-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, I8Hk84BV7T0L59Z19ZyTu6EqMUnNFwuH+2IntyNofJNRkCjw/WqlFBSvzTrvI5kx A/+ByZ4x0tRiJD0ZIXB2rA== 0000950146-96-001632.txt : 19960912 0000950146-96-001632.hdr.sgml : 19960912 ACCESSION NUMBER: 0000950146-96-001632 CONFORMED SUBMISSION TYPE: S-1/A PUBLIC DOCUMENT COUNT: 45 FILED AS OF DATE: 19960911 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: IRON MOUNTAIN INC /DE CENTRAL INDEX KEY: 0001004317 STANDARD INDUSTRIAL CLASSIFICATION: PUBLIC WAREHOUSING & STORAGE [4220] IRS NUMBER: 043107342 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-1/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-10359 FILM NUMBER: 96628628 BUSINESS ADDRESS: STREET 1: 745 ATLANTIC AVE CITY: BOSTON STATE: MA ZIP: 02111 BUSINESS PHONE: 6173576966 MAIL ADDRESS: STREET 1: 745 ATLANTIC AVENUE STREET 2: 7TH FLOOR CITY: BOSTON STATE: MA ZIP: 02111 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DATA STORAGE SYSTEMS INC CENTRAL INDEX KEY: 0000855197 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 770154612 FILING VALUES: FORM TYPE: S-1/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-10359-01 FILM NUMBER: 96628629 BUSINESS ADDRESS: STREET 1: 745 ATLANTIC AVE CITY: BOSTON STATE: MA ZIP: 02111 BUSINESS PHONE: 617-357-4455 MAIL ADDRESS: STREET 1: 745 ATLANTIC AVE CITY: BOSTON STATE: MA ZIP: 02111 FILER: COMPANY DATA: COMPANY CONFORMED NAME: IRON MOUNTAIN RECORDS MANAGEMENT INC CENTRAL INDEX KEY: 0001020882 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 043038590 FILING VALUES: FORM TYPE: S-1/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-10359-02 FILM NUMBER: 96628630 BUSINESS ADDRESS: STREET 1: 745 ATLANTIC AVE CITY: BOSTON STATE: MA ZIP: 02111 BUSINESS PHONE: 617-357-4455 MAIL ADDRESS: STREET 1: 745 ATLANTIC AVE CITY: BOSTON STATE: MA ZIP: 02111 FILER: COMPANY DATA: COMPANY CONFORMED NAME: METRO BUSINESS ARCHIVES INC CENTRAL INDEX KEY: 0001020883 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 132687436 FILING VALUES: FORM TYPE: S-1/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-10359-03 FILM NUMBER: 96628631 BUSINESS ADDRESS: STREET 1: 745 ATLANTIC AVE CITY: BOSTON STATE: MA ZIP: 02111 BUSINESS PHONE: 617-357-4455 MAIL ADDRESS: STREET 1: 745 ATLANTIC AVE CITY: BOSTON STATE: MA ZIP: 02111 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CRITERION ATLANTIC PROPERTY INC CENTRAL INDEX KEY: 0001020884 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 043102768 FILING VALUES: FORM TYPE: S-1/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-10359-04 FILM NUMBER: 96628632 BUSINESS ADDRESS: STREET 1: 745 ATLANTIC AVE CITY: BOSTON STATE: MA ZIP: 02111 BUSINESS PHONE: 617-357-4455 MAIL ADDRESS: STREET 1: 745 ATLANTIC AVE CITY: BOSTON STATE: MA ZIP: 02111 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CRITERION PROPERTY INC CENTRAL INDEX KEY: 0001020885 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 061270033 FILING VALUES: FORM TYPE: S-1/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-10359-05 FILM NUMBER: 96628633 BUSINESS ADDRESS: STREET 1: 745 ATLANTIC AVE CITY: BOSTON STATE: MA ZIP: 02111 BUSINESS PHONE: 617-357-4455 MAIL ADDRESS: STREET 1: 745 ATLANTIC AVE CITY: BOSTON STATE: MA ZIP: 02111 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HOLLYWOOD PROPERTY INC CENTRAL INDEX KEY: 0001020886 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 954284487 FILING VALUES: FORM TYPE: S-1/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-10359-06 FILM NUMBER: 96628634 BUSINESS ADDRESS: STREET 1: 745 ATLANTIC AVE CITY: BOSTON STATE: MA ZIP: 02111 BUSINESS PHONE: 617-357-4455 MAIL ADDRESS: STREET 1: 745 ATLANTIC AVE CITY: BOSTON STATE: MA ZIP: 02111 FILER: COMPANY DATA: COMPANY CONFORMED NAME: IM SAN DIEGO INC CENTRAL INDEX KEY: 0001020887 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 954453815 FILING VALUES: FORM TYPE: S-1/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-10359-07 FILM NUMBER: 96628635 BUSINESS ADDRESS: STREET 1: 745 ATLANTIC AVE CITY: BOSTON STATE: MA ZIP: 02111 BUSINESS PHONE: 617-357-44 MAIL ADDRESS: STREET 1: 745 ATLANTIC AVE CITY: BOSTON STATE: MA ZIP: 02111 FILER: COMPANY DATA: COMPANY CONFORMED NAME: IRON MOUNTAIN INFORMATION PARTNERS INC CENTRAL INDEX KEY: 0001020888 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 043241466 FILING VALUES: FORM TYPE: S-1/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-10359-08 FILM NUMBER: 96628636 BUSINESS ADDRESS: STREET 1: 745 ATLANTIC AVE CITY: BOSTON STATE: MA ZIP: 02111 BUSINESS PHONE: 617-357-44 MAIL ADDRESS: STREET 1: 745 ATLANTIC AVE CITY: BOSTON STATE: MA ZIP: 02111 FILER: COMPANY DATA: COMPANY CONFORMED NAME: IRON MOUNTAIN RECORDS MANAGEMENT OF MARYLAND INC CENTRAL INDEX KEY: 0001020889 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 521911465 FILING VALUES: FORM TYPE: S-1/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-10359-09 FILM NUMBER: 96628637 BUSINESS ADDRESS: STREET 1: 745 ATLANTIC AVE CITY: BOSTON STATE: MA ZIP: 02111 BUSINESS PHONE: 617-357-4455 MAIL ADDRESS: STREET 1: 745 ATLANTIC AVE CITY: BOSTON STATE: MA ZIP: 02111 FILER: COMPANY DATA: COMPANY CONFORMED NAME: IRON MOUNTAIN RECORDS MANAGEMENT OF OHIO INC CENTRAL INDEX KEY: 0001020890 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 311419399 FILING VALUES: FORM TYPE: S-1/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-10359-10 FILM NUMBER: 96628638 BUSINESS ADDRESS: STREET 1: 745 ATLANTIC AVE CITY: BOSTON STATE: MA ZIP: 02111 BUSINESS PHONE: 617-357-4455 MAIL ADDRESS: STREET 1: 745 ATLANTIC AVE CITY: BOSTON STATE: MA ZIP: 02111 FILER: COMPANY DATA: COMPANY CONFORMED NAME: IRON MOUNTAIN WILMINGTON INC CENTRAL INDEX KEY: 0001020891 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 510370149 FILING VALUES: FORM TYPE: S-1/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-10359-11 FILM NUMBER: 96628639 BUSINESS ADDRESS: STREET 1: 745 ATLANTIC AVE CITY: BOSTON STATE: MA ZIP: 02111 BUSINESS PHONE: 617-357-44 MAIL ADDRESS: STREET 1: 745 ATLANTIC AVE CITY: BOSTON STATE: MA ZIP: 02111 FILER: COMPANY DATA: COMPANY CONFORMED NAME: IRON MOUNTAIN RECORDS MANAGEMENT OF BOSTON INC CENTRAL INDEX KEY: 0001020892 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 043321756 FILING VALUES: FORM TYPE: S-1/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-10359-12 FILM NUMBER: 96628640 BUSINESS ADDRESS: STREET 1: 745 ATLANTIC AVE CITY: BOSTON STATE: MA ZIP: 02111 BUSINESS PHONE: 617-357-4455 MAIL ADDRESS: STREET 1: 745 ATLANTIC AVE CITY: BOSTON STATE: MA ZIP: 02111 FILER: COMPANY DATA: COMPANY CONFORMED NAME: IRON MOUNTAIN DATA PROTECTION SERVICES INC CENTRAL INDEX KEY: 0001020893 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 061402551 FILING VALUES: FORM TYPE: S-1/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-10359-13 FILM NUMBER: 96628641 BUSINESS ADDRESS: STREET 1: 745 ATLANTIC AVE CITY: BOSTON STATE: MA ZIP: 02111 BUSINESS PHONE: 617-357-4455 MAIL ADDRESS: STREET 1: 745 ATLANTIC AVE CITY: BOSTON STATE: MA ZIP: 02111 FILER: COMPANY DATA: COMPANY CONFORMED NAME: IRON MOUNTAIN RECORDS MANAGEMENT OF MISSOURI LLC CENTRAL INDEX KEY: 0001020894 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 431743847 FILING VALUES: FORM TYPE: S-1/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-10359-14 FILM NUMBER: 96628642 BUSINESS ADDRESS: STREET 1: 745 ATLANTIC AVE CITY: BOSTON STATE: MA ZIP: 02111 BUSINESS PHONE: 617-357-4455 MAIL ADDRESS: STREET 1: 745 ATLANTIC AVE CITY: BOSTON STATE: MA ZIP: 02111 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DATA ARCHIVES SERVICES INC CENTRAL INDEX KEY: 0001021093 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 592320120 FILING VALUES: FORM TYPE: S-1/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-10359-15 FILM NUMBER: 96628643 BUSINESS ADDRESS: STREET 1: 745 ATLANTA AVENUE CITY: BOSTON STATE: MA ZIP: 02111-2735 BUSINESS PHONE: 6173574455 MAIL ADDRESS: STREET 1: 745 ATLANTIC AVENUE CITY: BOSTON STATE: MA ZIP: 02111-2735 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DATA ARCHIVES SERVICES OF MIAMI INC CENTRAL INDEX KEY: 0001021094 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 650209438 FILING VALUES: FORM TYPE: S-1/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-10359-16 FILM NUMBER: 96628644 BUSINESS ADDRESS: STREET 1: 745 ATLANTA AVENUE CITY: BOSTON STATE: MA ZIP: 02111-2735 BUSINESS PHONE: 6173574455 MAIL ADDRESS: STREET 1: 745 ATLANTIC AVENUE CITY: BOSTON STATE: MA ZIP: 02111-2735 S-1/A 1 IRON MOUNTAIN FORM S-1/A As filed with the Securities and Exchange Commission on September 11, 1996 Registration No. 333-10359 ----------------------------------------------------------------------------- ----------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------- AMENDMENT NO. 1 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------- IRON MOUNTAIN INCORPORATED (Exact name of registrant as specified in its charter)
DELAWARE 4226 04-3107342 (State of incorporation) (Primary Standard Industrial (IRS Employer Identification No.) Classification Code Number)
745 ATLANTIC AVENUE, BOSTON, MA 02111 (617) 357-4455 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) ------------- C. RICHARD REESE CHAIRMAN OF THE BOARD OF DIRECTORS AND CHIEF EXECUTIVE OFFICER IRON MOUNTAIN INCORPORATED 745 Atlantic Avenue Boston, MA 02111 (617) 357-4455 (Name, address, including zip code, and telephone number, including area code, of agent for service) ------------- Copies to:
WILLIAM J. CURRY ROBERT A. ZUCCARO SULLIVAN & WORCESTER LLP JONES, DAY, REAVIS & POGUE One Post Office Square 599 Lexington Avenue Boston, MA 02109 New York, NY 10022 (617) 338-2800 (212) 326-3939
------------- Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. [ ] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ] ------------- The Registrants hereby amend this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrants shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. ----------------------------------------------------------------------------- ----------------------------------------------------------------------------- INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. SUBJECT TO COMPLETION, DATED SEPTEMBER 11, 1996 PROSPECTUS , 1996 $150,000,000 [LOGO] IRON MOUNTAIN INCORPORATED % Senior Subordinated Notes due 2006 The % Senior Subordinated Notes due 2006 (the "Notes") are being offered (the "Offering") by Iron Mountain Incorporated (the "Company" or "Iron Mountain"). The net proceeds of the Offering will be used to repay outstanding bank debt and certain other indebtedness and to fund a portion of the purchase price of the Pending Acquisitions. Interest on the Notes is payable on and , commencing , 1997. Except as described below, the Notes are not redeemable by the Company prior to , 2001. Thereafter, the Notes are redeemable at the option of the Company, in whole or in part, at any time and from time to time, at the redemption prices set forth herein plus accrued and unpaid interest to, but excluding, the date of redemption. In addition, during the first 36 months after the date of issuance of the Notes, the Company, at its option, may redeem up to 35% of the initial principal amount of the Notes with the net proceeds of one or more Qualified Equity Offerings at a redemption price equal to %, plus accrued and unpaid interest to, but excluding, the date of redemption; provided that at least 65% of the initial principal amount of the Notes remains outstanding after each such redemption. Except as set forth herein, the Company is not required to make sinking fund or redemption payments with respect to the Notes at any time prior to maturity. Upon the occurrence of a Change of Control, each Holder of Notes may require the Company to repurchase such Notes at 101% of the principal amount thereof, plus accrued and unpaid interest to, but excluding, the date of repurchase. The Notes will be general unsecured senior subordinated obligations of the Company ranking junior to all existing and future Senior Debt of the Company. The Notes will be fully and unconditionally guaranteed on an unsecured senior subordinated and joint and several basis (the "Subsidiary Guarantees") by substantially all of the Company's present and future Restricted Subsidiaries (collectively, the "Guarantors"). The Subsidiary Guarantees will rank junior to all existing and future Senior Debt of the Guarantors. As of June 30, 1996, on a pro forma basis after giving effect to the Transactions, the aggregate outstanding principal amount of Senior Debt of the Company and the Guarantors would have been $24.5 million. The Notes will not be listed on any securities exchange or included in the National Association of Securities Dealers Automated Quotation System, and there can be no assurance that there will be a secondary market therefor. SEE "RISK FACTORS" COMMENCING ON PAGE 10 FOR A DISCUSSION OF CERTAIN MATERIAL FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE NOTES OFFERED HEREBY. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Price to Discounts and Proceeds to the the Public (1) Commissions (2) Company(1)(3) - ------------ ------------------- ------------------- ----------------- Per Note % % % Total $ $ $
(1)Plus accrued interest, if any, on the Notes from the date of issuance. (2)The Company and the Guarantors have agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act of 1933, as amended. See "Underwriting." (3)Before deduction of expenses payable by the Company estimated to be $800,000. The Notes are offered by Donaldson, Lufkin & Jenrette Securities Corporation, Bear, Stearns & Co. Inc. and Prudential Securities Incorporated (collectively, the "Underwriters") subject to prior sale, when, as and if delivered to and accepted by the Underwriters, and subject to certain prior conditions, including the right of the Underwriters to reject any order in whole or in part. It is expected that delivery of the Notes will be made in New York, New York through the facilities of the Depository Trust Company on or about , 1996, against payment therefor in immediately available funds. Donaldson, Lufkin & Jenrette Securities Corporation Bear, Stearns & Co. Inc. Prudential Securities Incorporated [Color Coded Map of Company Systems, Logos, Graphics, etc.] IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. 2 PROSPECTUS SUMMARY The following summary is qualified in its entirety by, and should be read in conjunction with, the more detailed information and financial statements appearing elsewhere in this Prospectus. References to "Iron Mountain" and the "Company" include Iron Mountain Incorporated (including predecessor entities) and its consolidated subsidiaries, unless the context otherwise requires. The Company Iron Mountain is the largest records management company in the United States, as measured by revenues. The Company is a full-service provider of records management and related services, enabling customers to outsource records management functions. Pro forma for the Acquisitions (as defined herein), as of June 30, 1996, the Company managed approximately 29.6 million Cartons* in 103 records centers in 33 markets nationwide. The Company has a diversified base of over 19,000 customer accounts, which includes more than half of the Fortune 500 and numerous legal, banking, healthcare, accounting, insurance, entertainment and government organizations. The Company provides storage and related services for all major media, including paper (which is the dominant form of records retention and which has accounted for approximately 85% of the Company's revenues since 1992), computer disks and tapes, microfilm and microfiche, master audio and video tapes, film and optical disks, X-rays and blueprints. The Company's principal services include filing, retrieval and destruction of records, courier pick-up and delivery, database management and customized reporting. The Company also sells storage materials and provides consulting and other records-related services. The Company continues to capitalize on its leading position in the records management industry and the industry trends of increased records retention, outsourcing of records management and vendor consolidation. As a result, the Company has achieved significant increases in revenues and EBITDA (as defined herein). From 1991 to 1995, Iron Mountain's total revenues increased from $62.8 million to $104.4 million primarily from internal growth, representing a compound annual growth rate ("CAGR") of 13.5%. During the same period, storage revenues grew at a 12.9% CAGR while service and storage material sales revenues grew at a 14.6% CAGR. From 1991 to 1995, the Company's EBITDA grew from $15.0 million to $26.1 million, representing a 14.9% CAGR. Revenues and EBITDA for the six months ended June 30, 1996 increased 27.3% (10.2% from internal growth and 17.1% from acquisitions) and 24.8%, respectively, over the same period in 1995. For a discussion of the significance of EBITDA and other measures of the Company's performance determined in accordance with generally accepted accounting principles ("GAAP") and the Company's sources and applications of cash flow, see "Management's Discussion and Analysis of Financial Condition and Results of Operations--Overview" and "--Liquidity and Capital Resources." Industry Overview According to industry sources, organizations in the United States generate an estimated four trillion documents each year, many of which must be retained and remain available for reference for many years. These records may be generally divided into two categories: active and inactive. Inactive records, which are the principal focus of the records management industry, consist of records that are not needed for immediate access but which must be retained for legal or regulatory reasons or for occasional reference to support ongoing business operations. Based on industry studies, the Company believes that inactive records make up approximately 80% of all records. The Company believes that the volume of inactive records is increasing for a number of reasons, including: (i) the rapid growth of inexpensive document producing technologies such as facsimile, desktop printing and computer networking; (ii) increased regulatory requirements; (iii) concerns over possible future litigation and the resulting increases in volume and holding periods of documentation; (iv) the high cost of reviewing records and deciding whether to retain or destroy them; and (v) the failure of many entities to adopt or follow policies on records destruction. Despite the growth of new "paperless" technologies, such as the Internet and e-mail, management believes that stored information remains predominantly paper-based and that such technologies have promoted the creation of hard copies of such electronic information. - ------------- * The term "Carton" is defined as a measurement of volume equal to a single standard storage carton, approximately 1.2 cubic feet. The number of Cartons stored does not include storage volumes in the Company's vital records services and data protection services, which are described under "Business." 3 The Company believes that it benefits from several industry fundamentals, including: (i) the historically non- cyclical nature of the records management industry; (ii) the continued trend towards corporate outsourcing of records management functions; (iii) the ability of larger records management companies to achieve economies of scale with respect to labor, real estate costs and the utilization of management information systems; and (iv) the ongoing consolidation of the records management industry. The Company believes that it is one of only four records management providers with a national operating presence, the balance being regional or, in most instances, single-city operators. According to the Association of Commercial Records Centers (the "ACRC"), a trade group of approximately 500 members, as of January 1994 (the latest date for which such information is available), approximately 2,600 firms offered records storage and management services in the United States. The Company believes that there is a trend toward consolidation in the records management industry and that such trend will continue to accelerate primarily because of: (i) the opportunities to achieve economies of scale; (ii) the industry's capital requirements for growth; (iii) customer demands for more sophisticated technology-based solutions; and (iv) the preference of certain large, national customers to outsource a significant portion of their records management functions to one vendor with a national presence, such as Iron Mountain. Financial Characteristics of Iron Mountain's Business Iron Mountain's records management business has the following financial characteristics: (bullet)Recurring Revenues. Iron Mountain derives a majority of its revenues from fixed periodic (usually monthly) fees charged to customers for storage of records. Storage revenues have grown for 30 consecutive quarters and have represented approximately 60% of the Company's total revenues in each of the last five years. Once a customer places a record in storage with the Company and until that record is destroyed or permanently removed (for which the Company typically receives a service fee), the Company receives recurring payments of fixed periodic fees without incurring additional labor or marketing expenses or significant capital costs. The stable and growing storage base also provides the foundation for increases in revenues and EBITDA from service activities and sales of storage materials. (bullet)Historically Non-Cyclical Business. Iron Mountain has not experienced a reduction of its business as a result of past general economic downturns, although there can be no assurance that this would be the case in the future. Management believes that the outsourcing of records management may accelerate during economic downturns as companies focus on reducing costs through outsourcing non-core operating functions. In addition, management believes that companies that have outsourced records management are less likely during economic downturns to incur the move-out costs and other expenses associated with switching vendors or moving records management in-house. (bullet)Inherent Growth from Existing Customers. The Company's customers have on average generated additional Cartons at a faster rate than stored Cartons have been destroyed or permanently removed. From 1992 to 1995, net Cartons from existing customers grew at an average annual rate of 6.7%. The Company believes the consistent growth of its storage revenues is the result of a number of additional factors, including: (i) the trend toward increased records retention; (ii) customer satisfaction with the Company's services; and (iii) the costs and inconvenience of moving storage operations in-house or to another provider of records management services. (bullet)Diversified and Stable Customer Base. The Company has over 19,000 customer accounts in a variety of industries. The Company currently provides services to more than half of the Fortune 500 and numerous legal, banking, healthcare, accounting, insurance, entertainment and government organizations. Only one of the Company's customers accounted for more than 3% of revenues in 1993, 1994 or 1995. From 1992 to 1995, average annual permanent removals of Cartons represented only approximately 4% of total Cartons stored. (bullet)Capital Expenditures Related Primarily to Growth. The Company's business requires limited annual maintenance capital expenditures. Maintenance capital expenditures were $1.8 million, $1.2 million and $0.9 million in 1993, 1994 and 1995, respectively. From 1992 to 1995, over 90% of the Company's aggregate capital expenditures were growth-related investments, primarily in racking systems, new 4 buildings and leasehold improvements, equipment for new facilities, management information systems and facilities restructuring. These growth-related capital expenditures are primarily discretionary and create additional capacity for increases in revenues and EBITDA. Business Strategy Iron Mountain's business strategy is to increase revenues and EBITDA while maintaining a low-cost operating structure and providing premium service. The Company intends to generate growth by increasing its storage and service revenues from existing customers, adding new customers and making acquisitions. The Company's strategy is based on the following elements: (bullet)Provide Superior Customer Service. The Company believes it has a reputation for providing reliable, quality service based on its more than 45 years of operations, its commitment to providing premium customer service and the continuity and depth of its management team. The Company has successfully implemented a decentralized management structure that enables the Company to respond quickly and flexibly to local customer needs. Iron Mountain's proprietary Safekeeper(R) system enables it to quickly provide customized records management solutions to its customers, enhancing the quality of its services. In addition, Iron Mountain's national operating presence allows it to better service large organizations that require records management functions at multiple, geographically diverse facilities. (bullet)Capitalize on Operating Efficiencies. Iron Mountain pursues a low-cost operating strategy based primarily on achieving economies of scale in the areas of storage, labor and transportation, general and administrative functions and management information systems. Because occupancy costs are a major component of the Company's cost of sales, its real estate management staff aggressively seeks to minimize per Carton storage costs by designing racking systems and operating space to maximize facility storage efficiency, negotiating favorable facility leases, contracting for facilities to be built to its custom specifications, and leasing larger facilities in order to reduce operating costs per Carton. The Company seeks to increase labor efficiency by offering incentive compensation to all full-time employees based upon achieving specific operating targets. Certain operating costs, such as the maintenance of local delivery fleets, general and administrative costs and management information systems, offer economies of scale, providing the Company with operating leverage and the ability to increase its efficiency through further growth. (bullet)Pursue Acquisition Opportunities. The Company believes that it is well positioned to participate in the further consolidation of the records management industry. Iron Mountain's management team has successfully completed 17 acquisitions since the Company embarked on a proactive acquisition strategy in mid-1994, and two additional acquisitions are currently pending. The Company intends to continue to make fold-in acquisitions to augment its operations in existing markets and to make strategic acquisitions in new geographic markets, with an emphasis on the 50 largest markets in the United States and potentially in certain markets outside the United States. Following an acquisition in a new market, the Company seeks to increase its business with the acquired customer base and to supplement that growth both with new customers and through appropriate fold-in acquisitions. In addition, the Company has successfully reduced the cost structure of its acquired operations by implementing its efficient operating strategies and leveraging its centralized administrative resources and management information systems. (bullet)Leverage Proprietary Safekeeper System. The Company pioneered the application of advanced information technology to the records management industry. Iron Mountain's proprietary Safekeeper system provides advanced inventory control and information access, enabling the Company to provide faster, higher quality and more flexible solutions to its customers and to lower the costs of its operations. Safekeeper has been designed to easily and effectively integrate newly acquired records management companies and offer improved levels of customer service and records management capabilities to customers acquired through acquisitions. Iron Mountain's Safekeeper system exploits bar-code technology to provide a comprehensive, standardized approach to tracking, accessing and retrieving records. Safekeeper offers state-of-the-art records management capabilities and ease of access to customers while featuring security functions to protect customer information from unauthorized access. Since 1992, the Company has invested $12.5 million to develop and refine its management information systems, including Safekeeper. 5 The Offering Securities Offered $150,000,000 principal amount of % Senior Subordinated Notes due 2006 (the "Notes"). Maturity Date , 2006 Interest Payment Dates and of each year, commencing , 1997. Guarantees The Notes will be fully and unconditionally guaranteed on an unsecured senior subordinated and joint and several basis (the "Subsidiary Guarantees") by substantially all of the Company's present and future Restricted Subsidiaries (collectively, the "Guarantors"). Each of the Guarantors has also guaranteed unconditionally the indebtedness outstanding under the Company's existing bank credit facility (the "Credit Agreement") and will be required to guarantee unconditionally the indebtedness outstanding under the new bank credit facility the Company intends to enter into with its lenders (the "New Credit Facility"). See "Description of the Notes--Subsidiary Guarantees." Subordination The Notes will be general unsecured senior subordinated obligations of the Company ranking junior to all existing and future Senior Debt of the Company, including any indebtedness that may be incurred under the Credit Agreement or the New Credit Facility. The Subsidiary Guarantees will rank junior to all existing and future Senior Debt of the Guarantors. As of June 30, 1996, on a pro forma basis after giving effect to the Transactions, the aggregate outstanding principal amount of Senior Debt of the Company and the Guarantors would have been $24.5 million. See "Description of the Notes--Subordination." Optional Redemption Except as described below, the Notes are not redeemable by the Company prior to , 2001. Thereafter, the Notes are redeemable at the option of the Company, in whole or in part, at any time and from time to time, at the redemption prices set forth herein plus accrued and unpaid interest to, but excluding, the date of redemption. In addition, during the first 36 months after the date of issuance of the Notes, the Company, at its option, may redeem up to 35% of the initial principal amount of the Notes with the net proceeds of one or more Qualified Equity Offerings at a redemption price equal to %, plus accrued and unpaid interest to, but excluding, the date of redemption; provided that at least 65% of the initial principal amount of the Notes remains outstanding after each such redemption. See "Description of the Notes--Optional Redemption." Mandatory Redemption Except with respect to required repurchases upon the occurrence of a Change of Control or in the event of certain Asset Sales, the Company is not required to make sinking fund or redemption payments with respect to the Notes at any time prior to maturity. See "Description of the Notes-- Mandatory Redemption." 6 Change of Control Upon the occurrence of a Change of Control, each Holder of Notes may require the Company to repurchase such Notes at 101% of the principal amount thereof, plus accrued and unpaid interest to, but excluding, the date of repurchase. See "Description of the Notes--Repurchase at the Option of Holders--Change of Control." Certain Covenants The Indenture governing the Notes (the "Indenture") will contain covenants restricting or limiting the ability of the Company and its Restricted Subsidiaries to, among other things: (i) incur additional indebtedness, including indebtedness ranking senior to the Notes and junior to any Senior Debt; (ii) pay dividends or make other restricted payments; (iii) make asset dispositions; (iv) permit liens; (v) enter into sale and leaseback transactions; (vi) enter into certain mergers; (vii) make certain investments; and (viii) enter into transactions with related persons. See "Description of the Notes--Certain Covenants." Use of Proceeds The net proceeds of the Offering will be used to repay outstanding bank debt and certain other indebtedness and to fund a portion of the purchase price of the Pending Acquisitions.
Risk Factors For a discussion of certain material factors that should be considered in connection with an investment in the Notes offered hereby, see "Risk Factors" on pages 10 to 14. 7 Summary Historical and Pro Forma Information (Dollars in thousands) The following summary historical consolidated statements of operations and balance sheet data of the Company as of and for each of the years ended December 31, 1991, 1992, 1993, 1994 and 1995 have been derived from the Company's audited consolidated financial statements. The summary historical consolidated statements of operations and balance sheet data of the Company for the six months ended June 30, 1995 and 1996 have been derived from the Company's unaudited condensed consolidated financial statements. The Company's unaudited condensed consolidated financial statements include all adjustments, consisting of normal recurring accruals, that the Company considers necessary for a fair presentation of the financial position and the results of operations for those periods. Operating results for the six months ended June 30, 1996 are not necessarily indicative of the results for the entire year ending December 31, 1996. The summary historical and pro forma financial data set forth below should be read in conjunction with "Pro Forma Condensed Consolidated Financial Information" and the Notes thereto, with "Selected Financial and Operating Information" and the Notes thereto, with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and with Iron Mountain's Consolidated Financial Statements and the Notes thereto included elsewhere in this Prospectus.
Year Ended December 31, Six Months Ended June 30, -------------------------------------------------------------------- -------------------------------- Pro Forma Historical Historical Pro Forma ----------------------------------------------------- ---------------- 1991 1992 1993 1994 1995 1995 (1) 1995 1996 1996 (1) ------ ------ ------ ------------- ------ ----------- ------ ------ ------------ Consolidated Statements of Operations Data: Revenues: Storage ..................$39,510 $44,077 $48,892 $54,098 $ 64,165 $ 86,689 $30,748 $39,363 $46,224 Service and Storage Material Sales ......... 23,330 26,596 32,781 33,520 40,271 54,211 19,476 24,587 29,127 ------ ------- ------- ------- -------- -------- ------- ------- ------- Total Revenues ....... 62,840 70,673 81,673 87,618 104,436 140,900 50,224 63,950 75,351 Operating Expenses: Cost of Sales (Excluding Depreciation) .......... 31,375 35,169 43,054 45,880 52,277 69,853 25,112 32,383 37,594 Selling, General and Administrative ......... 16,471 17,630 19,971 20,853 26,035 35,038 12,697 16,067 19,317 Depreciation and Amortization ........... 7,674 5,780 6,789 8,690 12,341 18,182 5,428 7,530 9,099 ------ ------- ------- ------- -------- -------- ------- ------- ------- Total Operating Expenses ................ 55,520 58,579 69,814 75,423 90,653 123,073 43,237 55,980 66,010 ------ ------- ------- ------- -------- -------- ------- ------- ------- Operating Income ........$ 7,320 $12,094 $11,859 $12,195 $ 13,783 $ 17,827 $ 6,987 $ 7,970 $ 9,341 ====== ======= ======= ======= ======== ======== ======= ======= ======= Other Data: EBITDA (2) ................$14,994 $17,874 $18,648 $20,885 $ 26,124 $ 36,009 $12,415 $15,500 $18,440 EBITDA as a Percentage of Total Revenues ..... 23.9% 25.3% 22.8% 23.8% 25.0% 25.6% 24.7% 24.2% 24.5% Capital Expenditures: Growth (3) .............. -- $11,226 $13,605 $15,829(4) $ 14,395 -- $ 6,730 $10,702 -- Maintenance ............. -- 818 1,846 1,151 858 -- 592 460 -- ------ ------- ------- ------- -------- -------- ------- ------- ------- Total Capital Expenditures ...........$ 8,163 $12,044 $15,451 $16,980(4) $ 15,253 -- $ 7,322 $11,162 -- Approximate Cartons in Storage at End of Period (in millions) (5) ...................... 10.8 12.6 15.5 17.7 23.3 -- 20.3 26.4 29.6 Adjusted EBITDA and As of Credit Ratios: June 30, 1996 --------------- Adjusted EBITDA (6) ..... $39,018 Cash Interest Expense (7) ...................... 17,952 Ratio of Adjusted EBITDA to Cash Interest Expense ................. 2.2x Ratio of Net Debt to Adjusted EBITDA (8) ... 4.4x
As of June 30, 1996 ---------------------- Historical Pro Forma (9) --------- ------------- Balance Sheet Data: Cash and Cash Equivalents . $ 2,232 $ 2,232 Total Assets ................. 212,630 268,705 Total Debt ................... 118,894 174,518 Stockholders' Equity ....... 54,729 52,501
(Footnotes on the following page) 8 - ------------- (Footnotes from the preceding page) (1) Gives effect to: (i) the Completed Acquisitions (as defined herein); (ii) the Pending Acquisitions (as defined herein); (iii) the consummation of the Company's initial public offering of its Common Stock, par value $0.01 per share (the "Common Stock"), which closed on February 6, 1996 (the "Initial Public Offering") and the application of the net proceeds therefrom; (iv) the closing under the New Credit Facility; and (v) the application of the estimated net proceeds from the Offering, as if each had occurred as of January 1, 1995. The Company will record, in the quarter in which the Offering is consummated, an extraordinary loss on retirement of debt, net of related tax benefit. As of June 30, 1996, the amount of such loss would have been approximately $2.2 million. The pro forma statements of operations data do not give effect to such loss. See "The Transactions," "Use of Proceeds" and "Pro Forma Condensed Consolidated Financial Information." (2) Earnings before interest, taxes, depreciation, amortization and extraordinary charges ("EBITDA"). Based on its experience in the records management industry, the Company believes that EBITDA is an important tool for measuring the performance of records management companies (including potential acquisition targets) in several areas, such as liquidity, operating performance and leverage. In addition, lenders use EBITDA as a criterion in evaluating records management companies, and substantially all of the Company's financing agreements contain covenants in which EBITDA is used as a measure of financial performance. However, EBITDA should not be considered an alternative to operating or net income (as determined in accordance with GAAP) as an indicator of the Company's performance or to cash flow from operations (as determined in accordance with GAAP) as a measure of liquidity. See "Management's Discussion and Analysis of Financial Condition and Results of Operations--Overview" and "--Liquidity and Capital Resources" for discussions of other measures of performance determined in accordance with GAAP and the Company's sources and applications of cash flow. (3) Growth capital expenditures include investments in racking systems, new buildings and leasehold improvements, equipment for new facilities, management information systems and facilities restructuring. See "Management's Discussion and Analysis of Financial Condition and Results of Operations--Liquidity and Capital Resources--Capital Investments." (4) Includes $2,901 related to the cost of constructing a records management facility which was sold in a sale and leaseback transaction in the fourth quarter of 1994. (5) The term "Carton" is defined as a measurement of the volume equal to a single standard storage carton, approximately 1.2 cubic feet. The number of Cartons stored does not include storage volumes in the Company's vital records services and data protection services which are described under "Business." Pro forma Carton information for 1995 is not available. (6) Gives effect to (i) the Completed Acquisitions completed after June 30, 1996 and (ii) the Pending Acquisitions. Adjusted EBITDA, as defined in the Indenture, equals the sum of (i) EBITDA of the Company and the Restricted Subsidiaries for the most recent fiscal quarter for which internal financial statements are available, multiplied by four, plus (ii) Acquisition EBITDA of each business that has been acquired by the Company since the beginning of such quarter (including any such acquisition which is occurring on the date of the calculation), multiplied by a fraction, (a) the numerator of which is three minus the number of months (and/or any portion thereof) in such quarter for which the financial results of such acquired business are included in the EBITDA of the Company and its Restricted Subsidiaries under clause (i) above, and (b) the denominator of which is three. In addition, the effects of unusual or non-recurring items occurring in any relevant period shall be excluded in the calculation of Adjusted EBITDA. With respect to any such acquired business, Acquisition EBITDA equals the sum of (i) EBITDA of such acquired business for its last fiscal quarter for which financial statements are available, multiplied by four (or if such quarterly statements are not available, EBITDA for the last fiscal year for which financial statements are available), plus (ii) projected quantifiable improvements in operating results (on an annualized basis) due to cost reductions calculated in good faith by the Company or one of its Restricted Subsidiaries, as certified by an Officers' Certificate filed with the Trustee, without giving effect to any operating losses of the acquired business. Such projected quantifiable savings may differ from the cost savings used to calculate the Pro Forma Condensed Consolidated Statement of Operations. Adjusted EBITDA is merely a calculation utilized for purposes of debt incurrence under the Indenture and should not be viewed as indicative of actual or future results. (7) Cash interest expense represents total interest expense less amortization of deferred financing costs and other non-cash interest charges for the twelve months ended June 30, 1996 on a pro forma basis giving effect to the Transactions (as defined herein) as if each had occurred on July 1, 1995. The calculation of cash interest expense assumes an interest rate of 10-1/2% on the Notes. (8) Net debt represents total debt less cash and cash equivalents and was calculated based on the pro forma net debt as of June 30, 1996 of $172.3 million. (9) Gives effect to: (i) the Completed Acquisitions consummated after June 30, 1996; (ii) the Pending Acquisitions; (iii) the closing under the New Credit Facility; and (iv) the application of the net proceeds from the Offering, as if each had occurred as of June 30, 1996. See "The Transactions," "Use of Proceeds" and "Pro Forma Condensed Consolidated Financial Information." 9 RISK FACTORS Prospective investors should carefully consider the following risk factors, in addition to the other information contained in this Prospectus, in connection with an investment in the Notes offered hereby. Certain statements contained under "Management's Discussion and Analysis of Financial Condition and Results of Operations," such as those regarding the goals, beliefs or current expectations of the Company and its management with respect to, among other things, revenue growth and future capital needs, and other statements contained in this Prospectus regarding matters that are not historical facts are forward-looking statements (as such term is defined in the rules promulgated pursuant to the Securities Act of 1933, as amended). Because such forward-looking statements include risks and uncertainties, actual results may differ materially from those expressed in or implied by such forward- looking statements. Factors that could cause actual results to differ materially include, but are not limited to, those discussed herein under "Risk Factors." The Company undertakes no obligation to release publicly the result of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Financial Leverage; Debt Service Requirements. The Company is highly leveraged due to the substantial indebtedness it has incurred primarily to finance acquisitions and expand its operations. As of June 30, 1996, on a pro forma basis, after giving effect to the Transactions, the Company would have had $174.5 million in total indebtedness and $52.5 million in stockholders' equity. The Company expects to continue to borrow under the New Credit Facility and possible future credit arrangements in order to finance possible future acquisitions and for general corporate purposes. The ability of the Company to repay the Notes and its other indebtedness will depend upon future operating performance, which is subject to the success of the Company's business strategy, prevailing economic conditions, levels of interest rates and financial, business and other factors, many of which are beyond the Company's control. The debt service obligations of the Company could have important consequences, including the following: (i) the ability of the Company to obtain additional financing for future working capital needs or for possible future acquisitions or other purposes may be limited; (ii) a substantial portion of the Company's cash flow from operations will be dedicated to the payment of principal and interest on its indebtedness, thereby reducing funds available for other purposes; (iii) the Company may be more vulnerable to adverse economic conditions than some of its competitors and thus may be limited in its ability to withstand competitive pressures; and (iv) the Company may be more highly leveraged than certain of its competitors, which may place it at a competitive disadvantage. A substantial portion of the Company's cash flow from operations is required for debt service. Management believes that cash flow from operations in conjunction with borrowings from existing and possible future credit facilities will be sufficient for the foreseeable future to meet debt service requirements and to make possible future acquisitions and capital expenditures. However, there can be no assurance in this regard, and the Company's leverage could make it vulnerable to a downturn in the operating performance of its subsidiaries, a downturn in economic conditions or, because borrowings under the New Credit Facility will bear interest at rates which fluctuate, increases in interest rates on borrowings under the New Credit Facility. If such cash flow were not sufficient to meet such debt service requirements or payments of principal, the Company could be required to sell additional equity securities, refinance its obligations or dispose of assets in order to make such scheduled payments. There can be no assurance that the Company would be able to effect any of such transactions or do so on favorable terms. Subordination; Guarantees. The Notes will be unsecured senior subordinated obligations of the Company and will be subordinated in right of payment to the prior payment in full of all existing and future Senior Debt of the Company. At June 30, 1996, the Company had $103.6 million of indebtedness outstanding that would have constituted Senior Debt. On a pro forma basis, after giving effect to the Transactions, the Company would have had $24.5 million of Senior Debt outstanding. The Company intends to actively pursue additional acquisitions which would likely be financed through the incurrence of additional indebtedness. Such additional indebtedness may constitute Senior Debt. The Indenture allows the Company to incur Senior Debt from time to time under the New Credit Facility or otherwise, subject to certain limitations. Upon any acceleration of the maturity of the Notes or upon any payment or distribution of assets of the Company to creditors upon any liquidation, dissolution, winding- up, reorganization, assignment for the benefit of creditors, marshaling of assets or any bankruptcy, insolvency or similar proceedings of the Company, the holders of all Senior Debt will be first entitled to receive payment in full of all amounts due or to become due thereon before the Holders of Notes will be entitled to receive any payment in respect of the principal of or premium, if any, or interest on the Notes. In addition, upon the occurrence of a 10 payment default or certain other defaults in respect of outstanding Senior Debt, Holders of Notes may be prevented from receiving payments with respect to the Notes for an extended period. See "Description of the Notes-- Subordination." Iron Mountain's subsidiaries have guaranteed on a senior subordinated basis its obligations under the Credit Agreement and are expected to guarantee its obligations under the New Credit Facility. Iron Mountain's obligations under the Credit Agreement are secured by a first priority security interest in substantially all of its assets (including the stock of its subsidiaries). It is expected that Iron Mountain's obligations under the New Credit Facility will be secured by a pledge of the stock of its subsidiaries. If Iron Mountain becomes insolvent or is liquidated or if the indebtedness under the Credit Agreement or the New Credit Facility is accelerated, the lenders under the Credit Agreement or the New Credit Facility would be entitled to exercise the remedies available to a secured lender. Accordingly, such lenders will have a prior claim on such assets of Iron Mountain and its subsidiaries. In such event, it is possible that there would be no assets remaining from which claims of the Holders of Notes could be satisfied or, if any assets remained, such assets might be insufficient to fully satisfy such claims. The Company may incur additional secured indebtedness in the future. See "Description of the Notes--Certain Covenants--Incurrence of Indebtedness and Issuance of Preferred Stock" and "--Liens." Iron Mountain is a holding company, substantially all of the assets of which are the stock of its subsidiaries. Substantially all of the operations of the Company are currently conducted by Iron Mountain's direct and indirect wholly owned subsidiaries, all of which will be Guarantors, subject to the terms of the Indenture. Management of the Company believes that separate financial statements of such subsidiaries are not meaningful or material to investors and therefore such statements have not been included in this Prospectus. The Company does not currently expect that it will be required to prepare separate financial statements for any of its subsidiaries in the foreseeable future and does not expect to do so. Unenforceability and Release of Guarantees. Iron Mountain's obligations under the Notes will be guaranteed, jointly and severally, on a senior subordinated basis by the Guarantors. To the extent that a court were to find that (i) a Subsidiary Guarantee was incurred by a Guarantor with intent to hinder, delay or defraud any present or future creditor or the Guarantor contemplated insolvency with a design to prefer one or more creditors to the exclusion in whole or in part of others, or (ii) such Guarantor did not receive fair consideration or reasonably equivalent value for issuing its Subsidiary Guarantee and such Guarantor (a) was insolvent; (b) was rendered insolvent by reason of the issuance of such Subsidiary Guarantee; (c) was engaged or about to engage in a business or transaction for which the remaining assets of such Guarantor constituted unreasonably small capital to carry on its business; (d) intended to incur, or believed that it would incur, debts beyond its ability to pay such debts as they mature; or (e) was a defendant in an action for money damages or had a judgment for money damages docketed against it (if, in either case, after final judgment, the judgment is unsatisfied), then in each such case, a court could avoid or subordinate such Subsidiary Guarantee in favor of the Guarantor's other creditors. The measure of insolvency for purposes of the foregoing will vary depending upon the law of the jurisdiction which is being applied. Generally, however, a company will be considered insolvent for purposes of the foregoing if, at the time it incurs any given obligation, the sum of the company's debts (including unliquidated or contingent debt) is greater than all the company's property at a fair valuation, or if the present fair salable value of the company's assets is less than the amount that will be required to pay its probable liability on its existing debts (including unliquidated or contingent debt) as they become absolute and matured. To the extent any Subsidiary Guarantee were to be avoided as a fraudulent conveyance or held unenforceable for any other reason, Holders of Notes would cease to have any claim in respect of such Guarantor and would be creditors solely of the Company and any Guarantor whose Subsidiary Guarantee was not avoided or held unenforceable. In such event, the claims of the Holders of Notes against the issuer of an invalid Subsidiary Guarantee would be subject to the prior payment of all liabilities of such Guarantor, including without limitation, to the extent valid and enforceable, such Guarantor's guarantee of indebtedness of Iron Mountain under the Credit Agreement or the New Credit Facility, as the case may be, and any other Senior Debt of Iron Mountain guaranteed by such Guarantor. There can be no assurance that, after providing for all prior claims, there would be sufficient assets to satisfy the claims of the Holders of Notes relating to any voided Subsidiary Guarantee. See "Description of the Notes--Subordination." Based upon financial and other information currently available to it, the Company believes that the Notes and the Subsidiary Guarantees are being incurred for proper purposes and in good faith, and that the Company and each Guarantor 11 are solvent and will continue to be solvent after issuing the Notes or the Subsidiary Guarantees, as the case may be, will have sufficient capital for carrying on their businesses after such issuance and will be able to pay their debts as they mature. There can be no assurance, however, that a court would reach the same conclusion. Any Guarantor may be released from its Subsidiary Guarantee at any time upon any sale, exchange or transfer in compliance with the provisions of the Indenture by the Company of the capital stock of such Guarantor or substantially all of the assets of such Guarantor and, in certain other circumstances, a Guarantor may be released from its Subsidiary Guarantee in connection with the Company's designation of such Guarantor as an Unrestricted Subsidiary. See "Description of the Notes--Certain Covenants--Additional Subsidiary Guarantees." Restrictions Imposed by Terms of Indebtedness. The Indenture will contain covenants restricting or limiting the ability of the Company and its Restricted Subsidiaries to, among other things: (i) incur additional indebtedness, including indebtedness ranking senior to the Notes and junior to any Senior Debt; (ii) pay dividends or make other restricted payments; (iii) make asset dispositions; (iv) permit liens; (v) enter into sale and leaseback transactions; (vi) enter into certain mergers; (vii) make certain investments; and (viii) enter into transactions with related persons. In addition, the Credit Agreement contains, and the New Credit Facility is expected to contain, certain other and more restrictive covenants than those contained in the Indenture. See "Description of New Credit Facility." This may adversely affect the Company's ability to pursue its acquisition strategy. The Credit Agreement also requires, and the New Credit Facility is expected to require, the Company to maintain specific financial ratios and to satisfy certain financial condition tests. The Company's ability to meet those financial ratios and financial condition tests can be affected by events beyond its control, and there can be no assurance that the Company will meet those tests. The breach of any of those covenants could result in a default under the New Credit Facility, the Indenture, or both. In the event of a default under the New Credit Facility or the Indenture, the lenders could seek to declare all amounts outstanding under the New Credit Facility, together with accrued and unpaid interest, if any, to be immediately due and payable. If the Company were unable to repay those amounts, the lenders under the New Credit Facility could proceed against the collateral granted to them to secure that indebtedness. If the indebtedness under the New Credit Facility or the Notes were to be accelerated, there can be no assurance that the assets of the Company would be sufficient to repay in full that indebtedness and the other indebtedness of the Company. The Notes are subordinated to all existing and future Senior Debt of the Company, including indebtedness under the Credit Agreement or the New Credit Facility, as the case may be, and the Guarantees are subordinated to all existing and future Senior Debt of the Guarantors, including guarantees by the Guarantors of the indebtedness outstanding under the Credit Agreement or the New Credit Facility, as the case may be. See "Management's Discussion and Analysis of Financial Condition and Results of Operations--Liquidity and Capital Resources." Holding Company Structure; Dependence Upon Operations of Subsidiaries. Substantially all of the tangible assets of the Company are held by, and substantially all of the Company's operating revenues are derived from operations of, the Company's subsidiaries. Therefore, the Company's ability to pay interest and principal when due to Holders of Notes will be dependent upon the receipt of sufficient funds from such subsidiaries. However, the Company's obligations under the Notes will be guaranteed, jointly and severally, on a senior subordinated basis, by substantially all of the Company's present and future Restricted Subsidiaries. Risk of Inability to Finance Change of Control Offer. In the event of a Change of Control, the Company will be required to offer to purchase all Notes then outstanding at a purchase price, in cash, equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, to the date of purchase. There can be no assurance that the Company would be able to obtain such funds through a refinancing of the Notes to be purchased or otherwise, or that the purchase would be permitted under the Credit Agreement, the New Credit Facility or the terms of other financing instruments, as the case may be. Also, the requirement that the Company offer to purchase all Notes then outstanding in the event of a Change of Control may have the effect of deterring a third party from effecting a transaction that would constitute a Change of Control. See "Description of the Notes-- Repurchase at the Option of Holders--Change of Control." Absence of Public Market for the Notes. There is no public market for the Notes. The Notes will not be listed on any securities exchange or included in the National Association of Securities Dealers Automated Quotation System. The Company has been advised by the Underwriters that, following the completion of the Offering, the Underwriters presently intend to make a market in the Notes; however, they are under no obligation to do so and may discontinue any market-making activities at any time without notice. No assurance can be given as to the liquidity of the trading market for the Notes or that an active public market will develop or, if developed, will 12 continue. If an active public market does not develop or is not maintained, the market price and liquidity of the Notes may be adversely affected. See "Underwriting." Risks Associated with Acquisition Strategy. The Company has pursued and intends to continue to pursue acquisitions of records management businesses as a key component of its growth strategy. Since mid-1994, the Company has acquired or entered into agreements to acquire 19 companies (of which 17 have been completed and two are pending) engaged in the records management and related businesses for estimated cash purchase prices aggregating $103.2 million (not including contingent payments of up to $4.6 million based upon the achievement of certain revenue targets from 1996 through 1998). See "The Transactions" and "Recent and Pending Acquisitions." Possible future acquisitions may be for purchase prices significantly larger than those paid for acquisitions consummated since mid-1994. Certain risks are inherent in an acquisition strategy, such as increasing leverage and debt service requirements and combining disparate company cultures and facilities, which could adversely affect the Company's operating results. The success of any completed acquisition will depend in part on Iron Mountain's ability to integrate effectively the acquired records management business into the Company. The process of integrating such acquired businesses may involve unforeseen difficulties and may require a disproportionate amount of management's attention and the Company's financial and other resources. No assurance can be given that the Pending Acquisitions will be completed, that additional suitable acquisition candidates will be identified, financed and purchased on acceptable terms, or that recent acquisitions or future acquisitions, if completed, will be successful. See "Business--Growth Strategy--Growth through Acquisitions." Acquisitions by the Company in excess of $25 million individually and $50 million in the aggregate per year will require the approval of the majority lenders under the Credit Agreement, and the New Credit Facility will contain similar or other restrictions on acquisitions. No assurance can be given that the lenders will consent to any acquisitions that the Company proposes to make in excess of such limits. The size, timing and integration of possible future acquisitions may cause substantial fluctuations in operating results from quarter to quarter. As a result, operating results for any quarter may not be indicative of the results that may be achieved for any subsequent fiscal quarter or for a full fiscal year. Competition; Alternative Technologies. The Company faces competition from one or more competitors in all geographic areas where it operates. The Company believes that competition for customers is based on price, reputation for reliability, quality of service and scope and scale of technology, and believes that it generally competes effectively based on these factors. As a result of this competition, the records management industry has for the past several years experienced downward pricing pressures. While Iron Mountain believes that this pricing climate is stabilizing, there can be no assurance that prices will not decline further, as competitors seek to gain or preserve market share. Should a further downward trend in pricing occur or continue for an extended period of time, it could have a material adverse effect on the Company's results of operations. The Company also competes for acquisition candidates. Some of the Company's competitors may possess greater financial and other resources than the Company. If any such competitor were to devote additional resources to the records management business and such acquisition candidates or to focus its strategy on the Company's markets, the Company's results of operations could be adversely affected. In addition, the Company faces competition from the internal document handling capability of its current and potential customers. There can be no assurance that these organizations will outsource more of their document management needs or that they will not bring in-house some or all of the functions they currently outsource. See "Business--The Records Management Industry" and "Business--Competition." The substantial majority of the Company's revenues have been derived from the storage of paper documents and from related services. Such storage requires significant physical space. Alternative technologies for generating, capturing, managing, transmitting and storing information have been developed, many of which require significantly less space than paper. Such technologies include computer media, microforms, audio/video tape, film, CD-ROM and optical disk. None of these technologies has replaced paper as the principal means for storing information. However, there can be no assurance that one or more non-paper-based technologies (whether now existing or developed in the future) may not in the future reduce or supplant the use of paper as a preferred medium, which could in turn adversely affect the Company's business. Casualty. The Company currently maintains and intends to continue to maintain, to the extent such insurance is available on commercially reasonable terms, comprehensive liability, fire, flood and earthquake (where appropriate) and extended coverage insurance with respect to the properties that it now owns or leases or that it 13 may in the future own or lease, with customary limits and deductibles. Certain types of loss, however, may not be fully insurable on a cost-effective basis, such as losses from earthquakes, or may be altogether uninsurable, such as losses from riots. In addition, 24 of the Company's 89 records management facilities are located in California and the Company derived approximately 30% of its revenues for the six months ended June 30, 1996 from its operations in California. The Company has in the past suffered damages and losses from an earthquake and a riot in California, which damages and losses were substantially covered by insurance. In the future, should uninsured losses or damages occur, the Company could lose both its investment in and anticipated profits and cash flow from the affected property and may continue to be obligated on any leasehold obligations, mortgage indebtedness or other obligations related to such property. As a result, any such loss could materially adversely affect the Company. See "Business--Insurance." Environmental Matters. As of June 30, 1996, the Company owned or leased approximately 6.3 million square feet of facilities. Under various federal, state and local environmental laws, ordinances and regulations ("environmental laws"), an owner of real estate or a lessee conducting operations thereon may become liable for the costs of investigation, removal or remediation of soil and groundwater contaminated by certain hazardous substances or wastes or petroleum products. Certain such laws impose cleanup responsibility and liability without regard to whether the owner or operator of the real estate or operations thereon knew of or was responsible for the contamination, and whether or not operations at the property have been discontinued or title to the property has been transferred. In addition, the presence of such substances, or the failure to properly remediate such property, may adversely affect the current property owner's or operator's ability to sell or rent such property or to borrow using such property as collateral. The owner or operator of contaminated real estate also may be subject to common law claims by third parties based on damages and costs resulting from off-site migration of the contamination. Certain environmental laws govern the removal, encapsulation or disturbance of asbestos-containing materials ("ACMs"). Such laws may impose liability for release of ACMs and may enable third parties to seek recovery from owners or operators of real estate for personal injury associated with exposure to such substances. Certain facilities operated by the Company contain or may contain ACMs. In addition, certain of the properties formerly or currently owned or operated by the Company were previously used for industrial or other purposes that involved the use or storage of hazardous substances or petroleum products or the generation and disposal of hazardous wastes, and in some instances, included the operation of underground storage tanks ("USTs"). In connection with its former and current ownership or operation of certain properties, the Company may be potentially liable for environmental costs such as those discussed above and as more specifically described under "Business--Environmental Matters." The Company has from time to time conducted certain environmental investigations and remedial activities at certain of its former and current facilities, but an in-depth environmental review of the properties has not been conducted by or on behalf of the Company. The Company believes it is in substantial compliance with all applicable material environmental laws. The Company has not received any written notice from any governmental authority or third party asserting, and is not otherwise aware of, any material environmental noncompliance, liability or claim relating to hazardous substances or wastes, petroleum products or material environmental laws applicable to Company operations in connection with any of its present or former properties other than as described under "Business--Environmental Matters." However, no assurance can be given that there are, or as a result of possible future acquisitions there will be, no environmental conditions for which the Company might be liable in the future or that future regulatory action, as well as compliance with future environmental laws, will not require the Company to incur costs for or at its properties that could have a material adverse effect on the Company's financial condition and results of operations. Reliance on Executive Officers. The Company's success is partially dependent upon the performance and continued availability of its current executive officers. The Company does not have employment contracts with any of its current executive officers. There can be no assurance that the Company will be able to retain such officers, the loss of whom could have a material adverse effect upon the Company. See "Management." Recent Publicity. On September 3, 1996, The Boston Globe, a regional daily newspaper, published a business news article regarding the Company. The article contained numerous statements about the Company and quotations from the Company's Chief Executive Officer. The article did not set forth material information or cautionary statements relevant to an evaluation of the statements and quotations regarding the Company in the article. Prospective investors in the Notes should not rely on such article and should only rely upon the information and cautionary statements contained in this Prospectus, including "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations." 14 THE COMPANY Iron Mountain is the largest records management company in the United States, as measured by revenues. The Company is a full-service provider of records management and related services, enabling customers to outsource data and records management functions. Pro forma for the Acquisitions, as of June 30, 1996, the Company managed approximately 29.6 million Cartons in 103 records centers in 33 markets nationwide. The Company has a diversified base of over 19,000 customer accounts, which includes more than half of the Fortune 500 and numerous legal, banking, healthcare, accounting, insurance, entertainment and government organizations. The Company provides storage and related services for all major media, including paper (which is the dominant form of records retention and which has accounted for approximately 85% of the Company's revenues since 1992), computer disks and tapes, microfilm and microfiche, master audio and video tapes, film and optical disks, X-rays and blueprints. The Company's principal services include filing, retrieval and destruction of records, courier pick-up and delivery, database management and customized reporting. The Company also sells storage materials and provides consulting and other records-related services. Iron Mountain's operations date to 1951, when a corporate predecessor commenced storage operations in a network of underground vaults in a former iron ore mine, focusing on the maximum-security storage of corporate vital records in the Northeast. That company was acquired by Schooner Capital Corporation ("Schooner") in 1975, after which its focus shifted to more general records management. In 1988, a corporate affiliate of Schooner acquired the Bell & Howell Records Management Company and its subsidiaries ("BHRM") for approximately $75 million. At that time, BHRM conducted storage operations in various states, with significant operations in California. The current Iron Mountain was incorporated in 1990 as part of a recapitalization that consolidated the former BHRM operations with the predecessor's Northeast operations. The principal executive offices of the Company are located at 745 Atlantic Avenue, Boston, Massachusetts 02111. Its telephone number is (617) 357-4455. THE TRANSACTIONS In connection with the Offering, the Company intends to: (i) repay all indebtedness outstanding under the Credit Agreement; (ii) repay its 13.42% Senior Subordinated Notes due December 14, 2000 (the "Chrysler Notes"); (iii) repay certain indebtedness incurred by the Company in connection with a 1990 acquisition and represented by two junior subordinated notes (collectively, the "FDS Notes"), one of which is held by Schooner; (iv) fund the purchase price of the Pending Acquisitions described below under "Recent and Pending Acquisitions;" and (v) enter into the New Credit Facility (the foregoing, together with the Offering and the application of the net proceeds therefrom and the Completed Acquisitions consummated after June 30, 1996, are referred to collectively as the "Transactions"). Sources and Uses of Funds The estimated sources and uses of funds in connection with the Transactions are set forth below (in millions): Sources of Funds: New Credit Facility $ 13.7 Senior Subordinated Notes due 2006 150.0 ------ Total Sources $163.7 ====== Uses of Funds: Repay Credit Agreement (1) $ 92.9 Repay Chrysler Notes (1) 14.8 Repay FDS Notes (1) 0.4 Purchase Price of Pending Acquisitions and Acquisitions Completed after June 30, 1996 (2) 47.5 Estimated Fees and Expenses (3) 8.1 Total Uses $163.7 ====== (Footnotes on the following page) 15 - ------------- (Footnotes from the preceding page) (1) Balances are as of June 30, 1996. (2) Acquisitions completed after June 30, 1996 were initially financed by borrowings under the Credit Agreement and a portion of the net proceeds of the Offering will be used to repay such indebtedness. (3) Consists of estimated fees and expenses related to the Offering, the repayment of the Credit Agreement, the Chryster Notes and the FDS Notes and the closing of the New Credit Facility. Repayment of Credit Agreement Indebtedness. The Company is party to the Amended and Restated Credit Agreement dated as of January 31, 1995, as amended (as so amended, the "Credit Agreement") among the Company, the lenders party thereto and The Chase Manhattan Bank (National Association), as agent for such lenders. Borrowings by the Company under the Credit Agreement during the most recent twelve months were used to finance acquisitions and for working capital. The Credit Agreement has a final maturity date of July 31, 2002. The weighted average interest rate on September 3, 1996 on the indebtedness outstanding under the Credit Agreement was 8.5%. Repayment of Chrysler Notes. Pursuant to a Note Purchase Agreement dated as of December 14, 1990, as amended, the Company issued the Chrysler Notes in an aggregate principal amount of $15.0 million to Chrysler Capital Corporation. The Company will repay the Chrysler Notes in full with a portion of the net proceeds of the Offering; the amount shown under "Uses of Funds" above does not include related fees and expenses. Repayment of FDS Notes. In connection with a 1990 acquisition, the Company issued to First Document Storage Corporation of America $450,000 in principal amount of the FDS Notes, which mature in March 2000 and bear interest at the rate of 8% per annum. In 1991, Schooner acquired $382,500 in principal amount of the FDS Notes as an investment. The Company intends to use a portion of the net proceeds from the Offering to repay the FDS Notes in their entirety. Pending Acquisitions. A portion of the net proceeds from the Offering, together with borrowings under the New Credit Facility, will be used to fund the Pending Acquisitions described under "Recent and Pending Acquisitions" below. New Credit Facility. The Company intends to replace the Credit Agreement with the New Credit Facility. The New Credit Facility is expected to provide the Company with revolving credit availability of up to $100 million for the Pending Acquisitions and possible future acquisitions, working capital and other corporate purposes, and is expected to terminate on September 30, 2001. As was the case with the Credit Agreement, the Company's obligations under the New Credit Facility are expected to be guaranteed by substantially all of the Company's subsidiaries; however, unlike the Credit Agreement, the New Credit Facility is expected to be secured only by the pledge of the stock of such subsidiaries. See "Description of New Credit Facility" for a description of the currently expected terms of the New Credit Facility. No assurance can be given that the Company will enter into the New Credit Facility on these or any other terms. The Offering is not conditioned on the closing of the New Credit Facility. 16 RECENT AND PENDING ACQUISITIONS As part of its growth strategy, since mid-1994 the Company has acquired or entered into agreements to acquire 19 records management businesses. Since January 1, 1995, the Company has purchased for cash 14 such businesses (the "Completed Acquisitions") and has entered into definitive agreements to acquire two additional records management businesses (each a "Pending Acquisition" and collectively, the "Pending Acquisitions" and, together with the Completed Acquisitions, the "Acquisitions"). The total purchase price of the Completed Acquisitions was approximately $76.3 million (not including contingent payments of up to $0.6 million based upon the achievement of certain revenue targets during 1996 and 1997), and the total purchase price of the Pending Acquisitions is approximately $24.0 million (not including contingent payments of up to $4.0 million based upon the achievement of certain revenue targets during 1997 and 1998). The Completed Acquisitions represent in the aggregate total annual revenues of approximately $30.6 million, and the Pending Acquisitions represent in the aggregate total annual revenues of approximately $10.2 million (calculated in each case by reference to the revenues of each such acquired business during the twelve months ended December 31, 1995, which calculation includes an estimate of total revenues for the portion of 1995, if any, during which any such acquired business was included in the Company's results of operations). See "Pro Forma Condensed Consolidated Financial Information." The following table presents certain information for each acquisition completed since 1994 and for the Pending Acquisitions.
Principal State(s) of Acquisition Operation Completion Date - -------------------------------------------------------------------------- -------------- ----------------------- 1994 Acquisitions Data protection service business of Media Management Group, Inc. Connecticut June 1994 Data protection service business of Digital Equipment Corporation Massachusetts July 1994 Storage and Retrieval Concepts, Inc. Ohio October 1994 1995 Acquisitions National Business Archives, Inc. Maryland March 1995 DataFile Services, Inc. Texas October 1995 Brooks Records Center, Inc. Delaware December 1995 Data Management Business Records Storage, Inc. Georgia December 1995 1996 Acquisitions Nashville Vault Company, Ltd. Tennessee January 1996 Florida Data Bank, Inc. Florida January 1996 DataVault Corporation Massachusetts February 1996 Data Storage Systems, Inc. California March 1996 Brambles CRC, Inc. Ohio and Kentucky April 1996 Records management business of Output Technologies Central Region, Inc. Missouri May 1996 Records management business of The Fortress Corporation Massachusetts and Florida July 1996 Data Archive Services, Inc. and Data Archive Services of Miami, Inc. Florida August 1996 DKA Industries, Inc. (d/b/a Systems Record Storage) Florida August 1996 International Record Storage and Retrieval Service, Inc. New Jersey September 1996 Pending Acquisitions Status ------ Security Archives Corporation California Definitive Agreement Mohawk Business Record Storage, Inc. Minnesota Definitive Agreement
The closing of each Pending Acquisition is subject to various conditions and no assurance can be given that either Pending Acquisition will be completed. See "Risk Factors--Risks Associated with Acquisition Strategy." The Offering is not conditioned upon the completion of either Pending Acquisition, and neither Pending Acquisition is conditioned upon completion of the Offering or the other Pending Acquisition. 17 USE OF PROCEEDS The gross proceeds from the Offering will be used: (i) to repay indebtedness under the Credit Agreement, the Chrysler Notes and the FDS Notes; (ii) to fund a portion of the purchase price of the Pending Acquisitions; and (iii) to pay certain fees and expenses related to the Offering. See "The Transactions" and "Recent and Pending Acquisitions." The net proceeds to the Company from the Offering are estimated to be approximately $144.7 million, after deducting underwriting discounts and commissions and estimated Offering expenses. In the event the Pending Acquisitions are not consummated, the available net proceeds from the Offering will be used for possible future acquisitions and for general corporate purposes. Prior to funding the Pending Acquisitions or to such other use, the net proceeds from the Offering will be invested in short-term, dividend-paying or interest-bearing investment grade securities. CAPITALIZATION (Dollars in thousands, except per share data) The following table sets forth the capitalization of the Company at June 30, 1996 and pro forma to give effect to the Transactions as if they had occurred on June 30, 1996.
As of June 30, 1996 --------------------- Actual Pro Forma ------- ---------- Cash and Cash Equivalents $ 2,232 $ 2,232 ======== ======== Long-term Debt (Including Current Maturities): Credit Agreement $ 92,850 $ -- New Credit Facility -- 13,731 Real Estate Mortgages 10,761 10,761 Senior Subordinated Notes due 2006 -- 150,000 Chrysler Notes 14,807 -- FDS Notes and Other 476 26 -------- -------- Total Long-term Debt 118,894 174,518 Stockholders' Equity: Common Stock, $0.01 par value; 13,000,000 Shares Authorized, 9,627,141 Issued and Outstanding 96 96 Non-voting Common Stock, $0.01 par value; 1,000,000 Shares Authorized, 500,000 Issued and Outstanding 5 5 Additional Paid-in Capital 62,014 62,014 Accumulated Deficit (7,386) (9,614) -------- -------- Total Stockholders' Equity 54,729 52,501 -------- -------- Total Capitalization $173,623 $227,019 ======== ========
18 PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION The following unaudited Pro Forma Condensed Consolidated Balance Sheet has been prepared based upon the unaudited historical condensed consolidated balance sheet of Iron Mountain as of June 30, 1996 and the balance sheets as of June 30, 1996 of the Completed Acquisitions consummated after June 30, 1996 and the Pending Acquisitions, and gives effect to: (i) such Completed Acquisitions and the Pending Acquisitions; (ii) the closing under the New Credit Facility; and (iii) the application of the estimated net proceeds from the Offering (after deducting underwriting discounts and commissions and estimated expenses of the Offering), as if each had occurred as of June 30, 1996. The following unaudited Pro Forma Condensed Consolidated Statements of Operations for the six months ended June 30, 1996 and for the year ended December 31, 1995 give effect to each of the above transactions and to (i) the Completed Acquisitions which occurred before June 30, 1996 and (ii) the Initial Public Offering and the application of the net proceeds therefrom, as if each had occurred as of January 1, 1995. Pro forma adjustments are described in the accompanying notes. The following unaudited Pro Forma Condensed Consolidated Statements of Operations are not necessarily indicative of the actual results of operations that would have been reported if the events described above had occurred as of January 1, 1995, nor do they purport to indicate the results of the Company's future operations. Furthermore, the pro forma results do not give effect to all cost savings or incremental costs that may occur as a result of the integration and consolidation of the Acquisitions. In the opinion of management, all adjustments necessary to present fairly such pro forma financial statements have been made. The pro forma condensed consolidated financial information should be read in conjunction with "Capitalization" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" and with the Financial Statements and the Notes thereto included elsewhere in this Prospectus. 19 IRON MOUNTAIN INCORPORATED UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 1996 (In thousands)
Pending and Pro Forma Iron Completed Iron Mountain Acquisitions (1) Adjustments Mountain ------- ----------------- ----------- --------- Assets Current Assets $ 25,865 $ 3,302 $ 941 (A) $ 30,108 Property, Plant and Equipment, net 103,004 6,940 4,324 (A) 114,268 Goodwill, net 72,213 20 36,037 (A) 108,270 Other Long-term Assets 11,548 480 4,031 (A) 16,059 -------- ------- ------- -------- Total Assets $212,630 $10,742 $45,333 $268,705 ======== ======= ======= ======== Liabilities and Stockholders' Equity Current Liabilities $ 23,129 $ 6,540 $ (7,385) (B) $ 22,284 Long-term Debt, net of current portion 115,700 1,185 57,439 (B) 174,324 Other Long-term Liabilities 6,769 1,281 (1,219) (B) 6,831 Deferred Rent 7,897 242 220 (B) 8,359 Deferred Income Taxes 4,406 -- -- 4,406 Stockholders' Equity 54,729 1,494 (3,722) (B) 52,501 -------- ------- ------- -------- Total Liabilities and Stockholders' Equity $212,630 $10,742 $45,333 $268,705 ======== ======= ======= ========
- ------------- (1) See Schedule A for detail of the Pending and Completed Acquisitions. The accompanying Notes are an integral part of these pro forma financial statements. 20 IRON MOUNTAIN INCORPORATED UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1996 (In thousands, except per share data)
Pending and Pro Forma Iron Completed Iron Mountain Acquisitions (1) Adjustments Mountain ---------- ----------------- -------------- ------------- Revenues: Storage $39,363 $ 6,861 $ -- $46,224 Service and Storage Material Sales 24,587 4,540 -- 29,127 ------- ------- ---------- ------- Total Revenues 63,950 11,401 -- 75,351 Operating Expenses: Cost of Sales (Excluding Depreciation) 32,383 5,540 (329) (D) 37,594 Selling, General and Administrative 16,067 4,432 (1,182) (E) 19,317 Depreciation and Amortization 7,530 750 819 (F) 9,099 ------- ------- ---------- ------- Total Operating Expenses 55,980 10,722 (692) 66,010 ------- ------- ---------- ------- Operating Income 7,970 679 692 9,341 Interest Expense 6,385 334 2,980 (G) 9,699 ------- ------- ---------- ------- Income (Loss) before Provision (Benefit) for Income Taxes 1,585 345 (2,288) (358) Provision (Benefit) for Income Taxes 888 (30) (705) (H) 153 ------- ------- ---------- ------- Net Income (Loss) 697 375 (1,583) (511) Accretion of Redeemable Put Warrant 280 -- (280) (I) -- ------- ------- ---------- ------- Net Income (Loss) Applicable to Common Stockholders $ 417 $ 375 $(1,303) $ (511) ======= ======= ========== ======= Net Income (Loss) per Common and Common Equivalent Share $ 0.04 $ (0.05) Weighted Average Common and Common Equivalent Shares Outstanding 9,899 400 (J) 10,299 Other Data: EBITDA $15,500 $ 1,429 $1,511 $18,440
- ------------- (1) See Schedule B for detail of the Pending and Completed Acquisitions. The accompanying Notes are an integral part of these pro forma financial statements. 21 IRON MOUNTAIN INCORPORATED UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1995 (In thousands, except per share data)
Pending and Pro Forma Iron Completed Iron Mountain Acquisitions (1) Adjustments Mountain ------- ----------------- ---------- --------- Revenues: Storage $ 64,165 $22,524 $ -- $ 86,689 Service and Storage Material Sales 40,271 14,677 (737) (C) 54,211 -------- -------- ------- -------- Total Revenues 104,436 37,201 (737) 140,900 Operating Expenses: Cost of Sales (Excluding Depreciation) 52,277 18,570 (994) (D) 69,853 Selling, General and Administrative 26,035 11,555 (2,552) (E) 35,038 Depreciation and Amortization 12,341 2,962 2,879 (F) 18,182 -------- -------- ------- -------- Total Operating Expenses 90,653 33,087 (667) 123,073 -------- -------- ------- -------- Operating Income 13,783 4,114 (70) 17,827 Interest Expense 11,838 1,814 5,751 (G) 19,403 -------- -------- ------- -------- Income (Loss) before Provision for Income Taxes 1,945 2,300 (5,821) (1,576) Provision for Income Taxes 1,697 102 (1,427) (H) 372 -------- -------- ------- -------- Net Income (Loss) 248 2,198 (4,394) (1,948) Accretion of Redeemable Put Warrant 2,107 -- (2,107) (I) -- -------- -------- ------- -------- Net Income (Loss) Applicable to Common Stockholders $ (1,859) $ 2,198 $(2,287) $ (1,948) ======== ======== ======= ======== Net (Loss) per Common and Common Equivalent Share $ (0.24) $ (0.19) Weighted Average Common and Common Equivalent Shares Outstanding 7,784 2,350(J) 10,134 Other Data: EBITDA $ 26,124 $ 7,076 $2,809 $ 36,009
- ------------- (1) See Schedule C for detail of the Pending and Completed Acquisitions. The accompanying Notes are an integral part of these pro forma financial statements. 22 SCHEDULE A IRON MOUNTAIN INCORPORATED SCHEDULE OF PENDING AND COMPLETED ACQUISITIONS AS OF JUNE 30, 1996 (In thousands) (Unaudited)
Acquisitions Pending Acquisitions Completed ---------------------------------- Pending after Security Total and June 30, Archives Pending Completed 1996 Mohawk Corporation Acquisitions Acquisitions ---------- ----- ---------- ----------- ------------- Assets Current Assets $1,544 $1,488 $270 $1,758 $ 3,302 Property, Plant and Equipment, net 2,486 3,805 649 4,454 6,940 Goodwill, net 20 -- -- -- 20 Other Long-term Assets 222 231 27 258 480 ------ ------ ---- ------ ------- Total Assets $4,272 $5,524 $946 $6,470 $10,742 ====== ====== ==== ====== ======= Liabilities and Stockholders' Equity (Deficit) Current Liabilities $2,480 $3,970 $ 90 $4,060 $ 6,540 Long-term Debt, net of current portion 354 -- 831 831 1,185 Other Long-term Liabilities 1,281 -- -- -- 1,281 Deferred Rent 242 -- -- -- 242 Stockholders' Equity (Deficit) (85) 1,554 25 1,579 1,494 ------ ------ ---- ------ ------- Total Liabilities and Stockholders' Equity (Deficit) $4,272 $5,524 $946 $6,470 $10,742 ====== ====== ==== ====== =======
The accompanying Notes are an integral part of these pro forma financial statements. 23 SCHEDULE B IRON MOUNTAIN INCORPORATED SCHEDULE OF PENDING AND COMPLETED ACQUISITIONS FOR THE SIX MONTHS ENDED JUNE 30, 1996 (In thousands) (Unaudited)
Pending Acquisitions ---------------------------------- Pending Security Total and Completed Archives Pending Completed Acquisitions (1) Mohawk Corporation Acquisitions Acquisitions ---------------- ----- ---------- ----------- ------------- Revenues: Storage $3,712 $2,651 $498 $3,149 $ 6,861 Service and Storage Material Sales 1,965 2,086 489 2,575 4,540 ------ ------ ---- ------ ------- Total Revenues 5,677 4,737 987 5,724 11,401 Operating Expenses: Cost of Sales (Excluding Depreciation) 2,773 2,357 410 2,767 5,540 Selling, General and Administrative 2,643 1,614 175 1,789 4,432 Depreciation and Amortization 331 359 60 419 750 ------ ------ ---- ------ ------- Total Operating Expenses 5,747 4,330 645 4,975 10,722 ------ ------ ---- ------ ------- Operating Income (Loss) (70) 407 342 749 679 Interest Expense 162 125 47 172 334 ------ ------ ---- ------ ------- Income (Loss) before (Benefit) for Income Taxes (232) 282 295 577 345 (Benefit) for Income Taxes (30) -- -- -- (30) ------ ------ ---- ------ ------- Net Income (Loss) $ (202) $ 282 $295 $ 577 $ 375 ====== ====== ==== ====== ======= Other Data: EBITDA $ 261 $ 766 $402 $1,168 $ 1,429
- ------------- (1) Represents historical results of operations for each Completed Acquisition consummated in 1996 for the period in 1996 prior to acquisition by the Company. See "Overview" in the accompanying Notes. The accompanying Notes are an integral part of these pro forma financial statements. 24 SCHEDULE C IRON MOUNTAIN INCORPORATED SCHEDULE OF PENDING AND COMPLETED ACQUISITIONS FOR THE YEAR ENDED DECEMBER 31, 1995 (In thousands) (Unaudited)
Completed Acquisitions (1) Pending Acquisitions ---------------------------------------------------- ------------------------------- ------------ Pending National Total Security Total and Business Data Nashville Completed Archives Pending Completed Archives Management Vault Other Acquisitions Mohawk Corporation Acquisitions Acquisitions ------ -------- ------ ----- ---------- ---- --------- ---------- ------------ Revenues: Storage $ 758 $2,912 $ 636 $12,375 $16,681 $4,925 $ 918 $5,843 $22,524 Service and Storage Material Sales 471 2,308 739 6,783 10,301 3,875 501 4,376 14,677 ------ ------ ------ ------- ------- ------ ------ ------ ------- Total Revenues 1,229 5,220 1,375 19,158 26,982 8,800 1,419 10,219 37,201 Operating Expenses: Cost of Sales (Excluding Depreciation) 712 2,543 499 9,457 13,211 4,644 715 5,359 18,570 Selling, General and Administrative 89 1,418 327 6,407 8,241 2,834 480 3,314 11,555 Depreciation and Amortization 55 506 122 1,522 2,205 658 99 757 2,962 ------ ------ ------ ------- ------- ------ ------ ------ ------- Total Operating Expenses 856 4,467 948 17,386 23,657 8,136 1,294 9,430 33,087 ------ ------ ------ ------- ------- ------ ------ ------ ------- Operating Income 373 753 427 1,772 3,325 664 125 789 4,114 Interest Expense 14 494 61 883 1,452 269 93 362 1,814 ------ ------ ------ ------- ------- ------ ------ ------ ------- Income before Provision for Income Taxes 359 259 366 889 1,873 395 32 427 2,300 Provision for Income Taxes -- 87 -- 15 102 -- -- -- 102 ------ ------ ------ ------- ------- ------ ------ ------ ------- Net Income $ 359 $ 172 $ 366 $ 874 $ 1,771 $ 395 $ 32 $ 427 $ 2,198 ====== ====== ====== ======= ======= ====== ====== ====== ======= Other Data: EBITDA $ 428 $1,259 $ 549 $ 3,294 $ 5,530 $1,322 $ 224 $ 1,546 $ 7,076
- ------------- (1) Represents historical results of operations for each Completed Acquisition for the period in 1995 prior to acquisition by the Company. See "Overview" in the accompanying Notes. The accompanying Notes are an integral part of these pro forma financial statements. 25 IRON MOUNTAIN INCORPORATED NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Overview In March 1995, the Company acquired National Business Archives, Inc. ("NBA") for $15.7 million. In October 1995, the Company acquired DataFile Services, Inc. In December 1995, the Company acquired Data Management Business Records Storage, Inc. ("Data Management") for $14.5 million. In December 1995, the Company also acquired Brooks Records Center, Inc. In January 1996, the Company acquired Nashville Vault Company, Ltd. ("Nashville Vault") for $3.5 million. In January 1996, the Company also acquired Florida Data Bank, Inc. ("FDB"). In February 1996, the Company acquired DataVault Corporation. In March 1996, the Company acquired Data Storage Systems, Inc. In April 1996, the Company acquired Brambles CRC, Inc. ("CRC"). In May 1996, the Company acquired the records management business of Output Technologies Central Region, Inc. In July 1996, the Company acquired the records management business of The Fortress Corporation. In August 1996, the Company acquired Data Archive Services, Inc. and Data Archive Services of Miami, Inc. (collectively, "DAS") and DKA Industries, Inc. In September 1996, the Company acquired International Record Storage and Retrieval Service, Inc. The results of operations of the Acquisitions which were consummated prior to June 30, 1996 are included in the results of operations of the Company from their respective dates of acquisition. The historical balance sheet of the Company at June 30, 1996 includes the acquisitions consummated prior to June 30, 1996. The aggregate purchase price of the foregoing acquisitions, excluding NBA, Data Management and Nashville Vault, was $42.6 million (not including contingent payments of up to $0.6 million based upon the achievement of certain revenue targets during 1996 and 1997). During September 1996, the Company entered into definitive agreements to purchase Mohawk Business Record Storage, Inc. ("Mohawk") for $20.2 million (not including contingent payments of up to $4.0 million based upon the achievement of certain revenue targets during 1997 and 1998) and Security Archives Corporation for $3.8 million. The closing of each Pending Acquisition is subject to various conditions, and no assurance can be given that either such acquisition will be completed. All of the Completed Acquisitions have been, and the Pending Acquisitions, if consummated, will be, accounted for as purchases. The accompanying unaudited pro forma condensed consolidated financial statements reflect the following as though each had occurred on January 1, 1995: (i) the Initial Public Offering and the application of the net proceeds therefrom; (ii) the Offering and the application of the net proceeds therefrom; (iii) the closing of the New Credit Facility; and (iv) the Acquisitions. The Company will record, in the quarter in which the Offering is consummated, an extraordinary loss on retirement of debt, net of related tax benefit. As of June 30, 1996, the amount of such loss would have been approximately $2.2 million. While the extraordinary charge has been reflected in the accompanying pro forma balance sheet, the pro forma statements of operations do not give effect to such loss. Such loss consists of the write-off of deferred financing costs, original issue discount, prepayment penalty and loss on termination of interest rate protection agreements. Balance Sheet The aggregate consideration paid or to be paid for the Acquisitions is approximately $100.3 million in cash (not including up to $4.6 million of contingent payments based upon the achievement of certain revenue targets from 1996 through 1998). The excess of the purchase price over the book value of the net assets acquired for each of the Acquisitions has been allocated to tangible and intangible assets, based on the Company's estimate of the fair value of the net assets acquired. The allocations of the purchase price as illustrated below may change upon final appraisal of the fair value of the net assets acquired. 26
(In millions) Acquisitions Completed Prior to June 30, 1996: Book value of net assets acquired $ 11.6 Allocation of purchase price in excess of acquired assets: Property, Plant and Equipment (Fair Value Adjustment) 5.4 Other Long-term Assets (Covenants not to Compete) 2.8 Current Liabilities (Relocation and Other Reserves) (1.8) Deferred Rent (Unfavorable Lease Liability) (5.3) Goodwill 40.1 ----- Purchase Price of Acquisitions Completed Prior to June 30, 1996 $ 52.8 Acquisitions Completed after June 30, 1996 and the Pending Acquisitions: Book value of net assets acquired $ 9.2 Allocation of purchase price in excess of acquired assets: Property, Plant and Equipment (Fair Value Adjustment) 4.8 Other Long-term Assets (Covenants not to Compete) 0.2 Current Liabilities (Relocation and Other Reserves) (2.3) Deferred Rent (Unfavorable Lease Liability) (0.4) Goodwill 36.0 ----- Purchase Price of Acquisitions Pending as of June 30, 1996 47.5 ------ Total Purchase Price of Acquisitions $100.3 ======
The Acquisitions completed prior to June 30, 1996 were financed with long-term debt and proceeds from the Initial Public Offering. The Acquisitions completed after June 30, 1996 and the Pending Acquisitions are assumed to be financed with long-term debt. The Company will fund the purchase price of each Pending Acquisition with a portion of the net proceeds from the Offering and the New Credit Facility. See "Recent and Pending Acquisitions," "The Transactions" and "Management's Discussion and Analysis of Financial Condition and Results of Operations." The accompanying pro forma condensed consolidated balance sheet as of June 30, 1996 has been prepared as if the Transactions had all been completed as of June 30, 1996 and reflects the following adjustments: (A) The pro forma adjustments to Assets consist of the following:
Property, Other Current Plant and Long-term Assets Equipment Goodwill Assets ------- --------- -------- --------- (In millions) Acquisition Entries: Reverse assets of acquired companies not purchased $(0.6) $(0.2) $ -- $(0.5) Record estimated fair value of assets of acquired companies -- 4.5 -- -- Record increase in intangible assets equal to the excess of purchase price over fair value of net assets acquired -- -- 36.0 0.2 ----- ----- ----- ----- Total Acquisition Entries (0.6) 4.3 36.0 (0.3) ----- ----- ----- ----- Use of Proceeds Entries: Record deferred financing fees associated with the Notes and the New Credit Facility -- -- -- 6.3 Write-off of pre-existing deferred financing costs -- -- -- (2.0) Tax benefit associated with extraordinary charge related to early retirement of pre-existing debt 1.5 -- -- -- ----- ----- ----- ----- Total Use of Proceeds Entries 1.5 -- -- 4.3 ----- ----- ----- ----- Total Adjustments $ 0.9 $ 4.3 $36.0 $ 4.0 ===== ===== ===== =====
27 (B) The pro forma adjustments to Liabilities and Stockholders' Equity consist of the following:
Other Current Long-term Long-term Deferred Stockholders' Liabilities Debt Liabilities Rent Equity ---------- ------- ---------- ------ ------------- (In millions) Acquisition Entries: Reverse liabilities and equity not assumed in connection with Acquisitions closing after June 30, 1996 $(4.4) $ (1.2) $(1.2) $(0.2) $(1.5) Record unfavorable lease obligation -- -- -- 0.4 -- Record additional debt to finance Acquisitions closing after June 30, 1996 47.5 ----- ------ ----- ----- ----- Total Acquisition Entries (4.4) 46.3 (1.2) 0.2 (1.5) ----- ------ ----- ----- ----- Use of Proceeds Entries: Issuance of the Notes -- 150.0 -- -- -- Borrowings under New Credit Facility -- 13.7 -- -- -- Prepayment of Credit Agreement, Chrysler Notes and FDS Notes (3.0) (105.1) -- -- -- Use of proceeds to repay debt issued to finance Acquisitions closing after June 30, 1996 -- (47.5) -- -- -- Extraordinary charge, net of tax benefit, related to early retirement of pre-existing debt -- -- -- -- (2.2) ----- ------ ----- ----- ----- Total Use of Proceeds Entries (3.0) 11.1 -- -- (2.2) ----- ------ ----- ----- ----- Total Adjustments $(7.4) $ 57.4 $(1.2) $0.2 $(3.7) ===== ====== ===== ===== =====
Statements of Operations All of the Acquisitions, except Data Management, FDB, CRC and DAS, have a December 31 fiscal year end. Data Management's and CRC's fiscal year end is June 30, DAS's fiscal year end is May 31 and FDB's fiscal year end is August 31. Accordingly, Data Management's, CRC's, DAS's and FDB's results of operations were calendarized to the twelve months ended December 31, 1995 and the six months ended June 30, 1996. The accompanying pro forma condensed consolidated statements of operations for the year ended December 31, 1995 and for the six months ended June 30, 1996 have been prepared as if the Transactions and the Initial Public Offering had occurred on January 1, 1995 and reflect the following adjustments: (C) A pro forma adjustment has been made to eliminate a $0.7 million non-recurring gain on the sale of property and equipment by Data Management in the year ended December 31, 1995. (D) Pro forma adjustments for the six months ended June 30, 1996 and for the year ended December 31, 1995 have been made to reduce cost of sales by $0.3 million and $1.0 million, respectively, to eliminate specific expenses that would not have been incurred had the Acquisitions occurred at the beginning of 1995. Such cost savings relate to (i) the termination of certain employees due to the integration and consolidation of certain Acquisitions and (ii) a reduction in warehouse rent expense related to facilities the Company will vacate upon completion of certain Acquisitions. (E) Pro forma adjustments for the six months ended June 30, 1996 and for the year ended December 31, 1995 have been made to reduce selling, general and administrative expenses by $1.2 million and $2.6 million, respectively, to eliminate specific expenses that would not have been incurred had the Acquisitions occurred as of January 1, 1995. Such cost savings relate to (i) the termination of certain employees due to the integration and consolidation of certain Acquisitions and (ii) the elimination of related party expenses and management fees in excess of amounts that would have been incurred by the Company for the services rendered. Additional cost savings 28 that the Company expects to realize through integration of the Acquisitions into the Company's operations have not been reflected herein. (F) A pro forma adjustment has been made to reflect additional depreciation and amortization expense on the fair value of the assets acquired and goodwill. Property and equipment are depreciated over three to 50 years, goodwill is amortized over 25 years and covenants not-to-compete are amortized over two to five years on a straight- line basis. Such depreciation and amortization may change upon final appraisal of the fair market value of the net assets acquired. (G) The pro forma adjustments to interest expense consist of the following:
June 30, December 31, 1996 1995 -------- ----------- (In millions) Acquisition Entries: Reverse interest expense on debt not assumed in connection with Acquisitions $(0.3) $ (1.8) Record interest expense due to assumption of unfavorable lease liabilities in connection with the NBA and Mohawk acquisitions 0.1 0.1 Use of Proceeds Entries: Reverse interest expense on pre-existing debt of the Company retired with proceeds of the Offering (5.7) (10.3) Record interest expense from issuance of the Notes at an assumed interest rate of 10-1/2%, plus amortization of deferred financing costs 8.1 16.2 Record interest expense at an assumed interest rate of 7.85%, plus amortization of deferred financing fees associated with the New Credit Facility 0.8 1.6 ----- ------ Total Adjustments $ 3.0 $ 5.8 ===== ======
A 1/4% increase (or decrease) in the assumed 10-1/2% interest rate with respect to the Notes would increase (or decrease) annual interest expense with respect to the Notes by $375,000. A 1/8% increase (decrease) in the interest rate with respect to the New Credit Facility would increase (decrease) annual interest expense with respect to the assumed borrowings under the New Credit Facility by approximately $17,000. (H) A pro forma adjustment has been made to adjust the provision for income taxes to a 40% rate on pro forma income before nondeductible goodwill amortization and other nondeductible expenses. (I) Pro forma adjustments of $0.3 million and $2.1 million for the periods ended June 30, 1996 and December 31, 1995, respectively, have been made to eliminate the accretion of a redeemable put warrant. (J) A pro forma adjustment has been made to adjust the pro forma weighted average common and common equivalent shares outstanding as if the Initial Public Offering had occurred on January 1, 1995. 29 SELECTED CONSOLIDATED FINANCIAL AND OPERATING INFORMATION (In thousands, except per share amounts and Carton data) The following selected consolidated statements of operations and balance sheet data of the Company as of and for each of the years ended December 31, 1991, 1992, 1993, 1994 and 1995 have been derived from the Company's audited consolidated financial statements. The selected consolidated statements of operations and balance sheet data of the Company for the six months ended June 30, 1995 and 1996 have been derived from the Company's unaudited condensed consolidated financial statements. The Company's unaudited condensed consolidated financial statements include all adjustments, consisting of normal recurring accruals, that the Company considers necessary for a fair presentation of the financial position and the results of operations for those periods. Operating results for the six months ended June 30, 1996 are not necessarily indicative of the results for the entire year ending December 31, 1996. The selected consolidated financial and operating information set forth below should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and with Iron Mountain's Consolidated Financial Statements and the Notes thereto included elsewhere in this Prospectus.
