Immediately after the consolidation or merger or sale of assets we are not
in default on the debt securities. A default for this purpose would
include any event that would be an event of default without regard to
notice obligations or the length of time of the default.
CERTAIN COVENANTS
PROVISION OF FINANCIAL INFORMATION. We will deliver to the trustee a copy
of our annual report to shareholders, our reports on Forms 10-K, 10-Q and 8-K
and any other reports that we are required to file with the SEC pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934.
ADDITIONAL COVENANTS. Any additional or different covenants, or
modifications to these covenants, with respect to any series of debt securities
will be set forth in the applicable prospectus supplement.
EVENTS OF DEFAULT AND RELATED MATTERS
EVENTS OF DEFAULT. The term "event of default" means any of the following:
- we do not pay the principal or any premium on a debt security on its due
date;
- we do not pay interest on a debt security within 30 days of its due date;
- we do not deposit any sinking fund payment on its due date;
- we fail to comply with any "change of control" covenant included in the
applicable indenture;
- we remain in breach of any other term of the applicable indenture for
60 days after we receive a notice of default stating we are in breach.
Either the trustee or the holders of 25% in principal amount of debt
securities of the affected series may send the notice;
- we default in the payment of any of our other indebtedness over a
specified amount that results in the acceleration of the maturity of the
indebtedness or constitutes a default in the payment of the indebtedness
at final maturity, but only if the indebtedness is not discharged or the
acceleration is not rescinded or annulled;
- we or one of our "significant subsidiaries" files for bankruptcy or
certain other events in bankruptcy, insolvency or reorganization occur;
and
- any other event of default, or modification of any of the foregoing events
of default, described in the applicable prospectus supplement occurs.
The term "significant subsidiary" means each of our significant subsidiaries
(as defined in Regulation S-X promulgated under the Securities Act of 1933).
REMEDIES IF AN EVENT OF DEFAULT OCCURS. If an event of default has occurred
and has not been cured, the trustee or the holders of at least 25% in principal
amount of the debt securities of the affected series may declare the entire
principal amount of all the debt securities of that series to be due and
immediately payable. We call this a "declaration of acceleration of maturity."
If an event of default occurs because of certain events in bankruptcy,
insolvency or reorganization, the principal amount of all the debt securities of
that series will be automatically accelerated, without any action by the trustee
or any holder. At any time after the trustee or the holders have accelerated any
series of debt securities, the holders of at least a majority in principal
amount of the debt securities of the affected series may, under certain
circumstances, rescind and annul such acceleration.
The trustee will be required to give notice to the holders of debt
securities within 90 days of a default of which the trustee has knowledge under
the applicable indenture unless the default has been cured or waived. The
trustee may withhold notice to the holders of any series of debt securities of
any default with respect to that series, except a default in the payment of the
principal of or interest on any
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debt security of that series, if specified responsible officers of the trustee
in good faith determine that withholding the notice is in the interest of the
holders.
Except in cases of default, where the trustee has some special duties, the
trustee is not required to take any action under the applicable indenture at the
request of any holders unless the holders offer the trustee reasonable
protection from expenses and liability. We refer to this as an "indemnity." If
reasonable indemnity is provided, the holders of a majority in principal amount
of the outstanding securities of the relevant series may direct the time, method
and place of conducting any lawsuit or other formal legal action seeking any
remedy available to the trustee. These majority holders may also direct the
trustee in performing any other action under the applicable indenture, subject
to certain limitations.
Before you bypass the trustee and bring your own lawsuit or other formal
legal action or take other steps to enforce your rights or protect your
interests relating to the debt securities, the following must occur:
- you must give the trustee written notice that an event of default has
occurred and remains uncured;
- the holders of at least 25% in principal amount of all outstanding
securities of the relevant series must make a written request that the
trustee take action because of the default, and must offer indemnity
satisfactory to the trustee against the costs, expenses and other
liabilities of taking that action;
- the trustee must have not taken action for 60 days after receipt of the
above notice, request and offer of indemnity; and
- the trustee does not receive direction contrary to the holders' written
request, within 60 days following receipt of the holders' written request,
from holders of a majority in principal amount of the outstanding
securities of that series.
However, you are entitled at any time to bring a lawsuit for the payment of
money due on your security after its due date.
Every year we will furnish to the trustee a written statement by certain of
our officers certifying that to their knowledge we are in compliance with the
applicable indenture and the debt securities, or else specifying any default.
MODIFICATION OF AN INDENTURE
There are three types of changes we can make to the indentures and the debt
securities:
CHANGES REQUIRING YOUR APPROVAL. First, there are changes we cannot make to
your debt securities without your specific approval. The following is a list of
those types of changes:
- reduce the principal amount of debt securities whose holders must consent
to an amendment, supplement or waiver;
- reduce the principal of or change the fixed maturity of any security or
change any of the redemption provisions in a manner adverse to you;
- reduce the rate of or change the time for payment of interest on any debt
security;
- waive a default in the payment of principal of or premium, if any, or
interest on any debt security (except a rescission of acceleration of such
debt securities by the holders of at least a majority in aggregate
principal amount of the then outstanding debt securities and a waiver of
the payment default that resulted from such acceleration);
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- make any debt security payable in money other than that stated in such
debt security;
- make any change in the provisions of the indenture relating to waivers of
past defaults or your right to receive payments of principal of or
premium, if any, or interest on the debt securities;
- except under certain circumstances described in the applicable prospectus
supplement, waive a redemption payment with respect to any debt security;
- if the debt securities are guaranteed, other than as described in the
applicable prospectus supplement, release any guarantor from its
obligations under its subsidiary guarantee, or change any subsidiary
guarantee in any manner that would materially adversely affect you; or
- make any change in the foregoing amendment and waiver provisions.
CHANGES REQUIRING A MAJORITY VOTE. The second type of change to an
indenture and the debt securities is the kind that requires a vote in favor by
holders of a majority of the principal amount of the particular series of debt
securities affected. Most changes fall into this category, except for clarifying
changes and certain other changes that would not materially adversely affect
holders of the debt securities. We require the same vote to obtain a waiver of a
past default. However, we cannot obtain a waiver of a payment default or any
other aspect of an indenture or the debt securities listed under "--Changes
Requiring Your Approval" unless we obtain your individual consent to the waiver.
CHANGES NOT REQUIRING APPROVAL. The third type of change does not require
any vote by holders of debt securities. This type is limited to clarifications
and certain other changes that would not materially adversely affect holders of
the debt securities.
FURTHER DETAILS CONCERNING VOTING. Debt securities are not considered
outstanding, and therefore not eligible to vote, if we have deposited or set
aside in trust for you money for their payment or redemption or if we or one of
our affiliates own them. Debt securities are also not eligible to vote if they
have been fully defeased as described immediately below under "--Discharge,
Defeasance and Covenant Defeasance--Full Defeasance." For original issue
discount securities, we will use the principal amount that would be due and
payable on the voting date if the maturity of the debt securities were
accelerated to that date because of a default.
DEFEASANCE AND COVENANT DEFEASANCE
FULL DEFEASANCE. We can, under particular circumstances, effect a full
defeasance of your series of debt securities. By this we mean we can legally
release ourselves from any payment or other obligations on the debt securities
if we deliver certain certificates and opinions to the trustee and put in place
the following arrangements to repay you:
- We must deposit in trust for your benefit and the benefit of all other
direct holders of the debt securities a combination of money and U.S.
government or U.S. government agency notes or bonds that will generate
enough cash to make interest, principal and any other payments on the debt
securities on their various due dates. If the debt securities are
denominated in a foreign currency, then we may deposit foreign government
notes or bonds.
- The current federal tax law must be changed or an IRS ruling must be
issued permitting the above deposit without causing you to be taxed on the
debt securities any differently than if we did not make the deposit and
just repaid the debt securities ourselves. Under current federal tax law,
the deposit and our legal release from the debt securities would be
treated as though we took back your debt securities and gave you your
share of the cash and notes or bonds deposited in trust. In that event,
you could recognize gain or loss on the debt securities you give back to
us.
- We must deliver to the trustee a legal opinion confirming the tax law
change described above.
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- No default shall be in effect on the date of deposit or, insofar as
bankruptcy and insolvency defaults 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 us).
- The full defeasance must not result in a breach or violation of, or
constitute a default under, any material agreement or instrument (other
than the applicable indenture) to which we are a party or by which we are
bound.
- We must deliver 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 and
various other opinions of counsel and officers' certificates.
If we did accomplish a full defeasance, you would have to rely solely on the
trust deposit for repayment on the debt securities. You could not look to us for
repayment in the unlikely event of any shortfall. The trust deposit would,
however, most likely be protected from claims of our lenders and other creditors
if we ever became bankrupt or insolvent. You would also be released from any
subordination provisions.
Notwithstanding the foregoing, the following rights and obligations shall
survive full defeasance:
- your rights to receive payments from the trust when payments are due;
- our obligations relating to registration and transfer of securities and
lost or mutilated certificates;
- our obligations to maintain a payment office and to hold moneys for
payment in trust;
- the rights, powers, trusts, duties and immunities of the trustee, and our
obligations in connection therewith; and
- the provisions of the indenture relating to defeasance.
COVENANT DEFEASANCE. Under current federal tax law, we can make the same
type of deposit described above and be released from some of the restrictive
covenants in the debt securities. This is called "covenant defeasance." In that
event, you would lose the protection of those restrictive covenants but would
gain the protection of having money and securities set aside in trust to repay
the debt securities and you would be released from any subordination provisions.
In order to achieve covenant defeasance, we must do certain things, including
the following:
- we must deposit in trust for your benefit and the benefit of all other
direct holders of the debt securities a combination of money and U.S.
government or U.S. government agency notes or bonds (or, in the case of
debt securities denominated in a foreign currency, foreign government
notes or bonds) that will generate enough cash to make interest, principal
and any other payments on the debt securities on their various due dates;
- we must deliver to the trustee a legal opinion confirming that under
current federal tax law we may make the above deposit without causing you
to be taxed on the debt securities any differently than if we did not make
the deposit and just repaid the debt securities ourselves;
- no default shall be in effect on the date of deposit or, insofar as
bankruptcy and insolvency defaults 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 us);
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- the covenant defeasance must not result in a breach or violation of, or
constitute a default under, any material agreement or instrument (other
than the applicable indenture) to which we are a party or by which we are
bound; and
- we must deliver 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 and
various other opinions of counsel and officers' certificates.
If we accomplish covenant defeasance, we will be released from certain
covenants that we will describe in the applicable prospectus supplement. If we
accomplish covenant defeasance, you can still look to us for repayment of the
debt securities if a shortfall in the trust deposit occurred. If one of the
remaining events of default occurs, for example, our bankruptcy, and the debt
securities become immediately due and payable, there may be a shortfall.
Depending on the event causing the default, you may not be able to obtain
payment of the shortfall.
SUBORDINATION
We will set forth in the applicable prospectus supplement the terms and
conditions, if any, upon which any series of senior subordinated securities or
subordinated securities is subordinated to debt securities of another series or
to other indebtedness of ours. The terms will include a description of:
- the indebtedness ranking senior to the debt securities being offered;
- the restrictions, if any, on payments to the holders of the debt
securities being offered while a default with respect to the senior
indebtedness is continuing;
- the restrictions, if any, on payments to the holders of the debt
securities being offered following an event of default; and
- provisions requiring holders of the debt securities being offered to remit
some payments to holders of senior indebtedness.
CONVERSION RIGHTS
The terms and conditions, if any, upon which the debt securities are
convertible into shares of our common or preferred stock will be set forth in
the prospectus supplement relating thereto. Such terms will include whether the
debt securities are convertible into shares of our common or preferred stock,
the conversion price (or manner of calculation thereof), the conversion period,
provisions as to whether conversion will be at the option of the holders, the
events requiring an adjustment of the conversion price and provisions affecting
conversion in the event of the redemption of such debt securities and any
restrictions on conversion.
GLOBAL SECURITIES
If so set forth in the applicable prospectus supplement, we may issue the
debt securities of a series, in whole or in part, in the form of one or more
global securities that will be deposited with a depositary identified in the
prospectus supplement. We may issue global securities in either registered or
bearer form and in either temporary or permanent form. The specific terms of the
depositary arrangement with respect to any series of debt securities will be
described in the prospectus supplement.
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DESCRIPTION OF OUR CAPITAL STOCK
The description below summarizes the more important terms of our capital
stock. We have previously filed with the SEC copies of our articles of
incorporation and bylaws, as amended. See "Where You Can Find More Information."
You should refer to those documents for the complete terms of our capital stock.
This summary is subject to and qualified by reference to the description of the
particular terms of your securities described in the applicable prospectus
supplement.
GENERAL
Our authorized capital stock consists of 150,000,000 shares of common stock,
par value $.01 per share, and 10,000,000 shares of preferred stock, par value
$.01 per share.
PREFERRED STOCK
We are authorized to issue up to 10,000,000 shares of preferred stock, $0.01
par value per share.
This section describes the general terms and provisions of our preferred
stock that we may offer from time to time. The applicable prospectus supplement
will describe the specific terms of the shares of preferred stock offered
through that prospectus supplement. We will file a copy of the statement with
respect to shares that contains the terms of each new series of preferred stock
with the SEC each time we issue a new series of preferred stock, and these
statements with respect to shares will be incorporated by reference into the
registration statement of which this prospectus is a part. Each statement with
respect to shares will establish the number of shares included in a designated
series and fix the designation, powers, privileges, preferences and rights of
the shares of each series as well as any applicable qualifications, limitations
or restrictions. A holder of our preferred stock should refer to the applicable
statement with respect to shares, our articles of incorporation and the
applicable prospectus supplement for more specific information.
Our board of directors has been authorized, subject to limitations provided
in our articles of incorporation, to provide for the issuance of shares of our
preferred stock in multiple series. No shares of our preferred stock are
currently outstanding.
With respect to each series of our preferred stock, our board of directors
has the authority to fix the following terms:
- the designation of the series;
- the number of shares within the series;
- whether dividends are cumulative and, if cumulative, the dates from which
dividends are cumulative;
- the rate of any dividends, any conditions upon which dividends are
payable, and the dates of payment of dividends;
- whether the shares are redeemable, the redemption price and the terms of
redemption;
- the amount payable to a holder for each share owned if we are dissolved or
liquidated;
- whether the shares are convertible or exchangeable, the price or rate of
exchange, and the applicable terms and conditions;
- any restrictions on issuance of shares in the same series or any other
series; and
- your voting rights for the shares you own.
Holders of our preferred stock will not have preemptive rights with respect
to shares of our preferred stock. In addition, rights with respect to shares of
our preferred stock will be subordinate to
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the rights of our general creditors. If we receive the appropriate payment,
shares of our preferred stock that we issue will be fully paid and
nonassessable.
As described under "Description of Our Depositary Shares," we may, at our
option, elect to offer depositary shares evidenced by depositary receipts. If we
elect to do this, each depositary receipt will represent a fractional interest
in a share of the particular series of the preferred stock issued and deposited
with a depositary. The applicable prospectus supplement will specify that
fractional interest.
We currently plan to retain EquiServe Trust Company, N.A. as the registrar
and transfer agent of any series of our preferred stock.
COMMON STOCK
VOTING RIGHTS. Holders of common stock are entitled to one vote per share
on each matter to be decided by our shareholders, subject to the rights of
holders of any series of preferred stock that may be outstanding from time to
time. Pursuant to our articles of incorporation, there are no cumulative voting
rights in the election of directors. Accordingly, the holders of a majority of
common stock entitled to vote in any election of directors may elect all of the
directors standing for election.
DIVIDEND RIGHTS AND LIMITATIONS. Holders of common stock will be entitled
to receive ratably any dividends or distributions that our board of directors
may declare from time to time out of funds legally available for this purpose.
Dividends and other distributions on common stock are also subject to the
rights of holders of any series of preferred stock that may be outstanding from
time to time and to the restrictions in our credit agreement and indentures. See
"--Preferred Stock."
LIQUIDATION RIGHTS. In the event of liquidation, dissolution or winding up
of our affairs, after payment or provision for payment of all of our debts and
obligations and any preferential distributions to holders of shares of preferred
stock, if any, the holders of the common stock will be entitled to share ratably
in our remaining assets available for distribution.