Six Months Ended Year Ended December 31, June 30, ----------------------------------------------------- ------------------ 1991 1992 1993 1994 1995 1995 1996 ------- ------ ------ ----------- ------- ------ -------- Consolidated Statements of Operations Data: Revenues: Storage $39,510 $44,077 $48,892 $54,098 $ 64,165 $30,748 $39,363 Service and Storage Material Sales 23,330 26,596 32,781 33,520 40,271 19,476 24,587 ------- ------- ------- ------- -------- ------- ------- Total Revenues 62,840 70,673 81,673 87,618 104,436 50,224 63,950 Operating Expenses: Cost of Sales (Excluding Depreciation) 31,375 35,169 43,054 45,880 52,277 25,112 32,383 Selling, General and Administrative 16,471 17,630 19,971 20,853 26,035 12,697 16,067 Depreciation and Amortization 7,674 5,780 6,789 8,690 12,341 5,428 7,530 ------- ------- ------- ------- -------- ------- ------- Total Operating Expenses 55,520 58,579 69,814 75,423 90,653 43,237 55,980 ------- ------- ------- ------- -------- ------- ------- Operating Income 7,320 12,094 11,859 12,195 13,783 6,987 7,970 Interest Expense 8,612 8,412 8,203 8,954 11,838 5,936 6,385 Income (Loss) before Provision for Income Taxes (1,292) 3,682 3,656 3,241 1,945 1,051 1,585 Provision for Income Taxes 105 2,095 2,088 1,957 1,697 631 888 ------- ------- ------- ------- -------- ------- ------- Net Income (Loss) (1,397) 1,587 1,568 1,284 248 420 697 Accretion of Redeemable Put Warrant 417 626 940 1,412 2,107 953 280 ------- ------- ------- ------- -------- ------- ------- Net Income (Loss) Applicable to Common Stockholders $(1,814) $ 961 $ 628 $ (128) $ (1,859) $ (533) $ 417 ======= ======= ======= ======= ======== ======= ======= Net Income (Loss) per Common and Common Equivalent Share $ (0.23) $ 0.12 $ 0.08 $ (0.02) $ (0.24) $ (0.07) $ 0.04 Weighted Average Common and Common Equivalent Shares Outstanding 8,038 8,052 8,067 7,984 7,784 7,790 9,899 Other Data: EBITDA (1) $14,994 $17,874 $18,648 $20,885 $ 26,124 $12,415 $15,500 EBITDA as a Percentage of Total Revenues 23.9% 25.3% 22.8% 23.8% 25.0% 24.7% 24.2% Capital Expenditures: Growth (2) -- $11,226 $13,605 $15,829 (3) $ 14,395 $ 6,730 $10,702 Maintenance -- 818 1,846 1,151 858 592 460 ------- ------- ------- ------- -------- ------- ------- Total Capital Expenditures $ 8,163 $12,044 $15,451 $16,980 (3) $ 15,253 $ 7,322 $11,162 Additions to Customer Acquisition Costs $ -- $ 1,268 $ 922 $ 1,366 $ 1,379 $ 418 $ 717 Approximate Cartons in Storage at End of Period (in millions) (4) 10.8 12.6 15.5 17.7 23.3 20.3 26.4 Ratio of Earnings to Fixed Charges (5) 0.9x 1.3x 1.3x 1.2x 1.1x 1.1x 1.2x
(Footnotes on the following page) 30
As of December 31, As of ---------------------------------------------- June 30, 1991 1992 1993 1994 1995 1996 ------ ------ ------ ------ ------ -------- Balance Sheet Data: Cash and Cash Equivalents $ 407 $ 498 $ 591 $ 1,303 $ 1,585 $ 2,232 Total Assets 107,874 115,429 125,288 136,859 186,881 212,630 Total Debt 68,229 73,304 78,460 86,258 121,874 118,894 Stockholders' Equity 22,291 23,419 24,047 22,869 21,011 54,729
- ------------- (Footnotes from the preceding page) (1) Earnings before interest, taxes, depreciation, amortization and extraordinary charges ("EBITDA"). Based on its experience in the records management industry, the Company believes that EBITDA is an important tool for measuring the performance of records management companies (including potential acquisition targets) in several areas, such as liquidity, operating performance and leverage. In addition, lenders use EBITDA as a criterion in evaluating records management companies, and substantially all of the Company's financing agreements contain covenants in which EBITDA is used as a measure of financial performance. However, EBITDA should not be considered an alternative to operating or net income (as determined in accordance with GAAP) as an indicator of the Company's performance or to cash flow from operations (as determined in accordance with GAAP) as a measure of liquidity. See "Management's Discussion and Analysis of Financial Condition and Results of Operations--Overview" and "--Liquidity and Capital Resources" for discussions of other measures of performance determined in accordance with GAAP and the Company's sources and applications of cash flow. (2) Growth capital expenditures include investment in racking systems, new buildings and leasehold improvements, equipment for new facilities, management information systems and facilities restructuring. See "Management's Discussion and Analysis of Financial Condition and Results of Operations--Liquidity and Capital Resources--Capital Investments." (3) Includes $2,901 related to the cost of constructing a records management facility which was sold in a sale and leaseback transaction in the fourth quarter of 1994. (4) The term "Carton" is defined as a measurement of the volume equal to a single standard storage carton, approximately 1.2 cubic feet. The number of Cartons stored does not include storage volumes in the Company's vital records services and data protection services which are described under "Business." (5) The pro forma ratio of earnings to fixed charges, giving effect to the Transactions as if each had occurred as of January 1, 1995, would have been 0.9x for the year ended December 31, 1995 and 0.9x for the six months ended June 30, 1996. For the year ended December 31, 1995 and the six months ended June 30, 1996, the Company would have needed to generate additional income from continuing operations, before provision for income taxes, of $1,576 and $358 to cover its pro forma fixed charges of $26,162 and $13,272, respectively. The ratio of earnings to fixed charges was 0.9x for the fiscal year ended December 31, 1991. For such period, the Company would have needed to generate additional income from continuing operations, before provision for income taxes, of $1,292 to cover its fixed charges of $11,689. 31 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with the Selected Consolidated Financial and Operating Information and Iron Mountain's Consolidated Financial Statements and the Notes thereto and the other financial and operating information included elsewhere in this Prospectus. This Prospectus contains, in addition to historical information, forward-looking statements that include risks and uncertainties. The Company's actual results may differ materially from the results discussed in the forward-looking statements. Factors that might cause such a difference include those discussed below, as well as those discussed elsewhere in this Prospectus. The Company undertakes no obligation to release publicly the result of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Overview The Company's primary financial objective is to increase its EBITDA, which is a source of funds to service indebtedness and for investment in continued internal growth and growth through acquisitions. The Company has benefited from growth in EBITDA, which has increased from $17.9 million in 1992 to $26.1 million in 1995 (a CAGR of 13.5%), but other measures of the Company's financial performance, such as net income and net income applicable to common stockholders, have been negatively affected by this objective. In 1994 and 1995, the Company experienced net losses applicable to common stockholders. Such net losses are attributable in part to significant increases in non-cash charges associated with the Company's pursuit of its growth strategy, namely, (i) increases in depreciation and amortization expenses associated with expansion of the Company's storage capacity and the acquisition of certain large volume accounts and (ii) increases in goodwill amortization associated with acquisitions accounted for under the purchase method. In addition, net income available to common stockholders has been negatively affected by a non-cash charge for accretion of a redeemable put warrant, which was redeemed upon completion of the Company's Initial Public Offering. See Note 5 of Notes to the Company's Audited Consolidated Financial Statements. Iron Mountain's revenues consist of storage revenues and service and storage material sales revenues. Storage revenues are derived from charges for storing records (either on a per unit or a per cubic foot of records basis), and have accounted for approximately 60% of total revenues in each of the last three years and for the six months ended June 30, 1996. Service and storage material sales revenues are derived primarily from the Company's courier operations (consisting primarily of the pickup and delivery of records upon customer request), additions of new Cartons, temporary removal of records from storage, refiling of removed records, destructions of records, permanent withdrawals from storage and sales of specially designed storage containers and related supplies. Customers are generally billed on a monthly basis on contractually agreed-upon terms. While the Company's total revenues have increased from $70.7 million in 1992 to $104.4 million in 1995, average revenue on a per Carton basis has declined over this period. The year-over-year declines in average revenue per Carton for 1993, 1994 and 1995 were approximately 8%, 7% and 2%, respectively. Such declines were attributable to: (i) increases in sales to large volume accounts, which typically generate lower revenue per Carton (in particular the Resolution Trust Corporation (the "RTC") account, which incorporated substantial volume discounts, although such discounts were offset by revenues from special service projects during 1993 and 1994); (ii) a facilities management arrangement with a large volume account under which, prior to July 1996, the Company managed the customer's records management facility and, therefore, the charges to the customer prior to July 1996 did not include a rent component; and (iii) industry-wide pricing pressures. Despite this decline, the Company has been able to maintain its EBITDA margins through increased overall operating efficiencies and economies of scale as well as specific efficiencies realized in the servicing of large volume accounts. For 1992, 1993, 1994, 1995 and the six months ended June 30, 1996, EBITDA margins were 25.3%, 22.8%, 23.8%, 25.0% and 24.2%, respectively. Pursuant to its 1992 contract with the RTC, the Company participated in the consolidation and centralization of a large number of records on behalf of the RTC. This activity, which entailed extensive services and the Company's start-up of operations in two new markets, resulted in a significant increase in service and storage material sales revenues in 1993. After the labor-intensive process of assembling and inventorying the records was substantially completed in 1994, the revenue from RTC service and storage material sales began to decrease, which decrease was partially offset by increases in storage revenues due to an increase in Cartons stored. The contract 32 has been renewed effective July 27, 1996 for a one-year term by the Federal Deposit Insurance Corporation (the "FDIC"), as successor in interest to the RTC, and may be renewed at the option of the FDIC for three further terms of one year each. Although the substantial costs of removing its records from the Company's facilities may act as a disincentive to the FDIC to select another vendor, there can be no assurance that this contract will be further renewed or that the terms of any such renewal will be as favorable to Iron Mountain as the terms of the current contract. Cost of sales consists primarily of wages and benefits, facility occupancy costs, vehicle and other equipment costs and supplies. Of these, the most significant are wages and benefits and facility occupancy costs. Over the past several years, Iron Mountain has been able to reduce per Carton storage costs by: (i) designing racking systems and operating space to maximize facility storage efficiency; (ii) negotiating favorable facility leases and having facilities built to its custom specifications; and (iii) leasing larger facilities, which, when filled, are less expensive per Carton to operate. Selling, general and administrative expenses consist primarily of management, administrative, sales and marketing wages and benefits, and also include travel, communications, professional fees, bad debts, training, office equipment and supplies expenses. The Company's depreciation and amortization charges result primarily from the capital-intensive nature of the records management industry and the acquisitions the Company has completed. The principal components of depreciation relate to racking systems and related equipment, new buildings and leasehold improvements, equipment for new facilities and computer system software and hardware. Amortization primarily relates to goodwill and noncompetition agreements arising from acquisitions and customer acquisition costs. The Company has accounted for all of its acquisitions under the purchase method. Since the purchase price for records management companies is usually substantially in excess of the book values of their assets, these purchases have given rise to significant goodwill and, accordingly, significant levels of amortization. Although amortization is a non-cash charge, it does decrease reported net income. Accordingly, the faster the Company expands by making such acquisitions, the more likely it will be to incur amortization charges, reducing net income. In February 1996, the Company received net proceeds of $33.3 million from its Initial Public Offering. The Company used $6.6 million of such net proceeds to repurchase a warrant to acquire 444,385 shares of Common Stock (the "Warrant"). For financial reporting purposes, the Company was required to record a non-cash charge (based on the estimated redemption value calculated using the effective interest rate method), resulting in substantial charges to net income applicable to common stockholders over the period the Warrant was outstanding. See Note 5 of Notes to the Company's Audited Consolidated Financial Statements. The remaining net proceeds were used by the Company to fund acquisitions (including Completed Acquisitions consummated after the closing of the Initial Public Offering), to repay indebtedness used to fund acquisitions and for working capital. In December 1995, the Company decided to consolidate its corporate accounting activities by transferring to Boston, Massachusetts those accounting activities previously performed in Los Angeles, California. As a result of such transfer, the Company recorded charges of $0.5 million and $0.3 million in the fourth quarter of 1995 and the first six months of 1996, respectively. Forward-Looking Statements Regarding Revenues One of the Company's goals is to achieve revenue growth of five to 10 percent per year from its existing business through the end of 1997. In addition, over the same period, the Company's goal is to achieve revenue growth of between 10 to 15 percent per year as a result of acquisitions. There can be no assurance that the Company will be able to meet these goals. See "Risk Factors." 33 Results of Operations The following table sets forth, for the periods indicated, information derived from the Company's consolidated statements of operations, expressed as a percentage of revenue. There can be no assurance that the trends in revenue growth or operating results shown below will continue in the future.
Six Months Year Ended December 31, Ended June 30, ------------------------------- --------------------- 1993 1994 1995 1995 1996 -------- -------- -------- -------- ---------- Revenues: Storage 59.9% 61.7% 61.4% 61.2% 61.6% Service and Storage Material Sales 40.1 38.3 38.6 38.8 38.4 ----- ----- ----- ----- ----- Total Revenues 100.0 100.0 100.0 100.0 100.0 ----- ----- ----- ----- ----- Operating Expenses: Cost of Sales (Excluding Depreciation) 52.7 52.4 50.1 50.0 50.6 Selling, General and Administrative 24.5 23.8 24.9 25.3 25.1 Depreciation and Amortization 8.3 9.9 11.8 10.8 11.8 ----- ----- ----- ----- ----- Total Operating Expenses 85.5 86.1 86.8 86.1 87.5 ----- ----- ----- ----- ----- Operating Income 14.5 13.9 13.2 13.9 12.5 Interest Expense 10.0 10.2 11.3 11.8 10.0 ----- ----- ----- ----- ----- Income before Provision for Income Taxes 4.5 3.7 1.9 2.1 2.5 Provision for Income Taxes 2.6 2.2 1.7 1.3 1.4 ----- ----- ----- ----- ----- Net Income 1.9% 1.5% 0.2% 0.8% 1.1% ===== ===== ===== ===== ===== EBITDA 22.8% 23.8% 25.0% 24.7% 24.2%
Six Months Ended June 30, 1996 Compared to Six Months Ended June 30, 1995 Storage revenues increased from $30.7 million for the first six months of 1995 to $39.4 million for the first six months of 1996, an increase of $8.7 million or 28.0%. Ten acquisitions completed by the Company in 1995 and the first six months of 1996 accounted for $5.5 million or 63.7% of such increase. The balance of the storage revenues growth resulted primarily from net increases in Cartons stored by existing customers and from sales to new customers. Service and storage material sales revenues increased from $19.5 million for the first six months of 1995 to $24.6 million for the first six months of 1996, an increase of $5.1 million or 26.2%. Acquisitions accounted for $3.4 million or 66.2% of such increase. The balance of such increase resulted from increases in service and storage material sales to existing customers and the addition of new customer accounts. For the reasons discussed above, total revenues increased from $50.2 million for the first six months of 1995 to $64.0 million for the first six months of 1996, an increase of $13.8 million or 27.3%. Of such increase, $8.9 million or 64.6% was attributable to acquisitions completed by the Company in 1995 and the first six months of 1996. Cost of sales (excluding depreciation) increased from $25.1 million for the first six months of 1995 to $32.4 million for the first six months of 1996, an increase of $7.3 million or 29.0%, and increased as a percentage of revenues from 50.0% for the first six months of 1995 to 50.6% for the first six months of 1996. The increase was primarily attributable to the increase in Cartons stored, increased expenses related to the severe winter weather on the Atlantic coast during the first quarter of 1996 and expenses related to certain facility relocations. Selling, general and administrative expenses increased from $12.7 million for the first six months of 1995 to $16.1 million for the first six months of 1996, an increase of $3.4 million or 26.5%, and decreased as a percentage of revenues from 25.3% for the first six months of 1995 to 25.1% for the first six months of 1996. The $3.4 million increase was primarily attributable to the costs associated with becoming a public company, with accelerated acquisition activity, including certain redundant transitional expenses as new acquisitions were integrated into the Company, and the addition of personnel needed to support the Company's growth. Additionally, the selling, general 34 and administrative expenses of acquired companies tend to be higher than Iron Mountain's, and cost reductions and other possible synergies are not realized immediately. Depreciation and amortization expense increased from $5.4 million for the first six months of 1995 to $7.5 million for the first six months of 1996, an increase of $2.1 million or 38.7%, and increased as a percentage of revenues from 10.8% for the first six months of 1995 to 11.8% for the first six months of 1996. The increase was primarily attributable to the additional depreciation and amortization expense related to the aforementioned acquisitions, capital expenditures, including racking systems, information systems and improvements to existing facilities, and additions to customer acquisition costs. As a result of the foregoing factors, operating income increased from $7.0 million for the first six months of 1995 to $8.0 million for the first six months of 1996, an increase of $1.0 million or 14.1%. As a percentage of revenues, operating income decreased from 13.9% for the first six months of 1995 to 12.5% for the first six months of 1996. Interest expense increased from $5.9 million for the first six months of 1995 to $6.4 million for the first six months of 1996, an increase of $0.5 million or 7.6%. The increase was primarily attributable to increased indebtedness to finance acquisitions and capital expenditures. The decrease in interest expense as a percentage of revenues was primarily attributable to a net decrease in interest rates. As a result of the foregoing factors, income before provision for income taxes increased from $1.1 million (2.1% of revenues) for the first six months of 1995 to $1.6 million (2.5% of revenues) in the first six months of 1996, an increase of $0.5 million or 50.8%. Provision for income taxes increased from $0.6 million (1.3% of revenues) for the first six months of 1995 to $0.9 million (1.4% of revenues) for the first six months of 1996. The Company's effective tax rate is higher than statutory rates primarily due to the amortization of the nondeductible portion of goodwill associated with acquisitions made prior to the change in tax laws which now generally permit deduction of such expenses. Net income increased from $0.4 million (0.8% of revenues) for the first six months of 1995 to $0.7 million (1.1% of revenues) for the first six months of 1996, an increase of $0.3 million, or 66.0%. Net income (loss) applicable to common stockholders was a $0.5 million net loss (1.1% of revenues), after accretion of $0.9 million related to the Warrant, for the first six months of 1995 compared to net income of $0.4 million (0.7% of revenues), after accretion of $0.3 million related to the Warrant, for the first six months of 1996. The Warrant was redeemed in full in February 1996, with a portion of the proceeds from the Initial Public Offering. As a result of such redemption, there will be no future charges for such accretion. As a result of the foregoing factors, EBITDA increased from $12.4 million for the first six months of 1995 to $15.5 million for the first six months of 1996, an increase of $3.1 million, or 24.8%. As a percentage of revenues, EBITDA decreased from 24.7% for the first six months of 1995 to 24.2% for the first six months of 1996. Year Ended December 31, 1995 Compared to Year Ended December 31, 1994 Storage revenues increased from $54.1 million in 1994 to $64.2 million in 1995, an increase of $10.1 million or 18.6%. Seven acquisitions completed between June 1994 and December 1995 accounted for $5.7 million or 56.7% of such increase. The balance of the storage revenues growth resulted primarily from net increases in Cartons stored by existing customers and from sales to new customers. Service and storage material sales revenues increased from $33.5 million in 1994 to $40.3 million in 1995, an increase of $6.8 million or 20.1%. This increase was accomplished despite a decrease of approximately $0.8 million in such revenues received from the RTC, which decrease was primarily due to a reduction in revenues from special service projects. Acquisitions accounted for $4.3 million or approximately 63.5% of such increase. The balance of such increase resulted from increases in service and storage material sales to existing customers and the addition of new customer accounts. For the reasons discussed above, total revenues increased from $87.6 million in 1994 to $104.4 million in 1995, an increase of $16.8 million or 19.2%. Of such increase, $10.0 million or 59.4% was attributable to acquisitions made by the Company between June 1994 and December 1995. The monthly average Cartons stored increased approximately 22% in 1995 as compared to 1994, from approximately 16.7 million Cartons to approximately 20.4 million Cartons. The percentage increase was greater than that of total revenues primarily for the reason described in the third paragraph under "Overview" above. 35 Cost of sales (excluding depreciation) increased from $45.9 million in 1994 to $52.3 million in 1995, an increase of $6.4 million or 13.9%, and decreased as a percentage of revenues from 52.4% in 1994 to 50.1% in 1995. The $6.4 million increase resulted primarily from an increase in Cartons stored. The decrease as a percentage of revenues was due primarily to increased storage efficiencies resulting from relocations to, or additions of, newer, higher density facilities as well as increased utilization of storage capacity. Selling, general and administrative expenses increased from $20.9 million in 1994 to $26.0 million in 1995, an increase of $5.1 million or 24.9%, and increased as a percentage of revenues from 23.8% in 1994 to 24.9% in 1995. The $5.1 million increase was due primarily to increases in field management and administrative staffing, including increases due to acquisitions. Of the 1.1% increase as a percentage of revenues, $0.6 million (0.6% of revenues) resulted from a provision for a judgment in a lawsuit relating to a 1992 incident and a $0.5 million (0.5% of revenues) charge for the relocation of the corporate accounting function from Los Angeles to Boston. Depreciation and amortization expenses increased from $8.7 million in 1994 to $12.3 million in 1995, an increase of $3.6 million or 42.0%, and increased as a percentage of revenues from 9.9% in 1994 to 11.8% in 1995. Depreciation and amortization expenses, both in absolute dollars and as a percentage of revenues, continued to increase, primarily as a result of the Company's acquisitions and growth-related capital investments for racking systems, improvements to records management facilities, information systems and customer acquisition costs. Amortization during 1995 included a one-time charge of $0.9 million (0.9% of revenues) in connection with the write-down of the goodwill of a subsidiary due to the Company's decision to sell such subsidiary at an estimated price which is $0.9 million less than such subsidiary's book value and related goodwill. The Company subsequently decided not to sell such subsidiary. As a result of the foregoing factors, operating income increased from $12.2 million in 1994 to $13.8 million in 1995, an increase of $1.6 million or 13.0%, and decreased as a percentage of revenues from 13.9% to 13.2%. Interest expense increased from $9.0 million in 1994 to $11.8 million in 1995. This increase was due primarily to increased levels of indebtedness primarily to finance acquisitions, as well as higher interest rates and higher deferred financing charges. As a result of the foregoing factors, income before provision for income taxes decreased from $3.2 million (3.7% of revenues) in 1994 to $1.9 million (1.9% of revenues) in 1995, a decrease of $1.3 million or 40.0%. Provision for income taxes decreased from $2.0 million (2.2% of revenues) to $1.7 million (1.7% of revenues). The Company's effective tax rates for 1994 and 1995 were higher than statutory rates primarily due to $1.5 million and $2.5 million, respectively, of amortization of nondeductible goodwill. Net income decreased $1.1 million from $1.3 million (1.5% of revenues) in 1994 to $0.2 million (0.2% of revenues) in 1995 as a result of the factors outlined above. As a result of the foregoing factors, EBITDA increased from $20.9 million in 1994 to $26.1 million in 1995, an increase of $5.2 million or 25.1%, and increased as a percentage of revenues from 23.8% to 25.0%. These increases reflect continuing economies of scale and increased operating efficiencies, which were partially offset by the $0.6 million (0.6% of revenues) reserve relating to the judgment in the lawsuit referred to above and by the $0.5 million (0.5% of revenues) charge for the relocation of the corporate accounting function from Los Angeles to Boston. Year Ended December 31, 1994 Compared to Year Ended December 31, 1993 Storage revenues increased from $48.9 million in 1993 to $54.1 million in 1994, an increase of $5.2 million or 10.6%. The substantial majority of the storage revenues growth resulted from sales to new customers and increases in Cartons stored from existing customers. Three acquisitions completed between June and October 1994 accounted for only $0.8 million of the increase. Service and storage material sales revenues increased from $32.8 million in 1993 to $33.5 million in 1994, an increase of $0.7 million or 2.3%. This increase was due primarily to an increase in services provided to existing and new customers, which was partially offset by a $0.9 million decrease in such revenues received from the RTC primarily due to a reduction in revenues from special service projects. For the reasons discussed above, total revenues increased from $81.7 million in 1993 to $87.6 million in 1994, an increase of $5.9 million or 7.3%. The monthly average Cartons stored increased from approximately 14.5 million 36 in 1993 to approximately 16.7 million in 1994, an increase of approximately 15%. The percentage increase in Cartons stored was greater than that of total revenues for the reasons discussed in the third paragraph under "Overview" above. Cost of sales (excluding depreciation) increased from $43.1 million in 1993 to $45.9 million in 1994, an increase of $2.8 million or 6.6%, and decreased as a percentage of revenues from 52.7% in 1993 to 52.4% in 1994. The $2.8 million increase was due primarily to increases in storage capacity. The decrease as a percentage of revenues was due primarily to increased storage efficiencies. Selling, general and administrative expenses increased from $20.0 million in 1993 to $20.9 million in 1994, an increase of $0.9 million or 4.4%, and decreased as a percentage of revenues from 24.5% in 1993 to 23.8% in 1994. The increase in such expenses was due primarily to inflationary increases in wages and benefits, partially offset by a $0.2 million decrease in bad debt expense. The decrease as a percentage of revenues was due to operating efficiencies and the decrease of 0.3% in bad debt expense. Depreciation and amortization expenses increased from $6.8 million in 1993 to $8.7 million in 1994, an increase of $1.9 million or 28.0%, and increased as a percentage of revenues from 8.3% in 1993 to 9.9% in 1994. This increase, both in dollars and as a percentage of revenues, was due primarily to an increase in depreciation charges resulting from capital expenditures for racking systems and improvements to records management facilities and information systems. As a result of the foregoing factors, operating income increased from $11.9 million in 1993 to $12.2 million in 1994, an increase of $0.3 million or 2.8%, and decreased from 14.5% of revenues to 13.9% of revenues. Interest expense increased from $8.2 million in 1993 to $9.0 million in 1994, an increase of $0.8 million or 9.2%, due primarily to increased levels of indebtedness. As a result of the foregoing factors, income before provision for income taxes decreased from $3.7 million in 1993 (4.5% of revenues) to $3.2 million in 1994 (3.7% of revenues), a decrease of $0.5 million or 11.4%. Provision for income taxes decreased from $2.1 million in 1993 (2.6% of revenues) to $2.0 million in 1994 (2.2% of revenues). The Company's effective tax rates for financial reporting purposes for 1994 and 1993 exceeded statutory tax rates primarily because of $1.5 million of amortization of nondeductible goodwill in each year. Net income decreased from $1.6 million (1.9% of revenues) to $1.3 million (1.5% of revenues) as a result of the factors outlined above. As a result of the foregoing factors, EBITDA increased from $18.6 million in 1993 to $20.9 million in 1994, an increase of $2.3 million or 12.0%, and increased as a percentage of revenues from 22.8% to 23.8%. The increase as a percentage of revenues reflected economies of scale and increased operating efficiencies. 37 Recent Quarterly Financial Data The following table sets forth certain consolidated statements of operations data of the Company for the quarterly periods shown. The unaudited quarterly information has been prepared on the same basis as the annual financial information and, in management's opinion, includes all adjustments (consisting of normal recurring accruals) necessary to present fairly the information for the quarters presented. The operating results for any quarter are not necessarily indicative of results for the year or for any future period.
Three Months Ended -------------------------------------------------------------------------------------------------------------- 1994 1995 1996 ------------------------------------------ ------------------------------------------- ------------------- Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 June 30 ------- ------- -------- -------- ------- ------- -------- -------- ------- ------- (In thousands) Revenues: Storage $12,863 $13,220 $13,855 $14,160 $14,882 $15,866 $16,246 $17,171 $19,154 $20,209 Service and Storage Material Sales 8,452 8,489 8,171 8,408 9,456 10,020 10,324 10,471 11,874 12,713 ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- otal Revenues 21,315 21,709 22,026 22,568 24,338 25,886 26,570 27,642 31,028 32,922 Operating Expenses: Cost of Sales (Excluding Depreciation) 11,429 11,325 11,509 11,617 12,224 12,888 12,888 14,277 15,668 16,715 Selling, General and Administrative 5,146 5,113 5,329 5,265 5,849 6,848(2) 6,358 6,980(4) 7,807 8,260(5) Depreciation and Amortization 1,845 1,936 2,526(1) 2,383 2,752 2,676 3,775(3) 3,138 3,608 3,922 ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- Total Operating Expenses 18,420 18,374 19,364 19,265 20,825 22,412 23,021 24,395 27,083 28,897 ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- perating Income $ 2,895 $ 3,335 $ 2,662 $ 3,303 $ 3,513 $ 3,474 $ 3,549 $ 3,247 $ 3,945 $ 4,025 ======= ======= ======= ======= ======= ======= ======= ======= ======= ======= BITDA $ 4,740 $ 5,271 $ 5,188 $ 5,686 $ 6,265 $ 6,150(2) $ 7,324 $ 6,385(4) $ 7,553 $7,947(5)
- ------------- (1) Includes a $277 write-down relating to the closing of two facilities. (2) Includes a $600 reserve for litigation. (3) Includes a $900 write-down of the goodwill of a subsidiary as described in "Results of Operations." (4) Includes a charge of $500 relating to the relocation of the Company's corporate accounting function. (5) Includes a charge of $321 relating to the relocation of the Company's corporate accounting function. Liquidity and Capital Resources In February 1996, the Company raised $33.3 million, net of underwriters' discounts and commissions and associated costs, in the Initial Public Offering. The net proceeds from the Initial Public Offering were used to retire the Warrant, to fund acquisitions, to repay debt that had been incurred to make acquisitions and for working capital. As the Company has sought to increase its EBITDA, it has made significant capital investments, consisting primarily of acquisitions; growth-related capital expenditures, including racking systems, information systems and improvements to existing facilities; and customer acquisition costs. Cash paid for these investments during the first six months of 1996 amounted to $19.2 million, $11.2 million and $0.7 million, respectively. These investments have been primarily funded through a portion of the net proceeds of the Initial Public Offering, cash flows from operations and borrowings under the Credit Agreement. Stockholders' equity has been negatively affected primarily by the accretion of the Warrant, interest expense, depreciation and amortization expenses associated with expansion of the Company's storage capacity and the acquisition of certain large volume accounts, and amortization of goodwill. In part as a result of the Initial Public Offering, the Company's ratio of total debt to stockholders' equity decreased from 3.1-to-1 at December 31, 1992 to 2.2-to-1 at June 30, 1996. On a pro forma basis (after giving effect to the Transactions), the ratio of total debt to stockholders' equity at June 30, 1996 would have been 3.3-to-1. The Company currently intends to apply a portion of the net proceeds from the Offering to the prepayment of the Credit Agreement, the Chrysler Notes and the FDS Notes. The Company will record, in the quarter in which 38 the Offering is consummated, an extraordinary loss on retirement of debt, net of related tax benefit. Assuming the Transactions were to be consummated on September 30, 1996, the amount of such loss would be approximately $2.0 million. Such loss will consist of the write-down of deferred financing costs, original issue discount, prepayment penalty and loss on possible termination of certain interest rate protection agreements. Capital Investments For 1994, 1995 and the six months ended June 30, 1996, the Company's growth-related capital expenditures were $15.8 million, $14.4 million and $10.7 million, respectively. Included in capital expenditures for 1994 is $2.9 million for the construction of a records management facility which was sold in a sale and leaseback transaction. Growth-related capital expenditures consist primarily of investment in racking systems, new building and leasehold improvements, equipment for new facilities, management information systems and facilities restructuring. For 1994, 1995 and the six months ended June 30, 1996, the Company's maintenance capital expenditures were $1.2 million, $0.9 million and $0.5 million, respectively. In addition, the Company incurs costs (net of revenues received for the initial transfer of records) related to the acquisition of large volume accounts (typically over 10,000 Cartons). For 1994, 1995 and the six months ended June 30, 1996, the Company's additions to customer acquisition costs were $1.4 million, $1.4 million and $0.7 million, respectively. The Company currently expects that its capital expenditures (other than capital expenditures related to future acquisitions, which cannot be presently estimated) for the second half of 1996 will be between $9 million and $10 million, and for 1997 will be between $18 million and $21 million. The Company expects to fund these expenditures and costs from cash flows from operations and by borrowings under the New Credit Facility. Recent and Pending Acquisitions The Company's liquidity and capital resources have been significantly impacted by acquisitions and, given the Company's acquisition strategy, may be significantly impacted for the foreseeable future. In order to capitalize on industry consolidation, the Company in mid-1994 adopted a more active acquisition strategy. Since mid-1994, the Company has acquired or entered into agreements to acquire 19 records management businesses, 17 of which have been completed and two of which are pending, for a total purchase price of $103.2 million (not including contingent payments of up to $4.6 million based upon the achievement of certain revenue targets during 1996 through 1998). The Company has historically financed its acquisitions with borrowings under the Credit Agreement in conjunction with cash flows provided by operations and, more recently, from a portion of the proceeds of the Initial Public Offering. Net borrowings for acquisitions during 1994, 1995 and the first six months of 1996 totaled $2.1 million, $32.3 million and $19.0 million, respectively. In addition, subsequent to June 30, 1996, the Company has incurred an additional $24.5 million under the Credit Agreement to fund the Completed Acquisitions consummated after such date. The Company intends to use a portion of the net proceeds from the Offering, together with borrowings under the New Credit Facility, to fund the Pending Acquisitions. The Company's future interest expense may increase significantly as a result of the additional indebtedness the Company may incur to finance possible future acquisitions. To the extent that future acquisitions are financed by additional borrowings under the New Credit Facility or other credit facilities, the resulting increase in debt and interest expense could have a negative effect on such measures of liquidity as debt to equity, EBITDA to debt and EBITDA to interest expense. Sources of Funds During the six months ended June 30, 1996, the Company generated $8.1 million in cash flows from operations as compared to $8.2 million for the same period of the prior year. Such change in cash flows from operations resulted from a $3.1 million increase in EBITDA and an increase in accounts payable, which were partially offset by an increase in accounts receivable and other changes in working capital accounts. During the years ended December 31, 1994 and 1995, the Company generated cash flows from operations of $11.6 million and $15.7 million, respectively. At December 31, 1995, the Company had estimated net operating loss carryforwards of approximately $7.3 million for federal income tax purposes. As a result of such loss carryforwards, cash paid for income taxes has historically been substantially lower than the provision for income taxes. 39 Net cash flows provided by financing activities were $6.7 million and $34.1 million in 1994 and 1995, respectively, substantially all of which was provided under the Credit Agreement, and $23.7 million for the six months ended June 30, 1996, substantially all of which was provided by the net proceeds of the Initial Public Offering and under the Credit Agreement. Credit Arrangements of the Company The Credit Agreement provides for total borrowings not to exceed $130 million and consists of the following facilities: (i) a $15 million revolving working capital facility; (ii) a $10 million term loan; (iii) a $55 million revolving acquisition credit facility; and (iv) a $50 million term loan. At June 30, 1996, all borrowings under the Credit Agreement bore interest at a weighted average annual rate of 8.5%. The obligations under the Credit Agreement are secured by substantially all of the Company's assets, including the stock of its operating subsidiaries. The Company also has the Chrysler Notes outstanding. These facilities require the Company to meet certain financial covenants and ratios. See Note 3 of Notes to the Company's Audited Consolidated Financial Statements. The Company intends to apply a portion of the net proceeds from the Offering to prepay in its entirety all indebtedness outstanding under the Credit Agreement and the Chrysler Notes. See "The Transactions" and "Use of Proceeds." In addition, the Company intends to terminate the Credit Agreement and to enter into the New Credit Facility as a replacement bank credit facility. The New Credit Facility is expected to provide the Company with revolving credit availability of $100 million for acquisitions, working capital and other corporate purposes. See "Description of the New Credit Facility" for a more detailed description of the currently expected terms of the New Credit Facility. No assurance can be given that the Company will enter into the New Credit Facility on these or any other terms. The Offering is not conditioned on the closing of the New Credit Facility. The annual maturities of Iron Mountain's indebtedness for the second half of 1996 and for 1997, 1998, 1999 and 2000 are $1.6 million, $3.4 million, $8.3 million, $8.4 million and $32.5 million, respectively. Giving pro forma effect to the Transactions, the annual maturities of Iron Mountain's indebtedness for the second half of 1996 and for 1997, 1998, 1999 and 2000 would be $0.1 million, $0.4 million, $0.4 million, $0.4 million and $7.8 million, respectively. As of June 30, 1996, the Company had available under the Credit Agreement $6.2 million under the working capital facility and $24.7 million under the acquisition credit facility. Subsequent to June 30, 1996, the Company borrowed $24.5 million under the acquisition credit facility to finance acquisitions, and amended the Credit Agreement to increase the acquisition credit facility by $5.0 million. As of June 30, 1996, on a pro forma basis, after giving effect to the Transactions (see "The Transactions" and "Use of Proceeds"), the Company would have had $174.5 million in total indebtedness and an aggregate of approximately $86.3 million available under the New Credit Facility. Under the Credit Agreement, Iron Mountain is required to use, and may in the future use, interest rate protection products to reduce its exposure to increases in interest rates. Under the New Credit Facility, Iron Mountain will also be required to use such interest rate protection products. As of June 30, 1996, the Company had $118.9 million of total debt, of which $26.0 million had fixed interest rates and $92.9 million had variable interest rates, $30.0 million of which was covered by interest rate protection products, certain of which may be terminated in connection with the repayment of the Credit Agreement. See Note 3 of Notes to the Company's Audited Consolidated Financial Statements. Future Capital Needs Iron Mountain's ability to generate cash adequate to fund its needs depends generally on the results of its operations and the availability of financing. Management believes that cash flow from operations in conjunction with borrowings from existing and possible future credit facilities will be sufficient for the foreseeable future to meet debt service requirements and to make possible future acquisitions and capital expenditures. Depending on the pace of the Company's acquisitions, the Company may elect to seek additional financing during the next two years. The Company anticipates that any such financing will be debt financing, including the issuance of debt securities. However, depending on market conditions and the preferences of acquisition candidates, the Company would consider issuing equity securities. However, there can be no assurance in this regard or that the terms available for any future financing, if required, would be favorable to Iron Mountain. 40 Seasonality Historically, the Company's business has not been subject to seasonality in any material respect. Inflation Certain of the Company's expenses, such as wages and benefits, occupancy costs and equipment repair and replacement, are subject to normal inflationary pressures. Although the Company to date has been able to offset inflationary cost increases through increased operating efficiencies, there can be no assurance that the Company will be able to offset any future inflationary cost increases through similar efficiencies or increased storage or service charges. 41 BUSINESS Introduction Iron Mountain is the largest records management company in the United States, as measured by revenues. The Company is a full-service provider of records management and related services, enabling customers to outsource data and records management functions. Pro forma for the Transactions, as of June 30, 1996, the Company managed approximately 29.6 million Cartons in 103 records centers in 33 markets nationwide. The Company has a diversified base of over 19,000 customer accounts, which includes more than half of the Fortune 500 and numerous legal, banking, healthcare, accounting, insurance, entertainment and government organizations. The Company provides storage and related services for all major media, including paper (which is the dominant form of records retention and which has accounted for approximately 85% of the Company's revenues since 1992), computer disks and tapes, microfilm and microfiche, master audio and video tapes, film and optical disks, X-rays and blueprints. The Company's principal services include filing, retrieval and destruction of records, courier pick-up and delivery, database management and customized reporting. The Company also sells storage materials and provides consulting and other records-related services. The Records Management Industry Overview Based on publicly available information, organizations in the United States generate an estimated four trillion documents each year. Many of these documents must be retained and available for reference for many years. These records may be generally divided into two categories: active and inactive. Active records relate to ongoing and recently completed activities or contain information that is frequently referenced. Active records are usually stored and managed on-site by the organization which originated them to ensure ready availability. Inactive records are the principal focus of the records management industry. Inactive records consist of those records which are not needed for immediate access but which must be retained for legal reasons or regulatory compliance or for occasional reference in support of ongoing business operations. Based on industry studies, the Company believes that inactive records make up approximately 80% of all records. [Pyramid chart showing relative size of estimated active and inactive records market segments] Growth of Market; Outsourcing The Company believes that the volume of inactive records is increasing for a number of reasons, including: (i) the rapid growth of inexpensive document-producing technologies such as facsimile, desktop printing and computer networking; (ii) increased regulatory requirements; (iii) concerns over possible future litigation and the resulting increases in volume and holding periods of documentation; (iv) the high cost of reviewing records and deciding whether to retain or destroy them; and (v) the failure of many entities to adopt or follow policies on records destruction. Despite the growth of new "paperless" technologies, such as the Internet and e-mail, management believes that stored information remains predominantly paper-based and that such technologies have promoted the creation of hard copies of such electronic information. The Company believes that the records management industry will gain a growing share of this increased volume as more large organizations make the strategic decision to outsource their records management as part of 42 a growing trend to outsource a wide variety of functions that can be performed more cost-effectively by third parties, though there can be no assurance in this regard. Records management companies can offer occupancy and labor cost reductions while at the same time providing greater levels of service than are typically available in-house. Highly Fragmented Industry Most records management companies serve a single local market, and are often either owner-operated or ancillary to another business, such as a moving company. According to the ACRC, as of January 1994 (the latest date for which such information is available), approximately 2,600 firms offered records storage and management services in the United States. The Company believes that there are only four national providers in the industry (including the Company) and that the rest are regional or, in most instances, single-city operators. Increasing Industry Consolidation The Company believes that there is a trend towards consolidation in the records management industry and that it will continue and accelerate because of the industry's capital requirements for growth, customer demands for more sophisticated technology solutions, a trend for certain large customers to contract with one vendor in multiple cities and opportunities to achieve economies of scale. The records management business requires significant up-front capital investment for real estate, racking systems and management information technology. Economies of scale available in these areas can reward larger initial capital investments by reducing per unit storage costs. However, such economies of scale are only realized once a facility begins storage operations and fills available capacity. Thus, larger companies with both access to capital and the ability to quickly fill a new facility enjoy a competitive cost advantage, thereby putting pressures on smaller competitors. Financial Characteristics of Iron Mountain's Business Iron Mountain's records management business has the following financial characteristics: (bullet)Recurring Revenues. Iron Mountain derives a majority of its revenues from fixed periodic (usually monthly) fees charged to customers for storage of records. Storage revenues have grown for 30 consecutive quarters and have represented approximately 60% of the Company's total revenues in each of the last five years. Once a customer places a record in storage with the Company and until that record is destroyed or permanently removed (for which the Company typically receives a service fee), the Company receives recurring payments of fixed periodic fees without incurring additional labor or marketing expenses or significant capital costs. The stable and growing storage base also provides the foundation for increases in revenues and EBITDA from service activities and sales of storage materials. (bullet)Historically Non-Cyclical Business. Iron Mountain has not experienced a reduction of its business as a result of past general economic downturns, although there can be no assurances that this would be the case in the future. Management believes that the outsourcing of records management may accelerate during economic downturns as companies focus on reducing costs through outsourcing non-core operating functions. In addition, management believes that companies that have outsourced records management are less likely during economic downturns to incur the move-out costs and other expenses associated with switching vendors or moving records management in-house. (bullet)Inherent Growth from Existing Customers. The Company's customers have on average generated additional Cartons at a faster rate than stored Cartons have been destroyed or permanently removed. From 1992 to 1995, net Cartons from existing customers grew at an average annual rate of 6.7%. The Company believes the consistent growth of its storage revenues is the result of a number of additional factors, including: (i) the trend toward increased records retention; (ii) customer satisfaction with the Company's services; and (iii) the costs and inconvenience of moving storage operations in-house or to another provider of records management services. (bullet)Diversified and Stable Customer Base. The Company has over 19,000 customer accounts in a variety of industries. The Company currently provides services to more than half of the Fortune 500 and numerous legal, banking, healthcare, accounting, insurance, entertainment and government organizations. Only one 43 of the Company's customers accounted for more than 3% of revenues in 1993, 1994 or 1995. From 1992 to 1995, average annual permanent removals of Cartons represented only approximately 4% of total Cartons stored. (bullet)Capital Expenditures Related Primarily to Growth. The Company's business requires limited annual maintenance capital expenditures. Maintenance capital expenditures were $1.8 million, $1.2 million and $0.9 million in 1993, 1994 and 1995, respectively. From 1992 to 1995, over 90% of the Company's aggregate capital expenditures were growth-related investments, primarily in racking systems, new buildings and leasehold improvements, equipment for new facilities, management information systems and facilities restructuring. These growth-related capital expenditures are primarily discretionary and create additional capacity for increases in revenues and EBITDA. Growth Strategy Iron Mountain's growth strategy is to expand aggressively in existing and new markets through increased business from existing customers, additions of new customers and acquisitions. The Company's goal is to be one of the largest records management companies in each of its markets. In addition, through its growth strategy, the Company seeks to attain increasing economies of scale in order to provide high-quality service at competitive prices. The following table sets forth the Company's approximate growth in Cartons stored by existing customers, new customers and as a result of acquisitions for the three years ended December 31, 1993, 1994 and 1995 and the twelve months ended June 30, 1996. The figures for the twelve months ended June 30, 1996 are not necessarily indicative of the results that will be achieved for the twelve months ended December 31, 1996. Cartons Added to Storage(1) (In millions)
Year Ended December 31, Twelve Months ------------------------------- Ended June 30, 1993 1994 1995 1996 -------- -------- -------- -------------- Cartons at Beginning of Period 12.6 15.5 17.7 20.3 Additions from Existing Customers Gross Cartons Added (2) 1.9 2.6 2.5 3.1 Cartons Deleted: Destructions (0.6) (0.9) (1.0) (1.1) Permanent Removals (0.6) (0.6) (0.6) (0.8) ----- ----- ----- ----- Net Carton Growth from Existing Customers 0.7 1.1 0.9 1.2 Additions from New Customers (2) 2.2 1.0 1.4 1.8 Additions from Acquisitions 0.0 0.1 3.3 3.1 ----- ----- ----- ----- Total Carton Additions 2.9 2.2 5.6 6.1 ===== ===== ===== ===== Percentage Increase 23% 14% 32% 30%
- ------------- (1) Excludes storage volumes attributable to the Company's vital records services and data protection services. (2) Gross Cartons added by the RTC or its successor the FDIC were approximately 0.9 million, 0.3 million, 0.3 million and 0.3 million for 1993, 1994, 1995 and the twelve months ended June 30, 1996, respectively. RTC additions in 1993 are included in Additions from New Customers because the initial transfer of Cartons from the RTC commenced in the fourth quarter of 1992 and continued into 1993. Additions in 1994, 1995 and the twelve months ended June 30, 1996 are included in Additions from Existing Customers. Growth from Existing Customers Existing Iron Mountain customers have contributed to storage and services revenue growth because they have on average generated additional Cartons at a faster rate than old Cartons are destroyed or permanently removed. In order to maximize growth opportunities from existing customers, the Company seeks to maintain high levels of customer retention by providing premium customer service through its decentralized customer support staff. 44 The local customer support staff, working in conjunction with the corporate staff, is also responsible for marketing additional services to existing customers, including records tracking, indexing, customized reporting, vital records management and records management consulting services. Additions of New Customers The Company's direct sales force is dedicated solely to establishing new account relationships and draws on the Company's national marketing organization and senior management. New customer sales efforts have resulted in the addition of more than 900 new customer accounts in each of the last three years. Iron Mountain segments its market into large volume accounts (typically over 10,000 Cartons) and standard accounts. As of June 30, 1996, large volume accounts represented more than half of the total Cartons stored. The two segments differ in complexity of service and technology needs, purchasing behavior and purchasing leverage. The Company employs different database marketing techniques, program design features and pricing structures to meet the needs of each segment. In recent years the Company's large volume account segment has grown rapidly, driven by strategic outsourcing initiatives and the Company's marketing efforts. In 1993, 1994, 1995 and the six months ended June 30, 1996, large volume accounts represented 88%, 70%, 76% and 63% respectively, of the additions of Cartons from new customers. Growth through Acquisitions Iron Mountain has had a successful record of acquiring and integrating smaller records management companies. From 1990 through 1994, Iron Mountain completed five acquisitions. In order to capitalize on industry consolidation, the Company in mid-1994 adopted a more active acquisition strategy and implemented changes in its management, systems and financial infrastructure, including the consummation of the Initial Public Offering, to execute such strategy. Since June 1994, the Company has acquired or entered into agreements to acquire 19 companies, 17 of which have been completed and two of which are pending. The Company operates in 32 markets nationwide and intends to continue to make fold-in acquisitions in existing markets and to make strategic acquisitions in new geographic markets, with an emphasis on the 50 largest markets in the United States. The Company's corporate development staff is engaged in an ongoing review of acquisition candidates. As of the date hereof, the Company is in contact with approximately 40 companies, and expects that it will continue to meet several new candidates each month, although the actual number may vary from month to month and there can be no assurance that any such review will result in an acquisition. Management believes that Iron Mountain is well positioned to participate in the further consolidation of the records management industry. See "Risk Factors--Risks Associated with Acquisition Strategy" and "Recent and Pending Acquisitions." The Company seeks to expand its national presence, size and customer base through new-market acquisitions. Management believes that the high start-up costs of commencing operations make acquisitions an attractive means of entering new markets. The Company seeks to acquire records management companies in markets where management believes there is the potential for growth. Within such markets, the Company uses a variety of criteria to evaluate acquisition candidates, including the capacity and condition of existing storage facilities, past and current operating performance and revenues and the experience and depth of existing management. The Company is also considering investments in records management businesses outside of the United States. See "Potential International Investments." The Company believes that it can use its expertise and central administrative organization to leverage the acquisition candidate's local market presence, promoting the development of underperforming facilities and enhancing the value of the local assets. The Company believes that its new-market acquisition strategy could have a number of benefits, including: (i) continued growth in revenues and EBITDA and diversification across a greater number of markets; (ii) introduction of the Company's efficient storage, labor, transportation and other operating efficiencies into new markets; (iii) the increased utilization of efficiencies available through the Company's central administrative and management information functions; (iv) increased market awareness of Iron Mountain's national scope and presence; and (v) increased overall scale, which should broaden the range of and facilitate the Company's capital-raising activities. See "Risk Factors--Risks Associated with Acquisition Strategy." The Company also intends to continue to make fold-in acquisitions to augment its operations in existing markets. The Company's goal in its existing markets is to exploit economies of scale while maintaining high quality 45 service. Following a new-market acquisition, the Company seeks to increase its business with the acquired customer base and to supplement that growth with new customers and, potentially, with appropriate fold-in acquisitions so that the Company may benefit from economies of scale. Premium Service Strategy Organizations selecting a provider of records management services consider a number of factors in addition to price. Management believes that Iron Mountain is a "premium" brand in the marketplace based upon its reputation for reliability, customer-oriented organization, investment in technology and national operating presence. The Company seeks to exploit its strengths in each of these areas to maintain customer relationships and to attract new customers. Reputation for Reliability. The Company believes it has a reputation for reliability based on its more than 40 years of operations, the continuity and depth of its management, its successful historical growth, the quality and diversity of its customer base which includes more than half the Fortune 500, its technological capabilities and its size and financial resources. Customer-Oriented Organization and Locally Responsive Management. Iron Mountain has developed a decentralized, local management structure that brings significant management experience and stability to local markets and allows the Company to respond directly, effectively and flexibly to customers. Broad operating authority is delegated to regional Vice Presidents and to local managers. In pursuing its acquisition strategy, Iron Mountain seeks to capitalize upon the experience and strengths of existing management. In addition, all full-time union and non-union employees participate in incentive-based compensation programs that provide payments based on profits or attainment of specified objectives for the unit in which they work. Iron Mountain believes that the experience, stability and commitment of its regional and local management is integral to its ability to provide superior customer service and maximize growth potential. Investment in Technology. The Company has invested $12.5 million in technology since 1992 in order to provide faster and more flexible solutions for its customers and to enhance the quality and lower the costs of its own operations. The Company believes that its technological capabilities, especially its Safekeeper system, are a significant tool in attracting new customers. The Company plans to continue to invest in its proprietary technologies in the future. See "Technology and Development; Management Information Systems." National Operating Presence. The Company believes it is one of only four records management companies with a national operating presence. Traditionally, the purchase decision for large multi-site customers has been made at the local level. Recently, however, the Company has found that certain large organizations have sought to obtain operating and economic efficiencies by outsourcing a significant portion of their records management functions with a single records management company. The Company seeks to use its national operating presence to compete for such large multi-site customer accounts. Low-Cost Operating Strategy Iron Mountain pursues a low-cost operating strategy based primarily on achieving economies of scale in the areas of storage, labor and transportation, general and administrative functions and management information systems. The Company believes that it is one of the few records management companies with the size and resources to realize significant economies of scale in these areas. Storage Costs Because occupancy costs are a major component of the Company's cost of sales, reducing per Carton storage costs is a primary strategic goal of the Company and its real estate management staff. The Company seeks to minimize per Carton storage costs by: (i) designing racking systems and operating space to maximize facility storage efficiency; (ii) negotiating favorable facility leases and having facilities built to its custom specifications; and (iii) leasing larger facilities, which, when filled, are less expensive per Carton to operate. Since 1991, the Company has acquired or leased 11 custom-designed records management facilities. The average Carton density (the ratio of standard Carton storage capacity to total square feet of floor space) of these facilities is approximately twice 46 that of the Company's overall average Carton density. As a result of these practices and after giving effect to the consummation of the Acquisitions, average Carton density in the Company's facilities increased 32% from December 31, 1992 to June 30, 1996. Labor and Transportation Efficiency The Company has made significant investments in computer technologies for its service operations, resulting in greater efficiencies. In addition, by increasing its operations and customer base in a local market area, the Company seeks to maximize its courier delivery fleet usage and to increase delivery and routing efficiencies. The Company's incentive structure has also contributed to labor efficiency. Each of the Company's full-time employees participates in incentive compensation programs based upon achievement of specific operating targets designed to integrate the objectives and performance of records management facility employees and managers. For the six months ended June 30, 1996, the Company's employees earned incentive compensation in an amount equal to approximately 10.8% of the base wages paid by the Company. In part as a result of the foregoing factors, while the number of Cartons stored at the Company's facilities between January 1, 1992 and June 30, 1996 increased by approximately 15.6 million (or approximately 144%), the Company's staff increased during the same period by approximately 520 employees (or approximately 65%). G&A and MIS Efficiencies The Company's corporate staff provides support to local management in the areas of acquisitions, marketing, facility acquisition and leasing, racking system purchasing, finance and accounting and human resource management. In addition, the Company's corporate staff is responsible for the design and support of all records management technology. The Company believes that central support in these areas provides local managers with competitive advantages over smaller, local competitors and results in significant economies of scale. Technology and Development; Management Information Systems The Company pioneered the application of advanced information technology to the records management industry. Iron Mountain's proprietary Safekeeper system provides advanced inventory control and information access, enabling the Company to provide faster, higher quality and more flexible solutions to its customers and to lower the costs of its operations. Iron Mountain's Safekeeper system exploits bar-code technology to provide inventory integrity and a comprehensive, standardized approach to tracking, accessing and retrieving records. Safekeeper offers state-of-the-art records management capabilities and ease of access to customers while featuring security functions to protect customer information from unauthorized access. The system coordinates inventory control, order entry, billing, material sales, service activity, accounts receivable and management reporting, and features system-driven quality assurance and error-prevention. Since 1992, the Company has invested $12.5 million to develop and refine its management information systems, including Safekeeper. Safekeeper is built on an open systems architecture which is fully portable and can be implemented in small processing environments with several users and in large processing environments with hundreds of users. This allows the Company a substantial measure of flexibility and vendor independence, and reduces the risk of technological obsolescence. Safekeeper has improved the Company's customer support and operating efficiency in the following ways: (bullet)Acquisition System Integration. Safekeeper has been designed to easily and effectively integrate newly acquired records management companies and offer improved levels of customer service and records management capabilities to customers acquired through acquisitions. The critical components of integrating acquisition systems are the abilities to match the acquired company's carton identifiers, location identifiers, records descriptive data, and billing data. Safekeeper is designed with flexible, comprehensive capabilities in each of these areas. Consequently, an acquired company's inventory can be converted to Safekeeper without having to relabel cartons or reset and relabel inventory locations. The customers of the acquired company retain their records data and receive similar billing rate structures. In addition, acquisition customers experience minimal disruption during integration and, after conversion, gain access to advanced records management and information access capabilities. Safekeeper utilizes a suite of 47 conversion routines to automate the conversion process and effectively translate customer and inventory information. (bullet)Storage Efficiency. Safekeeper enables the Company to maximize the efficient use of storage space at its facilities. When cartons are added or returned to storage, Safekeeper identifies available space and the location of the customer's other records at the facility. Because there is a continual flow of cartons into and out of the Company's facilities, Safekeeper also permits facility operators to utilize space that becomes available as soon as cartons are removed. Safekeeper can pinpoint the location of any carton, enabling facility operators to quickly determine the optimal location for new or returning cartons. (bullet)Inventory Integrity. Bar-coding and scanning are used to track a carton or a record throughout its life cycle at Iron Mountain. Safekeeper identifies inventory discrepancies during the order processing cycle and forces their resolution before they affect the customer. This forced discrepancy resolution means that errors must be resolved before an order can be closed; until the order is closed, billing cannot be processed. Management believes that this system-driven quality assurance is a significant advantage over the "best efforts" approach used by most of its competitors. (bullet)Customer Information Access. Customers can access their records management data through a variety of formats, including direct access via Safekeeper Online, access on their own PCs via Safekeeper Desktop, integration of their internal system with Safekeeper via automated file transfers and paper reports. Safekeeper Online enables a customer to place orders directly via online access, resulting in efficiencies for Iron Mountain order processing. It features robust querying and searching tools to enable customers to identify records with only partial information. Safekeeper Desktop is a PC application, run from customers' desktop or network PCs; it provides customers with an entire set of records management data along with user-friendly tools for querying, reporting, and editing. Safekeeper's suite of file transfers enable customers to automatically transfer records data and service requests from their internal system to Safekeeper. The paper reports include inventory detail and summary, service activity analysis, quality assurance, and management review. (bullet)Records Management Flexibility. Safekeeper offers full life-cycle records management, from file creation to destruction, enabling each customer to establish schedules for records retention and destruction as dictated by the customer's specific needs. Safekeeper can flexibly accommodate large or small amounts of records management data in accordance with customer requirements. A series of customer-specific features and options allows Iron Mountain to tailor the records management functionality and reporting to the customer's needs. (bullet)Security. Safekeeper incorporates strict security protocols and procedures for all customers to prevent unauthorized access to a client's records information. Advanced security features that can automatically restrict access by departmental identification and/or type of service request are available to customers that are internally set up to provide this information. In addition to Safekeeper, the Company's data protection services facilities utilize the Company's Media Link(tm) software, a state-of-the-art media management system which provides integrated bar-code tracking and electronic data interface between customer and Iron Mountain facilities, as well as audit trail and remote inventory query functionality. The Company plans to continue to invest in its proprietary technologies in the future in order to enhance its customer service as well as to increase its own operating efficiency. Description of Iron Mountain Records Management Services Iron Mountain's records management services consist primarily of the storage operations for the management of hard copy documents. These and related services and products sold have, since 1992, accounted for approximately 85% of the Company's revenues. The balance of the Company's revenues come from the storage and service of vital records and data protection, consulting and other services. 48 Storage Operations Storage revenues accounted for approximately 60% of revenues in each of the Company's last five fiscal years. Storage charges are generally billed monthly on a per storage unit basis (usually either per unit or per cubic foot of records) and include the provision of space, racking, computerized inventory and activity tracking, physical security, environmental and climate control and fire protection. The storage of a carton begins by issuing Safekeeper bar-coded labels to the customer. The customer packs records in cartons and affixes the bar-coded label to each carton. Customer personnel and the Iron Mountain driver conduct a physical count of the cartons and the driver signs for the cartons, which are then transported to the records management facility. Upon delivery to the facility, the cartons are subjected to a second physical count. The cartons are delivered to available space identified by Safekeeper and the bar-coded information is scanned into the computer together with a bar-coded location identifier. At the same time, a computer operator enters the customer's data describing the stored material into the computer and the system confirms that the cartons sent match the data entered in the computer. Under the Company's computer control system, the order can only be closed out when all requisite steps and checks have been completed and counts and locations have been reconciled. Service and Courier Operations Principal services include adding cartons to storage, temporary removal of files or cartons from storage, refiling of removed records, permanent withdrawals from storage and destruction of records. Service charges are generally assessed for each procedure on a per unit basis. The Safekeeper system controls the service processes from order entry through transportation and invoicing. Courier operations consist primarily of the pickup and delivery of records upon customer request. Courier delivery schedules can be tailored to fit customers' needs, but generally customer orders received by 4:00 p.m. on a business day are delivered the following business day. The Company also provides same-day and immediate delivery during business hours and emergency delivery at night and on weekends and holidays. Charges for courier services are based on urgency of delivery, volume and location and are billed monthly as incurred. The Company currently utilizes a fleet of approximately 250 owned or leased delivery vehicles. Vital Records Services Vital records contain critical or irreplaceable data such as master audio and video recordings, film, software source code and other highly proprietary information. Vital records may require special facilities or services, either because of the data they contain or the media on which they are recorded. The Company's charges for providing enhanced security and special climate-controlled environments for vital records are higher than for typical storage functions. The Company provides the same ancillary services for vital records as it provides for its other storage operations. Data Protection Services Data protection services consist of the storage, backup and archiving of computer media as part of corporate disaster and business recovery plans. Computer tapes, cartridges and disk packs are transported off-site by the Company's courier operations on a scheduled basis to secure, climate-controlled facilities, where they are available to customers 24 hours a day, 365 days a year, to facilitate data recovery in the event of a disaster. This process is managed by Iron Mountain's Media Link software, a state-of-the-art media management system which provides integrated bar-code tracking, electronic data interface between customer and Iron Mountain's facilities as well as audit trail and remote inventory query functionality. Iron Mountain also manages tape library relocation and supports disaster recovery testing and execution. Additional Services and Products Iron Mountain offers a variety of additional services, which customers may request or contract for on an individual basis. These services include performing records inventories, packing records into cartons or other containers, computerized indexing of files and individual documents, developing schedules for the retention and destruction of records and records management consulting services. The Company also sells a full line of specially designed corrugated cardboard, metal and plastic storage containers. 49 The Company's subsidiary, Iron Mountain Information Partners, Inc., provides professional consulting services to large customers, enabling them to develop and implement comprehensive records management programs. The Company's consulting business draws on the Company's 45 years of experience to analyze the practices of such companies and assist them in creating more effective programs of records management. The Company's consultants work with such customers to develop policies for document review, analysis and evaluation and for scheduling of document retention and destruction. In addition to its historical focus on the management of inactive records, the Company has recently begun to provide services for the management of active records. The Company can provide these services, which generally include document and file processing and storage, both off-site at its own facilities and by supplying its own personnel to perform management functions on-site at the customer's premises. The Company sees active records management as a potential source of future revenue growth for the Company, although there can be no assurance in this regard. Potential International Investments Iron Mountain is considering capitalizing upon its expertise in the records management industry by making investments in records management businesses outside the United States. From time to time, the Company has had discussions concerning such investments. Such investments, if consummated, would be subject to risks and uncertainties relating to the indigenous political, social, regulatory, tax and economic structures of countries in those areas, as well as fluctuations in currency valuation, exchange controls, expropriation and governmental policies limiting returns to foreign investors. At this time, there can be no assurance as to whether any such investment will be made or, if made, will be successful in achieving its objectives. Customers The Company's customer base is diversified in terms of revenue and industry concentration. The Company has over 19,000 customer accounts. Iron Mountain considers each invoice it delivers to its customers a separate customer account and, accordingly, an organization which receives more than one invoice represents multiple customer accounts. The chart below shows, as of June 1994, the relative amounts of revenue attributable to certain business sectors. [Pie chart showing relative amounts of revenue attributable to certain business sectors] [TABULAR REPRESENTATION OF PIE CHART] Other Financial Institutions 10% Health Care 10% Professional Services 7% Government 6% Manufacturing 4% Retail 4% Entertainment 2% Other 19% Legal Services 16% Depository Institutions 14% Insurance Companies 5% The Company services accounts of all sizes, from small businesses and professional groups to over half of the Fortune 500. Other than the RTC or its successor, the FDIC, which accounted for 7.4%, 6.3%, 4.8% and 3.6% of Iron Mountain's revenues for the years ended December 31, 1993, 1994 and 1995 and the six months ended June 30, 1996, respectively, no account or related set of accounts generated more than 3% of Iron Mountain's revenues during any such period. The Company's contract with the FDIC, as successor under the contract to the RTC, was renewed effective July 27, 1996 for a one-year term, with three further annual renewal options at the election of the FDIC. Although the substantial costs of removing its records from the Company's facilities may act as a disincentive to the FDIC 50 to select another vendor, there can be no assurance that the contract will be further renewed or that the terms of such renewal will be as favorable to Iron Mountain as the terms of the current contract. See "Management's Discussion and Analysis of Financial Condition and Results of Operations--Overview." Marketing and Sales The Company uses database marketing and a dedicated sales force to focus exclusively on new business development. A corporate marketing organization provides sales support, training, marketing communications and product management as support functions. The program has successfully produced over 900 new customer accounts per year since 1991. The selling effort is bolstered by regional and senior managers focused on key account selling. Properties As of June 30, 1996, Iron Mountain conducted operations through 77 leased and 12 owned facilities containing a total of approximately 6.3 million square feet of space. The leased facilities typically have initial lease terms of 10 years with options to renew for an additional 10 years. The weighted average remaining term of the leases on these facilities is approximately 7.0 years. In addition, many of the leases contain either a purchase option or a right of first refusal upon the sale of the property. The leases include one property leased from affiliates of the Company. See "Management--Executive Compensation--Compensation Committee Interlocks and Insider Participation" and Note 8 of Notes to the Company's Audited Consolidated Financial Statements. As of June 30, 1996, the Company owned or leased (directly or through its subsidiaries) the following records management facilities in the geographic locations indicated below.