MISCELLANEOUS. All outstanding shares of common stock are validly issued,
fully paid and nonassessable. Our board of directors has the power to issue
shares of authorized but unissued common stock without further shareholder
action. The issuance of these unissued shares could have the effect of diluting
the earnings per share and book value per share of currently outstanding shares
of common stock. The holders of common stock have no preemptive, subscription,
redemption or conversion rights.
Reference is made to the applicable prospectus supplement relating to the
common stock offered by that prospectus supplement for specific terms,
including:
- amount and number of shares offered;
- the initial offering price, if any, and market price; and
- information with respect to dividends.
TRANSFER AGENT AND REGISTRAR. The transfer agent and registrar for our
common stock is EquiServe Trust Company, N.A., 150 Royall Street, Canton,
Massachusetts 02021. Its telephone number is (781) 575-2000.
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DESCRIPTION OF OUR DEPOSITARY SHARES
GENERAL
The description shown below, and in any applicable prospectus supplement, of
certain provisions of any deposit agreement and of the depositary shares and
depositary receipts representing depositary shares does not purport to be
complete and is subject to and qualified in its entirety by reference to the
forms of deposit agreement and depositary receipts relating to each applicable
series of preferred stock. The deposit agreement and the depositary receipts
contain the full legal text of the matters described in this section. We will
file a copy of those documents with the SEC at or before the time of the
offering of the applicable series of preferred stock. This summary also is
subject to and qualified by reference to the description of the particular terms
of your series of depositary shares described in the applicable prospectus
supplement.
We may, at our option, elect to offer depositary shares representing
fractional interests in shares of preferred stock, rather than shares of
preferred stock. If we exercise this option, we will appoint a depositary to
issue depositary receipts representing those fractional interests. Preferred
stock of each series represented by depositary shares will be deposited under a
separate deposit agreement between us and the depositary. The prospectus
supplement relating to a series of depositary shares will disclose the name and
address of the depositary. Subject to the terms of the applicable deposit
agreement, each holder of depositary shares will be entitled to all of the
distribution, voting, conversion, redemption, liquidation and other rights and
preferences of the preferred stock represented by those depositary shares.
Depositary receipts issued pursuant to the applicable deposit agreement will
evidence ownership of depositary shares. Upon surrender of depositary receipts
at the office of the depositary, and upon payment of the charges provided in and
subject to the terms of the deposit agreement, a holder of depositary shares
will be entitled to receive the shares of preferred stock underlying the
surrendered depositary receipts.
DISTRIBUTIONS
A depositary will be required to distribute all cash distributions received
in respect of the applicable preferred stock to the record holders of depositary
shares in proportion to the number of depositary shares held by the holders on
the relevant record date, which will be the same as the record date fixed by us
for the applicable series of preferred stock. Fractions will be rounded down to
the nearest whole cent.
If the distribution is other than in cash, a depositary will be required to
distribute property received by it to the record holders of depositary shares
entitled thereto, in proportion, as nearly as practicable, to the number of
depositary shares owned by those holders on the relevant record date, unless the
depositary determines that it is not feasible to make the distribution. In that
case, the depositary may, with our approval, sell the property and distribute
the net proceeds from the sale to the holders.
Depositary shares that represent preferred stock converted or exchanged will
not be entitled to distributions. The deposit agreement will also contain
provisions relating to the manner in which any subscription or similar rights we
offer to holders of the preferred stock will be made available to holders of
depositary shares. All distributions will be subject to obligations of holders
to file proofs, certificates and other information and to pay certain charges
and expenses to the depositary.
WITHDRAWAL OF PREFERRED STOCK
Holders of depositary shares may receive the number of whole shares of the
applicable series of preferred stock and any money or other property represented
by those depositary shares after
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surrendering the depositary receipts at the corporate trust office of the
depositary and paying the charges provided in the depositary agreement. Partial
shares of preferred stock will not be issued. If the depositary receipts that a
holder surrenders evidence a number of depositary shares in excess of the number
of depositary shares representing the number of whole shares of preferred stock
the holder wishes to withdraw, then the depositary will deliver to the holder at
the same time a new depositary receipt evidencing the excess number of
depositary shares. Once a holder has withdrawn the holder's preferred stock, the
holder will not be entitled to re-deposit those shares of preferred stock under
the deposit agreement in order to receive depositary shares. We do not expect
that there will be any public trading market for withdrawn shares of preferred
stock.
REDEMPTION OF DEPOSITARY SHARES
If we redeem a series of the preferred stock underlying the depositary
shares, the depositary will redeem those depositary shares representing the
preferred stock so redeemed from the proceeds received by it in connection with
the redemption. The depositary will mail notice of redemption not less than 30
and not more than 60 days before the date fixed for redemption to the record
holders of the depositary shares we are redeeming at their addresses appearing
in the depositary's books. The redemption price per depositary share will be
equal to the applicable fraction of the redemption price per share payable with
respect to the series of the preferred stock. The redemption date for depositary
shares will be the same as that of the preferred stock. If we are redeeming less
than all of the depositary shares, the depositary will select the depositary
shares we are redeeming by lot or pro rata as the depositary may determine.
After the date fixed for redemption, the depositary shares called for
redemption will no longer be deemed outstanding. All rights of the holders of
the depositary shares and the related depositary receipts will cease at that
time, except the right to receive the money or other property to which the
holders of depositary shares were entitled upon redemption. Receipt of the money
or other property is subject to surrender to the depositary of the depositary
receipts evidencing the redeemed depositary shares.
VOTING OF THE PREFERRED STOCK
Upon receipt of notice of any meeting at which the holders of preferred
stock represented by depositary shares are entitled to vote, a depositary will
be required to mail the information contained in the notice of meeting to the
record holders of the applicable depositary shares. Each record holder of
depositary shares on the record date, which will be the same date as the record
date for the preferred stock, will be entitled to instruct the depositary as to
the exercise of the voting rights pertaining to the amount of preferred stock
represented by the holder's depositary shares. The depositary will try, as
practical, to vote the depositary shares as instructed by the record holder of
depositary shares. We will agree to take all reasonable action that the
depositary deems necessary in order to enable it to do so. If a record holder of
depositary shares does not instruct the depositary how to vote the holder's
depositary shares, the depositary will abstain from voting those shares.
LIQUIDATION PREFERENCE
Upon our liquidation, whether voluntary or involuntary, each holder of
depositary shares will be entitled to the fraction of the liquidation preference
accorded each share of preferred stock represented by the depositary shares, as
shown in the applicable prospectus supplement.
CONVERSION OR EXCHANGE OF PREFERRED STOCK
The depositary shares will not themselves be convertible into or
exchangeable for common stock, preferred stock or any of our other securities or
property. Nevertheless, if so specified in the applicable
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prospectus supplement, the depositary receipts may be surrendered by holders to
the applicable depositary with written instructions to it to instruct us to
cause conversion of the preferred stock represented by the depositary shares.
Similarly, if so specified in the applicable prospectus supplement, we may
require holders of depositary shares to surrender all of their depositary
receipts to the applicable depositary upon our requiring the conversion or
exchange of the preferred stock represented by the depositary shares into a
different class of our securities. We will agree that, upon receipt of the
instruction and any amounts payable in connection with the conversion or
exchange, we will cause the conversion or exchange using the same procedures as
those provided for delivery of preferred stock to effect the conversion or
exchange. If a holder of depositary shares is converting only a part of the
depositary shares, the depositary will issue the holder a new depositary receipt
for any unconverted depositary shares.
TAXATION
A holder of depositary shares will be treated for U.S. federal income tax
purposes as if it were a holder of the series of preferred stock represented by
the depositary shares. Therefore, the holder of depositary shares will be
required to take into account for U.S. federal income tax purposes income and
deductions to which it would be entitled if it were a holder of the underlying
series of preferred stock. In addition:
- no gain or loss will be recognized for U.S. federal income tax purposes
upon the withdrawal of preferred stock in exchange for depositary shares
provided in the deposit agreement;
- the tax basis of each share of preferred stock issued to a holder as
exchanging owner of depositary shares will, upon exchange, be the same as
the aggregate tax basis of the depositary shares exchanged for the
preferred stock; and
- if a holder held the depositary shares as a capital asset at the time of
the exchange for preferred stock, the holding period for shares of the
preferred stock will include the period during which the holder owned the
depositary shares.
AMENDMENT AND TERMINATION OF A DEPOSIT AGREEMENT
We and the applicable depositary are permitted to amend the form of the
depositary receipt and the provisions of the deposit agreement. However, the
holders of at least a majority of the applicable depositary shares then
outstanding must approve any amendment that adds or increases fees or materially
and adversely alters the rights of holders. Every holder of an outstanding
depositary receipt at the time any amendment becomes effective, by continuing to
hold the receipt, will be bound by the applicable deposit agreement, as amended.
Any deposit agreement may be terminated by us upon not less than 30 days'
prior written notice to the applicable depositary if a majority of each series
of preferred stock affected by the termination consents to the termination. When
that event occurs, the depositary will be required to deliver or make available
to each holder of depositary shares, upon surrender of the depositary receipts
held by the holder, the number of whole or fractional shares of preferred stock
as are represented by the depositary shares evidenced by the depositary
receipts, together with any other property held by the depositary with respect
to the depositary shares. In addition, a deposit agreement will automatically
terminate if:
- all outstanding depositary shares have been redeemed;
- there shall have been a final distribution in respect of the related
preferred stock in connection with our liquidation and the distribution
has been made to the holders of depositary receipts evidencing the
depositary shares underlying the preferred stock; or
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- each of the shares of related preferred stock shall have been converted or
exchanged into securities not represented by depositary shares.
CHARGES OF A DEPOSITARY
We will pay all transfer and other taxes and governmental charges arising
solely from the existence of a deposit agreement. In addition, we will pay the
fees and expenses of a depositary in connection with the initial deposit of the
preferred stock and any redemption of the preferred stock. However, holders of
depositary shares will pay any transfer taxes or other governmental charges and
the fees and expenses of a depositary, including a fee for the withdrawal of
shares of preferred stock upon surrender of depositary receipts, as are
expressly provided in the deposit agreement to be for their accounts.
RESIGNATION AND REMOVAL OF DEPOSITARY
A depositary may resign at any time by delivering to us notice of its
election to do so. In addition, we may at any time remove a depositary. Any
resignation or removal will take effect when we appoint a successor depositary
and it accepts the appointment. We must appoint a successor depositary within
60 days after delivery of the notice of resignation or removal. A depositary
must be a bank or trust company having its principal office in the United States
that has a combined capital and surplus of at least $50 million.
MISCELLANEOUS
A depositary will be required to forward to holders of depositary shares any
reports and communications that it receives from us with respect to the related
preferred stock. Holders of depository shares will be able to inspect the
transfer books of the depository and the list of holders of depositary shares
upon reasonable notice.
Neither we nor a depositary will be liable if either of us are prevented
from, or delayed in performing, by law or any circumstances beyond our control,
our obligations under a deposit agreement. Our obligations and those of the
depositary under a deposit agreement will be limited to performing our duties in
good faith and without gross negligence or willful misconduct. Neither we nor
any depositary will be obligated to prosecute or defend any legal proceeding in
respect of any depositary receipts, depositary shares or related preferred stock
unless satisfactory indemnity is furnished. We and each depositary will be
permitted to rely on written advice of counsel or accountants, on information
provided by persons presenting preferred stock for deposit, by holders of
depositary shares, or by other persons believed in good faith to be competent to
give the information, and on documents believed in good faith to be genuine and
signed by a proper party.
If a depositary receives conflicting claims, requests or instructions from
any holders of depositary shares, on the one hand, and us, on the other hand,
the depositary shall be entitled to act on the claims, requests or instructions
received from us.
DESCRIPTION OF OUR WARRANTS
This section describes the general terms and provisions of our warrants to
acquire our securities that we may issue from time to time. The applicable
prospectus supplement will describe the specific terms of the warrants offered
through that prospectus supplement.
We may issue, together with any other securities being offered or
separately, warrants entitling the holder to purchase from or sell to us, or to
receive from us the cash value of the right to purchase or sell, our debt
securities, preferred stock, depositary shares or common stock. We and a warrant
agent will enter a warrant agreement pursuant to which the warrants will be
issued. The warrant agent will act solely as our agent in connection with the
warrants and will not assume any obligation or
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relationship of agency or trust for or with any holders or beneficial owners of
warrants. We will file a copy of the warrants and the warrant agreement with the
SEC at or before the time of the offering of the applicable series of warrants.
A holder of our warrants should refer to the provisions of the applicable
warrant agreement and prospectus supplement for more specific information.
In the case of each series of warrants, the applicable prospectus supplement
will describe the terms of the warrants being offered thereby. These include the
following, if applicable:
- the offering price;
- the number of warrants offered;
- the securities underlying the warrants;
- the exercise price, the amount of securities you will receive upon
exercise, the procedure for exercise of the warrants and the
circumstances, if any, that will cause the warrants to be automatically
exercised;
- the rights, if any, we have to redeem the warrants;
- the date on which the warrants will expire;
- U.S. federal income tax consequences;
- the name of the warrant agent; and
- any other terms of the warrants.
Warrants may be exercised at the appropriate office of the warrant agent or
any other office indicated in the applicable prospectus supplement. Before the
exercise of warrants, holders will not have any of the rights of holders of the
securities purchasable upon exercise and will not be entitled to payments made
to holders of those securities.
The warrant agreements may be amended or supplemented without the consent of
the holders of the warrants to which it applies to effect changes that are not
inconsistent with the provisions of the warrants and that do not materially and
adversely affect the interests of the holders of the warrants. However, any
amendment that materially and adversely alters the rights of the holders of
warrants will not be effective unless the holders of at least a majority of the
applicable warrants then outstanding approve the amendment. Every holder of an
outstanding warrant at the time any amendment becomes effective, by continuing
to hold the warrant, will be bound by the applicable warrant agreement as
amended. The prospectus supplement applicable to a particular series of warrants
may provide that certain provisions of the warrants, including the securities
for which they may be exercisable, the exercise price and the expiration date,
may not be altered without the consent of the holder of each warrant.
DESCRIPTION OF THE STOCK PURCHASE CONTRACTS AND THE STOCK PURCHASE UNITS
We may issue contracts obligating holders to purchase from us, and us to
sell to the holders, a specified number of shares of common stock at a future
date or dates, which we refer to herein as "stock purchase contracts." The price
per share of common stock and the number of shares of common stock may be fixed
at the time the stock purchase contracts are issued or may be determined by
reference to a specific formula set forth in the stock purchase contracts. The
stock purchase contracts may be issued separately or as part of units consisting
of a stock purchase contract and debt securities, trust preferred securities or
debt obligations of third parties, including U.S. treasury securities, which
secure the holders' obligations to purchase the common stock under the stock
purchase contracts. We refer to these units herein as "stock purchase units."
The stock purchase contracts may require holders to secure their obligations
thereunder in a specified manner. The stock purchase contracts also may
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require us to make periodic payments to the holders of the stock purchase units
or vice versa, and such payments may be unsecured or refunded on some basis.
The applicable prospectus supplement will describe the terms of the stock
purchase contracts or stock purchase units. The description in the applicable
prospectus supplement will not necessarily be complete, and reference will be
made to the stock purchase contracts, and, if applicable, collateral or
depositary arrangements, relating to the stock purchase contracts or stock
purchase units. Material U.S. federal income tax considerations applicable to
the stock purchase units and the stock purchase contracts will also be discussed
in the applicable prospectus supplement.
DESCRIPTION OF THE TRUST PREFERRED SECURITIES
If and when IM Capital Trust issues trust preferred securities, its
declaration of trust will be replaced by an amended and restated declaration of
trust which will authorize its trustees to issue one series of trust preferred
securities and one series of trust common securities. The form of amended and
restated declaration of trust is filed with the SEC as an exhibit to the
registration statement of which this prospectus is a part.
The terms of the trust preferred securities will include those stated in IM
Capital Trust's declaration of trust, as it may be amended and restated from
time to time, and those made a part of that declaration by the Trust Indenture
Act of 1939. This section describes the general terms and provisions of IM
Capital Trust's amended and restated declaration of trust and the trust
securities IM Capital Trust may offer from time to time. The applicable
prospectus supplement will describe the specific terms of the amended and
restated declaration of trust and the trust preferred securities offered through
that prospectus supplement. Any final amended and restated declaration of trust
will be filed with the SEC if IM Capital Trust issues trust preferred
securities. A holder of trust preferred securities should read the applicable
prospectus supplement and the amended and restated declaration of trust for more
specific information.