Records Management State Facilities - ----- ------------- Arizona 2 California 24 Colorado 3 Connecticut 2 Delaware 1 Florida 4 Georgia 8 Illinois 3 Kansas 1 Kentucky 1 Massachusetts 7 Maryland 3 Missouri 2 New Hampshire 1 New Jersey 4 New York 4 Ohio 4 Pennsylvania 2 Rhode Island 1 Tennessee 1 Texas 8 Virginia 3 -- Total 89 ==
The Company or its principal subsidiary is a guarantor of a substantial portion of the leases to which other subsidiaries are party. Substantially all of the property and assets currently owned and leased by the Company or its subsidiaries are pledged as security for the lenders under the Credit Agreement. It is expected that, in connection with the New Credit Facility, such liens (other than the pledge of the stock of the Company's subsidiaries) will be released. See Notes 3 and 7 of Notes to the Company's Audited Consolidated Financial Statements for additional information regarding the Credit Agreement and the minimum annual rental commitments of the Company, respectively. 51 Employees A key feature of Iron Mountain's operating strategy is its decentralized management structure and reliance on local management operating in local business environments. The Company's operations are divided into three areas comprising seven local management regions to maximize marketing and operating effectiveness and to minimize supervisory costs. The management regions, each of which is managed by a Vice President, are further divided into a total of 27 districts, each managed by a General Manager. The management regions are overseen by offices in Boston and Los Angeles, but regional Vice Presidents and General Managers have broad operating authority. The Company's headquarters staff performs a variety of central administrative and support functions in order to maximize the time and resources that local personnel can devote to customer service and client development. Iron Mountain had approximately 1,200 full-time employees as of June 30, 1996, of whom approximately 89% are employed at the district level, 8% at the corporate level and the balance at the area and regional levels. Approximately 11% of the Company's employees are represented by various Teamsters Union locals under five different agreements. Two of these agreements, representing 42 employees, have expired and are currently under negotiation. Based on its prior experience with the two union locals involved in these negotiations, the Company expects that it will enter into new agreements on satisfactory terms. The remaining three contracts expire in December 1996, March 1997 and March 1999. In addition, at two of Iron Mountain's facilities an election, subject to National Labor Relations Board regulations, was held on June 20, 1996. A majority of the approximately 40 employees voted for representation by a Teamsters Union local. The election results have not been certified as of the date hereof. All non-union employees are eligible to participate in the Company's benefit programs, which include medical, dental, life, short and long-term disability and accidental death and dismemberment plans. Unionized employees receive these types of benefits through their unions. In addition to base compensation and other usual benefits, all full-time union and non-union employees participate in some form of incentive-based compensation program that provides payments based on profits, collections, or attainment of specified objectives for the unit in which they work. Management believes that the Company has good relationships with its employees and unions. Competition Iron Mountain competes with three other national companies as well as a large number of local and regional concerns. The Company believes that competition for customers is based on price, reputation for reliability, quality of service and scope and scale of technology, and believes that it generally competes effectively based on these factors. Management believes that, except for Pierce Leahy Corp., all of these competitors have records management revenues significantly lower than those of the Company. To accommodate growth, a records management vendor must invest in incremental storage capacity, which requires added warehouses, racking systems, and related equipment including computer systems capable of tracking increasingly large inventories. The amount of such investment is significant relative to the immediate return that can be realized, and the faster a vendor grows, the more capital is required. As a result, the industry trend toward consolidation will, in management's opinion, continue and accelerate. In addition, the Company faces competition from the internal document handling capability of its current and potential customers. There can be no assurance that these organizations will outsource more of their document management needs or that they will not bring in-house some or all of the functions they currently outsource. The Company also faces competition for acquisition candidates. The substantial majority of the Company's revenues have been derived from the storage of paper documents and from related services. Such storage requires significant physical space. Alternative technologies for generating, capturing, managing, transmitting and storing information have been developed, many of which require significantly less space than paper. Such technologies include computer media, microforms, audio/video tape, film, CD-ROM and optical disk. None of these technologies has replaced paper as the principal means for storing information. However, there can be no assurance that one or more non-paper-based technologies (whether now existing or developed in the future) may not in the future significantly reduce or supplant the use of paper as a preferred medium, which could in turn adversely affect the Company's business. 52 Insurance Iron Mountain carries a comprehensive property insurance policy with insurers that it believes to be reputable and in amounts that it believes to be appropriate, covering replacement cost of real and personal property, including improvements. Subject to sub-limits, the policy also covers extraordinary expenses associated with business interruption and damage or loss from flood or earthquake, subject to certain deductibles. Separate policies for California earthquake insurance carry other deductibles that may be significant. Iron Mountain also maintains general liability and excess liability insurance covering bodily injury, property damage and personal injury. See "Risk Factors--Casualty." The Company's standard form of contract sets forth an agreed maximum value for each carton or other storage unit held by the Company as a limitation on liability for loss or damage, as permitted under the Uniform Commercial Code. In contracts containing such limits, such values are nominal, and the Company believes that in typical circumstances its liability would be so limited in the event of loss or damage relating to the value of information stored on media held by the Company. However, certain of the Company's agreements with certain large volume accounts contain no such limits or contain higher limits or supplemental insurance arrangements. Environmental Matters Under various environmental laws, an owner of real estate or a lessee conducting operations thereon may become liable for the costs of investigation, removal or remediation of soil and groundwater contaminated by certain hazardous substances or wastes or petroleum products. Certain such laws impose cleanup responsibility and liability without regard to whether the owner or operator of the real estate or operations thereon knew of or was responsible for the contamination, and whether or not operations at the property have been discontinued or title to the property has been transferred. In addition, the presence of such substances, or the failure to properly remediate such property may adversely affect the current property owner's or operator's ability to sell or rent such property or to borrow using such property as collateral. The owner or operator of contaminated real estate also may be subject to common law claims by third parties based on damages and costs resulting from off-site migration of the contamination. Certain environmental laws govern the removal, encapsulation or disturbance of ACMs. Such laws may impose liability for the release of ACMs and may enable third parties to seek recovery from owners or operators of real estate for personal injury associated with exposure to such substances. The Company is aware of the presence of ACMs at some of the Company's facilities, but believes that such materials are in acceptable condition at this time. The Company believes that future costs related to any remediation of ACMs at these facilities will not be material, either on an annual basis or in the aggregate, although there can be no assurance with respect thereto. In addition, certain of the properties formerly or currently owned or operated by the Company were previously used for industrial or other purposes that involved the use or storage of hazardous substances or petroleum products or the generation and disposal of hazardous wastes and, in some instances, included the operation of USTs. In connection with its former and current ownership or operation of certain properties, the Company may be potentially liable for environmental costs such as those discussed above, and as more specifically described below. At the Company's Hollywood, California facilities, certain USTs and contaminated soils have been removed. Some additional contamination of soils and groundwater remains and may be migrating. In 1990 and 1991, the Company filed certain reports documenting its efforts and site conditions with the appropriate environmental agencies pursuant to various environmental laws. Investigations conducted on behalf of the Company in connection with its on-site remedial activities disclosed that regional groundwater contamination, unrelated to the Company's property, exists. At this time, the Company has not received any notice from any regulatory agency or third party seeking further remediation of soil or groundwater by the Company; however, there can be no assurance that such further action will not be sought in the future. The Company has accrued estimated costs of $0.8 million that it believes it may reasonably be expected to incur in connection with this site if such additional remediation were to become necessary; however, there can be no assurance as to the adequacy of such accrual. The Company believes the ultimate outcome of the foregoing will not have a material adverse effect on the Company's financial condition or results of operations. See Note 7 of Notes to the Company's Audited Consolidated Financial Statements. The Company has also from time to time conducted certain environmental investigations and remedial activities at certain of its other former and current facilities, but an in-depth environmental review of the properties has not been conducted by or on behalf of the Company. The Company believes that it is in substantial compliance 53 with all applicable material environmental laws. The Company has not received any written notice from any governmental authority or third party asserting, and is not otherwise aware of, any material noncompliance, liability or claim relating to hazardous substances or wastes, petroleum products or material environmental laws applicable to Company operations in connection with any of its present or former properties other than as described above. However, no assurance can be given that there are no environmental conditions for which the Company might be liable in the future or that future regulatory action, as well as compliance with future environmental laws, will not require the Company to incur costs for or at its properties that could have a material adverse effect on the Company's financial condition and results of operations. Legal Proceedings The Company is involved in litigation from time to time in the ordinary course of business. In the opinion of management, no material legal proceedings are pending to which the Company, or any of its properties, is subject. 54 MANAGEMENT Directors, Executive Officers and Certain Other Officers The Directors, executive officers and certain other officers of the Company are as follows:
Names of Directors and Executive Officers Age Position - ------------------------------------------- --- -------- C. Richard Reese (1) 50 Chairman of the Board of Directors and Chief Executive Officer David S. Wendell 42 President and Chief Operating Officer, Director Eugene B. Doggett (1) 60 Executive Vice President and Chief Financial Officer, Director Robert P. Swift 54 Executive Vice President Kenneth F. Radtke, Jr. 51 Executive Vice President Constantin R. Boden (2) (3) 60 Director Arthur D. Little (2) (3) 52 Director Vincent J. Ryan (1) (3) 60 Director Names of Certain Other Officers Age Position - ------------------------------------------- --- -------- Jean A. Bua 38 Vice President and Corporate Controller James R. Jandl 42 Vice President of Human Resources John F. Kenny 39 Vice President of Corporate Development Joseph J. Larizza 54 Vice President and Chief Information Officer John P. Lawrence 45 Vice President and Treasurer Kenneth A. Rubin 34 Vice President of Marketing T. Anthony Ryan 55 Vice President of Real Estate
- ------------- (1) Member of the Executive Committee; Mr. Ryan is the Chairman of the Executive Committee. (2) Member of the Audit Committee; Mr. Boden is the Chairman of the Audit Committee. (3) Member of the Compensation Committee; Mr. Little is the Chairman of the Compensation Committee. The Board of Directors currently consists of six directors. There are three classes of directors who serve for three-year terms and are elected on a staggered basis, one class of two directors standing for election each year. The term of the Class B Directors, C. Richard Reese and Arthur D. Little, will expire at the 1997 Annual Meeting of Stockholders, the term of the Class C Directors, Eugene B. Doggett and Constantin R. Boden, will expire at the 1998 Annual Meeting of Stockholders and the term of the Class A Directors, David S. Wendell and Vincent J. Ryan, will expire at the 1999 Annual Meeting. Directors of each class will thereafter hold office until the third annual meeting of the stockholders of the Company following their election or until their successors are elected and qualified. The executive officers and other officers were elected by the Board of Directors on June 14, 1996. All executive officers and other officers hold office at the discretion of the Board until the first meeting of the Iron Mountain Board following the next annual meeting of stockholders and until their successors are chosen and qualified. Directors and Executive Officers C. Richard Reese is the Chairman of the Board of Directors of Iron Mountain, a position he has held since November 1995, and the Chief Executive Officer, a position he has held since December 1981. Prior to November 1995, Mr. Reese was the President of Iron Mountain, a position he had held since 1981. Mr. Reese is also a Director of Schooner. Prior to joining Iron Mountain, he lectured at Harvard Business School in "Entrepreneurship" and provided consulting services to small and medium-sized emerging enterprises. Mr. Reese has also served as president and a Director of the ACRC. He holds a Master of Business Administration degree from Harvard Business School. David S. Wendell is the President and Chief Operating Officer of Iron Mountain, a position he has held since November 1995. After practicing law with Brown & Wood, Mr. Wendell joined Iron Mountain in 1984, where he has served in a variety of positions. Prior to November 1995, he was Executive Vice President, Atlantic Area and 55 prior to 1991, he was Vice President, New England Region. He holds a Master of Business Administration degree from Harvard Business School and a Juris Doctor degree from the University of Virginia. Eugene B. Doggett is the Executive Vice President and Chief Financial Officer of Iron Mountain, a position he has held since 1987. Mr. Doggett is also a Director of Schooner. Prior to joining the Company, he had extensive experience in commercial and investment banking, as well as financial and general management experience at senior levels. He holds a Master of Business Administration degree from Harvard Business School. Robert P. Swift is an Executive Vice President of Iron Mountain, a position he has held since November 1995. Prior to November 1995, Mr. Swift was the Executive Vice President, Western Area of Iron Mountain and prior to 1988, Mr. Swift was employed in various positions at Bell & Howell Records Management Company. Kenneth F. Radtke, Jr. is an Executive Vice President of Iron Mountain, a position that he has held since June 1996. Prior to June 1996, Mr. Radtke was Northeast Regional Vice President and prior to 1995 was Sales Manager, New York Region. Mr. Radtke has worked in the records and information industry since 1988 as President and Chief Executive Officer, Dataport Company, Inc. and Senior Vice President, Arcus, Inc. He holds a graduate degree from the University of Wisconsin, Graduate School of Banking. Constantin R. Boden is a Director of Iron Mountain, a position he has held since December 1990. Mr. Boden is on the advisory board of Boston Capital Ventures, a risk capital concern. For 33 years, until January 1995, Mr. Boden was employed by Bank of Boston, most recently as Executive Vice President, International Banking. He holds a Master of Business Administration degree from Harvard Business School. Arthur D. Little is a Director of Iron Mountain, a position he has held since November 1995. Mr. Little is a principal of The Little Investment Company, which he founded in 1992. Prior to that, he was Managing Director of and also a partner in Narragansett Capital, Inc., a private investment firm. He holds a Bachelor of Arts degree in history from Stanford University. Vincent J. Ryan is a Director of Iron Mountain. Mr. Ryan is the founder of Schooner and has served as Chairman and Chief Executive Officer of Schooner since 1971. Prior to November 1995, Mr. Ryan served as Chairman of the Board of Directors of Iron Mountain. Mr. Ryan also serves as a Director and member of the Executive Committee of Continental Cablevision, Inc. He holds a Bachelors of Arts degree in English from Boston University. Certain Other Officers Jean A. Bua is Vice President and Corporate Controller. Ms. Bua joined Iron Mountain in such capacity in March 1996. From 1993 to 1996, Ms. Bua was the Corporate Controller for Duracraft Corp., a consumer products manufacturer. Prior to that, Ms. Bua was the accounting manager for a high-tech manufacturer and was a management consultant for Ernst & Young. She holds a Master of Business Administration degree from the University of Rhode Island. Ms. Bua is a certified public accountant. James R. Jandl is Vice President of Human Resources. Mr. Jandl joined Iron Mountain in 1989. For the preceding nine years he was involved in human resources management in the hospitality industry with focus on operational start-up and turn-around situations. He holds a masters degree in psychology from West Georgia College. John F. Kenny is Vice President of Corporate Development, with primary responsibility for implementing the Company's acquisition strategy. Mr. Kenny joined Iron Mountain in 1991. Prior to 1991, he was a Vice President of CS First Boston Merchant Bank, New York, with responsibility for risk capital, portfolio and transaction management. He holds a Master of Business Administration degree from Harvard Business School. Joseph J. Larizza is Vice President and Chief Information Officer, with responsibility for management information systems, including oversight of the development of Iron Mountain's Safekeeper system. Prior to joining Iron Mountain in 1996, Mr. Larizza was the chief information officer at Service America, a large food service corporation and, prior to that, chief information officer at the Advertising Checking Bureau, with responsibility for information systems and development of client-server products. He holds a Bachelors degree in management from Post College. John P. Lawrence is Vice President and Treasurer, with responsibility for acquisition integration, internal audit, risk management and purchasing and contracting. Mr. Lawrence has been associated with Iron Mountain since 1988. 56 Prior to 1988, he worked for Hewlett Packard for nine years in various management positions in finance, control, marketing and manufacturing. He holds a Master of Business Administration degree from Harvard Business School. Kenneth A. Rubin is Vice President of Marketing. Mr. Rubin joined Iron Mountain in 1989. Prior to 1989, he was Director of both Sales and Marketing for Leahy/Instar, a records management company. He was also a founding director of Software Escrow Security. He holds a Bachelors degree in political science from Drew University. T. Anthony Ryan is Vice President of Real Estate. Mr. Ryan manages the real estate department of Iron Mountain and is responsible for identifying and evaluating new facility opportunities and negotiating long-term leases. He has been involved in real estate development for 22 years. His work experience includes positions as Director of Development for Gilbane Property, Vice President of CRJ Investments and, more recently, Vice President and Partner at the Linpro Company. He holds a Bachelors degree in history from The George Washington University. Biographical information of the Directors, executive officers and other officers is as of September 3, 1996. Executive Compensation The following table provides certain information concerning compensation earned by the Chief Executive Officer and each other executive officer serving in such capacity at December 31, 1995 who received compensation in excess of $100,000 (the "Named Executive Officers") for the years ended December 31, 1994 and December 31, 1995. Summary Compensation Table
Annual Compensation Long-Term Compensation ---------------------- ---------------------------------- Number of Shares Underlying All Other Name and Principal Position Year (1) Salary Bonus Options Compensation (2) - ----------------------------- ---------- --------- --------- -------------- ---------------- C. Richard Reese 1995 $261,765 $200,000 0 $1,790 Chairman of the Board and Chief Executive Officer 1994 $255,400 $125,000 0 $1,623 David S. Wendell 1995 $136,627 $ 62,731 35,469 $1,573 President and Chief Operating Officer 1994 $129,800 $ 50,000 0 $1,352 Eugene B. Doggett 1995 $192,274 $165,000 0 $1,790 Executive Vice President and Chief Financial Officer 1994 $187,500 $ 93,750 0 $1,623 Robert P. Swift 1995 $131,119 $ 24,397 8,096 $1,243 Executive Vice President 1994 $126,600 $ 16,740 0 $ 865
- ------------- (1) In accordance with the requirements of Item 402(b) of Regulation S-K, information is presented for the Company's two most recent years. (2) Reflects the Company's matching contribution to the Iron Mountain Profit Sharing Retirement Plan for each individual. 57 Compensation Committee Interlocks and Insider Participation Prior to November 1995, Iron Mountain's Compensation Committee of the Board of Directors consisted of Constantin R. Boden and Vincent J. Ryan, who was until November 17, 1995 the Chairman of the Board. The present Compensation Committee consists of Mr. Little, who is the Chairman of the Committee, and Messrs. Boden and Ryan. Messrs. Reese and Doggett are executive officers of Iron Mountain and are directors of Schooner. Prior to November 1995, they were also executive officers of Schooner. Mr. Ryan is the Chairman of the Board and principal stockholder of Schooner. In 1993, the Company paid fees of $95,927 to Vincent J. Ryan for consulting services. In each of 1994 and 1995, the Company paid fees of $111,048 to Schooner for consulting services rendered by Mr. Ryan. These services and fees terminated as of December 31, 1995. Iron Mountain Records Management, Inc. ("IMRM"), a subsidiary of the Company, is the tenant under a lease dated January 1, 1991 for a 31,500 square-foot building in Houston, Texas. The owner of the building is IM Houston (CR) Limited Partnership, a Texas limited partnership, of which Mountain Realty, Inc., a Massachusetts corporation whose sole stockholder is Vincent J. Ryan, is the sole general partner, and the limited partners of which are Vincent J. Ryan, C. Richard Reese and Eugene B. Doggett. The term of the lease expires December 31, 2000, with two five-year extension options exercisable by IMRM. IMRM currently pays annual rent in the amount of approximately $94,000, subject to adjustment in 1997 and 1999 (and in the option periods if the term is extended) based upon percentage changes in the consumer price index, with a floor of 3% and a ceiling of 5%, compounded annually. As tenant, IMRM is responsible for taxes, insurance and maintenance. The space is used by IMRM as a records management facility. During 1993, 1994, 1995 and the six months ended June 30, 1996, IMRM paid rent in the annual amount of $88,000, $88,000, $94,000 and $47,000, respectively, under the lease. The lease is, in the opinion of management, on commercially reasonable terms, no less favorable to IMRM than could have been obtained from an unaffiliated party at the time of the transaction. The Company paid compensation of $120,000, $144,000, $154,000 and $62,000 for 1993, 1994, 1995 and the six months ended June 30, 1996, respectively, to Mr. T. Anthony Ryan. Mr. Ryan is Vice President, Real Estate, of the Company and is the brother of Mr. Vincent J. Ryan, a Director and the former Chairman of the Board of the Company. The Company believes that the terms of Mr. Ryan's employment are no less favorable to it than would be negotiable with an unrelated third party. Iron Mountain is indebted to Schooner in the principal amount of $382,500 under a junior subordinated note, which was incurred by Iron Mountain in 1990 in connection with an acquisition. Schooner subsequently acquired the note from the holder as an investment. The Company intends to use a portion of the net proceeds from the Offering to prepay such indebtedness in its entirety. See "The Transactions--Repayment of FDS Notes." Schooner leases space from Iron Mountain at Iron Mountain's corporate headquarters. Such lease is a tenancy- at-will and may be terminated by either Iron Mountain or Schooner at any time. As consideration for such lease, Schooner pays rent to Iron Mountain based on its pro rata share of all expenses related to the use and occupancy of the premises. The rent paid by Schooner to Iron Mountain under such lease was approximately $48,000, $58,000, $59,000 and $33,000 in 1993, 1994, 1995 and the six months ended June 30, 1996, respectively. Employees of Schooner were eligible to participate in the Iron Mountain Profit Sharing Retirement Plan, a Section 401(k) plan, as well as the Company's group medical, dental, life, disability and accidental death and dismemberment arrangements (the "Company Benefit Plans"). Schooner reimbursed the Company for costs incurred as a result of the participation of Schooner employees in Company Benefit Plans. Participation by Schooner employees in the Company Benefit Plans terminated shortly after the consummation of the Initial Public Offering. Director Compensation Directors who are employees of the Company do not receive additional compensation for serving as directors. Each director who is not an employee of the Company (each an "Eligible Director") receives an annual retainer fee of $10,000 as compensation for his or her services as a member of the Board of Directors and is also paid $2,500 per quarter (to a maximum of $10,000 per year) for attendance at meetings (the "Director's Compensation"). All directors of the Company are reimbursed for out-of-pocket expenses incurred in attending meetings of the Board of Directors or committees thereof, and for other expenses incurred in their capacities as directors of the Company. 58 Pursuant to the Iron Mountain Incorporated 1995 Stock Plan for Non-Employee Directors (the "Directors Plan"), Eligible Directors may elect to receive all or a portion of their Director Compensation in the form of Common Stock. An Eligible Director electing to receive Common Stock under the Directors Plan will, as an incentive, receive in lieu of cash an amount of Common Stock equivalent to 110% of the Director Compensation otherwise due to be paid in cash. The Company has reserved 15,000 shares of Common Stock for issuance under the Directors Plan. Stock Option Information Effective November 30, 1995, Iron Mountain instituted the Iron Mountain Incorporated 1995 Stock Incentive Plan (the "Stock Option Plan"), which is administered by the Compensation Committee, as a restatement of Iron Mountain's then-existing stock option plan. The purpose of the Stock Option Plan is to encourage key employees, directors, and consultants of the Company and its subsidiaries who render services of special importance to, and who have contributed or may be expected to contribute materially to the success of, the Company or a subsidiary to continue their association with the Company and its subsidiaries by providing favorable opportunities for them to participate in the ownership of the Company and in its future growth through the granting of restricted shares ("Restricted Stock"), options to acquire Common Stock ("Options"), stock appreciation rights ("SARs") and other rights to compensation in amounts determined by the value of the Common Stock. Restricted Stock, SARs and other rights are referred to collectively as "Other Rights." The total number of shares of Common Stock that may be subject to Options and Other Rights under the Stock Option Plan may not exceed 1,000,000. As of June 30, 1996, options for 757,827 shares of Common Stock were outstanding under the Stock Option Plan and 213,258 shares of Common Stock were available for grants of Options and/or Other Rights under the Stock Option Plan. The duration of the Options granted under the Stock Option Plan may be specified pursuant to each respective stock option agreement, but in no event can any Option intended to qualify as an incentive stock option (an "ISO") within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), be exercisable after the expiration of 10 years after the date of grant. In the case of any employee who owns (or is considered under Section 424(d) of the Code as owning) stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or any of its Subsidiaries, no ISO shall be exercisable after the expiration of five years from its date of grant. The following table sets forth certain information concerning the grant of Options to Messrs. Wendell and Swift. Neither of the other Named Executive Officers was granted Options in 1995. Option Grants in Last Fiscal Year
Potential Realizable Value At Assumed Annual Rates of Stock Appreciation Number of % of Total for Securities Options Option Terms (2) Underlying Granted to Exercise -------------------- Options Employees in Price Per Expiration Name Granted Fiscal Year Share Date 5%($) 10%($) - ------------------------------------- ------------ -------------- ----------- -------- ------- --------- David S. Wendell 35,469 21.9% $16.125 (1) $359,688 $911,521 President and Chief Operating Officer Robert P. Swift 8,096 5.0% $16.125 2/5/2006 $ 82,101 $208,066 Executive Vice President
- ------------- (1) Options granted to Mr. Wendell with respect to 29,410 shares of Common Stock expire February 5, 2006, and options with respect to the remaining 6,059 shares expire 60 days after termination of Mr. Wendell's employment with the Company. (2) Potential Realizable Value is based on the assumed growth rates for an assumed ten-year option term. 5% annual growth results in a Common Stock price per share of $26.27, and 10% results in a Common Stock price per share of $41.82, respectively, for such term. The actual value, if any, an executive may realize will depend on the excess of the market price of the Common Stock over the exercise price on the date the option is exercised, so that there is no assurance the value realized by an executive will be at or near the amounts reflected in this table. 59 The following table sets forth certain information with respect to the unexercised Options granted to Messrs. Wendell and Swift. Neither of such individuals exercised any stock options during the year ended December 31, 1995. Neither of the other Named Executive Officers has any unexercised Options. Fiscal Year End Option Values
Value of Unexercised Number of Unexercised In-the-Money-Options at Options at December 31, 1995 December 31, 1995 (1) -------------------------------- ---------------------------- Name Exercisable Unexercisable Exercisable Unexercisable - ---- -------------- -------------- ---------- -------------- David S. Wendell 71,077 53,266 $676,653 $169,427 President and Chief Operating Officer Robert P. Swift 11,566 15,806 $110,108 $ 73,399 Executive Vice President
- ------------- (1) Based on the initial public offering price of $16.00 per share, less the exercise price. CERTAIN TRANSACTIONS In 1993, in connection with the employment of David S. Wendell, the Company made demand loans to Mr. Wendell in an aggregate principal amount of $70,000 in connection with Mr. Wendell's purchase of a home. The loans bear interest at a rate equal to the Company's cost to borrow such funds and are secured by a second mortgage on the home. As of September 3, 1996, the principal balance of the loans was $25,000. See "Management--Executive Compensation--Compensation Committee Interlocks and Insider Participation" for a discussion of: (i) certain payments to Vincent J. Ryan and Schooner for consulting services; (ii) a lease between a partnership affiliated with Messrs. Doggett, Reese and Ryan and a subsidiary of the Company; (iii) the familial relationship between Vincent J. Ryan, an Iron Mountain Director, and T. Anthony Ryan, an Iron Mountain officer; (iv) a lease between Schooner and the Company; (v) certain indebtedness of Iron Mountain to Schooner to be repaid with a portion of the net proceeds of the Offering; and (vi) Schooner's prior participation in Iron Mountain's 401(k) plan and certain other employee benefit plans. 60 PRINCIPAL STOCKHOLDERS The following table sets forth certain information known to the Company with respect to beneficial ownership of Common Stock by: (i) each stockholder known by the Company to be the beneficial owner of more than five percent of the Common Stock; (ii) each director; (iii) each Named Executive Officer; and (iv) all executive officers and directors of the Company as a group. Such information is presented as of September 3, 1996.
Amount of Beneficial Ownership (1) ------------------------------ Percent Name Shares Owned - ---------------------------------- -------------- ------------ Directors and Executive Officers: C. Richard Reese (2) 1,127,503 11.7% David S. Wendell (3) 83,815 * Eugene B. Doggett (4) 219,745 2.3% Robert P. Swift (5) 15,421 * Constantin R. Boden (6) 19,746 * Arthur D. Little (7) 98,730 1.0% Vincent J. Ryan (8) 3,503,250 36.4% All Directors and executive officers as a group (8 persons)(9) 4,371,289 45.0% Five Percent Stockholder: Schooner Capital Corporation (10) 1,909,384 19.8%
- ------------- * Less than 1% (1) Except as otherwise indicated, the persons named in the table above have sole voting and investment power with respect to all shares of Common Stock shown as beneficially owned by them. (2) Mr. Reese is a director and Chairman of the Board and Chief Executive Officer of the Company. Includes 12,160 shares of Common Stock held by trusts for the benefit of Mr. Reese's children, as to which Mr. Reese disclaims beneficial ownership. Also includes 668,166 shares of Common Stock as to which Mr. Reese shares beneficial ownership with Schooner as a result of a 1988 deferred compensation arrangement, as amended, between Schooner and Mr. Reese relating to Mr. Reese's former services as President of Schooner. Pursuant to such arrangement, upon the earlier to occur of (i) Schooner's sale or exchange of substantially all of the shares of Common Stock held by Schooner or (ii) the cessation of Mr. Reese's employment with Iron Mountain, Schooner is required to transfer such shares of Common Stock to Mr. Reese or remit to Mr. Reese cash in an amount equal to the then current fair market value of such shares of Common Stock. Schooner has agreed to vote the shares of Common Stock subject to such arrangement at the direction of Mr. Reese. Mr. Reese's address is c/o Iron Mountain Incorporated, 745 Atlantic Avenue, Boston, Massachusetts 02111. (3) Mr. Wendell is a director and President and Chief Operating Officer of the Company. Includes 79,960 shares that Mr. Wendell has the right to acquire pursuant to currently exercisable options. See "Executive Compensation." Mr. Wendell's address is c/o Iron Mountain Incorporated, 745 Atlantic Avenue, Boston, Massachusetts 02111. (4) Mr. Doggett is a director and Executive Vice President and Chief Financial Officer of the Company. Includes 29,550 shares of Common Stock as to which Mr. Doggett shares beneficial ownership with Schooner as a result of a 1988 deferred compensation arrangement, as amended, between Schooner and Mr. Doggett relating to Mr. Doggett's former services as Chief Financial Officer of Schooner. Pursuant to such arrangement, upon the earlier to occur of (i) Schooner's sale or exchange of substantially all of the shares of Common Stock held by Schooner or (ii) the cessation of Mr. Doggett's employment with Iron Mountain, Schooner is required to transfer such shares of Common Stock to Mr. Doggett or remit to Mr. Doggett cash in an amount equal to the then current fair market value of such shares of Common Stock. Schooner has agreed to vote the shares of Common Stock subject to such arrangement at the direction of Mr. Doggett. Mr. Doggett's address is c/o Iron Mountain Incorporated, 745 Atlantic Avenue, Boston, Massachusetts 02111. 61 (5) Mr. Swift is a director and Executive Vice President of the Company. Consists of shares that Mr. Swift has the right to acquire pursuant to currently exercisable options. See "Executive Compensation." Mr. Swift's address is c/o Iron Mountain Incorporated, 1340 East 6th Street, Los Angeles, California 90021. (6) Mr. Boden is a director of the Company. Mr. Boden's address is c/o Boston Capital Ventures, 45 School Street, Boston, Massachusetts 02110. (7) Mr. Little is a director of the Company. Consists of 49,365 shares held by The Little Family Trust and 49,365 shares held by The Little Family Foundation, as to which Mr. Little disclaims beneficial ownership. Mr. Little's address is c/o The Little Investment Company, 33 Broad Street, Boston, Massachusetts 02109. (8) Mr. Ryan is a director of the Company. Mr. Ryan holds 1,593,866 shares of Common Stock. The remaining shares of Common Stock listed as being beneficially owned by Mr. Ryan are held by Schooner, as to which Mr. Ryan has sole voting power and investment power as the Chairman of the Board and principal stockholder of Schooner. Mr. Ryan's address is c/o Schooner Capital Corporation, 745 Atlantic Avenue, Boston, Massachusetts 02111. See footnote (10) regarding shares held by Schooner. (9) Includes 96,156 shares that directors and executive officers have the right to acquire pursuant to currently exercisable options. (10) Mr. Ryan is the Chairman of the Board and the principal stockholder of Schooner and, accordingly has sole voting and investment power with respect to the shares of Common Stock held by Schooner. Includes 668,166 shares of Common Stock as to which Schooner shares beneficial ownership with Mr. Reese as described in footnote (2). Also includes 29,550 shares of Common Stock as to which Schooner shares beneficial ownership with Mr. Doggett as described in footnote (4). Schooner has agreed to vote the shares of Common Stock subject to such arrangements at the direction of Mr. Reese or Mr. Doggett, as the case may be. 62 DESCRIPTION OF THE NOTES General The Notes will be issued pursuant to an Indenture (the "Indenture") between the Company and First Bank National Association, as trustee (the "Trustee"). The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (the "Trust Indenture Act"). The Notes are subject to all such terms, and Holders of Notes are referred to the Indenture and the Trust Indenture Act for a statement thereof. The following summary of certain provisions of the Indenture does not purport to be complete and is qualified in its entirety by reference to the Indenture, including the definitions therein of certain terms used below. A copy of the proposed form of Indenture has been filed as an exhibit to the Registration Statement of which this Prospectus is a part. The definitions of certain terms used in the following summary are set forth below under "Certain Definitions." Principal, Maturity and Interest The Notes will be general unsecured obligations of the Company, will be limited in aggregate principal amount to $150 million and will mature on , 2006. Interest on the Notes will accrue at the rate of % per annum and will be payable semi-annually in arrears on and , commencing on , 1997, to Holders of record on the immediately preceding and . Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of original issuance. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months. The Notes will be payable both as to principal and interest at the office or agency of the Company maintained for such purpose within the City and State of New York or, at the option of the Company, payment of interest may be made by check mailed to the Holders of Notes at their addresses set forth in the register of Holders of Notes. Until otherwise designated by the Company, the Company's office or agency in New York will be the office of the Trustee maintained for such purpose. The Notes will be issued in registered form, without coupons, and in denominations of $1,000 and integral multiples thereof. Subsidiary Guarantees The Company's payment obligations under the Notes will be jointly and severally guaranteed (the "Subsidiary Guarantees") on an unsecured senior subordinated basis by all of the Company's existing and future Restricted Subsidiaries other than the Excluded Restricted Subsidiaries (each, a "Subsidiary Guarantor") (see "Certain Covenants--Additional Subsidiary Guarantees"). Each Subsidiary Guarantee will be subordinated to the prior payment in full of all Senior Debt of each such Subsidiary Guarantor, which on a pro forma basis would have been $24.5 million at June 30, 1996 for all Subsidiary Guarantors. Notwithstanding the subordination provisions contained in the Indenture, the obligations of a Subsidiary Guarantor under its Subsidiary Guarantee will be unconditional. See "Risk Factors-- Unenforceability and Release of Guarantees." Subordination The payment of principal of, premium, if any, and interest on the Notes will be subordinated in right of payment, as set forth in the Indenture, to the prior payment in full in cash of all Obligations with respect to Senior Debt, whether outstanding on the date of the Indenture or thereafter incurred. Upon any payment or distribution to creditors of the Company or any Subsidiary Guarantor in a liquidation or dissolution of the Company or such Subsidiary Guarantor or in a bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to the Company or any Subsidiary Guarantor or its property, an assignment for the benefit of creditors or any marshaling of the assets and liabilities of the Company or any Subsidiary Guarantor, (a) the holders of Senior Debt will be entitled to receive payment in full in cash of all Obligations due in respect of such Senior Debt (including interest after the commencement of any such proceeding at the rate specified in the applicable Senior Debt, whether or not allowed as a claim in such proceeding) before the Holders of Notes will be entitled to receive any payment or distribution with respect to the Notes, and (b) until all Obligations with respect to Senior Debt are paid in full in cash, any payment or distribution to which the Holders of Notes would be entitled shall be made to the holders of Senior Debt. 63 Neither the Company nor any Subsidiary Guarantor may make any payment or distribution upon or in respect of the Notes, including, without limitation, by way of set-off or otherwise, or redeem (or make a deposit in redemption of), defease or acquire any of the Notes for cash, properties or securities if (a) a default in the payment of any Obligation in respect of any Senior Debt occurs and is continuing or (b) any other default (or any event that, after notice or passage of time would become a default) (a "Non-Monetary Default") occurs and is continuing with respect to Senior Debt and, in the case of clause (b), the Trustee receives a notice of such default (a "Payment Blockage Notice") from the holders (or the agent or representative of such holders) of any Designated Senior Debt. Payments on the Notes may and shall be resumed (i) in the case of a payment default, on the date on which such default is cured or waived and (ii) in the case of a Non-Monetary Default, on the earlier of the date on which such Non- Monetary Default is cured or waived or 179 days after the date on which the applicable Payment Blockage Notice is received, unless the maturity of any Senior Debt has been accelerated. Any number of Payment Blockage Notices may be given, provided, however, that (A) not more than one Payment Blockage Notice may be commenced during any period of 360 consecutive days and (B) any Non-Monetary Default that existed or was continuing on the date of delivery of any Payment Blockage Notice to the Trustee (to the extent the holder of Designated Senior Debt, or such trustee or agent, giving such Payment Blockage Notice had knowledge of the same) shall not be the basis for a subsequent Payment Blockage Notice, unless such default has been cured or waived for a period of not less than 90 consecutive days. The Indenture will further require that the Company promptly notify holders of Senior Debt if payment of the Notes is accelerated because of an Event of Default. As a result of the subordination provisions described above, in the event of a liquidation or insolvency, Holders of Notes may recover less ratably than creditors of the Company who are holders of Senior Debt. On a pro forma basis, after giving effect to the Transactions, the principal amount of Senior Debt of the Company and the Restricted Subsidiaries outstanding at June 30, 1996 would have been $24.5 million. The Indenture will not limit the amount of additional Indebtedness, including Senior Debt, that the Company and its Subsidiaries can incur if certain financial tests are met. See "Certain Covenants--Incurrence of Indebtedness and Issuance of Preferred Stock." Optional Redemption The Notes will not be redeemable at the Company's option prior to , 2001. Thereafter, the Notes will be subject to redemption at the option of the Company, in whole or in part, upon not less than 30 nor more than 60 days' notice, at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest thereon to but excluding the applicable redemption date, if redeemed during the twelve- month period beginning on of the years indicated below:
Year Percentage - ---- ---------- 2001 % 2002 % 2003 % 2004 and thereafter 100%
Notwithstanding the foregoing, at any time during the first 36 months after the date of issuance of the Notes, the Company may redeem up to 35% of the initial principal amount of the Notes originally issued with the net proceeds of one or more Qualified Equity Offerings at a redemption price equal to % of the principal amount of such Notes, plus accrued and unpaid interest, if any, to but excluding the date of redemption; provided, that at least 65% of the principal amount of Notes originally issued remains outstanding immediately after the occurrence of any such redemption and that such redemption occurs within 60 days following the closing of any such Qualified Equity Offering. 64 Mandatory Redemption Except with respect to required repurchases upon the occurrence of a Change of Control or in the event of certain Asset Sales, each as described below under "Repurchase at the Option of Holders," the Company is not required to make sinking fund or redemption payments with respect to the Notes. Repurchase at the Option of Holders Change of Control Upon the occurrence of a Change of Control, each Holder of Notes will have the right to require the Company to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of such Holder's Notes pursuant to the offer described below (the "Change of Control Offer") at an offer price in cash equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest, if any, to but excluding the date of purchase (the "Change of Control Payment"). Within 30 calendar days following any Change of Control, the Company will mail a notice to each Holder stating: (a) that the Change of Control Offer is being made pursuant to the covenant entitled "Change of Control" and that all Notes tendered will be accepted for payment; (b) the purchase price and the purchase date, which will be no earlier than 30 calendar days nor later than 60 calendar days from the date such notice is mailed (the "Change of Control Payment Date"); (c) that any Note not tendered will continue to accrue interest; (d) that, unless the Company defaults in the payment of the Change of Control Payment, all Notes accepted for payment pursuant to the Change of Control Offer will cease to accrue interest on and after the Change of Control Payment Date; (e) that Holders electing to have any Notes purchased pursuant to a Change of Control Offer will be required to surrender the Notes, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Notes completed, to the Paying Agent at the address specified in such notice prior to the close of business on the fifth Business Day preceding the Change of Control Payment Date; (f) that Holders will be entitled to withdraw their election if the Paying Agent receives, not later than the close of business on the second Business Day preceding the Change of Control Payment Date, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of Notes delivered for purchase, and a statement that such Holder is withdrawing his election to have such Notes purchased; and (g) that Holders whose Notes are being purchased only in part will be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered, which unpurchased portion must be equal to $1,000 in principal amount or an integral multiple thereof. The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable to the repurchase of the Notes in connection with a Change of Control. On the Change of Control Payment Date, the Company will, to the extent lawful, (a) accept for payment Notes or portions thereof tendered pursuant to the Change of Control Offer, (b) deposit with the Paying Agent an amount equal to the Change of Control Payment in respect of all Notes or portions thereof so tendered and (c) deliver or cause to be delivered to the Trustee the Notes so accepted together with an Officers' Certificate stating the Notes or portions thereof tendered to the Company. The Paying Agent will promptly mail to each Holder of Notes so accepted the Change of Control Payment for such Notes, and the Trustee will promptly authenticate and mail to each Holder a new Note equal in principal amount to any unpurchased portion of the Notes surrendered, if any; provided that each such new Note will be in a principal amount of $1,000 or an integral multiple thereof. Except as described above with respect to a Change of Control, the Indenture does not contain provisions that permit the Holders of the Notes to require that the Company repurchase or redeem the Notes in the event of a takeover, recapitalization or similar restructuring, nor does it contain any other "event risk" protections for Holders of the Notes. Although the Change of Control provision may not be waived by the Company, and may be waived by the Trustee only in accordance with the provisions of the Indenture, there can be no assurance that any particular transaction (including a highly leveraged transaction) cannot be structured or effected in a manner not constituting a Change of Control. The Credit Agreement currently prohibits the Company from purchasing any Notes prior to the expiration of the Credit Agreement and also provides that certain change of control events with respect to the Company would constitute a default thereunder. The New Credit Facility is expected to contain, and any future credit agreements 65 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 the consent of its lenders to the purchase of Notes or could attempt to refinance the borrowings that contain such prohibition. If the Company does not obtain such a consent or repay such borrowings, the Company will remain prohibited from purchasing Notes. In such case, the Company's failure to purchase tendered Notes would constitute an Event of Default under the Indenture which would, in turn, constitute a default under the Credit Agreement and is expected to constitute an event of default under the New Credit Facility. In such circumstances, the subordination provisions in the Indenture would likely restrict payments to the Holders of Notes. "Change of Control" means the occurrence of any of the following events: (a) any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than the Principal Stockholders (or any of them), is or becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of more than a majority of the voting power of all classes of Voting Stock of the Company; (b) the Company consolidates with, or merges with or into, another Person or conveys, transfers, leases or otherwise disposes of all or substantially all of its assets to any Person, or any Person consolidates with, or merges with or into, the Company, in any such event pursuant to a transaction in which the outstanding Voting Stock of the Company is converted into or exchanged for cash, securities or other property, other than any such transaction where (i) the outstanding Voting Stock of the Company is not converted or exchanged at all (except to the extent necessary to reflect a change in the jurisdiction of incorporation) or is converted into or exchanged for (A) Voting Stock (other than Disqualified Stock) of the surviving or transferee Person or (B) cash, securities and other property (other than Capital Stock described in the foregoing clause (A)) of the surviving or transferee Person in an amount that could be paid as a Restricted Payment as described under the "Restricted Payments" covenant and (ii) immediately after such transaction, no "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than the Principal Stockholders (or any of them), is the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of more than a majority of the total outstanding Voting Stock of the surviving or transferee Person; (c) during any consecutive two-year period, individuals who at the beginning of such period constituted the Board of Directors (together with any new directors whose election to such Board of Directors, or whose nomination for election by the stockholders of the Company, was approved by a vote of 66-2/3% of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Directors then in office; or (d) the Company is liquidated or dissolved or adopts a plan of liquidation or dissolution other than in a transaction which complies with the provisions described under "Consolidation, Merger and Sale of Assets." Asset Sales The Indenture will provide that the Company will not, and will not permit any of its Restricted Subsidiaries to, (a) sell, lease, convey or otherwise dispose of any assets (including by way of a Sale and Leaseback Transaction, but excluding a Qualifying Sale and Leaseback Transaction) other than sales of inventory in the ordinary course of business (provided that the sale, lease, conveyance or other disposition of all or substantially all of the assets of the Company will be governed by the provisions of the Indenture described above under the caption "Change of Control" and/or the provisions described below under the caption "Merger, Consolidation or Sale of Assets" and not by the provisions of this covenant), or (b) issue or sell Equity Interests of any of its Restricted Subsidiaries, that, in the case of either clause (a) or (b) above, whether in a single transaction or a series of related transactions, (i) have a fair market value in excess of $1.0 million, or (ii) result in Net Proceeds in excess of $1.0 million (each of the foregoing, an "Asset Sale"), unless (x) the Company (or the Restricted Subsidiary, as the case may be) receives consideration at the time of such Asset Sale at least equal to the fair market value (evidenced by an Officers' Certificate delivered to the Trustee, and for Asset Sales having a fair market value or resulting in net proceeds in excess of $5.0 million, evidenced by a resolution of the Board of Directors set forth in an Officers' Certificate 66 delivered to the Trustee) of the assets sold or otherwise disposed of and (y) at least 75% of the consideration therefor received by the Company or such Restricted Subsidiary is in the form of cash or like-kind assets (in each case as determined in good faith by the Company, evidenced by a resolution of the Board of Directors and certified by an Officers' Certificate filed with the Trustee); provided, however, that the amount of (A) any liabilities (as shown on the Company's or such Restricted Subsidiary's most recent balance sheet or in the notes thereto) of the Company or such Restricted Subsidiary (other than liabilities that are by their terms subordinated to the Notes or any Subsidiary Guarantee) that are assumed by the transferee of any such assets and (B) any notes or other obligations received by the Company or such Restricted Subsidiary from such transferee that are immediately converted by the Company or such Restricted Subsidiary into cash (to the extent of the cash received) or Cash Equivalents, shall be deemed to be cash for purposes of this provision; and provided, further, that the 75% limitation referred to in the foregoing clause (y) shall not apply to any Asset Sale in which the cash portion of the consideration received therefrom is equal to or greater than what the after-tax proceeds would have been had such Asset Sale complied with the aforementioned 75% limitation. A transfer of assets or issuance of Equity Interests by the Company to a Wholly Owned Restricted Subsidiary or by a Wholly Owned Restricted Subsidiary to the Company or to another Wholly Owned Restricted Subsidiary will not be deemed to be an Asset Sale. Within 360 days of any Asset Sale, the Company may, at its option, apply an amount equal to the Net Proceeds from such Asset Sale either (a) to permanently reduce Senior Debt, or (b) to an investment in a Restricted Subsidiary or in another business or capital expenditure or other long-term/tangible assets, in each case, in the same line of business as the Company or any of its Restricted Subsidiaries was engaged in on the date of the Indenture or in businesses similar or reasonably related thereto. Pending the final application of any such Net Proceeds, the Company may temporarily reduce Senior Bank Debt or otherwise invest such Net Proceeds in any manner that is not prohibited by the Indenture. Any Net Proceeds from such Asset Sale that are not applied or invested as provided in the first sentence of this paragraph will be deemed to constitute "Excess Proceeds." When the aggregate amount of Excess Proceeds exceeds $5.0 million, the Company shall make an offer to all Holders of Notes (an "Asset Sale Offer") to purchase the maximum principal amount of Notes that may be purchased out of the Excess Proceeds, at an offer price in cash in an amount equal to 100% of the principal amount thereof plus accrued and unpaid interest, if any, to the date of purchase, in accordance with the procedures set forth in the Indenture. To the extent that the aggregate amount of Notes tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Company may use any remaining Excess Proceeds for general corporate purposes. If the aggregate principal amount of Notes surrendered by Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select the Notes to be purchased on a pro rata basis. Upon completion of such offer to purchase, the amount of Excess Proceeds shall be reset at zero. Selection and Notice If less than all of the Notes are to be redeemed at any time, selection of Notes for redemption will be made by the Trustee in compliance with the requirements of the principal national securities exchange, if any, on which the Notes are listed, or, if the Notes are not so listed, on a pro rata basis, by lot or by such method as the Trustee shall deem fair and appropriate, provided that no Notes of $1,000 or less shall be redeemed in part. Notices of redemption shall be mailed by first class mail at least 30 but not more than 60 days before the redemption date to each Holder of Notes to be redeemed at its registered address. If any Note is to be redeemed in part only, the notice of redemption that relates to such Note shall state the portion of the principal amount thereof to be redeemed. A new Note in principal amount equal to the unredeemed portion thereof will be issued in the name of the Holder thereof upon cancellation of the original Note. On and after the redemption date, interest will cease to accrue on Notes or portions of them called for redemption. Certain Covenants Restricted Payments The Indenture will provide that the Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly: (a) declare or pay any dividend or make any distribution on account of the Company's or any of its Restricted Subsidiaries' Equity Interests (other than dividends or distributions payable in Equity Interests (other than Disqualified Stock) of the Company or such Restricted Subsidiary or dividends or distributions payable to the Company or any Restricted Subsidiary of the Company); (b) purchase, redeem or otherwise acquire 67 or retire for value any Equity Interests of the Company or any Restricted Subsidiary or other Affiliate of the Company (other than any such Equity Interests owned by the Company or any Restricted Subsidiary); (c) purchase, redeem or otherwise acquire or retire prior to scheduled maturity for value any Indebtedness that is subordinated in right of payment to the Notes or (d) make any Investment other than a Permitted Investment (all such payments and other actions set forth in clauses (a) through (d) above being collectively referred to as "Restricted Payments"), unless, at the time of such Restricted Payment: (i) no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof; and (ii) the Company would, at the time of such Restricted Payment and after giving pro forma effect thereto, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the test set forth in the first paragraph of the covenant entitled "Incurrence of Indebtedness and Issuance of Preferred Stock;" and (iii) such Restricted Payment, together with the aggregate of all other Restricted Payments made by the Company and its Restricted Subsidiaries after the date of the Indenture is less than (x) the cumulative EBITDA of the Company, minus 1.75 times the cumulative Consolidated Interest Expense of the Company, in each case for the period (taken as one accounting period) from June 30, 1996, to the end of the Company's most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment, plus (y) the aggregate net Equity Proceeds received by the Company from the issuance or sale since the date of the Indenture of Equity Interests of the Company or of debt securities of the Company that have been converted into such Equity Interests (other than Equity Interests or convertible debt securities sold to a Restricted Subsidiary of the Company and other than Disqualified Stock or debt securities that have been converted into Disqualified Stock), plus (z) $2.0 million. The foregoing provisions will not prohibit (A) the payment of any dividend within 60 days after the date of declaration thereof, if at said date of declaration such payment would have complied with the provisions of the Indenture; (B) the redemption, repurchase, retirement or other acquisition or retirement for value of any Equity Interests of the Company in exchange for, or with the net cash proceeds of, the substantially concurrent sale (other than to a Restricted Subsidiary of the Company) of other Equity Interests of the Company (other than any Disqualified Stock); (C) the defeasance, redemption, repurchase, retirement or other acquisition or retirement for value of Indebtedness that is subordinated or pari passu in right of payment to the Notes in exchange for, or with the net cash proceeds of, a substantially concurrent issuance and sale (other than to a Restricted Subsidiary of the Company) of Equity Interests of the Company (other than Disqualified Stock); (D) the defeasance, redemption, repurchase, retirement or other acquisition or retirement for value of Indebtedness that is subordinated or pari passu in right of payment to the Notes in exchange for, or with the net cash proceeds of, a substantially concurrent issue and sale (other than to the Company or any of its Restricted Subsidiaries) of Refinancing Indebtedness; (E) the repurchase of any Indebtedness subordinated or pari passu in right of payment to the Notes at a purchase price not greater than 101% of the principal amount of such Indebtedness in the event of a Change of Control in accordance with provisions similar to the "Change of Control" covenant, provided that prior to or contemporaneously with such repurchase the Company has made the Change of Control Offer as provided in such covenant with respect to the Notes and has repurchased all Notes validly tendered for payment in connection with such Change of Control Offer; (F) the prepayment of the Chrysler Notes, together with premium and interest thereon; (G) the prepayment of $450,000 of junior subordinated notes issued by the Company in connection with a 1990 acquisition, together with interest thereon; and (H) additional payments to current or former employees of the Company for repurchases of stock, stock options or other equity interests, provided that the aggregate amount of all such payments under this clause (H) does not exceed $500,000 in any year and $2.0 million in the aggregate. The Restricted Payments described in clauses (B), (C), (E) and (H) of the immediately preceding paragraph will be Restricted Payments that will be permitted to be taken in accordance with such paragraph but will reduce the amount that would otherwise be available for Restricted Payments under clause (iii) of the first paragraph of this section, and the Restricted Payments described in clauses (A), (D), (F) and (G) of the immediately preceding paragraph will be Restricted Payments that will be permitted to be taken in accordance with such paragraph and will not reduce the amount that would otherwise be available for Restricted Payments under clause (iii) of the first paragraph of this section. If an Investment results in the making of a Restricted Payment, the aggregate amount of all Restricted Payments deemed to have been made as calculated under the foregoing provision will be reduced by the amount of any net 68 reduction in such Investment (resulting from the payment of interest or dividends, loan repayment, transfer of assets or otherwise) to the extent such net reduction is not included in the Company's EBITDA; provided, however, that the total amount by which the aggregate amount of all Restricted Payments may be reduced may not exceed the lesser of (a) the cash proceeds received by the Company and its Restricted Subsidiaries in connection with such net reduction and (b) the initial amount of such Investment. If the aggregate amount of all Restricted Payments calculated under the foregoing provision includes an Investment in an Unrestricted Subsidiary or other Person that thereafter becomes a Restricted Subsidiary, such Investment will no longer be counted as a Restricted Payment for purposes of calculating the aggregate amount of Restricted Payments. For the purpose of making any calculations under the Indenture, (a) an Investment will include the fair market value of the net assets of any Restricted Subsidiary at the time that such Restricted Subsidiary is designated an Unrestricted Subsidiary and will exclude the fair market value of the net assets of any Unrestricted Subsidiary that is designated as a Restricted Subsidiary, (b) any property transferred to or from an Unrestricted Subsidiary will be valued at fair market value at the time of such transfer, provided that, in each case, the fair market value of an asset or property is as determined by the Board of Directors in good faith, and (c) subject to the foregoing, the amount of any Restricted Payment, if other than cash, will be determined by the Board of Directors, whose good faith determination will be conclusive. The Board of Directors may designate a Restricted Subsidiary to be an Unrestricted Subsidiary in compliance with the covenant entitled "Unrestricted Subsidiaries." Upon such designation, all outstanding Investments by the Company and its Restricted Subsidiaries (except to the extent repaid in cash) in the Subsidiary so designated will be deemed to be Restricted Payments made at the time of such designation and will reduce the amount available for Restricted Payments under the first paragraph of this covenant. Such designation will only be permitted if such Restricted Payment would be permitted at such time and if such Restricted Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. Incurrence of Indebtedness and Issuance of Preferred Stock The Indenture will provide that the Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guaranty or otherwise become directly or indirectly liable with respect to (collectively, "incur") any Indebtedness (including Acquired Debt) and that the Company will not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that the Company may incur Indebtedness and may permit a Restricted Subsidiary to incur Indebtedness if at the time of such incurrence and after giving effect thereto the Leverage Ratio would be less than 6.0 to 1.0. The foregoing limitations will not apply to (a) the incurrence by the Company or any Restricted Subsidiary of Senior Bank Debt in an aggregate amount not to exceed $25.0 million at any one time outstanding, (b) the issuance by the Restricted Subsidiaries of Subsidiary Guarantees, (c) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness, (d) the issuance by the Company of the Notes, (e) the incurrence by the Company and its Restricted Subsidiaries of Capital Lease Obligations and/or additional Indebtedness constituting purchase money obligations up to an aggregate of $2.5 million at any one time outstanding, provided that the Liens securing such Indebtedness constitute Permitted Liens, (f) the incurrence of Indebtedness between (i) the Company and its Restricted Subsidiaries and (ii) the Restricted Subsidiaries, (g) Hedging Obligations that are incurred for the purpose of fixing or hedging interest rate risk with respect to any floating rate Indebtedness that is permitted by the terms of the Indenture to be outstanding, (h) the incurrence by the Company and its Restricted Subsidiaries of Indebtedness arising out of letters of credit, performance bonds, surety bonds and bankers' acceptances incurred in the ordinary course of business up to an aggregate of $2.0 million at any one time outstanding, (i) the incurrence by the Company and its Restricted Subsidiaries of Indebtedness consisting of guarantees, indemnities or obligations in respect of purchase price adjustments in connection with the acquisition or disposition of assets, including, without limitation, shares of Capital Stock, and (j) the incurrence by the Company and its Restricted Subsidiaries of Refinancing Indebtedness issued in exchange for, or the proceeds of which are used to repay, redeem, defease, extend, refinance, renew, replace or refund, Indebtedness referred to in clauses (b) through (e) above, and this clause (j). Liens The Indenture will provide that neither the Company nor any of its Restricted Subsidiaries may directly or indirectly create, incur, assume or suffer to exist any Lien (other than a Permitted Lien) upon any property or assets 69 now owned or hereafter acquired, or any income, profits or proceeds therefrom, or assign or otherwise convey any right to receive income therefrom, unless (a) in the case of any Lien securing any Indebtedness that is subordinate to the Notes, the Notes are secured by a Lien on such property, assets or proceeds that is senior in priority to such Lien and (b) in the case of any other Lien, the Notes are equally and ratably secured with the obligation or liability secured by such Lien. Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries The Indenture will provide that the Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any encumbrance or restriction on the ability of any Restricted Subsidiary to (a) (i) pay dividends or make any other distributions to the Company or any of its Restricted Subsidiaries (A) on its Capital Stock or (B) with respect to any other interest or participation in, or measured by, its profits, or (ii) pay any Indebtedness owed to the Company or any of its Restricted Subsidiaries, (b) make loans or advances to the Company or any of its Restricted Subsidiaries or (c) transfer any of its properties or assets to the Company or any of its Restricted Subsidiaries, except for such encumbrances or restrictions existing under or by reason of (1) Existing Indebtedness, (2) the Credit Agreement as in effect as of the date of the Indenture, and any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancing thereof, provided that such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are no more restrictive in the aggregate with respect to such dividend and other payment restrictions than those contained in the Credit Agreement as in effect on the date of the Indenture, (3) the Indenture and the Notes, (4) applicable law, (5) any instrument governing Indebtedness or Capital Stock of a Person acquired by the Company or any of its Restricted Subsidiaries as in effect at the time of such acquisition (except to the extent such Indebtedness was incurred in connection with or in contemplation of such acquisition), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired, provided that the EBITDA of such Person is not taken into account in determining whether such acquisition was permitted by the terms of the Indenture, (6) customary non-assignment provisions in leases entered into in the ordinary course of business and consistent with past practices, (7) restrictions on the transfer of property subject to purchase money or Capital Lease Obligations otherwise permitted by clause (e) of the covenant entitled "Incurrence of Indebtedness and Issuance of Preferred Stock," or (8) permitted Refinancing Indebtedness, provided that the restrictions contained in the agreements governing such Refinancing Indebtedness are no more restrictive in the aggregate than those contained in the agreements governing the Indebtedness being refinanced. Merger, Consolidation, or Sale of Assets The Indenture will provide that the Company may not consolidate or merge with or into (whether or not the Company is the surviving corporation), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties or assets in one or more related transactions, to another Person unless (a) the Company is the surviving corporation or the Person formed by or surviving any such consolidation or merger (if other than the Company) or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made is a corporation organized or existing under the laws of the United States, any state thereof or the District of Columbia; (b) the Person formed by or surviving any such consolidation or merger (if other than the Company) or the Person to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made assumes all the obligations of the Company under the Notes and the Indenture pursuant to a supplemental indenture in a form reasonably satisfactory to the Trustee; (c) immediately after such transaction no Default or Event of Default exists; and (d) the Company or Person formed by or surviving any such consolidation or merger, or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made, will, at the time of such transaction and after giving pro forma effect thereto, be permitted to incur at least $1.00 of additional Indebtedness pursuant to the test set forth in the first paragraph of the covenant entitled "Incurrence of Indebtedness and Issuance of Preferred Stock." Transactions with Affiliates The Indenture will provide that the Company will not, and will not permit any of its Restricted Subsidiaries to, sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into any contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, 70 any Affiliate (each of the foregoing, an "Affiliate Transaction"), unless (a) such Affiliate Transaction is on terms that are no less favorable to the Company or the relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by the Company or such Restricted Subsidiary with a non-Affiliated Person and (b) the Company delivers to the Trustee (i) with respect to any Affiliate Transaction involving aggregate payments in excess of $1.0 million, a resolution of the Board of Directors set forth in an Officers' Certificate certifying that such Affiliate Transaction complies with clause (a) above and such Affiliate Transaction is approved by a majority of the disinterested members of the Board of Directors and (ii) with respect to any Affiliate Transaction involving aggregate payments in excess of $5.0 million, an opinion as to the fairness to the Company or such Restricted Subsidiary from a financial point of view issued by an investment banking firm of national standing; provided, however, that (A) any employment agreement entered into by the Company or any of its Restricted Subsidiaries in the ordinary course of business and consistent with the past practice of the Company or such Restricted Subsidiary, (B) transactions between or among the Company and/or its Restricted Subsidiaries, (C) transactions permitted by the provisions of the Indenture described above under the covenant "Restricted Payments" and (D) the grant of stock, stock options or other equity interests to employees and directors of the Company in accordance with duly adopted Company stock grant, stock option and similar plans, in each case, shall not be deemed Affiliate Transactions; and further provided that (1) the provisions of clause (b) shall not apply to sales of inventory by the Company or any Restricted Subsidiary to any Affiliate in the ordinary course of business and (2) the provisions of clause (b) (ii) shall not apply to loans or advances to the Company or any Restricted Subsidiary from, or equity investments in the Company or any Restricted Subsidiary by, any Affiliate to the extent permitted by the provisions of the Indenture described above under the covenant entitled "Incurrence of Indebtedness and Issuance of Preferred Stock." Certain Senior Subordinated Debt The Indenture will provide that (a) the Company will not incur any Indebtedness that is subordinated or junior in right of payment to any Senior Debt of the Company and senior in any respect in right of payment to the Notes, and (b) the Company will not permit any Restricted Subsidiary to incur any Indebtedness that is subordinated or junior in right of payment to its Senior Debt and senior in any respect in right of payment to its Subsidiary Guarantee. Additional Subsidiary Guarantees The Indenture will provide that if any entity (other than an Excluded Restricted Subsidiary) shall become a Restricted Subsidiary after the date of the Indenture, then such Restricted Subsidiary shall execute a Subsidiary Guarantee and deliver an opinion of counsel with respect thereto, in accordance with the terms of the Indenture. The Indenture will provide that no Restricted Subsidiary may consolidate with or merge with or into (whether or not such Restricted Subsidiary is the surviving Person), another Person (other than the Company) whether or not affiliated with such Restricted Subsidiary unless (a) subject to the provisions of the following paragraph, the Person formed by or surviving any such consolidation or merger (if other than such Restricted Subsidiary) assumes all the obligations of such Restricted Subsidiary under its Subsidiary Guaranty, if any, pursuant to a supplemental indenture in form and substance reasonably satisfactory to the Trustee; (b) immediately after giving effect to such transaction, no Default or Event of Default exists; and (c) such Restricted Subsidiary, or any Person formed by or surviving any such consolidation or merger, would be permitted to incur, immediately after giving effect to such transaction, at least $1.00 of additional Indebtedness pursuant to the test set forth in the first paragraph of the covenant entitled "Incurrence of Indebtedness and Issuance of Preferred Stock." The Indenture will provide that in the event of (a) a sale or other disposition of all of the assets of any Restricted Subsidiary, by way of merger, consolidation or otherwise, (b) a sale or other disposition of all of the capital stock of any Restricted Subsidiary, or (c) the designation of a Restricted Subsidiary as an Unrestricted Subsidiary in accordance with the terms of the covenant entitled "Unrestricted Subsidiaries," then such Subsidiary (in the event of a sale or other disposition, by way of such a merger, consolidation or otherwise, of all of the capital stock of such Restricted Subsidiary or in the event of the designation of such Restricted Subsidiary as an Unrestricted Subsidiary) or the corporation acquiring the property (in the event of a sale or other disposition of all of the assets of such Restricted Subsidiary) will be released and relieved of any obligations under its Subsidiary Guarantee; provided that the Net Proceeds of such sale or other disposition are applied in accordance with the applicable provisions of the Indenture. See "Redemption or Repurchase at Option of Holders--Asset Sales." 71 Unrestricted Subsidiaries The Board of Directors may designate any Subsidiary (including any Restricted Subsidiary or any newly acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary so long as: (i) neither the Company nor any Restricted Subsidiary is directly or indirectly liable for any Indebtedness of such Subsidiary; (ii) no default with respect to any Indebtedness of such Subsidiary would permit (upon notice, lapse of time or otherwise) any holder of any other Indebtedness of the Company or any Restricted Subsidiary to declare a default on such other Indebtedness or cause the payment thereof to be accelerated or payable prior to its stated maturity; (iii) any Investment in such Subsidiary deemed to be made as a result of designating such Subsidiary an Unrestricted Subsidiary will not violate the provisions of the covenant entitled "Restricted Payments;" (iv) neither the Company nor any Restricted Subsidiary has a contract, agreement, arrangement, understanding or obligation of any kind, whether written or oral, with such Subsidiary other than (A) those that might be obtained at the time from Persons who are not Affiliates of the Company or (B) administrative, tax sharing and other ordinary course contracts, agreements, arrangements and understandings or obligations entered into in the ordinary course of business; and (v) neither the Company nor any Restricted Subsidiary has any obligation to subscribe for additional shares of Capital Stock or other Equity Interests in such Subsidiary, or to maintain or preserve such Subsidiary's financial condition or to cause such Subsidiary to achieve certain levels of operating results other than as permitted under the covenant entitled "Restricted Payments." Notwithstanding the foregoing, the Company may not designate as an Unrestricted Subsidiary any Subsidiary which, on the date of the Indenture, is a Significant Subsidiary, and may not sell, transfer or otherwise dispose of any properties or assets of any such Significant Subsidiary to an Unrestricted Subsidiary, other than in the ordinary course of business. The Board of Directors may designate any Unrestricted Subsidiary as a Restricted Subsidiary; provided that such designation will be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of any outstanding Indebtedness of such Unrestricted Subsidiary and such designation will only be permitted if (i) such Indebtedness is permitted under the "Incurrence of Indebtedness and Issuance of Preferred Stock" covenant and (ii) no Default or Event of Default would occur as a result of such designation. Reports Whether or not required by the rules and regulations of the Securities and Exchange Commission (the "Commission"), so long as any Notes are outstanding, the Company will furnish to the Holders of Notes (a) all quarterly and annual financial information that would be required to be contained in a filing with the Commission on Forms 10-Q and 10-K if the Company were required to file such Forms, including a "Management's Discussion and Analysis of Financial Condition and Results of Operations" and, with respect to the annual information only, a report thereon by the Company's certified independent accountants and (b) all financial information that would be required to be included in a Form 8-K filed with the Commission if the Company were required to file such reports. In addition, whether or not required by the rules and regulations of the Commission, the Company will file a copy of all such information and reports with the Commission for public availability (unless the Commission will not accept such a filing) and make such information available to investors who request it in writing. Events of Default and Remedies The Indenture will provide that each of the following constitutes an Event of Default: (a) default for 30 days in the payment when due of interest on the Notes (whether or not prohibited by the subordination provisions of the Indenture); (b) default in payment when due of the principal of or premium, if any, on the Notes (whether or not prohibited by the subordination provisions of the Indenture); (c) failure by the Company to comply with the provisions described under "Change of Control;" (d) failure by the Company or any Subsidiary Guarantor for 60 days after written notice from the Trustee or Holders of not less than 25% of the aggregate principal amount of the Notes outstanding to comply with any of its other agreements in the Indenture, Notes or the Subsidiary Guarantees; (e) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of its Restricted Subsidiaries (or the payment of which is guaranteed by the Company or any of its Restricted Subsidiaries) whether such Indebtedness or guarantee exists on the date of the Indenture or is created thereafter, if (i) such default results in the acceleration of such Indebtedness prior to its express maturity or shall constitute a default in the payment of such Indebtedness at final maturity of such Indebtedness, and (ii) the principal amount of any such Indebtedness 72 that has been accelerated or not paid at maturity, when added to the aggregate principal amount of all other such Indebtedness that has been accelerated or not paid at maturity, exceeds $5.0 million; (f) failure by the Company or any of its Restricted Subsidiaries to pay final judgments aggregating in excess of $5.0 million, which judgments remain unpaid, undischarged or unstayed for a period of 60 days; (g) certain events of bankruptcy or insolvency with respect to the Company or any of its Restricted Subsidiaries that are Significant Subsidiaries; and (h) except as permitted by the Indenture or the Subsidiary Guarantees, any Subsidiary Guarantee issued by a Restricted Subsidiary shall be held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect, or any Restricted Subsidiary or any Person acting on behalf of any Restricted Subsidiary shall deny or disaffirm in writing its obligations under its Subsidiary Guarantee. If any Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare all the Notes to be due and payable immediately; provided, however, that if any Obligation with respect to Senior Bank Debt is outstanding pursuant to the Credit Agreement upon a declaration of acceleration of the Notes, the principal, premium, if any, and interest on the Notes will not be payable until the earlier of (i) the day which is five business days after written notice of acceleration is received by the Company and the Credit Agent, or (ii) the date of acceleration of the Indebtedness under the Credit Agreement. Notwithstanding the foregoing, in the case of an Event of Default arising from certain events of bankruptcy or insolvency with respect to the Company or any Restricted Subsidiary that is a Significant Subsidiary, the principal of, and premium, if any, and any accrued and unpaid interest on all outstanding Notes will become due and payable without further action or notice. Holders of the Notes may not enforce the Indenture or the Notes except as provided in the Indenture. In the event of a declaration of acceleration of the Notes because an Event of Default has occurred and is continuing as a result of the acceleration of any Indebtedness described in clause (e) of the preceding paragraph, the declaration of acceleration of the Notes shall be automatically annulled if the holders of any Indebtedness described in clause (e) have rescinded the declaration of acceleration in respect of such Indebtedness within 30 days of the date of such declaration and if (i) the annulment of the acceleration of the Notes would not conflict with any judgment or decree of a competent jurisdiction, and (ii) all existing Events of Default, except non- payment of principal or interest on the Notes that became due solely because of the acceleration of the Notes, have been cured or waived. In the case of any Event of Default occurring by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Company with the intention of avoiding payment of the premium that the Company would have had to pay if the Company then had elected to redeem the Notes pursuant to the optional redemption provisions of the Indenture, an equivalent premium shall also become and be immediately due and payable to the extent permitted by law upon the acceleration of the Notes. If an Event of Default occurs prior to , 2004 by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Company with the intention of avoiding the prohibition on redemption of the Notes prior to , 2004, then the premium specified in the Indenture shall also become immediately due and payable to the extent permitted by law upon the acceleration of the Notes. The Holders of a majority in aggregate principal amount of the Notes then outstanding by notice to the Trustee may on behalf of the Holders of all of the Notes waive any existing Default or Event of Default and its consequences under the Indenture except a continuing Default or Event of Default in the payment of interest on, or the principal of, the Notes. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of the Notes notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal or interest) if it determines that withholding notice is in their interest. The Company is required to deliver to the Trustee annually a statement regarding compliance with the Indenture, and the Company is required upon becoming aware of any Default or Event of Default, to deliver to the Trustee a statement specifying such Default or Event of Default. No Personal Liability of Directors, Officers, Employees and Stockholders No director, officer, employee, incorporator or stockholder of the Company or any Restricted Subsidiary, as such, shall have any liability for any obligations of the Company or any Restricted Subsidiary under the Notes, the Subsidiary Guarantees or the Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of Notes by accepting a Note and the Subsidiary Guarantees waives and releases 73 all such liability. The waiver and release are part of the consideration for issuance of the Notes and the Subsidiary Guarantees. Such waiver may not be effective to waive liabilities under the federal securities laws and it is the view of the Commission that such a waiver is against public policy. Legal Defeasance and Covenant Defeasance The Company may, at its option and at any time, elect to have all of its obligations discharged with respect to the outstanding Notes ("Legal Defeasance") except for (a) the rights of Holders of outstanding Notes to receive payments in respect of the principal of, premium, if any, and interest on such Notes when such payments are due, (b) the Company's obligations with respect to the Notes concerning issuing temporary Notes, registration of Notes, mutilated, destroyed, lost or stolen Notes and the maintenance of an office or agency for payment and money for security payments held in trust, (c) the rights, powers, trusts, duties and immunities of the Trustee, and the Company's obligations in connection therewith and (d) the Legal Defeasance provisions of the Indenture. In addition, the Company may, at its option and at any time, elect to have the obligations of the Company released with respect to certain covenants that are described in the Indenture ("Covenant Defeasance"), and thereafter any omission to comply with such obligations shall not constitute a Default or Event of Default with respect to the Notes. In the event Covenant Defeasance occurs, certain events (not including non-payment, bankruptcy, receivership and insolvency events) described under "Events of Default" will no longer constitute an Event of Default with respect to the Notes. In order to exercise either Legal Defeasance or Covenant Defeasance, (a) the Company must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders of the Notes, cash in Dollars, non-callable Government Securities, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, premium, if any, and interest on the outstanding Notes on the stated maturity or on the applicable redemption date, as the case may be, of such principal or installment of principal of, premium, if any, or interest on the outstanding Notes; (b) in the case of Legal Defeasance, the Company shall have delivered to the Trustee an opinion of counsel in the United States reasonably acceptable to the Trustee confirming that (i) the Company has received from, or there has been published by, the Internal Revenue Service a ruling or (ii) since the date of the Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion of counsel shall confirm that, the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred; (c) in the case of Covenant Defeasance, the Company shall have delivered to the Trustee an opinion of counsel in the United States reasonably acceptable to the Trustee confirming that the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred; (d) no Default or Event of Default shall have occurred and be continuing on the date of such deposit or insofar as Events of Default from bankruptcy or insolvency events are concerned, at any time in the period ending on the 91st day after the date of deposit; (e) such Legal Defeasance or Covenant Defeasance shall not result in a breach or violation of, or constitute a default under, any material agreement or instrument to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound; (f) the Company shall have delivered to the Trustee an opinion of counsel to the effect that after the 91st day following the deposit, the trust funds will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally; (g) the Company shall have delivered to the Trustee an Officers' Certificate stating that the deposit was not made by the Company with the intent of preferring the Holders of Notes over the other creditors of the Company with the intent of defeating, hindering, delaying or defrauding creditors of the Company or others; and (h) the Company shall have delivered to the Trustee an Officers' Certificate and an opinion of counsel, each stating that all conditions precedent provided for relating to the Legal Defeasance or the Covenant Defeasance have been complied with. Transfer and Exchange A Holder may transfer or exchange Notes in accordance with the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Company may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The 74 Company is not required to transfer or exchange any Note selected for redemption. Also, the Company is not required to transfer or exchange any Note for a period of 15 days before a selection of Notes to be redeemed. The registered Holder of a Note will be treated as the owner of it for all purposes. Book-Entry, Delivery and Form The Notes will be represented by one or more fully registered global notes (collectively, the "Global Note"). The Global Note will be deposited upon issuance with, or on behalf of, The Depository Trust Company, as Depositary (the "Depositary"), and registered in the name of the Depositary or a nominee of the Depositary (the "Global Note Registered Owner"). Except as set forth below, the Global Note may be transferred, in whole and not in part, only to another nominee of the Depositary or to a successor of the Depositary or its nominee. The Depositary has advised the Company that the Depositary is a limited-purpose trust company created to hold securities for its participating organizations (collectively, the "Participants") and to facilitate the clearance and settlement of transactions in those securities between the Participants through electronic book-entry changes in accounts of its Participants. The Participants include securities brokers and dealers (including the Underwriters), banks, trust companies, clearing corporations and certain other organizations. Access to the Depositary's systems is also available to other entities such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a Participant, either directly or indirectly (collectively, the "Indirect Participants"). Persons who are not Participants may beneficially own securities held by or on behalf of the Depositary only through the Participants or the Indirect Participants. The ownership interest and transfer of ownership interest of each actual purchaser of each security held by or on behalf of the Depositary are recorded on the records of the Participants and Indirect Participants. The Depositary has also advised the Company that, pursuant to procedures established by it, (i) upon deposit of the Global Note, the Depositary will credit the accounts of Participants designated by the Underwriters with portions of the principal amount of the Global Note and (ii) ownership of such interests in the Global Note will be shown on, and the transfer of ownership thereof will be effected only through, records maintained by the Depositary (with respect to the Participants) or by the Participants and the Indirect Participants (with respect to other owners of beneficial interests in the Global Note). The laws of some states require that certain persons take physical delivery in definitive form of securities that they own. Consequently, the ability to transfer the Notes will be limited to that extent. Except as provided below, owners of interests in the Global Note will not have Notes registered in their names, will not receive physical delivery of the Notes in definitive form and will not be considered the registered owners or holders thereof under the Indenture for any purpose. Payments in respect of the principal of and premium, if any, and interest on any Notes registered in the name of the Global Note Registered Owner will be payable by the Trustee to the Global Note Registered Owner in its capacity as the registered holder under the Indenture. Under the terms of the Indenture, the Company and the Trustee will treat the persons in whose names the Notes, including the Global Note, are registered as the owners thereof for the purpose of receiving such payments and for any and all other purposes whatsoever. Consequently, neither the Company, the Trustee nor any agent of the Company or the Trustee has or will have any responsibility or liability for (i) any aspect of the Depositary's records or any Participant's records relating to or payments made on account of beneficial ownership interests in the Global Note, or for maintaining, supervising or reviewing any of the Depositary's records or any Participant's records relating to the beneficial ownership interests in the Global Note or (ii) any other matter relating to the actions and practices of the Depositary or any of its Participants. The Depositary has advised the Company that its current practice, upon receipt of any payment in respect of securities such as the Notes (including principal and interest), is to credit the accounts of the relevant Participants with the payment on the payment date, in amounts proportionate to their respective holdings in principal amount of beneficial interests in the relevant security as shown on the records of the Depositary. Payments by the Participants and the Indirect Participants to the beneficial owners of the Notes will be governed by standing instructions and customary practices and will be the responsibility of the Participants or the Indirect Participants and will not be the responsibility of the Depositary, the Trustee or the Company. Neither the Company nor the Trustee will be liable for any delay by the Depositary or any of its Participants in identifying the beneficial owners of the Notes, and 75 the Company and Trustee may conclusively rely on and will be protected in relying on instructions from the Global Note Registered Owner for all purposes. The Global Note is exchangeable for definitive Notes: (i) if the Depositary notifies the Company that it is unwilling or unable to continue as Depositary of the Global Note and the Company thereupon fails to appoint a successor Depositary; (ii) if the Company, at its option, notifies the Trustee in writing that it elects to cause the issuance of the Notes in definitive registered form; or (iii) if there shall have occurred and be continuing an Event of Default or any event which after notice or lapse of time or both would be an Event of Default with respect to the Notes. Such definitive Notes shall be registered in the names of the owners of the beneficial interests in the Global Note as provided by the Participants. Upon issuance of the Notes in definitive form, the Trustee is required to register the Notes in the name of, and cause the Notes to be delivered to, the person or persons (or the nominee thereof) identified as the beneficial owners as the Depositary shall direct. Settlement for purchases of beneficial interests in the Global Note upon the original issuance thereof will be required to be made by wire transfer in immediately available funds. Payments in respect of the Notes represented by the Global Note (including principal, premium, if any, and interest) will be made by wire transfer in immediately available funds to the accounts specified by the Global Note Registered Owner. With respect to the definitive Notes, the Company will make all payments of principal, premium, if any, and interest by wire transfer in immediately available funds to the accounts specified by the Holders thereof or, if no such account is specified, by mailing a check to such Holder's registered address. Secondary trading in long-term notes of corporate issuers is generally settled in clearing-house or next-day funds. In contrast, the beneficial interests in the Global Note are expected to trade in the Depositary's Same-Day Funds Settlement System, in which secondary market trading activity in those beneficial interests would be required by the Depositary to settle in immediately available funds. There is no assurance as to the effect, if any, that settlement in immediately available funds would have on trading activity in such beneficial interests. Amendment, Supplement and Waiver Except as provided in the next two succeeding paragraphs, the Indenture or the Notes may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the Notes then outstanding (including consents obtained in connection with a tender offer or exchange offer for Notes), and any existing default or compliance with any provision of the Indenture or the Notes may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Notes (including consents obtained in connection with a tender offer or exchange offer for Notes). Without the consent of each Holder affected, an amendment or waiver may not (with respect to any Notes held by a non-consenting Holder of Notes): (a) reduce the principal amount of Notes whose Holders must consent to an amendment, supplement or waiver; (b) reduce the principal of or change the fixed maturity of any Note or alter the provisions with respect to the redemption of the Notes in a manner adverse to the Holders of the Notes; (c) reduce the rate of or change the time for payment of interest on any Note; (d) waive a Default or Event of Default in the payment of principal of or premium, if any, or interest on the Notes (except a rescission of acceleration of the Notes by the Holders of at least a majority in aggregate principal amount of the then outstanding Notes and a waiver of the payment default that resulted from such acceleration); (e) make any Note payable in money other than that stated in the Notes; (f) make any change in the provisions of the Indenture relating to waivers of past Defaults or the rights of Holders of Notes to receive payments of principal of or premium, if any, or interest on the Notes; (g) waive a redemption payment with respect to any Note (other than a payment required by one of the covenants described above under the caption "Repurchase at the Option of Holders"); (h) except pursuant to the Indenture, release any Restricted Subsidiary from its obligations under its Subsidiary Guarantee, or change any Subsidiary Guarantee in any manner that would materially adversely affect the Holders; or (i) make any change in the foregoing amendment and waiver provisions. Notwithstanding the foregoing, without the consent of any Holder of Notes, the Company and the Trustee may amend or supplement the Indenture or the Notes to cure any ambiguity, defect or inconsistency, to provide for uncertificated Notes in addition to or in place of certificated Notes, to provide for the assumption of the Company's obligations to Holders of the Notes in the case of a merger or consolidation, to make any change that would provide any additional rights or benefits to the Holders of the Notes or that does not adversely affect the legal rights under 76 the Indenture of any such Holder, or to comply with requirements of the Commission in order to effect or maintain the qualification of the Indenture under the Trust Indenture Act. Concerning the Trustee The Indenture contains certain limitations on the rights of the Trustee, should it become a creditor of the Company, to obtain payment of claims in certain cases or to realize on certain property received in respect of any such claim as security or otherwise. The Trustee will be permitted to engage in other transactions; however, if it acquires any conflicting interest it must eliminate such conflict within 90 days, apply to the Commission for permission to continue or resign. The Holders of a majority in principal amount of the then outstanding Notes will have the right to direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee, subject to certain exceptions. The Indenture provides that in case an Event of Default shall occur (which shall not be cured), the Trustee will be required, in the exercise of its power, to use the degree of care of a prudent man in the conduct of his own affairs. Subject to such provisions, the Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request of any Holder of Notes, unless such Holder shall have offered to the Trustee security and indemnity satisfactory to it against any loss, liability or expense. Additional Information Anyone who receives this Prospectus may obtain a copy of the Indenture without charge by writing to Iron Mountain Incorporated, 745 Atlantic Avenue, Boston, MA 02111, Attention: Executive Vice President/Chief Financial Officer. Certain Definitions Set forth below are certain defined terms used in the Indenture. Reference is made to the Indenture for a full disclosure of all such terms, as well as any other capitalized terms used herein for which no definition is provided. "Acquired Debt" means, with respect to any specified Person, (a) Indebtedness of any other Person, existing at the time such other Person merged with or into or became a Subsidiary of such specified Person, including Indebtedness incurred in connection with, or in contemplation of, such other Person merging with or into or becoming a Subsidiary of such specified Person and (b) Indebtedness encumbering any asset acquired by such specified Person. "Acquisition EBITDA" means, as of any date of determination, with respect to an Acquisition EBITDA Entity, the sum of (a) EBITDA of such Acquisition EBITDA Entity for its last fiscal quarter for which financial statements are available at such date of determination, multiplied by four (or if such quarterly statements are not available, EBITDA for the most recent fiscal year for which financial statements are available), plus (b) projected quantifiable improvements in operating results (on an annualized basis) due to cost reductions calculated in good faith by the Company or one of its Restricted Subsidiaries, as certified by an Officers' Certificate filed with the Trustee, without giving effect to any operating losses of the acquired Person. "Acquisition EBITDA Entity" means, as of any date of determination, a business or Person (a) which has been acquired by the Company or one of its Restricted Subsidiaries and with respect to which financial results on a consolidated basis with the Company have not been made available for an entire fiscal quarter or (b) which is to be acquired in whole or in part with Indebtedness, the incurrence of which will require the calculation on such date of the Acquisition EBITDA of such Acquisition EBITDA Entity for purposes of the covenant entitled "Incurrence of Indebtedness and Issuance of Preferred Stock." "Adjusted EBITDA" means, as of any date of determination and without duplication, the sum of (a) EBITDA of the Company and its Restricted Subsidiaries for the most recent fiscal quarter for which internal financial statements are available at such date of determination, multiplied by four, and (b) Acquisition EBITDA of each business or Person that is an Acquisition EBITDA Entity as of such date of determination, multiplied by a fraction, the numerator of which is three minus the number of months (and/or any portion thereof) in such most recent fiscal quarter for which the financial results of such Acquisition EBITDA Entity are included in the EBITDA of the Company and its Restricted Subsidiaries under clause (a) above, and (ii) the denominator of which is three. The 77 effects of unusual or non-recurring items in respect of the Company, a Restricted Subsidiary or an Acquisition EBITDA Entity occurring in any period shall be excluded in the calculation of Adjusted EBITDA. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, "control" (including, with correlative meanings, the terms "controlling," "controlled by" and "under common control with"), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise; provided, however, that beneficial ownership of 10% or more of the voting securities of a Person shall be deemed to be control. "Capital Lease Obligation" means, at the time any determination thereof is to be made, the amount of the liability in respect of a capital lease that would at such time be so required to be capitalized on the balance sheet in accordance with GAAP. "Capital Stock" means any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock, including, without limitation, with respect to partnerships, partnership interests (whether general or limited) and any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, such partnership. "Cash Equivalents" means (a) securities with maturities of one year or less from the date of acquisition, issued, fully guaranteed or insured by the United States Government or any agency thereof, (b) certificates of deposit, time deposits, overnight bank deposits, bankers acceptances and repurchase agreements issued by a Qualified Issuer having maturities of 270 days or less from the date of acquisition, (c) commercial paper of an issuer rated at least A-2 by Standard & Poor's Rating Group, a division of McGraw Hill, Inc., or P-2 by Moody's Investors Service, or carrying an equivalent rating by a nationally recognized rating agency if both of the two named rating agencies cease publishing ratings of investments and having maturities of 270 days or less from the date of acquisition, (d) money market accounts or funds with or issued by Qualified Issuers and (e) Investments in money market funds substantially all of the assets of which are comprised of securities and other obligations of the types described in clauses (a) through (c) above. "Consolidated Adjusted Net Income" means, for any period, the net income (or net loss) of the Company and its Restricted Subsidiaries for such period as determined on a consolidated basis in accordance with GAAP, adjusted to the extent included in calculating such net income or loss by excluding (a) any net after-tax extraordinary gains or losses (less all fees and expenses relating thereto), (b) any net after-tax gains or losses (less all fees and expenses relating thereto) attributable to Asset Sales, (c) the portion of net income (or loss) of any Person (other than the Company or a Restricted Subsidiary), including Unrestricted Subsidiaries, in which the Company or any Restricted Subsidiary has an ownership interest, except to the extent of the amount of dividends or other distributions actually paid to the Company or any Restricted Subsidiary in cash dividends or distributions by such Person during such period, and (d) the net income (or loss) of any Person combined with the Company or any Restricted Subsidiary on a "pooling of interests" basis attributable to any period prior to the date of combination. "Consolidated Income Tax Expense" means, for any period, the provision for federal, state, local and foreign income taxes of the Company and its Restricted Subsidiaries for such period as determined on a consolidated basis in accordance with GAAP. "Consolidated Interest Expense" means, for any period, without duplication, the sum of (a) the amount which, in conformity with GAAP, would be set forth opposite the caption "interest expense" (or any like caption) on a consolidated statement of operations of the Company and its Restricted Subsidiaries for such period, including, without limitation, (i) amortization of debt discount, (ii) the net cost of interest rate contracts (including amortization of discounts), (iii) the interest portion of any deferred payment obligation, (iv) amortization of debt issuance costs, and (v) the interest component of Capital Lease Obligations of the Company and its Restricted Subsidiaries, plus (b) all interest on any Indebtedness of any other Person guaranteed and paid by the Company or any of its Restricted Subsidiaries; provided, however, that Consolidated Interest Expense will not include any gain or loss from extinguishment of debt, including write-off of debt issuance costs. "Consolidated Non-Cash Charges" means, for any period, the aggregate depreciation, amortization and other non-cash expenses of the Company and its Restricted Subsidiaries reducing Consolidated Adjusted Net Income for 78 such period, determined on a consolidated basis in accordance with GAAP (excluding any such non-cash charge that requires an accrual of or reserve for cash charges for any future period). "Credit Agent" means The Chase Manhattan Bank, in its capacity as administrative agent for the lenders party to the Credit Agreement, or any successor or successors party thereto. "Credit Agreement" means that certain Credit Agreement, dated as of December 10, 1990, as amended and restated as of April 15, 1993, and as further amended and restated as of January 31, 1995, among the Company, the lenders party thereto and the Credit Agent, as the same may be refunded, replaced or refinanced by the New Credit Facility, and in each case as amended, restated, supplemented, modified, renewed, refunded, increased, extended, replaced or refinanced from time to time. "Default" means any event that is or with the passage of time or the giving of notice or both would be an Event of Default. "Designated Senior Debt" means (a) Senior Bank Debt and (b) other Senior Debt the principal amount of which is $50.0 million or more at the date of designation by the Company in a written instrument delivered to the Trustee; provided that Senior Debt designated as Designated Senior Debt pursuant to clause (b) shall cease to be Designated Senior Debt at any time that the aggregate principal amount thereof outstanding is $10.0 million or less. "Disqualified Stock" means any Capital Stock which, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event, matures or is mandatorily redeemable, for cash or other property (other than Capital Stock that is not Disqualified Stock) pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the Holder thereof, in whole or in part, in each case on or prior to the stated maturity of the Notes. "Dollars" and "$" mean lawful money of the United States of America. "EBITDA" means for any period Consolidated Adjusted Net Income for such period increased by (a) Consolidated Interest Expense for such period, plus (b) Consolidated Income Tax Expense for such period, plus (c) Consolidated Non-Cash Charges for such period. "Equity Interests" means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock). "Equity Proceeds" means (a) with respect to Equity Interests (or debt securities converted into Equity Interests) issued or sold for cash Dollars, the aggregate amount of such cash Dollars and (b) with respect to Equity Interests (or debt securities converted into Equity Interests) issued or sold for any consideration other than cash Dollars, the aggregate Market Price thereof computed on the date of the issuance or sale thereof. "Excluded Restricted Subsidiary" means any Wholly Owned Restricted Subsidiary principally engaged in the records management business domiciled outside the United States of America if the issuance of a Subsidiary Guarantee by such Subsidiary would, as determined in a resolution of the Board of Directors set forth in an Officers' Certificate delivered to the Trustee, create a tax disadvantage that is material in relation to the aggregate amount of the Company's and any Restricted Subsidiary's Investment or proposed Investment therein. "Existing Indebtedness" means Indebtedness of the Company and its Subsidiaries (other than under the Credit Agreement) in existence on the date of the Indenture, until such amounts are repaid. "Government Securities" means direct obligations of, or obligations guaranteed by, the United States of America for the payment of which guarantee or obligations the full faith and credit of the United States of America is pledged. "Guarantee" means, as applied to any obligation, (a) a guarantee (other than by endorsement of negotiable instruments for collection in the ordinary course of business), direct or indirect, in any manner, of any part or all of such obligation and (b) an agreement, direct or indirect, contingent or otherwise, the practical effect of which is to assure in any way the payment or performance (or payment of damages in the event of non-performance) of all or any part of such obligation, including, without limiting the foregoing, the obligation to reimburse amounts drawn down under letters of credit securing such obligations. 79 "Hedging Obligations" means, with respect to any Person, the obligations of such Person under (a) interest rate swap agreements, interest rate cap agreements and interest rate collar agreements and (b) other agreements or arrangements designed to protect such Person against fluctuations in interest rates. "Indebtedness" means (without duplication), with respect to any Person, whether recourse is to all or a portion of the assets of such Person, and whether or not contingent, (a) every obligation of such Person for money borrowed, (b) every obligation of such Person evidenced by bonds, debentures, notes or other similar instruments, (c) every reimbursement obligation of such Person with respect to letters of credit, bankers' acceptances or similar facilities issued for the account of such Person, (d) every obligation of such Person issued or assumed as the deferred purchase price of property or services, (e) every Capital Lease Obligation and every obligation of such Person in respect of Sale and Leaseback Transactions that would be required to be capitalized on the balance sheet in accordance with GAAP, (f) all Disqualified Stock of such Person valued at the greater of its voluntary or involuntary maximum fixed repurchase price, plus accrued and unpaid dividends (unless included in such maximum repurchase price), (g) all obligations of such Person under or with respect to Hedging Obligations which would be required to be reflected on the balance sheet as a liability of such Person in accordance with GAAP and (h) every obligation of the type referred to in clauses (a) through (g) of another Person and dividends of another Person the payment of which, in either case, such Person has guaranteed. For purposes of this definition, the "maximum fixed repurchase price" of any Disqualified Stock that does not have a fixed repurchase price will be calculated in accordance with the terms of such Disqualified Stock as if such Disqualified Stock were repurchased on any date on which Indebtedness is required to be determined pursuant to the Indenture, and if such price is based upon, or measured by, the fair market value of such Disqualified Stock, such fair market value will be determined in good faith by the board of directors of the issuer of such Disqualified Stock. Notwithstanding the foregoing, trade accounts payable and accrued liabilities arising in the ordinary course of business and any liability for federal, state or local taxes or other taxes owed by such Person shall not be considered Indebtedness for purposes of this definition. The amount outstanding at any time of any Indebtedness issued with original issue discount is the aggregate principal amount at maturity of such Indebtedness, less the remaining unamortized portion of the original issue discount of such Indebtedness at such time, as determined in accordance with GAAP. "Investments" means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the forms of loans (including Guarantees), advances or capital contributions (excluding commission, travel and similar advances to officers and employees made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities and all other items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP. "Leverage Ratio" means, at any date, the ratio of (a) the aggregate principal amount of Indebtedness of the Company and its Restricted Subsidiaries outstanding as of the most recent available quarterly or annual balance sheet to (b) Adjusted EBITDA, after giving pro forma effect, without duplication, to (i) the incurrence, repayment or retirement of any Indebtedness by the Company or its Restricted Subsidiaries since the last day of the most recent full fiscal quarter of the Company, (ii) if the Leverage Ratio is being determined in connection with the incurrence of Indebtedness by the Company or a Restricted Subsidiary, such Indebtedness, and (iii) the Indebtedness to be incurred in connection with the acquisition of any Acquisition EBITDA Entity. "Lien" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law (including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code, or equivalent statutes, of any jurisdiction). "Market Price" means, (a) with respect to the calculation of Equity Proceeds from the issuance or sale of debt securities which have been converted into Equity Interests, the value received upon the original issuance or sale of such converted debt securities, as determined reasonably and in good faith by the Board of Directors, and (b) with respect to the calculation of Equity Proceeds from the issuance or sale of Equity Interests, the average of the daily closing prices for such Equity Interests for the 20 consecutive trading days preceding the date of such computation. The closing price for each day shall be (a) if such Equity Interests are then listed or admitted to trading on the New York Stock Exchange, the closing price on the NYSE Consolidated Tape (or any successor consolidated tape reporting transactions on the New York Stock Exchange) or, if such composite tape shall not be in use or shall not report transactions in such Equity Interests, or if such Equity Interests shall be listed on a stock exchange other 80 than the New York Stock Exchange (including for this purpose the Nasdaq National Market), the last reported sale price regular way for such day, or in case no such reported sale takes place on such day, the average of the closing bid and asked prices regular way for such day, in each case on the principal national securities exchange on which such Equity Interests are listed or admitted to trading (which shall be the national securities exchange on which the greatest number of such Equity Interests have been traded during such 20 consecutive trading days), or (b) if such Equity Interests are not listed or admitted to trading on any such exchange, the average of the closing bid and asked prices thereof in the over-the-counter market as reported by the National Association of Securities Dealers Automated Quotation System or any successor system, or if not included therein, the average of the closing bid and asked prices thereof furnished by two members of the National Association of Securities Dealers selected reasonably and in good faith by the Board of Directors for that purpose. In the absence of one or more such quotations, the Market Price for such Equity Interests shall be determined reasonably and in good faith by the Board of Directors. "Net Proceeds" means the aggregate cash proceeds received by the Company or any of its Restricted Subsidiaries in respect of any Asset Sale, which amount is equal to the excess, if any, of (a) the cash received by the Company or such Restricted Subsidiary (including any cash payments received by way of deferred payment pursuant to, or monetization of, a note or installment receivable or otherwise, but only as and when received) in connection with such disposition over (b) the sum of (i) the amount of any Indebtedness which is secured by such asset and which is required to be repaid in connection with the disposition thereof, plus (ii) the reasonable out- of-pocket expenses incurred by the Company or such Restricted Subsidiary, as the case may be, in connection with such disposition or in connection with the transfer of such amount from such Restricted Subsidiary to the Company, plus (iii) provisions for taxes, including income taxes, attributable to the disposition of such asset or attributable to required prepayments or repayments of Indebtedness with the proceeds thereof, plus (iv) if the Company does not first receive a transfer of such amount from the relevant Restricted Subsidiary with respect to the disposition of an asset by such Restricted Subsidiary and such Restricted Subsidiary intends to make such transfer as soon as practicable, the out-of-pocket expenses and taxes that the Company reasonably estimates will be incurred by the Company or such Restricted Subsidiary in connection with such transfer at the time such transfer is expected to be received by the Company (including, without limitation, withholding taxes on the remittance of such amount). "Obligations" means any principal, interest (including post-petition interest, whether or not allowed as a claim in any proceeding), penalties, fees, costs, expenses, indemnifications, reimbursements, damages and other liabilities payable under or in connection with any Indebtedness. "Officers' Certificate" means a certificate signed, unless otherwise specified, by any two of the Chairman of the Board, a Vice Chairman of the Board, the President, the Chief Financial Officer, the Controller, or an Executive Vice President of the Company, and delivered to the Trustee. "Permitted Investments" means (a) any Investments in the Company or in a Restricted Subsidiary (other than an Excluded Restricted Subsidiary) of the Company, including without limitation the Guarantee of Indebtedness permitted under the covenant entitled "Incurrence of Indebtedness and Issuance of Preferred Stock;" (b) any Investments in Cash Equivalents; (c) Investments by the Company or any Restricted Subsidiary of the Company in a Person, if as a result of such Investment (i) such Person becomes a Restricted Subsidiary (other than an Excluded Restricted Subsidiary) of the Company or (ii) such Person is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, the Company or a Restricted Subsidiary (other than an Excluded Restricted Subsidiary) of the Company; (d) Investments in assets (including accounts and notes receivable) owned or used in the ordinary course of business; (e) Investments for any purpose related to the Company's records management business in an aggregate outstanding amount not to exceed $10.0 million; and (f) Investments by the Company or a Restricted Subsidiary (other than an Excluded Restricted Subsidiary) in one or more Excluded Restricted Subsidiaries, the aggregate outstanding amount of which does not exceed 10% of the consolidated assets of the Company and its Restricted Subsidiaries. "Permitted Liens" means: (a) Liens existing as of the date of issuance of the Notes; (b) Liens on property or assets of the Company or any Restricted Subsidiary securing Senior Debt; 81 (c) Liens on any property or assets of a Restricted Subsidiary granted in favor of the Company or any Wholly Owned Restricted Subsidiary; (d) Liens securing the Notes or the Guarantees; (e) any interest or title of a lessor under any Capital Lease Obligation or Sale and Leaseback Transaction so long as the Indebtedness, if any, secured by such Lien does not exceed the principal amount of Indebtedness permitted under the covenant entitled "Incurrence of Indebtedness and Issuance of Preferred Stock;" (f) Liens securing Acquired Debt created prior to (and not in connection with or in contemplation of) the incurrence of such Indebtedness by the Company or any Restricted Subsidiary; provided that such Lien does not extend to any property or assets of the Company or any Restricted Subsidiary other than the assets acquired in connection with the incurrence of such Acquired Debt; (g) Liens securing Hedging Obligations permitted to be incurred pursuant to clause (g) of the covenant entitled "Incurrence of Indebtedness and Issuance of Preferred Stock;" (h) Liens arising from purchase money mortgages and purchase money security interests, or in respect of the construction of property or assets, incurred in the ordinary course of the business of the Company or a Restricted Subsidiary; provided that (i) the related Indebtedness is not secured by any property or assets of the Company or any Restricted Subsidiary other than the property and assets so acquired or constructed and (ii) the Lien securing such Indebtedness is created within 60 days of such acquisition or construction; (i) statutory Liens or landlords' and carriers', warehousemen's, mechanics', suppliers', materialmen's, repairmen's or other like Liens arising in the ordinary course of business and with respect to amounts not yet delinquent or being contested in good faith by appropriate proceedings, if a reserve or other appropriate provision, if any, as shall be required in conformity with GAAP shall have been made therefor; (j) Liens for taxes, assessments, government charges or claims with respect to amounts not yet delinquent or that are being contested in good faith by appropriate proceedings diligently conducted, if a reserve or other appropriate provision, if any, as is required in conformity with GAAP has been made therefor; (k) Liens incurred or deposits made to secure the performance of tenders, bids, leases, statutory obligations, surety and appeal bonds, government contracts, performance bonds and other obligations of a like nature incurred in the ordinary course of business (other than contracts for the payment of money); (l) easements, rights-of-way, restrictions and other similar charges or encumbrances not interfering in any material respect with the business of the Company or any Restricted Subsidiary incurred in the ordinary course of business; (m) Liens arising by reason of any judgment, decree or order of any court so long as such Lien is adequately bonded and any appropriate legal proceedings that may have been duly initiated for the review of such judgment, decree or order shall not have been finally terminated or the period within which such proceedings may be initiated shall not have expired; (n) Liens arising under options or agreements to sell assets; (o) other Liens securing obligations incurred in the ordinary course of business, which obligations do not exceed $1.0 million in the aggregate at any one time outstanding; and (p) any extension, renewal or replacement, in whole or in part, of any Lien described in the foregoing clauses (a) through (o); provided that any such extension, renewal or replacement shall not extend to any additional property or assets. "Person" means any individual, corporation, limited liability company, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. "Principal Stockholders" means each of Vincent J. Ryan, Schooner Capital Corporation, C. Richard Reese, Eugene B. Doggett, and their respective Affiliates. 82 "Qualified Equity Offering" means an offering of Capital Stock, other than Disqualified Stock, of the Company for Dollars, whether registered or exempt from registration under the Securities Act. "Qualified Issuer" means (a) any lender party to the Credit Agreement or (b) any commercial bank (i) which has capital and surplus in excess of $500,000,000 and (ii) the outstanding short- term debt securities of which are rated at least A-2 by Standard & Poor's Rating Group, a division of McGraw-Hill, Inc. or at least P-2 by Moody's Investors Service, or carry an equivalent rating by a nationally recognized rating agency if both of the two named rating agencies cease publishing ratings of investments. "Qualifying Sale and Leaseback Transaction" means any Sale and Leaseback Transaction between the Company or any of its Restricted Subsidiaries and any bank, insurance company or other lender or investor providing for the leasing to the Company or such Restricted Subsidiary of any property (real or personal) which has been or is to be sold or transferred by the Company or such Restricted Subsidiary to such lender or investor or to any Person to whom funds have been or are to be advanced by such lender or investor and where the property in question has been constructed or acquired after the date of the Indenture. "Refinancing Indebtedness" means new Indebtedness incurred or given in exchange for, or the proceeds of which are used to repay, redeem, defease, extend, refinance, renew, replace or refund, other Indebtedness; provided, however, that (a) the principal amount of such new Indebtedness shall not exceed the principal amount of Indebtedness so repaid, redeemed, defeased, extended, refinanced, renewed, replaced or refunded (plus the amount of fees, premiums, consent fees, prepayment penalties and expenses incurred in connection therewith); (b) such Refinancing Indebtedness shall have a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of the Indebtedness so repaid, redeemed, defeased, extended, refinanced, renewed, replaced or refunded or shall mature after , 2006; (c) to the extent such Refinancing Indebtedness refinances Indebtedness that has a final maturity date occurring after , 2006, such new Indebtedness shall have a final scheduled maturity not earlier than the final scheduled maturity of the Indebtedness so repaid, redeemed, defeased, extended, refinanced, renewed, replaced or refunded and shall not permit redemption at the option of the holder earlier than the earliest date of redemption at the option of the holder of the Indebtedness so repaid, redeemed, defeased, extended, refinanced, renewed, replaced or refunded; (d) to the extent such Refinancing Indebtedness refinances Indebtedness subordinate to the Notes, such Refinancing Indebtedness shall be subordinated in right of payment to the Notes and to the extent such Refinancing Indebtedness refinances Notes or Indebtedness pari passu with the Notes, such Refinancing Indebtedness shall be pari passu with or subordinated in right of payment to the Notes, in each case on terms at least as favorable to the holders of Notes as those contained in the documentation governing the Indebtedness so repaid, redeemed, defeased, extended, refinanced, renewed, replaced or refunded; and (e) with respect to Refinancing Indebtedness incurred by a Restricted Subsidiary, such Refinancing Indebtedness shall rank no more senior, and shall be at least as subordinated, in right of payment to the Subsidiary Guarantee of such Restricted Subsidiary as the Indebtedness being extended, refinanced, renewed, replaced or refunded. "Restricted Subsidiary" means (a) each direct or indirect Subsidiary of the Company existing on the date of the Indenture and (b) any other direct or indirect Subsidiary of the Company formed, acquired or existing after the date of the Indenture, in each case which is not designated by the Board of Directors as a "Unrestricted Subsidiary." "Sale and Leaseback Transaction" means any transaction or series of related transactions pursuant to which a Person sells or transfers any property or asset in connection with the leasing, or the resale against installment payments, of such property or asset to the seller or transferor. "Senior Bank Debt" means all Obligations outstanding under or in connection with the Credit Agreement (including Guarantees of such Obligations by Subsidiaries of the Company). "Senior Debt" means (a) the Senior Bank Debt and (b) any other Indebtedness permitted to be incurred by the Company or any Restricted Subsidiary, as the case may be, under the terms of the Indenture, unless the instrument under which such Indebtedness is incurred expressly provides that it is (i) on a parity with or subordinated in right of payment to the Notes or (ii) subordinated to Senior Debt on terms substantially similar to those of the Notes. Notwithstanding anything to the contrary in the foregoing, Senior Debt shall not include (i) any liability for federal, state, local or other taxes owed or owing by the Company, (ii) any Indebtedness of the Company to any of its Subsidiaries or other Affiliates, (iii) any trade payables or (iv) any Indebtedness that is incurred in violation of the Indenture, provided that such Indebtedness shall be deemed not to have been incurred in violation of the 83 Indenture for purposes of this clause (iv) if, in the case of any obligations under the Credit Agreement, the holders of such obligations or their agent or representative shall have received a representation from the Company to the effect that the incurrence of such Indebtedness does not violate the provisions of the Indenture. "Significant Subsidiary" means any Subsidiary that would be a "significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Act, as such Regulation is in effect on the date hereof. "Subsidiary" means, with respect to any Person, any corporation, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of such Person or a combination thereof. "Unrestricted Subsidiary" means (a) any Subsidiary that is designated by the Board of Directors as an Unrestricted Subsidiary in accordance with the "Unrestricted Subsidiaries" covenant and (b) any Subsidiary of an Unrestricted Subsidiary. "Voting Stock" means any class or classes of Capital Stock pursuant to which the holders thereof have the general voting power under ordinary circumstances to elect at least a majority of the board of directors, managers or trustees of any Person (irrespective of whether or not, at the time, stock of any other class or classes has, or might have, voting power by reason of the happening of any contingency). "Weighted Average Life to Maturity" means, when applied to any Indebtedness at any date, the number of years obtained by dividing (a) the sum of the products obtained by multiplying (x) the amount of each then remaining installment, sinking fund, serial maturity or other required payment of principal, including payment at final maturity, in respect thereof, by (y) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment, by (b) the then outstanding principal amount of such Indebtedness. "Wholly Owned Restricted Subsidiary" means any Restricted Subsidiary of the Company all of the outstanding Capital Stock or other ownership interests of which (other than directors' qualifying shares) shall at the time be owned by the Company or by one or more Wholly Owned Restricted Subsidiaries of the Company. DESCRIPTION OF NEW CREDIT FACILITY The Company intends to replace the Credit Agreement with the New Credit Facility. The following description is based upon a term sheet relating to the New Credit Facility. No assurances can be given that the Company will enter into the New Credit Facility on these or any other terms. The Offering is not conditioned on the closing of the New Credit Facility. It is anticipated that the New Credit Facility will be a $100 million revolving credit facility with up to $2 million of availability for letters of credit. The New Credit Facility is expected to terminate on September 30, 2001, at which time all outstanding revolving credit loans and other amounts payable thereunder will become due. Borrowings under the New Credit Facility may be used to finance possible future acquisitions, as well as for working capital and general corporate purposes. As with the Credit Agreement, the Company's obligations under the New Credit Facility are expected to be guaranteed by substantially all of the Company's subsidiaries; however, unlike the Credit Agreement, the New Credit Facility is expected to be secured only by the pledge of the stock of such subsidiaries. Prepayments of outstanding borrowings under the New Credit Facility will be required in certain circumstances out of the proceeds of certain insurance payments, condemnations, issuances of indebtedness and asset dispositions. The New Credit Facility is expected to permit the Company to elect from time to time, as to all or any portion of the borrowings thereunder, an interest rate based upon (i) a fluctuating rate equal to the highest of (x) the prime rate of The Chase Manhattan Bank, (y) the secondary market rate for three-month certificates of deposit (adjusted for statutory reserves and FDIC assessments), plus 1%, or (z) the overnight federal funds rate plus 1/2 of 1% (the "Adjusted Base Rate") or (ii) the interest rates prevailing on the date of determination in the London interbank market (the "Eurodollar Rate") for the interest period selected by the Company, plus, in the case of either (i) or (ii), a margin (the "Applicable Margin") over the Adjusted Base Rate or the Eurodollar Rate. The Applicable Margins for loans bearing interest at a rate based upon the Adjusted Base Rate or the Eurodollar Rate ("Eurodollar Loans"), and commitment fees on the undrawn portion of the New Credit Facility, will vary based on the Company's 84 achieving and maintaining specified ratios of funded indebtedness (net of cash and cash equivalents on hand) to EBITDA. The New Credit Facility is expected to provide for payment by the Company in respect of letters of credit of: (i) a per annum fee equal to the Applicable Margin for Eurodollar Loans from time to time in effect; (ii) a fronting fee of 1/4 of 1%; plus (iii) customary issuing fees and expenses. The New Credit Facility is expected to contain covenants restricting the ability of the Company and its subsidiaries to, among other things: (i) declare dividends or redeem or repurchase capital stock; (ii) make optional payments and modifications of subordinated and other debt instruments; (iii) incur liens and engage in sale and leaseback transactions; (iv) make loans and investments; (v) incur indebtedness and contingent obligations; (vi) make capital expenditures; (vii) engage in mergers, acquisitions and asset sales; (viii) enter into transactions with affiliates; and (ix) make changes in their lines of business. It is also expected that the Company will be required to comply with financial covenants with respect to: (i) a maximum leverage ratio; (ii) a minimum interest coverage ratio; and (iii) a minimum fixed charge coverage ratio. The Company will also be required to make certain customary affirmative covenants. Events of default under the New Credit Facility are expected to include: (i) the Company's failure to pay principal or interest when due; (ii) the Company's material breach of any covenant, representation or warranty contained in the loan documents; (iii) customary cross-default provisions; (iv) events of bankruptcy, insolvency or dissolution of the Company or its subsidiaries; (v) the levy of certain judgments against the Company, its subsidiaries or their assets; (vi) certain adverse events under ERISA plans of the Company or its subsidiaries; (vii) the actual or asserted invalidity of security documents or guarantees of the Company or its subsidiaries; (viii) a change of control of the Company; and (ix) the creation of certain environmental liabilities. DESCRIPTION OF CAPITAL STOCK The Company's authorized capital stock consists of 13,000,000 shares of Common Stock, 1,000,000 shares of Nonvoting Common Stock, $.01 par value per share (the "Nonvoting Common Stock"), and 2,000,000 shares of Preferred Stock, $.01 par value per share. On September 3, 1996, 9,627,141 shares of Common Stock were outstanding and 500,000 shares of Nonvoting Common Stock were outstanding. Holders of shares of Common Stock are entitled to one vote per share for each matter submitted to the stockholders of the Company without cumulative voting rights in the election of Directors. Holders of Nonvoting Common Stock have no right to vote on any matter voted on by the stockholders of the Company, except as may otherwise be provided by law. In all other respects (other than as to convertibility), the rights of holders of the Common Stock and the Nonvoting Common Stock are identical. Shares of Nonvoting Common Stock are convertible, at any time at the option of the holder, on a share-for-share basis into shares of Common Stock without the payment of any additional consideration; provided that the conversion of any shares of Nonvoting Common Stock by a "bank holding company" under the Bank Holding Company Act of 1956, as amended, or an affiliate thereof is prohibited if the conversion of the total number of shares of Nonvoting Common Stock held by such holder would cause it to be in violation of such Act. The 2,000,000 authorized and unissued shares of Preferred Stock may be issued with such designations, preferences, limitations and relative rights as the Board of Directors may authorize including, but not limited to: (i) the distinctive designation of each series and the number of shares that will constitute such series; (ii) the voting rights, if any, of shares of such series; (iii) the dividend rate on the shares of such series, any restriction, limitation or condition upon the payment of such dividends, whether dividends shall be cumulative, and the dates on which dividends are payable; (iv) the prices at which, and the terms and conditions on which, the shares of such series may be redeemed, if such shares are redeemable; (v) the purchase or sinking fund provisions, if any, for the purchase or redemption of shares of such series; (vi) any preferential amount payable upon shares of such series in the event of the liquidation, dissolution or winding-up of the Company or the distribution of its assets; and (vii) the price or rates of conversion at which, and the terms and conditions on which the shares of such series may be converted into other securities, if such shares are convertible. Although the Company has no present intention to issue shares of Preferred Stock, the issuance of Preferred Stock, or the issuance of rights to purchase such shares, could discourage an unsolicited acquisition proposal and the rights of holders of Common Stock will be subject to, and may be adversely affected by, the rights of holders of any Preferred Stock that may be issued in the future. 85 UNDERWRITING Subject to the terms and conditions set forth in the Underwriting Agreement (the "Underwriting Agreement") between the Company and Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), Bear, Stearns & Co. Inc. ("Bear Stearns") and Prudential Securities Incorporated (together with DLJ and Bear Stearns, the "Underwriters"), each of the several Underwriters has severally agreed to purchase from the Company, and the Company has agreed to sell to each of the Underwriters, the respective principal amounts of Notes set forth opposite its name below, at the public offering price set forth on the cover page of this Prospectus, less the underwriting discount:
Principal Amount Underwriters of Notes ------------------------------------------------------- ---------------- Donaldson, Lufkin & Jenrette Securities Corporation $ Bear, Stearns & Co. Inc. Prudential Securities Incorporated ------------ $150,000,000 ============
The Underwriting Agreement provides that the obligations of the several Underwriters are subject to certain conditions precedent, including the approval of certain legal matters by counsel. The Company and the Guarantors have agreed to indemnify the Underwriters against certain liabilities and expenses, including liabilities under the Securities Act or to contribute to payments that the Underwriters may be required to make in respect thereof. The nature of the Underwriters' obligations is such that the Underwriters are committed to purchase all of the Notes if any of the Notes are purchased. The Underwriters have advised the Company that they propose to offer the Notes directly to the public initially at the public offering price set forth on the cover page of this Prospectus and to certain dealers at such offering price less a concession not to exceed % of the principal amount of the Notes. The Underwriters may allow, and such dealers may reallow, discounts not in excess of % of the principal amount of the Notes to certain other dealers. After the initial public offering of the Notes, the offering price and other selling terms may be changed by the Underwriters. The Notes are a new issue of securities, have no established trading market, will not be listed on any securities exchange or included in the National Association of Securities Dealers Automated Quotation System and may not be widely distributed. The Company has been advised by the Underwriters that, following the completion of this Offering, the Underwriters presently intend to make a market in the Notes as permitted by applicable laws and regulations. The Underwriters, however, are under no obligation to do so and may discontinue any market-making activities at any time at the sole discretion of the Underwriters. No assurances can be given as to the liquidity of any trading market for the Notes. VALIDITY OF SECURITIES The validity of the securities offered hereby will be passed upon for the Company by Sullivan & Worcester LLP, Boston, Massachusetts, and for the Underwriters by Jones, Day, Reavis & Pogue, New York, New York. Jas. Murray Howe, Secretary of the Company, is of counsel to Sullivan & Worcester LLP and beneficially owns 3,855 shares of Common Stock. EXPERTS The consolidated financial statements and schedule of Iron Mountain Incorporated and its subsidiaries for each of the three years ended December 31, 1995 included in this Prospectus and elsewhere in the Registration Statement have been audited by Arthur Andersen LLP, independent public accountants, as indicated in their reports with respect thereto, and are included herein in reliance upon the authority of said firm as experts in giving said reports. The financial statements of National Business Archives, Inc. for the two years ended December 31, 1993 and 1994, included in this Prospectus and elsewhere in the Registration Statement have been audited by Wolpoff & Company, LLP, independent public accountants, as indicated in their report with respect thereto, and are included herein in reliance upon the authority of said firm as experts in giving said report. 86 The financial statements of Data Management Business Records Storage, Inc. for the year ended June 30, 1995, included in this Prospectus and elsewhere in the Registration Statement have been audited by Morrison and Smith, independent public accountants, as indicated in their report with respect thereto, and are included herein in reliance upon the authority of said firm as experts in giving said report. The financial statements of Nashville Vault Company, Ltd., for the year ended December 31, 1995, included in this Prospectus and elsewhere in the Registration Statement have been audited by Geo. S. Olive & Co. LLC, independent public accountants, as indicated in their report with respect thereto, and are included herein in reliance upon the authority of said firm as experts in giving said report. The combined financial statements of Data Archive Services, Inc. and Data Archive Services of Miami, Inc. for the year ended May 31, 1996, included in this Prospectus and elsewhere in the Registration Statement have been audited by Perless, Roth, Jonas & Hartney, CPAs, PA, independent public accountants, as indicated in their report with respect thereto, and are included herein in reliance upon the authority of said firm as experts in giving said report. The financial statements of Data Storage Systems, Inc. for the year ended December 31, 1995, included in this Prospectus and elsewhere in the Registration Statement have been audited by Arthur Andersen LLP, independent public accountants, as indicated in their report with respect thereto, and are included herein in reliance upon the authority of said firm as experts in giving said report. The financial statements of DataVault Corporation, for the year ended December 31, 1995, included in this Prospectus and elsewhere in the Registration Statement have been audited by Robert F. Gayton, CPA, independent public accountant, as indicated in his report with respect thereto, and are included herein in reliance upon the authority of said firm as an expert in giving said report. The financial statements of International Record Storage and Retrieval Service, Inc. for the year ended December 31, 1995, included in this Prospectus and elsewhere in the Registration Statement have been audited by Rothstein, Kass & Company, P.C., independent public accountants, as indicated in their report with respect thereto, and are included herein in reliance upon the authority of said firm as experts in giving said report. The financial statements of DKA Industries, Inc., for the year ended December 31, 1995, included in this Prospectus and elsewhere in the Registration Statement have been audited by Arthur Andersen LLP, independent public accountants, as indicated in their report with respect thereto, and are included herein in reliance upon the authority of said firm as experts in giving said report. The financial statements of Mohawk Business Record Storage, Inc., for the year ended December 31, 1995, included in this Prospectus and elsewhere in the Registration Statement have been audited by Arthur Andersen LLP, independent public accountants, as indicated in their report with respect thereto, and are included herein in reliance upon the authority of said firm as experts in giving said report. The financial statements of Security Archives Corporation, for the year ended December 31, 1995, included in this Prospectus and elsewhere in the Registration Statement have been audited by Arthur Andersen LLP, independent public accountants, as indicated in their report with respect thereto, and are included herein in reliance upon the authority of said firm as experts in giving said report. ADDITIONAL INFORMATION The Company has filed with the Commission, Washington, D.C. 20549, a Registration Statement on Form S-1 under the Securities Act with respect to the Notes offered hereby. This Prospectus does not contain all of the information set forth in the Registration Statement and the exhibits and schedules thereto. For further information with respect to the Company and the Notes offered hereby, reference is made to the Registration Statement and the exhibits and schedules filed therewith. Statements contained in this Prospectus as to the contents of any contract or any other document to which reference is made are not necessarily complete, and in each instance reference is made to the copy of such contract or other document filed as an exhibit to the Registration Statement. Each such statement is qualified in all respects by such reference. A copy of the Registration Statement may be inspected without charge at the offices of the Commission in Washington D.C. 20549, and copies of all or any part of the Registration Statement may be obtained from the Public Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 upon the payment of the fees prescribed by the Commission. 87 The Company is subject to the informational requirements of the Exchange Act and in accordance therewith files reports, proxy statements and other information with the Commission. Such reports, proxy statements and other information filed by the Company can be inspected and copied at the public reference facilities maintained by the Commission at 450 Fifth Street, N.W., Room 1024, Judiciary Plaza, Washington, D.C. 20549, and at the Commission's Regional Offices at Citicorp Center, 500 West Madison, Suite 1400, Chicago, Illinois 60661 and 7 World Trade Center, Suite 1300, New York 10048. Copies of such material can be obtained from the Public Reference Section of the Commission at 450 Fifth Street, N.W., Room 1024, Judiciary Plaza, Washington, D.C. 20549, at prescribed rates. In addition, the Common Stock is listed on the Nasdaq National Market, and such reports, proxy statements and certain other information can also be inspected at the offices of Nasdaq Operations, 1735 K Street, N.W., Washington, D.C. 20006. The Commission maintains a Web site that contains reports, proxy statements and other information filed with the Commission; the address of such site is http://www.sec.gov. Certain such reports, proxy statements and other information filed with the Commission by the Company on or after August 14, 1996 may be found at such Web site. 88 INDEX TO FINANCIAL STATEMENTS Page ------- Financial Statements of Iron Mountain Incorporated: Unaudited Condensed Consolidated Interim Financial Statements ......... F-2 Audited Consolidated Financial Statements ............................. F-8 Financial Statements of Completed Acquisitions: National Business Archives, Inc. ...................................... F-24 Data Management Business Records Storage, Inc. ........................ F-33 Nashville Vault Company, Ltd. ......................................... F-44 Data Archive Services, Inc. and Data Archive Services of Miami, Inc. .. F-50 Data Storage Systems, Inc. ............................................ F-59 DataVault Corporation ................................................. F-66 International Record Storage and Retrieval Service, Inc. .............. F-72 DKA Industries, Inc. d/b/a Systems Record Storage ..................... F-80 Financial Statements of Pending Acquisitions: Mohawk Business Record Storage, Inc. .................................. F-88 Security Archives Corporation ......................................... F-96 F-1 IRON MOUNTAIN INCORPORATED CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) ASSETS
December 31, June 30, 1995 1996 ------------ --------- Current Assets: Cash and Cash Equivalents ........................................ $ 1,585 $ 2,232 Accounts Receivable (Less allowance for doubtful accounts of $651 and of $790, respectively) .................................... 16,936 19,756 Inventories ...................................................... 682 523 Deferred Income Taxes ............................................ 1,943 2,036 Prepaid Expenses and Other ....................................... 1,862 1,318 ------------ --------- Total Current Assets ........................................... 23,008 25,865 Property, Plant and Equipment: Property, Plant and Equipment .................................... 125,240 141,601 Less: Accumulated Depreciation ................................... (32,564) (38,597) ------------ --------- Net Property, Plant and Equipment .............................. 92,676 103,004 Other Assets: Goodwill ......................................................... 59,253 72,213 Customer Acquisition Costs ....................................... 5,210 5,671 Deferred Financing Costs ......................................... 2,638 2,268 Other ............................................................ 4,096 3,609 ------------ --------- Total Other Assets ............................................. 71,197 83,761 ------------ --------- Total Assets ................................................... $186,881 $212,630 ============ ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Current Portion of Long-term Debt ................................ $ 2,578 $ 3,194 Accounts Payable ................................................. 4,797 6,342 Accrued Expenses ................................................. 10,917 10,638 Deferred Income .................................................. 3,108 2,454 Other Liabilities ................................................ 469 501 ------------ --------- Total Current Liabilities ...................................... 21,869 23,129 Long-term Debt, Net of Current Portion ............................ 119,296 115,700 Deferred Rent ..................................................... 7,983 7,897 Deferred Income Taxes ............................................. 3,621 4,406 Other Long-term Liabilities ....................................... 6,769 6,769 Commitments and Contingencies Redeemable Put Warrant ............................................ 6,332 -- Stockholders' Equity: Preferred Stock .................................................. 5 -- Common Stock--Voting ............................................. 0 96 Common Stock--Non-voting ......................................... -- 5 Additional Paid-In Capital ....................................... 28,809 62,014 Accumulated Deficit .............................................. (7,803) (7,386) ------------ --------- Total Stockholders' Equity ..................................... 21,011 54,729 ------------ --------- Total Liabilities and Stockholders' Equity ..................... $186,881 $212,630 ============ =========
The accompanying notes are an integral part of these condensed consolidated financial statements. F-2 IRON MOUNTAIN INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands except per share data) (Unaudited)
Three Months Ended June 30, ----------------------------- 1995 1996 ------------ -------------- Revenues: Storage .......................................................... $15,866 $20,209 Service and Storage Material Sales ............................... 10,020 12,713 ------------ -------------- Total Revenues ................................................. 25,886 32,922 Operating Expenses: Cost of Sales (Excluding Depreciation) ........................... 12,888 16,715 Selling, General and Administrative .............................. 6,848 8,260 Depreciation and Amortization .................................... 2,676 3,922 ------------ -------------- Total Operating Expenses ....................................... 22,412 28,897 ------------ -------------- Operating Income .................................................. 3,474 4,025 Interest Expense .................................................. 2,868 3,091 ------------ -------------- Income Before Provision for Income Taxes .......................... 606 934 Provision for Income Taxes ........................................ 364 523 ------------ -------------- Net Income ........................................................ 242 411 Accretion of Redeemable Put Warrant ............................... 501 -- ------------ -------------- Net Income (Loss) Applicable to Common Stockholders ............... $ (259) $ 411 ============ ============== Net Income (Loss) Per Common and Common Equivalent Share .......... $ (0.03) $ 0.04 ============ ============== Weighted Average Common and Common Equivalent Shares Outstanding .. 7,779 10,336 ============ ==============
The accompanying notes are an integral part of these condensed consolidated financial statements. F-3 IRON MOUNTAIN INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands except per share data) (Unaudited)
Six Months Ended June 30, -------------------------- 1995 1996 ---------- ------------ Revenues: Storage .......................................................... $30,748 $39,363 Service and Storage Material Sales ............................... 19,476 24,587 ---------- ------------ Total Revenues ................................................. 50,224 63,950 Operating Expenses: Cost of Sales (Excluding Depreciation) ........................... 25,112 32,383 Selling, General and Administrative .............................. 12,697 16,067 Depreciation and Amortization .................................... 5,428 7,530 ---------- ------------ Total Operating Expenses ....................................... 43,237 55,980 ---------- ------------ Operating Income .................................................. 6,987 7,970 Interest Expense .................................................. 5,936 6,385 ---------- ------------ Income Before Provision for Income Taxes .......................... 1,051 1,585 Provision for Income Taxes ........................................ 631 888 ---------- ------------ Net Income ........................................................ 420 697 Accretion of Redeemable Put Warrant ............................... 953 280 ---------- ------------ Net Income (Loss) Applicable to Common Stockholders ............... $ (533) $ 417 ========== ============ Net Income (Loss) Per Common and Common Equivalent Share .......... $ (0.07) $ 0.04 ========== ============ Weighted Average Common and Common Equivalent Shares Outstanding .. 7,790 9,899 ========== ============
The accompanying notes are an integral part of these condensed consolidated financial statements. F-4 IRON MOUNTAIN INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)
Six Months Ended June 30, -------------------------- 1995 1996 ---------- ------------ Cash Flows from Operating Activities: Net Income ...................................................... $ 420 $ 697 Adjustments to Reconcile Net Income to Net Cash Provided by Operations: Depreciation and Amortization .................................. 5,428 7,530 Amortization of Financing Costs ................................ 756 429 Provision for Deferred Income Taxes ............................ 540 492 Changes in Assets and Liabilities (Exclusive of Acquisitions): Accounts Receivable ............................................ (910) (2,194) Inventories .................................................... (29) 174 Prepaid Expenses and Other Current Assets ...................... (195) 444 Other Assets ................................................... 180 674 Accounts Payable ............................................... 645 1,545 Accrued Expenses ............................................... 1,324 (279) Deferred Income ................................................ 127 (865) Other Current Liabilities ...................................... (27) (474) Deferred Rent .................................................. (86) (86) Other Long-term Liabilities .................................... 1 -- ---------- ------------ Cash Flows Provided by Operations ............................. 8,174 8,087 Cash Flows from Investing Activities: Capital Expenditures ............................................ (7,322) (11,162) Additions to Customer Acquisition Costs ......................... (418) (717) Cash Paid for Acquisitions ...................................... (15,484) (19,187) Other ........................................................... -- (25) ---------- ------------ Cash Flows Used in Investing Activities ....................... (23,224) (31,091) Cash Flows Provided by Financing Activities: Repayment of Debt ............................................... (8,369) (29,515) Net Proceeds from Borrowings .................................... 25,186 26,500 Financing Costs ................................................. (1,402) (24) Proceeds from Exercise of Stock Options ......................... 200 -- Repurchase of Stock ............................................. (199) -- Proceeds from Initial Public Offering, Net of Costs and Expenses -- 33,302 Retirement of Put Warrant ....................................... -- (6,612) ---------- ------------ Cash Flows Provided by Financing Activities ................... 15,416 23,651 ---------- ------------ Increase in Cash and Cash Equivalents ............................ 366 647 Cash and Cash Equivalents, Beginning of Period ................... 1,303 1,585 ---------- ------------ Cash and Cash Equivalents, End of Period ......................... $ 1,669 $ 2,232 ========== ============
The accompanying notes are an integral part of these condensed consolidated financial statements. F-5 IRON MOUNTAIN INCORPORATED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (In thousands except per share data) (Unaudited) 1. General The interim condensed consolidated financial statements presented herein have been prepared by Iron Mountain Incorporated ("Iron Mountain" or the "Company") without audit and, in the opinion of management, reflect all adjustments of a normal recurring nature necessary for a fair presentation. Interim results are not necessarily indicative of results for a full year. The condensed consolidated balance sheet presented as of December 31, 1995, has been derived from the consolidated financial statements that have been audited by the Company's independent public accountants. The unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in the annual financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to those rules and regulations, but the Company believes that the disclosures are adequate to make the information presented not misleading. The condensed consolidated financial statements and notes included herein should be read in conjunction with the consolidated financial statements and notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 1995. 2. Initial Public Offering of Common Stock On February 6, 1996, the Company completed the sale of 2,350 shares of its common stock in an initial public offering at a price of $16.00 per share. The proceeds from the public offering were $34,968 after underwriting discounts and commissions, and $33,302 after other expenses of the offering totaling $1,666. Such net proceeds were used to retire the redeemable put warrant for $6,612, to fund acquisitions, to repay debt that had been incurred to make acquisitions and for working capital. 3. Acquisitions and Dispositions During 1995, the Company purchased four records management businesses. During the six months ended June 30, 1996, the Company purchased six additional records management businesses. Each of these acquisitions was accounted for using the purchase method of accounting, and accordingly, the results of operations for each acquisition have been included in the consolidated results of the Company from the respective acquisition dates. The purchase price for the 1996 acquisitions exceeded the underlying fair value of the net assets acquired by $14,554, which has been assigned to goodwill and is being amortized over the estimated benefit period of 25 years. Funds used to make the various acquisitions were provided through the Company's acquisition credit facility and, indirectly, a portion of the net proceeds of the Company's initial public offering. A summary of the cash consideration and allocation of the purchase price as of the acquisition dates are as follows: 1996 -------- Fair Value of Assets Acquired in 1996 ............... $20,104 Liabilities Assumed ................................. (917) -------- Cash Paid ........................................... $19,187 ======== F-6 IRON MOUNTAIN INCORPORATED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (Continued) (In thousands except per share data) (Unaudited) The following unaudited pro forma information shows the results of the Company's operations for the year ended December 31, 1995 and the six months ended June 30, 1996, as though each of the completed acquisitions had occurred as of January 1, 1995. 1995 1996 ------- --------- Revenues ...................................... $123,438 $65,678 Net Income (Loss) ............................. (348) 728 Accretion of Redeemable Put Warrant ........... 2,107 280 ------- --------- Net Income (Loss) Applicable to Stockholders .. $ (2,455) $ 448 ======= ========= Net Income (Loss) Per Share ................... $ (0.32) $ 0.05 ======= ========= The pro forma results have been prepared for comparative purposes only and are not necessarily indicative of the actual results of operations had the acquisitions taken place as of January 1, 1995 or the results that may occur in the future. Furthermore, the pro forma results do not give effect to all cost savings or incremental costs which may occur as a result of the integration and consolidation of the companies. 4. Long-term Debt Long-term debt as of December 31, 1995 and June 30, 1996, is as follows: 1995 1996 ------- -------- Term Loans A and B ......................... $ 59,625 $ 58,750 $50,000 Acquisition Credit Facility ........ 34,400 25,300 $15,000 Working Capital Facility ........... 1,700 8,800 Chrysler Notes ............................. 14,772 14,807 Real Estate Mortgages ...................... 10,797 10,761 Other ...................................... 580 476 ------- -------- Total Long-term Debt .................... 121,874 118,894 Less: Current Portion ...................... (2,578) (3,194) ------- -------- Long-term Debt, Net of Current Portion .. $119,296 $115,700 ======= ======== 5. Commitments and Contingencies Litigation During the second quarter of 1996, the Company paid $600 to cover the uninsured portion of a judgment previously entered by the California Workers Compensation Board against the Company relating to injuries sustained by a driver employed by a courier company used at the time by the Company. This amount had been fully reserved in the second quarter of 1995 and therefore had no impact on the results of operations for the three and six month periods ended June 30, 1996. Iron Mountain is presently involved as a defendant in various litigation which has occurred in the normal course of business. Management believes it has meritorious defenses in all such actions, and in any event, the amount of damages, if such matters were decided adversely, would not have a material adverse effect on Iron Mountain's financial condition or results of operations. 6. Subsequent Events Subsequent to June 30, 1996, the Company acquired four records management businesses for $23,523 in transactions that were accounted for as purchases. On August 29, 1996 the Company amended its Credit Agreement to increase its Acquisition Credit Facility from $50,000 to $55,000. F-7 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Board of Directors of Iron Mountain Incorporated: We have audited the accompanying consolidated balance sheets of Iron Mountain Incorporated (a Delaware corporation) and its subsidiaries, as of December 31, 1994 and 1995 and the related consolidated statements of operations, stockholders' equity and cash flows for each of the three years in the period ended December 31, 1995. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Iron Mountain Incorporated and its subsidiaries, as of December 31, 1994 and 1995 and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1995, in conformity with generally accepted accounting principles. ARTHUR ANDERSEN LLP Los Angeles, California February 26, 1996 F-8 IRON MOUNTAIN INCORPORATED CONSOLIDATED BALANCE SHEETS--DECEMBER 31, 1994 AND 1995 (In thousands) ASSETS
December 31, -------------------- 1994 1995 ------- --------- Current Assets: Cash and Cash Equivalents ........................................ $ 1,303 $ 1,585 Accounts Receivable (Less allowance for doubtful accounts of $531 and $651 as of 1994 and 1995, respectively) ..................... 13,270 16,936 Inventories ...................................................... 503 682 Deferred Income Taxes ............................................ 778 1,943 Prepaid Expenses and Other ....................................... 1,223 1,862 ------- --------- Total Current Assets ........................................... 17,077 23,008 Property, Plant and Equipment: Property, Plant and Equipment .................................... 99,753 125,240 Less--Accumulated Depreciation ................................... (24,735) (32,564) ------- --------- Net Property, Plant and Equipment .............................. 75,018 92,676 Other Assets: Goodwill ......................................................... 36,720 59,253 Customer Acquisition Costs ....................................... 4,273 5,210 Deferred Financing Costs ......................................... 2,247 2,638 Other ............................................................ 1,524 4,096 ------- --------- Total Other Assets ............................................. 44,764 71,197 ------- --------- Total Assets ...................................................... $136,859 $186,881 ======= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Current Portion of Long-term Debt ................................ $ 628 $ 2,578 Accounts Payable ................................................. 3,756 4,797 Accrued Expenses ................................................. 4,710 10,917 Deferred Income .................................................. 2,096 3,108 Other Liabilities ................................................ 344 469 ------- --------- Total Current Liabilities ...................................... 11,534 21,869 Long-term Debt, Net of Current Portion ............................ 85,630 119,296 Other Long Term Liabilities ....................................... 7,296 6,769 Deferred Rent ..................................................... 2,837 7,983 Deferred Income Taxes ............................................. 2,468 3,621 Commitments and Contingencies Redeemable Put Warrant ............................................ 4,225 6,332 Stockholders' Equity: Preferred Stock .................................................. 5 5 Common Stock ..................................................... 0 0 Additional Paid-In Capital ....................................... 28,808 28,809 Accumulated Deficit .............................................. (5,944) (7,803) ------- --------- Total Stockholders' Equity ..................................... 22,869 21,011 ------- --------- Total Liabilities and Stockholders' Equity ........................ $136,859 $186,881 ======= =========
The accompanying notes are an integral part of these consolidated financial statements. F-9 IRON MOUNTAIN INCORPORATED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995 (In thousands except per share data)
1993 1994 1995 -------- -------- ---------- Revenues: Storage .................................................. $48,892 $54,098 $ 64,165 Service and Storage Material Sales ....................... 32,781 33,520 40,271 -------- -------- ---------- Total Revenues ........................................ 81,673 87,618 104,436 Operating Expenses: Cost of Sales (Excluding Depreciation) ................... 43,054 45,880 52,277 Selling, General and Administrative ...................... 19,971 20,853 26,035 Depreciation and Amortization ............................ 6,789 8,690 12,341 -------- -------- ---------- Total Operating Expenses .............................. 69,814 75,423 90,653 -------- -------- ---------- Operating Income ......................................... 11,859 12,195 13,783 Interest Expense ......................................... 8,203 8,954 11,838 -------- -------- ---------- Income Before Provision for Income Taxes ................. 3,656 3,241 1,945 Provision for Income Taxes ............................... 2,088 1,957 1,697 -------- -------- ---------- Net Income ............................................... 1,568 1,284 248 Accretion of Redeemable Put Warrant ...................... 940 1,412 2,107 -------- -------- ---------- Net Income (Loss) Applicable to Common Stockholders ...... $ 628 $ (128) $ (1,859) ======== ======== ========== Net Income (Loss) Per Common and Common Equivalent Share . $ 0.08 $ (0.02) $ (0.24) Weighted Average Common and Common Equivalent Shares Outstanding ............................................. 8,067 7,984 7,784
The accompanying notes are an integral part of these consolidated financial statements. F-10 IRON MOUNTAIN INCORPORATED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AS OF DECEMBER 31, 1993, 1994 AND 1995 (Dollars in thousands)
December 31, ---------------------------------- 1993 1994 1995 -------- -------- ---------- Series A1 Preferred Stock: Balance, Beginning of Period .................................. $ 2 $ 2 $ 1 Conversion of 100,000 Shares of Series A1 Preferred Stock to Series A2 Preferred Stock .................................... -- (1) -- Conversion of 43,500 Shares of Series A1 Preferred Stock to Series A3 Preferred Stock .................................... -- -- (1) -------- -------- ---------- Balance, End of Period; (150,000, 50,000 and 6,500 Shares Outstanding as of December 31, 1993, 1994 and 1995, Respectively) ................................................ 2 1 0 Series A2 Preferred Stock: Balance, Beginning of Period .................................. -- -- 1 Conversion of 100,000 Shares of Series A1 Preferred Stock to Series A2 Preferred Stock .................................... -- 1 -- Repurchase of 2,000 Shares of Series A2 Preferred Stock ....... -- -- 0 -------- -------- ---------- Balance, End of Period; (None Outstanding as of December 31, 1993; 100,000 and 98,000 Shares Outstanding as of December 31, 1994 and 1995, Respectively) ................................. -- 1 1 Series A3 Preferred Stock: Balance, Beginning of Period .................................. -- -- -- Conversion of 43,500 Shares of Series A1 Preferred Stock to Series A3 Preferred Stock .................................... -- -- 1 -------- -------- ---------- Balance, End of Period (None outstanding December 31, 1993 and 1994; 43,500 Shares Outstanding December 31, 1995) ........... -- -- 1 Series C Preferred Stock: Balance, End of Period; (351,395 Shares Outstanding as of December 31, 1993, 1994 and 1995, Respectively) .............. 3 3 3 -------- -------- ---------- Total Preferred Stock ........................................ 5 5 5 -------- -------- ---------- Class A Common Stock: Balance, Beginning of Period .................................. 0 0 0 Stock Options Exercised for 15,976 Shares of Class A Common Stock in 1995 ................................................ -- -- 0 -------- -------- ---------- Balance, End of Period; 28,912, 28,912 and 44,888 Shares Outstanding as of December 31, 1993, 1994 and 1995, Respectively) ................................................ 0 0 0 Class C Common Stock: Balance, Beginning of Period .................................. 0 0 -- Repurchase of 17,289 Shares of Class C Common Stock ........... -- (0) -- -------- -------- ---------- Balance, End of Period; (17,289 Shares Outstanding as of December 31, 1993; None Outstanding as of December 31, 1994 and 1995) .................................................... 0 -- -- -------- -------- ---------- Total Common Stock ........................................... 0 0 0 -------- -------- ----------
The accompanying notes are an integral part of these consolidated financial statements. F-11 IRON MOUNTAIN INCORPORATED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY -- (Continued)
December 31, ---------------------------- 1993 1994 1995 ------ ------ -------- Additional Paid in Capital: Balance, Beginning of Period ........................ $29,858 $29,858 $28,808 Class C Common Stock Repurchased, 17,289 Shares ..... -- (1,050) -- Series A2 Preferred Stock Repurchased, 2,000 Shares . -- -- (199) Class A Common Stock, Options Exercised, 15,976 Shares ............................................. -- -- 200 ------ ------ -------- Balance, End of Period .............................. 29,858 28,808 28,809 ------ ------ -------- Accumulated Deficit: Balance, Beginning of Period ........................ (6,444) (5,816) (5,944) Net Income .......................................... 1,568 1,284 248 Accretion of Redeemable Put Warrant ................. (940) (1,412) (2,107) ------ ------ -------- Balance, End of Period .............................. (5,816) (5,944) (7,803) ------ ------ -------- Total Stockholders' Equity ........................... $24,047 $22,869 $21,011 ====== ====== ========
The accompanying notes are an integral part of these consolidated financial statements. F-12 IRON MOUNTAIN INCORPORATED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995 (In thousands)
1993 1994 1995 ------- ------- --------- Cash Flows from Operating Activities: Net Income .................................... $ 1,568 $ 1,284 $ 248 Adjustments to Reconcile Net Income to Cash Flows Provided by Operations: Depreciation and Amortization ............... 6,789 8,690 12,341 Amortization of Financing Costs ............. 954 1,046 1,135 Loss on Sale of Fixed Assets ................ 145 278 400 Provision for Deferred Income Taxes ......... 1,766 1,714 1,179 Changes in Deferred Rent .................... 605 441 (110) Changes in Other Long-term Liabilities ...... 1,051 (394) (527) Changes in Assets and Liabilities (Exclusive of Acquisitions): Accounts Receivable ......................... (1,005) (1,807) (2,541) Inventory ................................... (33) (39) (100) Prepaid Expenses ............................ (304) (517) (639) Accounts Payable ............................ 304 83 265 Accrued Expenses ............................ (70) 1,191 4,252 Deferred Income ............................. 971 (26) (301) Other Liabilities ........................... 80 (369) 125 ------- ------- --------- Cash Flows Provided by Operations ........... 12,821 11,575 15,727 ------- ------- --------- Cash Flows from Investing Activities: Capital Expenditures ......................... (15,451) (16,980) (15,253) Additions to Customer Acquisition Costs ...... (922) (1,366) (1,379) Cash Paid for Acquisitions ................... -- (2,846) (33,048) Proceeds from Sale of Assets ................. 14 2,973 73 Other, Net ................................... (209) 705 71 ------- ------- --------- Cash Flows Used in Investing Activities ..... (16,568) (17,514) (49,536) ------- ------- --------- Cash Flows Provided by Financing Activities: Repayment of Debt .............................. (4,659) (13,642) (812) Net Proceeds from Borrowings ................... 9,100 21,350 36,350 Cash From Exercise of Stock Options ............ -- -- 200 Repurchase of Stock ............................ -- (1,050) (199) Financing Costs ................................ (601) (7) (1,448) ------- ------- --------- Cash Flows Provided by Financing Activities ... 3,840 6,651 34,091 ------- ------- --------- Increase in Cash ............................... 93 712 282 Cash and Cash Equivalents, Beginning of Year ... 498 591 1,303 ------- ------- --------- Cash and Cash Equivalents, End of Year ......... $ 591 $ 1,303 $ 1,585 ======= ======= ========= Supplemental Information: Cash Paid for Interest ......................... $ 7,239 $ 7,741 $ 9,111 ======= ======= ========= Cash Paid for Income Taxes ..................... $ 859 $ 339 $ 1,177 ======= ======= =========
The accompanying notes are an integral part of these consolidated financial statements. F-13 IRON MOUNTAIN INCORPORATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1995 (Amounts in thousands except share data) 1. Nature of Business The accompanying financial statements represent the consolidated accounts of Iron Mountain Incorporated (formerly Iron Mountain Information Services, Inc.) and its subsidiaries (collectively Iron Mountain or the Company). Iron Mountain is a full service records management company providing storage and related services for all media in various locations throughout the United States to Fortune 500 Companies and numerous legal, banking, health care, accounting, insurance, entertainment, and government organizations. 2. Summary of Significant Accounting Policies a. Principles of Consolidation The financial statements reflect the financial position and results of operations of Iron Mountain on a consolidated basis. All significant intercompany account balances and transactions with affiliates have been eliminated. b. Property, Plant and Equipment Property, plant and equipment are stated at cost and depreciated using the straight-line method with the following useful lives: Buildings ........................ 40 to 50 years Leasehold improvements ........... 8 to 10 years or the life of the lease, whichever is shorter Racking .......................... 10 to 20 years Warehouse equipment/vehicles ..... 5 to 10 years Office equipment ................. 3 to 5 years Computer hardware and software ... 3 to 5 years Property, plant and equipment consist of the following: December 31, ------------------ 1994 1995 ------ -------- Real property ..................... $33,118 $ 34,162 Leasehold improvements ............ 8,958 11,206 Racking ........................... 35,977 53,348 Warehouse equipment/vehicles ...... 5,238 5,810 Furniture and fixtures ............ 2,411 2,754 Computer hardware and software .... 9,771 13,729 Construction in progress .......... 4,280 4,231 ------ -------- $99,753 $125,240 ====== ======== Minor maintenance costs are expensed as incurred. Major improvements to the leased buildings are capitalized as leasehold improvements and depreciated as described above. c. Revenue Recognition Storage and service revenues are recognized in the month the respective service is provided. Storage material sales are recognized when shipped to the customer. Amounts related to future storage for customers where storage fees are billed in advance are accounted for as deferred income and amortized over the applicable period. These amounts are included in deferred income in the accompanying financial statements. F-14 IRON MOUNTAIN INCORPORATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued) (Amounts in thousands except share data) d. Goodwill Goodwill reflects the cost in excess of fair value of the net assets of companies acquired in purchase transactions. Goodwill is amortized using the straight-line method from the date of acquisition over the expected period to be benefited, currently estimated at 25 years. The Company assesses the recoverability of goodwill, as well as other long lived assets based upon expectations of future undiscounted cash flows in accordance with Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long Lived Assets and for Long Lived Assets to be Disposed of." Accumulated amortization of goodwill was $11,205 and $15,071 as of December 31, 1994 and 1995, respectively. e. Deferred Financing Costs Deferred financing costs are amortized over the life of the related debt using the effective interest rate method. As of December 31, 1994 and 1995, deferred financing costs were $6,271, and $4,688, respectively, and accumulated amortization of those costs were $4,024, and $2,050, respectively. f. Customer Acquisition Costs Costs, net of revenues received for the initial transfer of the records, related to the acquisition of large volume accounts (accounts consisting of 10,000 or more cartons) are capitalized and amortized for an appropriate period not exceeding 12 years, unless the customer terminates its relationship with the Company, at which time the unamortized cost is charged to expense. However, in the event of such termination, the Company collects and records as income permanent removal fees that generally equal or exceed the amount of unamortized customer acquisition costs. As of December 31, 1994 and 1995 those costs were $5,114 and $6,492, respectively, and accumulated amortization of those costs were $841 and $1,282, respectively. g. Deferred Rent The Company has entered into various leases for buildings used in the storage of records. Certain leases have fixed escalation clauses or other features which require normalization of the rental expense over the life of the lease resulting in deferred rent being reflected in the accompanying balance sheets. In addition, the Company has assumed various unfavorable leases in connection with certain of its acquisitions. The discounted present value of these lease obligations in excess of market rate at the date of the acquisition was recorded as a deferred rent liability and is being amortized over the remaining lives of the respective leases. h. Inventories Inventories are carried at the lower of cost using the first-in, first-out basis or market and are comprised primarily of cartons. i. Accrued expenses Accrued expenses consist of the following: December 31, ---------------- 1994 1995 ----- ------- Accrued incentive compensation ............. $1,202 $ 1,701 Accrued vacation ........................... 809 1,014 Accrued interest ........................... 145 1,737 Accrued workers' compensation .............. 499 2,415 Other ...................................... 2,055 4,050 ----- ------- Accrued expenses ........................... $4,710 $10,917 ===== ======= F-15 IRON MOUNTAIN INCORPORATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued) (Amounts in thousands except share data) j. Net Income (Loss) Per Common Share Net income (loss) per common share is computed based on the weighted average number of common and common stock equivalent shares outstanding during each period. Common stock equivalents consist of preferred stock that is convertible into common stock and employee options to purchase common stock. Pursuant to certain SEC regulations, the calculation of weighted average shares outstanding assumes the conversion of preferred stock for all periods presented. The stock options have not been included in the calculation of common stock equivalents because their dilutive effect was immaterial. k. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that effect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. l. Cash and Cash Equivalents The Company defines cash and cash equivalents to include cash on hand and cash invested in short-term securities which have original maturities of less than 90 days. 3. Debt Debt consists of the following:
December 31, ------------------ 1994 1995 ------ -------- Working Capital Line and $36,000 Term Loan Refinanced in 1995 $59,934 $ -- Term Loans A and B ........................................... -- 59,625 $50,000 Acquisition Credit Facility .......................... -- 34,400 $15,000 Working Capital Facility ............................. -- 1,700 Chrysler Notes ............................................... 14,693 14,772 Real Estate Mortgages ........................................ 10,855 10,797 Other ........................................................ 776 580 ------ -------- Long-term Debt ............................................... 86,258 121,874 Less -- current portion ...................................... (628) (2,578) ------ -------- Long-term Debt, Net of Current Portion ....................... $85,630 $119,296 ====== ========
During 1994, the Company had a revolving credit facility of $44,625. This facility along with a $36,000 senior term loan was refinanced on January 31, 1995 under an amended and restated credit agreement (the Credit Agreement). Interest on the $36,000 senior debt term loan and the $44,625 revolving credit facility was based, at the Company's option, on a choice of base rates plus a margin. The margin varied depending upon the base rate selected. F-16 IRON MOUNTAIN INCORPORATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued) (Amounts in thousands except share data) The Credit Agreement is with a syndicate of lenders and provides for four separate credit facilities representing an aggregate commitment of $125,000 as follows: Maturity Amount Date ------ -------- Term Loan A ............................ $10,000 2000 Term Loan B ............................ 50,000 2002 Working Capital Facility ............... 15,000 2000 Acquisition Credit Facility ............ 50,000 2002 Commencing in 1996, Term Loans A and B are payable in quarterly installments of $625 and $125, respectively. Term Loan B has a balloon payment due upon maturity of $46,375. The Working Capital Facility is due in full upon maturity and the Acquisition Credit Facility is payable in eight quarterly installments equal to one-eighth of the outstanding balance commencing in 2000. Interest rates on all four facilities under the Credit Agreement are based, at the Company's option, on a choice of base rates plus a margin. The margin varies for each facility depending upon the base rate selected. The margins are subject to adjustment after January 1996 based on the Company's ability to meet certain financial covenant targets. At December 31, 1995, the effective interest rates for Term Loans A and B were 8.22% and 8.72%, respectively, and for the Working Capital Facility and Acquisition Credit Facility were 9.75% and 8.72%, respectively. There is a commitment fee of 1/2% per year on the unused portion of the Working Capital Facility and Acquisition Credit Facility. The $15,000 Chrysler Notes were issued in 1990 and mature in 2000. Annual principal payments of $5,000 commence in 1998. A warrant was issued in connection with the Chrysler Notes to which management assigned an initial value of $750 for financial reporting purposes (see Note 5). The value of the warrant is being accounted for as an original issue discount of the Chrysler Notes and is being amortized as interest expense over the life of the loan using the effective interest rate method. The note is junior only to the Credit Agreement and has an effective interest rate of 13.7%. The Credit Agreement and Chrysler Notes specify certain minimum or maximum relationships between operating cash flows (earnings before interest, taxes, depreciation and amortization) and interest, total debt and fixed charges. There are restrictions on dividends, sales or pledging of assets, capital expenditures and change in business and ownership; cash dividends are effectively prohibited. The Company was in compliance with the applicable provisions of these agreements at December 31, 1995. Loans under the Credit Agreement are secured by substantially all of the stock and assets of the Company's subsidiaries, with the exception of a secondary position on two owned properties encumbered by first mortgages. The real estate mortgages consist of an $8,037, 10 year, 11% mortgage based on 30 year amortization with a balloon payment due October, 2000 and a $3,000, 8% note that is payable in various installments commencing in 1996 and maturing in November, 2006. The Company is required to maintain interest rate protection under the Credit Agreement. In 1988, the Company entered into an interest rate swap (which expired in October 1995) whereby the Company paid a fixed interest rate of 9.28% and received a rate equal to the 3-month LIBOR rate. The interest was based on the outstanding notional principal amount which was $2,338 at December 31, 1994. The Company has also purchased two interest rate caps under which it will receive payments in the event that the three month LIBOR rate exceeds those specified in the caps. Each cap covers $10,000 of notional principal amount. One had a rate cap of 6.5% and expired on August 11, 1995 and the other has a rate cap of 7.5% and expires August 12, 1997. On March 24, 1995, the Company entered into two three-year interest rate collar swap transactions. Under these agreements, interest costs for the debt covered by the notional amount of these contracts will essentially float when the three-month LIBOR is between 6% and 7.5% but the Company will receive a payment from the bank in the event that the three month LIBOR interest rate exceeds 7.5%, or make a payment to the bank if such rate F-17 IRON MOUNTAIN INCORPORATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued) (Amounts in thousands except share data) is below 6%. Each transaction covers $10,000 of notional principal amount which will result in a maximum interest cost (including margin and transaction costs) of approximately 10.54% and 10.67%, respectively, for the covered amounts. In the event of non-performance by the counterparty, the Company would be exposed to additional interest rate risk if the variable interest rate were to exceed the ceiling (7.5%) under the terms of the swap agreement. Maturities of long-term debt are as follows: Year Amount ---- -------- 1996 ....................................... $ 2,578 1997 ....................................... 3,386 1998 ....................................... 8,320 1999 ....................................... 8,366 2000 ....................................... 28,824 Thereafter ................................. 70,400 ------ $121,874 ====== Based on the borrowing rates currently available to the Company for loans with similar terms and average maturities, the Company has estimated the following fair values for its long-term debt and swap agreements as of December 31, 1995 as follows: Carrying Fair Amount Value -------- ---------- Credit Agreement ............. $(95,725) $(95,725) Chrysler Notes ............... (14,772) (15,737) Real Estate Mortgages ........ (10,797) (11,849) Other ........................ (580) (580) Swap Agreements .............. 25 (638) The fair value of the various swap agreements is based on the estimated amount a bank would charge to terminate the various swap agreements. 4. Acquisitions and Dispositions During 1994, the Company purchased substantially all of the assets, and assumed certain liabilities, of three separate records management businesses. During 1995, the Company purchased substantially all of the assets, subject to certain liabilities, of four records management businesses. Each of these acquisitions was accounted for using the purchase method of accounting and accordingly, the results of operations for each acquisition have been included in the consolidated results of the Company from the respective acquisition dates. The excess of the purchase price over the underlying fair value of the assets and liabilities of each acquisition has been assigned to goodwill ($2,484 and $26,054 in 1994 and 1995, respectively) and is being amortized over the estimated benefit period of 25 years. Funds used to make the various acquisitions were provided through the Company's acquisition credit facilities. A summary of the cash consideration and allocation of the purchase price as of the acquisition dates are as follows: 1994 1995 ----- -------- Fair value of assets acquired ..... $3,223 $41,286 Liabilities assumed ............... (377) (8,238) --- ------ Cash paid ......................... $2,846 $33,048 === ====== F-18 IRON MOUNTAIN INCORPORATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued) (Amounts in thousands except share data) The following unaudited pro forma combined information shows the results of the Company's operations for the years ended December 31, 1994 and 1995 as though each of the completed acquisitions had occurred as of January 1, 1994. 1994 1995 ------- ------- Revenues ............................................ $103,644 $112,675 Net income (loss) ................................... 574 (577) Accretion of redeemable Put Warrant ................. 1,412 2,107 ----- ----- Net loss applicable to Common Stockholders .......... $ (838) $ (2,684) ===== ===== Net loss per common share ........................... $(0.10) $(0.34) The pro forma results have been prepared for comparative purposes only and are not necessarily indicative of the actual results of operations had the acquisitions taken place as of January 1, 1994 or the results that may occur in the future. Furthermore, the pro forma results do not give effect to all cost savings or incremental costs which may occur as a result of the integration and consolidation of the companies. In 1995, the Company made a decision to sell one of its subsidiaries and has estimated that the purchase price will be $900 less than the book value of the assets and related goodwill. Consequently, the Company has recorded an impairment of the related goodwill in the accompanying statement of operations for 1995. 5. Common and Preferred Stock and Redeemable Put Warrant During 1995, the Company declared a 15.4215-for-1 stock split of the Class A and Class B Common Stock in the form of a stock dividend payable on November 29, 1995 to stockholders of record on November 28, 1995. All weighted average common share and stock related data in the consolidated financial statements have been retroactively restated to reflect the stock split. The Company has authorized the following eight classes of capital stock as of December 31, 1995: Number of Shares ------------------------- Par Issued and Equity Type Value Authorized Outstanding - ----------------------------------- -------- --------- ------------ Class A Common (voting) ........... $0.01 13,000,000 44,888 Class B Common (non-voting) ....... $0.01 10,300,000 -- Class C Common (non-voting) ....... $0.01 1 -- Series A1 Preferred (non-voting) .. $0.01 6,500 6,500 Series A2 Preferred (non-voting) .. $0.01 98,000 98,000 Series A3 Preferred (voting) ...... $0.01 43,500 43,500 Series B Preferred (voting) ....... $0.01 148,000 -- Series C Preferred (voting) ....... $0.01 351,395 351,395 Upon consummation of the underwritten public offering of common stock (See Note 10), all shares of preferred stock were automatically converted into shares of common stock. The number of common shares received upon conversion were as follows: Preferred Common -------- ---------- Series A1 and Series A3 ........... 50,000 987,314 Series A2 ......................... 98,000 1,935,146 Series C .......................... 351,395 4,809,793 The preferred stock is entitled to weighted average anti-dilution protection and receives dividends on a common stock equivalent basis. F-19 IRON MOUNTAIN INCORPORATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued) (Amounts in thousands except share data) In anticipation of the public offering, the Board of Directors approved and the shareholders ratified a recapitalization plan as follows: The designation of three new classes of stock: Authorized Class Shares - ----- ----------- Preferred Stock, $0.01 par value .................... 2,000,000 Common Stock, $0.01 par value ....................... 13,000,000 Nonvoting Common Stock, $0.01 par value ............. 1,000,000 In connection with the issuance of the Chrysler Notes, the Company also issued a warrant, dated December 14, 1990 (the Warrant), exercisable for 444,385 shares of common stock for nominal consideration upon the occurrence of certain specified events, including the effectiveness of an underwritten public offering of the Company's capital stock, and at any time after December 14, 1995. Chrysler Capital had the right to put (the Put) all or any part of the Warrant to the Company at any time after December 14, 1995, at the higher of a formula price based on a specified multiple of the Company's operating cash flow for the preceding 12 months, subject to certain adjustments, or fair market value of the Company (the Put Price). The Put was to terminate upon the consummation of an underwritten public offering which yielded net proceeds of not less than $10 million to the Company. Chrysler Capital and the Company reached an agreement pursuant to which Chrysler Capital would not exercise the Warrant or the Put until April 30, 1996 and the Company would redeem the Warrant upon completion of the closing of the public offering (See Note 10). On February 7, 1996, the Warrant was redeemed for $6,612. This Warrant has been accreted each year using the effective interest rate method based on the Warrant's estimated redemption value at its estimated redemption date of February 15, 1996 and is reflected as a redeemable put warrant in the accompanying balance sheets. In September, 1991 the Company created a non-qualified stock option plan pursuant to which up to 444,385 shares of Class A common stock of the Company can be issued at the discretion of the stock option committee to key employees, consultants and directors. The following is a summary of stock option transactions during the applicable periods: Option Price Options Per Share ------- ------------------ Options outstanding, December 31, 1992 ..... 302,040 $6.48 - $12.58 Expired ................................... (18,506) 6.48 ----- Options outstanding, December 31, 1993 ..... 283,534 6.48 - 12.58 Expired ................................... (23,903) 6.48 ----- Options outstanding, December 31, 1994 ..... 259,631 6.48 - 12.58 Granted ................................... 162,184 12.58 - 16.00 Exercised ................................. (15,976) 12.58 Expired ................................... (6,370) 12.58 ----- Options outstanding, December 31, 1995 ..... 399,469 $6.48 - $16.00 ===== The stock options were granted at an amount equal to or greater than the fair market value at the date of grant as determined by the Board of Directors. There are no shares available for grant under the 1991 plan as of December 31, 1995. The majority of options become exercisable ratably over a period of five years unless the holder terminates employment. As of December 31, 1995, 175,380 of the options outstanding were exercisable. Effective November 30, 1995, the Board of Directors approved the adoption of the 1995 Stock Incentive Plan (the Stock Option Plan), which replaced the previous stock option plan. A total of 1,000,000 shares of Class A Common Stock are available for grant as options and other rights under the Stock Option Plan, including the options issued under the 1991 plan. The number of options available for grant at December 31, 1995 was 555,615. F-20 IRON MOUNTAIN INCORPORATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued) (Amounts in thousands except share data) 6. Income Taxes The Company accounts for income taxes in accordance with SFAS No. 109 which requires the recognition of deferred tax assets and liabilities for the expected tax consequences of temporary differences between the tax and financial reporting bases of assets and liabilities. The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are presented below: December 31, -------------------- 1994 1995 ------- --------- Current deferred tax assets: Accrued liabilities ................................ $ 527 $ 1,585 Other .............................................. 251 358 ----- ------- Current deferred tax assets ......................... $ 778 $ 1,943 ===== ======= Non-current deferred tax assets (liabilities): Accrued liabilities ................................ $ 1,147 $ 3,462 Net operating loss carryforwards ................... 3,280 2,522 AMT credit ......................................... 206 628 Deferred income .................................... 791 360 Other .............................................. 511 792 ----- ------- Non-current deferred tax assets ..................... 5,935 7,764 ----- ------- Other assets principally due to differences in amortization ....................................... (1,165) (2,051) Plant and equipment, principally due to differences in depreciation ................................... (5,383) (7,201) Customer acquisition costs ......................... (1,335) (1,716) Other .............................................. (520) (417) ----- ------- Non-current deferred tax liabilities ................ (8,403) (11,385) ----- ------- Net non-current deferred tax liability .............. $(2,468) $ (3,621) ===== ======= The Company and its subsidiaries file a consolidated Federal income tax return. The provision for income taxes consists of the following components: Years ended December 31, ------------------------ 1993 1994 1995 ----- ----- ------ Federal -- current ......................... $ 131 $ 68 $ 422 Federal -- deferred ........................ 1,645 1,416 837 State -- current ........................... 191 175 96 State -- deferred .......................... 121 298 342 --- --- ---- $2,088 $1,957 $1,697 === === ==== A reconciliation of total income tax expense and the amount computed by applying the U.S. Federal income tax rate of 34% to income before income taxes is as follows: 1993 1994 1995 ----- ----- ------ Computed "expected" tax provision ............ $1,243 $1,102 $ 661 Increase in income taxes resulting from: State taxes ................................. 206 312 289 Non-deductible Goodwill amortization ........ 521 521 843 Other ....................................... 118 22 (96) --- --- ---- $2,088 $1,957 $1,697 === === ==== F-21 IRON MOUNTAIN INCORPORATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued) (Amounts in thousands except share data) The Company has estimated Federal net operating loss carryforwards of $7,296 at December 31, 1995 to reduce future Federal income taxes, if any, which begin to expire in 2005. The Company has estimated state net operating loss carryforwards of approximately $441 to reduce future state income taxes, if any. The Company has alternative minimum tax credit carryforwards of $628 which have no expiration date and are available to reduce future income taxes, if any. 7. Commitments and Contingencies a. Leases Iron Mountain leases most of its facilities under various operating leases. A majority of these leases have renewal options of five to ten years and have either fixed escalation clauses or Consumer Price Index escalation. The Company also leases equipment under operating and capital leases, primarily computers which have an average lease life of three years. Trucks and office equipment are also leased and have remaining lease lives ranging from one to five years. Rent expense was $12,680, $13,555, and $15,661 for the years ended December 31, 1993, 1994 and 1995, respectively. Minimum future lease payments are as follows: Year Operating ----------------------------------------------------- ---------- 1996 ................................................ $ 18,278 1997 ................................................ 15,571 1998 ................................................ 13,585 1999 ................................................ 13,332 2000 ................................................ 13,537 Thereafter .......................................... 53,465 -------- Total minimum lease payments ........................ $127,768 ======== b. Litigation In 1992, the Company was named co-defendant in a suit alleging personal injuries sustained in an automobile collision with a driver employed by a courier company used at the time by Iron Mountain. The courier company subsequently filed for bankruptcy. In March, 1995, a judgment was entered against the Company in the Superior Court of the State of California for County of Los Angeles. The Company has accrued $600 in the accompanying financial statements which approximates the uninsured portion of the judgment. Iron Mountain is presently involved as a defendant in various litigation which has occurred in the normal course of business. Management believes it has meritorious defenses in all such actions, and in any event, the amount of damages, if such matters were decided adversely, would not have a material adverse effect on Iron Mountain's financial condition or results of operations. c. Other The Company may be responsible for environmental clean-up costs at certain of its facilities. Estimated costs of $800 to perform the necessary remediation work are included in other liabilities in the accompanying balance sheets. In 1994, the Company incurred losses at one of its facilities in California, resulting from the Northridge earthquake. The Company has filed a claim for reimbursement with its insurance carrier and has received partial reimbursement to date, with the balance of $1,400 expected to be received upon the insurance company's completion of its review of the pending claim. Management believes the ultimate outcome of the above issues will not have a material adverse effect on Iron Mountain's financial condition or results of operations. F-22 IRON MOUNTAIN INCORPORATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued) (Amounts in thousands except share data) 8. Related Party Transactions a. Rental Arrangements Iron Mountain leases space to an affiliated company, Schooner Capital Corporation (Schooner) for its corporate headquarters located in Boston, Massachusetts. Accordingly, for the years ended December 31, 1993, 1994 and 1995, Schooner paid Iron Mountain rent totaling $48, $58, and $49, respectively. Iron Mountain leases one facility from a landlord which is a related party. Total rental payments for the years ended December 31, 1993, 1994 and 1995 for this facility totaled $88, $88, and $93, respectively. In the opinion of management, both of these leases were entered into at market prices and terms. b. Long Term Debt Iron Mountain is obligated in the amount of $383 on a junior subordinated note bearing interest at 8%, payable in March, 2000. This note, originally issued in connection with an acquisition, was purchased by and is now held by Schooner. 9. Profit Sharing Retirement Plan The Company has a defined contribution plan which covers all non-union employees meeting certain service requirements. Eligible employees may elect to defer from 1 to 15% of compensation per pay period up to the amount allowed by the Internal Revenue Code. The Company makes matching contributions based on the amount of the employee contribution and years of credited service, according to a schedule as described in the Plan documents. The Company has expensed $131, $146, and $294, for the years ended December 31, 1993, 1994 and 1995, respectively. 10. Subsequent Events In January and February 1996, the Company acquired three records services businesses for $10,047 in transactions that will be accounted for as purchases. On February 6, 1996, the Company completed an initial public offering of its stock. The net proceeds from the public offering of $34,968 were used to repay $28,313 of indebtedness and interest under the acquisition credit facility, to retire a warrant of $6,612, and for working capital. F-23 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Board of Directors of National Business Archives, Inc.: Towson, Maryland. We have audited the accompanying balance sheet of National Business Archives, Inc. as of December 31, 1993 and 1994, and the related statements of income, stockholder's equity (deficit) and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of National Business Archives, Inc. as of December 31, 1993 and 1994, and the results of its operations and its cash flows for the years then ended, in conformity with generally accepted accounting principles. Wolpoff & Company, LLP Baltimore, Maryland November 3, 1995 F-24 NATIONAL BUSINESS ARCHIVES, INC. BALANCE SHEETS ASSETS December 31, ----------------------- 1993 1994 --------- ---------- Current Assets: Cash--Note 1 .............................. $ -- $ 1,000 Note Receivable, Related Party--Note 2 .... -- 1,416,148 Accounts Receivable--Note 1 ............... 714,974 687,645 Inventory--Note 1 ......................... 75,620 69,149 Prepaid Expenses .......................... 149,724 44,362 ------- -------- Total Current Assets ................... 940,318 2,218,304 ------- -------- Property, Plant and Equipment--Notes 1 and 4: Shelving .................................. 2,702,645 3,153,726 Motor Vehicles ............................ 479,961 498,011 Computers and Software .................... 195,033 212,830 Furniture, Fixtures and Equipment ......... 148,638 195,544 Leasehold Improvements .................... 76,820 318,258 ------- -------- 3,603,097 4,378,369 Less Accumulated Depreciation ............. 1,083,347 1,255,781 ------- -------- Property, net .......................... 2,519,750 3,122,588 ------- -------- Other Assets .............................. 7,498 56,001 ------- -------- Total Assets ........................... $3,467,566 $5,396,893 ======= ======== The notes to financial statements are an integral part of this statement. F-25 NATIONAL BUSINESS ARCHIVES, INC. BALANCE SHEETS LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)