The prospectus supplement relating to the trust preferred securities being
offered will include specific terms relating to the offering. These terms will
include some or all of the following:
- the designation of the trust preferred securities;
- the number of trust preferred securities to be issued;
- the annual distribution rate and any conditions upon which distributions
are payable, the distribution payment dates, the record dates for
distribution payments and the additional amounts, if any, that may be
payable with respect to the trust preferred securities;
- whether distributions will be cumulative and compounding and, if so, the
dates from which distributions will be cumulative or compounded;
- the amounts that will be paid out of the assets of IM Capital Trust, after
the satisfaction of liabilities to creditors of IM Capital Trust, to the
holders of trust preferred securities upon dissolution, winding up or
termination of IM Capital Trust;
- any repurchase, redemption or exchange provisions;
- any preference or subordination rights upon a default or liquidation of IM
Capital Trust;
- any voting rights of the trust preferred securities in addition to those
required by law, including the number of votes per trust preferred
security and any requirement for the approval by the holders of trust
preferred securities, as a condition to a specified action or amendments
to the declaration of trust;
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- terms for any conversion or exchange of the related series of our debt
securities or the trust preferred securities into other securities;
- any rights to defer distributions on the trust preferred securities by
extending the interest payment period on the related series of our debt
securities;
- any terms and conditions upon which the related series of our debt
securities may be distributed to holders of trust preferred securities;
and
- any other relevant terms, rights, preferences, privileges, limitations or
restrictions of the trust preferred securities.
The regular trustee, on behalf of IM Capital Trust and pursuant to the
declaration of trust, will issue one class of trust preferred securities and one
class of trust common securities. The trust preferred and trust common
securities will represent undivided beneficial ownership interests in the assets
of IM Capital Trust. Except as described in the applicable prospectus
supplement, the trust preferred securities will rank equally, and payments will
be made thereon proportionately, with the trust common securities. The trust
preferred securities will be issued to the public under the registration
statement of which this prospectus is a part. The trust common securities will
be issued directly or indirectly to us.
The only source of cash to make payments on the trust preferred securities
issuable by IM Capital Trust will be payments on debt securities IM Capital
Trust purchases from us. The property trustee of IM Capital Trust will hold
legal title to the debt securities IM Capital Trust purchases in trust for the
benefit of the holders of its trust preferred securities. If IM Capital Trust is
dissolved, after satisfaction of IM Capital Trust's creditors, the property
trustee may distribute the debt securities held in trust on a proportionate
basis to the holders of trust preferred and trust common securities.
We will execute a guarantee agreement for the benefit of the holders of the
trust preferred securities. The terms of our guarantee will be set forth in the
applicable prospectus supplement and are summarized under the caption
"Description of the Trust Preferred Securities Guarantee" included elsewhere in
this prospectus. The guarantee will not guarantee the payment of distributions,
as defined below, or any amounts payable on redemption or liquidation of the
trust preferred securities when IM Capital Trust does not have funds available
to make these payments.
In the applicable prospectus supplement we will also describe certain
material U.S. federal income tax consequences and special considerations
applicable to the trust preferred securities.
DESCRIPTION OF THE TRUST PREFERRED SECURITIES GUARANTEE
If and when IM Capital Trust issues trust preferred securities, we will
fully and unconditionally guarantee payments on the trust preferred securities
as described in this section, any applicable prospectus supplement and the
guarantee executed by us in connection with the issuance of the trust preferred
securities. The Bank of New York, as guarantee trustee, will hold the guarantee
for the benefit of the holders of trust preferred securities.
This section describes the general terms and provisions of our trust
preferred securities guarantee. The applicable prospectus supplement will
describe the specific terms of the trust preferred securities guarantee. The
form of trust guarantee is filed with the SEC as an exhibit to the registration
statement of which this prospectus is a part. We will file with the SEC a final
guarantee if IM Capital Trust issues trust preferred securities. A holder of
trust preferred securities should refer to the applicable prospectus supplement
and to the full text of our guarantee and those terms made a part of the
guarantee by the Trust Indenture Act of 1939 for more specific information.
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We will irrevocably and unconditionally agree to pay in full to holders of
trust preferred securities the following amounts to the extent not paid by IM
Capital Trust:
- any accumulated and unpaid distributions and any additional amounts with
respect to the trust preferred securities and any redemption price for
trust preferred securities called for redemption by IM Capital Trust, if
and to the extent that we have made corresponding payments on the debt
securities to the property trustee of IM Capital Trust; and
- payments upon the dissolution of IM Capital Trust equal to the lesser of:
(1) the liquidation amount plus all accumulated and unpaid distributions
and additional amounts on the trust preferred securities to the extent
IM Capital Trust has funds legally available for those payments; and
(2) the amount of assets of IM Capital Trust remaining legally available
for distribution to the holders of trust preferred securities in
liquidation of IM Capital Trust.
We will not be required to make these liquidation payments if:
- IM Capital Trust distributes the debt securities to the holders of trust
preferred securities in exchange for their trust preferred securities; or
- IM Capital Trust redeems the trust preferred securities in full upon the
maturity or redemption of the debt securities.
We may satisfy our obligation to make a guarantee payment either by making
payment directly to the holders of trust preferred securities or to the
guarantee trustee for remittance to the holders or by causing IM Capital Trust
to make the payment to them.
The guarantee is a guarantee from the time of issuance of the applicable
series of trust preferred securities. THE GUARANTEE ONLY COVERS, HOWEVER,
DISTRIBUTIONS AND OTHER PAYMENTS ON TRUST PREFERRED SECURITIES IF AND TO THE
EXTENT THAT WE HAVE MADE CORRESPONDING PAYMENTS ON THE DEBT SECURITIES TO THE
APPLICABLE PROPERTY TRUSTEE. IF WE DO NOT MAKE THOSE CORRESPONDING PAYMENTS ON
THE DEBT SECURITIES, IM CAPITAL TRUST WILL NOT HAVE FUNDS AVAILABLE FOR PAYMENTS
AND WE WILL HAVE NO OBLIGATION TO MAKE A GUARANTEE PAYMENT.
The obligations under the debt securities, the associated indenture, IM
Capital Trust's declaration of trust and our related guarantee, taken together,
will provide a full and unconditional guarantee of payments of distributions and
other amounts due on the trust preferred securities.
IRON MOUNTAIN COVENANTS
In the guarantee, we will agree that, as long as any trust preferred
securities issued by IM Capital Trust are outstanding, we will not make the
payments and distributions described below if:
- we are in default on our guarantee payments or other payment obligations
under the related guarantee;
- any trust enforcement event under IM Capital Trust's declaration of trust
has occurred and is continuing; or
- we elect to defer payments of interest on the related debt securities by
extending the interest payment period, and that deferral period is
continuing.
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In these circumstances, we will agree that we will not:
- declare or pay any dividends or distributions on, or redeem, purchase,
acquire, or make a liquidation payment with respect to, any of our capital
stock; or
- make any payment of principal, interest or premium, if any, on or repay,
repurchase or redeem any debt securities that rank equally with, or junior
in interest to, the debt securities we issue to IM Capital Trust or make
any guarantee payments with respect to any guarantee by us of the debt of
any of our subsidiaries if that guarantee ranks equally with or junior in
interest to the debt securities we issue to IM Capital Trust.
However, even during these circumstances, we may:
- purchase or acquire our capital stock in connection with the satisfaction
of our obligations under any employee benefit plans or pursuant to any
contract or security outstanding on the first day of any extension period
requiring us to purchase our capital stock (other than a contract or
security ranking expressly by its terms on a parity with or junior to the
debt securities);
- reclassify our capital stock or exchange or convert one class or series of
our capital stock for another class or series of our capital stock;
- purchase fractional interests in shares of our capital stock pursuant to
the conversion or exchange provisions of our capital stock or the security
being converted or exchanged;
- declare dividends or distributions in our capital stock where the dividend
stock is the same stock as that on which the dividend is being paid;
- redeem, repurchase or issue any rights pursuant to a rights agreement; and
- make payments under the guarantee related to the trust preferred
securities.