December 31, ------------------------ 1993 1994 ---------- ---------- Current Liabilities: Accounts Payable ..................................... $ 171,566 $ 302,222 Accrued Expenses ..................................... 176,355 238,354 Deferred Revenue--Note 1 ............................. 977,212 1,201,314 Long-term Liabilities, Current Portion--Notes 2 and 4 652,584 63,092 Note Payable, Related Party--Note 2 .................. 150,000 -- Dividends Payable--Note 3 ............................ 11,064 -- -------- -------- Total Current Liabilities. ........................ 2,138,781 1,804,982 -------- -------- Long-term Liabilities: Note Payable, Bank--Note 3 ........................... -- 2,333,901 Notes Payable, Stockholder--Note 2 ................... 1,913,333 355,000 Motor Vehicle Loans Payable--Note 4 .................. 171,636 100,582 -------- -------- 2,084,969 2,789,483 Less Current Portion ................................. 652,584 63,092 -------- -------- Total Long-term Liabilities ....................... 1,432,385 2,726,391 -------- -------- Deferred Rent--Note 5 ................................ 1,068,904 1,007,488 -------- -------- Total Liabilities .................................... 4,640,070 5,538,861 -------- -------- Commitments--Notes 2 and 5 Stockholder's Equity (Deficit): Common Stock ......................................... 100 100 Accumulated Deficit .................................. (1,172,604) (142,068) -------- -------- Total Stockholder's Equity (Deficit) .............. (1,172,504) (141,968) -------- -------- Total Liabilities and Stockholder's Equity (Deficit) ................................. $ 3,467,566 $5,396,893 ======== ========
The notes to financial statements are an integral part of this statement. F-26 NATIONAL BUSINESS ARCHIVES, INC. STATEMENTS OF INCOME Year Ended December 31, ------------------------ 1993 1994 --------- ----------- Revenue: Storage .............................. $3,406,317 $3,872,529 Service and Storage Material Sales ... 2,586,223 2,825,546 ------- --------- Total Revenue ..................... 5,992,540 6,698,075 ------- --------- Operating Expenses: Cost of Sales (Excluding Depreciation) 3,273,478 3,866,897 Selling, General and Administrative .. 1,040,057 1,093,935 Depreciation and Amortization ........ 286,843 344,800 ------- --------- Total Operating Expenses .......... 4,600,378 5,305,632 ------- --------- Operating Income ..................... 1,392,162 1,392,443 Interest Expense ..................... 187,115 101,490 ------- --------- Net Income--Note 1 ................... $1,205,047 $1,290,953 ======= ========= The notes to financial statements are an integral part of this statement. F-27 NATIONAL BUSINESS ARCHIVES, INC. STATEMENTS OF STOCKHOLDER'S EQUITY (DEFICIT)
Year Ended December 31, --------------------------- 1993 1994 ----------- ------------ Common Stock: 5,000 Shares Authorized, 100 Shares Issued and Outstanding, No Par Value .......................................... $ 100 $ 100 --------- ---------- Retained Earnings (Deficit): Beginning Balance ....................................... (2,283,254) (1,172,604) Net Income .............................................. 1,205,047 1,290,953 Dividends ............................................... (94,397) (260,417) --------- ---------- Ending Balance .......................................... (1,172,604) (142,068) --------- ---------- Total Stockholder's Equity (Deficit) .................... $(1,172,504) $ (141,968) ========= ==========
The notes to financial statements are an integral part of this statement. F-28 NATIONAL BUSINESS ARCHIVES, INC. STATEMENTS OF CASH FLOWS
Year Ended December 31, -------------------------- 1993 1994 ---------- ------------ Cash Flows From Operating Activities: Net Income .............................................. $ 1,205,047 $ 1,290,953 -------- ---------- Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities Depreciation and Amortization .......................... 286,843 344,800 (Gain) Loss on Disposal of Assets ...................... (1,115) 3,818 Increase in Accounts Payable ........................... 26,685 130,656 Increase in Accrued Expenses ........................... 145,939 61,991 Change in Accounts Receivable .......................... (121,414) 27,329 Change in Inventory .................................... (19,161) 6,471 Change in Prepaid Expenses ............................. (27,949) 105,362 Decrease in Deferred Rent Payable ...................... (62,830) (61,416) Increase in Deferred Revenue ........................... 154,985 224,102 -------- ---------- Total Adjustments .................................... 381,983 843,113 -------- ---------- Net Cash Provided by Operating Activities ........... 1,587,030 2,134,066 -------- ---------- Cash Flows From Investing Activities: Property and Equipment Expenditures ..................... (534,070) (955,924) Proceeds from Disposal of Assets ........................ 7,783 12,973 Other Assets ............................................ -- (57,000) Loan to Related Party ................................... -- (1,416,148) -------- ---------- Net Cash Used by Investing Activities ................ (526,287) (2,416,099) -------- ---------- Cash Flows From Financing Activities: Stockholder Loan Proceeds ............................... 672,222 -- Stockholder Note Principal Payments ..................... (580,558) (1,558,333) Net Bank Loan Proceeds .................................. -- 2,333,901 Bank Loan Principal Payments ............................ (1,218,662) -- Motor Vehicle Loan Proceeds ............................. 106,226 21,419 Repayment of Motor Vehicle Loans ........................ (106,638) (92,473) Net Proceeds to Related Party ........................... 150,000 (150,000) Dividends Paid .......................................... (83,333) (271,481) -------- ---------- Net Cash Used by Financing Activities ................ (1,060,743) 283,033 -------- ---------- Net Change in Cash ...................................... -- 1,000 Cash at Beginning of Year ............................... -- -- -------- ---------- Cash at End of Year ..................................... $ -- $ 1,000 ======== ========== Supplemental Disclosures of Cash Flow Information: Cash Paid During the Year for Interest ................. $ 166,875 $ 106,965 ======== ==========
The notes to financial statements are an integral part of this statement. F-29 NATIONAL BUSINESS ARCHIVES, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1994 NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization and Activity National Business Archives, Inc. was incorporated under the laws of Maryland pursuant to Articles of Incorporation dated June 18, 1987. The Company provides record storage and management services in the Baltimore-Washington area. Cash Cash in excess of the minimum balance required is swept daily to and offset against the revolving loan (see Note 3). Allowance for Doubtful Accounts The Company established an allowance for doubtful accounts of $120,000 in the current year. Inventory Inventory is stated at the lower of cost or market and is comprised of computer tape cases and records and storage boxes used in the business. Property, Plant and Equipment Property is recorded at cost. Depreciation is computed using either the straight-line method or accelerated methods with useful lives ranging from 5 to 7 years for equipment, 20 years for shelving and 31.5 to 39 years for leasehold improvements. Revenue Recognition Revenue is recognized when earned. Storage revenue is billed either monthly, quarterly or annually, depending on the terms of the lease. The estimated amount of storage revenue collected in advance as of December 31, 1993 and 1994, is shown as deferred revenue. Income and Taxes The shareholder has elected under Subchapter S of the Internal Revenue Code to report the Company's income at the shareholder level. Accordingly, no provision for income taxes is included herein. NOTE 2--RELATED PARTY TRANSACTIONS Note Receivable, Related Party In December 1994, the Company advanced $1,416,148 to James F. Knott Development Corp., an entity related to the shareholder. The unsecured loan is due on demand and bears interest at 9.5%. The note was repaid in January 1995. On May 19, 1994, the loan remaining from the sole shareholder was repaid when the revolving loan was modified. The interest expense in 1993 and 1994 was $108,652 and $39,037. F-30 NATIONAL BUSINESS ARCHIVES, INC. NOTES TO FINANCIAL STATEMENTS -- (Continued) NOTE 2--RELATED PARTY TRANSACTIONS -- (Continued) The sole shareholder loaned an additional $355,000 to the Company. This unsecured loan is subordinated to the bank loans. The terms are as follows:
Balance -------------------- Lender 12/31/93 12/31/94 Interest Rate Terms Maturity Date ---------------- --------- ------- ------------- ---------- ---------------- Stockholder .... $1,558,333 $ -0- Prime + 2% * October 1, 1996 Stockholder .... 355,000 355,000 -- Non-interest October 1, 1996 bearing ------- ----- $1,913,333 $355,000 ======= =====
* Principal was payable in consecutive monthly installments of $45,833 commencing on November 1, 1993 (36 X $45,833 = $1,650,000). The remaining stockholder note balance of $355,000 matures in 1996. Note Payable, Related Party James F. Knott Development Corp., an entity related to the shareholder, advanced the Company various amounts in 1993 and 1994. The loans were due on demand and bear interest at 6.5%. The balance at December 31, 1993 and 1994, was $150,000 and $-0-, respectively. Interest on the unsecured loans for 1993 and 1994 was $7,228 and $23,807, respectively. Office and Warehouse Leases See Note 5. NOTE 3--NOTE PAYABLE, BANK On December 19, 1994, the revolving loan was modified for the second time and the amount available was increased to $3,000,000. The balance at December 31, 1993 and 1994, was $-0- and $2,333,901, respectively. The terms of the loan are interest only at prime + 1/2% (prime at December 31, 1994, was 8.5%) until maturity on December 31, 1996. The loan is secured by all property and assets of the Company. The maximum unpaid outstanding principal available under the revolving loan is $2,500,000 and $1,500,000 as of December 31, 1995 and 1996, respectively. Interest on this loan was $51,408 and $25,049 in 1993 and 1994, respectively. Under the loan agreement, the Company is permitted to pay dividends to its sole shareholder in an aggregate amount equal to the amount of federal and state income taxes due on the taxable income of the Company, as if such taxable income was the sole taxable income of the shareholder. NOTE 4--MOTOR VEHICLE LOANS PAYABLE Pertinent information on the motor vehicle loans payable is as follows:
Balance ------------------ Total Interest Monthly Lender 12/31/93 12/31/94 Rate Payments Maturity Collateral - ---------------------- ------- ------- ------- ------- -------- ---------------- Ford Motor Credit .... Automobiles/ $171,636 $100,582 6.42-12% $9,442 3/95-8/97 Trucks Less Current Portion . 103,077 63,092 ----- ----- $ 68,559 $ 37,490 ===== =====
F-31 NATIONAL BUSINESS ARCHIVES, INC. NOTES TO FINANCIAL STATEMENTS -- (Continued) NOTE 4--MOTOR VEHICLE LOANS PAYABLE -- (Continued) Interest on these loans was $15,077 and $11,825 in 1993 and 1994, respectively. The remaining principal payments on these loans are as follows: 1995 .............................. $ 63,092 1996 .............................. 33,596 1997 .............................. 3,894 ------ $100,582 ====== NOTE 5--COMMITMENTS Deferred Rent Office and warehouse leases:
Square Effective Lease Free Expiration Lessor* Feet Date Term Rent Date - --------------------------------- ------ ------- ---------------- ---------- ---------- B.W.I.P. Associates Limited 11 Yrs. 7.5 Partnership .................. 68,200 12/01/87 Mths.** 8 Mths. 7/15/99 Dorsey Run Industrial Park 10 Yrs. 9 Limited Partnership (DRIP) .... 142,885 11/01/89 Mths. 14 Mths. 7/31/00 DRIP ............................ 42,413 9/01/94 5 Years -- 8/31/99 DRIP ............................ 97,587 3/01/95 4 Yrs. 6 Mths. -- 8/31/99
* Lessors are related to sole shareholder. ** Lease term was extended 1 year and 7.5 months in the current year. Annual rental expense recognized on the straight-line basis on the above leases for 1993 and 1994 was $1,092,132 and $1,146,564, respectively. Future minimum annual rental payments are as follows: 1995 ...................................... $1,764,714 1996 ...................................... 1,825,706 1997 ...................................... 1,834,600 1998 ...................................... 1,826,606 1999 ...................................... 1,427,525 2000 ...................................... 510,099 ---------- Total minimum future rental payments ......... $9,189,250 ========== NOTE 6--SUBSEQUENT EVENT On March 1, 1995, the Company sold all of its assets to Iron Mountain Records Management, Inc. and all debt was repaid from the proceeds of the sale. In addition, the Company's assets were released from security interests held by the bank with the full payment of the note payable (see Note 3). F-32 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Board of Directors of Data Management Business Records Storage, Inc.: We have audited the accompanying balance sheet of Data Management Business Records Storage, Inc. as of June 30, 1995 and the related statement of operations and retained earnings (deficit), and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Data Management Business Records Storage, Inc. as of June 30, 1995 and the results of their operations and their cash flows for the year then ended in conformity with generally accepted accounting principles. MORRISON AND SMITH Tuscaloosa, Alabama September 18, 1995 (except for Note 14, as to which the date is December 1, 1995) F-33 DATA MANAGEMENT BUSINESS RECORDS STORAGE, INC. BALANCE SHEETS
June 30, September 30, 1995 1995 ---------- ------------- (unaudited) ASSETS Cash ................................................... $ 125,982 $ 626,578 Accounts receivables, net .............................. 576,979 517,903 Materials inventory .................................... 7,909 7,909 Prepaid expenses ....................................... 11,744 12,867 Other .................................................. 115,154 374 -------- ----------- Total current assets ................................ 837,768 1,165,631 -------- ----------- Plant, property and equipment, net ..................... 3,334,017 2,435,362 -------- ----------- Intangible assets ...................................... 572,558 533,228 Notes receivable, intercompany ......................... 316,551 373,082 Deferred income tax .................................... 810,431 554,752 Other .................................................. 11,748 11,748 -------- ----------- 1,711,288 1,472,810 -------- ----------- Total assets ...................................... $ 5,883,073 $ 5,073,803 ======== =========== LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) Accounts payable--trade ................................ $ 92,193 $ 61,592 Accrued expenses ....................................... 136,505 137,043 Unearned income ........................................ 309,735 309,735 Current portion--leases ................................ 68,242 63,240 Current portion--notes ................................. 5,353,941 4,428,159 -------- ----------- Total current liabilities ........................... 5,960,616 4,999,769 -------- ----------- Leases payable, long-term .............................. 114,216 96,885 Notes payable, long-term ............................... 1,328,764 1,292,495 Notes payable, intercompany ............................ 50,000 38,760 Deferred compensation payable .......................... 12,115 -- Earnest money deposit .................................. 154,988 -- -------- ----------- Total long-term liabilities ......................... 1,660,083 1,428,140 -------- ----------- Total liabilities ................................. 7,620,699 6,427,909 Stockholders' equity (deficit) Common stock ........................................... 500 500 Paid-in capital ........................................ 1,321,809 1,321,809 Retained earnings (deficit) ............................ (3,059,935) (2,676,415) -------- ----------- (1,737,626) (1,354,106) ======== =========== Total liabilities and stockholders' equity (deficit) ............................... $ 5,883,073 $ 5,073,803 ======== ===========
The accompanying notes are an integral part of these financial statements. F-34 DATA MANAGEMENT BUSINESS RECORDS STORAGE, INC. STATEMENTS OF OPERATIONS AND RETAINED EARNINGS (DEFICIT) Three Year Ended Months Ended June 30, September 30, 1995 1995 ----------- ------------- (Unaudited) Revenues: Storage .................................... $ 3,143,737 $ 797,715 Services and storage material sales ........ 1,683,035 414,650 Net gain (loss) on sale of assets .......... (4,045) 738,049 --------- ----------- Total Revenues ............................ 4,822,727 1,950,414 --------- ----------- Operating expenses: Cost of sales (excluding depreciation) ..... 891,293 310,610 Selling, administrative and general expenses 2,730,013 767,702 Depreciation and amortization .............. 510,831 115,653 --------- ----------- Total operating expenses .................. 4,132,137 1,193,965 --------- ----------- Operating income ............................ 690,590 756,449 Interest expense ............................ (551,569) (121,915) Other income (expense), net ................. 611 4,664 --------- ----------- Income before provision for income taxes .... 139,632 639,198 Provision for income taxes .................. 55,589 255,678 --------- ----------- Net income .................................. 84,043 383,520 Retained earnings (deficit)--beginning ...... (3,143,978) (3,059,935) --------- ----------- Retained earnings (deficit)--ending ......... $(3,059,935) $(2,676,415) ========= =========== The accompanying notes are an integral part of these financial statements. F-35 DATA MANAGEMENT BUSINESS RECORDS STORAGE, INC. STATEMENTS OF CASH FLOWS
Three Year Ended Months Ended June 30, September 30, 1995 1995 ---------- ------------- (Unaudited) Cash Flow from Operating Activities: Cash received from customers and affiliates ........................... $ 4,769,087 $1,271,441 Cash paid for cost of sales ........................................... (873,587) (218,510) Cash paid for operating expenses ...................................... (2,693,965) (805,400) Interest expense ...................................................... (550,807) (113,677) Income taxes paid ..................................................... -- (457) Interest and dividends received ....................................... 1,082 3,691 Other income (expense) ................................................ (471) 973 -------- ----------- Net Cash from Operating Activities .................................. 651,339 138,061 -------- ----------- Cash Flow from Investing Activities: Proceeds from escrow money deposit .................................... 154,988 -- Proceeds from sale of assets and equipment ............................ 12,117 1,686,742 Payments for purchase of property and equipment ....................... (554,247) (280,623) Payments (to) from employees for advances ............................. (9,635) 9,670 Payments (to) from affiliates for advances ............................ (151,360) (67,771) Payments for investments and intangibles .............................. (3,494) (726) Payments for deposits ................................................. -- (374) -------- ----------- Net Cash from Investing Activities .................................. (551,631) 1,346,918 -------- ----------- Cash Flows from Financing Activities: Proceeds from borrowings .............................................. 272,330 -- Repayment of debt ..................................................... (276,748) (984,383) -------- ----------- Net Cash from Financing Activities .................................. (4,418) (984,383) -------- ----------- Net change in cash and cash equivalents ................................ 95,290 500,596 Cash and cash equivalents at beginning of period ....................... 30,692 125,982 -------- ----------- Cash and cash equivalents at end of period ............................. $ 125,982 $ 626,578 ======== =========== Reconciliation of net income to net cash provided by operating activities: Net income ............................................................ $ 84,043 $ 383,520 Depreciation and amortization ......................................... 510,831 115,653 Deferred compensation ................................................. 6,304 -- (Gain) loss on sale of assets ......................................... 4,045 (738,049) (Increase) decrease in accounts receivable ............................ (72,453) 59,076 (Increase) in inventory ............................................... (1,581) -- (Increase) decrease in prepayments and escrow ......................... (49,272) 104,361 Increase (decrease) in accounts payable, accrued expenses and unearned income .................................................... 114,290 (42,178) Decrease in deferred tax benefit ...................................... 55,132 255,678 -------- ----------- Net cash provided by operating activities .............................. $ 651,339 $ 138,061 ======== ===========
The accompanying notes are an integral part of these financial statements. F-36 DATA MANAGEMENT BUSINESS RECORDS STORAGE, INC. NOTES TO FINANCIAL STATEMENTS JUNE 30, 1995 NOTE 1--ORGANIZATIONAL HISTORY OF THE COMPANY Data Management Business Records Storage, Inc. ("the Company"), organized in 1985, provides data management and storage ("DMS") services in the Atlanta, Georgia market. The Company currently has 1,447,024 cubic feet of warehouse capacity. The Company is a wholly owned subsidiary of Outdoor West, Inc., a management and holding company. Outdoor West, Inc. also owns two subsidiaries which operate in the outdoor advertising business, Outdoor West, Inc. of Georgia and Outdoor West, Inc. of Tennessee. NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Method of Accounting The Company's financial statements are presented on the accrual basis. Cash Equivalents For purposes of reporting cash flows, cash and cash equivalents include money market accounts and highly liquid debt instruments purchased with a maturity of three months or less. The Company maintains cash balances at several financial institutions. Accounts at each institution are insured by the Federal Deposit Insurance Corporation up to $100,000. Uninsured balances held in accounts at the Company's primary lender aggregate $25,982 at June 30, 1995. Allowance for Doubtful Trade Receivables Bad debts are accounted for on the reserve method. The allowance for doubtful accounts at June 30, 1995 was $837. Materials Inventory Materials inventory is valued at cost using the first-in, first-out method. Property and Depreciation Property and equipment are recorded at cost. Depreciation is provided on the straight-line method over the estimated useful lives of the respective assets. Maintenance and repairs are charged to expense as incurred; major renewals and betterments are capitalized. When items of property and equipment are sold or retired, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is recognized. Major classifications of property and equipment and their respective depreciable lives are summarized below: Years ------ Buildings ........................................... 15-40 Leasehold improvements .............................. 5-40 Autos and trucks .................................... 3-6 Equipment, construction ............................. 5-12 Shelving ............................................ 12 Computer equipment .................................. 5 Office furniture and fixtures ....................... 5-10 Leased assets ....................................... 7-25 F-37 DATA MANAGEMENT BUSINESS RECORDS STORAGE, INC. NOTES TO FINANCIAL STATEMENTS -- (Continued) NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (Continued) Intangible Assets In acquisitions of record storage businesses, agreements not to compete and goodwill were part of the purchase price. Non-compete agreements are amortized over the lives of the agreements ranging from ten to twenty years; goodwill is amortized over forty years. Loan costs are amortized over the lives of the loans. Income Taxes The Company is included in a consolidated federal income tax return of an affiliated group. Income tax expense in the Company's statement of operations has been allocated based on the ratio that each member's separate taxable income bears to the sum of the separate taxable incomes of all members having taxable income for the year. Unused net operating losses and tax credits available for carryforward to future years are detailed in Note 4. NOTE 3--INTANGIBLE ASSETS Intangible assets as of June 30, 1995 consist of: Accumulated Cost Amortization Net --------- ----------- --------- Non-compete agreements ............ $ 698,000 $418,282 $279,718 Loan costs ........................ 257,197 166,422 90,775 Goodwill .......................... 253,781 51,716 202,065 ------- --------- ------- Total .......................... $1,208,978 $636,420 $572,558 ======= ========= ======= NOTE 4--FEDERAL INCOME TAXES The Company accounts for income taxes in accordance with the provisions of Statement of Financial Accounting Standards Number 109, "Accounting for Income Taxes". Under the provisions of Statement No. 109, a current tax liability or asset is recognized for the estimated taxes currently payable or refundable for the current year and a deferred tax liability or asset is recognized for the estimated future tax effects attributable to temporary differences and carryforwards. Temporary differences represent the difference between the book and tax bases of assets or liabilities that will result in taxable or deductible amounts in future years when the asset or liability is recovered or settled. Summary of the provision for income tax expense (benefit) for the year ended June 30, 1995 is as follows: Currently payable ................................... $ 457 Deferred ............................................ (4,595) Utilization of operating loss carryforward .......... 59,727 ------ Provision for income tax expense .................... $55,589 ====== A reconciliation of income tax at the statutory rate to the Company's effective rate is as follows: Computed at the expected statutory rate ............. 38.0% Officer's life insurance ............................ .9 Amortization of goodwill ............................ 1.7 Deferred compensation ............................... 1.7 Other differences ................................... (2.5) ---- Effective rate ...................................... 39.8% ==== F-38 DATA MANAGEMENT BUSINESS RECORDS STORAGE, INC. NOTES TO FINANCIAL STATEMENTS -- (Continued) NOTE 4--FEDERAL INCOME TAXES -- (Continued) For the year ended June 30, 1995, the Company was included in a consolidated federal income tax return. The Company had carryovers as follows: Carryover Amount Expiration --------------------------- --------- ----------- Net operating loss ........ $2,109,000 2004-2009 Contributions ............. 5,510 1996-1999 The deferred tax benefit consisted of the following at June 30, 1995: Deferred tax benefit: Net operating loss carryforward .......... $801,420 Other temporary differences .............. 9,011 ------- 810,431 Valuation allowance ...................... -0- ------- Net deferred tax benefit ................. $810,431 ======= Even though the Company has net operating loss carryforwards from fiscal years ended June 30, 1985 through June 30, 1994, management believes that it is more likely than not that it will generate taxable income sufficient to realize the tax benefit associated with net operating loss and tax credit carryforwards. This belief is based upon, among other factors, expectations of continued growth in sales and changes in operations, as well as consideration of available tax planning strategies. Specifically, the Company has plans to consolidate operations in the DMS business by selling a warehouse and moving files to an existing leased facility. The sale of the warehouse facility is expected to result in a significant gain as the facility's best use, due to its location and structure, is other than warehouse space. Additionally, the Company has plans to sell the operating assets of the DMS business at a significant gain. Management believes that no valuation allowance is appropriate given the current estimates of future taxable income. If the Company is unable to generate sufficient taxable income in the future through operating results, or through the sales discussed in Note 14, increases in the valuation allowance will be required through a charge to income tax expense. NOTE 5--CAPITAL STOCK Common stock of the Company has a par value of $0.10 per share; 5,000 shares were authorized, issued and outstanding. NOTE 6--PROPERTIES AND FACILITIES 1995 ------------ Land ................................................ $ 364,657 Buildings ........................................... 1,831,905 Leasehold improvements .............................. 126,501 Autos and trucks .................................... 355,032 Equipment ........................................... 110,916 Shelving ............................................ 2,586,900 Computer equipment .................................. 334,018 Office furniture and fixtures ....................... 128,503 Leased assets ....................................... 313,667 ---------- 6,152,099 Less accumulated depreciation ....................... (2,818,082) ---------- $ 3,334,017 ========== F-39 DATA MANAGEMENT BUSINESS RECORDS STORAGE, INC. NOTES TO FINANCIAL STATEMENTS -- (Continued) NOTE 7--NOTES PAYABLE
Interest Balance Maturity Collateral and Repayment Terms Rate June 30, 1995 - ---------- --------------------------------------------------- ------------ -------------- 6/96 Substantially all of assets of the Company except those subject to prior liens and the outstanding stock of the Company pari passu with other major lender. Interest due monthly and principal payments of approximately $60,000 due 9/30/95; 7.62%- 12/31/95 and 3/31/96. Remaining principal balance LIBOR+ due 6/30/96. 3.25% $5,124,242 2/01-3/01 Certain assets of DMS on purchase money contracts, non-competes; due $16,667 monthly 10.00% 1,071,038 9/99 Real estate of DMS due $4,152 monthly 9.00% 384,892 9/94-4/96 Rolling stock and equipment, principal and interest of approximately $9,000 due monthly Various 102,533 ------------ $6,682,705 ============
Principal maturities of notes payable for the five years ending after June 30, 1995 are: 6/30/96 ............................................. $ 5,353,941 6/30/97 ............................................. 195,314 6/30/98 ............................................. 196,611 6/30/99 ............................................. 522,343 6/30/00 ............................................. 272,365 Maturities after 5 years ............................ 142,131 ---------- Total maturities ................................. 6,682,705 Less current maturities ............................. (5,353,941) ---------- Long term maturities ............................. $ 1,328,764 ========== At June 30, 1995, a substantial portion of the Company's notes payable were due within one year. However, as discussed in Note 14, substantially all of the operating assets of the Company were sold effective November 30, 1995. The proceeds of this sale were sufficient to pay all of the Company's notes payable. Additional Restrictions Required by Long-Term Debt The Company, its parent and affiliates entered into loan agreements with Massachusetts Mutual Life Insurance Company and National Westminster Bank USA. The affiliated group is required to comply with certain restrictive covenants which require, among other things, limitations on capital expenditures and corporate overhead and a deadline for providing audited financial statements. While the affiliated group was in violation of these agreements, the two lenders have issued waivers for the covenant violations as of June 30, 1995. NOTE 8--TRANSACTIONS WITH RELATED PARTIES The Company has various lease and management agreements with affiliates. The Company's parent, Outdoor West, Inc., charges the Company a management fee which covers executive management supervision in addition to general management services which include leasing, accounting, finance, personnel and general supervision F-40 DATA MANAGEMENT BUSINESS RECORDS STORAGE, INC. NOTES TO FINANCIAL STATEMENTS -- (Continued) NOTE 8--TRANSACTIONS WITH RELATED PARTIES -- (Continued) responsibilities. Amounts included in the statement of operations with respect to transactions with affiliates for June 30, 1995 are: Outdoor West, The Eagle Inc. Group --------- ---------- Income Land Lease ......................... $ -- $ 4,900 Expenses Management fees ..................... 398,000 -- Interest ............................ -- 13,932 Building rental ..................... -- 103,875 ------- -------- Net transactions with related parties $(398,000) $(112,907) ======= ======== Receivables from and payables to affiliates as of June 30, 1995 are: Accounts receivable from: Outdoor West, Inc. ......................... $316,551 ======= Notes payable to: Outdoor West, Inc. of Georgia .............. $ 50,000 ======= Charles H. Renfroe is Chairman of the Board of Directors of the Company. The Eagle Group is a sole proprietorship, owned by Mr. Renfroe, which operates a mini-warehouse project and leases office and warehouse space to Outdoor West, Inc. of Georgia and to the Company. In addition, the Eagle Group owns 19 parcels of land leased to Outdoor West, Inc. of Georgia and Tennessee. In the opinion of management, all of the transactions with related parties are at rates and terms equivalent to those that prevail in arm's-length transactions. NOTE 9--UNEARNED INCOME Unearned income represents primarily income billed one month in advance for record storage. Most of this was recognized as income in July, 1995. NOTE 10--OBLIGATIONS UNDER CAPITAL LEASE The Company is the lessee of property under capital leases with expirations as disclosed in the following table. Assets and liabilities under capital leases are recorded at the lower of the present value of the minimum lease payments or the fair value of the asset. The assets are depreciated over the lower of their related lease terms or their estimated productive lives. Depreciation of assets under capital leases is included in depreciation expense for 1995. Interest rates on capitalized leases vary and are imputed based on the lower of the Company's incremental borrowing rate at the inception of each lease or the lessor's implicit rate of return. General Description of Capital Leases June 30, 1995 Termination Leased Property Balance Dates --------------- ----------- ---------------- Equipment ......................... $182,457 10/05/96-12/19/99 ========= F-41 DATA MANAGEMENT BUSINESS RECORDS STORAGE, INC. NOTES TO FINANCIAL STATEMENTS -- (Continued) NOTE 10--OBLIGATIONS UNDER CAPITAL LEASE -- (Continued) Net Obligations Under Capital Leases at June 30, 1995: Capital Less: Balance Lease Imputed Sheet Balance Interest Values ------- ------- -------- Current liabilities ........... $ 84,078 $15,836 $ 68,242 ===== ===== ====== Long-term liabilities ......... $129,366 $15,150 $114,216 ===== ===== ====== Gross Assets and Accumulated Depreciation June 30, 1995 -------------- Equipment and automobiles ......... $313,667 Less accumulated depreciation ..... (68,721) ------------ $244,946 ============ Minimum Future Lease Payments Years Ended June 30 ------------------- 1996 .............................................. $ 84,078 1997 .............................................. 73,109 1998 .............................................. 30,229 1999 .............................................. 17,352 2000 .............................................. 8,676 ------ Total minimum lease payments .................... 213,444 Less imputed interest ............................... 30,986 ------ Present value of net minimum lease payments ......... $182,458 ====== NOTE 11--OBLIGATIONS UNDER OPERATING LEASES The Company leases real estate under operating leases expiring in various years through January 31, 2008. Minimum future rental payments under non-cancellable operating leases having remaining terms in excess of one year as of June 30, 1995 for each of the next five years in the aggregate are: Years Ended June 30 Amount ------------------ ---------- 1996 .............................................. $ 745,918 1997 .............................................. 528,299 1998 .............................................. 425,770 1999 .............................................. 428,208 2000 .............................................. 418,197 Subsequent to 2000 ................................ 3,373,556 -------- $5,919,948 ======== Rental expense under all operating leases for the fiscal year ended June 30, 1995: Rental Expense ...................................... $491,139 ====== The Company leases real estate from affiliates. The leases are classified as operating leases and provide for minimum annual rentals of $103,875 with expirations ranging from February 28, 1996 to January 6, 2000. See Note 8. F-42 DATA MANAGEMENT BUSINESS RECORDS STORAGE, INC. NOTES TO FINANCIAL STATEMENTS -- (Continued) NOTE 12--COMMITMENTS AND CONTINGENCIES The Company began a self-insured program for its group health plan January 1, 1990. The Company is liable for claims up to $20,000 per employee annually and aggregate claims up to $154,861 annually. Self-insurance costs are accrued based upon the aggregate of the liability for reported claims and an actuarially determined estimated liability for claims incurred but not reported. NOTE 13--PROFIT SHARING PLAN Effective January 1, 1994, the Company implemented a profit sharing plan described in Internal Revenue Code Section 401(k). All employees of the Company are eligible to participate once they meet the eligibility and participation requirements of the plan. Employees become eligible for participation in the plan after attaining age 21 and completing 12 months of service. Under the terms of the plan, participants may contribute a portion of their compensation to the plan on a tax deferred basis. Employee contributions may not exceed the annual limitations established by the Treasury. The Company matches 10% of the first 6% of compensation contributed by each participant. During the year ended June 30, 1995 the cost of the plan to the Company totaled $7,128. NOTE 14--SUBSEQUENT EVENTS On July 31, 1995 the Company sold a warehouse and distribution facility. Proceeds from the sale were $1,850,000. The transaction resulted in a gain of approximately $740,000 which will be included in net income from operations for the fiscal year ending June 30, 1996. On December 1, 1995, the Company sold, effective November 30, 1995, substantially all of its operating assets. F-43 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Partners Nashville Vault Company, Ltd.: We have audited the accompanying balance sheet of Nashville Vault Company, Ltd. (a Tennessee limited partnership) as of December 31, 1995, and the related statements of income, partners' capital and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Nashville Vault Company, Ltd. at December 31, 1995, and the results of its operations and its cash flows for the year then ended, in conformity with generally accepted accounting principles. Geo. S. Olive & Co. LLC Indianapolis, Indiana January 16, 1996 F-44 NASHVILLE VAULT COMPANY, LTD. (A TENNESSEE LIMITED PARTNERSHIP) BALANCE SHEET December 31, 1995 ------------ ASSETS Current assets: Cash and cash equivalents ............... $ 275,806 Accounts receivable--trade .............. 180,609 Prepaid expenses ........................ 60 ---------- Total current assets .................. 456,475 Property and equipment: Building and improvements ............... 1,148,652 Furniture and equipment ................. 269,798 Vehicles ................................ 88,386 ---------- 1,506,836 Accumulated depreciation and amortization (833,520) ---------- $ 673,316 ---------- $1,129,791 ========== LIABILITIES Current liabilities: Accounts payable and accrued expenses ... $ 104,662 Deferred revenue ........................ 43,253 Convertible notes payable ............... 325,000 ---------- Total current liabilities ............. 472,915 PARTNERS' CAPITAL ....................... 656,876 ---------- $1,129,791 ========== The accompanying notes are an integral part of these financial statements. F-45 NASHVILLE VAULT COMPANY, LTD. (A TENNESSEE LIMITED PARTNERSHIP) STATEMENT OF INCOME Year Ended December 31, 1995 ---------------- Revenue: Storage ........................................... $ 636,302 Service and storage material sales ................ 738,338 -------------- Total revenue .................................. $1,374,640 Operating expenses: Cost of sales (excluding depreciation) ............ 499,389 Selling, general and administrative expenses ...... 326,674 Depreciation and amortization ..................... 122,021 -------------- Total operating expenses ....................... 948,084 -------------- Operating income .................................... 426,556 Other income (expense): Interest income ................................... 18,994 Interest expense .................................. (80,022) -------------- (61,028) -------------- Net income .......................................... $ 365,528 ============== STATEMENT OF PARTNERS' CAPITAL Balance, Beginning of Year .......................... $ 306,499 Net income ........................................ 365,528 Cash distributions ................................ (15,151) -------------- Balance, End of Year ................................ $ 656,876 ============== The accompanying notes are an integral part of these financial statements. F-46 NASHVILLE VAULT COMPANY, LTD. (A TENNESSEE LIMITED PARTNERSHIP) STATEMENT OF CASH FLOWS Year Ended December 31, 1995 ---------------- Operating Activities: Net income ............................................... $ 365,528 Items not affecting net cash provided by operating activities: Depreciation and amortization ......................... 122,021 Gain on disposal of property and equipment ............ (141) Changes in other items: Accounts receivable--trade ......................... (333) Prepaid expenses ................................... 16,761 Accounts payable and accrued expenses .............. 41,230 Deferred revenue ................................... (2,012) -------------- Net cash provided by operating activities .......... $ 543,054 Investing Activities: Purchase of property and equipment ....................... (30,908) Proceeds from sale of property and equipment ............. 2,300 Proceeds from sale of investments ........................ 310,000 Purchase of investments .................................. (210,000) -------------- Net cash provided by investing activities .......... 71,392 Financing Activities: Payments on debt ......................................... (489,969) Cash distribution to partners ............................ (15,151) -------------- Net cash used by financing activities .............. (505,120) -------------- Net increase in Cash and Cash Equivalents .................. 109,326 Cash and Cash Equivalents, Beginning of Year ............... 166,480 -------------- Cash and Cash Equivalents, End of Year ..................... $ 275,806 ============== Supplemental Cash Flows Information: Cash paid during the year for interest ................... $ 80,022 Equipment acquired with installment note ................. 48,854 The accompanying notes are an integral part of these financial statements. F-47 NASHVILLE VAULT COMPANY, LTD. (A TENNESSEE LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS 1. Nature of Operations Nashville Vault Company, Ltd. (the "Partnership") is a limited partnership formed pursuant to the Uniform Limited Partnership Act of Tennessee on February 21, 1985 to renovate, own and operate a maximum security facility containing safe deposit boxes and secured storage vaults in Nashville. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statement and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 2. Summary of Significant Accounting Policies Cash Equivalents The Partnership considers all liquid investments with original maturities of three months or less to be cash equivalents. At December 31, 1995, cash equivalents consisted of savings accounts. From time to time during the year, the Partnership's cash accounts exceeded federally insured limits. Property and Equipment Property and equipment are carried at cost, and such cost is being recovered using straight-line and accelerated methods of depreciation, with useful lives of 15 to 31.5 years for building and improvements, 5 to 7 years for furniture and equipment, and 5 years for vehicles. Revenue Recognition Revenue is recognized when earned. Revenue billed in advance is shown as deferred revenue. Advertising Costs The Partnership expenses advertising costs as incurred. Advertising costs were $6,787 in 1995. Income Tax Status Since the entity is a partnership, it is not subject to federal and state income taxes and, accordingly, no provision for federal and state taxes on income is required. The partners include their allocable share of the net income or loss in their respective income tax returns. 3. Convertible Notes Payable The 12% convertible notes, payable to certain limited partners, are convertible into limited partnership units at a conversion price of $12,500 for one limited partnership unit. On January 1, 1996, all convertible notes were converted into 26 limited partnership units. 4. Employee Benefits On January 1, 1994, the Partnership established a 401(k) defined contribution plan for the benefit of substantially all of its employees, which allows for both employee and Partnership contributions. The Partnership contribution consists of a matching contribution of 25 percent of employee contributions, up to 3.75 percent of eligible employee compensation. The Partnership contribution to the plan was $3,924 for 1995. This plan was terminated on December 31, 1995. F-48 NASHVILLE VAULT COMPANY, LTD. (A TENNESSEE LIMITED PARTNERSHIP) -- (Continued) 5. Partnership Agreement The Agreement of Limited Partnership (as amended) specifies the allocation of profits, losses, and distributions to be allocated 1% to the General Partner and 99% to the Investor Limited Partners. Under the agreement, the limited partners are not liable for any debts of the Partnership nor are they required to make any additional capital contributions. 6. Related Party Transactions The Partnership leases the ground on which its building is located from family members of stockholders of the General Partner and pays real estate taxes and other related expenses under the lease which expires November 30, 2000. On January 1, 1996, the Partnership exercised an option to purchase the land for $250,000. Rent expense in 1995 was $29,000. The General Partner, USA Vault Corporation, is guaranteed a monthly management fee for the operation of the Partnership. The fee begins at $1,000 per month increasing to $2,000 and $3,000 monthly when annual gross revenue exceeds $200,000 and $300,000, respectively. The Partnership incurred management fees to the General Partner of $32,000 in 1995. The Partnership pays fees to a company owned by the president of USA Vault Corporation for accounting and bookkeeping services. Fees paid totaled $12,000 for 1995. 7. Major Customer Sales from a major customer approximated 10% of sales and 19% of accounts receivable at December 31, 1995. 8. Subsequent Event On January 4, 1996, the Partnership sold, effective January 1, 1996, substantially all of its operating assets for approximately $3,450,000 to Iron Mountain Record Management, Inc. F-49 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Directors and Stockholders Data Archive Services, Inc. and Data Archive Services of Miami, Inc.: We have audited the accompanying combined balance sheet of Data Archive Services, Inc. and Data Archive Services of Miami, Inc. (Florida Corporations) as of May 31, 1996, and the related combined statements of operations and retained earnings, and cash flows for the year then ended. These combined financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these combined financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the combined financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the combined financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the combined financial statements referred to above present fairly, in all material respects, the financial position of Data Archive Services, Inc. and Data Archive Services of Miami, Inc. as of May 31, 1996, and the results of their operations and their cash flows for the year then ended, in conformity with generally accepted accounting principles. The combined financial statements include the financial statements of Data Archive Services, Inc. and Data Archive Services of Miami, Inc., which are related through controlled ownership and management. Perless, Roth, Jonas & Hartney, CPAs, PA Miami, Florida July 30, 1996 (except for Note 11, for which the date is August 9, 1996) F-50 DATA ARCHIVE SERVICES, INC. COMBINED BALANCE SHEET MAY 31, 1996 ASSETS Current Assets: Cash ........................................ $ 155,435 Accounts Receivable ......................... 291,711 Due from Related Party ...................... 19,379 Inventories ................................. 4,061 Prepaid Expenses ............................ 45,673 Income Taxes Receivable ..................... 34,485 ------- Total Current Assets ..................... 550,774 Property, Plant and Equipment: Shelving .................................... 565,513 Office Furniture and Equipment .............. 217,686 Vaults ...................................... 110,139 Leasehold Improvements ...................... 61,914 Vehicle ..................................... 18,237 ------- 973,489 Less: Accumulated Depreciation .............. (490,025) ------- Property, Plant and Equipment, Net ....... 483,464 Other Assets ................................ 46,730 ------- Total Assets ............................. $1,080,938 ======= LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Current Portion of Long-Term Liabilities .... $ 129,407 Accounts Payable ............................ 251,207 Accrued Expenses ............................ 126,909 Loan Payable to Stockholder ................. 165,154 Deferred Revenue ............................ 170,140 Income Taxes Payable ........................ 8,365 ------- Total Current Liabilities ................ 851,182 Long-Term Liabilities: Lease Obligation Payable .................... 7,117 Installment Obligations Payable ............. 145,298 Line of Credit Payable to Bank .............. 100,000 Less: Current Portion of Long-Term Liabilities ............................... (129,407) ------- Total Long-Term Liabilities .............. 123,008 Stockholders' Equity: Capital Stock ............................... 11,000 Additional Paid-in Capital .................. 50,050 Retained Earnings ........................... 45,698 ------- Total Stockholders' Equity ............... 106,748 ------- Total Liabilities and Stockholders' Equity $1,080,938 ======= The accompanying notes are an integral part of these financial statements. F-51 DATA ARCHIVE SERVICES, INC. COMBINED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS FOR THE YEAR ENDED MAY 31, 1996 Revenues: Storage ............................................. $1,106,051 Service and Storage Material Sales .................. 609,955 --------- Total Revenues .................................... 1,716,006 Operating Expenses: Cost of Sales (Excluding Depreciation) .............. 962,801 Selling, General and Administrative ................. 919,022 Depreciation and Amortization ....................... 38,285 --------- Total Operating Expenses .......................... 1,920,108 --------- Operating Loss ...................................... (204,102) Interest Expense, Net ............................... (3,177) Loss Before Income Tax Benefit ...................... (207,279) Income Tax Benefit .................................. 1,190 --------- Net Loss ............................................ (206,089) Retained Earnings--Beginning of Year ................ 251,787 --------- Retained Earnings--End of Year ...................... $ 45,698 ========= The accompanying notes are an integral part of these financial statements. F-52 DATA ARCHIVE SERVICES, INC. COMBINED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED MAY 31, 1996 Cash Flows From Operating Activities: Net Loss ............................................ $(206,089) Adjustments to Reconcile Net Loss to Net Cash Provided by Operating Activities: Depreciation and Amortization ...................... 38,285 Loss on Abandonment of Assets ...................... 26,725 Increase in Accounts Receivable .................... (82,260) Increase in Inventories ............................ (1,146) Increase in Prepaid Expenses ....................... (6,538) Increase in Income Taxes Receivable ................ (34,485) Decrease in Due from Related Party ................. 49,793 Decrease in Other Assets ........................... 29,875 Increase in Accounts Payable ....................... 166,391 Increase in Accrued Expenses ....................... 72,577 Increase in Deferred Revenue ....................... 52,710 Increase in Income Taxes Payable ................... 6,624 --------- Total Adjustments ................................ 318,551 --------- Net Cash Provided by Operating Activities ........ 112,462 --------- Cash Flows From Investing Activities: Property, Plant and Equipment Expenditures .......... (369,522) Cash Flows From Financing Activities: Advances from Stockholder ........................... 288,050 Repayments to Stockholder ........................... (122,896) Proceeds from Line of Credit ........................ 100,000 Proceeds from Lease and Installment Obligations ..... 150,337 Repayments on Lease and Installment Obligations ..... (48,190) --------- Net Cash Provided by Financing Activities ........ 367,301 --------- Net Increase in Cash ................................ 110,241 Cash at Beginning of Year ........................... 45,194 --------- Cash at End of Year ................................. $ 155,435 ========= Supplemental Disclosures of Cash Flow Information: Cash Paid During the Year for Interest .............. $ 7,485 ========= Cash Paid During the Year for Income Taxes .......... $ 13,443 ========= The accompanying notes are an integral part of these financial statements. F-53 DATA ARCHIVE SERVICES, INC. NOTES TO COMBINED FINANCIAL STATEMENTS MAY 31, 1996 NOTE 1--NATURE OF BUSINESS The accompanying financial statements represent the combined accounts of Data Archive Services, Inc. and Data Archive Services of Miami, Inc. (Affiliate). Data Archive Services, Inc. and Affiliate (the Companies) are records management companies providing storage and related services primarily in Dade, Broward and Palm Beach Counties. NOTE 2--SIGNIFICANT ACCOUNTING POLICIES a. Principles of Combination The financial statements reflect the financial position and results of operations of the Companies on a combined basis. All significant intercompany balances and transactions have been eliminated. b. Property and Equipment Property and equipment are recorded at cost and depreciated using the straight-line and declining balance methods with the following useful lives: Years ------ Leasehold Improvements 14-20 Shelving 8-33 Vaults and Security Systems 8-10 Office Furniture and Equipment 5-7 Vehicle 6 Expenditures for repairs and maintenance are charged to expense as incurred. Expenditures for major renewals and betterments, which significantly extend the useful lives of existing property and equipment, are capitalized and depreciated. Upon retirement or disposition of property and equipment, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in income. c. Allowance for Doubtful Trade Receivables Bad debts are accounted for on the reserve method. As at May 31, 1996, no reserve for doubtful accounts was required. d. Revenue Recognition Storage and service revenues are recognized in the month the respective service is provided. Storage material sales are recognized when shipped to the customer. Amounts related to future storage for customers when storage fees are billed in advance are accounted for as deferred revenue and amortized over the applicable period. These amounts are included in deferred revenue in the accompanying financial statements. e. Inventories Inventories are carried at the lower of cost using the first-in, first-out basis, or market and are comprised primarily of boxes. f. Cash and Cash Equivalents The Companies define cash and cash equivalents to include cash on hand and cash invested in short-term securities which have original maturities of less than 90 days. F-54 DATA ARCHIVE SERVICES, INC. NOTES TO COMBINED FINANCIAL STATEMENTS -- (Continued) g. Financial Statements Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions which affect the reporting of assets and liabilities as of the dates of the financial statements and revenues and expenses during the reporting period. Actual results may differ from these estimates. h. Income Taxes The Company accounts for income taxes in accordance with Statement of Financial Accounting Standards No. 109 (SFAS No. 109), "Accounting For Income Taxes". Under SFAS No. 109, an asset and liability approach is required. Such approach results in the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the book carrying amounts and the tax basis of assets and liabilities. NOTE 3--LONG-TERM LIABILITIES
Long-Term Liabilities consist of the following: Line of Credit with Bank--$100,000 Line of Credit Secured by Substantially all of the Assets. Interest, Paid Monthly, Calculated at 1% above Published Prime. Principal Balance is due and Payable March 22, 1997 ............................ $100,000 Financing, Primarily for Shelving Principal and Interest Calculated at 12.27%, Paid in Monthly Installments of $3,184 ............................................... 140,552(A) Other Financing for Shelving, Equipment, and a Vehicle. Principal and Interest Ranging from 9.82% to 13.19%, Paid in Monthly Installments of $734 ................................................................. 11,863 ---------- Long-Term Liabilities .................................................. 252,415 Less: Current Portion .................................................. 129,407 ---------- Long-Term Liabilities, Net of Current Portion .......................... $123,008 ==========
The scheduled repayment of long-term liabilities is as follows:
Year Amount ----- --------- 1997 ............................................................... $129,407 1998 ............................................................... 27,891 1999 ............................................................... 30,144 2000 ............................................................... 32,000 2001 ............................................................... 32,973 ------- $252,415 =======
(A) This obligation is non-cancelable with no offset. Therefore the payoff amount, if Data Archive Services, Inc. cancels this agreement, is based upon the remaining payments. The cancellation amounts versus the outstanding indebtedness for the 12 months ended May 31 are as follows: Number of Remaining Outstanding Cancellation Year Payments Indebtedness Indebtedness ---------------- ------- ----------- ------------- 1996 59 $140,552 $187,856 1997 47 118,363 149,648 1998 35 93,294 111,440 1999 23 64,971 73,232 2000 11 32,971 35,024 F-55 DATA ARCHIVE SERVICES, INC. NOTES TO COMBINED FINANCIAL STATEMENTS -- (Continued) NOTE 4--CONTINGENCIES AND COMMITMENTS Obligations Under Operating Leases The Companies presently lease all their facilities under various operating leases. Several of these leases have renewal options of three (3) years and have consumer price index escalation clauses. The Companies also lease computer equipment and warehouse equipment under operating leases expiring at various dates within a two (2) year period. Rent expense for the year ended May 31, 1996 is as follows: Rent--Premises ...................................... $432,742 ======= Rent--Computer and Warehouse Equipment .............. $ 91,537 ======= Minimum future lease payments for the 12 months ended May 31, are as follows: Lease Computer and Lease Warehouse Year Premises Equipment ----------------------------------- --------- ---------- 1997 .............................. $ 358,263 $ 79,658 1998 .............................. 356,291 32,840 1999 .............................. 356,291 -- 2000 .............................. 356,291 -- 2001 .............................. 356,291 -- Thereafter ........................ 3,767,123 -- ------- -------- $5,550,550 $112,498 ======= ======== Certain of the operating leases contracted for by the companies are contracted with the controlling shareholder of the Companies. This is discussed more fully in Note 7 "Transactions With Related Parties". Concentration of Credit Risk The Companies maintain their bank accounts with FDIC financial institutions. As at May 31, 1996, the cash balance in one (1) of the accounts exceeded the insured limits by approximately $42,000. NOTE 5--PROFIT SHARING PLAN Effective January 1, 1995, the Companies implemented a profit sharing plan described in Internal Revenue Code Section 401(k). All employees of the Companies are eligible to participate once they meet the eligibility and participation requirements of the plan. Employees become eligible for participation in the plan after attaining age 21 and completing 12 months of service. Under the terms of the plan, participants may contribute a portion of their compensation to the plan on a tax deferred basis. Employee contributions may be made with a maximum deferral up to 15 percent of compensation, not to exceed the annual limitations established by the Treasury. The Companies are required to make contributions to the plan, but the amount of the contribution is determined by the Companies. During the year ended May 31, 1996, the Companies contributed $12,013 to the plan. NOTE 6--CAPITAL STOCK Common stock of Data Archive Services, Inc. has a par value of $1.00 per share; 1,000 shares are authorized, issued and outstanding. Common stock of Data Archive Services of Miami, Inc. (Affiliate) has a par value of $0.01 per share; 1,000,000 shares are authorized, issued and outstanding. There have been no changes in the capital stock of both companies during the fiscal year ended May 31, 1996. F-56 DATA ARCHIVE SERVICES, INC. NOTES TO COMBINED FINANCIAL STATEMENTS -- (Continued) NOTE 7--TRANSACTIONS WITH RELATED PARTIES P. Douglas McCraw, chief operating officer and controlling shareholder of the Companies has entered into certain lease and loan arrangements with the Companies. The Companies have entered into various lease and loan arrangements either through Mr. McCraw or other companies controlled by Mr. McCraw. These lease and loan arrangements are as follows:
Number of Lease Months Expense Remaining Total May 31, on Lease Lessor and Description 1996 Lease Obligation ------------------------------------------ ----------- ------- ----------- DAS Imaging Systems, Inc. Computer Equipment ..................... $73,140 17 $ 103,615 P. Douglas McCraw Ft. Lauderdale Storage Facility ........ 22,366 238 4,478,446 Galt Ocean Mile Partnership Ft. Lauderdale Storage Facility ........ 27,943 87 120,147 P. Douglas McCraw Month Lower Matecumbe Facility ............... to 10,845 Month -- P. Douglas McCraw Miami Storage Facility .................. 84,241 84 628,766 P. Douglas McCraw Miami Storage Facility ................. 28,603 160 321,221 Receivables from and Payables to Related Parties: Loan Receivable from: DAS Imaging Systems, Inc. ............. $ 19,379 ========= Loan Payble to: P. Douglas McCraw--Non-Interest Bearing Loan ......................... $ 165,154 ========= Amounts Included in Accounts Payable: P. Douglas McCraw--Lease--Miami Storage Facilities ................... $ 27,559 Galt Ocean Mile Partnership--Lease Ft. Lauderdale Storage Facility ...... 7,308 P. Douglas McCraw--Lease--Other Facilities ........................... 4,518 --------- $ 39,385 =========
NOTE 8--INCOME TAXES The income tax benefit (provision) consisted of the following: Current Federal Credit .............................. $ 24,615 Current Federal Provision ........................... (18,532) Current State Provision ............................. (4,893) ------- Total Current Credit ............................. $ 1,190 ======= At May 31, 1996, there are no temporary differences which would give rise to deferred tax assets and liabilities except as follows. Data Archive Services, Inc. has a federal operating loss carryforward of $167,621, and a state F-57 DATA ARCHIVE SERVICES, INC. NOTES TO COMBINED FINANCIAL STATEMENTS -- (Continued) operating loss carryforward of $318,682, which will expire in 2011. Realization of the deferred tax asset of $75,000 associated with the loss carryforwards is dependent upon the future earnings of this company. Because of the uncertainty of realization of this asset, a valuation allowance has been recognized for the entire deferred tax asset. NOTE 9--FAIR VALUE OF FINANCIAL INSTRUMENTS The following disclosure of the estimated fair value of financial instruments is made in accordance with the requirements of SFAS No. 107, "Disclosures About Fair Value of Financial Instruments." These estimates have been determined by the Companies using available market information and appropriate valuation techniques based on information as of May 31, 1996. As considerable judgment is inherent in the development of these estimates, they are not necessarily indicative of the amounts that the companies could realize in the current market exchange. The recorded amounts and fair values are as follows: May 31, 1996 -------------------- Recorded Fair Amount Value ------- --------- Assets: Cash ........................................ $155,435 $155,435 Due from Related Party ...................... 19,379 19,379 Liabilities: Current Portion of Long-Term Liabilities .... 129,407 129,407 Long-Term Liabilities ....................... 123,008 123,008 NOTE 10--SIGNIFICANT COMPONENTS OF COMBINED FINANCIAL STATEMENTS The significant components of the entities, before elimination, comprising the combined financial statements are as follows: Data Archive Data Archive Services, Services of Inc. Miami, Inc. ----------- ------------ Total Assets ............................... $ 953,885 $255,729 ========= ========== Total Liabilities .......................... $1,000,747 $102,119 ========= ========== Total Stockholders' Equity (Deficit) ........................ $ (46,862) $153,610 ========= ========== Net Income (Loss) .......................... $ (276,619) $ 70,530 ========= ========== NOTE 11--SUBSEQUENT EVENTS Effective August 1, 1996, all of the outstanding capital stock of the Companies was sold to Iron Mountain Records Management, Inc. All debt of the Companies will be repaid from the proceeds of the sale. F-58 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Board of Directors of Iron Mountain Incorporated: We have audited the accompanying balance sheet of Data Storage Systems, Inc. (a California corporation) as of December 31, 1995, and the related statements of operations, shareholders' deficit and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Data Storage Systems, Inc. as of December 31, 1995 and the results of its operations and its cash flows for the year then ended, in conformity with generally accepted accounting principles. Arthur Andersen LLP San Jose, California May 17, 1996 F-59 DATA STORAGE SYSTEMS, INC. BALANCE SHEET DECEMBER 31, 1995 Assets Current Assets: Cash ......................................... $ 185,278 Accounts receivable .......................... 243,923 Prepaid expenses and other ................... 23,624 ---------- Total current assets ..................... 452,825 Property and Equipment: Equipment and improvements ................... 1,020,762 Less--Accumulated depreciation ............... 828,074 ---------- Net property and equipment ................... 192,688 Other Assets ................................. 12,297 ---------- Total assets ............................. $ 657,810 ========== Liabilities and Shareholders' Deficit Current Liabilities: Accounts payable ............................. $ 27,822 Accrued liabilities .......................... 70,876 Deferred revenue ............................. 65,504 Notes payable ................................ 993,402 Accrued interest ............................. 313,875 ---------- Total current liabilities ................ 1,471,479 ---------- Shareholders' Deficit: Series A preferred stock, no par value- Authorized--1,000,000 shares Outstanding--1,000,000 shares .............. 1,000,000 Series B preferred stock, no par value- Authorized--500,000 shares Outstanding--266,666 shares ................ 365,333 Series C preferred stock, no par value- Authorized--2,000,000 shares Outstanding--1,083,334 shares .............. 650,000 Common stock, no par value- Authorized--137,000,000 shares Outstanding--110,756,630 shares ............ 1,178,967 Accumulated deficit .......................... (4,007,969) ---------- Total shareholders' deficit .............. (813,669) ---------- Total liabilities and shareholders' deficit .................................... $ 657,810 ========== The accompanying notes are an integral part of these financial statements. F-60 DATA STORAGE SYSTEMS, INC. STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1995 Revenues: Storage ............................................. $ 739,177 Service and storage material sales .................. 586,673 -------- 1,325,850 -------- Operating Expenses: Cost of sales (excluding depreciation) .............. 556,092 Selling, general, and administrative ................ 316,905 Depreciation and amortization ....................... 131,314 -------- Total operating expenses ........................ 1,004,311 -------- Operating Income .................................... 321,539 Interest Expense .................................... 127,477 -------- Net income .......................................... $ 194,062 ======== STATEMENT OF SHAREHOLDERS' EQUITY FOR THE YEAR ENDED DECEMBER 31, 1995
Series Series Series A B C Total Preferred Preferred Preferred Common Accumulated Shareholders' Stock Stock Stock Stock Deficit Deficit --------- ------- ------- --------- ----------- ------------- Balance at December 31, 1994 $1,000,000 $365,333 $650,000 $ 79,333 $(4,202,031) $(2,107,365) Issuance of common stock on conversion of notes payable ................ -- -- -- 1,099,634 -- 1,099,634 Net income ............... -- -- -- -- 194,062 194,062 ------- ----- ----- ------- --------- ----------- Balance at December 31, 1995 $1,000,000 $365,333 $650,000 $1,178,967 $(4,007,969) $ (813,669) ======= ===== ===== ======= ========= ===========
F-61 DATA STORAGE SYSTEMS, INC. STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 1995 Cash Flows from Operating Activities: Net income .................................................... $ 194,062 Adjustments to reconcile net income to net cash used in operating activities-- Depreciation and amortization ............................. 69,575 Net changes in assets and liabilities- Accounts receivable ..................................... 2,361 Inventory ............................................... (3,300) Prepaids and other ...................................... 12,337 Accounts payable ........................................ (142,056) Accrued liabilities ..................................... (179,529) -------- Net cash used in operating activities .................. (46,550) -------- Cash Flows from Financing Activities: Proceeds from notes payable ................................... 206,258 -------- Net Increase in Cash ............................................ 159,708 Cash at Beginning of Period ..................................... 25,570 -------- Cash at End of Period ........................................... $ 185,278 ======== Supplemental Disclosure of Noncash Financing Activities: The Company issued 109,963,296 shares of common stock on conversion of notes payable amounting to $1,099,634 The accompanying notes are an integral part of these financial statements. F-62 DATA STORAGE SYSTEMS, INC. NOTES TO FINANCIAL STATEMENTS December 31, 1995 1. ORGANIZATION OF THE COMPANY: Data Storage Systems, Inc. (a California corporation) operates a records-storage warehouse in San Jose, California. The Company entered into a merger agreement with Iron Mountain Records Management, Inc. in November 1995. The merger was effective as of February 29, 1996. Iron Mountain is the surviving entity and the Company became a wholly owned subsidiary of Iron Mountain. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Cash For purposes of the statements of cash flows, the Company considers all highly liquid investments with an original maturity of 90 days or less to be cash equivalents. Equipment and Improvements Equipment and improvements are stated at cost and depreciated using the straight-line method over the estimated useful lives (ranging from three to seven years) or over the shorter of the estimated useful life of the asset or its lease term for leasehold improvements. Equipment and improvements consist of the following: Warehouse equipment ................................. $ 931,814 Office equipment .................................... 68,006 Improvements ........................................ 20,942 -------- $1,020,762 ======== Revenue Recognition Revenue is recognized ratably over the time that the Customer's records are in storage. Customers are billed one month in advance for storage and in arrears for service. Advance billings for storage are recorded as deferred revenue. Income Taxes The Company accounts for income taxes pursuant to the provisions of Statement of Financial Accounting Standards No. 109 "Accounting for Income Taxes" (SFAS 109). SFAS 109 requires recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax liabilities and assets are determined using the current applicable enacted tax rate and provisions of the enacted tax law. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 3. NOTES PAYABLE AND RELATED PARTIES: At December 31, 1995, the Company had several notes payable totaling $993,402 to shareholders with varying interest rates ranging from 10.0% to 18.8%. These notes are payable upon demand. The fair value of the notes F-63 DATA STORAGE SYSTEMS, INC. NOTES TO FINANCIAL STATEMENTS -- (Continued) payable does not materially differ from the carrying value. On February 29, 1996, these notes and the related accrued interest were converted to shares of common stock in connection with the acquisition of the Company by Iron Mountain Records Management, Inc. 4. PREFERRED STOCK: Series A, Series B, and Series C Convertible Preferred Stock The Convertible Preferred Stock outstanding consists of 1,000,000, 266,666, and 1,083,334 shares of Series A Convertible Preferred Stock ("Series A"), Series B Convertible Preferred Stock ("Series B"), and Series C Convertible Preferred Stock ("Series C"), respectively. The rights and preferences of the Series A, Series B and Series C Convertible Preferred Stock are as follows: Dividends The holders of the Series C shall be entitled when and if declared by the Board of Directors, to dividends at a rate of $0.05 per share, per annum, payable in preference and priority to payment of any dividend to the holders of Series A, Series B or Common Stock. The holders of the Series A shall be entitled when and if declared by the Board of Directors, to dividends at a rate of $0.09 per share, per annum, payable in preference and priority to payment of any dividend to the holders of Series B or Common Stock. The holders of the Series B shall be entitled when and if declared by the Board of Directors, to dividends at a rate of $0.12 per share, per annum, payable in preference and priority to payment of any dividend to the holders of Common Stock. After an equal amount per share has been paid on all Common and Preferred Stock, the holders of Series B shall be entitled to dividends in an amount per share equal to any further dividend on Common Stock. Dividends are not cumulative. Liquidation Preference In the event of any liquidation, dissolution, or winding up of the Company, either voluntary or involuntary, distributions to the shareholders of the Company shall be made in the following manner: The holders of the Series C shall be entitled to receive, prior and in preference to any distribution of any assets or surplus funds of the Company to the holders of the Series A, Series B or Common Stock, an amount equal to $0.60 per share for each share of Series C held by them. If the assets and funds are insufficient to permit the payment of the entire preferential amount, then the entire assets and funds legally available for distribution shall be distributed ratably among the holders of Series C. The holders of the Series A shall be entitled to receive, prior and in preference to any distribution of any assets or surplus funds of the Company to the holders of the Series B or Common Stock, an amount equal to $1.00 per share for each share of Series A held by them. If the remaining assets and funds are insufficient to permit the payment of the entire preferential amount, then the entire assets and funds legally available for distribution shall be distributed ratably among the holders of Series A. The holders of the Series B shall be entitled to receive, prior and in preference to any distribution of any assets or surplus funds of the Company to the holders of Common Stock, an amount equal to $1.37 per share for each share of Series B held by them. If the remaining assets and funds are insufficient to permit the payment of the entire preferential amount, then the entire assets and funds legally available for distribution shall be distributed ratably among the holders of Series B. After the distribution of the preferential amounts to the preferred shareholders, the holders of Common Stock shall be entitled to receive an amount equal to $0.40 per share for each share of Common Stock held by them. After the aforementioned distributions to the holders of Preferred and Common Stock, all remaining assets and funds of the Company legally available for distribution shall be distributed ratably among the holders of Common and F-64 DATA STORAGE SYSTEMS, INC. NOTES TO FINANCIAL STATEMENTS -- (Continued) Preferred Stock based on the number of shares of Common, Series A, B and C (on an as converted basis) then issued and outstanding. Conversion Each share of Series A, B and C shall be convertible into the number of shares of Common Stock which results from dividing $1.00 in the case of Series A and B, and $0.60 in the case of Series C by the conversion price per share applicable to such series of Preferred Stock at the time of conversion. The conversion rate is subject to adjustment for anti-dilution as defined in the Certificate of Incorporation. Each share of Series A, B and C shall automatically be converted into shares of Common Stock immediately upon the closing of the issuance of shares following the effectiveness of a registration statement under the Securities Act of 1933 when the net proceeds equal or exceed $5,000,000 and the price per share of Common Stock is not less than $4.00. Additionally, Series B shall automatically be converted into shares of Common Stock: (1) immediately upon the closing of any sale or sales of its Preferred Stock when the aggregate gross proceeds equal or exceeds $1,000,000 and the price per share of Preferred Stock is not less than $1.00, (2) the last day of any fiscal year in which the Company realizes gross revenues of at least $1,000,000 and (3) the last day of any fiscal year in which the Company realizes after-tax operating income of at least $200,000. Because of the pending merger of the Company, no conversion of the Series B took place. 5. COMMITMENTS: The Company leases its facility under an operating lease which expires in December 1997. Future minimum rental payments as of December 31, 1995 under this lease are $432,000, ($216,000 for 1996 and $216,000 for 1997). Facility rent expense for the year ended December 31, 1995 was $218,420. 6. INCOME TAXES: As of December 31, 1995, the Company had Federal net operating loss ("NOL") carryforwards for tax purposes of approximately $2,538,548 which expire in fiscal years 2004 and 2008. The Company had a net deferred tax asset at December 31, 1995 of approximately $1,057,000. Realization of the deferred tax asset is dependent upon the Company achieving adequate levels of taxable income. A valuation allowance has been recognized against the entire net deferred tax asset because of uncertainty of realization of the asset. The use of the NOL is limited to maximum amounts each year as a result of the change in control to Iron Mountain. F-65 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Board of Directors of Iron Mountain Incorporated: I have audited the accompanying balance sheet of DataVault Corporation as of December 31, 1995 and the related statements of income and accumulated deficit, and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audit provides a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of DataVault Corporation as of December 31, 1995 and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. Robert F. Gayton, CPA Natick, Massachusetts August 7, 1996 F-66 DATAVAULT CORPORATION BALANCE SHEET DECEMBER 31, 1995 ASSETS Current Assets: Cash ......................................... $ 115,492 Accounts receivable .......................... 315,555 Prepaid expenses and supplies ................ 45,828 --------- Total current assets ...................... 476,875 Property, Plant and Equipment (Note 2): Land ......................................... 130,000 Building and improvements .................... 1,224,857 Furniture and equipment ...................... 1,125,925 --------- 2,480,782 Less--Accumulated depreciation ............... 1,228,376 --------- Property, plant and equipment, net ........ 1,252,406 Other Assets: Customer acquisition costs ................... 45,600 Deferred financing costs ..................... 49,014 --------- Total other assets ........................ 94,614 --------- Total Assets ................................. $1,823,895 ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Current portion of long-term debt ............ $ 44,450 Accounts payable ............................. 17,890 Deferred income .............................. 47,438 --------- Total current liabilities ................. 109,778 Long-Term Debt (Note 2): Mortgage note payable--bank .................. 665,076 Mortgage note payable--bank .................. 70,001 Mortgage note payable--SBA ................... 609,003 Equipment notes payable ...................... 7,558 --------- 1,351,638 Less--Current portion ........................ 44,450 --------- Total long-term debt, net of current portion .................................... 1,307,188 Notes Payable to Stockholder (Note 3) ........ 379,499 --------- Total Liabilities ......................... 1,796,465 --------- Commitments and Contingencies (Note 4) Stockholders' Equity: Common stock, no par value -- Authorized--30,000 shares Issued and outstanding--15,000 shares ...... 7,500 Additional paid-in capital ................... 50,000 Accumulated deficit .......................... (30,070) --------- Total Stockholders' Equity ................ 27,430 --------- Total Liabilities and Stockholders' Equity ... $1,823,895 ========= The accompanying notes are an integral part of these financial statements. F-67 DATAVAULT CORPORATION STATEMENT OF INCOME AND ACCUMULATED DEFICIT FOR THE YEAR ENDED DECEMBER 31, 1995 Revenue: Storage ............................................. $1,637,995 Service ............................................. 519,479 --------- Total revenue .................................... 2,157,474 Operating Expenses: Cost of sales (excluding depreciation) .............. 410,860 Selling, general and administrative ................. 1,333,609 Depreciation and amortization ....................... 198,901 --------- Total operating expenses ......................... 1,943,370 --------- Operating Income ................................. 214,104 Interest Expense .................................... 124,270 --------- Income before income tax ......................... 89,834 Provision for State Income Tax ...................... 456 --------- Net income ....................................... 89,378 Cash distribution of Subchapter S Earnings .......... (24,309) Accumulated Deficit--Beginning ...................... (95,139) --------- Accumulated Deficit--Ending ......................... $ (30,070) ========= The accompanying notes are an integral part of these financial statements. F-68 DATAVAULT CORPORATION STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 1995 Cash Flows From Operating Activities: Net income .................................................... $ 89,378 Adjustments to reconcile net income to cash provided by operating activities-- Depreciation and amortization ................................ 198,901 Changes in: Accounts receivable ......................................... 28,467 Prepaid expenses and supplies ............................... 27,626 Accounts payable ............................................ (23,081) Deferred income ............................................. (1,356) -------- Cash provided by operating activities ...................... 319,935 Cash Flows From Investing Activities: Acquisition of fixed assets ................................... (43,970) Cash Flows from Financing Activities: Repayment of notes ............................................ (184,915) Repayment of shareholder loan ................................. (67,598) Distribution of Subchapter S earnings ......................... (24,309) -------- Cash used by financing activities .......................... (276,822) -------- Net decrease in cash ....................................... (857) Cash--beginning of year .................................... 116,349 -------- Cash--end of year .......................................... $ 115,492 ======== Supplemental disclosure of cash flow information: Cash paid for interest ........................................ $ 124,270 Cash paid for taxes ........................................... 456 The accompanying notes are an integral part of these financial statements. F-69 DATAVAULT CORPORATION NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1995 NOTE 1--ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES Organization--DataVault Corporation (the Company) is a Massachusetts corporation. The Company provides record storage and management services in the New England area. Use of Estimates--The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that effect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Revenue Recognition--Revenue is recognized when the services are provided. Amounts related to future storage that have been billed in advance are recorded as deferred revenue and recognized over the applicable period. Plant and Equipment--Plant and equipment are recorded at cost. Maintenance and repairs are charged to expense and major improvements are capitalized. Depreciation is computed on the straight line and declining balance methods over estimated useful lives as follows: Building and improvements .................. 15-31 years Furniture and fixtures ..................... 5 years Equipment .................................. 5 years Deferred Costs--Deferred financing costs are amortized over the life of the related debt. Customer acquisition costs related to the initial transfer of records are amortized over the term of the initial storage agreement. Income Taxes--The Company has elected to be taxed as a Small Business Corporation. Accordingly, net income and other items of Federal and state tax significance are reported on the income tax returns of the individual shareholders. NOTE 2--LONG-TERM DEBT During 1993, the Company constructed an addition to the records storage facility. The Company refinanced the existing mortgage loan in conjunction with supplemental financing for the addition. The refinanced mortgage will be paid in monthly installments over a 20 year period. The interest rate will be 9% adjustable every three years with initial monthly payments of $6,361. The additional bank mortgage note of $70,001 is due in monthly installments of $640 over 20 years at an interest rate of 8.75%, adjustable every three years. Additional financing for the records storage facility has been obtained from Bay Colony Development Corp., a Certified Development Company. This financing has been funded by debentures issued by the development company and guaranteed by the Small Business Administration. Monthly payments of $5,290 will be made over 20 years and include interest at 6.359% and a service fee. The mortgage notes are secured by land, buildings and business assets of the Corporation and the personal guaranty of the sole shareholder. The equipment notes are payable in monthly installments of approximately $2,100 over various periods up to five years at interest rates from 8% to 14%. The notes are secured by certain furniture and equipment. F-70 DATAVAULT CORPORATION NOTES TO FINANCIAL STATEMENTS -- (Continued) DECEMBER 31, 1995 Maturities of long-term debt are as follows: Year Amount ----------------------------------------------------- ---------- 1996 $ 44,450 1997 38,660 1998 40,570 1999 42,610 2000 44,800 Thereafter 1,140,548 -------- $1,351,638 ======== The fair value of the Company's assets and liabilities which qualify as financial instruments under Statement of Financial Accounting Standards No. 107, "Disclosures about Fair Value of Financial Instruments", approximates the carrying value of amounts presented in the balance sheet. NOTE 3--NOTES PAYABLE TO STOCKHOLDER Stockholder notes are due on demand, bear interest at rates varying from 7.5% to 12% and are subordinated to mortgage and term notes payable. NOTE 4--COMMITMENTS AND CONTINGENCIES In addition to the storage facility referred to in Note 2, the Company operates an additional data storage facility and maintains its corporate headquarters in premises leased through the year 2000 at an annual rental of approximately $84,000. NOTE 5--RENTALS UNDER STORAGE AGREEMENTS The following is a schedule by years of approximate minimum future rentals under non-cancellable storage agreements as of December 31, 1995: Year Amount ---- --------- 1996 ................................................ $1,345,000 1997 ................................................ 1,183,000 --------- $2,528,000 ========= NOTE 6--SUBSEQUENT EVENT Effective February 1, 1996, the Company sold all of its assets to Iron Mountain Records Management, Inc. All debt was repaid from the proceeds of the sale. F-71 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Directors Iron Mountain Incorporated: We have audited the accompanying balance sheet of International Record Storage and Retrieval Service, Inc. as of December 31, 1995 and the related statements of operations, stockholders' deficit, and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of International Record Storage and Retrieval Service, Inc. as of December 31, 1995, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. Rothstein, Kass & Company, P.C. Roseland, New Jersey July 19, 1996 F-72 INTERNATIONAL RECORD STORAGE AND RETRIEVAL SERVICE, INC. BALANCE SHEETS
December 31, June 30, 1995 1996 ---------- ------------ (Unaudited) ASSETS Current assets: Cash ................................................... $ 134,340 $ 66,151 Accounts receivable, less allowance for doubtful accounts of $16,000 in 1995 and 1996 ................. 255,276 264,020 Inventories ............................................ 13,505 12,997 Prepaid expenses and other ............................. 24,690 33,576 -------- ---------- Total current assets ................................. 427,811 376,744 Equipment and improvements, less accumulated depreciation of $244,831 in 1995 and $277,428 in 1996 ............... 437,522 452,340 Deferred income taxes .................................... 171,000 160,000 Other assets ............................................. 21,667 21,667 -------- ---------- $ 1,058,000 $ 1,010,751 ======== ========== LIABILITIES AND STOCKHOLDERS' DEFICIENCY Current liabilities: Current portion of long-term debt ...................... $ 13,474 $ 14,459 Accounts payable ....................................... 5,449 31,757 Accrued expenses ....................................... 62,558 69,714 Due affiliates ......................................... 617,173 513,261 Deferred income ........................................ 86,096 89,529 Deferred compensation, current portion ................. 40,401 41,940 -------- ---------- Total current liabilities ............................ 825,151 760,660 -------- ---------- Notes payable, net of current portion .................... 7,572 -- Deferred compensation, net of current portion ............ 772,518 751,156 Deferred rent ............................................ 236,035 233,254 Commitments and contingency Stockholders' deficiency: Common stock, no par value, authorized, issued and outstanding 100 shares ............................... 100 100 Additional paid-in capital ............................. 970,792 970,792 Accumulated deficit .................................... (1,754,168) (1,705,211) -------- ---------- Total stockholders' deficiency ....................... (783,276) (734,319) -------- ---------- $ 1,058,000 $ 1,010,751 ======== ==========
See independent public accountants' report and notes to financial statements. F-73 INTERNATIONAL RECORD STORAGE AND RETRIEVAL SERVICE, INC. STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
Six Months Ended June 30, --------------------------- Year Ended December 31, 1995 1995 1996 ----------- ----------- ------------ (Unaudited) (Unaudited) Revenues: Storage ............................... $ 962,463 $ 462,275 $ 528,604 Service and storage material sales .... 620,428 322,215 312,739 --------- --------- ---------- Total revenues ...................... 1,582,891 784,490 841,343 --------- --------- ---------- Operating expenses: Costs of sales (excluding depreciation) 790,127 380,347 430,969 Selling, general and administrative ... 427,748 212,704 247,085 Depreciation and amortization ......... 72,723 36,065 34,741 --------- --------- ---------- Total operating expenses ............ 1,290,598 629,116 712,795 --------- --------- ---------- Operating income ....................... 292,293 155,374 128,548 Interest expense ....................... 66,681 34,536 32,591 --------- --------- ---------- Income before provision for income taxes 225,612 120,838 95,957 Provision for income taxes ............. 21,000 13,000 11,000 --------- --------- ---------- Net income ............................. 204,612 107,838 84,957 Accumulated deficit: Beginning of period .................... (1,908,780) (1,908,780) (1,754,168) Dividends .............................. (50,000) -- (36,000) --------- --------- ---------- End of period .......................... $(1,754,168) $(1,800,942) $(1,705,211) ========= ========= ==========
See independent public accountants' report and notes to financial statements. F-74 INTERNATIONAL RECORD STORAGE AND RETRIEVAL SERVICE, INC. STATEMENTS OF CASH FLOWS
Six Months Ended June 30, ---------------------- Year Ended December 31, 1995 1995 1996 ---------- -------- ---------- (Unaudited) (Unaudited) Cash Flows from Operating Activities: Net income .......................................... $ 204,612 $107,838 $ 84,957 Adjustments to reconcile net income to net cash provided by operating activities: Provision for doubtful accounts .................... 8,000 8,000 -- Depreciation ....................................... 72,723 36,065 34,741 Provision for deferred income taxes ................ 21,000 13,000 11,000 Gain on disposal of property and equipment ......... (7,468) (7,468) -- Increase (decrease) in cash attributable to changes in assets and liabilities: Accounts receivable ............................... (102,421) (82,045) (8,744) Inventories ....................................... 1,825 (4,824) 508 Prepaid expenses and other ........................ (22,921) (33,881) (8,886) Accounts payable .................................. (8,110) 40,228 26,308 Accrued expenses .................................. 42,810 27,031 7,156 Deferred income ................................... 13,016 8,074 3,433 Deferred compensation and other liabilities ....... (50,195) (31,099) (19,823) Deferred rent ..................................... 20,452 5,281 (2,781) -------- ------ -------- Net Cash Provided by Operating Activities ............ 193,323 86,200 127,869 -------- ------ -------- Cash Flows from Investing Activities: Proceeds from the sale of property and equipment .... 17,565 17,565 -- Acquisitions of property and equipment .............. (67,810) (67,027) (49,559) -------- ------ -------- Net Cash used in Investing Activities ................ (50,245) (49,462) (49,559) -------- ------ -------- Cash Flow from Financing Activities: Repayment of notes payable .......................... (59,089) (42,814) (6,587) Advances from (repayments to) affiliates ............ 81,310 61,673 (103,912) Dividends paid ...................................... (50,000) -- (36,000) -------- ------ -------- Net Cash Provided by (used in) Financing Activities .. (27,779) 18,859 (146,499) -------- ------ -------- Increase (Decrease) in Cash .......................... 115,299 55,597 (68,189) Cash, beginning of period ............................ 19,041 19,041 134,340 -------- ------ -------- Cash, end of period .................................. $ 134,340 $ 74,638 $ 66,151 ======== ====== ======== Supplemental Disclosure of Cash Flow Information, cash $ paid during the period for interest ................ $ 66,681 34,536 $ 32,591 ======== ====== ========