In addition, as long as trust preferred securities issued by IM Capital
Trust are outstanding, we will agree that we will:
- remain the sole direct or indirect owner of all the outstanding trust
common securities of IM Capital Trust, except as permitted by its
declaration of trust;
- permit the trust common securities of IM Capital Trust to be transferred
only as permitted by its declaration of trust; and
- use reasonable efforts to cause IM Capital Trust to continue to be treated
as a grantor trust for U.S. federal income tax purposes, except in
connection with a distribution of debt securities to the holders of trust
preferred securities as provided in its declaration of trust, in which
case IM Capital Trust would be dissolved.
AMENDMENTS AND ASSIGNMENT
We and the guarantee trustee may amend the guarantee without the consent of
any holder of trust preferred securities if the amendment does not adversely
affect the rights of the holders in any material respect. In all other cases, we
and the guarantee trustee may amend the guarantee only with the prior approval
of the holders of at least a majority of outstanding trust preferred securities
issued by IM Capital Trust.
We may assign our obligations under the guarantee only in connection with a
consolidation, merger or asset sale involving us that is permitted under the
indenture governing the debt securities.
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TERMINATION OF THE GUARANTEE
Our guarantee will terminate upon:
- full payment of the redemption price of all trust preferred securities of
IM Capital Trust;
- distribution of the related debt securities, or any securities into which
those debt securities are convertible, to the holders of the trust
preferred and trust common securities of IM Capital Trust in exchange for
all the securities issued by IM Capital Trust; or
- full payment of the amounts payable upon liquidation of IM Capital Trust.
The guarantee will, however, continue to be effective, or will be
reinstated, if any holder of trust preferred securities must repay any amounts
paid on those trust preferred securities or under the guarantee.
STATUS OF THE GUARANTEE
We will specify in the applicable prospectus supplement the ranking of the
guarantee with respect to our capital stock and other liabilities, including
other guarantees.
The guarantee will be deposited with the guarantee trustee to be held for
the benefit of the holders of the trust preferred securities. The guarantee
trustee will have the right to enforce the guarantee on the holders' behalf. In
most cases, the holders of a majority of outstanding trust preferred securities
issued by IM Capital Trust will have the right to direct the time, method and
place of:
- conducting any proceeding for any remedy available to the applicable
guarantee trustee; or
- exercising any trust or other power conferred upon that guarantee trustee
under the guarantee.
The guarantee will constitute a guarantee of payment and not merely of
collection. This means that the guarantee trustee may institute a legal
proceeding directly against us to enforce the payment rights under the
guarantee, without first instituting a legal proceeding against IM Capital Trust
or any other person or entity.
If the guarantee trustee fails to enforce the guarantee or we fail to make a
guarantee payment, a holder of the trust preferred securities may institute a
legal proceeding directly against us to enforce the holder's rights under that
guarantee without first instituting a legal proceeding against IM Capital Trust,
the guarantee trustee or any other person or entity.
PERIODIC REPORTS UNDER GUARANTEE
We will be required to provide annually to the guarantee trustee a statement
as to our performance of our obligations and our compliance with all conditions
under the guarantee.
DUTIES OF GUARANTEE TRUSTEE
The guarantee trustee normally will perform only those duties specifically
set forth in the guarantee. The guarantee will not contain any implied
covenants. If a default occurs on the guarantee, the guarantee trustee will be
required to use the same degree of care and skill in the exercise of its powers
under the guarantee as a prudent person would exercise or use under the
circumstances in the conduct of his own affairs. The guarantee trustee will
exercise any of its rights or powers under the guarantee at the request or
direction of holders of the trust preferred securities only if the guarantee
trustee is offered security and indemnity satisfactory to it.
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RELATIONSHIP AMONG THE DEBT SECURITIES, THE TRUST PREFERRED SECURITIES AND THE
TRUST PREFERRED SECURITIES GUARANTEE
To the extent set forth in the guarantee and to the extent funds are
available, we will irrevocably guarantee the payment of distributions and other
amounts due on the trust preferred securities. If and to the extent we do not
make payments on the debt securities to the property trustee, IM Capital Trust
will not have sufficient funds to pay distributions or other amounts due on the
trust preferred securities. The guarantee does not cover any payment of
distributions or other amounts due on the trust preferred securities unless IM
Capital Trust has sufficient funds for the payment of such distributions or
other amounts. In such event, a holder of trust preferred securities may
institute a legal proceeding directly against us to enforce payment of such
distributions or other amounts to such holder after the respective due dates.
Taken together, our obligations under the debt securities, the associated
indenture, IM Capital Trust's declaration of trust and our related guarantee
will provide a full and unconditional guarantee of payments of distributions and
other amounts due on the trust preferred securities. No single document standing
alone or operating in conjunction with fewer than all of the other documents
constitutes such guarantee. It is only the combined operation of these documents
that provides a full and unconditional guarantee of IM Capital Trust's payment
obligations under the trust preferred securities.
SUFFICIENCY OF PAYMENTS
As long as payments of interest and other amounts are made when due on the
debt securities, such payments will be sufficient to cover distributions and
payments due on the trust preferred securities because of the following factors:
- the aggregate principal amount of the debt securities will be equal to the
sum of the aggregate stated liquidation amount of the trust preferred
securities;
- the interest rate and the interest and other payment dates on the debt
securities will match the distribution rate and distribution and other
payment dates for the trust preferred securities;
- we, as issuer of the debt securities, will pay, and IM Capital Trust will
not be obligated to pay, directly or indirectly, any costs, expenses,
debts and obligations of IM Capital Trust, other than with respect to the
trust preferred securities; and
- the declaration of trust will further provide that IM Capital Trust will
not engage in any activity that is not consistent with the limited
purposes of IM Capital Trust.
Notwithstanding anything to the contrary in the indenture, we have the right
to set off any payment we are otherwise required to make thereunder against and
to the extent we have already made, or are concurrently on the date of such
payment making, a related payment under the guarantee.
ENFORCEMENT RIGHTS OF HOLDERS OF PREFERRED SECURITIES
The declaration of trust provides that if we fail to make interest or other
payments on the debt securities when due, taking account of any extension
period, the holders of the trust preferred securities may direct the property
trustee to enforce its rights under the applicable indenture. If the property
trustee fails to enforce its rights under the indenture in respect of an event
of default under the indenture, any holder of record of trust preferred
securities may, to the fullest extent permitted by applicable law, institute a
legal proceeding against us to enforce the property trustee's rights under the
indenture without first instituting any legal proceeding against IM Capital
Trust, the property trustee or any other person or entity. Notwithstanding the
foregoing, if a trust enforcement event has occurred and is continuing and such
event is attributable to our failure to pay interest, premium or principal on
the debt securities on the date such interest, premium or principal is otherwise
payable, then a holder
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of trust preferred securities may institute a direct action against us for
payment of such holder's pro rata share. If a holder brings such a direct
action, we will be entitled to that holder's rights under IM Capital Trust's
declaration of trust to the extent of any payment made by us to that holder.
If we fail to make payments under the guarantee, a holder of trust preferred
securities may institute a proceeding directly against us for enforcement of the
guarantee for such payments.
LIMITED PURPOSE OF TRUST
The trust preferred securities evidence undivided beneficial ownership
interests in the assets of IM Capital Trust, and IM Capital Trust exists for the
sole purpose of issuing and selling the trust preferred and trust common
securities and using the proceeds to purchase our debt securities. A principal
difference between the rights of a holder of trust preferred securities and a
holder of our debt securities is that a holder of our debt securities is
entitled to receive from us the principal amount of, and interest accrued on,
the debt securities held, while a holder of trust preferred securities is
entitled to receive distributions and other payments from IM Capital Trust, or
from us under the guarantee, only if, and to the extent, IM Capital Trust has
funds available for the payment of such distributions and other payments.
RIGHTS UPON DISSOLUTION
Upon any voluntary or involuntary dissolution of IM Capital Trust involving
the redemption or repayment of the debt securities, the holders of the trust
preferred securities will be entitled to receive, out of assets held by IM
Capital Trust, subject to the rights of creditors of IM Capital Trust, if any,
the liquidation distribution in cash. Because we are the guarantor under the
guarantee and, as issuer of the debt securities, we have agreed to pay for all
costs, expenses and liabilities of IM Capital Trust other than IM Capital
Trust's obligations to the holders of the trust preferred securities, the
positions of a holder of trust preferred securities and a holder of debt
securities relative to other creditors and to our stockholders in the event of
liquidation or bankruptcy of us would be substantially the same.
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DESCRIPTION OF CERTAIN PROVISIONS OF PENNSYLVANIA LAW AND OUR ARTICLES OF
INCORPORATION AND BYLAWS
We are organized as a Pennsylvania corporation. The following is a summary
of our articles of incorporation and by-laws and certain provisions of
Pennsylvania law. Because it is a summary, it does not contain all the
information that may be important to you. If you want more information, you
should read our entire articles of incorporation and by-laws, copies of which we
have previously filed with the SEC, see "Where You Can Find More Information,"
or refer to the provisions of Pennsylvania law.
Pennsylvania law, our articles of incorporation and our bylaws contain some
provisions that could delay or make more difficult the acquisition of us by
means of a tender offer, a proxy contest or otherwise. These provisions, as
described below, are expected to discourage certain types of coercive takeover
practices and inadequate takeover bids and to encourage persons seeking to
acquire control of us first to negotiate with us. We believe that the benefits
of increased protection of our ability to negotiate with the proponent of an
unfriendly or unsolicited proposal to acquire or restructure us outweigh the
disadvantages of discouraging such proposals because, among other things,
negotiations with respect to such proposals could result in an improvement of
their terms.
PENNSYLVANIA ANTI-TAKEOVER STATUTORY PROVISIONS
We are subject to the anti-takeover provisions of Section 2538 and Sections
2551-2556 of the Pennsylvania Business Corporation Law of 1988, as amended (the
"PBCL"), which in certain cases impose restrictions on, including providing for
supermajority shareholder approval of, business combinations involving us and
any "interested shareholder." "Interested shareholder" includes generally, in
the case of Section 2538, shareholders who are a party to the business
combination or who are treated differently from other shareholders, and, in the
case of Sections 2551-2556, shareholders beneficially owning 20% or more of the
voting power of a "registered" corporation, such as us, or an affiliate or
associate of such corporation which, during the prior five year period,
beneficially owned 20% or more of the voting power of such corporation. The term
"business combination" is broadly defined to include various transactions
including mergers, consolidations, asset sales and other similar transactions.
The PBCL provides for further statutory anti-takeover provisions relating to
control transactions, control-share acquisitions and disgorgement. We have
specifically opted out of these provisions pursuant to our articles of
incorporation.
The PBCL also provides that when making decisions concerning takeovers or
any other matters, the directors of a corporation may consider, to the extent
that they deem appropriate, among other things, (1) the effects of any proposed
transaction upon any or all groups affected by the transaction, including, among
others, shareholders, employees, suppliers, customers, creditors and communities
in which we have offices, (2) the short-term and long-term interests of the
corporation and (3) the resources, intent and conduct of the person seeking
control.
CLASSIFIED BOARD OF DIRECTORS AND OTHER PROVISIONS OF OUR ARTICLES OF
INCORPORATION AND BYLAWS
Our bylaws provide that, other than directors to be elected by holders of
any series of preferred stock, our board of directors is to be composed of three
classes, with staggered three-year terms, each class to be as nearly equal in
number as reasonably possible. Accordingly, at each annual meeting of
shareholders, only approximately one-third of the directors will be elected. The
classification of directors has the effect of making it more difficult to change
the composition of our board of directors.
Our bylaws provide that a vacancy on the board of directors, including a
vacancy created by an increase in the size of the board of directors by the
directors, may be filled by a majority of the remaining directors, or by a sole
remaining director, or by the shareholders, and each person so elected shall be
a director to serve for the balance of the unexpired term of that class of
directors. Likewise,
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under the PBCL, without an unanimous vote, shareholders may only remove
directors for cause. These provisions are to ensure that a third party would be
precluded from removing incumbent directors and simultaneously gaining control
of the board of directors by filling the vacancies with its own nominees.
Certain other provisions of our articles of incorporation and bylaws could
also have the effect of preventing or delaying any change in control of us,
including:
- the advance notification procedures imposed on shareholders for
shareholder nominations of candidates for the board of directors and for
other shareholder business to be conducted at annual or special meetings;
- the absence of authority for shareholders to call special shareholder
meetings, except in certain limited circumstances mandated by the PBCL;
and
- the absence of authority for shareholder action by unanimous or partial
written consent in lieu of an annual or special meeting.
These provisions, the classified board of directors and statutory
anti-takeover provisions, could make it more difficult for a third party to
acquire, or discourage a third party from seeking to acquire, control of us.
LIMITATION OF DIRECTORS' LIABILITY AND INDEMNIFICATION OF DIRECTORS AND OFFICERS
As permitted by the PBCL, our bylaws provide that a director shall not be
personally liable for monetary damages for any action taken, or any failure to
take any action, unless the director breaches or fails to perform the duties of
his office under the PBCL, and the breach or failure to perform constitutes
self-dealing, willful misconduct or recklessness. These provisions of our
bylaws, however, do not apply to the responsibility or liability of a director
pursuant to any criminal statute, or to the liability of a director for the
payment of our taxes pursuant to local, Pennsylvania or federal law. These
provisions offer persons who serve on the board of directors protection against
awards of monetary damages for negligence in the performance of their duties.
Our bylaws also provide that directors or officers made a party to, or
threatened to be made a party to, or otherwise involved in, any proceeding,
because he or she is or was a representative of us or is or was serving as a
representative of another corporation or any partnership, joint venture, trust,
employee benefit plan or other enterprise, on our behalf, shall be indemnified
and held harmless by us to the fullest extent permitted by Pennsylvania law
against all expenses, liabilities and losses reasonably incurred by or imposed
upon him or her, in connection with any threatened, pending or completed action,
suit or proceeding. Indemnification is not available, however, if a court
determines that the act or failure to act giving rise to the claim constitutes
willful misconduct or recklessness.
Pursuant to our bylaws, amending the provisions to reduce the limitation of
director's liability or limit the right to indemnification requires unanimous
vote of the directors or a majority vote of the shareholders.
PLAN OF DISTRIBUTION
We and IM Capital Trust may sell the offered securities to one or more
underwriters for public offering and sale by them. We and IM Capital Trust may
also sell the offered securities to investors directly or through agents. We
will name any underwriter or agent involved in the offer and sale of the offered
securities in the applicable prospectus supplement.
The distribution of offered securities may be effected from time to time in
one or more transactions at:
- a fixed price or varying prices;
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- market prices prevailing at the time of sale;
- prices related to the market prices; or
- negotiated prices.
In compliance with NASD guidelines, the maximum commission or discount to be
received by any NASD member or independent broker dealer may not exceed 8% of
the aggregate amount of the securities offered pursuant to this prospectus or
any applicable prospectus supplement.
Underwriters, dealers and agents participating in the distribution of the
securities may be deemed to be underwriters, and any discounts and commissions
received by them and any profit realized by them on resale of the securities may
be deemed to be underwriting discounts and commissions under the Securities Act
of 1933. Underwriters, dealers and agents may be entitled, under agreements with
us and/or IM Capital Trust, to indemnification against and contribution toward
certain civil liabilities, including liabilities under the Securities Act of
1933, and to reimbursement by us and/or IM Capital Trust for certain expenses.
If an underwriter or underwriters are used in the offer or sale of
securities, we and/or IM Capital Trust will execute an underwriting agreement
with the underwriters at the time of sale of the securities to the underwriters,
and the names of the underwriters and the principal terms of our and/or IM
Capital Trust's agreements with the underwriters will be provided in the
applicable prospectus supplement.
If we so indicate in the prospectus supplement, we and IM Capital Trust may
authorize agents, underwriters or dealers to solicit offers from certain types
of institutions to purchase securities from us or IM Capital Trust at the public
offering price under delayed delivery contracts. These contracts would provide
for payment and delivery on a specified date in the future. The contracts would
be subject only to those conditions described in the prospectus supplement. The
prospectus supplement will describe the commission payable for solicitation of
those contracts.