See independent public accountants' report and notes to financial statements. F-75 INTERNATIONAL RECORD STORAGE AND RETRIEVAL SERVICE, INC. NOTES TO FINANCIAL STATEMENTS NOTE 1--NATURE OF BUSINESS: The Company is engaged principally in the storage of records for customers in the New Jersey-New York area and providing ancillary services in conjunction with such records. NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Revenue Recognition Storage and service revenues are recognized in the month the respective service is provided. Storage material sales are recognized when shipped to the customer. The Company invoices storage charges to its customers in advance and these advanced billings are recorded as accounts receivable and the related revenues are included as deferred income in the accompanying financial statements. Inventories Inventories are carried at the lower of cost or market using the first-in first-out basis and are comprised primarily of cartons. Income Taxes The Company has elected to be treated as an "S" Corporation under the applicable sections of the Internal Revenue Code. Under these sections, corporate income or loss is allocated to the stockholders for inclusion in their personal income tax returns. Accordingly, there is no provision for federal income tax in the accompanying financial statements. State income taxes are recorded in accordance with Statement of Financial Accounting Standards No. 109. Equipment and Improvements Equipment and improvements are stated at cost and depreciated using the straight-line method with the following useful lives: Office Equipment .................................... 5 years Transportation equipment ............................ 5 to 10 years Shelving and warehouse improvements ................. 10 to 15 years Impairment of Long-Lived Assets The Company periodically assesses the recoverability of the carrying amounts of long-lived assets, including intangible assets. A loss is recognized when expected undiscounted future cash flows are less than the carrying amount of the asset. The impairment loss is the difference by which the carrying amount of the asset exceeds its fair value. Deferred Rent The Company's lease for its building used in the storage of records has fixed escalation clauses which require the normalization of rental expense over the life of the lease, resulting in deferred rent being reflected in the accompanying balance sheets. F-76 INTERNATIONAL RECORD STORAGE AND RETRIEVAL SERVICE, INC. NOTES TO FINANCIAL STATEMENTS -- (Continued) NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): Fair Value of Financial Instruments The fair value of the Company's assets and liabilities which qualify as financial instruments under Statement of Financial Accounting Standards (SFAS) No. 107, "Disclosures about Fair Value of Financial Instruments", approximates the carrying amounts presented in the balance sheets. Unaudited Financial Statements The unaudited financial statements included herein have been prepared in accordance with generally accepted accounting principles. In the opinion of management, the unaudited financial statements include all adjustments of a normal and recurring nature which are necessary for a fair presentation. The results of operations for the six months ended June 30, 1995 and 1996 are not necessarily indicative of the results expected for the full year. NOTE 3--EQUIPMENT AND IMPROVEMENTS: Equipment and improvements consist of the following: December 31, June 30, 1995 1996 ---------- ---------- (Unaudited) Office equipment ........................... $ 97,919 $ 106,427 Transportation equipment ................... 108,217 108,217 Shelving and warehouse improvements ........ 476,217 515,124 -------- -------- 682,353 729,768 Less accumulated depreciation .............. (244,831) (277,428) -------- -------- $ 437,522 $ 452,340 ======== ======== NOTE 4--NOTES PAYABLE: Long-term debt consists of various loans payable in monthly installments of approximately $1,200 including interest at rates ranging between 8.4% and 10.2% with the final payment June 1997. The loans are collateralized by certain equipment. Aggregate principal payment requirements in each of the years subsequent to December 31, 1995 are as follows: 1996 ................................................ $13,474 1997 ................................................ 7,572 NOTE 5--RELATED PARTY TRANSACTIONS: The Company is affiliated, through common ownership, with a real estate management company, International Management Services, Inc. (IMS). IMS provides certain administrative services to the Company under agreements designed to reimburse IMS for the approximate cost of providing such services. Amounts due affiliates are non-interest bearing and have no specific repayment terms. The Company incurred charges for management fees to IMS of approximately $90,000 for the year ended December 31, 1995 and $44,000 and $50,000 for the six months ended June 30, 1995 (unaudited) and 1996 (unaudited), respectively. F-77 INTERNATIONAL RECORD STORAGE AND RETRIEVAL SERVICE, INC. NOTES TO FINANCIAL STATEMENTS -- (Continued) NOTE 6--DEFERRED COMPENSATION: The Company is obligated under an Income Continuation agreement dated October 1, 1994 with a former employee providing for a payment of $100,000 annually for the life of the employee. In 1994, the Company recorded an expense of $864,297 representing the present value of the benefits for the employee's life expectancy discounted at the rate of 7.5% per annum. Payments commenced in September 1994 and amounted to $100,000 for the year ended December 31, 1995 and $50,000 for each of the six month periods ended June 30, 1995 (unaudited) and 1996 (unaudited). NOTE 7--INCOME TAXES: The provision for income taxes in the accompanying statements of operations consists of the following: Year Ended Six Months Ended December June 30, 31, ---------------------- 1995 1995 1996 ---------- -------- ---------- (Unaudited) (Unaudited) State income taxes deferred ... $21,000 $13,000 $11,000 ======== ====== ======== A reconciliation of total income tax expense and the amount computed by applying the state income tax rate of 9% to income before income taxes is as follows: Year Ended Six Months Ended December June 30, 31, ---------------------- 1995 1995 1996 ---------- -------- ---------- (Unaudited) (Unaudited) Computed "expected" tax provision .................. $20,000 $11,000 $ 9,000 Other ....................... 1,000 2,000 2,000 -------- ------ -------- $21,000 $13,000 $11,000 ======== ====== ======== The Company has approximately $1,000,000 of net operating loss carryforwards for state income tax purposes at December 31, 1995. These carryforwards, which management expects will be fully utilized, expire through the year 2000. The components of the Company's deferred tax assets and liabilities are as follows: Year Six Ended Months December Ended 31, June 30, 1995 1996 ---------- ---------- (Unaudited) Deferred Tax Assets: Tax benefit attributable to: Net operating loss carryforwards ......... $ 89,000 $ 80,000 Deferred rent ............................ 21,000 21,000 Deferred compensation .................... 73,000 71,000 Other .................................... 2,000 2,000 Deferred tax liability, tax depreciation in excess of book depreciation .............. (14,000) (14,000) -------- -------- Net Deferred Tax Asset .................... $171,000 $160,000 ======== ======== F-78 INTERNATIONAL RECORD STORAGE AND RETRIEVAL SERVICE, INC. NOTES TO FINANCIAL STATEMENTS -- (Continued) NOTE 8--RETIREMENT PLANS: The Company maintains a 401(k) plan for the benefit of its employees. The Company contributes to the plan annually, at their discretion, up to 4% of each participant's compensation. The expense amounted to $4,311 for the year ended December 31, 1995 and $1,960 and $1,839 for the six months ended June 30, 1995 (unaudited) and 1996 (unaudited), respectively. NOTE 9--LEASE COMMITMENTS: The Company occupies general office and warehouse facilities under an operating lease expiring December 31, 2002, providing for minimum annual rentals as follows: Year ending December 31, 1996 ................................................ $ 318,000 1997 ................................................ 318,000 1998 ................................................ 318,000 1999 ................................................ 318,000 2000 ................................................ 350,000 Thereafter .......................................... 700,000 -------- $2,322,000 ======== Rent expense for facilities charged to operations was $273,791 for the year ended December 31, 1995 and $113,556 and $158,506 for the six months ended June 30, 1995 (unaudited) and 1996 (unaudited), respectively. NOTE 10--CONTINGENCY: The Company is a defendant in a legal proceeding with the lessor of its office and warehouse facilities relating to alleged damages suffered in connection with the cancellation of a proposed sale of the property to a third party. The claim does not specify an amount of damages and the Company has responded to the complaint and made a counter claim. It is management's opinion that the outcome of this litigation will not have a material effect on the Company's financial position or results of operations. F-79 REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS To the Board of Directors of Iron Mountain Incorporated: We have audited the accompanying balance sheet of DKA Industries, Inc. d/b/a Systems Record Storage (a Florida corporation) as of December 31, 1995, and the related statements of operations and accumulated deficit and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of DKA Industries, Inc. d/b/a Systems Record Storage as of December 31, 1995, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. Arthur Andersen LLP Orlando, Florida August 30, 1996 F-80 DKA INDUSTRIES, INC. d/b/a SYSTEMS RECORD STORAGE BALANCE SHEETS--DECEMBER 31, 1995, AND JUNE 30, 1996 ASSETS
December 31, June 30, 1995 1996 -------------- ---------- (Unaudited) Current Assets: Cash $ 24,665 $ 22,083 Accounts receivable 121,064 170,858 Inventories 3,049 5,286 Prepaid expenses and other 11,695 11,320 --------- --------- Total current assets 160,473 209,547 Property and Equipment, net 150,729 141,362 Goodwill, net 20,625 20,312 --------- --------- Total assets $ 331,827 $ 371,221 ========= ========= LIABILITIES AND STOCKHOLDERS' DEFICIT Current Liabilities: Current maturities of notes payable $ 89,013 $ 47,411 Note payable to related party 285,000 285,000 Accounts payable and accrued expenses 10,807 21,959 Deferred income 58,617 69,074 --------- --------- Total current liabilities 443,437 423,444 Notes payable, less current maturities 218,781 215,310 Deferred income 63,401 55,167 Deferred rent 10,318 8,598 --------- --------- Total liabilities 735,937 702,519 --------- --------- Commitments and Contingencies Stockholders' Deficit: Common stock, $1 par value, 1,000 shares authorized, issued and outstanding 1,000 1,000 Accumulated deficit (405,110) (332,298) --------- --------- Total stockholders' deficit (404,110) (331,298) --------- --------- Total liabilities and stockholders' deficit $ 331,827 $ 371,221 ========= =========
The accompanying notes are an integral part of these financial statements. F-81 DKA INDUSTRIES, INC. d/b/a SYSTEMS RECORD STORAGE STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT FOR THE YEAR ENDED DECEMBER 31, 1995, AND THE SIX-MONTH PERIOD ENDED JUNE 30, 1996
Year Six Months Ended Ended December 31, June 30, 1995 1996 -------------- ---------- (Unaudited) Revenues: Storage $ 638,442 $ 358,150 Service and storage material sales 386,637 219,328 ---------- --------- Total revenues 1,025,079 577,478 ---------- --------- Operating Expenses: Costs of sales (excluding depreciation and amortization) 462,387 224,599 Selling, general and administrative 400,310 200,031 Depreciation and amortization 72,625 36,313 ---------- --------- Total operating expenses 935,322 460,943 ---------- --------- Operating Income 89,757 116,535 Interest Expense 56,387 30,023 ---------- --------- Net income 33,370 86,512 Accumulated Deficit, beginning of period (425,768) (405,110) Distributions (12,712) (13,700) ---------- --------- Accumulated Deficit, end of period $ (405,110) $(332,298) ========== =========
The accompanying notes are an integral part of these financial statements. F-82 DKA INDUSTRIES, INC. d/b/a SYSTEMS RECORD STORAGE STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 1995, AND THE SIX-MONTH PERIOD ENDED JUNE 30, 1996
Year Six Months Ended Ended December 31, June 30, 1995 1996 -------------- ---------- (Unaudited) Cash Flows From Operating Activities: Net income $ 33,370 $ 86,512 Adjustments to reconcile net income to net cash provided by operating activities-- Depreciation and amortization 72,625 36,313 Changes in assets and liabilities-- Accounts receivable 8,819 (49,794) Inventories (1,430) (2,237) Prepaid expenses and other -- 375 Accounts payable and accrued expenses (12,079) 11,152 Deferred income 128 2,223 Deferred rent (3,440) (1,720) --------- --------- Net cash provided by operating activities 97,993 82,824 --------- --------- Cash Flows used in Investing Activities: Acquisitions of property and equipment (75,528) (26,633) --------- --------- Cash Flow From Financing Activities: Repayment on notes payable (253,660) (45,073) Additional borrowing on notes payable 268,522 -- Distributions to shareholders (12,712) (13,700) --------- --------- Net cash provided by (used in) financing activities 2,150 (58,773) --------- --------- Net increase (decrease) in cash 24,615 (2,582) Cash, beginning of period 50 24,665 --------- --------- Cash, end of period $ 24,665 $ 22,083 ========= ========= Supplemental Disclosure of Cash Flow Information: Cash paid during the period for interest $ 56,387 $ 30,023
The accompanying notes are an integral part of these financial statements. F-83 DKA INDUSTRIES d/b/a SYSTEMS RECORD STORAGE NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1995 1. Nature of Business DKA Industries, Inc. d/b/a Systems Record Storage (the Company) provides record storage and management services in the Orlando, Florida, area. 2. Summary of Significant Accounting Policies Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Revenue Recognition Storage and service revenues are recognized in the month the respective service is provided. Storage material sales are recognized when shipped to the customer. Amounts related to future storage for customers where storage fees are billed in advance are accounted for as deferred income and recognized in the applicable period. Inventories Inventories are carried at the lower of cost or market using the first-in, first-out basis, and are comprised primarily of cartons. Goodwill Goodwill is amortized over 40 years. For 1995, amortization was $625. As of December 31, 1995, there was $4,375 of accumulated amortization. Income Taxes The Company has elected to be treated as an S corporation under the applicable sections of the Internal Revenue Code. Under these sections, corporate income or loss is allocated to the stockholders for inclusion in their personal income tax returns. Accordingly, there is no provision for federal income taxes in the accompanying financial statements. Property and Equipment Equipment and improvements are stated at cost and depreciated or amortized using accelerated methods with the following useful lives:
Years ------ Office and computer equipment 5-7 Transportation equipment 5 Warehouse equipment and improvements 7-10
Deferred Rent The Company's lease for its building used in the storage of records has uneven rental payments which requires the normalization of rental expense over the life of the lease, resulting in deferred rent being reflected in the accompanying balance sheet. F-84 DKA INDUSTRIES d/b/a SYSTEMS RECORD STORAGE NOTES TO FINANCIAL STATEMENTS -- (Continued) Fair Value of Financial Instruments The fair value of the Company's assets and liabilities which qualify as financial instruments under Statement of Financial Accounting Standards No. 107, "Disclosures about Fair Value of Financial Instruments," approximates the carrying amounts presented in the balance sheet. Unaudited Financial Statements The unaudited financial statements included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of management, the unaudited financial statements include all adjustments of a normal and recurring nature which are necessary for a fair presentation. The results of operations for the six months ended June 30, 1996, are not necessarily indicative of the results expected for the full year. 3. Significant Customer One major customer accounted for approximately 38 percent of revenue during 1995 and 27 percent of accounts receivable at December 31, 1995. 4. Property and Equipment Property and equipment consisted of the following:
December 31, 1995 ------------ Office and computer equipment $ 68,250 Transportation equipment 60,976 Warehouse equipment and improvements 388,636 --------- 517,862 Less -- Accumulated depreciation and amortization (367,133) --------- $ 150,729 =========
5. Notes Payable Notes payable consisted of the following at December 31, 1995:
Amount --------- Line of credit agreement with maximum borrowing of $50,000, bearing interest at prime plus 1% (9.5% at December 31, 1995), collateralized by accounts receivable, inventory, equipment and improvements. The line of credit is payable upon demand and expires September 23, 1996. As of December 31, 1995, the Company had $35,000 available on the line of credit. $15,000 F-85 DKA INDUSTRIES d/b/a SYSTEMS RECORD STORAGE NOTES TO FINANCIAL STATEMENTS -- (Continued) Amount Note payable, collateralized by accounts receivable, inventory, equipment and improvements, due in monthly installments through November 29, 2000, of $3,357, plus interest at prime plus 1% (9.5% at December 31, 1995). $ 201,387 Note payable, collateralized by the purchased assets of the Company, due in monthly principal and interest payments of $2,500 through October 1998, interest at 11%. 71,686 Other notes payable, collateralized by certain transportation equipment of the Company, principal due in monthly installments of $887 through August 1998, interest at prime plus 1% (9.5% at December 31, 1995). 19,721 -------- 307,794 Less -- Current maturities (89,013) -------- $218,781 ========
Aggregate principal payment requirements in each of the years subsequent to December 31, 1995, are as follows:
Year Ending December 31, Amount - ------------- -------- 1996 $ 89,013 1997 71,751 1998 66,495 1999 40,284 2000 40,251 -------- $307,794 ========
All the notes payable were paid in full subsequent to December 31, 1995, in connection with the acquisition described in Note 9. 6. Related Party Transactions As of December 31, 1995, the Company had a $285,000 note payable to a former owner of the Company. The note payable is due on demand. The interest on the note payable is 10 percent and payable monthly. The note payable was paid in full subsequent to December 31, 1995, in connection with the acquisition described in Note 9. 7. Retirement Plans The Company maintains a 401(k) plan for the benefit of its employees. All employees who have completed 12 months of service, 1,000 hours and attained the age of 21 are eligible to enroll in the plan. Employees may contribute up to 15 percent of their pay. Employees are always 100 percent vested in their contributions. The Company matches 25 percent of employee salary deferral contribution, up to a maximum of 4 percent. Employees are 20 percent vested in employer contributions after three years of service and become an additional 20 percent vested for each subsequent year of service. The employer matching contribution expense amounted to $1,941 for the year ended December 31, 1995. Subsequent to December 31, 1995, the plan was terminated (see Note 9). F-86 DKA INDUSTRIES d/b/a SYSTEMS RECORD STORAGE NOTES TO FINANCIAL STATEMENTS -- (Continued) 8. Lease Commitments The Company occupies office and warehouse facilities and rents a vehicle under operating leases that expire during December 1998, providing for minimum annual rentals as follows:
Year Ending December 31, Amount - ------------- 1996 $238,438 1997 238,438 1998 237,940 -------- $714,816 ========
Rent expense for facilities charged to operations was $232,960 for the year ended December 31, 1995. 9. Subsequent Event Effective August 1, 1996, substantially all of the Company's assets and certain liabilities were acquired by Iron Mountain Records Management, Inc. Proceeds from the sale were used to repay all the outstanding notes payable, and the remainder was distributed to the owners. F-87 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Board of Directors of Iron Mountain Incorporated: We have audited the accompanying balance sheet of Mohawk Business Record Storage, Inc. (a Minnesota corporation) as of December 31, 1995, and the related statements of operations and retained earnings and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Mohawk Business Record Storage, Inc. as of December 31, 1995, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. Arthur Andersen LLP Minneapolis, Minnesota September 6, 1996 F-88 MOHAWK BUSINESS RECORD STORAGE, INC. BALANCE SHEETS ASSETS
December 31, June 30, 1995 1996 -------------- ------------ (Unaudited) Current Assets: Cash and cash equivalents $ 223,478 $ 112,547 Accounts receivable (less allowance for doubtful accounts of $5,000 and $9,000 in 1995 and 1996, respectively) 1,186,858 1,228,167 Notes receivable, stockholder 100,000 -- Inventories 31,548 49,009 Prepaid expenses and other 51,110 81,718 Current portion of note receivable, related company 15,996 15,996 ----------- ----------- Total current assets 1,608,990 1,487,437 ----------- ----------- Property and Equipment 9,049,148 9,160,561 Less -- Accumulated depreciation (5,013,510) (5,355,137) ----------- ----------- Net property and equipment 4,035,638 3,805,424 ----------- ----------- Other Assets: Other 15,000 15,000 Long-term note receivable, related company 222,004 216,004 ----------- ----------- 237,004 231,004 ----------- ----------- $ 5,881,632 $ 5,523,865 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $ 47,887 $ 64,378 Notes payable-- Bank 1,625,000 1,000,000 Related parties 333,200 2,024,100 Accrued expenses 507,450 442,461 Deferred revenue 551,947 439,255 ---------- ----------- Total current liabilities 3,065,484 3,970,194 ---------- ----------- Long-term Notes Payable, stockholders 1,400,000 -- Commitments and Contingencies (Note 4) -- -- Stockholders' Equity: Common stock, 25,000 shares, $1 par, 4,000 shares issued and outstanding 4,000 4,000 Paid-in capital 46,000 46,000 Retained earnings 1,366,148 1,503,671 ----------- ---------- Total stockholders' equity 1,416,148 1,553,671 ----------- ---------- $ 5,881,632 $5,523,865 =========== ==========
The accompanying notes are an integral part of these financial statements. F-89 MOHAWK BUSINESS RECORD STORAGE, INC. STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
Year Ended December 31, Six Months Ended June 30 1995 1995 1996 --------------- --------- ----------- (Unaudited) Revenues: Storage $4,705,253 $2,310,469 $ 2,651,026 Service and storage material sales 4,094,977 2,053,952 2,085,531 ---------- ---------- ----------- Total revenues 8,800,230 4,364,421 4,736,557 ---------- ---------- ----------- Operating Expenses: Cost of sales (excluding depreciation) 4,644,836 2,387,642 2,356,940 Selling, general and administrative 2,833,687 1,535,504 1,613,978 Depreciation and amortization 657,586 218,298 358,670 ---------- ---------- ----------- Total operating expenses 8,136,109 4,141,444 4,329,588 ---------- ---------- ----------- Operating Income 664,121 222,977 406,969 Interest Expense 297,868 141,785 134,918 Interest Income 28,382 16,448 9,968 ---------- ---------- ----------- Net Income 394,635 97,640 282,019 Retained Earnings, beginning of period 1,262,433 1,262,433 1,366,148 Dividend Distributions (290,920) -- (144,496) ---------- ---------- ----------- Retained Earnings, end of period $1,366,148 $1,360,073 $ 1,503,671 ========== ========== ===========
The accompanying notes are an integral part of these financial statements. F-90 MOHAWK BUSINESS RECORD STORAGE, INC. STATEMENTS OF CASH FLOWS
Year Ended December 31, Six Months Ended June 30 1995 1995 1996 --------------- ---------- ---------- (Unaudited) Operating Activities: Net income $ 394,635 $ 97,640 $ 282,019 Adjustments to reconcile net income to net cash provided by operating activities-- Depreciation and amortization 657,586 218,298 358,670 Gain (Loss) on sale of assets (6,662) 31,138 (11,955) Changes in assets and liabilities: Accounts receivable (38,848) 168,318 (41,309) Inventories (2,299) (8,245) (17,461) Prepaid expenses and other (29,817) (101,092) (30,608) Deferred revenue 69,238 (115,562) (112,692) Accounts payable and accrued expenses 233,202 97,613 (48,498) ----------- ---------- --------- Net cash provided by operating activities 1,277,035 388,108 378,166 ----------- ---------- --------- Investing Activities: Purchase of property and equipment (1,869,325) (1,251,924) (128,456) Notes receivable 12,000 (52,500) 106,000 Proceeds from sale of assets 31,143 20,500 11,955 Other (15,000) (15,000) -- ----------- ---------- --------- Net cash used for investing activities (1,841,182) (1,298,924) (10,501) ----------- ---------- --------- Financing Activities: Proceeds from notes payable 1,659,482 1,292,745 343,880 Principal payments on notes payable (744,582) (204,100) (677,980) Dividend distributions (290,920) -- (144,496) ----------- ---------- --------- Net cash provided by (used for) financing activities 623,980 1,088,645 (478,596) ----------- ---------- --------- Net Increase (Decrease) in Cash 59,833 177,829 (110,931) Cash and Cash Equivalents, beginning of period 163,645 163,645 223,478 ----------- ----------- ---------- Cash and Cash Equivalents, end of period $ 223,478 $ 341,474 $ 112,547 ========== =========== ========== Supplemental Disclosure: Interest paid $ 301,018 $ 144,935 $ 134,918 =========== =========== ==========
The accompanying notes are an integral part of these financial statements. F-91 MOHAWK BUSINESS RECORD STORAGE, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1995 1. Organization of Business and Significant Accounting Policies Mohawk Business Record Storage, Inc. (the Company), a Minnesota corporation, is a full-service records management company providing storage and related services for all media. The Company serves numerous legal, banking, healthcare, accounting, insurance, entertainment and retail organizations in the Minneapolis and Saint Paul, Minnesota metropolitan areas. Property and Equipment Depreciation and amortization of property and equipment are recorded using the straight-line and accelerated methods. Property and equipment consist of the following:
December 31, Useful Lives 1995 ----------------- ------------ Warehouse and disintegration equipment 7 to 10 years $ 5,585,597 Leasehold improvements 10 to 39 years 1,441,291 Transportation equipment 5 to 10 years 723,603 Office equipment 5 to 10 years 1,298,657 ---------- $9,049,148 ==========
Minor maintenance costs are expensed as incurred. Major improvements to the leased buildings are capitalized as leasehold improvements and depreciated as described above. Revenue Recognition Storage and service revenues are recognized in the month the respective service is provided. Storage material sales are recognized when shipped to the customer. Amounts related to future storage for customers where storage fees are billed in advance are accounted for as deferred revenue and amortized over the applicable period. These amounts are included in deferred revenue in the accompanying balance sheet. The Company has one customer which accounted for 13% of revenues for the year ended December 31, 1995. Cash and Cash Equivalents The Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. Inventories Inventories are carried at the lower of cost (first-in, first-out basis) or market and are comprised primarily of cartons. Accrued Expenses Accrued expenses consisted of the following:
December 31, 1995 ---------------- Accrued incentive compensation $ 307,621 Accrued profit sharing 160,000 Other 39,829 -------------- Accrued expenses $507,450 ==============
F-92 MOHAWK BUSINESS RECORD STORAGE, INC. NOTES TO FINANCIAL STATEMENTS -- (Continued) Income Taxes The Company has elected to be taxed as an S corporation under the applicable Internal Revenue Code sections. The net income of the Company is included in the individual income tax returns of the stockholders. Accordingly, there is no provision for federal income taxes in the accompanying financial statements. Financial Instruments Unless otherwise noted, financial instruments are stated at cost, which approximates fair value. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates relate primarily to the realizability of accounts receivable and the adequacy of certain accrued expenses. Actual results could differ from those estimates. Concentrations of Credit Risk Credit risk with respect to accounts receivable is generally spread across a large number of customers with dispersion across different businesses. As of December 31, 1995, one customer accounted for 17% of outstanding accounts receivable. Unaudited Financial Information The financial information as of June 30, 1996 and for the six-month periods ended June 30, 1995 and 1996 is unaudited and has been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of management, such information reflects all normal recurring adjustments necessary for a fair presentation. Operating results for the six months ended June 30, 1996 are not necessarily indicative of the results that may be expected for the year ending December 31, 1996. 2. Debt Notes Payable Notes payable consisted of the following:
December 31, 1995 ------------ Unsecured notes payable to stockholders, principal due February 1997, interest payable monthly at the prime rate (8.5% at December 31, 1995) $1,400,000 Unsecured notes payable to related parties, due on demand, interest payable monthly at the prime rate (8.5% at December 31, 1995) 333,200 ---------- Total notes payable 1,733,200 Less -- Current maturities (333,200) ---------- Notes payable, net of current maturities $1,400,000 ==========
F-93 MOHAWK BUSINESS RECORD STORAGE, INC. NOTES TO FINANCIAL STATEMENTS -- (Continued) Line of Credit The Company has a $2,000,000 revolving credit agreement with a bank which is payable on demand. Borrowings bear interest at the prime rate and are collateralized by property and equipment, certain intangible assets and the personal guarantees of the Company's stockholders. The line-of-credit agreement contains various covenants which require the Company to maintain certain specified financial ratios. The Company was in compliance with these covenants as of December 31, 1995. Additional information relating to the line of credit is as follows:
1995 ----------- Borrowings outstanding at year-end $1,625,000 Available borrowings at year-end 375,000 Average borrowings outstanding during the year 1,436,000 Range of interest rates during the year 8.5%-9.0%
3. Notes Receivable Stockholder The Company loaned $452,300 to one of its stockholders on May 12, 1992. Interest is being paid monthly to the Company at the prime rate. Principal is payable upon demand. The balance due to the Company under this agreement as of December 31, 1995 was $100,000 and was repaid during the six-month period ended June 30, 1996. Related Company The Company loaned $400,000 to a related partnership certain of whose partners are also stockholders of the Company. The proceeds of this loan were used to purchase a building that the Company is renting from this partnership (see Note 4). Interest is payable monthly by the partnership at the prime rate. Monthly principal payments are $1,333. Principal outstanding at December 31, 1995 was $238,000. 4. Commitments and Contingencies Operating Leases -- Related Parties The Company has lease agreements for warehouse and office space with a partnership whose partners are also stockholders of the Company. The leases are operating leases with varying terms expiring between May 1998 and November 2009. The Company pays all maintenance, insurance and utilities. Rent expense under these leases was $509,000 for 1995. The Company has another lease agreement for additional warehouse space with a partnership, certain of whose partners are also stockholders of the Company. The lease is an operating lease with a term of 10 years through July 2000. The Company pays all taxes, maintenance, insurance and utilities. Rent expense under this lease was $472,000 for 1995. F-94 MOHAWK BUSINESS RECORD STORAGE, INC. NOTES TO FINANCIAL STATEMENTS -- (Continued) Future minimum lease payments on these operating leases for each of the next five years and thereafter are as follows:
1996 $ 980,000 1997 980,000 1998 857,000 1999 769,000 2000 and thereafter 3,226,000 $6,812,000 ==========
Purchase Order Commitment In June 1996, the Company committed to purchase approximately $450,000 in additional warehouse storage racking. 5. Employee Benefits Profit-Sharing Plan The Company has a profit-sharing plan covering substantially all of its full-time employees. Contributions are determined annually by the board of directors. Benefits are provided upon retirement, disability or death on the basis of funds added to the trust accounts and earnings during periods of participation. The total contribution to this plan was $160,000 for the year ended December 31, 1995. Employee Benefit Plan The Company has adopted a salary deduction benefit plan which provides child care, medical and dental premiums, and other unreimbursed medical expenses. All regular employees who complete more than 25 hours per week of service are eligible to participate on a voluntary basis. The Company does not match employee contributions. Bonus Plans The Company has agreed to pay bonuses to each of two of its stockholders equal to 20% of the net profits of the Company, as defined. Two other stockholders and a member of senior management each are entitled to receive bonuses equal to 5% of the net profits of the Company. In addition, the vice president of one of the Company's divisions receives a bonus equal to 10% of that division's net profits, as defined. Bonus expense for the year ended December 31, 1995 was $703,000. 6. Sale of Operating Assets On September 6, 1996, the Company entered into an agreement to sell substantially all of its operating assets to Iron Mountain Records Management, Inc. F-95 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Board of Directors of Iron Mountain Incorporated: We have audited the accompanying balance sheet of Security Archives Corporation (a Minnesota corporation) as of December 31, 1995, and the related statements of operations and accumulated deficit and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Security Archives Corporation as of December 31, 1995, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. Arthur Andersen LLP Minneapolis, Minnesota August 23, 1996 (except for Note 6, as to which the date is September 6, 1996) F-96 SECURITY ARCHIVES CORPORATION BALANCE SHEETS ASSETS
December 31, June 30, 1995 1996 -------------- ---------- (Unaudited) Current Assets: Cash and cash equivalents $ 32,819 $ 49,044 Accounts receivable, net of allowance for doubtful accounts of $49,382 and $4,408 140,950 165,006 Inventories 9,905 23,229 Prepaid expenses 33,192 31,710 --------- ----------- Total current assets 216,866 268,989 --------- ----------- Property and Equipment 997,992 1,067,355 Less -- Accumulated depreciation (358,283) (418,255) --------- ----------- Net property and equipment 639,709 649,100 --------- ----------- Other Assets: 37,818 27,410 --------- ----------- $ 894,393 $ 945,499 ========= =========== LIABILITIES AND STOCKHOLDER'S EQUITY Current Liabilities: Accounts payable $ 10,992 $ 36,554 Current portion of long-term debt -- Capital leases and other debt 21,747 206,313 Related parties 59,437 611,600 Accrued expenses 44,875 31,499 --------- ----------- Total current liabilities 137,051 885,966 --------- ----------- Long-term Notes Payable 257,891 -- Long-term Notes Payable -- related parties 768,926 34,346 Commitments and Contingencies Stockholder's Equity: Capital stock 25,000 shares, $1 par 1,200 shares issued and outstanding 1,200 1,200 Paid-in capital 646,229 646,229 Accumulated deficit (916,904) (622,242) --------- ----------- Total stockholder's equity (deficit) (269,475) 25,187 --------- ----------- $ 894,393 $ 945,499 ========= ===========
The accompanying notes are an integral part of these financial statements. F-97 SECURITY ARCHIVES CORPORATION STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
Year Ended Six Months Ended June December 31, 30 ----------------------- 1995 1995 1996 --------------- --------- ---------- (Unaudited) Revenues: Storage $ 917,637 $ 459,566 $ 497,501 Service and storage materials sales 500,989 222,107 489,278 ----------- --------- --------- Total revenues 1,418,626 681,673 986,779 ----------- --------- --------- Operating Expenses: Cost of sales (excluding depreciation) 669,017 328,210 388,016 Selling, general and administrative 525,518 234,249 197,393 Depreciation and amortization 99,159 46,080 59,972 ----------- --------- --------- Total operating expenses 1,293,694 608,539 645,381 ----------- --------- --------- Income from operations 124,932 73,134 341,398 ----------- --------- --------- Interest expense 92,988 46,815 46,736 Net Income 31,944 26,319 294,662 Accumulated Deficit, beginning of period (948,848) (948,848) (916,904) ----------- --------- --------- Accumulated Deficit, end of period $ (916,904) $(922,529) $(622,242) =========== ========= =========
The accompanying notes are an integral part of these financial statements. F-98 SECURITY ARCHIVES CORPORATION STATEMENTS OF CASH FLOWS
Year Ended Six Months Ended December 31, June 30 ---------------------- 1995 1995 1996 --------------- -------- ---------- (Unaudited) Operating Activities: Net income $ 31,944 $ 26,319 $ 294,662 Adjustments to reconcile net income to net cash provided by operating activities -- Depreciation and amortization 99,159 46,080 59,972 Changes in assets and liabilities: Accounts receivable (2,424) (31,408) (24,056) Inventories 1,538 (2,292) (13,324) Prepaid expenses (4,962) (4,558) 1,482 Accounts payable and accrued expenses 1,565 6,884 12,186 Other 10,068 6,958 10,408 --------- -------- --------- Net cash provided by operating activities 136,888 47,983 341,330 --------- -------- --------- Investing Activities: Purchase of property and equipment (193,797) (103,791) (69,363) --------- -------- --------- Financing Activities: Proceeds from notes payable 227,000 112,284 49,983 Principal payments on notes payable (161,606) (56,122) (305,725) --------- -------- --------- Net cash provided by (used for) financing activities 65,394 56,162 (255,742) --------- -------- --------- Net increase in Cash 8,485 354 16,225 Cash and cash equivalents, at beginning of period 24,334 24,334 32,819 --------- -------- --------- Cash and cash equivalents, at end of period $ 32,819 $ 24,688 $ 49,044 ========= ========= ========= Supplemental Disclosure: Interest paid $ 92,989 $ 46,815 $ 41,815 ========= ======== =========
The accompanying notes are an integral part of these financial statements. F-99 SECURITY ARCHIVES CORPORATION NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1995 1. Organization of Business and Significant Accounting Policies Security Archives Corporation (the Company), a Minnesota corporation, is a full service records management company providing storage and related services for all media. The Company serves numerous legal, banking, healthcare, accounting, insurance, entertainment and retail organizations in the Los Angeles, California metropolitan area. Inventories Inventories are carried at the lower of cost (using the first-in, first-out basis) or market and are comprised primarily of cartons. Property and Equipment Depreciation and amortization of property and equipment are recorded using the straight-line and accelerated methods. Property and equipment consist of the following:
Useful December 31, Lives 1995 ------------------ ------------ Warehouse and disintegration equipment 9 years $645,326 Leasehold improvements 10 years 103,928 Transportation equipment 5 years 112,946 Office equipment 5 to 10 years 135,792 -------- $997,992 ========
Minor maintenance costs are expensed as incurred. Major improvements are capitalized and depreciated as described above. Revenue Recognition Storage and service revenues are recognized in the month the respective service is provided. Storage material sales are recognized when shipped to the customer. The Company has two customers which accounted for 25% of revenues for the year ended December 31, 1995. Cash and Cash Equivalents The Company considers all highly liquid investments purchased with a maturity of three months or less to be cash equivalents. Other Assets Other assets consist of customer acquisition costs. Costs, net of revenues received for the initial transfer of records, related to the acquisition of accounts are capitalized and amortized for an appropriate period not exceeding three years, unless the customer terminates its relationship with the Company, at which time the unamortized cost is charged to expense. However, in the event of such termination, the Company collects and records as income permanent removal fees that generally equal or exceed the amount of unamortized customer acquisition costs. Financial Instruments Unless otherwise noted, financial instruments are stated at cost, which approximates fair value. F-100 SECURITY ARCHIVES CORPORATION NOTES TO FINANCIAL STATEMENTS -- (Continued) Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates relate primarily to the realizability of accounts receivable and the adequacy of certain accrued expenses. Actual results could differ from those estimates. Unaudited Financial Information The financial information as of June 30, 1996 and for the six-month periods ended June 30, 1996 and 1995 is unaudited and has been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of management, such information reflects all normal recurring adjustments necessary for a fair presentation. Operating results for the six months ended June 30, 1996 are not necessarily indicative of the results that may be expected for the year ending December 31, 1996. Included in service and storage materials sales for the six months ended June 30, 1996 is $250,000 of fees paid to the Company for removal of cartons for a large customer that transferred its business to Iron Mountain Incorporated. 2. Notes Payable Notes payable consisted of the following:
December 31, 1995 ------------ Long-term revolving note payable, providing for borrowings of up to $600,000, interest payable monthly at 8.25%, principal due May 31, 1997 $ 234,554 Obligations under capital leases, payable in various installments through 1999, 8.75-9.25% imputed interest 45,084 Long-term revolving note payable, providing for borrowings of up to $50,000, interest payable monthly at the prime rate plus 1% (9.5% at December 31, 1995), principal due May 31, 1997 -- Unsecured notes payable to stockholder, principal due in various installments through 2000, interest payable monthly at rates varying from 9.75-10% 826,695 Other related party obligations 1,668 ---------- Total notes payable 1,108,001 Less -- Current maturities (81,184) ---------- Notes payable, net of current maturities $1,026,817 ==========
F-101 SECURITY ARCHIVES CORPORATION NOTES TO FINANCIAL STATEMENTS -- (Continued) Maturities of long-term debt are as follows:
Year Amount 1996 $ 81,184 1997 904,709 1998 76,989 1999 41,778 2000 3,341 $1,108,001 ==========
3. Operating Leases Future minimum payments, by year and in the aggregate, under noncancelable operating leases with initial or remaining terms of one year or more consist of the following at December 31, 1995:
Minimum Year Payment -------- ---------- 1996 $ 367,452 1997 367,452 1998 367,452 1999 367,452 2000 367,452 Thereafter 926,022 Total $2,763,282 ==========
The Company's rent expense for operating leases was $380,832 for the year ended December 31, 1995, and $204,210 for the six month period ended June 30, 1996. 4. Income Taxes The Company accounts for income taxes in accordance with SFAS No. 109 which requires the recognition of deferred tax assets and liabilities for the expected tax consequences of temporary differences between the tax and financial reporting bases of assets and liabilities. The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are presented below (in thousands):
Deferred income tax assets $ 312 Deferred income tax liabilities (42) Valuation allowance (270) ----- $ -- =====
As of December 31, 1995, the Company has NOL carryforwards of $745,106 which expire in varying amounts through 2009. The primary deferred tax liabilities consist of tax over book depreciation. The valuation allowance relates to uncertainties surrounding the realization of the NOL carryforwards. F-102 SECURITY ARCHIVES CORPORATION NOTES TO FINANCIAL STATEMENTS -- (Continued) 5. Related Party Transactions The Company provides management services to affiliated entities in exchange for a management fee. Management fee revenue was $92,040 for the year ended December 31, 1995 and $28,020 for the six months ended June 30, 1996. In addition, the Company has notes payable to a related party. Interest expense on related party notes payable was $58,302 for the year ended December 31, 1995 and $31,907 for the six months ended June 30, 1996. 6. Sale of Operating Assets On September 6, 1996 the Company entered into an agreement to sell substantially all of its operating assets to Iron Mountain Records Management, Inc. All debt of the Company will be repaid from the proceeds of the sale. F-103 [THIS PAGE INTENTIONALLY LEFT BLANK] [THIS PAGE INTENTIONALLY LEFT BLANK] [THIS PAGE INTENTIONALLY LEFT BLANK] ================================================================================ No dealer, salesperson or other person has been authorized to give any information or to make any representations not contained in this Prospectus in connection with the offer made in this Prospectus, and, if given or made, such information or representations must not be relied upon as having been authorized by the Company or any of the Underwriters. This Prospectus does not constitute an offer to sell or solicitation of an offer to buy any security other than the Notes offered hereby, nor does it constitute an offer to sell, or a solicitation of an offer to buy, to any person in any jurisdiction where such an offer or solicitation would be unlawful. Neither the delivery of this Prospectus nor any sale made hereunder shall, under any circumstances, create any implication that the information contained herein is correct as of any time subsequent to the date hereof. ------------- TABLE OF CONTENTS Page Prospectus Summary 3 Summary Historical and Pro Forma Information 8 Risk Factors 10 The Company 15 The Transactions 15 Recent and Pending Acquisitions 17 Use of Proceeds 18 Capitalization 18 Pro Forma Condensed Consolidated Financial Information 19 Selected Consolidated Financial and Operating Information 30 Management's Discussion and Analysis of Financial Condition and Results of Operations 32 Business 42 Management 55 Certain Transactions 60 Principal Stockholders 61 Description of the Notes 63 Description of New Credit Facility 84 Description of Capital Stock 85 Underwriting 86 Validity of Securities 86 Experts 86 Additional Information 87 Index to Financial Statements F-1 $150,000,000 [LOGO] Iron Mountain Incorporated % Senior Subordinated Notes due 2006 ------------- P R O S P E C T U S ------------- Donaldson, Lufkin & Jenrette Securities Corporation Bear, Stearns & Co. Inc. Prudential Securities Incorporated , 1996 ================================================================================ Part II INFORMATION NOT REQUIRED IN PROSPECTUS Item 13. Other Expenses of Issuance and Distribution.
Securities and Exchange Commission fee $ 51,725 NASD filing fee 15,500 Blue Sky fees and expenses 15,000 Rating Agency fees and expenses 80,000 Printing and engraving fees 200,000 Accountants' fees and expenses 300,000 Legal fees and expenses 100,000 Trustee's fees and expenses 6,000 Miscellaneous 31,775 -------- Total $800,000 ========
The foregoing, except for the Securities and Exchange Commission fee and the NASD filing fee, are estimated. Item 14. Indemnification of Directors and Officers. Section 145 of the Delaware General Corporation Law (the "DGCL") provides, in effect, that any person made a party to any action by reason of the fact that he is or was a director, officer, employee or agent of the Company may and, in certain cases, must be indemnified by the Company against, in the case of a non-derivative action, judgments, fines, amounts paid in settlement and reasonable expenses (including attorney's fees) incurred by him as a result of such action, and in the case of a derivative action, against expenses (including attorney's fees), if in either type of action he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company. This indemnification does not apply, in a derivative action, to matters as to which it is adjudged that the director, officer, employee or agent is liable to the Company, unless upon court order it is determined that, despite such adjudication of liability, but in view of all the circumstances of the case, he is fairly and reasonable entitled to indemnity for expenses, and, in a non-derivative action, to any criminal proceeding in which such person had reasonable cause to believe his conduct was unlawful. Article Sixth of the Company's Amended and Restated Certificate of Incorporation provides that the Company shall indemnify each person who is or was an officer or director of the Company to the fullest extent permitted by Section 145 of the DGCL. Article Seventh of the Company's Amended and Restated Certificate of Incorporation states that no director of the Company shall be liable to the Company or its stockholders for monetary damages for breach of fiduciary duty as a director, except to the extent that exculpation from liability is not permitted under the Delaware General Corporation Law as in effect when such breach occurred. Reference is made to Section 7 of the Underwriting Agreement filed as Exhibit 1 hereto, pursuant to which the underwriters have agreed to indemnify officers and directors of the Company against certain liabilities. Item 15. Recent Sales of Unregistered Securities. The Company's Amended and Restated Certificate of Incorporation provides for 16,000,000 shares of authorized capital stock, each with par value $.01 per share, as follows: 13,000,000 shares of authorized Common Stock, 1,000,000 shares of authorized Nonvoting Common Stock and 2,000,000 shares of Preferred Stock. On February 6, 1996, simultaneously with the consummation of the Company's Initial Public Offering and without any action on the part of the holders thereof, all outstanding shares of the Company's Series A1 Convertible Preferred Stock, par value $0.01 per share ("Series A1 Preferred Stock"), Series A2 Convertible Preferred Stock, par value $0.01 per share, Series A3 Convertible Preferred Stock, par value $0.01 per share, and Series C Convertible Preferred Stock, par value $0.01 per share (the "Old Preferred Stock"), was automatically converted into shares II-1 of Common Stock (or, in the case of one holder, shares of Common Stock and 500,000 shares of Nonvoting Common Stock). All of the shares of Common Stock and Nonvoting Common Stock issued as a result of such conversion were issued by the Company in reliance on the exemptions provided by Sections 3(a)(9) and 4(2) of the Securities Act. No commission or other remuneration was paid or given by the Company directly or indirectly for effecting the exchange. On January 31, 1994, one shareholder of the Company exchanged 98,000 shares of Series A1 Preferred Stock for an equal number of shares of Series A2 Preferred Stock. On November 28, 1995, another shareholder of the Company exchanged 43,500 shares of Series A1 Preferred Stock for an equal number of shares of Series A3 Preferred Stock. All such shares were issued by the Company in reliance on the exemptions provided by Sections 3(a)(9) and 4(2) of the Securities Act. No commission or other remuneration was paid or given by the Company directly or indirectly for effecting the exchange. In 1995, the Company (i) issued options to acquire an aggregate of 162,184 shares of its Class A Common Stock pursuant to its stock option plan to certain of its officers and employees and (ii) issued to one employee an aggregate of 1,036 shares of Class A Common Stock pursuant to the exercise of stoock options granted under the Company's stock option plan for an aggregate purchase price of $200,984. In 1995, the Company also issued options to acquire an aggregate of 65,152 shares of its Common Stock pursuant to its stock option plan to certain of its officers and employees (which grants were conditioned on the consummation of the Initial Public Offering). In April 1996, the Company issued options to acquire an additional 361,452 shares. All securities referred to in this paragraph were issued by the Company in reliance on the exemption provided by Section 4(2) of the Securities Act or Rule 701 promulgated thereunder. Item 16. Exhibits and Financial Statement Schedules. Each exhibit marked by an asterisk (*) is incorporated by reference to the Company's Registration Statement No. 33-99950 filed with the Securities and Exchange Commission on December 1, 1995. Each exhibit marked with a double asterisk (**) is incorporated by reference to Amendment No. 2 to the Company's Registration Statement filed with the Securities and Exchange Commission on January 11, 1996. Each exhibit marked with a triple asterisk (***) is incorporated by reference to the Company's Registration Statement No. 333-10359 filed with the Securities and Exchange Commission on August 16, 1996. Exhibit 3.2 is incorporated by reference to the Company's Quarterly Report on Form 10-Q (File No. 0-27584) filed with the Securities and Exchange Commission on August 14, 1996. Exhibit numbers in parentheses refer to the exhibit numbers in the applicable filing. (a) Exhibits
Exhibit Number Item Exhibit - ------ ---- ------- 1 Form of Underwriting Agreement Filed herewith as Exhibit 1 3.1 Amended and Restated Certificate of Incorporation of the *(3.1) Company 3.1A Certificate of Incorporation of Iron Mountain Records To be filed by amendment 3.1B Certificate of Incorporation of Metro Business Archives, To be filed by Inc. amendment 3.1C Certificate of Incorporation of Criterion Atlantic Filed herewith as Property, Inc. Exhibit 3.1C 3.1D Certificate of Incorporation of Criterion Property, Inc. Filed herewith as Exhibit 3.1D 3.1E Articles of Incorporation of Hollywood Property, Inc. Filed herewith as Exhibit 3.1E 3.1F Certificate of Incorporation of IM San Diego, Inc. Filed herewith as Exhibit 3.1F II-2 Exhibit Number Item Exhibit - ------- ---- ------- 3.1G Certificate of Incorporation of Iron Mountain Information Filed herewith as Partners, Inc. Exhibit 3.1G 3.1H Articles of Organization of Iron Mountain Data Protection Filed herewith as Services, Inc. Exhibit 3.1H 3.1I Articles of Incorporation of Iron Mountain Records Filed herewith as Management of Maryland, Inc. Exhibit 3.1I 3.1J Articles of Incorporation of Iron Mountain Records Filed herewith as Management of Ohio, Inc. Exhibit 3.1J 3.1K Certificate of Incorporation of Iron Mountain Wilmington, Filed herewith as Inc. Exhibit 3.1K 3.1L Articles of Incorporation of Data Storage Systems, Inc. Filed herewith as Exhibit 3.1L 3.1M Certificate of Formation of Iron Mountain Records Filed herewith as Management of Missouri LLC Exhibit 3.1M 3.1N Articles of Organization of Iron Mountain Records Filed herewith as Management of Boston, Inc. Exhibit 3.1N 3.1O Articles of Incorporation of Data Archive Services, Inc. To be filed by amendment 3.1P Articles of Incorporation of Data Archives Services of Filed herewith as Miami, Inc. Exhibit 3.1P 3.2 Bylaws of the Company, as amended * (3) 3.2A Bylaws of Iron Mountain Records Management, Inc. Filed herewith as Exhibit 3.2A 3.2B Bylaws of Metro Business Archives, Inc. Filed herewith as Exhibit 3.2B 3.2C Bylaws of Criterion Atlantic Property, Inc. Filed herewith as Exhibit 3.2C 3.2D Bylaws of Criterion Property, Inc. Filed herewith as Exhibit 3.2D 3.2E Bylaws of Hollywood Property, Inc. Filed herewith as Exhibit 3.2E 3.2F Bylaws of IM San Diego, Inc. Filed herewith as Exhibit 3.2F 3.2G Bylaws of Iron Mountain Information Partners, Inc. Filed herewith as Exhibit 3.2G 3.2H Bylaws of Iron Mountain Data Protection Services, Inc. Filed herewith as Exhibit 3.2H 3.2I Bylaws of Iron Mountain Records Management of Maryland, Filed herewith as Inc. Exhibit 3.2I 3.2J Regulations of Iron Mountain Records Management of Ohio, Filed herewith as Inc. Exhibit 3.2J 3.2K Bylaws of Iron Mountain Wilmington, Inc. Filed herewith as Exhibit 3.2K 3.2L Bylaws of Data Storage Systems, Inc. Filed herewith as Exhibit 3.2L 3.2M Limited Liability Company Agreement of Iron Mountain Filed herewith as Records Management of Missouri LLC Exhibit 3.2M 3.2N Bylaws of Iron Mountain Records Management of Boston, Filed herewith as Inc. Exhibit 3.2N 3.2O Bylaws of Data Archives Services, Inc. Filed herewith as Exhibit 3.2O II-3 Exhibit Number Item Exhibit - ------ ---- ------- 3.2P Bylaws of Data Archive Services of Miami, Inc. Filed herewith as Exhibit 3.2P 4.1 Registration Rights Agreement between the Company and * (4.1) certain Stockholders, dated as of December 14, 1990 4.2 Form of Indenture for the Notes Filed herewith as Exhibit 4.2 5 Opinion of Sullivan & Worcester LLP To be filed by amendment 10.1 Credit Agreement between the Company and Chase Manhattan * (10.1) Bank (N.A.) as Agent, dated as of December 10, 1990, amended and restated as of April 15, 1993 and further amended and restated as of January 31, 1995 10.2 Consent and Amendment No. 1 to the Credit Agreement, * (10.2) dated as of November 1, 1995 between the Company and Chase Manhattan Bank (N.A.) as Agent 10.3 Consent and Amendment No. 2 to the Credit Agreement, * (10.3) dated as of November 2, 1995 between the Company and Chase Manhattan Bank (N.A.) as Agent 10.3A Amendment No. 3 to the Credit Agreement, dated as of Filed herewith as August 29, 1996, among the Company the lenders party Exhibit 10.3A thereto and The Chase Manhattan Bank, as Agent 10.4 Note Purchase Agreement between the Company and Chrysler * (10.4) Capital Corporation, dated as of December 14, 1990, as amended. 10.4A Letter agreement, dated July 15, 1996, between the *** (10.4A) Company and Chrysler Capital Corporation 10.5 Subordinated Term Note between the Company and Schooner * (10.5) Capital Corporation, dated February 11, 1991 10.6 Iron Mountain Incorporated 1995 Stock Incentive Plan * (10.6) 10.7 Form of Iron Mountain Incorporated 1995 Stock Option Plan ** (10.7) for Non- Employee Directors 10.8 Asset Purchase and Sale Agreement, dated as of July 8, * (10.8) 1994, between Iron Mountain Data Protection Services, Inc. and Digital Equipment Corporation 10.9 Asset Purchase and Sale Agreement, dated as of October * (10.9) 31, 1994, among Iron Mountain Records Management of Ohio, Inc., Storage and Retrieval Concepts, Inc., Thomas Waldon and Dann Scheiferstein 10.10 Asset Purchase and Sale Agreement, dated as of February * (10.10) 28, 1995, among Iron Mountain Records Management ("IMRM"), National Business Archives, Inc., and James F. Knott 10.11 Asset Purchase Agreement, dated July 19, 1995, among * (10.11) IMRM, DataFile Services, Inc. and Cynthia and Lee Macklin 10.12 Asset Purchase and Sale Agreement, dated as of October 5, * (10.12) 1995, among IMRM, Brooks Records Center, Inc. and Forty Acres, Ltd. 10.13 Asset Purchase and Sale Agreement, dated as of November * (10.13) 1, 1995, among IMRM, Nashville Vault Company, Ltd. and USA Vault Corporation 10.14 Asset Purchase and Sale Agreement, dated November 14, * (10.14) 1995, among IMRM, Data Vault Corporation and Ralph Stoddard III 10.15 Merger Agreement, dated as of November 17, 1995, among * (10.15) IMRM, Temp DSSI, Inc. and Data Storage Systems, Inc. 10.16 Asset Purchase and Sale Agreement, dated November 17, * (10.16) 1995, among IMRM, Florida Data Bank, Inc., Carl J. Strang III, Carl J. Strang II and 6/10 Corporation II-4 Exhibit Number Item Exhibit - ------- ---- ------- 10.17 Asset Purchase and Sale Agreement, dated November 22, * (10.17) 1995 among IMRM, Data Management Business Records Storage, Inc. and Outdoor West, Inc. 10.18 Record Center Storage Services Agreement between IMRM and * (10.18) Resolution Trust Corporation, dated July 31, 1992 10.19 Lease between IMRM and IM Houston (CR) Limited * (10.19) Partnership, dated January 1, 1991 10.20 Asset Purchase and Sale Agreement, dated July 11, 1996, ***(10.20) among IMRM, The Fortress Corporation and certain subsidiaries 10.21 Stock Purchase and Sale Agreement, dated as of August 9, *** (10.21) 1996, among IMRM and the shareholders of Data Archive Services of Miami, Inc. and Data Archives Services, Inc. 10.22 Asset Purchase and Sale Agreement, dated August 13, 1996, *** (10.22) among IMRM, International Record Storage and Retrieval Service, Inc. and Laurance Winnerman, Sanford Winnerman and Penny Novak 10.23 Asset Purchase Agreement, dated as of September 6, 1996, Filed herewith as among IMRM, Mohawk Business Record Storage, Inc., Exhibit 10.23 Michael M. Rabin, Richard K. Rabin, Herman Ladin and Sidney Ladin 11 Statement re: computation of per share earnings *** (11) 12 Statement re: computation of ratio of earnings to fixed Filed herewith as charges Exhibit 12 21 Subsidiaries of the Company *** (21) 23.1 Consent of Sullivan & Worcester LLP Contained in Exhibit 5; to be filed by amendment 23.2 Consent of Arthur Andersen LLP Filed herewith as Exhibit 23.2 23.3 Consent of Wolpoff & Company, LLP Filed herewith as Exhibit 23.3 23.4 Consent of Morrison and Smith Filed herewith as Exhibit 23.4 23.5 Consent of Geo. S. Olive & Co. LLC Filed herewith as Exhibit 23.5 23.6 Consent of Robert F. Gayton, CPA Filed herewith as Exhibit 23.6 23.7 Consent of Perless, Roth, Jonas & Hartney, CPAs, PA Filed herewith as Exhibit 23.7 23.8 Consent of Rothstein, Kass & Company, P.C. Filed herewith as Exhibit 23.8 24 Powers of Attorney Power of Attorney of C.R. Boden filed herewith as Exhibit 24; others previously filed on Pages II-6 and II-7 of the Registration Statement 25 Statement re eligibility of trustee Filed herewith as Exhibit 25
II-5 (b) Financial Statement Schedules The following Financial Statement Schedule is filed herewith: Schedule II--Valuation and Qualifying Accounts Item 17. Undertakings Insofar as indemnification for liabilities arising under the Act may be permitted to directors, officers and controlling persons of the Registrants, the Registrants have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by a Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, such Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. The undersigned Registrants hereby undertake that: (1) For purposes of determining any liability under the Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Act shall be deemed to be part of this registration statement as of the time it was declared effective. (2) For the purpose of determining any liability under the Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. II-6 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, Iron Mountain Incorporated has duly caused this amendment to its Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Boston, Commonwealth of Massachusetts, on September 11, 1996. IRON MOUNTAIN INCORPORATED By:/s/C. Richard Reese ----------------------------------------- Name: C. Richard Reese Title: Chairman of the Board of Directors and Chief Executive Officer Pursuant to the requirements of the Securities Act of 1933, as amended, this amendment to the Registrant's Registration Statement on Form S-1 relating to Iron Mountain Incorporated's Senior Subordinated Notes and the guarantees thereof has been signed below by the following persons in the capacities and on the dates indicated.
Signature Title Date --------- ----- ---- * - --------------------- Chairman of the Board of Directors September 11, 1996 C. Richard Reese and Chief Executive Officer * - --------------------- President, Chief Operating Officer September 11, 1996 David S. Wendell and Director * - --------------------- Executive Vice President, Chief September 11, 1996 Eugene B. Doggett Financial Officer and Director * - --------------------- Director September 11, 1996 Constantin R. Boden * - --------------------- Director September 11, 1996 Arthur D. Little * - --------------------- Director September 11, 1996 Vincent J. Ryan, Jr. * - --------------------- Vice President and Corporate September 11, 1996 Jean A. Bua Controller *By:/s/C. Richard Reese ------------------- C. Richard Reese Attorney-in-fact
II-7 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, their undersigned Registrants have each duly caused this amendment to their Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Boston, Commonwealth of Massachusetts, on September 11, 1996. IRON MOUNTAIN RECORDS MANAGEMENT, INC. METRO BUSINESS ARCHIVES, INC. CRITERION ATLANTIC PROPERTY, INC. CRITERION PROPERTY, INC. HOLLYWOOD PROPERTY, INC. IM SAN DIEGO, INC. IRON MOUNTAIN INFORMATION PARTNERS, INC. IRON MOUNTAIN DATA PROTECTION SERVICES, INC. IRON MOUNTAIN RECORDS MANAGEMENT OF MARYLAND, INC. IRON MOUNTAIN RECORDS MANAGEMENT OF OHIO, INC. IRON MOUNTAIN WILMINGTON, INC. DATA STORAGE SYSTEMS, INC. IRON MOUNTAIN RECORDS MANAGEMENT OF MISSOURI LLC IRON MOUNTAIN RECORDS MANAGEMENT OF BOSTON, INC. DATA ARCHIVE SERVICES, INC. DATA ARCHIVE SERVICES OF MIAMI, INC. By: /s/C. Richard Reese ----------------------------------------- Name: C. Richard Reese Title: Chairman of the Board of Directors and Chief Executive Officer Pursuant to the requirements of the Securities Act of 1933, as amended, this amendment to the Registrants' Registration Statement on Form S-1 relating to Iron Mountain Incorporated's Senior Subordinated Notes and the guarantees thereof has been signed below by the following persons in the capacities and on the dates indicated.
Signature Title Date - -------------------- --------------------------------- ------------------ * - ------------------- Chairman of the Board and Director, September 11, 1996 C. Richard Reese and Chief Executive Officer * - ------------------- Executive Vice President and Chief September 11, 1996 Eugene B. Doggett Financial Officer, and Manager of Iron Mountain Records Management of Missouri, LLC * - ------------------- Vice President and Corporate September 11, 1996 Jean A. Bua Controller *By: /s/C. Richard Reese -------------------- C. Richard Reese Attorney-in-fact
II-8 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Board of Directors of Iron Mountain Incorporated: We have audited, in accordance with generally accepted auditing standards, the consolidated financial statements of Iron Mountain Incorporated for each of the three years in the period ended December 31, 1995 and have issued our report thereon dated February 26, 1996. Our audits were made for the purpose of forming an opinion on those statements taken as a whole. The accompanying supplemental schedule is the responsibility of the Company's management and is presented for purposes of complying with the Securities and Exchange Commission's rules and regulations under the Securities and Exchange Act of 1934 and is not a required part of the basic financial statements. The supplemental schedule has been subjected to the auditing procedures applied in our audits of the basic financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. Arthur Andersen LLP Los Angeles, California February 26, 1996 S-1 SCHEDULE II IRON MOUNTAIN INCORPORATED VALUATION AND QUALIFYING ACCOUNTS Years Ended December 31, 1993, 1994 and 1995 (In thousands)
Balance at Balance beginning Charged to at end of year expense Deductions of year -------------- -------------- --------- -------- Year ended December 31, 1993 Allowance for doubtful accounts $424 $581 $(503) $502 Year ended December 31, 1994 Allowance for doubtful accounts $502 $356 $(327) $531 Year ended December 31, 1995 Allowance for doubtful accounts $531 $630 $(510) $651
S-2 Exhibit Index
Exhibit Number Item Exhibit - --------- --------------------------------------------------------------------------- -------------------- 1 Form of Underwriting Agreement Filed herewith as Exhibit 1 3.1 Amended and Restated Certificate of Incorporation of the Company *(3.1) 3.1A Certificate of Incorporation of Iron Mountain Records Management, Inc. To be filed by amendment 3.1B Certificate of Incorporation of Metro Business Archives, Inc. To be filed by amendment 3.1C Certificate of Incorporation of Criterion Atlantic Property, Inc. Filed herewith as Exhibit 3.1C 3.1D Certificate of Incorporation of Criterion Property, Inc. Filed herewith as Exhibit 3.1D 3.1E Articles of Incorporation of Hollywood Property, Inc. Filed herewith as Exhibit 3.1E 3.1F Certificate of Incorporation of IM San Diego, Inc. Filed herewith as Exhibit 3.1F Exhibit Number Item Exhibit - --------- --------------------------------------------------------------------------- -------------------- 3.1G Certificate of Incorporation of Iron Mountain Information Partners, Inc. Filed herewith as Exhibit 3.1G 3.1H Articles of Organization of Iron Mountain Data Protection Services, Inc. Filed herewith as Exhibit 3.1H 3.1I Articles of Incorporation of Iron Mountain Records Management of Maryland, Filed herewith as Inc. Exhibit 3.1I 3.1J Articles of Incorporation of Iron Mountain Records Management of Ohio, Inc. Filed herewith as Exhibit 3.1J 3.1K Certificate of Incorporation of Iron Mountain Wilmington, Inc. Filed herewith as Exhibit 3.1K 3.1L Articles of Incorporation of Data Storage Systems, Inc. Filed herewith as Exhibit 3.1L 3.1M Certificate of Formation of Iron Mountain Records Management of Missouri Filed herewith as LLC Exhibit 3.1M 3.1N Articles of Organization of Iron Mountain Records Management of Boston, Filed herewith as Inc. Exhibit 3.1N 3.1O Articles of Incorporation of Data Archive Services, Inc. To be filed by amendment 3.1P Articles of Incorporation of Data Archives Services of Miami, Inc. Filed herewith as Exhibit 3.1P 3.2 Bylaws of the Company, as amended * (3) 3.2A Bylaws of Iron Mountain Records Management, Inc. Filed herewith as Exhibit 3.2A 3.2B Bylaws of Metro Business Archives, Inc. Filed herewith as Exhibit 3.2B 3.2C Bylaws of Criterion Atlantic Property, Inc. Filed herewith as Exhibit 3.2C 3.2D Bylaws of Criterion Property, Inc. Filed herewith as Exhibit 3.2D 3.2E Bylaws of Hollywood Property, Inc. Filed herewith as Exhibit 3.2E 3.2F Bylaws of IM San Diego, Inc. Filed herewith as Exhibit 3.2F 3.2G Bylaws of Iron Mountain Information Partners, Inc. Filed herewith as Exhibit 3.2G 3.2H Bylaws of Iron Mountain Data Protection Services, Inc. Filed herewith as Exhibit 3.2H 3.2I Bylaws of Iron Mountain Records Management of Maryland, Inc. Filed herewith as Exhibit 3.2I 3.2J Regulations of Iron Mountain Records Management of Ohio, Inc. Filed herewith as Exhibit 3.2J 3.2K Bylaws of Iron Mountain Wilmington, Inc. Filed herewith as Exhibit 3.2K 3.2L Bylaws of Data Storage Systems, Inc. Filed herewith as Exhibit 3.2L 3.2M Limited Liability Company Agreement of Iron Mountain Records Management of Filed herewith as Missouri LLC Exhibit 3.2M 3.2N Bylaws of Iron Mountain Records Management of Boston, Inc. Filed herewith as Exhibit 3.2N 3.2O Bylaws of Data Archives Services, Inc. Filed herewith as Exhibit 3.2O Exhibit Number Item Exhibit - --------- --------------------------------------------------------------------------- -------------------- 3.2P Bylaws of Data Archive Services of Miami, Inc. Filed herewith as Exhibit 3.2P 4.1 Registration Rights Agreement between the Company and certain Stockholders, * (4.1) dated as of December 14, 1990 4.2 Form of Indenture for the Notes Filed herewith as Exhibit 4.2 5 Opinion of Sullivan & Worcester LLP To be filed by amendment 10.1 Credit Agreement between the Company and Chase Manhattan Bank (N.A.) as * (10.1) Agent, dated as of December 10, 1990, amended and restated as of April 15, 1993 and further amended and restated as of January 31, 1995 10.2 Consent and Amendment No. 1 to the Credit Agreement, dated as of November * (10.2) 1, 1995 between the Company and Chase Manhattan Bank (N.A.) as Agent 10.3 Consent and Amendment No. 2 to the Credit Agreement, dated as of November * (10.3) 2, 1995 between the Company and Chase Manhattan Bank (N.A.) as Agent 10.3A Amendment No. 3 to the Credit Agreement, dated as of August 29, 1996, among Filed herewith as the Company the lenders party thereto and The Chase Manhattan Bank, as Exhibit 10.3A Agent 10.4 Note Purchase Agreement between the Company and Chrysler Capital * (10.4) Corporation, dated as of December 14, 1990, as amended. 10.4A Letter agreement, dated July 15, 1996, between the Company and Chrysler *** (10.4A) Capital Corporation 10.5 Subordinated Term Note between the Company and Schooner Capital * (10.5) Corporation, dated February 11, 1991 10.6 Iron Mountain Incorporated 1995 Stock Incentive Plan * (10.6) 10.7 Form of Iron Mountain Incorporated 1995 Stock Option Plan for Non- Employee ** (10.7) Directors 10.8 Asset Purchase and Sale Agreement, dated as of July 8, 1994, between Iron * (10.8) Mountain Data Protection Services, Inc. and Digital Equipment Corporation 10.9 Asset Purchase and Sale Agreement, dated as of October 31, 1994, among Iron * (10.9) Mountain Records Management of Ohio, Inc., Storage and Retrieval Concepts, Inc., Thomas Waldon and Dann Scheiferstein 10.10 Asset Purchase and Sale Agreement, dated as of February 28, 1995, among * (10.10) Iron Mountain Records Management ("IMRM"), National Business Archives, Inc., and James F. Knott 10.11 Asset Purchase Agreement, dated July 19, 1995, among IMRM, DataFile * (10.11) Services, Inc. and Cynthia and Lee Macklin 10.12 Asset Purchase and Sale Agreement, dated as of October 5, 1995, among IMRM, * (10.12) Brooks Records Center, Inc. and Forty Acres, Ltd. 10.13 Asset Purchase and Sale Agreement, dated as of November 1, 1995, among * (10.13) IMRM, Nashville Vault Company, Ltd. and USA Vault Corporation 10.14 Asset Purchase and Sale Agreement, dated November 14, 1995, among IMRM, * (10.14) Data Vault Corporation and Ralph Stoddard III 10.15 Merger Agreement, dated as of November 17, 1995, among IMRM, Temp DSSI, * (10.15) Inc. and Data Storage Systems, Inc. 10.16 Asset Purchase and Sale Agreement, dated November 17, 1995, among IMRM, * (10.16) Florida Data Bank, Inc., Carl J. Strang III, Carl J. Strang II and 6/10 Corporation Exhibit Number Item Exhibit - --------- --------------------------------------------------------------------------- -------------------- 10.17 Asset Purchase and Sale Agreement, dated November 22, 1995 among IMRM, Data * (10.17) Management Business Records Storage, Inc. and Outdoor West, Inc. 10.18 Record Center Storage Services Agreement between IMRM and Resolution Trust * (10.18) Corporation, dated July 31, 1992 10.19 Lease between IMRM and IM Houston (CR) Limited Partnership, dated January * (10.19) 1, 1991 10.20 Asset Purchase and Sale Agreement, dated July 11, 1996, among IMRM, ***(10.20) The Fortress Corporation and certain subsidiaries 10.21 Stock Purchase and Sale Agreement, dated as of August 9, 1996, among IMRM *** (10.21) and the shareholders of Data Archive Services of Miami, Inc. and Data Archives Services, Inc. 10.22 Asset Purchase and Sale Agreement, dated August 13, 1996, among IMRM, *** (10.22) International Record Storage and Retrieval Service, Inc. and Laurance Winnerman, Sanford Winnerman and Penny Novak 10.23 Asset Purchase Agreement, dated as of September 6, 1996, among IMRM, Mohawk Filed herewith as Business Record Storage, Inc., Michael M. Rabin, Richard K. Rabin, Herman Exhibit 10.23 Ladin and Sidney Ladin 11 Statement re: computation of per share earnings *** (11) 12 Statement re: computation of ratio of earnings to fixed charges Filed herewith as Exhibit 12 21 Subsidiaries of the Company *** (21) 23.1 Consent of Sullivan & Worcester LLP Contained in Exhibit 5; to be filed by amendment 23.2 Consent of Arthur Andersen LLP Filed herewith as Exhibit 23.2 23.3 Consent of Wolpoff & Company, LLP Filed herewith as Exhibit 23.3 23.4 Consent of Morrison and Smith Filed herewith as Exhibit 23.4 23.5 Consent of Geo. S. Olive & Co. LLC Filed herewith as Exhibit 23.5 23.6 Consent of Robert F. Gayton, CPA Filed herewith as Exhibit 23.6 23.7 Consent of Perless, Roth, Jonas & Hartney, CPAs, PA Filed herewith as Exhibit 23.7 23.8 Consent of Rothstein, Kass & Company, P.C. Filed herewith as Exhibit 23.8 24 Powers of Attorney Power of Attorney of C.R. Boden filed herewith as Exhibit 24; others previously filed on Pages II-6 and II-7 of the Registration Statement 25 Statement re eligibility of trustee Filed herewith as Exhibit 25
Each exhibit marked by an asterisk (*) is incorporated by reference to the Company's Registration Statement No. 33-99950 filed with the Securities and Exchange Commission on December 1, 1995. Each exhibit marked with a double asterisk (**) is incorporated by reference to Amendment No. 2 to the Company's Registration Statement filed with the Securities and Exchange Commission on January 11, 1996. Exhibit 3.2 is incorporated by reference to the Company's Quarterly Report on Form 10-Q (File No. 0-27584) filed with the Securities and Exchange Commission on August 14, 1996. Exhibit numbers in parentheses refer to the exhibit numbers in the applicable filing. EX-1 2 UNDERWRITING AGREEMENT Draft 9/6/96 $150,000,000 ------------ IRON MOUNTAIN INCORPORATED ___% SENIOR SUBORDINATED NOTES DUE 2006 UNDERWRITING AGREEMENT ---------------------- September __, 1996 DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION BEAR, STEARNS & CO. INC. PRUDENTIAL SECURITIES INCORPORATED c/o Donaldson, Lufkin & Jenrette Securities Corporation 277 Park Avenue New York, New York 10172 Dear Sirs: Iron Mountain Incorporated, a Delaware corporation (the "Company"), proposes to issue and sell $150,000,000 principal amount of its ___% Senior Subordinated Notes due 2006 (each a "Security" and collectively, the "Securities") to the several underwriters named in Schedule I hereto (the "Underwriters"). The Securities are to be issued pursuant to the provisions of an Indenture to be dated as of September __, 1996 (the "Indenture") between the Company and First Bank National Association, as Trustee (the "Trustee"). The Securities will be guaranteed as set forth in the Indenture by substantially all of the Company's present and future "Restricted Subsidiaries" (as defined in the Indenture) (each such guarantee being referred to herein as a "Guarantee" and collectively as the "Guarantees" and each such guarantor being referred to herein as a "Guarantor" and collectively as the "Guarantors"). 1. Registration Statement and Prospectus. The Company has filed with the Securities and Exchange Commission (the "Commission") in accordance with the provisions of the Securities Act of 1933, as amended, and the rules and regulations of the Commission thereunder (collectively called the "Securities Act"), a registration statement on Form S-1 including a prospectus relating to the Securities, which may be amended. Any preliminary prospectus that is contained in such registration statement (or any amendment thereto) prior to the time that it is declared effective by the Commission or that is filed with the Commission pursuant to Rule 424(a) of the Securities Act is hereinafter referred to as the Preliminary Prospectus; the registration statement as amended at the time when it becomes effective, including a registration statement (if any) filed pursuant to Rule 462(b) under the Securities Act increasing the size of the offering registered under the Securities Act and information (if any) deemed to be part of the registration statement at the time of effectiveness pursuant to Rule 430A under the Securities Act, is hereinafter referred to as the Registration Statement; and the prospectus in the form first used to confirm sales of Securities is hereinafter referred to as the Prospectus. 2. Agreements to Sell and Purchase. On the basis of the representations and warranties contained in this Agreement, and subject to its terms and conditions, the Company agrees to issue and sell, and each Underwriter agrees, severally and not jointly, to purchase from the Company the principal amount of Securities set forth opposite the name of such Underwriter in Schedule I hereto, at ____% of the principal amount thereof (the "Purchase Price") plus accrued interest thereon, if any, from __________ __, 1996 to the date of payment and delivery. 3. Terms of Public Offering. The Company is advised by you that the Underwriters propose (i) to make a public offering of their respective portions of the Securities as soon after the effective date of the Registration Statement as in your judgment is advisable and (ii) initially to offer the Securities upon the terms set forth in the Prospectus. 4. Delivery and Payment. (a) Delivery to the Underwriters of and payment for the Securities and the related Guarantees shall be made as described below at 10:00 A.M., New York City time, on September __, 1996 (the "Closing Date") (being the third or fourth business day, unless otherwise permitted by the Commission pursuant to Rule 15c6-1 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), following the date of the initial public offering). The Closing Date and the location of delivery of and the form of payment for the Securities and the related Guarantees may be varied by agreement between you and the Company. (b) The Securities and the related Guarantees to be purchased by each Underwriter hereunder will be represented by one or more definitive global notes in book-entry form which will be deposited by or on behalf of the Company with The Depository 2 Trust Company ("DTC") or its designated custodian. On the Closing Date, the Company will deliver the Securities and the related Guarantees to Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), for the account of each Underwriter, against payment by or on behalf of such Underwriter of the purchase price therefor by certified or official bank check or checks, payable to the order of the Company in federal (same day) funds, or by a wire transfer of federal (same day) funds to the account specified by the Company, by causing DTC to credit the Securities and the related Guarantees to the account of DLJ at DTC. Such notes shall be made available to DLJ for inspection not later than 9:30 A.M., New York City time, on the business day next preceding the Closing Date. Notes in definitive form evidencing the Securities shall be delivered with any transfer taxes thereon duly paid by the Company. (c) The documents to be delivered on the Closing Date by or on behalf of the parties hereto pursuant to Section 8 hereof, including any additional documents requested by the Underwriters pursuant to Section 8 hereof, will be delivered at the offices of Jones, Day, Reavis & Pogue, 599 Lexington Avenue, New York, New York 10022. A meeting will be held at such offices at 2:00 p.m., New York City time, on the business day next preceding the Closing Date, at which meeting the final drafts of documents to be delivered pursuant to the preceding sentence will be available for review by or on behalf of the parties hereto. For the purposes of this Section 4, "business day" means each day other than Saturday or Sunday which is not a day on which banking institutions in New York are generally authorized or obligated by law or executive order to close. 5. Agreements of the Company. The Company agrees with you: (a) To timely file with the Commission a prospectus in the form most recently included in an amendment to the registration statement relating to the Securities and the related Guarantees with such changes and additions as are required or permitted under Rule 430A or Rule 424(b) under the Securities Act and have been provided in advance to and approved by DLJ on behalf of the Underwriters. (b) To advise you promptly and, if requested by you, to confirm such advice in writing, (i) when any post-effective amendment to the Registration Statement has become effective, (ii) of any request by the Commission for amendments to the Registration Statement or amendments or supplements to the Prospectus or for additional information, (iii) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or of the suspension of qualification of the Securities for offering or sale in any jurisdiction, or the initiation of any proceeding for such purposes, and (iv) of the happening of any event during the period referred to in paragraph (e) 3 below which makes any statement of a material fact made in the Registration Statement or the Prospectus untrue or which requires the making of any additions to or changes in the Registration Statement or the Prospectus in order to make the statements therein not misleading. If at any time the Commission shall issue any stop order suspending the effectiveness of the Registration Statement, the Company will make every reasonable effort to obtain the withdrawal or lifting of such order at the earliest possible time. (c) To furnish to you, without charge, four signed copies of the Registration Statement as first filed with the Commission and of each amendment to it, including all exhibits, and to furnish to you and each Underwriter designated by you such number of conformed copies of the Registration Statement as so filed and of each amendment to it, without exhibits, as you may reasonably request. (d) Not to file any amendment or supplement to the Registration Statement, whether before or after the time when it becomes effective, or to make any amendment or supplement to the Prospectus of which you shall not previously have been advised or to which you shall reasonably object; and to prepare and file with the Commission, promptly upon your reasonable request, any amendment to the Registration Statement or amendment or supplement to the Prospectus which may be necessary or advisable in connection with the distribution of the Securities and the related Guarantees by you, and to use its best efforts to cause the same to become promptly effective. (e) Promptly after the Registration Statement becomes effective, and from time to time thereafter for such period as in the opinion of counsel for the Underwriters a prospectus is required by law to be delivered in connection with sales by an Underwriter or a dealer, to furnish to each Underwriter and dealer as many copies of the Prospectus (and of any amendment or supplement to the Prospectus) as such Underwriter or dealer may reasonably request. (f) If during the period specified in paragraph (e) any event shall occur as a result of which, in the opinion of counsel for the Underwriters, it becomes necessary to amend or supplement the Prospectus in order to make the statements therein, in the light of the circumstances when the Prospectus is delivered to a purchaser, not misleading, or if it is necessary to amend or supplement the Prospectus to comply with the Securities Act, the Exchange Act, the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), and any state and securities or Blue Sky laws, forthwith to prepare and file with the Commission an appropriate amendment or supplement to the Prospectus so that the statements in the Prospectus, as so amended or supplemented, will not in the light of the circumstances 4 when it is so delivered, be misleading, or so that the Prospectus will comply with law, and to furnish to each Underwriter and to such dealers as you shall specify, such number of copies thereof as such Underwriter or dealers may reasonably request. (g) Prior to any public offering of the Securities, to cooperate with you and counsel for the Underwriters in connection with the registration or qualification of the Securities for offer and sale by the several Underwriters and by dealers under the state securities or Blue Sky laws of such jurisdictions as you may request, to continue such qualification in effect so long as required for distribution of the Securities and the related Guarantees and to file such consents to service of process or other documents as may be necessary in order to effect such registration or qualification provided that in connection therewith the Company shall not be required to qualify as a foreign corporation or execute a general consent to service of process. (h) To make generally available to its security holders as soon as reasonably practicable an earnings statement covering a period of at least twelve months beginning after the effective date of the Registration Statement (but in no event commencing later than 90 days after such date) which shall satisfy the provisions of Section 11(a) of the Securities Act, and to advise you in writing when such statement has been so made available. (i) Whether or not required by the rules and regulations of the Commission, so long as any Securities are outstanding and so long as the Indenture so requires, (i) unless such obligation is waived in writing by the holders of its Securities, to furnish to such holders (A) all quarterly and annual financial information that would be required to be contained in a filing with the Commission on Forms 10-Q and 10-K if the Company were required to file such Forms, including a "Management's Discussion and Analysis of Financial Condition and Results of Operations" and, with respect to the annual information only, a report thereon by the Company's certified independent accountants, and (B) all financial information that would be required to be included in a Form 8-K filed with the Commission if the Company were required to file such reports, and (ii) to 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 to make such information available to investors who request it in writing. (j) During the period referred to in paragraph (i), to furnish to you as soon as available a copy of each report or other publicly available information of the Company mailed to the security holders of the Company or filed with the 5 Commission and such other publicly available information concerning the Company and its subsidiaries as you may reasonably request. (k) To pay, or cause to be paid, all costs, expenses, fees and taxes incident to (i) the preparation, printing, filing and distribution under the Securities Act of the Registration Statement (including financial statements and exhibits), each Preliminary Prospectus and all amendments and supplements to any of them prior to or during the period specified in paragraph (e), (ii) the printing and delivery of the Prospectus and all amendments or supplements thereto during the period specified in paragraph (e), (iii) the printing and delivery of this Agreement, the Preliminary and Supplemental Blue Sky Memoranda and all other agreements, memoranda, correspondence and other documents printed and delivered in connection with the offering of the Securities and the related Guarantees (including in each case any disbursements of counsel for the Underwriters relating to such printing and delivery), (iv) the registration or qualification of the Securities and the related Guarantees for offer and sale under the securities or Blue Sky laws of the several states (including in each case the fees and disbursements of counsel for the Underwriters relating to such registration or qualification and memoranda relating thereto), (v) the filing fees of the National Association of Securities Dealers, Inc. in connection with the offering, (vi) if applicable, the listing of the Securities and the related Guarantees on any securities exchange including the National Association of Securities Dealers Automated Quotation system ("Nasdaq") National Market System and (vii) furnishing to the Underwriters such copies of the Registration Statement, the Prospectus and all amendments and supplements thereto as may be requested for use in connection with the offering or sale of the Securities and the related Guarantees by the Underwriters or by dealers to whom Securities and related Guarantees may be sold. (l) During the period beginning on the date hereof and continuing to and including the Closing Date, not to offer, sell, contract to sell or otherwise dispose of any debt securities of the Company or any Guarantor or warrants to purchase debt securities of the Company or any Guarantor substantially similar to the Securities or the Guarantees (other than (i) the Securities, (ii) the Guarantees and (iii) commercial paper issued in the ordinary course of business), without your prior written consent. (m) To use its best efforts to do and perform, or cause to be done or performed, all things required or necessary to be done and performed under this Agreement by the Company and the Guarantors prior to the Closing Date and to satisfy all conditions precedent to the delivery of the Securities. 6 (n) To cause each subsidiary of the Company which becomes a "Restricted Subsidiary" (other than an "Excluded Restricted Subsidiary")(each as defined in the Indenture) after the date hereof, in writing and in form and substance satisfactory to counsel to the Underwriters, to join as a party to this Agreement, but only for the purpose of providing the same indemnification to the Underwriters as the Company and its subsidiaries party hereto are providing under Section 7 of this Agreement. 6. Representations and Warranties of the Company. The Company represents and warrants to each Underwriter that: (a) The Registration Statement has become effective; no stop order suspending the effectiveness of the Registration Statement is in effect, and no proceedings for such purpose are pending before or threatened by the Commission. (b) (i) The Registration Statement when it became effective did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, (ii) the Registration Statement and the Prospectus comply and, as amended or supplemented, if applicable, will comply in all material respects with the Securities Act and the Trust Indenture Act and (iii) the Prospectus does not contain and, as amended or supplemented, if applicable, will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, except that the representations and warranties set forth in this paragraph (b) do not apply to statements or omissions in the Registration Statement or the Prospectus based upon information relating to any Underwriter furnished to the Company in writing by such Underwriter expressly for use therein. (c) Each Preliminary Prospectus, each post-effective amendment to the Registration Statement, if any, and each Registration Statement filed pursuant to Rule 462(b) under the Securities Act, if any, complied, and, if applicable, will comply when so filed in all material respects with the Securities Act; and did not, and, if applicable, will not contain an untrue statement of a material fact or did not omit, and, if applicable, will not omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (d) The Company and each of its subsidiaries has been duly incorporated or formed, is validly existing as a corporation or limited liability company in good standing 7 under the laws of its jurisdiction of incorporation or formation and has the corporate power and authority to carry on its business as it is currently being conducted and to own, lease and operate its properties, and each is duly qualified and is in good standing as a foreign corporation or limited liability company authorized to do business in each jurisdiction in which the nature of its business or its ownership or leasing of property requires such qualification, except where the failure to be so qualified would not have a material adverse effect (financial or otherwise) on the Company and its subsidiaries, taken as a whole. (e) All of the outstanding shares of capital stock of, or other ownership interests in, each of the Company's subsidiaries have been duly authorized and validly issued and are fully paid and non-assessable, and are owned directly or indirectly by the Company, free and clear of any security interest, claim, lien, encumbrance or adverse interest of any nature, except for the security interests granted under the Credit Agreement between The Chase Manhattan Bank, N.A., as Agent, as amended as of ________ __, 19__ . (f) The Securities have been duly authorized by the Company for issuance and sale pursuant to this Agreement, each Guarantee has been duly authorized by the Guarantor to which it relates and, when executed and authenticated in accordance with the provisions of the Indenture and delivered to the Underwriters against payment therefor as provided by this Agreement, the Securities and the Guarantees will be entitled to the benefits of the Indenture, and will be valid and binding obligations of the Company and the Guarantors, respectively, enforceable in accordance with their terms except as (i) the enforceability thereof may be limited by bankruptcy, insolvency, fraudulent conveyance or similar laws affecting creditors' rights generally and (ii) rights of acceleration and the availability of equitable remedies may be limited by equitable principles of general applicability. (g) This Agreement has been duly authorized, executed and delivered by the Company and the Guarantors and is a valid and binding agreement of the Company and the Guarantors enforceable in accordance with its terms except as (i) rights to indemnity and contribution hereunder may be limited by applicable law, (ii) the enforceability thereof may be limited by bankruptcy, insolvency, fraudulent conveyance or similar laws affecting creditors' rights generally and (iii) rights of acceleration and the availability of equitable remedies may be limited by equitable principles of general applicability. 8 (h) The Indenture has been duly qualified under the Trust Indenture Act and has been duly authorized, executed and delivered by the Company and the Guarantors party thereto and is a valid and binding agreement of the Company and the Guarantors party thereto, enforceable in accordance with its terms except as (i) the enforceability thereof may be limited by bankruptcy, insolvency, fraudulent conveyance or similar laws affecting creditors' rights generally and (ii) rights of acceleration and the availability of equitable remedies may be limited by equitable principles of general applicability. (i) The Securities and the Guarantees conform as to legal matters to the description thereof contained in the Prospectus. (j) Neither the Company nor any of its subsidiaries is in violation of its respective charter or by-laws or comparable organizational documents or in default (and no condition exists which, with notice or lapse of time or both, would constitute a default) in the performance of any obligation, agreement or condition contained in any bond, debenture, note or any other evidence of indebtedness or in any other agreement, indenture or instrument material to the conduct of the business of the Company and its subsidiaries, taken as a whole, to which the Company or any of its subsidiaries is a party or by which it or any of its subsidiaries or their respective property is bound. (k) The execution, delivery and performance of this Agreement, the Indenture, the Securities and the Guarantees and compliance by the Company and the Guarantors with all the provisions hereof and thereof, as the case may be, and the consummation of the transactions contemplated hereby and thereby will not require any consent, approval, authorization or other order of any court, regulatory body, administrative agency or other governmental body (except as such may be required under the securities or Blue Sky laws of the various states and except as have been obtained under the Securities Act and the Trust Indenture Act), and will not conflict with or constitute a breach of any of the terms or provisions of, or a default under, the charter or by-laws or comparable organizational documents of the Company or any of its subsidiaries or any agreement, indenture or other instrument to which it or any of its subsidiaries is a party or by which it or any of its subsidiaries or their respective property is bound, or violate or conflict with any laws, administrative regulations or rulings or court decrees applicable to the Company, any of its subsidiaries or their respective property. 9 (l) Except as otherwise set forth in the Prospectus (or, if the Prospectus is not yet in existence, the most recent Preliminary Prospectus), there are no material legal or governmental proceedings pending to which the Company or any of its subsidiaries is a party or to which any of their respective property is subject, and, to the best of the Company's knowledge, no such proceedings are threatened or contemplated. No contract or document of a character required to be described in the Registration Statement or the Prospectus or to be filed as an exhibit to the Registration Statement is not so described or filed as required. (m) Neither the Company nor any of its subsidiaries is currently in violation of any foreign, federal, state or local law or regulation relating to the protection of human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants ("Environmental Laws"), nor any federal or state law relating to discrimination in the hiring, promotion or pay of employees nor any applicable federal or state wages and hours laws, nor any provisions of the Employee Retirement Income Security Act or the rules and regulations promulgated thereunder, which in each case might result in any material adverse change in the business prospects, financial condition or results of operations of the Company and its subsidiaries, taken as a whole. (n) The Company and each of its subsidiaries has such permits, licenses, franchises and authorizations of governmental or regulatory authorities ("permits"), including, without limitation, under any applicable Environmental Laws, as are necessary to own, lease and operate its respective properties and to conduct its respective business; the Company and each of its subsidiaries has fulfilled and performed all of its material obligations with respect to such permits and no event has occurred which allows, or after notice or lapse of time would allow, revocation or termination thereof which might result in any material adverse change in the business prospects, financial condition or results of operations of the Company and its subsidiaries, taken as a whole; and, except as described in the Prospectus (or, if the Prospectus is not yet in existence, the most recent Preliminary Prospectus), such permits contain no restrictions that materially interfere with the business or operations of the Company or any of its subsidiaries as currently conducted. (o) In the ordinary course of its business, when the Company or any of its subsidiaries acquires a parcel of real property, the Company conducts a review of the effect of Environmental Laws on the business, operations and properties of the Company and its subsidiaries, in the course of which it identifies and evaluates associated costs 10 and liabilities (including, without limitation, any capital or operating expenditures required for clean-up, closure of properties or compliance with Environmental Laws or any permit, license or approval, any related constraints on operating activities and any potential liabilities to third parties). On the basis of such review, the Company has reasonably concluded that such associated costs and liabilities would not, singly or in the aggregate, have a material adverse effect (financial or otherwise) on the Company and its subsidiaries, taken as a whole. (p) Except as otherwise set forth in the Prospectus (or, if the Prospectus is not yet in existence, the most recent Preliminary Prospectus) or such as are not material to the business, prospects, financial condition or results of operations of the Company and its subsidiaries, taken as a whole, the Company and each of its subsidiaries has good and marketable title, free and clear of all liens, claims, encumbrances and restrictions except liens for taxes not yet due and payable, to all property and assets described in the Registration Statement as being owned by it. All leases to which the Company or any of its subsidiaries is a party are valid and binding and no default by the Company or any of its subsidiaries, or to the knowledge of the Company or any of its subsidiaries, by any other party, has occurred or is continuing thereunder, which might result in any material adverse change in the business prospects, financial condition or results of operations of the Company and its subsidiaries, taken as a whole, and the Company and its subsidiaries enjoy peaceful and undisturbed possession under all such leases to which any of them is a party as lessee with such exceptions as do not materially interfere with the use made or proposed to be made by the Company or such subsidiary. (q) The Company and each of its subsidiaries maintains reasonably adequate insurance against such losses and risks in such amounts as are prudent and customary in the business in which they are engaged. (r) Arthur Andersen LLP are independent public accountants with respect to the Company as required by the Securities Act. (s) The financial statements, together with related schedules and notes forming part of the Registration Statement and the Prospectus (or, if the Prospectus is not yet in existence, the most recent Preliminary Prospectus)(and any amendment or supplement thereto), present fairly the consolidated financial position, results of operations and changes in financial position of the Company and its subsidiaries on the basis stated in the Registration Statement at the respective dates or for the respective periods to which they apply; such statements and 11 related schedules and notes have been prepared in accordance with generally accepted accounting principles consistently applied throughout the periods involved, except as disclosed therein; and the other financial and statistical information and data set forth in the Registration Statement and the Prospectus (or, if the Prospectus is not yet in existence, the most recent Preliminary Prospectus)(and any amendment or supplement thereto) is, to the Company's knowledge, in all material respects, accurately presented and prepared on a basis reasonably consistent with the books and records of the Company. (t) Neither the Company nor any Guarantor is an "investment company" or a company "controlled" by an "investment company" within the meaning of the Investment Company Act of 1940, as amended. (u) No holder of any security of the Company who has any right to require registration of shares of Common Stock or any other security of the Company has the right to have such securities included in the Registration Statement or such holder has validly and irrevocably waived such right. (v) Neither the Company nor any of its affiliates does business with the government of Cuba or with any person or affiliate located in Cuba within the meaning of Section 517.075, Florida Statutes (Chapter 92-198, Laws of Florida). (w) The Company has an authorized, issued and outstanding capitalization as set forth in the Prospectus and all of the outstanding shares of capital stock of the Company have been duly authorized and validly issued and are fully paid and nonassessable. (x) There are no outstanding subscriptions, rights, warrants, options, calls, convertible securities, commitments of sale or liens related to or entitling any person to purchase or otherwise to acquire any shares of the capital stock of, or other ownership interest in, the Company or any subsidiary thereof except as otherwise disclosed in the Registration Statement. (y) Except as disclosed in the Prospectus, there are no business relationships or related party transactions required to be disclosed therein by Item 404 of Regulation S-K of the Commission. (z) There is (i) no significant unfair labor practice complaint pending against the Company or any of its subsidiaries or, to the best knowledge of the Company, threatened against any of them, before the National Labor Relations Board or any state or local labor relations board, and no significant grievance or arbitration proceeding arising out of or under any collective bargaining agreement 12 is pending against the Company or any of its subsidiaries or, to the best knowledge of the Company, threatened against any of them, and (ii) no significant strike, labor dispute, slowdown or stoppage pending against the Company or any of its subsidiaries or, to the best knowledge of the Company, threatened against it or any of its subsidiaries except for such actions specified in clause (i) or (ii) above, which, singly or in the aggregate, could not reasonably be expected to have a material adverse effect (financial or otherwise) on the Company and its subsidiaries, taken as a whole. (aa) The Company and each of its subsidiaries maintains a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management's general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset accountability; (iii) access to assets is permitted only in accordance with management's general or specific authorization; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. (bb) All material tax returns required to be filed by the Company and each of its subsidiaries in any jurisdiction have been filed, other than those filings being contested in good faith, and all material taxes, including withholding taxes, penalties and interest, assessments, fees and other charges due pursuant to such returns or pursuant to any assessment received by the Company or any of its subsidiaries have been paid, other than those being contested in good faith and for which adequate reserves have been provided. (cc) The Company and its subsidiaries own or possess, or can acquire on reasonable terms, all material patents, patent applications, trademarks, service marks, trade names, licenses, copyrights and proprietary or other confidential information currently employed by them in connection with their respective businesses, and neither the Company nor any such subsidiary has received any notice of infringement of or conflict with asserted rights of any third party with respect to any of the foregoing which, singly or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would result in any material adverse change in the business prospects, financial condition or results of operations of the Company and its subsidiaries, taken as a whole, except as described in or contemplated by the Prospectus (or, if the Prospectus is not in existence, the most recent Preliminary Prospectus). 