Unless otherwise specified in the related prospectus supplement, each series
of offered securities, other than shares of common stock, will be a new issue
with no established trading market. Any shares of common stock sold pursuant to
a prospectus supplement will be listed on the New York Stock Exchange, subject
to official notice of issuance. We and IM Capital Trust may elect to list any
other series or class of offered securities on an exchange or on the Nasdaq
National Market, but are not obligated to do so. Any underwriters to whom
offered securities are sold by us for public offering and sale may make a market
in those offered securities. Underwriters will not be obligated to make any
market, however, and may discontinue any market making at any time without
notice. No assurance can be given as to the liquidity of, or the trading markets
for, any offered securities.
Certain of the underwriters and their affiliates may engage in transactions
with and perform services for us in the ordinary course of business for which
they receive compensation.
The specific terms and manner of sale of the offered securities will be
shown or summarized in the applicable prospectus supplement.
VALIDITY OF THE OFFERED SECURITIES
Sullivan & Worcester LLP, Boston, Massachusetts, will pass upon the validity
of the debt securities, preferred stock, depositary shares, common stock,
warrants, guarantees, stock purchase contracts and stock purchase units. As to
certain matters of Pennsylvania law, Sullivan & Worcester LLP will rely upon an
opinion of Ballard Spahr Andrews & Ingersoll, LLP, Philadelphia, Pennsylvania.
Jas. Murray Howe is of counsel to Sullivan & Worcester LLP and beneficially owns
45,000 shares of common stock.
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The validity of the trust preferred securities to be issued by IM Capital
Trust, and the enforceability of its declaration of trust and the creation of IM
Capital Trust, will be passed upon by Richards, Layton and Finger, P.A.,
Wilmington, Delaware.
EXPERTS
The consolidated financial statements of Iron Mountain Incorporated and its
subsidiaries for the three years ended December 31, 2000, and its supplemental
schedule, Valuation and Qualifying Accounts, included in its Annual Report on
Form 10-K for the year ended December 31, 2000, dated March 23, 2001 and
incorporated by reference into this registration statement, have been audited by
Arthur Andersen LLP, independent public accountants, as set forth in their
reports. In their report on Iron Mountain's consolidated financial statements,
that firm states that, with respect to certain subsidiaries, its opinion is
based on the report of RSM Robson Rhodes, independent public accountants. The
consolidated financial statements and supporting schedule referred to above have
been incorporated by reference herein in reliance upon the authority of those
two firms as experts in giving said reports.
The consolidated financial statements of Iron Mountain Incorporated (f/k/a
Pierce Leahy Corp.), and its subsidiaries for the three years ended
December 31, 1999, and its supplemental schedule, Valuation and Qualifying
Accounts, included in its Annual Report on Form 10-K for the year ended
December 31, 1999, dated March 30, 2000, have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their reports with respect
thereto, and are incorporated by reference herein in reliance upon the authority
of said firm as experts in giving said reports.
The financial statements of Data Base, Inc. and Affiliate for the three
years ended December 31, 1998, included in Iron Mountain's Current Report on
Form 8-K dated April 16, 1999, have been audited by Moss Adams LLP, independent
public accountants, as indicated in their report with respect thereto, and are
incorporated by reference herein in reliance upon the authority of said firm as
experts in giving said report.
The financial statements of Data Storage Center, Inc. as of December 31,
1998 and 1999, and for the years then ended, included in Iron Mountain
Incorporated's Current Report on Form 8-K dated May 15, 2000, have been audited
by Deloitte & Touche LLP, independent auditors, as stated in their report, which
is incorporated herein by reference, and have been so incorporated in reliance
upon the report of such firm given upon their authority as experts in accounting
and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other
information with the SEC. You may read and copy any reports, statements or other
information on file at the SEC's public reference room at 450 Fifth Street,
N.W., Washington, D.C. 20549. You can request copies of those documents upon
payment of a duplicating fee to the SEC. Please call the SEC at 1-800-SEC-0330
for further information on the operation of the public reference rooms. You can
review our SEC filings and the registration statement by accessing the SEC's
Internet site at http://www.sec.gov. Our common stock is listed on the New York
Stock Exchange where reports, proxy statements and other information concerning
us can also be inspected. The offices of the NYSE are located at 20 Broad
Street, New York, New York 10005.
DOCUMENTS INCORPORATED BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file with
them, which means that we can disclose important information to you by referring
you to those documents. The information incorporated by reference is considered
to be part of this prospectus. Statements in this prospectus regarding the
contents of any contract or other document may not be complete. You should
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refer to the copy of the contract or other document filed as an exhibit to the
registration statement. Later information filed with the SEC will update and
supersede information we have included or incorporated by reference in this
prospectus.
We incorporate by reference the following documents filed by us:
- Annual Report on Form 10-K for the fiscal year ended December 31, 2000.
- Quarterly Reports on Form 10-Q for the quarters ended March 31, June 30
and September 30, 2001.
- Current Reports on Form 8-K filed March 23, 2001, April 3, 2001,
September 7, 2001, September 17, 2001 and December 13, 2001.
- The description of our common stock contained in the Registration
Statement on Form 8-A dated May 27, 1997, including all amendments and
reports filed for the purpose of updating such description.
In addition to the documents listed above, we incorporate by reference any
future filings made by us, including filings made prior to the effectiveness of
this registration statement, with the SEC under Section 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934 until our offering of the
securities made by this prospectus is completed or terminated.
We will provide you with a copy of the information we have incorporated by
reference, excluding exhibits other than those to which we specifically refer.
You may obtain this information at no cost by writing or telephoning us at: 745
Atlantic Avenue, Boston, Massachusetts 02111, (617) 535-4799, Attention:
Investor Relations.
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WE HAVE NOT AUTHORIZED ANY DEALER, SALESPERSON OR OTHER PERSON TO GIVE ANY
INFORMATION OR REPRESENT ANYTHING NOT CONTAINED IN THIS PROSPECTUS SUPPLEMENT OR
THE PROSPECTUS INCLUDED HEREIN. YOU MUST NOT RELY ON ANY UNAUTHORIZED
INFORMATION. THIS PROSPECTUS SUPPLEMENT DOES NOT OFFER TO SELL OR BUY ANY
SECURITIES IN ANY JURISDICTION WHERE IT IS UNLAWFUL. THE INFORMATION IN THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS INCLUDED HEREIN IS CURRENT AS OF
DECEMBER 16, 2002.
TABLE OF CONTENTS
Page
--------
PROSPECTUS SUPPLEMENT
Prospectus Supplement Summary............. S-1
Risk Factors.............................. S-7
Use of Proceeds........................... S-12
Capitalization............................ S-13
Description of the Notes.................. S-14
Material United States Federal Income Tax
Considerations.......................... S-49
Underwriting.............................. S-53
Notice to United Kingdom Residents........ S-53
Notice to Canadian Residents.............. S-54
Legal Matters............................. S-56
Notice Regarding Arthur Andersen LLP...... S-56
Experts................................... S-56
Documents Incorporated By Reference....... S-57
PROSPECTUS
About This Prospectus..................... i
Cautionary Note Regarding Forward-Looking
Statements.............................. ii
Our Company............................... 1
IM Capital Trust.......................... 1
Risk Factors.............................. 2
Ratio of Earnings to Fixed Charges........ 7
Use of Proceeds........................... 8
Description of our Debt Securities........ 8
Description of our Capital Stock.......... 16
Description of our Depositary Shares...... 18
Description of our Warrants............... 21
Description of the Stock Purchase
Contracts and the Stock Purchase
Units................................... 22
Description of the Trust Preferred
Securities.............................. 23
Description of the Trust Preferred
Securities Guarantee.................... 24
Relationship Among the Debt Securities,
the Trust Preferred Securities and the
Trust Preferred Securities Guarantee.... 28
Description of Certain Provisions of
Pennsylvania Law and Our Articles of
Incorporation and Bylaws................ 30
Plan of Distribution...................... 31
Validity of the Offered Securities........ 32
Experts................................... 33
Where You Can Find More Information....... 33
Documents Incorporated By Reference....... 33
$100,000,000
[LOGO]
IRON MOUNTAIN
INCORPORATED
7 3/4% SENIOR SUBORDINATED
NOTES DUE 2015
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PROSPECTUS SUPPLEMENT
--------------------------
December 16, 2002
BEAR, STEARNS & CO. INC.
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