13 (dd) No subsidiary of the Company is currently prohibited, directly or indirectly, from paying any dividends to the Company, from making any other distribution on such subsidiary's capital stock, from repaying to the Company any loan or advances to such subsidiary from the Company or from transferring any of such subsidiary's property or assets to the Company or any other subsidiary of the Company except as described in or contemplated by the Prospectus (or, if the Prospectus is not in existence, the most recent Preliminary Prospectus). (ee) Immediately after each subsidiary of the Company has entered into the Guarantees to which it is a party, (a) the fair value of the assets of such subsidiary will exceed the debts and liabilities, subordinated, contingent or otherwise, of such subsidiary, (b) the present fair saleable value of the property of such subsidiary will be greater than the amount that will be required to pay the probable liabilities of such subsidiary on its debts and other liabilities, subordinated, contingent or otherwise, as such debts and other liabilities, subordinated, contingent or otherwise, as such debts and other liabilities become absolute and matured, (c) such subsidiary will be able to pay its debts and other liabilities, subordinated, contingent or otherwise, as such debts and other liabilities become absolute and matured, and (d) such subsidiary will not have an unreasonably small capital with which to conduct the business in which it is engaged as such business is conducted and is proposed to be conducted following the Closing Date. (ff) Neither the Company nor any of its subsidiaries intends, or intends to permit any of its subsidiaries, to incur debts beyond its ability to pay such debts as they mature, taking into account the timing and the amounts of cash to be received by the Company or any of its subsidiaries and the timing and the amounts of cash to be payable on or in respect of the Company's indebtedness or the indebtedness of each subsidiary. 7. Indemnification. (a) Each of the Company and its subsidiaries party hereto jointly and severally agrees to indemnify and hold harmless each Underwriter and each person, if any, who controls any Underwriter within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, from and against any and all losses, claims, damages, liabilities and judgments caused by any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or the Prospectus (as amended or supplemented if the Company shall have furnished any amendments or supplements thereto) or any preliminary prospectus, or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as such losses, claims, damages, 14 liabilities or judgments are caused by any such untrue statement or omission or alleged untrue statement or omission based upon information relating to any Underwriters furnished in writing to the Company by or on behalf of any Underwriter through you expressly for use therein; provided, however, that the foregoing indemnity agreement with respect to any preliminary prospectus shall not inure to the benefit of any Underwriter from whom the person asserting any such losses, claims, damages and liabilities and judgments purchased Securities, or any person controlling such Underwriter, if a copy of the Prospectus (as then amended or supplemented if the Company shall have furnished any amendments or supplements thereto) was not sent or given by or on behalf of such Underwriter to such person, if required by law so to have been delivered, at or prior to the written confirmation of the sale of the Securities to such person, and if the Prospectus (as so amended and supplemented) would have cured the defect giving rise to such loss, claim, damage, liability or judgment. (b) In case any action shall be brought against any Underwriter or any person controlling such Underwriter, based upon any preliminary prospectus, the Registration Statement or the Prospectus or any amendment or supplement thereto and with respect to which indemnity may be sought against the Company and the Company's subsidiaries party hereto, such Underwriter shall promptly notify the Company in writing and the Company shall assume the defense thereof, including the employment of counsel reasonably satisfactory to such indemnified party and payment of all fees and expenses. Any Underwriter or any such controlling person shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Underwriter or such controlling person unless (i) the employment of such counsel shall have been specifically authorized in writing by the Company, (ii) the Company shall have failed to assume the defense and employ counsel or (iii) the named parties to any such action (including any impleaded parties) include both such Underwriter or such controlling person and the Company and such Underwriter or such controlling person shall have been advised by such counsel that there may be one or more legal defenses available to it which are different from or additional to those available to the Company (in which case the Company shall not have the right to assume the defense of such action on behalf of such Underwriter or such controlling person, it being understood, however, that the Company shall not, in connection with any one such action or separate but substantially similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the fees and expenses of more than one separate firm of attorneys (in addition to any local counsel) for all such Underwriters and controlling persons, which firm shall be designated in writing by Donaldson, Lufkin & Jenrette Securities Corporation and that all such fees and expenses shall be reimbursed as they are incurred). The Company and the Company's subsidiaries party hereto shall not be liable for any settlement of any such action effected without the 15 Company's written consent, but if settled with the written consent of the Company, the Company and the Company's subsidiaries party hereto jointly and severally agree to indemnify and hold harmless any Underwriter and any such controlling person from and against any loss or liability by reason of such settlement. Notwithstanding the immediately preceding sentence, if in any case where the fees and expenses of counsel are at the expense of the indemnifying party and an indemnified party shall have requested the indemnifying party to reimburse the indemnified party for such fees and expenses of counsel as incurred, such indemnifying party agrees that it shall be liable for any settlement of any action effected without its written consent if (i) such settlement is entered into more than 20 business days after the receipt by such indemnifying party of the aforesaid request and (ii) such indemnifying party shall have failed to reimburse the indemnified party in accordance with such request for reimbursement prior to the date of such settlement. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened proceeding in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party, unless such settlement includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such proceeding. (c) Each Underwriter agrees, severally and not jointly, to indemnify and hold harmless the Company and the Company's subsidiaries party hereto, the Company's directors, its officers who sign the Registration Statement and any person controlling the Company or any of the Company's subsidiaries party hereto within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, to the same extent as the foregoing indemnity from the Company and such subsidiaries to each Underwriter, but only with reference to information relating to such Underwriter furnished in writing by or on behalf of such Underwriter expressly for use in the Registration Statement, the Prospectus or any Preliminary Prospectus, as amended or supplemented. In case any action shall be brought against the Company or any of the Company's subsidiaries party hereto, any of the Company's directors, any such officer or any person controlling the Company or any of the Company's subsidiaries party hereto based on the Registration Statement, the Prospectus or any preliminary prospectus and in respect of which indemnity may be sought against any Underwriter, the Underwriter shall have the rights and duties given to the Company and such subsidiaries (except that if the Company shall have assumed the defense thereof, such Underwriter shall not be required to do so, but may employ separate counsel therein and participate in the defense thereof but the fees and expenses of such counsel shall be at the expense of such Underwriter), and the Company and such subsidiaries, the Company's directors, any such officers and any person controlling the Company or such subsidiaries shall have 16 the rights and duties given to the Underwriter, by Section 7(b) hereof. (d) If the indemnification provided for in this Section 7 is unavailable to an indemnified party in respect of any losses, claims, damages, liabilities or judgments referred to herein, then each indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities and judgments (i) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the Underwriters on the other hand from the offering of the Securities and the related Guarantees or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company and the Underwriters in connection with the statements or omissions which resulted in such losses, claims, damages, liabilities or judgments, as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and the Underwriters on the other shall be deemed to be in the same proportion as the total net proceeds from the offering (before deducting expenses) received by the Company, and the total underwriting discounts and commissions received by the Underwriters, bear to the total price to the public of the Securities, in each case as set forth in the table on the cover page of the Prospectus. The relative fault of the Company on the one hand and the Underwriters on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the Company or the Underwriters and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company, the Company's subsidiaries party hereto and the Underwriters agree that it would not be just and equitable if contribution pursuant to this Section 7(d) were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by an indemnified party as a result of the losses, claims, damages, liabilities or judgments referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 7, no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Securities and the related Guarantees underwritten by it and distributed to the public were offered to the public exceeds the 17 amount of any damages which such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Underwriters' obligations to contribute pursuant to this Section 7(d) are several in proportion to the respective principal amount of Securities and related Guarantees purchased by each of the Underwriters hereunder and not joint. 8. Conditions of Underwriters' Obligations. The several obligations of the Underwriters to purchase the Securities under this Agreement are subject to the satisfaction of each of the following conditions: (a) All the representations and warranties of the Company contained in this Agreement shall be true and correct on the Closing Date with the same force and effect as if made on and as of the Closing Date. (b) The Prospectus shall have been filed with the Commission pursuant to Rule 424(b) under the Securities Act within the applicable time period prescribed for such filing under the Securities Act; and no stop order suspending the effectiveness of the Registration Statement shall have been issued and no proceedings for that purpose shall have been commenced or shall be pending before or contemplated by the Commission. (c) Subsequent to the execution and delivery of this Agreement and prior to the Closing Date, there shall not have been any downgrading, nor shall any notice have been given of any intended or potential downgrading in the rating accorded any of the Company's securities by any "nationally recognized statistical rating organization," as such term is defined for purposes of Rule 436(g) (2) under the Securities Act. (d) (i) Since the date of the latest balance sheet included in the Registration Statement and the Prospectus, there shall not have been any material adverse change, or any development involving a prospective material adverse change, in the business prospects, financial condition or results of operations of the Company and its subsidiaries taken as a whole, whether or not arising in the ordinary course of business, except as otherwise described in or contemplated by the Prospectus, (ii) since the date of the latest balance sheet included in the Registration Statement and the Prospectus there shall not have been any material change, or any development involving a prospective material adverse change, in the capital stock or in the long-term debt of the Company from that set forth in the Registration Statement and Prospectus, except as otherwise described in 18 or contemplated by the Prospectus, (iii) the Company and its subsidiaries shall have no liability or obligation, direct or contingent, which is material to the Company and its subsidiaries, taken as a whole, other than those reflected in the Registration Statement and the Prospectus and (iv) on the Closing Date you shall have received a certificate dated the Closing Date, signed by C. Richard Reese, in his capacity as Chairman of the Board and Chief Executive Officer, and by Eugene B. Doggett, in his capacity as Executive Vice President and Chief Financial Officer of the Company, confirming the matters set forth in paragraphs (a), (b), (c) and (d) of this Section 8. (e) You shall have received on the Closing Date an opinion (satisfactory to you and counsel for the Underwriters), dated the Closing Date, of Sullivan & Worcester LLP, counsel for the Company, to the effect that: (i) each of the Company and its subsidiaries listed on Exhibit 21 to the Registration Statement has been duly incorporated or formed, is validly existing as a corporation or limited liability company in good standing under the laws of its jurisdiction of incorporation or formation and has the corporate or limited liability company power and authority required to carry on its business as it is currently being conducted and to own, lease and operate its properties; (ii) each of the Company and its subsidiaries is duly qualified and is in good standing as a foreign corporation or limited liability company authorized to do business in each jurisdiction in which the nature of its business or its ownership or leasing of property requires such qualification, except where the failure to be so qualified would not have a material adverse effect on the Company and its subsidiaries, taken as a whole; (iii) all of the outstanding shares of capital stock of, or other ownership interests in, each of the Company's subsidiaries have been duly and validly authorized and issued and are fully paid and non-assessable, and except as set forth in the Prospectus are owned beneficially by the Company, free and clear of any perfected security interest, or, to the knowledge of such counsel, any other security interest, claim, lien, encumbrance or adverse interest of any nature; (iv) the Securities have been duly authorized by all necessary corporate action and, when executed and authenticated in accordance with the provisions of the Indenture and delivered to and paid for by the Underwriters in accordance with the terms of this 19 Agreement, will be entitled to the benefits of the Indenture and will be valid and binding obligations of the Company enforceable in accordance with their terms except as (A) the enforceability thereof may be limited by bankruptcy, insolvency, fraudulent conveyance or similar laws affecting creditors' rights generally and (B) rights of acceleration and the availability of equitable remedies may be limited by equitable principles of general applicability; (v) this Agreement has been duly authorized, executed and delivered by the Company and the Guarantors and is a valid and binding agreement of the Company and the Guarantors enforceable in accordance with its terms except (A) as rights to indemnity and contribution hereunder may be limited by applicable law, (B) enforceability thereof may be limited by bankruptcy, insolvency, fraudulent conveyance or similar laws affecting creditors' rights generally and (C) the availability of equitable remedies may be limited by equitable principles of general applicability; (vi) the Indenture has been duly qualified under the Trust Indenture Act and has been duly authorized, executed and delivered by the Company and the Guarantors and is a valid and binding agreement of the Company and the Guarantors, enforceable in accordance with its terms except as (A) the enforceability thereof may be limited by bankruptcy, insolvency, fraudulent conveyance or similar laws affecting creditors' rights generally and (B) rights of acceleration and the availability of equitable remedies may be limited by equitable principles of general applicability; (vii) the Registration Statement has become effective under the Securities Act, no stop order suspending its effectiveness has been issued and, to the knowledge of such counsel, no proceedings for that purpose are pending before or contemplated by the Commission; (viii) the statements under the captions "Management - Executive Compensation - Compensation Committee Interlocks and Insider Participation" in the fourth, sixth and seventh paragraphs thereunder, "Management-Stock Option Information," "Certain Transactions," "Description of the Notes," "Description of New Credit Facility" and "Underwriting" in the Prospectus, as amended or supplemented, and Items 14 and 15 of Part II of the Registration Statement, insofar as such statements constitute a summary of legal matters, documents or proceedings referred to therein, fairly present the information called for with 20 respect to such legal matters, documents and proceedings; (ix) to such counsel's knowledge, neither the Company nor any of its subsidiaries is in violation of its respective charter or by-laws or comparable organizational documents and, to such counsel's knowledge, neither the Company nor any of its subsidiaries is in default in the performance of any obligation, agreement or condition contained in the Credit Agreement between the Company and The Chase Manhattan Bank, N.A., as Agent, as amended as of ___________ __, 199_, the Note Purchase Agreement between the Company and Chrysler Capital Corporation, dated as of December 14, 1990, as amended, and the Subordinated Term Note between the Company and Schooner Capital Corporation dated February 11, 1991 except as such defaults would not, singly or in the aggregate, result in a material adverse change in the business prospects, financial condition or results of operations of the Company or any of its subsidiaries, taken as a whole; (x) the execution, delivery and performance of this Agreement, the Indenture and the Securities and compliance by the Company with all the provisions hereof and thereof and the consummation of the transactions contemplated hereby and thereby do not (A) require any consent, approval, authorization or other order of any court, regulatory body, administrative agency or other governmental body (except as such may be required under the securities or Blue Sky laws of the various states and except as have been obtained under the Securities Act and the Trust Indenture Act), and (B) conflict with or constitute a breach of any of the terms or provisions of, or a default under, the charter or by-laws or comparable organizational documents of the Company or any of its subsidiaries or any agreement, indenture or other instrument known to such counsel to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries or their respective properties is bound, or violate or conflict with any laws, administrative regulations or rulings or, to such counsel's knowledge, court decrees applicable to the Company or any of its subsidiaries or their respective properties; (xi) such counsel does not know (A) of any legal or governmental proceeding pending or threatened to which the Company or any of its subsidiaries is a party or to which any of their respective property is subject which is required to be described in the Registration Statement or the Prospectus and is not so described, or 21 (B) of any contract or other document which is required to be described in the Registration Statement or the Prospectus or is required to be filed as an exhibit to the Registration Statement which is not described or filed as required; (xii) to such counsel's knowledge, (A) neither the Company nor any of its subsidiaries is in violation of any federal or state law or regulation relating to the storage, handling or transportation of hazardous or toxic materials, (B) the Company and its subsidiaries have received all permits, licenses or other approvals required of them under applicable federal and state environmental laws and regulations to conduct their respective businesses as described in the Prospectus and (C) the Company and each of its subsidiaries is in compliance with all terms and conditions of any such permit, license or approval, except any such violation of law or regulation, failure to receive required permits, licenses or other approvals or failure to comply with the terms and conditions of such permits, licenses or approvals as would not, singly or in the aggregate, result in a material adverse change in the business prospects, financial condition or results of operations of the Company and its subsidiaries, taken as a whole; (xiii) neither the Company nor any Guarantor is an "investment company" or a company "controlled" by an "investment company" within the meaning of the Investment Company Act of 1940, as amended; (xiv) to such counsel's knowledge, no holder of any security of the Company has any right to require registration of shares of Common Stock or any other security of the Company in connection with the Registration Statement; (xv) each of the Guarantees has been duly authorized and, when executed, and when the Security upon which such Guarantee is noted shall have been authenticated in accordance with the provisions of the Indenture and delivered and paid for by the Underwriters in accordance with the terms of this Agreement, will be entitled to the benefits of the Indenture and will be a valid and binding agreement of such Guarantor enforceable in accordance with its terms except as (A) the enforceability thereof may be limited by bankruptcy, insolvency, fraudulent conveyance, voidable preference, moratorium or similar laws affecting creditors' rights generally and (B) rights of acceleration and the availability of equitable remedies may be limited by equitable principles of general applicability; 22 (xvi) the execution, delivery and performance of each of the Guarantees and compliance by each subsidiary of the Company which is a party to such Guarantee with all the provisions thereof and the consummation of the transactions contemplated thereby do not (A) require any consent, approval, authorization or other order of any court, regulatory body, administrative agency or other governmental body (except as such may be required under the securities or Blue Sky laws of the various states and except as have been obtained under the Securities Act and the Trust Indenture Act), and (B) conflict with or constitute a breach of any of the terms or provisions of, or a default under, the charter or by-laws or comparable organizational documents of the Company or any of its subsidiaries or any agreement, indenture or other instrument known to such counsel to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries or their respective properties is bound, or violate or conflict with any laws, administrative regulations or rulings or, to such counsel's knowledge, court decrees applicable to the Company or any of its subsidiaries or their respective properties. (xvii) (A) the Registration Statement (including any Registration Statement filed under 462(b) of the Securities Act, if any) and the Prospectus and any supplement or amendment thereto (except for financial statements as to which no opinion need be expressed) comply as to form in all material respects with the Securities Act and the Trust Indenture Act, and (B) such counsel believes that (except for financial statements, as aforesaid and except for that part of the Registration Statement that constitutes the Form T-1) the Registration Statement at the time it became effective and at the date of such opinion did not contain and does not contain any untrue statement of a material fact or omit and does not omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, and that the Prospectus, as amended or supplemented, if applicable (except for financial statements, as aforesaid), as of its date and at the date of such opinion, did not and does not contain any untrue statement of a material fact or omitted or omits to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. In giving such opinion with respect to the matters covered by clause (xvii) such counsel may state that their opinion and belief are based upon their participation in the preparation of the Registration Statement and Prospectus and 23 any amendments or supplements thereto and review and discussion of the contents thereof, but are without independent check or verification except as specified. In giving such opinion with respect to the matters covered by clauses (v), (vi), (xv) and (xvi) relating to Guarantees of Guarantors organized under the laws of the states of California, Florida, Maryland and Ohio, if any, such counsel may rely on the opinion of local counsel satisfactory to the Underwriters. (f) You shall have received on the Closing Date an opinion (satisfactory to you and counsel for the Underwriters), dated the Closing Date, of Garry B. Watzke, Esq., general counsel for the Company, as to the matters referred to in clauses (viii), (x)(B), (xi), (xii), (xiv), (xvi)(B) and (xvii)(B) of the foregoing paragraph (e) and as to the following additional matters: (i) to such counsel's knowledge, neither the Company nor any of its subsidiaries is in violation of its respective charter or by-laws or comparable organizational documents and, to such counsel's knowledge, neither the Company nor any of its subsidiaries is in default in the performance of any obligation, agreement or condition contained in any bond, debenture, note or other evidence of indebtedness or in any other agreement, indenture or instrument material to the conduct of the business of the Company and its subsidiaries, taken as a whole, to which the Company or any of its subsidiaries is a party or by which it or any of its subsidiaries or their respective properties are bound; (ii) all leases to which the Company or any of its subsidiaries is a party relating to real property in Massachusetts or California are valid and binding and no default has occurred or is continuing thereunder, which might result in any material adverse change in the business, prospects, financial condition or results of operations of the Company and its subsidiaries taken as a whole, and the Company and its subsidiaries enjoy peaceful and undisturbed possession under all such leases to which any of them is a party as lessee with such exceptions as do not materially interfere with the use made by the Company or such subsidiary; and (iii) to such counsel's knowledge, the Company and each of its subsidiaries has such permits, licenses, franchises and authorizations of governmental or regulatory authorities ("permits"), including, without limitation, under any applicable Environmental Laws, as are necessary to own, lease and operate its respective properties and to conduct its respective business in 24 the manner described in the Prospectus; to such counsel's knowledge without having conducted any independent investigation, the Company and each of its subsidiaries has fulfilled and performed all of its material obligations with respect to such permits and no event has occurred which allows, or after notice or lapse of time would allow, revocation or termination thereof or would result in any other material impairment of the rights of the holder of any such permit, except in each case as would not, singly or in the aggregate, have a material adverse effect (financial or otherwise) on the Company and its subsidiaries, taken as a whole and, except as described in the Prospectus, such permits contain no restrictions that materially interfere with the business or operations of the Company or any of its subsidiaries as currently conducted; In giving such opinion with respect to the matters covered by clause (xvii)(B) of the foregoing paragraph (e) such counsel may state that his opinion and belief are based upon his participation in the preparation of the Registration Statement and Prospectus and any amendments or supplements thereto and review and discussion of the contents thereof, but are without independent check or verification except as specified. (g) The opinions of Sullivan & Worcester LLP and Garry B. Watzke described in paragraphs (e) and (f) above, respectively, shall be rendered to you at the request of the Company and shall so state therein. (h) You shall have received on the Closing Date an opinion, dated the Closing Date, of Jones, Day, Reavis & Pogue, counsel for the Underwriters, as to the matters referred to in clauses (iv), (v), (vi), (viii) (but only with respect to the statements under the caption "Description of Securities" and "Underwriting") and (xvii) of the foregoing paragraph (e). In giving such opinion with respect to the matters covered by clause (xvii) such counsel may state that their opinion and belief are based upon their participation in the preparation of the Registration Statement and Prospectus and any amendments or supplements thereto and review and discussion of the contents thereof, but are without independent check or verification except as specified. (i) You shall have received a letter or letters on and as of the date of this Agreement (each, an "initial letter"), in form and substance satisfactory to you, from Arthur Andersen LLP, Wolpoff & Company, LLP, Morrison and Smith, Geo. S. Olive & Co. LLC, Robert F. Gayton, CPA, Perles, Roth, Jonas & Hartney, CPAs, PA and Rothstein Kass & Company, P.C., each independent public accountants, with 25 respect to the financial statements and certain financial information contained in the Registration Statement and the Prospectus and a letter or letters on and as of the Closing Date, in form and substance satisfactory to you, from Arthur Andersen LLP, Wolpoff & Company, LLP, Morrison and Smith, Geo. S. Olive & Co. LLC, Robert F. Gayton, CPA, Perles, Roth, Jonas & Hartney, CPAs, PA and Rothstein Kass & Company, P.C. confirming the information contained in the initial letter or letters provided by such accountants. (j) The Company shall not have failed at or prior to the Closing Date to perform or comply with any of the agreements herein contained and required to be performed or complied with by the Company at or prior to the Closing Date. 9. Termination. This Agreement may be terminated at any time prior to the Closing Date by you by written notice to the Company if any of the following has occurred: (i) since the respective dates as of which information is given in the Registration Statement and the Prospectus, any material adverse change or development involving a prospective material adverse change in the business prospects, financial condition or results of operations of the Company or any of its subsidiaries, taken as a whole, whether or not arising in the ordinary course of business, which would, in your judgment, make it impracticable to market the Securities and the related Guarantees on the terms and in the manner contemplated in the Prospectus, (ii) any outbreak or escalation of hostilities or other national or international calamity or crisis involving the United States or change in economic conditions or in the financial markets of the United States that, in your judgment, is material and adverse and would, in your judgment, make it impracticable to market the Securities and the related Guarantees on the terms and in the manner contemplated in the Prospectus, (iii) the suspension or material limitation of trading in securities on the New York Stock Exchange, the American Stock Exchange or the Nasdaq National Market System or limitation on prices for securities on any such exchange or National Market System, (iv) the enactment, publication, decree or other promulgation of any federal or state statute, regulation, rule or order of any court or other governmental authority which in your opinion materially and adversely affects, or will materially and adversely affect, the business or operations of the Company or any subsidiary, or (v) the declaration of a banking moratorium by either federal or New York State authorities. If on the Closing Date any one or more of the Underwriters shall fail or refuse to purchase the Securities which it or they have agreed to purchase hereunder on such date and the aggregate principal amount of Securities and related Guarantees which such defaulting Underwriter or Underwriters, as the case may be, agreed but failed or refused to purchase is not more than one-tenth of the total principal amount of Securities 26 and related Guarantees to be purchased on such date by all Underwriters, each non-defaulting Underwriter shall be obligated severally, in the proportion which the principal amount of Securities and related Guarantees set forth opposite its name in Schedule I bears to the total principal amount of Securities and related Guarantees which all the non-defaulting Underwriters, as the case may be, have agreed to purchase, or in such other proportion as you may specify, to purchase the Securities and the related Guarantees which such defaulting Underwriter or Underwriters, as the case may be, agreed but failed or refused to purchase on such date; provided that in no event shall the principal amount of Securities and related Guarantees which any Underwriter has agreed to purchase pursuant to Section 2 hereof be increased pursuant to this Section 9 by an amount in excess of one-ninth of such principal amount of Securities and related Guarantees without the written consent of such Underwriter. If on the Closing Date any Underwriter or Underwriters shall fail or refuse to purchase Securities and related Guarantees and the aggregate principal amount of Securities and related Guarantees with respect to which such default occurs is more than one-tenth of the aggregate principal amount of Securities and related Guarantees to be purchased on such date by all Underwriters and arrangements satisfactory to you and the Company for purchase of such Securities and related Guarantees are not made within 48 hours after such default, this Agreement will terminate without liability on the part of any non-defaulting Underwriter and the Company. In any such case which does not result in termination of this Agreement, either you or the Company shall have the right to postpone the Closing Date, but in no event for longer than seven days, in order that the required changes, if any, in the Registration Statement and the Prospectus or any other documents or arrangements may be effected. Any action taken under this paragraph shall not relieve any defaulting Underwriter from liability in respect of any default of any such Underwriter under this Agreement. 10. Miscellaneous. Notices given pursuant to any provision of this Agreement shall be addressed as follows: (a) if to the Company, to Iron Mountain Incorporated, 745 Atlantic Avenue, Boston, Massachusetts 02111, and (b) if to any Underwriter or to you, to you c/o Donaldson, Lufkin & Jenrette Securities Corporation, 277 Park Avenue, New York, New York 10172, Attention: Syndicate Department, or in any case to such other address as the person to be notified may have requested in writing. The respective indemnities, contribution agreements, representations, warranties and other statements of the Company, its officers and directors and of the several Underwriters set forth in or made pursuant to this Agreement shall remain operative and in full force and effect, and will survive delivery of and payment for the Securities and the related Guarantees, regardless of (i) any investigation, or statement as to the results thereof, made by or on behalf of any Underwriter or by or 27 on behalf of the Company, the officers or directors of the Company or any controlling person of the Company, (ii) acceptance of the Securities and the related Guarantees and payment for them hereunder and (iii) termination of this Agreement. If this Agreement shall be terminated by the Underwriters because of any failure or refusal on the part of the Company to comply with the terms or to fulfill any of the conditions of this Agreement, the Company agrees to reimburse the several Underwriters for all out-of-pocket expenses (including the fees and disbursements of counsel) reasonably incurred by them. Except as otherwise provided, this Agreement has been and is made solely for the benefit of and shall be binding upon the Company, the Underwriters, any controlling persons referred to herein and their respective successors and assigns, all as and to the extent provided in this Agreement, and no other person shall acquire or have any right under or by virtue of this Agreement. The term "successors and assigns" shall not include a purchaser of any of the Securities from any of the several Underwriters merely because of such purchase. This Agreement shall be governed and construed in accordance with the laws of the State of New York. This Agreement may be signed in various counterparts which together shall constitute one and the same instrument. 28 Please confirm that the foregoing correctly sets forth the agreement between the Company and the several Underwriters. Very truly yours, IRON MOUNTAIN INCORPORATED By: _________________________________ Title: IRON MOUNTAIN RECORDS MANAGEMENT, INC. METRO BUSINESS ARCHIVES, INC. CRITERION ATLANTIC PROPERTY, INC. CRITERION PROPERTY, INC. HOLLYWOOD PROPERTY, INC. IM SAN DIEGO, INC. IRON MOUNTAIN INFORMATION PARTNERS, INC. IRON MOUNTAIN DATA PROTECTION SERVICES, INC. IRON MOUNTAIN RECORDS MANAGEMENT OF MARYLAND, INC. IRON MOUNTAIN RECORDS MANAGEMENT OF OHIO, INC. IRON MOUNTAIN WILMINGTON, INC. DATA STORAGE SYSTEMS, INC. IRON MOUNTAIN RECORDS MANAGEMENT OF MISSOURI LLC IRON MOUNTAIN RECORDS MANAGEMENT OF BOSTON, INC. DATA ARCHIVE SERVICES, INC. DATA ARCHIVE SERVICES OF MIAMI, INC. By______________________________________ C. Richard Reese Chairman of the Board of Directors and Chief Executive Officer 29 DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION BEAR, STEARNS & CO. INC. PRUDENTIAL SECURITIES INCORPORATED Acting severally on behalf of themselves By DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION By________________________ 30 SCHEDULE I Principal Amount of Securities Underwriter to be Purchased ----------- --------------- Donaldson, Lufkin & Jenrette $ Securities Corporation Bear, Stearns & Co. Inc. Prudential Securities Incorporated ------------ Total $150,000,000 31 EX-3.1C 3 CERT OF INC CRITERION ATLANTIC PROPERTY EXHIBIT 3.1C Certificate of Incorporation of CRITERION ATLANTIC PROPERTY, INC. FIRST: The name of the corporation is Criterion Atlantic Property, Inc. SECOND: The address of its registered office in the State of Delaware is 32 Loockerman Square, Suite L-100 in the City of Dover, County of Kent. The name of its registered agent at such address is The Prentice-Hall Corporation System, Inc. THIRD: The nature of the business or purposes to be conducted or promoted is to carry on and to engage in any lawful business, act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware; and to possess and exercise all the powers and privileges granted by the General Corporation Law of the State of Delaware or by any other law of the State of Delaware or by this Certificate of Incorporation together with any powers incidental thereto. FOURTH. The total number of shares of stock which the corporation shall have authority to issue is one thousand (1,000) shares of Common Stock, $.01 par value (the "Common Stock"). The following is a statement of the designations and the powers, privileges and rights, and the qualifications, limitations or restrictions thereof in respect of the Common Stock of the corporation. 4.1 COMMON STOCK. 4.1.1 Voting. The holders of shares of Common Stock are entitled to one vote for each share held at all meetings of stockholders (and written actions in lieu of meetings). There shall be no cumulative voting. 4.1.2 Dividends. Dividends may be declared and paid on the Common Stock from funds lawfully available therefor when and as determined by the Board of Directors. 4.1.3 Liquidation. Upon the dissolution or liquidation of the corporation, whether voluntary or involuntary, holders of Common Stock will be entitled to receive the net assets of the corporation available for distribution to its stockholders. FIFTH: The name and mailing address of the incorporator are as follows: NAME MAILING ADDRESS Bryan G. Tyson Sullivan & Worcester One Post Office Square Boston, Massachusetts 02109 SIXTH: The name and mailing address of the persons who are to serve as directors until the first annual meeting of stockholders, or until their successors are elected and qualify, are: NAME MAILING ADDRESS C. Richard Reese Schooner Capital Corporation 99 Bedford Street Boston, Massachusetts 02111 Eugene B. Doggett Schooner Capital Corporation 99 Bedford Street Boston, Massachusetts 02111 Jas. Murray Howe Sullivan & Worcester One Post Office Square Boston, Massachusetts 02109 SEVENTH: The corporation is to have perpetual existence. EIGHTH: The stockholders of the corporation shall not be personally liable for the payment of the corporation's debts to any extent whatever. -2- NINTH: Whenever a compromise or arrangement is proposed between this corporation and its creditors or any class of them and/or between this corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of this corporation or of any creditor or stockholder thereof or on the application of any receiver or receivers appointed for this corporation under the provisions of S291 of Title 8 of the Delaware Code or on the application of trustees in dissolution or of any receiver or receivers appointed for this corporation under the provisions of S279 of Title 8 of the Delaware Code order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of this corporation as consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of this corporation, as the case may be, and also on this corporation. TENTH: No director shall be personally liable to the corporation or any stockholder for monetary damages for breach of fiduciary duty as a director, except, in addition to any and all other requirements for such liability, (i) for any breach of such director's duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) to the extent -3- provided under Section 174 of Title 8 of the Delaware Code (relating to the General Corporation Law of the State of Delaware) or any amendment thereto or successor provision thereto, or (iv) for any transaction for which such director derived an improper personal benefit. Neither the amendment nor repeal of this Article TENTH, nor the adoption of any provision of this Certificate of Incorporation inconsistent with this Article TENTH, shall eliminate or reduce the effect of this Article TENTH in respect of any matter occurring, or any cause of action, suit or claim that, but for this Article TENTH, would accrue or arise, prior to such amendment, repeal, or adoption of an inconsistent provision. ELEVENTH: The Board of Directors shall have the power to adopt, amend or repeal the bylaws of the corporation. TWELFTH: The corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation. I, THE UNDERSIGNED, being the incorporator hereinbefore named, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware, do make this Certificate hereby declaring and certifying that this is my act and deed and the facts herein stated are true, and accordingly have hereunto set my hand this fifth day of November, 1990. /s/ Bryan G. Tyson --------------------------- Bryan G. Tyson -4- EX-3.1D 4 CERT OF INC CRITERION PROPERTY INC. EXHIBIT 3.1D Certificate of Incorporation of CRITERION PROPERTY, INC. FIRST: The name of the corporation is Criterion Property, Inc. SECOND: The address of its registered office in the State of Delaware is No. 229 South State Street in the City of Dover, County of Kent. The name of its registered agent at such address is The Prentice-Hall Corporation System, Inc. THIRD: The nature of the business or purposes to be conducted or promoted is to carry on and to engage in any lawful business, act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware; and to possess and exercise all the powers and privileges granted by the General Corporation Law of the State of Delaware or by any other law of the State of Delaware or by this Certificate of Incorporation together with any powers incidental thereto. FOURTH: The total number of shares of all classes of stock which the corporation shall have authority to issue is 1,000 shares of Common Stock, $.01 par value (the "Common Stock"). The following is a statement of the designations and the powers, privileges and rights, and the qualifications, limitations or restrictions thereof in respect of the Common Stock of the corporation. 4.1 Voting. The holders of shares of Common Stock are entitled to one vote for each share held at all meetings of stockholders (and written actions in lieu of meetings). There shall be no cumulative voting. 4.2 Dividends. Dividends may be declared and paid on the Common Stock from funds lawfully available therefor when and as determined by the Board of Directors. -1- 4.3 Liquidation. Upon the dissolution or liquidation of the corporation, whether voluntary or involuntary, holders of Common Stock will be entitled to receive the net assets of the corporation available for distribution to its stockholders. FIFTH: The name and mailing address of the incorporator are NAME MAILING ADDRESS Bryan G. Tyson Sullivan & Worcester One Post Office Square Boston, Massachusetts 02109 SIXTH: The names and mailing addresses of the persons who are to serve as directors until the first annual meeting of stockholders, or until their successors are elected and qualify, are: NAME MAILING ADDRESS C. Richard Reese Schooner Capital Corporation 99 Bedford Street Boston, Massachusetts 02111 Eugene B. Doggett Schooner Capital Corporation 99 Bedford Street Boston, Massachusetts 02111 Jas. Murray Howe Sullivan & Worcester One Post Office Square Boston, Massachusetts 02109 SEVENTH: The corporation is to have perpetual existence. EIGHTH: The stockholders of the corporation shall not be personally liable for the payment of the corporation's debts to any extent whatever. NINTH: The following additional provisions are inserted for the management of the business and the conduct of the affairs of the corporation. -2- 9.1 Except as otherwise provided in the Certificate of Incorporation or by the By-Laws of the corporation as from time to time amended, the business and affairs of the corporation shall be managed by its Board of Directors, and, without limitation, the Board of Directors of the corporation is hereby specifically authorized and empowered from time to time in its discretion: (a) to make, alter, amend and repeal the By-Laws of the corporation; and (b) to determine for any purpose and in any manner not inconsistent with the other provisions of this Certificate of Incorporation the amount of the gross assets, of the liabilities, of the net assets or of the net profits of the corporation as the same exist or shall have existed at any time or for any period or periods, and to create, increase, abolish or reduce any reserve or reserves for accrued, accruing or contingent liabilities or expenses, including taxes and other charges. 9.2 The Board of Directors in its discretion may submit any contract, transaction or act for approval or ratification at any annual meeting of the stockholders or at any meeting of the stockholders called for the purpose of considering any such contract, transaction or act, and any contract, transaction or act that shall be approved or be ratified by the vote of the holders of a majority of the stock of the corporation which is represented in person or by proxy at such meeting and entitled to vote thereat (provided that a lawful quorum of stockholders be there represented in person or by proxy) shall be as valid and as binding upon the corporation and upon all of the stockholders of the corporation as though it had been approved or ratified by every stockholder of the corporation. 9.3 Meetings of the stockholders may be held without the State of Delaware, if the By-Laws so provide. The books of the corporation may be kept (subject to any statutory provision) outside the State of Delaware at such place or places as may be from time to time -3- designated by the Board of Directors or in the By-Laws of the corporation. Elections of directors need not be by ballot unless the By-Laws shall otherwise provide. 9.4 The corporation shall have power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, by reason of the fact that such person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, trustee, employee or agent of another corporation, partnership, joint venture, trust or other entity to the fullest extent permitted by law or any agreement, vote of stockholders or directors or otherwise, or by any By-Law of this corporation, but the adoption of any such By-Law shall not be deemed to be exclusive of any other rights to indemnification any such person may be entitled to under any law, agreement, vote of stockholders or directors or otherwise. TENTH: Whenever a compromise or arrangement is proposed between the corporation and its creditors or any class of them and/or between this corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of this corporation or of any creditor or stockholder thereof or on the application of any receiver or receivers appointed for this corporation under the provisions of section 291 of Title 8 of the Delaware Code or on the application of trustees in dissolution or of any receiver or receivers appointed for this corporation under the provisions of section 279 of Title 8 of the Delaware Code, order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this -4- corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of this corporation as consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of this corporation, as the case may be, and also on this corporation. ELEVENTH: No director shall be personally liable to the corporation or any stockholder for monetary damages for breach of fiduciary duty as a director, except, in addition to any and all other requirements for such liability, (i) for any breach of such director's duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) to the extent provided under Section 174 of Title 8 of the Delaware Code (relating to the General Corporation Law of the State of Delaware) or any amendment thereto or successor provision thereto, or (iv) for any transaction for which such director derived an improper personal benefit. Neither the amendment nor repeal of this Article ELEVENTH, nor the adoption of any provision of this certificate of incorporation inconsistent with this Article ELEVENTH, shall eliminate or reduce the effect of this Article ELEVENTH in respect of any matter occurring, or any cause of action, suit or claim that, but for this Article ELEVENTH, would accrue or arise, prior to such amendment, repeal, or adoption of an inconsistent provision. TWELFTH: The corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation. -5- I, THE UNDERSIGNED, being the incorporator hereinbefore named, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware, do make this Certificate hereby declaring and certifying that this is my act and deed and the facts herein stated are true, and accordingly have hereunto set my hand this fourth day of November, 1988. /s/ Bryan G. Tyson ------------------ Bryan G. Tyson -6- EX-3.1E 5 ARTICLES OF INC. HOLLYWOOD PROPERTY INC. EXHIBIT 3.1E ARTICLES OF INCORPORATION OF HOLLYWOOD PROPERTY, INC. ARTICLE I The name of this corporation is Hollywood Property, Inc. (the "Corporation"). ARTICLE II The purpose of this Corporation is to engage in any lawful act or activity for which a corporation may be organized under the General Corporation Law of California other than the banking business, the trust company business or the practice of a profession permitted to be incorporated by the California Corporations Code. ARTICLE III The initial agent for service of process shall be Prentice-Hall Corporation System, Inc. ARTICLE IV This Corporation is authorized to issue one class of shares. The total number of shares which this Corporation is authorized to issue is 1,000, par value $.01. ARTICLE V The liability of the directors of the Corporation for monetary damages shall be eliminated to the fullest extent permissible under California law. ARTICLE VI The Corporation is authorized to provide indemnification of agents, as that term is defined in Section 317 of the California General Corporation Law, in excess of that expressly permitted by said Section 317 for those agents of the Corporation for breach of duty to the Corporation and its shareholders, under any bylaw, agreement, vote of shareholders or disinterested directors or otherwise, to the fullest extent such indemnification may be authorized hereby, subject to the limits on such excess indemnification set forth in Section 204 of the California General Corporation Law. The Corporation is further authorized to provide insurance for agents as set forth in Section 317 of the California Corporations Code, provided that, in cases where the corporation owns all or a portion of the shares of the company issuing the insurance policy, the company and/or the policy must meet one of the two sets of conditions set forth in Section 317, as amended. Any repeal or modification of the foregoing provisions of this Article VI by the shareholders of this Corporation shall not adversely affect any right or protection of an agent of this Corporation existing at the time of such repeal or modification. Dated: July 17, 1990 /s/ Garry B. Watzke ------------------- Garry B. Watzke Incorporator -2- EX-3.1F 6 CERT. OF INCORPORATION IM SAN DIEGO, INC. EXHIBIT 3.1F Certificate of Incorporation of IM San Diego, Inc. FIRST: The name of the corporation is IM San Diego, Inc. SECOND: The registered office of the Corporation in the State of Delaware is located at 32 Loockerman Square, Suite L-100, Dover, Kent County, Delaware 19901; and the name of its registered agent at such address is The Prentice-Hall Corporation System, Inc. THIRD: The purpose of the Corporation is to engage, anywhere in the world, in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware; and to possess and exercise all powers and privileges granted by the General Corporation Law of Delaware. FOURTH: The total number of shares of capital stock which the Corporation is authorized to issue is 1,000 (one thousand) shares, all of which shall be shares of Common Stock of the par value of $1.00 per share. FIFTH: The name and mailing address of the incorporator is as follows: Name Mailing Address Garry B. Watzke 745 Atlantic Avenue, Boston, MA 02111 SIXTH: The name and mailing address of the person who is to serve as sole director until the first meeting of stockholders, or until his successor is elected and qualified, whichever first occurs, is as follows: C. Richard Reese 745 Atlantic Avenue, Boston, MA 02111 SEVENTH: For the management of the business and for the conduct of the affairs of the Corporation, and in further definition, limitation and regulation of the powers of its directors and stockholders, it is further provided: 1. The number of directors of the Corporation shall be as prescribed in the By-laws of the Corporation but such number may from time to time be increased or decreased in such manner as may be prescribed by the By-laws. In no event shall the number of Directors be less than the minimum number prescribed by law. 2. In furtherance and not in limitation of the powers conferred by the laws of the State of Delaware, the Board of Directors is expressly authorized and empowered: -2- (a) Subject to the applicable provisions of the By-laws then in effect, to determine, from time to time, whether and to what extent and at what times and places and under what conditions and regulations the accounts and books of the Corporation, or any of them, shall be open to the inspection of the stockholders, and no stockholder shall have any right to inspect any account or document of the Corporation, except as conferred by the laws of the State of Delaware, unless and until authorized so to do by resolution of the Board of Directors or of the stockholders of the Corporation. (b) Without the assent or vote of the stockholders to authorize and issue obligations of the Corporation, secured or unsecured, to include therein such provisions as to redeemability, convertibility or otherwise, as the Board of Directors, in its sole discretion, may determine, and to authorize the mortgaging or pledging, as security therefor, of any property of the Corporation, real or personal, including after-acquired property. (c) To establish a bonus, profit-sharing or other types of incentive or compensation plans for the employees (including officers and Directors) of the Corporation and to fix the amount of profits to be distributed or shared and to determine the persons to participate in any such plans and the amounts their respective participants. (d) To make, alter, amend or repeal the By-laws of the Corporation. (e) To determine for any purpose and in any manner not inconsistent with the other provisions of this Certificate of Incorporation the amount of the gross assets, of the liabilities, of the net assets or of the net profits of the Corporation as the same exist or shall have existed at any time or for any period or periods, and to create, increase, abolish or reduce any reserve or reserves for accrued, accruing or contingent liabilities or expenses, including taxes and other charges. In addition to the powers and authorities hereinbefore or by statute expressly conferred upon it, the Board of Directors may exercise all such powers and do all such acts and things as may be exercised or done by the Corporation, subject, nevertheless, to the provisions of the laws of the State of Delaware, of the Certificate of Incorporation and of the By-laws of the Corporation. 3. Any Director or any officer elected or appointed by the stockholders or by the Board of Directors may be removed at any time in such manner as shall be provided in the By-laws of the Corporation. 4. In the absence of fraud, no contract or other transaction between the Corporation and any other corporation, and no act of the Corporation, shall in any way be affected or invalidated by the fact that any of the Directors of the Corporation are pecuniarily or otherwise interested in, or are directors or officers of, such other corporation and, in the absence of fraud, any Director may be a member, may be a party to, or may be -3- pecuniarily or otherwise interested in, any contract or transaction of the Corporation; provided, in any case, that the fact that he or such firm is so interested shall be disclosed or shall have been known to the Board of Directors or a majority thereof; and any Director of the Corporation who is also a director or officer of any such other corporation, or who is also interested, may be counted in determining the existence of a quorum at any meeting of the Board of Directors of the Corporation which shall authorize any such Contract, act or transaction and may vote thereat to authorize any such contract, act or transaction, with like force and effect as if he were not such director or officer of such corporation, or not so interested. 5. Any contract, act or transaction of the Corporation or of the Directors may be ratified by a vote of a majority of the shares having voting powers at any meeting of stockholders, or at any special meeting called for such purpose, and such ratification shall, so far as permitted by law and by this Certificate of Incorporation, be as valid and as binding as though ratified by every stockholder of the Corporation. 6. No director of the Corporation shall be liable to any person on account of any action undertaken by him as such director in reliance in good faith upon the existence of any fact or circumstance reported or certified to the Board of Directors by any officer of the Corporation or by any independent auditor, engineer, or consultant retained or employed as such by the Board of Directors. 7. Meetings of the stockholders may be held without the State of Delaware, if the Bylaws so provide. The books of the Corporation may be kept (subject to any statutory provision) outside the State of Delaware at such place or places as may be from time to time designated by the Board of Directors or in the By-laws of the Corporation. Elections of directors need not be by ballot unless the By-laws shall otherwise provide. EIGHTH: Whenever a compromise or arrangement is proposed between the Corporation and its creditors or any class of them and/or between the Corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of the Corporation or of any creditor or stockholder thereof or on the application of any receiver or receivers appointed for the Corporation under the provisions of Section 291 of Title 8 of the Delaware Code or on the application of trustees in dissolution or of any receiver or receivers appointed for the Corporation under the provisions of Section 279 of Title 8 of the Delaware Code, order a meeting of the creditors or class of creditors, and/or of all the stockholders or class of stockholders, of the Corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of the Corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of the Corporation as consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of the creditors, and/or on all the stockholders or class of stockholders, of the Corporation, as the case may be, and also on the Corporation. -4- NINTH: No director shall be personally liable to the Corporation or any stockholder for monetary damages for breach of fiduciary duty as a director, except, in addition to any and all other requirements for such liability, (i) for any breach of such director's duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) to the extent provided under Section 174 of Title 8 of the Delaware Code (relating to the General Corporation Law of the State of Delaware ) or any amendment thereto or successor provision thereto, or (iv) for any transaction for which such director derived an improper personal benefit. Neither the amendment nor repeal of this Article NINTH, nor the adoption of any provision of this Certificate of Incorporation inconsistent with the Article NINTH, shall eliminate or reduce the effect of this Article NINTH in respect of any matter occurring, or any cause of action, suit or claim that, but for this Article NINTH, would accrue or arise prior to such amendment, repeal, or adoption of an inconsistent provision. TENTH: The stockholders of the Corporation shall not be personally liable for the payment of the Corporation's debts. ELEVENTH: The Corporation shall indemnify, defend and hold harmless any person who was or is a party, or is threatened to be made a party, to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative, investigative or other, including appeals, by reason of the fact that he or she is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, trustee, officer, employer or agent of any corporation, partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, to the fullest extent authorized by Section 145 of the Delaware General Corporation Law, as amended from time to time, against all expenses, liabilities and losses (including attorneys' fees, judgment, fines, ERISA excise taxes and penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by such person in connection therewith; provided, however, that, except with respect to proceedings seeking to enforce the rights to indemnification granted herein, the Corporation shall indemnify any such person seeking indemnification in connection with a proceeding (or part thereof) initiated by such person only if the proceeding (or part thereof) was authorized by the Board of Directors of the Corporation. Without limiting the generality or the effect of the foregoing, the Corporation may enter into one or more agreements with any person which provide for indemnification greater or different than that provided in this Article ELEVENTH. Any repeal or modification of the provisions of this Article ELEVENTH, or the adoption of any provision inconsistent herewith, shall not adversely affect any right or protection existing hereunder immediately prior to such repeal, modification or adoption of an inconsistent provision. Notwithstanding the foregoing, all indemnification provided for in this Article ELEVENTH shall not be deemed exclusive of any other rights to which those entitled to receive indemnification or reimbursement hereunder may be entitled under any By-law of the Corporation, agreement, vote of stockholders or disinterested directors or otherwise. TWELFTH: From time to time any of the provisions of this Certificate of Incorporation may be amended, altered or repealed, and other provisions authorized by the laws of the State of Delaware at the time in force may be added or inserted in the manner and at the time prescribed by said laws, and all rights at any time conferred upon the stockholders of -5- the Corporation by this Certificate of Incorporation are granted subject to the provisions of this Article TWELFTH. IN WITNESS WHEREOF, I have hereunto set my hand and seal this 23rd day of September, 1993. /s/ Garry B. Watzke ------------------- Garry B. Watzke Sole Incorporator EX-3.1G 7 CERT. OF INC. IRON MOUNTAIN INFO PARTNERS EXHIBIT 3.1G Certificate of Incorporation of Iron Mountain Information Partners, Inc. FIRST: The name of the corporation is Iron Mountain Information Partners, Inc. SECOND: The registered office of the Corporation in the Sate of Delaware is located at 32 Loockerman Square, Suite L-100, Dover, Kent County, Delaware 19904; and the name of its registered agent at such address is The Prentice-Hall Corporation System, Inc. THIRD: The purpose of the Corporation is to engage, anywhere in the world, in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware; and to possess and exercise all powers and privileges granted by the General Corporation Law of Delaware. FOURTH: The total number of Shares of capital stock which the Corporation is authorized to issue is 1,000 (one thousand) shares, all of which shall be shares of Common Stock of the par value of $1.00 per share. FIFTH: The name and mailing address of the incorporator are as follow: NAME MAILING ADDRESS Garry B. Watzke 745 Atlantic Avenue, Boston, MA 02111 SIXTH: The name and mailing address of the person who is to serve as sole director until the first meeting of stockholders, or until his successor is elected and qualified, whichever first occurs, is as follows: C. Richard Reese 745 Atlantic Avenue, Boston, MA 02111 SEVENTH: For the management of the business and for the conduct of the affairs of the Corporation, and in further definition, limitation and regulation of the powers of its directors and stockholders, it is further provided: 1. The number of directors of the Corporation shall be as prescribed in the By-laws of the Corporation but such number may from time to time be increased or decreased in such manner as may be prescribed by the By-laws. In not event shall the number of Directors be less than the minimum number prescribed by law. 2. In furtherance and not in limitation of the powers conferred by the laws of the State of Delaware, the Board of Directors is expressly authorized and empowered: (a) Subject to the applicable provisions of the By-laws then in effect, to determine, from time to time, whether and to what extent and at what times and places and under what conditions and regulations the accounts and books of the -1- Corporation, or any of them, shall be open to the inspection of the stockholders, and no stockholder shall have any right to inspect any account or document of the Corporation, except as conferred by the laws of the State of Delaware, unless and until authorized so to do by resolution of the Board of Directors or of the stockholders of the Corporation. (b) Without the assent or vote of the stockholders to authorize and issue obligations of the Corporation, secured or unsecured, to include therein such provisions as to redeemability, convertibility or otherwise, as the Board of Directors, in its sole discretion, may determine, and to authorize the mortgaging or pledging, as security therefor, of any property of the Corporation, real or personal, including after-acquired property. (c) To establish a bonus, profit-sharing or other types of incentive or compensation plans for the employees (including officers and Directors) of the corporation and to fix the amount of profits to be distributed or shared and to determine the persons to participate in any such plans and the amounts their respective participants. (d) To make, alter, amend or repeal the By-laws of the Corporation. (e) To determine for any purpose and in any manner not inconsistent with the other provisions of this Certificate of Incorporation the amount of the gross assets, of the liabilities, of the net assets or of the net profits of the Corporation as the same exist or shall have existed at any time or for any period or periods, and to create, increase, abolish or reduce any reserve or reserves for accrued, accruing or contingent liabilities or expenses, including taxes and other charges. In addition to the powers and authorities hereinbefore or by statue expressly conferred upon it, the Board of Directors may exercise all such powers and do all such acts and things as may be exercised or done by the Corporation, subject, nevertheless, tot he provisions of the laws of the State of Delaware, of the Certificate of Incorporation and of the By-laws of the Corporation. 3. Any Director or any officer elected or appointed by the stockholders or by the Board of Directors may be removed at any time in such manner as shall be provided in the By-laws of the Corporation. 4. In the absence of fraud, no contract or other transaction between the Corporation and any other corporation, and no act of the Corporation, shall in any way be affected or invalidated by the fact that any of the Directors of the Corporation are pecuniarily or otherwise interested in, or are directors or officers of, such other corporation and, in the absence of fraud, any Director may be a member, may be a party to, or may be pecuniarily or otherwise interested in, any contract or transaction of the Corporation; provided, in any case, that the fact that he or such firm is so interested shall be disclosed or shall have been known to the Board of Directors or a majority thereof; and any Director of the Corporation who is also a director or officer of any such -2- other corporation, or who is also interested, may be counted in determining the existence of a quorum at any meeting of the Board of Directors of the Corporation which shall authorize any such contract, act or transaction and may vote thereat to authorize any such contract, act or transaction, with like force and effect as if he were not such director or office of such corporation, or not so interested. 5. Any contract, act or transaction of the Corporation or of the Directors may be ratified by a vote of a majority of the shares having voting powers at any meeting of stockholders, or at any special meeting called for such purpose, and such ratification shall, so far as permitted by law and by this Certificate of Incorporation, be as valid and as binding as though ratified by every stockholder of the Corporation. 6. No Director of the Corporation shall be liable to any person on account of any action undertaken by him as such director in reliance in good faith upon the existence of any fact or circumstance reported or certified to the Board of Directors by any officer of the Corporation or by any independent auditor, engineer, or consultant retained or employed as such by the Board of Directors. 7. Meetings of the stockholders may be held without the State of Delaware, if the By- laws so provide. The books of the Corporation may be kept (subject to any statutory provision) outside the State of Delaware at such place or places as may be from time to time designed by the Board of Directors or in the By-laws of the Corporation. Elections of directors need not be by ballot unless the By-laws shall otherwise provide. EIGHTH: Whenever a compromise or arrangement is proposed between the Corporation and its creditors or any class of them and/or between the Corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of the Corporation or of any creditor or stockholder thereof or on the application of any receiver or receivers appointed for the Corporation under the provisions of Section 291 of Title 8 of the Delaware Code or on the application of trustees in dissolution or of any receiver or receivers appointed for the Corporation under the provisions of Section 279 of Title 8 of the Delaware Code, order a meeting of the creditors or class of creditors, and/or of all the stockholders or class of stockholders, of the Corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of the Corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of the Corporation as consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of the creditors, and/or on all the stockholders or class of stockholders, of the Corporation, as the case may be, and also on the Corporation. NINTH: No director shall be personally liable to the Corporation or any stockholder for monetary damages for breach of fiduciary duty as a director, except, in addition to any and all other requirements for such liability, (i) for any breach of such director's duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which -3- involve intentional misconduct or a knowing violation of law, (iii) to the extent provided under Section 174 of Title 8 of the Delaware Code (relating to the General Corporation Law of the State of Delaware) or any amendment thereto or successor provision thereto, or (iv) for any transaction for which such director derived an improper personal benefit. Neither the amendment nor repeal of this Article NINTH, nor the adoption of any provision of this Certificate of Incorporation inconsistent with the Article NINTH, shall eliminate or reduce the effect of this Article NINTH in respect of any matter occurring, or any cause of action, suit or claim that, but for this Article NINTH, would accrue or arise prior to such amendment, repeal, or adoption of an inconsistent provision. TENTH: The stockholders of the Corporation shall not be personally liable for the payment of the Corporation's debts. ELEVENTH: The Corporation shall indemnify, defend and hold harmless any person who was or is a party, or is threatened to be made a party, to any threatened, pending or completed action, suite or proceeding, whether civil, criminal, administrative, investigative or other, including appeals, by reason of the fact that he or she is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, trustee, officer, employer or agent of any corporation, partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, to the fullest extent authorized by Section 145 of the Delaware General Corporation Law, as amended from time to time, against all expenses, liabilities and losses (including attorneys' fees, judgment, fines, ERISA excise taxes and penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by such person in connection therewith; provided, however, that, except with respect to proceedings seeking to enforce the rights to indemnification granted herein, the Corporation shall indemnify any such person seeking indemnification in connection with a proceeding (or part thereof) initiated by such person only if the proceeding (or part thereof) was authorized by the Board of Directors of the Corporation. Without limiting the generality or the effect of the foregoing, the Corporation may enter into one or more agreements with any person which provide for indemnification greater or different than that provided in this Article ELEVENTH. Any repeal or modification of the provisions of this Article ELEVENTH, or the adoption of any provision inconsistent herewith, shall not adversely affect any right or protection existing hereunder immediately prior to such repeal, modification or adoption of an inconsistent provision. Notwithstanding the foregoing, all indemnification provided for in this Article ELEVENTH shall not be deemed exclusive of any other rights to which those entitled to receive indemnification or reimbursement hereunder may be entitled under any By-law of the Corporation, agreement, vote of stockholder or disinterested directors or otherwise. TWELFTH: From to time to time any of the provisions of his Certificate of Incorporation may be amended, altered or repealed, and other provisions authorized by the laws of the State of Delaware at the time in force may be added or inserted in the manner and at the time prescribed by said laws, and all rights at any time conferred upon the stockholders of the Corporation by this Certificate of Incorporation are granted subject to the provisions of this Article TWELFTH. -4- IN WITNESS WHEREOF, I have hereunto set my hand and seal this ____ day of July, 1994. /s/ Garry B. Watzke ------------------------ Garry B. Watzke Sole Incorporator -5- EX-3.1H 8 ARTICLES OF INC. IRON MTN DATA PROTECTION SVCS EXHIBIT 3.1H The Commonwealth of Massachusetts OFFICE OF THE MASSACHUSETTS SECRETARY OF STATE MICHAEL JOSEPH CONNOLLY, Secretary ONE ASHBURTON PLACE, BOSTON, MASSACHUSETTS 02108 ARTICLES OF ORGANIZATION (UNDER G.L. Ch. 156B) ARTICLE I The name of the corporation is: Iron Mountain Data Protection Services, Inc. ARTICLE II The purpose of the corporation is to engage in the following business activities: To engage in the provision of management, storage and protection services for vital records, and to engage in any other activity, singly or in partnership with others, in which a corporation may lawfully participate under Chapter 156B of the General Laws of Massachusetts. Note: If the space provided under any article or item on this form is insufficient, additions shall be set forth on separate 8-1/2 x 11 sheets of paper leaving a left hand margin of at least 1 inch. Additions to more than one article may be continued on a single sheet so long as each article requiring each such addition is clearly indicated. ARTICLE III The type and classes of stock and the total number of shares and par value, if any, of each type and class of stock which the corporation is authorized to issue is as follows: - -------------------------------------------------------------------------------- WITHOUT PAR VALUE STOCKS | WITH PAR VALUE STOCKS ------------------------ | --------------------- TYPE NUMBER OF SHARES | TYPE NUMBER OF SHARES PAR VALUE ---- ---------------- | ---- ---------------- --------- | COMMON: 0 | COMMON: 10,000 $1.00 | PREFERRED: 0 | PREFERRED: 0 0 - -------------------------------------------------------------------------------- ARTICLE IV If more than one type, class or series is authorized, a description of each with, if any, the preferences, voting powers, qualifications, special or relative rights or privileges as to each type and class thereof and any series now established. Not applicable ARTICLE V The restrictions, if any, imposed by the Articles of Organization upon transfer of shares of stock of any class are as follows: None Article VI Other lawful provisions, if any, for the conduct and regulation of business and affairs of the corporation, for its voluntary dissolution, or for limiting, defining, or regulating the powers of the corporation, or of its directors or stockholders, or of any class of stockholder: (if there are no provisions state "NONE".) See Additional Sheets VI A through VI C. Note: The preceding six (6) articles are considered to be permanent and may ONLY be changed by filing appropriate Articles of Amendment. ARTICLE VII The effective date of organization of the corporation shall be the date approved and filed by the Secretary of the Commonwealth. If a later effective date is desired, specify such date which shall not be more than thirty days after the date of filing. The information contained in ARTICLE VIII is NOT a PERMANENT part of the Articles of Organization and may be changed ONLY by filing the appropriate form provided therefor. ARTICLE VIII a. The street address of the corporation IN MASSACHUSETTS is: (post office boxes are not acceptable) 745 Atlantic Avenue, 10th Floor, Boston, Massachusetts 02111-2735 b. The name, residence and post office address (if different) of the directors and officers of the corporation are as follows: NAME RESIDENCE POST OFFICE ADDRESS ---- --------- ------------------- President: C. Richard Reese 203 Hickory Road 745 Atlantic Avenue Weston, MA 02193 Boston, MA 02111-2735 Treasurer: Eugene B. Doggett 98 Lexington Street 745 Atlantic Avenue Weston, MA 02193 Boston, MA 02111-2735 Clerk: Garry B. Watzke 4 Peter Circle 745 Atlantic Avenue Marblehead, MA 01945 Boston, MA 02111-2735 Director: C. Richard Reese 203 Hickory Road 745 Atlantic Avenue Weston, MA 02193 Boston, MA 02111-2735 c. The fiscal year (i.e., tax year) of the corporation shall end on the last day of the month of: December d. The name and BUSINESS address of the RESIDENT AGENT of the corporation, if any, is: NONE ARTICLE IX By-laws of the corporation have been duly adopted and the president, treasurer, clerk and directors whose names are set forth above, have been duly elected. IN WITNESS WHEREOF and under the pains and penalties of perjury, I/WE, whose signature(s) appear below as incorporator(s) and whose names and business or residential address(es) ARE CLEARLY TYPED OR PRINTED beneath each signature do hereby associate with the intention of forming this corporation under the provisions of General Laws Chapter 156B and do hereby sign these Articles of Organization as incorporator(s) this 21st day of June, 1994 /s/ Garry B. Watzke --------------------- Note: If an already-existing corporation is acting an Incorporator, type in the exact name of the corporation, the state or other jurisdiction where it was incorporated, the name of the person signing on behalf of said corporation and the title he/she holds or other authority by which such action is taken. THE COMMONWEALTH OF MASSACHUSETTS ARTICLES OF ORGANIZATION GENERAL LAWS, CHAPTER 156B, SECTION 12 I hereby certify that, upon an examination of these articles of organization, duly submitted to me, it appears that the provisions of the General Laws relative to the organization of corporations have been complied with, and I hereby approve said articles; and the filing fee in the amount of $200.00 having been paid, said articles are deemed to have been filed with me this 21st day of June, 1994. Effective date /s/ Michael Joseph Connolly MICHAEL JOSEPH CONNOLLY Secretary of State FILING FEE: 1/10 of 1% of the total amount of the authorized capital stock, but not less than $200.00. For the purpose of filing, shares of stock with a par value less than one dollar or no par stock shall be deemed to have a par value of one dollar per share. PHOTOCOPY OF ARTICLES OF ORGANIZATION TO BE SENT Garry B. Watzke, Esq. 745 Atlantic Avenue, 10th Floor Boston, MA 02111-2735 Telephone: (617) 357-4057 CONTINUATION SHEET VI A ----------------------- Other Lawful Provisions ----------------------- 6. The following additional provisions are hereby established for the management, conduct and regulation of the business and affairs of the Corporation, and for creating, limiting, defining, and regulating the powers of the Corporation and of its Directors and stockholders: (a) The Board of Directors is authorized and empowered from time to time in its discretion to make, amend or repeal the By-laws in part or in whole, except with respect to any provision thereof which by law or the By-laws requires action by the stockholders. (b) The Board of Directors shall have full power and authority to determine the terms and manner of issue, including but not limited to the consideration therefor, and to issue or cause the issue of all shares of capital stock of the Corporation now or from time to time hereafter authorized. (c) Meetings of the stockholders may be held outside The Commonwealth of Massachusetts at such location within the United States as the Board of Directors may determine. The books of the Corporation may be kept (subject to any provision contained in the statutes) at such place or places within The Commonwealth of Massachusetts as may be designated from time to time by the Board of Directors or in the By-Laws of the Corporation. Elections of Directors need not be by ballot unless the By-Laws of the Corporation shall so provide. (d) Any contract, transaction or act of the Board of Directors purporting to be in behalf of the Corporation which shall be authorized, approved or ratified by the holders of a majority of the outstanding shares of the Corporation's stock at any special meeting duly called for that purpose, or at any annual meeting at which a quorum is present or represented, or by their consent in writing, shall be valid and binding as though authorized, approved and ratified by every shareholder of the Corporation. (e) No director of the Corporation shall be liable to the Corporation or its stockholders for monetary damages for breach of judiciary duty as a director notwithstanding any provision of law imposing such liability; provided, however, this provision shall not eliminate or limit the liability of a director (i) for any breach of the Director's duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under section sixty-one or sixty-two of Chapter 156B of the General Laws, or (iv) for any transaction from which the director derived an improper personal benefit. Each person who shall be, or shall have been, a director or officer of the Corporation, or who shall serve, or shall have served, at its request as a director or officer of another corporation, or as trustee or officer of an association or trust in which the Corporation owns stock or shares, or of which the Corporation is a creditor, shall be CONTINUATION SHEET VI B ----------------------- indemnified by the Corporation against all liabilities and expenses at any time imposed upon or reasonably incurred by him in connection with, arising out of or resulting from any action, suit or proceeding in which he may be involved or with which he may be threatened, by reason of his then serving or theretofore having served as such director, trustee or officer, or by reason of any alleged act or omission by him in any such capacity (including, without limitation, the making of loans to shareholders, if and to the extent performed in conformity with the provisions of these Articles), whether or not he shall be serving as such director, trustee or officer at the time any or all of such liabilities or expenses shall be imposed upon or incurred by him. The matters covered by the foregoing indemnity shall include any amounts paid by any such person in compromise or settlement, if such compromise or settlement shall be approved as in the best interests of the Corporation by resolution of a disinterested majority of the Board of Directors, or by vote of disinterested stockholders, holding a majority of the shares of stock entitled to vote, present or represented at a meeting called for the purpose; but such matters shall not include liabilities or expenses imposed or incurred in connection with any matters as to which such person shall be finally adjudged in such action, suit or proceeding not to have acted in good faith in the reasonable belief that his action was in the best interests of the Corporation. The matters covered by the foregoing indemnity shall also include payment by the Corporation of expenses incurred in defending a civil or criminal action or proceeding in advance of final disposition of such action or proceeding, provided, that the Corporation shall have received an undertaking by the person indemnified to repay such payment if he shall be adjudicated to be not entitled to indemnification under Section 67 of Chapter 156B of the General Laws. Each person who shall be or become a director, trustee or officer as aforesaid shall be deemed to have accepted and to have continued to serve in such office in reliance upon the indemnity herein provided. These indemnity provisions shall be separable, and if any portion hereof shall be finally adjudged to be invalid, such invalidity shall not affect any other portion which can be given effect. These indemnity provisions shall not be exclusive of any other right which any director, trustee or officer may have or hereafter acquire, whether under any by-law, vote of stockholders, agreement, judgment, decree, provision of law, or otherwise, and these indemnity provisions and all other such rights shall be cumulative. (f) No contract or other transaction between the Corporation and any other person, firm or corporation shall, in the absence of fraud, in any way be affected or invalidated, nor shall any officer or director be subject to surcharge with respect to any such contract or transaction, by the fact that such officer or director, or any firm of which any officer or director is a shareholder, officer or director, is a party to, or may be pecuniarily or otherwise interested in, such contract or transaction, provided, that the fact that the individual or such firm or corporation is so interested shall be known to the Board of Directors prior to or shall be disclosed to the Board of Directors at the meeting at which, or CONTINUATION SHEET VI C ----------------------- prior to the directors' executing their written consents by which, action to authorize, ratify, or approve such contract or transaction shall be taken. Any director of the Corporation may vote upon or give his written consent to any contract or other transaction between the Corporation and any subsidiary or affiliated corporation without regard to the fact that he is also a director or officer of such subsidiary or affiliated corporation. (g) Each director and officer of the Corporation shall, in the performance of his duties, be fully protected in relying in good faith upon the books of account of the Corporation, reports made to the Corporation by any of its officers or employees or by counsel, accountants, appraisers or other experts or consultants selected with reasonable care by the directors or officers of the Corporation, or upon other records of the Corporation. (h) Except as may be otherwise provided herein, the Corporation reserves the right to amend, alter, change or repeal any provision contained in these Articles of Organization, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation. (i) No stockholder shall have any right to examine any property or any books, accounts or other writings of the Corporation if there is reasonable ground for belief that such examination will for any reason be adverse to the interests of the Corporation, and a vote of the directors refusing permission to make such examination and setting forth that in the opinion of the directors such examination would be adverse to the interest of the Corporation shall be prima facie evidence that such examination would be adverse to the interests of the Corporation. Every such examination shall be subject to such reasonable regulations as the directors may establish in regard thereto. (j) The directors may specify the manner in which the accounts of the Corporation shall be kept and may determine what constitutes net earnings, profits and surplus, what amounts, if any, shall be reserved for any corporate purpose, and what amounts, if any shall be declared as dividends. Unless the Board of Directors otherwise specifies, the excess of the consideration received for any share of capital stock over its par value shall be paid-in surplus. All surplus shall be available for any corporate purpose, including the payment of dividends. (k) The purchase or other acquisition or retention by the Corporation of shares of its own capital stock shall not be deemed a reduction of its capital. Upon any reduction of capital or capital stock, no stockholder shall have any right to demand any distribution from the Corporation, except as and to the extent that the stockholders shall so have provided at the time authorizing such reduction. (l) The Corporation shall have the power to be a partner in any business enterprise which it would have power to conduct itself. EX-3.1I 9 ART. OF INC. IRON MTN RECORDS MGMT OF MARYLAND EXHIBIT 3.1I ARTICLES OF INCORPORATION OF IRON MOUNTAIN RECORDS MANAGEMENT OF MARYLAND, INC. ------------------------------- The undersigned, being a natural person and acting as incorporator, does hereby adopt the following Articles of Incorporation for the purpose of forming a business corporation in the State of Maryland, pursuant to the provisions of the Maryland General Corporation Law. FIRST: (1) The name of the incorporator is Garry B. Watzke. (2) The said incorporator's address, including the street and number, if any, including the county or municipal area, and including the state or country is 745 Atlantic Avenue, Boston, Massachusetts, 02111. (3) The said incorporator is at least eighteen years of age. (4) The said incorporator is forming the corporation named in these Articles of Incorporation under the general laws of the State of Maryland, to wit, the Maryland General Corporation Law. SECOND: The name of the corporation (hereinafter called the "corporation") is Iron Mountain Records Management of Maryland, Inc. THIRD: The corporation is formed for the following purpose or purposes: To engage in the business of managing, sorting, indexing, storing and providing other services in respect of business, legal, accounting, medical, engineering and other records, whether recorded on paper, film, magnetic or other media. To engage in such other businesses or activities as a corporation organized under the Maryland General Corporation Law may lawfully engage in, either alone or in a joint venture or partnership with others. To have all of the powers conferred upon corporations organized under the provisions of the Maryland General Corporation Law. FOURTH: The address, including street and number, if any, and the county or municipal area, of the principal office of the corporation within the State of Maryland, is c/o The Prentice-Hall Corporation System, Maryland, 11 East Chase Street, Baltimore City, Maryland 21202. FIFTH: The name and address, including street and number, if any, and the county or municipal area, of the resident agent of the corporation within the State of Maryland, is -2- The Prentice-Hall Corporation System, Maryland, 11 East Chase Street, Baltimore City, Maryland 21202. SIXTH: (1) The total number of shares of stock which the corporation has authority to issue is 1,000, all of which are of a par value of one dollar ($1.00) each and are designated as Common Stock. (2) The aggregate par value of all the authorized shares of stock is one thousand dollars. (3) The Board of Directors of the corporation is authorized, from time to time, to issue any additional stock or convertible securities of the corporation without the approval of the holders of outstanding stock. (4) Provisions, if any, governing the restriction on the transferability of any of the shares of stock of the corporation may be set forth in the Bylaws of the corporation or in any agreement or agreements duly entered into. (5) To the extent permitted by Section 2-104(b)(5) of the Maryland General Corporation Law, notwithstanding any provision of the Maryland General Corporation Law requiring a greater proportion than a majority of the votes entitled to be cast in order to take or authorize any action, any such action may be taken or authorized upon the concurrence of at least a majority of the aggregate number of votes entitled to be cast thereon. (6) No holder of any of the shares of any class of the corporation shall be entitled as of right to subscribe for, purchase, or otherwise acquire any shares of any class of the corporation which the corporation proposes to issue or any rights or options which the corporation proposes to grant for the purchase of shares of any class of the corporation or for the purchase of any shares, bonds, securities, or obligations of the corporation which are convertible into or exchangeable for, or which carry any rights, to subscribe for, purchase, or otherwise acquire shares of any class of the corporation; and any and all of such shares, bonds, securities, or obligations of the corporation, whether now or hereafter authorized or created, may be issued, or may be reissued or transferred if the same have been reacquired and have treasury status, and any and all of such rights and options may be granted by the Board of Directors to such persons, firms, corporations, and associations, and for such lawful consideration, and on such terms, as the Board of Directors in its discretion may determine, without first offering the same, or any thereof, to any said holder. SEVENTH: (1) The number of directors of the corporation, until such number shall be changed by the Bylaws of the corporation, is one. (2) The name of the person who will serve as director of the corporation until the first annual meeting of stockholders and until his successors are elected and qualify is as follows: C. Richard Reese. -3- (3) The initial Bylaws of the corporation shall be adopted by the initial director. Thereafter, the power to adopt, alter, and repeal the Bylaws of the corporation shall be vested in the Board of Directors of the corporation. (4) The liability of the directors of the corporation is limited to the fullest extent permitted by the provisions of Section 2-405.2 of the Maryland General Corporation Law, as the same may be amended and supplemented. (5) The corporation shall, to the fullest extent permitted by the Maryland General Corporation Law, as the same may be amended and supplemented, and, without limiting the generality of the foregoing, in accordance with Section 2-418 of said Maryland General Corporation Law, indemnify any and all persons whom it shall have power to indemnify under said law from and against any and all of the expenses, liabilities or other matters referred to in or covered by said Maryland General Corporation Law. EIGHTH: From time to time any of the provisions of these Articles of Incorporation may be amended, altered or repealed, and other provisions authorized by the Maryland General Corporation Law at the time in force may be added or inserted in the manner and at the time prescribed by said laws, and any contract rights at any time conferred upon the stockholders of the corporation by these Articles of Incorporation are granted subject to the provisions of this Article. IN WITNESS WHEREOF, I have adopted and signed these Articles of Incorporation and do hereby acknowledge that the adoption and signing are my act. Dated: January 16,1995 /s/ Garry B. Watzke --------------------------- Garry B. Watzke EX-3.1J 10 ART. OF INC. IRON MTN RECORDS MGMT OHIO EXHIBIT 3.1J ARTICLES OF INCORPORATION OF IRON MOUNTAIN RECORDS MANAGEMENT OF OHIO, INC. The undersigned, being a natural person and acting as the incorporator, does hereby adopt the following Articles of Incorporation for the purpose of forming a corporation pursuant to the provisions of Chapter 1701 of the Revised Code of Ohio, as amended and implemented, and as hereinafter sometimes referred to as the "General Corporation Law". FIRST: The name of the corporation (hereinafter called the "corporation") is Iron Mountain Records Management of Ohio, Inc. SECOND: The place in the State of Ohio where the principal office of the corporation is to be located is 5857 Highland Ridge Drive, City of Cincinnati, County of Hamilton 45232. THIRD: The purposes for which the corporation is formed shall be to engage in any lawful act or activity for which corporations may be formed under Chapter 1701 of the Revised Code of Ohio. FOURTH: The authorized number of shares of the corporation is one hundred, all of which are of a par value of one dollar each and are of the same class and are to be common shares. FIFTH: The period of existence of the corporation is perpetual. SIXTH: No holder of any of the shares of the corporation shall be entitled as of right to purchase or subscribe for any unissued shares of any class or any additional shares of any class to be issued by reason of any increase of the authorized number of shares of the corporation of any class, or bonds, certificates of indebtedness, debentures, or other securities convertible into shares of the corporation or carrying any right to purchase shares of any class, but any such unissued shares or such additional authorized issue of any shares or of other securities convertible into shares, or carrying any right to purchase shares, may be issued and disposed of pursuant to resolution of the Board of Directors to such persons, firms, corporations, or associations, and upon such terms as may be deemed advisable by the Board of Directors in the exercise of its discretion. SEVENTH: 1. Notwithstanding any provision in the General Corporation Law requiring for any purpose the vote, consent, waiver or release of the holders of a designated greater proportion (but less than all) of the shares of any particular class or of each class, if the shares are classified, the vote, consent, waiver or release of the holders of at least a majority of the voting power, or of at least a majority of the shares entitled to vote, of such particular class or of each class, if the shares are classified, shall be required in lieu of any such designated greater proportion otherwise required by any provision of the General Corporation Law. -2- 2. Whenever the General Corporation Law shall fail to prescribe a designated proportion of voting power required for any purpose, the vote, consent, waiver or release of at least a majority of the voting power represented at a meeting of shareholders at which a quorum is present shall be sufficient for any such purposes; and at any such meeting the shareholders entitled to exercise at least a majority of the voting power relating to any such purpose shall constitute a quorum. 3. The corporation shall have the power, without the approval, which might otherwise be required, of any of its shareholders, to repurchase any of its shares if and when any shareholder desires to, or on the happening of any event is required to, sell such shares, and shall have the power, without the approval of any of its shareholders, to purchase any of its issued shares to the fullest extent permitted by Section 1701.35 of the General Corporation Law. EIGHTH: The corporation shall, to the fullest extent permitted by Section 1701.13 of the General Corporation Law, as the same may be amended and supplemented, indemnify any and all persons whom it shall have power to indemnify under said section from and against any and all of the expenses, liabilities, or other matters referred to or covered by said section; and the indemnification provided for herein shall not be deemed exclusive of any other rights to which any person seeking indemnification may be entitled under the Regulations, any agreement, vote of shareholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, trustee, officer, employee, or agent, and shall inure to the benefit of the heirs, executors, and administrators of such a person. NINTH: From time to time any of the provisions of the Articles of Incorporation may be amended, altered, or repealed, and other provisions authorized by the General Corporation Law and the laws of the State of Ohio at the time in force may be added or inserted in the manner and at the time prescribed by said laws, and all rights at any time conferred upon the shareholders of the corporation by the Articles of Incorporation are granted subject to the provisions of this Article NINTH. Signed on October 19, 1994. /s/ Garry B. Watzke --------------------------- Garry B. Watzke Sole Incorporator EX-3.1K 11 CERT. OF INC. IRON MTN WILMINGTON, INC EXHIBIT 3.1K Certificate of Incorporation of Iron Mountain Wilmington, Inc. FIRST: The name of the corporation is Iron Mountain Wilmington, Inc. SECOND: The registered office of the Corporation in the State of Delaware is located at 32 Loockerman Square, Suite L-100, Dover, Kent County, Delaware 19904 and the name of its registered agent at such address is The Prentice-Hall Corporation System, Inc. THIRD: The purpose of the Corporation is to engage, anywhere in the world, in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware, and to possess and exercise all powers and privileges granted by the General Corporation Law of Delaware. FOURTH: The total number of shares of capital stock which the Corporation is authorized to issue is 1,000 (one thousand) shares, all of which shall be shares of Common Stock of the par value of $1.00 per share. FIFTH: The name and mailing address of the incorporator are as follows: NAME MAILING ADDRESS Garry B. Watzke 745 Atlantic Avenue, Boston, MA 02111 SIXTH: The name and mailing address of the person who is to serve as sole director until the first meeting of stockholders, or until his successor is elected and qualified, which ever first occurs, are as follows: NAME MAILING ADDRESS C. Richard Reese 745 Atlantic Avenue, Boston, MA 02111 SEVENTH: For the management of the business and for the conduct of the affairs of the Corporation, and in further definition, limitation and regulation of the powers of its directors and stockholders, it is further provided: 1. The number of directors of the Corporation shall be as prescribed in the Bylaws of the Corporation but such number may from time to time be increased or decreased in such manner as may be prescribed by the By-laws. In no event shall the number of Directors be less than the minimum number prescribed by law. -2- 2. In furtherance and not in limitation of the powers conferred by the laws of the State of Delaware, the Board of Directors is expressly authorized and empowered: (a) Subject to the applicable provisions of the By-laws then in effect, to determine, from time to time, whether and to what extent and at what times and places and under what conditions and regulations the accounts and books of the Corporation, or any of them, shall be open to the inspection of the stockholders, and no stockholder shall have any right to inspect any account or document of the Corporation, except as conferred by the laws of the State of Delaware, unless and until authorized so to do by resolution of the Board of Directors or of the stockholders of the Corporation. (b) Without the assent or vote of the stockholders to authorize and issue obligations of the Corporation, secured or unsecured, to include therein such provisions as to redeemability, convertibility or otherwise, as the Board of Directors, in its sole discretion, may determine, and to authorize the mortgaging or pledging, as security therefor, of any property of the Corporation, real or personal, including after-acquired property. (c) To establish a bonus, profit-sharing or other types of incentive or compensation plans for the employees (including officers and Directors) of the Corporation and to fix the amount of profits to be distributed or shared and to determine the persons to participate in any such plans and the amounts their respective participants. (d) To make, alter, amend or repeal the By-laws of the Corporation. (e) To determine for any purpose and in any manner not inconsistent with the other provisions of this Certificate of Incorporation the amount of the gross assets, of the liabilities, of the net assets or of the net profits of the Corporation as the same may exist or shall have existed at any time or for any period or periods, and to create, increase, abolish or reduce any reserve or reserves for accrued, accruing or contingent liabilities or expenses, including taxes and other charges. In addition to the powers and authorities hereinbefore or by statute expressly conferred upon it, the Board of Directors may exercise all such powers and do all such acts and things as may be exercised or done by the Corporation, subject, nevertheless, to the provisions of the laws of the State of Delaware, of the Certificate of Incorporation and of the By-laws of the Corporation. 3. Any Director or any officer elected or appointed by the stockholders or by the Board of Directors may be removed at any time in such manner as shall be provided in the By-laws of the Corporation. 4. In the absence of fraud, no contract or other transaction between the Corporation and any other corporation, and no act of the Corporation, shall in any way be affected or invalidated by the fact that any of the Directors of the Corporation are pecuniarily or otherwise interested in, or are directors or officer of, such other corporation and, in the absence of fraud, any Director may be a member, may be a party to, or may be pecuniarily -3- or otherwise interested in, any contract or transaction of the Corporation; provided, in any case, that the fact that he or such firm is so interested shall be disclosed or shall have been known to the Board of Directors or a majority thereof; and any Director of the Corporation who is also a director or officer of any such other corporation, or who is also interested, may be counted in determining the existence of a quorum at any meeting of the Board of Directors of the Corporation which shall authorize any such contract, act or transaction and may vote thereat to authorize any such contract, act or transaction, with like force and effect as if he were not such director or officer of such corporation, or not so interested. 5. Any contract, act or transaction of the Corporation or of the Directors may be ratified by vote of a majority of the shares having voting powers at any meeting of stockholders, or at any special meeting called for such purpose, and such ratification shall, so far as permitted by law and by this Certificate of Incorporation, be as valid and as binding as though ratified by every stockholder of the Corporation. 6. No Director of the Corporation shall be liable to any person on account of any action undertaken by him as such director in reliance in good faith upon the existence of any fact or circumstance reported or certified to the Board of Directors by any officer of the Corporation or by any independent auditor, engineer, or consultant retained or employed as such by the Board of Directors. 7. Meetings of the stockholders may be held without the State of Delaware, if the By-laws so provide. The books of the Corporation may be kept (subject to any statutory provision) outside the State of Delaware at such place or places as may be from time to time designated by the Board of Directors or in the By-laws of the Corporation. Elections of directors need not be by ballot unless the By-laws shall otherwise provide. EIGHTH: Whenever a compromise or arrangement is proposed between the Corporation and its creditors or any class of them and/or between the Corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of the Corporation or of any creditor or stockholder thereof or on the application of any receiver or receivers appointed for the Corporation under the provisions of Section 291 of Title 8 of the Delaware Code or on the application of trustees in dissolution or of any receiver or receivers appointed for the Corporation under the provisions of Section 279 of Title 8 of the Delaware Code, order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders, of the Corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of the Corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of the Corporation as consequences of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of the Corporation, as the case may be, and also on the Corporation. -4- NINTH: No director shall be personally liable to the Corporation, or any stockholder for monetary damages for breach of fiduciary duty as a director, except, in addition to any and all other requirements for such liability, (i) for any breach of such director's duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) to the extent provided under Section 174 of the General Corporation Law of Delaware or any amendment thereto or successor provision thereto, or (iv) for any transaction for which such director derived an improper personal benefit. Neither the amendment nor repeal of this Article NINTH, nor the adoption of any provision of this Certificate of Incorporation inconsistent with the Article NINTH, shall eliminate or reduce the effect of this Article NINTH in respect of any matter occurring, or any cause of action, suit or claim that, but for this Article NINTH, would accrue or arise prior to such amendment, repeal, or adoption of an inconsistent provision. TENTH: The stockholders of the Corporation shall not be personally liable for the payment of the Corporation's debts. ELEVENTH: The Corporation shall indemnify, defend and hold harmless any person who was or is a party, or is threatened to be made a party, to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative, investigative or other, including appeals, by reason of the fact that he or she is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, trustee, officer, employer or agent of any corporation, partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, to the fullest extent authorized by Section 145 of the General Corporation law of Delaware, as amended from time to time, against all expenses (including attorneys' fees), judgments, fines, and amounts paid or to be paid in settlement actually and reasonably incurred or suffered by such person in connection therewith if such person acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation and, with respect to any criminal action or proceeding, had no reason to believe his or her conduct was unlawful; provided, however, that, except with respect to proceedings seeking to enforce the rights to indemnification granted herein, the Corporation shall indemnify any such person seeking indemnification in connection with a proceeding (or part thereof) initiated by such person only if the proceeding (or part thereof) was authorized by the Board of Directors of the Corporation. Without limiting the generality or the effect of the foregoing, the Corporation may enter into one or more agreements with any person which provide for indemnification greater or different than that provided in this Article ELEVENTH. Any repeal or modification of the provisions of this Article ELEVENTH, or the adoption of any provision inconsistent herewith, shall not adversely affect any right or protection existing hereunder immediately prior to such repeal, modification or adoption of an inconsistent provision. Notwithstanding the foregoing, the indemnification provided for in this Article ELEVENTH shall not be deemed exclusive of any other rights to which those entitled to receive indemnification or reimbursement hereunder may be entitled under any By-law of the Corporation, agreement, vote of stockholders or disinterested directors or otherwise. -5- TWELFTH: From time to time any of the provisions of this Certificate of Incorporation may be amended, altered or repealed, and other provisions authorized by the laws of the State of Delaware at the time in force may be added or inserted in the manner and at the time prescribed by said laws, and all rights at any time conferred upon the stockholders of the Corporation by this Certificate of Incorporation are granted subject to the provisions of this Article TWELFTH. IN WITNESS WHEREOF, I have hereunto set my hand and seal this 16th day of November, 1995. /s/ Garry B. Watzke ------------------------- Garry B. Watzke EX-3.1L 12 RESTATED ART. OF INC. DATA STORAGE SYS., INC EXHIBIT 3.1L RESTATED ARTICLES OF INCORPORATION OF Data Storage Systems, Inc. I. The name of the corporation is Data Storage Systems, Inc. II. The purpose of the corporation is to engage in any lawful act or activity for which a corporation may be organized under the General Corporation Law of California other than the banking business, the trust company business, or the practice of a profession permitted to be incorporated by the California Corporations Code. III. (A) This corporation is authorized to issue two classes of stock to be designated, respectively, "Common Stock" and "Preferred Stock." The total number of shares which the corporation is authorized to issue is nine million (9,000,000) shares. Five million (5,000,000) shares shall be Common Stock. Four million (4,000,000) shares shall be Preferred Stock. (B) The Preferred Stock may be issued from time to time in one or more series. Excepting the Series A Preferred Stock, Series B Preferred Stock, and the Series C Preferred Stock, the Board of Directors is hereby authorized, within the limitations and restrictions stated in these Articles, to fix or alter the dividend rights, dividend rate, conversion rights, voting rights, rights and terms of redemption (including sinking fund provisions), the redemption price or prices, and the liquidation preferences of any wholly unissued series of Preferred Stock, and the number of shares constituting any such series and the designation thereof, or any of them; and to increase or decrease the number of shares of any series subsequent to the issue of shares of that series, but not below the number of shares of such series then outstanding. In case the number of shares of any series shall be so decreased, the shares constituting such decrease shall resume the status which they had prior to the adoption of the resolution originally fixing the number of shares of such series. (C) The rights, preferences, restrictions and other matters relating to the four million (4,000,000) shares of Preferred Stock are as follows: 1. Designation. One million (1,000,000) of the shares of Preferred Stock are hereby designated "Series A Preferred Stock" (hereinafter referred to as the "Series A Stock") and five hundred thousand (500,000) of the shares of Preferred Stock are hereby designated "Series B Preferred Stock" (hereinafter referred to as the "Series B Stock") and one million six hundred thousand (1,600,000) of the shares of Preferred Stock are hereby designated "Series C Preferred Stock" (hereinafter referred to as the "Series C Stock") with the rights, preferences and privileges as specified herein. 2. Dividends. The holders of the Series C Stock shall be entitled to receive, out of any funds legally available therefor, dividends, payable in preference and priority to any payment of any dividend on Series A Stock, Series B Stock or Common Stock and in an amount per share of up to $0.05 annually before any such funds are applied to the payment of dividends on Series A Stock, Series B Stock or Common Stock. The holders of the Series A Stock shall be entitled to receive, out of any funds legally available therefor, dividends, payable in preference and priority to any payment of any dividend on Series B Stock or Common Stock and in an amount per share of up to $0.09 annually before any such funds are applied to the payment of dividends on Series B Stock or Common Stock. The holders of the Series B stock shall be entitled to receive, out of any funds legally available therefor, dividends, payable in preference and priority to any payment of any dividend on Common Stock and in an amount per share of up to $0.12 annually before any such funds are applied to the payment of dividends on Common Stock, and then after an equal amount per share has been paid on all Common and Preferred Stock, in an amount per share equal to any such further dividend on Common Stock, all such amounts to be payable only when and as declared by the Board. Such dividends shall not be cumulative and no right shall accrue to the holders of the Series A Stock, Series B Stock or Series C Stock by reason of the Board's failure to pay or declare such dividends. -2- 3. Liquidation Preference. In the event of any liquidation, dissolution, or winding up of the corporation, either voluntary or involuntary, distributions to the shareholders of the corporation shall be made in the following manner: (a) The holders of the Series C Stock shall be entitled to receive, prior and in preference to any distribution of any of the assets or surplus funds of the corporation to the holders of the Series A Stock, Series B Stock or Common Stock by reason of their ownership of such stock, the amount of $0.60 per share for each share of Series C Stock then held by them, adjusted for any combinations, consolidations, or stock distributions or dividends with respect to such shares. If the assets and funds thus distributed among the holders of the Series C Stock shall be insufficient to permit the payment to such holders of the full aforesaid preferential amount, then the entire assets and funds of the corporation legally available for distribution shall be distributed among the holders of the Series C Stock in proportion to the full preferential amount each such holder is otherwise entitled to receive. (b) After payment to the holders of the Series C Stock of the amounts set forth in (a), the holders of the Series A Stock shall be entitled to receive, prior and in preference to any distribution of any of the assets or surplus funds of the corporation to the holders of the Series B Stock or Common Stock by reason of their ownership of such stock, the amount of $1.00 per share for each share of Series A Stock then held by them, adjusted for any combinations, consolidations, or stock distributions or dividends with respect to such shares. If the assets and funds thus distributed among the holders of the Series A Stock shall be insufficient to permit the payment to such holders of the full aforesaid preferential amount, then the entire assets and funds of the corporation legally available for distribution shall be distributed among the holders of the Series A Stock in proportion to the full preferential amount each such holder is otherwise entitled to receive. (c) After payment to the holders of the Series C Stock of the amounts set forth in (a), and after payment of the holders of Series A stock of the amounts set forth in (b), the holders of the Series B Stock shall be entitled to receive, prior and in preference to any distribution of any of the assets or surplus funds of the corporation to the holders of the Common Stock by reason of their ownership of such stock, the amount of $1.37 per share for each share of Series B Stock then held by them, adjusted for any combinations, -3- consolidations, or stock distributions or dividends with respect to such shares. If the assets and funds thus distributed among the holders of the Series B Stock shall be insufficient to permit the payment to such holders of the full aforesaid preferential amount, then the entire remaining assets and funds of the corporation legally available for distribution shall be distributed among the holders of the Series B Stock in proportion to the full preferential amount each such holder is otherwise entitled to receive. (d) After payment to the holders of Series C Stock of the amount set forth in (a), and to the holders of Series A Stock of the amounts set forth in (b), and to the holders of Series B Stock of the amounts set forth in (c), the holders of Common Stock shall then be entitled to receive $0.40 per share for each share of Common Stock held by them. (e) After payment to the holders of Series C Stock of the amounts set forth in (a), and payment to the holders of Series A Stock the amounts set forth in (b), and payment to the holders of Series B Stock the amounts set forth in (c), and payment to the holders of Common Stock of the amounts set forth in (d), the entire assets and funds of the corporation legally available for distribution, if any, shall be distributed ratably among the holders of the Common Stock and the holders of Preferred Stock on the basis of the number of shares of Common Stock (i) held by each of them and (ii) issuable at the time of such liquidation upon the conversion of the Preferred Stock. (f) A consolidation or merger of the corporation with or into any other corporation or corporations, or a sale of all or substantially all of the assets of the corporation, shall not be deemed to be a liquidation, dissolution, or winding up within the meaning of this paragraph. 4. Redemption. (a) On June 2, 1995, the corporation shall redeem the Series A Stock and Series C Stock by paying in cash for each share of Series A Stock and Series C Stock redeemed, the price of $1.00 per share and $0.60 per share, respectively. (b) The amount payable to the holders of Series A Stock and Series C Stock upon redemption thereof pursuant to paragraph 4(a) of this Article is hereinafter referred to as the "Redemption Price." -4- (c) At least sixty (60) days prior to the date fixed for any redemption of Series A Stock and Series C Stock (hereinafter referred to as the "Redemption Date"), written notice shall be mailed, postage prepaid, to each holder of record, at such holder's post office address last shown on the records of the corporation, notifying such holder of the election of the corporation to redeem such shares, specifying the Redemption Date, the applicable Redemption Price, and the date on which such holder's Conversion Rights (as defined in paragraph 6) as to such shares terminate and calling upon such holder to surrender to the corporation, in the manner and at the place designated, his certificate or certificates representing the shares to be redeemed (such notice is hereinafter referred to as the "Redemption Notice"). On or after the Redemption Date, each holder of stock to be redeemed shall surrender such holder's certificate or certificates representing such shares to the corporation, in the manner and at the place designated in the Redemption Notice, and thereupon the Redemption Price of such shares shall be payable to the order of the person whose name appears on such certificate or certificates as the owner of such shares and each surrendered certificate shall be cancelled. In the event less than all the shares represented by any such certificate are redeemed, a new certificate shall be issued representing the unredeemed shares. From and after the Redemption Date, unless there shall have been a default in payment of the Redemption Price, all rights of the holders of the stock designated for redemption in the Redemption Notice as shareholders of the corporation (except the right to receive the Redemption Price without interest upon surrender of their certificate or certificates) shall cease and determine with respect to such shares, and such shares shall not subsequently be transferred on the books of the corporation or be deemed to be outstanding for any purpose whatsoever. (d) On or prior to the Redemption Date, the corporation shall deposit the Redemption Price of all shares of stock designated for redemption in the Redemption Notice and not yet redeemed with a bank or trust company having aggregate capital and surplus in excess of $20,000,000 as a trust fund for the benefit of the respective holders of the shares designated for redemption and not yet redeemed, with irrevocable instructions and authority to the bank or trust company to pay the Redemption Price for such shares to their respective holders on or after the Redemption Date upon receipt of notification from the corporation -5- that such holder has surrendered his share certificate to the corporation pursuant to paragraph 4(c) of this Article. Such instructions shall also provide that any funds deposited by the corporation pursuant to this paragraph 4(d) for the redemption of shares that are subsequently converted into shares of Common Stock pursuant to paragraph 6 of this Article shall be returned to the corporation forthwith upon such conversion. The balance of any funds deposited by the corporation pursuant to this paragraph 4(d) remaining unclaimed at the expiration of two (2) years following the Redemption Date shall be returned to the corporation upon direction by Board of Directors. (e) In the event of any redemption of only a part of the then outstanding shares of any series of Preferred Stock, this corporation shall effect such redemption pro rata according to the number of shares of such series held by each holder thereof. 5. Voting Rights. The holder of each share of the Series A Stock, Series B Stock and Series C Stock shall be entitled to the number of votes equal to the number of shares of Common Stock into which such share of Series A Stock, Series B Stock and Series C Stock could be converted, shall have voting rights and powers equal to the voting rights and powers of the Common Stock, and shall be entitled to notice of any shareholders' meeting in accordance with the Bylaws of the corporation. Fractional votes shall not, however, be permitted and any fractional voting rights resulting from the above formula (after aggregating all shares into which shares of Series A Stock, Series B Stock and Series C Stock held by each holder could be converted) shall be rounded to the nearest whole number (with one-half being rounded upward). 6. Conversion. The holders of the Series A stock, Series B Stock and Series C Stock shall have conversion rights as follows (the "Conversion rights"): (a) Right to Convert. Each share of Series A Stock, Series B Stock and Series C Stock shall be convertible, at the option of the holder, at any time after the date of issuance of such share at the office of the corporation or any transfer agent for such stock, into fully paid and nonassessable shares of Common Stock at the Conversion Price (as hereafter defined) therefore in effect at the time of conversion determined as provided herein. (b) Automatic Conversion. Each share of Series A Stock, Series B Stock and Series C Stock shall automatically convert into fully paid and nonassessable shares of -6- Common Stock at the then effective conversion Price immediately upon the closing of a firmly underwritten registered public offering covering a primary sale of Common Stock at a public offering price (prior to underwriting discounts and expenses) of $4.00 per share or above with a total offering gross of $5,000,000 or more. Each share of Series B Stock shall automatically convert into fully paid and nonassessable shares of Common Stock at the then effective Conversion Price immediately upon any of the following events: (i) the closing of any sale or sales by the corporation of shares of its Preferred Stock at a price of not less than $1.00 per share of the Company's Preferred Stock, as presently constituted, the aggregate gross proceeds to the corporation of which equals or exceeds $1,000,000; (ii) the last day of any fiscal year in which the corporation realizes gross revenues of at least $1,000,000; and (iii) the last day of any fiscal year in which the corporation realizes after-tax operating income (assuming the same tax rate on operating income as on the corporation's net income as a whole) of at least $200,000. Upon such automatic conversion, the rights, preferences and privileges of the Series A Stock, Series B Stock or Series C Stock, as applicable, shall thereupon cease and determine, and the holders shall thereafter be treated in all respects as holders of the number of shares of Common Stock issuable at the Conversion Price in excess on the date of the automatic conversion, taking account of any necessary adjustments of the Conversion Price in accordance with this paragraph 6. The corporation shall notify each holder in writing of the automatic conversion upon the occurrence of such event. Each holder shall within ten (10) days of his receipt of such notice, surrender his certificate(s) representing his Series A Stock, Series B Stock or Series C Stock at the place specified in such notice, and shall thereupon be entitled to receive certificates representing the Common Stock into which his Series A Stock, Series B Stock or Series C Stock was converted. (c) Conversion Price. Each share of Series A Stock, Series B Stock and Series C Stock shall be convertible into that number of shares of Common which results from dividing $1.00, in the case of the Series A Sock, and the Series B Stock, and $.60 in the case of the Series C Stock, by the Conversion Price per share applicable to such Series of -7- Preferred at the time of conversion. The price at which shares of Common Stock shall be deliverable upon conversion of the Series A Stock, Series B Stock and Series C Stock (the "Conversion Price") shall initially be $1.00 per share, $1.00 per share and $.60 per share, respectively. Such conversion shall be subject to adjustment as provided herein. (d) Mechanics of Elective Conversion. Before any holder of Series A Stock, Series B Stock or Series C Stock shall be entitled to convert the same into shares of Common Stock, he shall surrender the certificate or certificates for such shares at the office of the corporation or of any transfer agent for such stock, and shall have given written notice to the corporation at such office that he elects to convert the same and shall state in the notice the name or names in which he wishes the certificate or certificates for shares of Common Stock to be issued. The Corporation shall then, as soon as is practicable, issue and deliver at such office to such holder, or to his nominee or nominees, a certificate or certificates for the number of shares of Common Stock to which he shall be entitled. Such conversion shall be deemed to have been made immediately prior to the close of business on the date of surrender of the shares to be converted, and the person or persons entitled to receive the shares of Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock on such date. (e) Adjustments to Conversion Price for Diluting Issues. (i) Special Definitions. For purposes of this Section 6(e), the following definitions shall apply: (1) "Option" shall mean rights, options or warrants to subscribe for, purchase or otherwise acquire either Common Stock or Convertible Securities. (2) "Original Issue Date" shall mean the date on which a share of Series C Preferred Stock was first issued. (3) "Convertible Securities" shall mean any evidences of indebtedness, shares or other securities directly or indirectly convertible into or exchangeable for Common Stock. (4) "Additional Shares of Common Stock" shall mean all shares of Common Stock issued (or, pursuant to Section 6(e)(iii), deemed to be issued) by -8- the corporation after the Original Issue Date, other than shares of Common Stock issued or issuable: (A) upon conversion of shares of Series A Stock or Series C Stock; (B) to officers or employees of, or consultants to, the corporation pursuant to any stock purchase plan or arrangement, stock option plan, or other stock incentive plan or agreement approved by the corporation's Board of Directors; (C) pursuant to any warrants issued to purchase shares of the corporation's Series C Stock; or (D) by way of dividend or other distribution on shares excluded from the definition of Additional Shares of Common Stock by the foregoing clauses (A), (B), (C) or this clause (D). (ii) No Adjustment of Conversion Price. No adjustment in the number of shares of Common Stock into which the Series A Stock or Series C Stock is convertible shall be made, by adjustment in the Conversion Price in respect to the issuance of Additional Shares of Common Stock or otherwise, unless the consideration per share for an Additional Share of Common Stock issued or deemed to be issued by the corporation is less than the Conversion Price in effect on the date of, and immediately prior to, the issue of such Additional Share. (iii) Issue of Securities Deemed Issue of Additional Shares of Common Stock. (1) Options and Convertible Securities. In the event the corporation at any time or from time to time after the Original Issue Date shall issue any Options or Convertible Securities or shall fix a record date for the determination of holders of any class of securities entitled to receive any such Options or Convertible Securities, then the maximum number of shares (as set forth in the instrument relating thereto without regard to any provisions contained therein for a subsequent adjustment of such number) of Common Stock issuable upon the exercise of such Options or, in the case of Convertible Securities and Options therefor, the conversion or exchange of such Convertible Securities, shall be deemed to be Additional Shares of Common Stock issued as of the time of such issue or, in case such -9- a record date shall have been fixed, as of the close of business on such record date, provided that Additional Shares of Common Stock shall not be deemed to have been issued with respect to a series of Preferred Stock unless the consideration per share (determined pursuant to Section 6(e)(v) hereof), of such Additional Shares of Common Stock would be less than the respective Conversion Price of such series in effect on the date of and immediately prior to such issue, or such record date, as the case may be, and provided further that in any case in which Additional Shares of Common Stock are deemed to be issued: (A) no further adjustment in the Conversion Price shall be made upon the subsequent issue of Convertible Securities or shares of Common Stock upon the exercise of such Options or conversion or exchange of such Convertible Securities; (B) if such Options or Convertible Securities by their terms provided, with the passage of time or otherwise, for any increase in the consideration payable to the corporation, or decreases in the number of shares of Common Stock issuable, upon the exercise, conversion or exchange thereof, the Conversion Price computed upon the original issue thereof (or upon the occurrence of a record date with respect thereto), and any subsequent adjustments based thereon, shall, upon any such increase or decrease becoming effective, be recomputed to reflect such increase or decrease insofar as it affects such Options or the rights of conversion or exchange under such Convertible Securities; (C) upon the expiration of any such Options or any rights of conversion or exchange under such Convertible Securities which shall not have been exercised, the respective Conversion Prices computed upon the original issue thereof (or upon the occurrence of a record date with respect thereto), and any subsequent adjustments based thereon, shall, upon such expiration, be recomputed as if: (i) in the case of Convertible Securities or Options for Common Stock the only Additional Shares of Common Stock issued were the shares of Common Stock, if any, actually issued upon the exercise of such Options or conversion or exchange of such Convertible Securities and the consideration received therefor was the consideration actually received by the corporation for the issue of all such Options, whether or not exercised, plus the consideration actually received by the corporation upon -10- such exercise, or for the issue of all such Convertible Securities which were actually converted or exchanged, plus the Additional consideration, if any, actually received by the corporation upon such conversion or exchange, and (ii) in the case of Options for Convertible Securities only the Convertible Securities, if any, actually issued upon the exercise thereof were issued at the time of issue of such Options, and the consideration received by the corporation for the Additional Shares of Common Stock deemed to have been then issued was the consideration actually received by the corporation for the issue of all such Options, whether or not exercised, plus the consideration deemed to have been received by the corporation (determined pursuant to Section 6(e)(v)) upon the issue of the Convertible Securities with respect to which such Options were actually exercised; (D) no readjustment pursuant to clause (B) or (C) above shall have the effect of increasing the Conversion Price to an amount which exceeds the lower of (i) such Conversion Price on the original adjustment date, or (ii) such Conversion Price that would have resulted from any issuance of Additional Shares of Common Stock between the original adjustment date and such readjustment date (nor shall any shares issued upon conversion prior to such readjustment be affected by such readjustment); (E) in the case of any Options that expire by their terms not more than thirty (30) days after the date of issue thereof, no adjustment of the Conversion Price shall be made until the expiration or exercise of all such Options, whereupon such adjustment shall be made in the same manner provided in class (C) above; and (F) if such record date shall have been fixed and such Options or Convertible Securities are not issued on the date fixed therefor, the adjustment previously made in the Conversion Price which became effective on such record date shall be cancelled as of the close of business on such record date, and thereafter the Conversion Price shall be adjusted pursuant to this subparagraph 6(e)(iii) as of the actual date of their issuance. (2) Stock Dividends, Stock Distributions and Subdivisions. In the event the corporation at any time or from time to time after the Original Issue Date -11- shall declare or pay dividend or make any other distribution on the Common Stock payable in Common Stock, or effect a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in Common Stock), then and in any such event, Additional Shares of Common Stock shall be deemed to have been issued: (A) in the case of such dividend or distribution, immediately after the close of business on the record date for the determination of holders of any class of securities entitled to receive such dividend or distribution, or (B) in the case of any such subdivision, at the close of business on the date immediately prior to the date upon which such corporate action becomes effective. If such record date shall have been fixed and such dividend shall not have been fully paid on the date fixed therefor, the adjustment previously made in the Conversion Price which became effective on such record date shall be cancelled as of the close of business on such record date, and thereafter the Conversion Price shall be adjusted pursuant to this subparagraph 6(e)(iii) as of the time of the actual payment of such dividend. (iv) Adjustment of Conversion Price Upon Issuance of Additional Shares of Common Stock. In the event the corporation shall issue Additional Shares of Common Stock (including Additional Shares of Common Stock deemed to be issued pursuant to Section 6(e)(iii) but excluding Additional Shares of Common Stock issued pursuant to Section 6 (e)(iii)(2) which event is dealt with in Section 6(3)(vi) hereof) without consideration or for a consideration per share less than the Conversion Price in effect on the date of and immediately prior to such issue, then in such event, the Conversion Price shall be reduced, concurrently with such issue in order to increase the number of shares of Common Stock into which the Series A Stock and Series C Stock is convertible, to a price equal to the consideration per share received by the corporation for such Additional Shares of Common Stock. (v) Determination of Consideration. For purposes of this Section 6(e), the consideration received by the corporation for the issue of any Additional Shares of Common Stock shall be computed as follows: -12- (1) Cash and Property. Such consideration shall: (A) insofar as it consists of cash, be computed at the aggregate amount of cash received by the corporation; (B) insofar as it consists of property other than cash, be computed at the fair value thereof at the time of such issue, as determined in good faith by the Board of Directors; and (C) in the event Additional Shares of Common Stock are issued together with other shares or securities or other assets of the corporation for consideration which covers both, be the proportion of such consideration so received, computed as provided in clauses (A) and (B) above, as determined in good faith by the Board of Directors. (2) Options and Convertible Securities. The consideration per share received by the corporation for Additional Shares of Common Stock deemed to have been issued pursuant to Section 6(e)(iii)(1), relating to Options and Convertible Securities, shall be determined by dividing: (a) the total amount, if any, received or receivable by the corporation as consideration for the issue of such Options or Convertible Securities, plus the minimum aggregate amount of additional consideration (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such consideration) payable to the corporation upon the exercise of such Options or the conversion or exchange of such Convertible Securities, or in the case of Options for Convertible Securities, the exercise of such Options for Convertible Securities and the conversion or exchange of such Convertible Securities, by (b) the maximum number of shares of Common Stock (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such number) issuable upon the exercise of such Options or the conversion or exchange of such Convertible Securities. (vi) Adjustment for Dividends, Distributions, Subdivisions, Combinations or Consolidation of Common Stock. -13- (1) Stock Dividends, Distribution or Subdivisions. In the event the corporation shall issue Common Stock pursuant to Section 6(e)(iii)(2) in a stock dividend, stock distribution or subdivision, the Conversion Price in effect immediately prior to such stock dividend, stock distribution or subdivision shall, concurrently with the effectiveness of such stock dividend, stock distribution or subdivision, be proportionately decreased. (2) Combinations or Consolidations. In the event the outstanding shares of Common Stock shall be combined or consolidated, by reclassification or otherwise, into a lesser number of shares of Common Stock, the Conversion Price in effect immediately prior to such combination or consolidation shall, concurrently with the effectiveness of such combination or consolidation, be proportionately increased. (vii) Adjustment for Merger or Reorganization, etc. In case of any consolidation or merger of the corporation with or into another corporation or the conveyance of all or substantially all the assets of the corporation to another corporation, each share of Series A Stock and Series C Stock shall thereafter be convertible into the number of shares of stock or other securities or property to which a holder of the number of shares of Common Stock of the corporation deliverable upon conversion of such Series A Stock or Series C Stock would have been entitled upon such consolidation, merger or conveyance; and, in any such case, appropriate adjustment (as determined by the Board of Directors) shall be made in the application of the provisions herein set forth with respect to the rights and interest thereafter of the holders of the Series A Stock and Series C Stock, to the end that the provisions set forth herein (including provisions with respect to changes in and other adjustments of the Conversion Price) shall thereafter be applicable, as nearly as reasonably may be, in relation to any shares of stock or other property thereafter deliverable upon the conversion of the Series C Stock. (f) No Impairment. The corporation will not, by amendment of these Restated Articles of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the corporation but will at all times in good faith assist in the -14- carrying out of all the provisions of this Section 6 and in the taking of all such action as may be necessary or appropriate in order to protect the Conversion Rights of the holders of the Series A Stock and Series C Stock against impairment. (g) Certificate as to Adjustments. Upon the occurrence of each adjustment or readjustment of the respective Conversion Prices pursuant to this Section 6, the corporation at its expense shall promptly compute such adjustments or readjustments in accordance with the terms hereof and furnish to each holder of Series A Stock and Series C Stock a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The corporation shall, upon the written request at any time of any holder of Series A Stock or Series C Stock, furnish or cause to be furnished to such holder a like certificate setting forth (i) such adjustments and readjustments, (ii) the Conversion Price at the time in effect, and (iii) the number of shares of Common Stock and the amount, if any, of other property which at the time would be received upon the conversion of such holder's shares. (h) Notices of Record Date. In the event of any taking by the corporation of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend (other than a cash dividend which is the same as cash dividends paid in previous quarters) or other distribution, the corporation shall mail to each holder of Series A Stock and Series C Stock at least ten (10) days prior to the date specified therein, a notice specifying the date on which any such record is to be taken for the purpose of such dividend or distribution. (i) Common Stock Reserved. The corporation shall reserve and keep available out of its authorized but unissued Common Stock such number of shares of Common Stock as shall from time to time be sufficient to effect conversion of the Series A Stock, Series B Stock and Series C Stock. 7. Consent to Certain Distributions. Each holder of Series A Stock, Series B Stock and Series C Stock shall be deemed to have consented, for purposes of Sections 502, 503 and 506 of the General Corporations Law, to distributions made by the corporation and approved by the Board of Directors of the corporation in connection with the repurchase of shares of Common Stock issued to or held by directors and employees of, or consultants to, -15- the corporation upon termination of their employment or services pursuant to agreements providing for the right of said repurchase between the corporation and such persons. 8. Voting Rights. Except as otherwise required by law and the provisions of this Section 8, the holders of Series A Stock, Series B Stock and Series C Stock shall be entitled to notice of any shareholders' meeting and to vote together with the holders of Common Stock as a single class of capital stock upon any matter submitted to shareholders for a vote, on the following basis: (a) Holders of Common Stock and Series B Stock shall have one (1) vote per share; and (b) Holders of Series A Stock and Series C Stock shall have that number of votes per share as is equal to the number of shares of Common Stock into which each such share of Series A Stock or Series C Stock held by such holder is convertible at the record date for the determination of the shareholders entitled to vote on such matters or, if no such record date is established, at the date such vote is taken or any written consent of shareholders is solicited. (c) So long as at least one million (1,000,000) shares of Series A Stock remain outstanding, the holders of the Series A Stock then outstanding shall be entitled, voting together as a class, to elect two (2) directors of the corporation at each election of directors. Any vacancy occurring because of the death, resignation or removal of a director elected by the holders of Series A Stock shall be filled by the vote or written consent of the holders of a majority of the shares of Series A Stock, or in the absence of such action by such holders, by action of the remaining directors then in office. (d) The holders of Common Stock, Series B Preferred and Series C Preferred shall be entitled, voting together as a separate class, to elect two (2) directors of the corporation at each election of directors. Any vacancy occurring because of the death, resignation or removal of a director elected by the holders of Common Stock, Series B Preferred and Series C Preferred shall be filled by the vote or written consent of the holders of a majority of the shares of Common Stock, Series B Preferred and Series C Preferred or, in the absence of such action by such holders, by action of the remaining directors then in office. -16- (e) All directors not elected by the holders of Series A Stock, Series B Stock, Series C Stock or by the holders of Common Stock as set forth above shall be elected by the holders of Common Stock and the holders of Preferred Stock, voting together and not as separate classes, with each share voting as provided in this Section 8. Any vacancy occurring because of the death, resignation or removal of a director elected by the holders of Common Stock and the holders of Preferred Stock voting together shall be filled by the vote or written consent of a majority of the holders of Common Stock and the holders of Preferred Stock voting together as provided above or, in the absence of action by such holders of Common Stock and Preferred stock, by action of the remaining directors then in office. 9. Covenants. In addition to any other rights provided by law, so long as any shares of Preferred Stock shall be outstanding, the corporation shall not, without first obtaining the affirmative vote or written consent of the holders of not less than a majority of the outstanding shares of Preferred Stock voting together as a class: (a) amend or repeal any provision of, or add any provision to, the corporation's Restated Articles of Incorporation or Bylaws if such action would alter or change the preferences, rights or privileges of, or the restrictions provided for the benefit of the Preferred Stock; (b) create any new series or class of stock having any preference or priority as to dividends or assets superior to or on a parity with any such preference or priority of the Preferred stock; (c) increase the total number of authorized shares of the Preferred Stock; (d) pay or declare any dividend or distribution on any shares of Common Stock or apply any of its assets to the redemption, retirement, purchase or other acquisition directly or indirectly, through subsidiaries or otherwise, of any shares of Common Stock except from employees or consultants of the corporation upon termination of employment; (e) effect any sale, lease, assignment, transfer or other conveyance of all or substantially all of the assets of the Corporation or any of its subsidiaries, or any consolidation or merger involving the Corporation or any of its subsidiaries, or any reclassification or other change of any stock, or any recapitalization of the Corporation. -17- 10. Residual Rights. All rights accruing to the outstanding shares of the corporation not expressly provided for to the contrary herein shall be vested in the Common Stock. IV. (A) The liability of the directors of the corporation for monetary damages shall be eliminated to the fullest extent permissible under California law. Any repeal or modification of this Article shall only be prospective and shall not affect the rights under this Article in effect at the time of the alleged occurrence of any action or omission to act giving rise to liability. (B) The corporation is authorized to provide indemnification of agents (as defined in Section 317 of the California Corporations Code) for breach of duty to the corporation and its shareholders through bylaw provisions, through agreements with the agents, and/or through shareholder resolutions, or otherwise, in excess of the indemnification otherwise permitted by Section 317 of the California Corporations Code, subject to the limits on such excess indemnification set forth in Section 204 of the California Corporations Code. Any repeal or modification of this Article shall only be prospective and shall not affect the rights under this Article in effect at the time of the alleged occurrence of any action or omission to act giving rise to indemnification. -18- CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION Whitney G. Newton certifies that: 1. He is the President and the Secretary of Data Storage Systems, Inc., a California corporation. 2. Article III, Paragraph (C) of the articles of incorporation of this corporation is amended to read as follows: "(C) The rights, preferences, restrictions and other matters relating to the four million (4,000,000) shares of Preferred Stock are as follows: 1. Designation. One million (1,000,000) of the shares of Preferred Stock are hereby designated "Series A Preferred Stock" (hereinafter referred to as the "Series A Stock") and five hundred thousand (500,000) of the shares of Preferred Stock are hereby designated "Series B Preferred Stock" (hereinafter referred to as the "Series B Stock") and two million (2,000,000) of the shares of Preferred Stock are hereby designated "Series C Preferred Stock" (hereinafter referred to as the "Series C Stock") with the rights, preferences and privileges as specified herein." 3. The foregoing amendment of articles of incorporation has been duly approved by the board of directors. 4. The foregoing amendment of articles of incorporation has been duly approved by the required vote of shareholders in accordance with Section 902 of the Corporations Code. The total number of outstanding shares of the corporation is 3,133, 334. The number of shares voting in favor of the amendment equaled or exceeded the vote required. The percentage vote required was more than 50%. I further declare under penalty of perjury under the laws of the State of California that the matters set forth in this certificate are true and correct of my own knowledge. DATE: July 24, 1991 /s/ Whitney G. Newton Whitney G. Newton, President /s/ Whitney G. Newton Whitney G. Newton, Secretary CERTIFICATE OF RESTATEMENT OF ARTICLES OF INCORPORATION OF Data Storage Systems, Inc. Whitney G. Newton certifies that: 1. He is the Chief Executive Officer and the Secretary of Data Storage Systems, Inc., a California corporation. 2. The Articles of Incorporation of the Corporation, as amended to the date of the filing of this certificate, including amendments set forth herein but not separately filed (and with the omissions required by section 910 of the Corporations Code) are restated as in Exhibit A attached hereto. 3. The Restated Articles of Incorporation have been duly approved by the Board of Directors of the Corporation. 4. The amendments herein set forth have been duly approved by the required vote of shareholders in accordance with section 903 of the Corporations Code. The total number of outstanding shares of the Corporation is 788,334 shares of Common Stock; 1,000,000 shares of Series A Preferred Stock; 266,666 shares of Series B Preferred Stock, and 1,083,334 shares of Series C Preferred Stock. The number of shares voting in favor of the amendment equaled or exceeded the percentage vote required. The percentage vote required -2- was more than 50% of each class of shares voting separately. March 12, 1991. /s/ Whitney G. Newton Whitney G. Newton Chief Executive Officer /s/ Whitney G. Newton Whitney G. Newton Secretary Each of the undersigned declares under penalty of perjury that he has read the foregoing certificate and knows the contents thereof and that the same is true of his own knowledge. Executed at San Francisco, California, on March 12, 1991. /s/ Whitney G. Newton Whitney G. Newton CERTIFICATE OF APPROVAL OF AGREEMENT OF MERGER OF DATA STORAGE SYSTEMS, INC. (surviving corporation) Kathryn McGovern hereby certifies that: 1. She is the President and Secretary of Data Storage Systems, Inc. a California corporation (the "Corporation"). 2. The Agreement Merger in the form attached was duly approved by the Board of Directors and shareholders of the Corporation. 3. The principal terms of the Agreement of Merger were approved by the Corporation by a vote of a number of shares of Common Stock which equaled or exceeded the vote required. The vote required was greater than 50% of the outstanding shares of Common Stock. 4. The Corporation has one class of stock outstanding, designated "Common Stock" of which 297,588,558 shares of Common Stock were outstanding and entitled to vote on the merger. There are no shares of Preferred Stock outstanding. I further declare under penalty of perjury under the laws of the State of California that the matters set forth in this certificate are true and correct of my own knowledge. Dated: March 15, 1996 By: /s/ Kathryn McGovern ---------------------- Kathryn McGovern President and Secretary CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION OF DATA STORAGE SYSTEMS, INC. The undersigned, Kathryn McGovern hereby certifies that: 1. I am the duly elected Chief Executive Officer and Secretary of Data Storage Systems, Inc., a California Corporation. 2. Article III, Section A of the articles of incorporation of this corporation is amended and restated to read as follows: "This corporation is authorized to issue two classes of stock to be designated, respectively, "Common Stock" and "Preferred Stock." The total number of shares which the corporation is authorized to issue is one hundred forty million (140,000,000) shares. One hundred thirty-seven million (137,000,000) shares shall be Common Stock. Three million (3,000,000) shares shall be Preferred Stock." 3. The first sentence of Article III, Section C, paragraph 6(b) is hereby amended and restated to read as follows: "Each share of Series A Stock, Series B Stock and Series C stock shall automatically convert into fully paid and nonassessable shares of Common Stock at the then effective Conversion Price immediately upon the closing of a firmly underwritten registered public offering covering a primary shall of Common Stock at a public offering price (prior to underwriting discounts and expenses) of $4.00 per share or above with a total offering gross of $5,000,000 or more or upon the consent of a majority of each class of Series A Stock, Series B Stock and Series C Stock." -2- 4. The foregoing amendment of articles of incorporation has been duly approved by the board of directors. 5. The foregoing amendment of articles of incorporation has been duly approved by the required vote of shareholders in accordance with Section 902 of the Corporations Code. The total number of outstanding shares of the corporation is 1,000,000 shares of Series A Preferred Stock, 1,083,334 shares of Series C Preferred Stock and 1,060,000 of Common Stock. The number of shares voting in favor of the amendment equaled or exceeded the vote required. The percentage vote required was more than 50% of the Preferred Stock voting as a single class and more than 50% of the Common Stock voting as a single class. I further declare under penalty of perjury under the laws of the State of California that the matters set forth in this certificate are true and correct of my own knowledge. DATE: November 3, 1995 /s/ Kathryn McGovern Kathryn McGovern, Chief Executive Officer and Secretary CERTIFICATE OF APPROVAL OF AGREEMENT OF MERGER OF TEMP DSSI, INC. (disappearing corporation) Eugene B. Doggett and Garry B. Watzke hereby certify that: 1. They are the Executive Vice President and Secretary, respectively, of Temp DSSI, Inc., a California corporation (the "Corporation"). 2. The Agreement Merger in the form attached was duly approved by the Board of Directors and shareholders of the Corporation. 3. The shareholder approval was by the holders of 100% of the outstanding shares of the Corporation. 4. There is only one class of shares and the number of outstanding shares is 100. We further declare under penalty of perjury under the laws of the State of California that the matters set forth in this certificate are true and correct of our own knowledge. Dated: March 15, 1996 By: /s/ Eugene B. Doggett ------------------------- Eugene B. Doggett Executive Vice President Dated: March 15, 1996 By: /s/ Garry B. Watzke ---------------------- Garry B. Watzke Secretary AGREEMENT OF MERGER THIS AGREEMENT OF MERGER, dated as of March 15, 1996 (the "Agreement"), is made and entered into by Temp DSSI, Inc., a California corporation ("Acquiror Sub") and Data Storage Systems, Inc. a California corporation ("Target" or "Surviving Corporation") (Target and Acquiror Sub being hereinafter collectively referred to as the "Constituent Corporations"). Recitals A. Iron Mountain Records Management, Inc., a Delaware corporation ("Acquiror"), Target and Acquiror Sub have entered into a Reorganization Agreement dated November 17, 1995 (the "Reorganization Agreement"), providing, among other things, for the execution and filing of this Merger Agreement and the merger of Acquiror Sub with and into Target upon the terms set forth in the Reorganization Agreement and this Merger Agreement (the "Merger"). B. The respective Boards of Directors of each of the Constituent Corporations deem it advisable and in the best interests of each of such corporations and their respective shareholders that Acquiror Sub be merged with and into Target. Agreement NOW, THEREFORE, in consideration of the promises and mutual agreements contained in this Merger Agreement, Acquiror and the Constituent Corporations hereby agree that Acquiror Sub shall be merged with and into Target in accordance with the provisions of the laws of the State of California, upon the terms and subject to the conditions set forth as follows: Article 1 The Merger 1.1 Filing. This Merger Agreement, together with the officers' certificates of each of the Constituent Corporations required by the General Corporation Law of the State of California (the "California Law"), shall be filed with the Secretary of State of the State of California at the time specified in the Reorganization Agreement. 1.2 Effectiveness. The Merger shall become effective upon the filing of this Merger Agreement with the Secretary of State of the State of California (the "Effective Time"). 1.3 Merger. At the Effective Time, Acquiror Sub shall be merged into Target and the separate corporate existence of Acquiror Sub shall thereupon cease. Target shall be the Surviving Corporation in the Merger and the separate corporate existence of Target, with all -2- of its purposes, objects, rights, privileges, powers, immunities and franchises, shall continue unaffected and unimpaired by the Merger. 1.4 Further Action. If at any time after the Effective Time any further action is necessary or desirable to carry out the purposes of this Merger Agreement or to vest the Surviving Corporation with the full right, title and possession to all assets, property, rights, privileges, immunities, powers and franchises of either or both of the Constituent Corporations, the officers and directors of the Surviving Corporation are fully authorized in the name of either or both of the constituent Corporations or otherwise to take all such action. Article 2 Corporate Governance Matters 2.1 Articles. The Articles of Incorporation of Target in effect immediately prior to the Effective Time shall be the Articles of Incorporation of the Surviving Corporation unless and until amended as provided by law. 2.2 Bylaws. The Bylaws of the Target in effect immediately prior to the Effective Time shall be the Bylaws of the Surviving Corporation unless and until amended as provided by law. 2.3 Directors. From and after the Effective Time, the directors of Acquiror Sub shall be the directors of the Surviving Corporation and they shall hold office as provided in the Bylaws of the Surviving Corporation. 2.4 Officers. The officers of the Surviving Corporation shall be the officers of Acquiror Sub on the Effective Time and they shall continue to hold office from and after the Effective Time as provided in the Bylaws of the Surviving Corporation. Article 3 Manner of Converting Shares of the Constituent Corporations 3.1 Conversion of Target Shares. (a) At and as of the Effective Time, (A) each Target Share (other than any Dissenting Share) shall be converted into the right to receive an amount (the "Merger Consideration") equal to (i) the difference between $3,310,776 and the total liabilities of the Target as of the close of business on February 29, 1996 (ii) divided by the aggregate number of Target Shares outstanding as of the Effective Time (without interest), and (B) each Dissenting Share shall be converted into the right to receive payment from the Surviving Corporation with respect thereto in accordance with the provisions of the California General Corporation Law; provided, however, that the Merger Consideration shall be subject to equitable adjustment in the event of any stock split, stock dividend, reverse stock split, or other change in the number of Target Shares outstanding between the date hereof and the -3- Effective Time; and further provided that there shall be withheld from payment to each holder of record a pro rata portion of the Merger Consideration which would otherwise be paid to such person such amount which, when aggregated, is equal to the Closing Escrow Deposit (as defined in Section 3.6). No target Shares shall be deemed to be outstanding or to have any rights, other than those set forth below in Section 3.2, after the Effective Time. For purposes hereof, the following terms shall have the following meanings: (i) "Target Shares" shall mean each issued and outstanding share of the Common Stock, no par value, of the Target issued and outstanding as of the Effective Time. (ii) "Dissenting Shares" shall mean any Target Share which any stockholder who has exercised his or her appraisal rights under the California General Corporation Law holds of record. 3.2 Acquiror Sub Common Stock. At the Effective Time, each then outstanding share of common stock, $1.00 par value, of Acquiror Sub shall cease to be an existing and issued share and shall become and be converted into, by virtue of the Merger and without any action on the part of Acquiror, Acquiror Sub or Target, one share of Common Stock of the Surviving Corporation and the aggregate of such shares shall constitute the only outstanding shares of capital stock of the Surviving Corporation. 3.3 Closing of Target Transfer Books. At and after the Effective Time, holders of certificates representing Target Shares shall cease to have any rights as shareholders of Target and the stock transfer books of Target shall be closed with respect to Target Shares issued and outstanding immediately prior to the Effective Time and no further transfer of such shares shall thereafter be made on such stock transfer books. If, after the Effective Time, valid certificates previously representing such shares are presented to Acquiror or Target, they shall be exchanged as provided in Section 3.4. 3.4 Exchange of Certificates for Merger Consideration. Promptly following the Effective Time, Acquiror or the Surviving Corporation shall transmit to the former Target shareholders appropriate documents to be used by them to surrender their Target Shares certificates in exchange for payment of the Merger Consideration. Until so surrendered and exchanged, each certificate for Target Shares shall represent solely the rights to receive payment of the Merger Consideration that it is entitled to pursuant to Section 3.1 (or to perfect the holder thereof's right to receive payment for such shares pursuant to Chapter 13 of the California Law and Section 3.5 hereof); provided, however, that customary and appropriate certifications and indemnities allowing exchange against lost or destroyed certificates shall be provided. 3.5 Dissenting Shares. Notwithstanding anything in this Agreement to the contrary, Target Shares that are issued and outstanding immediately prior to the Effective Time and that are held by shareholders who have not voted such shares in favor of the Merger and who have delivered a written demand for purchase of such shares in the manner provided in Chapter 13 of the California Law ("Dissenting Shares") shall not be canceled and -4- converted into rights to receive payment of the Merger Consideration in accordance with Section 3.1 unless and until such holder shall have failed to perfect, or shall have effectively withdrawn or lost, such holder's right to demand purchase and payment under the California Law. If such holder shall have so failed to perfect, or shall have effectively withdrawn or lost such right, such holder's Target Shares shall thereupon be deemed to have been canceled and converted as described in Section 3.1 at the Effective time, and each such share shall represent solely the right to receive payment of the Merger Consideration in accordance with such Section 3.1. From and after the Effective Time, no holder of Target Shares who has demanded the purchase of shares as provided in Chapter 13 of the California Law shall be entitled to vote such holder's shares for any purpose or to receive payment of dividends or other distributions with respect to such holder's shares (except dividends and other distributions payable to shareholders of record at a date which is prior to the Effective Time). 3.6 Post-Closing Escrow. A pro rata portion of the Merger Consideration payable in respect of each Target Share equal in the aggregate to $500,000 (the "Closing Escrow Deposit") shall be paid to Cooley Godward Castro Huddleston & Tatum, as escrow agent (the "Post-Closing Escrow Agent") under that certain Post-Closing Escrow Agreement in the form annexed to the Reorganization Agreement as Exhibit 1.6 (the "Post-Closing Escrow Agreement"). The Post-Closing Escrow Agent shall hold, invest and disburse the Post-Closing Escrow Deposit and any interest or dividends therein (together with the Escrow Deposit, the "Escrow Fund") as provided in the Post-Closing Escrow Agreement. The Post-Closing Escrow Agreement shall provide for disbursement of funds to the former shareholders of Target (other than funds required to cover claims) on December 15, 1996. Article 4 Termination and Amendment 4.1 Termination. Notwithstanding the approval of this Merger Agreement by the shareholders of Acquiror Sub and Target, this Merger Agreement shall terminate forthwith in the event that the Reorganization Agreement shall be terminated as therein provided. 4.2 Amendment. This Merger Agreement may be amended by the parties hereto at any time before or after approval hereof by the shareholders of either Acquiror Sub or Target, but, after any such approval, no amendment shall be made which without the further approval of such shareholders would (i) have a material adverse effect on the shareholders of either Acquiror Sub or Target, (ii) change any of the principal terms of the Merger Agreement, or (iii) change any term of the Articles of Incorporation of the Surviving Corporation. This Merger Agreement may not be amended except by an instrument in writing signed on behalf of each of the parties hereto. -5- IN WITNESS WHEREOF, the parties have duly executed this Merger Agreement as of the date first written above. DATA STORAGE SYSTEMS, INC. a California corporation By: /s/ Kathryn McGovern By: /s/ Kathryn McGovern ------------------------- ------------------------ Its Secretary Its President TEMP DSSI, INC. a California corporation By: /s/ Garry B. Watzke By: /s/ John F. Kenny ------------------------- ------------------------ Its Secretary Title: Vice President Iron Mountain Records Management, Inc. a Delaware corporation By: /s/ Garry B. Watzke By: /s/ John F. Kenny ------------------------- ------------------------ Its Secretary Title: Vice President EX-3.1M 13 CERT. OF FORMATION IRON MTN RECORDS MGMT MISSOURI EXHIBIT 3.1M CERTIFICATE OF FORMATION OF IRON MOUNTAIN RECORDS MANAGEMENT OF MISSOURI LLC The undersigned, an authorized natural person, for the purpose of forming a limited liability company, under the provisions and subject to the requirements of the State of Delaware (particularly Chapter 18, Title 6 of the Delaware Code and the acts amendatory thereof and supplemental thereto, and known, identified, and referred to as the "Delaware Limited Liability Company Act"), hereby certified that: FIRST: The name of the limited liability company (hereinafter called the "limited liability company") is Iron Mountain Records Management of Missouri LLC. SECOND: The address of the registered office and the name and the address of the registered agent of the limited liability company required to be maintained by Section 18-104 of the Delaware Limited Liability Company Act are The Prentice-Hall Corporation System, Inc., 1013 Centre Road, Wilmington, DE 19805. Executed on April 23, 1996 /s/ Garry B. Watzke Garry B. Watzke Authorized Person EX-3.2M 14 LIMITED LIABILITY COMPANY AGREEMENT EXHIBIT 3.2M LIMITED LIABILITY COMPANY AGREEMENT OF IRON MOUNTAIN RECORDS MANAGEMENT OF MISSOURI LLC A Delaware Limited Liability Company This Limited Liability Company Agreement of Iron Mountain Records Management of Missouri LLC (this "Agreement"), dated as of April 24, 1996, is adopted by and executed and agreed to by Iron Mountain Records Management, Inc. and Iron Mountain Records Management of Maryland, Inc. (individually, a "Member" and collectively referred to as the "Members"). ARTICLE 1 DEFINITIONS P. 1.01. Definition. The following terms shall have the following meanings when used in this Agreement: "Act" means the Delaware Limited Liability Company Act and any successor statute, as amended form time to time. "Adjusted Capital Account Deficit" means the Capital Account maintained for each Member as of the end of each fiscal year of the Company after giving effect to the following adjustments: (a) Increased by any amounts which the Member is obligated to restore under the stands set forth in Treas. Reg. ss. 1.704-1(b)(2)(ii)(c) or is deemed obligated to restore under Treas. Reg. ss. 1.704-2(g)(1) (relating to minimum gains) and Treas. Reg. ss. 1.704-2(i))(5) (relating to member minimum gains); and (b) Decreased by: (i) All losses and deductions that, as of the end of the applicable fiscal year, are reasonably expected to be allocated to the Member in years subsequent to the applicable fiscal year under Code ss.ss. 704(e)(2) and 706(d) and under Treas. Reg. ss. 1.751-1(b)(ii); and (ii) Distributions that are reasonably expected to be made to the applicable Member to the extent that such distributions exceed offsetting increases in the applicable Member's Capital Account that are reasonably expected to occur during (or prior to) the year in which such distributions are reasonably expected to be made. Notwithstanding anything to the contrary contained herein, an Adjusted Capital Account Deficit shall be determined in accordance with Treas. Reg. ss. 1.704-1(b)(2)(ii)(d). "Adjusted Capital Contribution" means, as of any day, a Member's Capital Contribution adjusted as follows: (a) Increased by the amount of any Company liabilities which, in connection with distributions pursuant to P. P. 4.06 or 10.03, are assumed by such Member or are secured by any Company Property distributed to such Member; and (b) Reduced by the amount of cash and the fair market value (as determined by the Members) of any Company Property distributed to such Member pursuant to P. P. 4.06 and 10.03 and the amount of any liabilities of such Member assumed by the Company or which are secured by any Property contributed by such member to the Company. In the event any Person transfers all or any portion of its Interest, the transferee shall succeed to the Adjusted Capital Contribution of the transferor to the extent it relates to the transferred Interest. "Affiliate" of another Person means: (a) any entity or individual that directly or indirectly controls or holds the power to vote 10% or more of the outstanding voting securities of the Person in question; (b) any Person 10% or more of whose voting securities are directly or indirectly owned, controlled or held with power to vote, by such other Person; (c) any Person directly or indirectly controlling, controlled by, or under common control with such other Person; (d) any officer, director or partner of such other Person; and (e) if such other Person is an officer, director or partner, any company for which such Person acts in any such capacity. "Agreed Value" of any Contributed Property means the fair market value of the property at the time of contribution as determined by the Members; provided, however, that the Agreed Value of any Property deemed contributed to the Company for federal income tax purposes upon termination and reconstitution thereof pursuant to Code ss. 708 shall be determined in accordance with P. 3.06. Subject to P. 3.06, in the event that more than a single item of Property is contributed to the Company in a single or integrated transaction, the Members shall use such method as they deem reasonable and appropriate to allocate the aggregate Agreed Value of Contributed Properties among each separate property in proportion to the respective fair market value of each item of such Property. "Articles" means the Certificate of Formation filed for the Company in accordance with the Act. "Bankruptcy" means, with respect to any Member: (i) an assignment for the benefit of creditors; (ii) a voluntary petition in bankruptcy; (iii) adjudication as a bankrupt or insolvent; (iv) the filing of a petition or answer seeking any reorganization, arrangement, composition, readjustment, liquidation or similar relief under any statute, regulation or law; (v) the filing of an answer or other pleading admitting or failing to contest the material allegations of a petition filed against the Member in any proceeding of this nature; or (vi) seeking, consenting to, or acquiescing in the appointment of a trustee, receiver, or liquidator of such Member's properties or of all or any substantial part of the Member's properties. "Book-Tax Disparity" shall mean with respect to any item of Contributed Property or Revalued Property, as of the date of any determination, the difference between the Carrying Value of such Contributed Property or Revalued Property and the adjusted basis thereof for federal income tax -2- purposes as of such date. A Member's share of the Company's Book-Tax Disparities in all of its Contributed Property and Revalued Property will be reflected by the difference between such Member's Capital Account balance, as maintained pursuant to Article 3, and the balance of such Member's Capital Account computed as if it had been maintained strictly in accordance with federal income tax accounting principles. "Capital Contributions" means the total amount of capital contributed by a Member to the Company, as determined from time to time, which shall include the Net Agreed Value of any Contributed Property. "Carrying Value" means: a) With respect to a Contributed property, the Agreed Value of such Property reduced (but not below zero) by all depreciation, depletion (computed as a separate item of deduction), amortization and cost recovery deductions charged to the Members' Capital Accounts; b) With respect to a Revalued Property, the fair market value of such Property at the time of revaluation, as determined by the Members in accordance with P. 3.07 hereof, reduced (but not below zero) by all depreciation, depletion, amortization and cost recovery deductions charged to the Members' Capital Accounts; and c) With respect to any other Company Property, the adjusted basis of such Property for federal income tax purposes, all as of the time of determination. The Carrying Value of any Property shall be adjusted from time to time in accordance with P. 3.07 hereof. "Code" means the Internal Revenue Code of 1986 and any successor statute, as amended from time to time. "Company" means Iron Mountain Records Management of Missouri LLC, a Delaware limited liability company. "Company Property" or "Property" means all properties, assets and rights of any type owned by the Company. "Contributed Property" means any property contributed to the Company at any time or from time to time (or deemed contributed to the Company upon a termination and reconstitution thereof under Code ss. 708). Once the Carrying Value of Contributed Property has been adjusted pursuant to P. 3.07 hereof, such property shall be deemed Revalued Property and shall no longer be deemed Contributed Property. "Corporation Act" means the Delaware General Corporation Law and any successor statute, as amended from time to time. -3- "Impasse" means the failure of a Member to consent to or approve any of the following actions, after any such action has been proposed by the other Member: (i) to sell or exchange all or any substantial part of the Company Property; (ii) to change the Company's purpose or the purpose for which the Company Property is owned; (iii) to refinance any of the Company's indebtedness; (iv) to incur more than Fifty Thousand Dollars ($50,000) of indebtedness in the aggregate; or (v) to raise any additional capital for the Company and/or issue any additional Membership Interests. An Impasse shall be considered to have occurred if the Members are unable to agree with respect to any of the foregoing actions within ten (10) days after any such action has been proposed. "Limited Liability Company Agreement" means this Agreement as it may from time to time be amended. "Majority Interest" means one or more Members holding more than 50% of the Units. "Member" means each Person identified as such in the introductory paragraph and each Person hereafter admitted to the Company as a Member as provided in this Agreement. The Members' Interests are set forth on attached and incorporated Exhibit "A". "Membership Interest" or "Interest" means the membership interest or interest of a member in the Company, including the right to any and all benefits to which such member may be entitled in accordance with this Agreement, and the obligations as provided in this Agreement and the Act. "Net Agreed Value" means, as follows: (a) In the case of any Contributed Property, the Agreed Value of such property net of liabilities either assumed by the Company upon such contribution or to which such property is subject when contributed to the Company, as determined in accordance with Code ss.752; and (b) In the case of any property distributed to a Member, the Company's Carrying Value of such property at the time such property is distributed, net of any indebtedness either assumed by such distributee Member upon such distribution or to which such property is subject at the time of distribution determined in accordance with Code ss.752. "Net Cash Receipts" means the gross cash proceeds from the operation of the Company's business less the portion thereof used to establish reserves for or to pay Company expenses, debt payments and capital expenditures. "Net Cash Receipts" shall include any net cash proceeds from the sale or disposition of company Property and from the refinancing of indebtedness of the Company, shall be increased by any reduction of reserves previously established by the Members, and shall not be reduced by depreciation, cost recovery, amortization or similar noncash deductions. "Person" means any individual, corporation, trust, partnership, joint venture, limited liability company or other entity. -4- "Proceeding" has the meaning given that term in P. 7.01. "Profits" and "Losses" mean, for each fiscal year, an amount equal to the Company's taxable income or loss for such year, determined in accordance with Code ss.703(a) (including all items required to be stated separately) with the following adjustments: (a) Any income exempt from federal income tax shall be included; (b) Any expenditures of the Company described in Code ss.705(a)(2)(B) (including expenditures treated as such pursuant to Treas. Reg. ss.1.704-1(b)(2)(iv)(i)) shall be subtracted; (c) In the event any Company Property is revalued pursuant to P. 3.07, the amount of such adjustment shall be taken into account in determining gain or loss from the disposition of such Property; (d) Any items which are specially allocated pursuant to P. 4.02 or 4.03 shall not be taken into account in computing Profits or Losses; (e) Gain or loss resulting from any disposition of Company Property with respect to which gain or loss is recognized for federal income tax purposes shall be computed by reference to the Carrying Value of the Property disposed of, notwithstanding that the adjusted tax basis of such Property differs from its Carrying Value; and (f) In the case of Company Property having a Book-Tax Disparity, in lieu of depreciation, amortization or other cost recovery deductions allowable under the Code ("Tax Depreciation"), there shall be taken into account for each Property a depreciation allowance which bears the same ratio to its initial Agreed Value (or, with respect to Revalued Property, its initial Carrying Value) as the Tax Depreciation for such year bears to its beginning adjusted tax basis. "Representative" shall mean the legally appointed guardian of a mentally incapacitated Member, the conservator of a mentally incapacitated Member's assets or the legally appointed and qualified executor or personal representative of the estate of a deceased Member. In the event no such guardian, executor or personal representative is appointed, then the Representative shall mean the spouse of such incapacitated or deceased Member, or if such Member does not have a spouse or the spouse is not then living or is unable ro unwilling to act, such Member's then living lineal descendants who are willing and capable of acting, one at a time in descending order of age but in no event younger than 21 years of age or, if none, such Member's then-living lineal ancestors who are willing and capable of acting, one at a time and in ascending order of age. "Revalued Property" shall mean any Property the Carrying Value of which has been adjusted in accordance with P. 3.07(a) or (b). If a Revalued Property is deemed distributed by, and recontributed to, the Company for federal income tax purposes upon a termination of the Company pursuant to Code ss.708, such Property shall constitute a Contributed Property until the Carrying Value of such Property is subsequently adjusted (if at all) pursuant to P. 3.07(a) or (b). -5- "Sharing Ratio" shall mean the ratio in which the Members share in all Profits, Losses and distributions to the Members. The Sharing Ratio for each Member shall be the same percentage that such Member's Units bear to all outstanding Units. "Transfer" means, with respect to an Interest, a sale, assignment, gift or any other disposition by a Member, whether voluntary, involuntary or by operation of law. "Transferor" means a Member who proposes to make a voluntary Transfer of its Interest, a Withdrawing Member, or the Representative of a Withdrawing Member. "Treasury Regulations", Treas. Reg. or "Reg.") means the income tax regulations promulgated under the Code as amended from time to time (including corresponding provisions of succeeding regulations). "Unit" means an Interest representing a Capital Contribution $10,000 to the Company. "Unrealized Gain" attributable to any item of Company Property means, as of any date of determination, the excess, if any, of (a) the fair market value of such Property (as determined under P. 3.07 hereof) as of such date, over (b) the Carrying Value of such Property as of such date (prior to any adjustment to be made pursuant to P. 3.07) as of such date. "Unrealized Loss" attributable to any item of Company Property means, as of any date of determination, the excess, if any, of (a) the Carrying Value of such Property as of such date (prior to any adjustment to be made pursuant to P. 3.07 as of such date), over (b) the fair market value of such Property (as determined under P. 3.07) as of such date. "Withdrawing Member" has the meaning given that term in P. 5.03(b). ARTICLE 2 ORGANIZATION P. 2.01. Formation. The Company has been organized as a Delaware limited liability company under and pursuant to the Act and a certificate of formation for the Company has been filed with the Secretary of State of Delaware. The rights and obligations of the Members shall be as set forth in the Act except as this Agreement expressly provides otherwise. P. 2.02. Name. The name of the Company is "Iron Mountain Records Management of Missouri LLC" and all Company business shall be conducted in that name or such other name as the Members may select from time to time and which is in compliance with all applicable laws. P. 2.03. Registered Office and Registered Agent and Principal Office. The registered office of the Company required by the Act to be maintained in the State of Delaware shall be the office of the initial registered agent named in the Certificate of Formation or such other office as the Members may designate from time to time in the manner provided by law. The registered agent -6- of the Company in the State of Delaware shall be the initial registered agent named in the Articles or such other Person or Persons as the Members may designate from time to time. The principal office of the Company shall be at such place as the Members may designate from time to time, and the Company shall maintain records there as required by the Act. P. 2.04. Purposes. The purposes of the Company shall be to provide records management and storage services and to undertake all such other activities and businesses as may be undertaken by a limited liability company under the Act. P. 2.05. Foreign Qualification. The Company shall not engage in any business outside the State of Delaware unless and until the Company has complied with the requirements necessary to qualify the Company as a foreign limited liability company in the other jurisdiction. P. 2.06. Term. The Company commenced on the date of issuance of its certificate of formation and shall continue in existence until December 31, 2025 or such earlier time as may be determined in accordance with the terms of the Agreement. P. 2.07. Recapitalization, Acquisitions, Restructuring and Mergers. The Company may participate in or be a party to any recapitalization, acquisition, restructuring or merger in accordance with and as allowed by the Act or the Corporation Act. P. 2.08. Entity Declaration. The Company shall not be a general partnership, a limited partnership or a joint venture, and no Member shall be considered a partner or joint venturer of or with any other Member, for any purposes other than for federal and state tax purposes, and this Agreement shall not be construed otherwise. ARTICLE 3 CAPITAL CONTRIBUTIONS AND CAPITAL ACCOUNTS P. 3.01. Initial Contributions. The Members shall make Capital Contributions to the Company in cash in the amount set forth in attached and incorporated Exhibit "A." P. 3.02. Subsequent Contributions. No Member shall be obligated to make any Capital Contributions to the Company other than those set forth on Exhibit "A." P. 3.03. Return of Capital Contributions. Each Member agrees not to withdraw as a member of the Company and, except as expressly provided herein, no Member shall be entitled to the return of any part of its Capital Contributions or to be paid interest in respect to either its Capital Account or its Capital Contributions. An unpaid Capital Contribution is not a liability of the Company or of any Member. P. 3.04. Loans by Members. Any Member may, but is not obligated to, loan to the Company such sums as the Members determine to be appropriate for the conduct of the Company's business. Any such loans shall bear interest at one percent (1%) above the prime rate of interest -7- charged from time to time by The Chase Manhattan Bank (National Association) and shall be on such other terms as the Members may agree. All loans shall be repaid in full before any distributions are made to the Members. P. 3.05. Capital Accounts. A separate Capital Account shall be maintained for each Member in accordance with Treas. Reg. ss.1.704-1(b)(2)(iv). Subject to the requirements of Treas. Reg. ss.704-1(b)(2)(iv), each Capital Account: (a) shall be credited with: (i) all cash contributions of such Members to the Company; (ii) the Net Agreed Value of Contributed Property, (iii) such Member's share of the Company's Profits; (iv) the amount of any liabilities of the Company assumed by such Member (other than liabilities included in the netting process of Subparagraph (b)(ii) below or increases in the Member's share of the Company's liabilities determined in accordance with the provisions of Code ss.752); and (v) the amount of any basis increase in Company Property attributable to investment credit recapture allocated to such Member; and (b) shall be debited for: (i) distributions of cash to such Member; (ii) the Net Agreed Value of Company Property distributed to such Member, (iii) such Member's share of the Company's Losses (including expenditures which can neither be capitalized nor deducted for tax purposes, organization and syndication expenses not subject to amortization, and loss on sale or disposition of Company Property, whether or not disallowed under the rules of Code ss.ss.267 or 707, but excluding losses or deductions described in Treas. Reg. ss.1.704-1(b)(4)(i) or (iii)); (iv) the amount of any liabilities of such Member assumed by the Company (other than liabilities already included in the netting process of Subparagraph (a)(ii) above or decreases in the Member's share of the Company's liabilities determined in accordance with the provisions of Code ss.752); and (v) the amount of any basis decrease in Company Property attributable to investment credit recapture allocated to such Member. P. 3.06. Capital Accounts Upon Sale or Exchange of Membership Interests. Upon the sale or exchange of an Interest, the following shall apply: (i) if such sale or exchange causes a termination of the Company in accordance with Code ss.708(b)(1)(B), the Company's Property shall be deemed to have been distributed to the Members in a liquidation of the Company and to have been recontributed to a new Company, and the Capital Accounts of the Members shall be redetermined in accordance with P. 3.07, or (ii) if such sale or exchange does not cause a termination of the Company in accordance with Code ss.708(b)(1)(B), the Capital Account of the selling or exchanging Member will be transferred to the transferee on a pro rata basis. P. 3.07. Revaluation of Capital Accounts Upon Occurrence of Certain Events. (a) Contributions. In accordance with the provisions of Treas. Reg. ss.1.704- 1(b)(2)(iv)(f), if after the initial capital is contributed pursuant to P. 3.01, money or property in other than a de minimis amount is contributed to the Company in exchange for an Interest, the Capital Accounts of the Members and Carrying Values of all the Company's Property (determined immediately prior to such issuance) shall be adjusted to reflect the Unrealized Gain or Unrealized Loss attributable to each such Company Property as if such Unrealized Gain or -8- Unrealized Loss had been recognized on a sale of each such item of Company Property immediately prior to such issuance and had been allocated to the Members in accordance with Article 4. In determining the Unrealized Gain or Unrealized Loss, the fair market value of Company Property shall be as determined by the Members. (b) Distributions. In accordance with the provisions of Treas. Reg. ss.1.704- 1(b)(2)(iv)(f), if money or Company Property in other than a de minimis amount is distributed (including any deemed distribution under P. 3.06(i)) to a Member in exchange for or part of an Interest, the Capital Accounts of the Members and the Carrying Values of all the Company's Property (determined immediately prior to such distribution) shall be adjusted to reflect the Unrealized Gain or Unrealized Loss attributable to each item of Company Property as if such Unrealized Gain or Unrealized Loss had been recognized on a sale of each such item of Company Property immediately prior to such distribution and had been allocated to the Members in accordance with Article 4. In determining the Unrealized Gain or Unrealized Loss, the fair market value of the distributed Property shall be as determined by the Members. ARTICLE 4 ALLOCATIONS AND DISTRIBUTIONS P. 4.01. Allocation of Profits and Losses. After giving effect to the special allocations set forth in P. P. 4.02 and 4.03, Profits and Losses for each fiscal year shall be allocated among the Members in accordance with the Sharing Ratio. P. 4.02. Special Allocations. Items of income, gain, loss and deduction shall be allocated in accordance with the provisions of this P. 4.02 without regard to the allocation provision contained in P. 4.01 in the following order: (a) Qualified Income Offset. If any Member's Capital Account is unexpectedly adjusted for, or such Member is unexpectedly allocated or there is unexpectedly distributed to such Member, any item described in Treas. Reg. ss.1.704-1(b)(2)(ii)(d)(4)-(6), and such treatment creates or increases a Member's Adjusted Capital Account Deficit, then without regard to the allocations provided in P. 4.01, the Company shall allocate to such member items of Company income and gain (consisting of a pro rata portion of each item of Company income, including gross income, and gain for such year) in an amount and manner sufficient to eliminate such Adjusted Capital Account Deficit as quickly as possible. (b) Gross Income Allocation. In the event that a Member has a deficit Capital Account at the end of any Company fiscal year which is in excess of the sum of (i) the amount the Member is obligated to restore pursuant to any provision of this Agreement, and (ii) the amount the Member is deemed to be obligated to restore pursuant to Treas. Reg. ss.1.704-2(g) and (i)(5), the Member shall be specially allocated items of Company income and gain in the amount of such excess as quickly as possible, provided that an allocation pursuant to this paragraph shall be made if and to the extent that the Member would have a deficit Capital Account in excess of -9- such sum after all other allocations provided for in this P. 4.02 have been tentatively made as if this P. 4.02(b) were not in this Agreement. P. 4.03. Curative Allocations. The allocations set forth in P. 4.02 ("Regulatory Allocations") are intended to comply with certain requirements of Treas. Reg. ss.1.704-1(b). Notwithstanding any other provision of Article 4 (other than Regulatory Allocations), the Regulatory Allocations shall be taken into account in allocating other profits, losses and items of income, gain, loss and deduction among the Members so that, to the extent possible, the net amount of such allocations of other profits, losses and other items and the Regulatory Allocations to each member shall be equal to the amount that would have been allocated if the Regulatory Allocations had not occurred. P. 4.04. Code Sections 704(c) Allocations. In accordance with Code ss.704(c), income, gain, loss and deduction concerning any Contributed Property shall, solely for tax purposes, be allocated among the Members to take account of any variation between the adjusted tax basis of such property and the Agreed Value of such property upon contribution. If the value of any Company Property is adjusted under P. 3.07 of this Agreement, subsequent allocations of income, gain, loss and deduction with respect to such asset shall take account of any variation between the adjusted tax basis of such asset for federal income tax purposes and its Carrying Value in the same manner as under Code ss.704(c). Allocations under this P. 4.04 are solely for purposes of federal income taxes and shall not affect or be taken into account in computing any Member's Capital Account. P. 4.05. Allocations Concerning Transferred Interests. Unless the Code requires otherwise, any Profits or Losses allocable to an interest which has been transferred during any year shall be allocated among the Persons who were holders of such Interest during such year by taking into account their varying interests during such taxable year in accordance with Code ss.706(d) and using any convention selected by the Members. P. 4.06. Distributions of Net Cash Receipts. Except as otherwise provided in P. 10.03, Net Cash Receipts, if any, shall be distributed to the Members within thirty (30) days after the end of each fiscal year, in the following order and priority: (a) First, pro rata to the Members in proportion to their Units, an amount equal to their Adjusted Capital Contributions, and (b) The balance to the Members in accordance with the Sharing Ratio. ARTICLE 5 MEMBERSHIP; DISPOSITIONS OF INTERESTS P. 5.01. Initial Members. The initial members of the Company are the Persons executing this Agreement as Members as of the date of this Agreement, each of which is admitted to the -10- Company as a Member effective contemporaneously with the execution by such Person of this Agreement. P. 5.02. Representations and Warranties. Each Member hereby represents and warrants to the Company and to each other Member that (a) if that Member is a corporation, it is duly organized, validly existing, and in good standing under the law of the state of its incorporation and is duly qualified and in good standing as a foreign corporation in the jurisdiction of its principal place of business (if not incorporated therein); (b) if that Member is a limited liability company, it is duly organized, validly existing, and (if applicable) in good standing under the law of the state of its organization and is duly qualified and (if applicable) in good standing as a foreign limited liability company in the jurisdiction of its principal place of business (if not organized therein); (c) if that Member is a partnership, trust, or other entity, it is duly formed, validly existing, and (if applicable) in good standing under the law of the state of its formation, and if required by law is duly qualified to do business and (if applicable) in good standing in the jurisdiction of its principal place of business (if not formed therein), and the representations and warranties in clauses (a)-(c), as applicable, are true and correct with respect to each partner (other than limited partners), trustee, or other member thereof; (d) the Member has full corporate, limited liability company, partnership, trust, or other applicable power and authority to execute and agree to this Agreement and to perform its obligations hereunder and all necessary actions by the board of directors, shareholders, members, partners, trustees, beneficiaries, or other Persons necessary for the due authorization, execution, delivery, and performance of this Agreement by that Member have been duly taken; (e) the Member has duly executed and delivered this Agreement; (f) the Member's authorization, execution, delivery, and performance of this Agreement does not conflict with (i) any law, rule or court order applicable to that Member, (ii) that Member's articles of incorporation, bylaws, partnership agreement, Agreement or articles of organization, or (iii) any other agreement or arrangement to which that Member is a party or by which it is bound. P. 5.03. Restrictions on Transfer of Membership Interests. (a) Voluntary Transfer. If a Member intends to Transfer any Membership Interests it owns to any Person other than the Company, it shall give written notice to the Company and the nonselling Member ("Remaining Member") of its intention to do so ("Transfer Notice"). The Transfer Notice, in addition to stating the Member's intention to Transfer its Membership Interests, shall state: (i) the number of Units it desires to Transfer; (ii) the name, business and residence address of the proposed transferee; and (iii) whether or not the Transfer is made at arm's length for full and valuable consideration and, if so, the amount of the consideration and the other terms of the sale. For sixty (60) days following the Company's receipt of the Transfer Notice (the "Company Option Period"), the Company shall have the option to purchase all or any portion of the Membership Interests which are proposed to be transferred, for the price and upon the terms set form in P. 5.03(i), and if the Company does not exercise its option to purchase all, but not less than all, of such Membership Interests within said sixty (60)-day period, the Remaining Member for a period of fifteen (15) days after the expiration of the Company Option Period shall have an option to purchase all of the membership Interests which have not been purchased by the Company, at the price and upon the terms set forth in P. 5.03(i). -11- (b) Involuntary Transfers. In the event of the death, incompetency, bankruptcy, withdrawal or dissolution of a Member (a "Withdrawing Member"), (i) for a period of ninety (90) days after the Company receives actual notice thereof, the Company shall have the option to purchase all or any portion of the Withdrawing Member's Interest, for the price and upon the terms set forth in P. 5.03(i). If the Company does not exercise its option to purchase all of the Withdrawing Member's Interest, for a period ending fifteen (15) days after the close of the Company's 90-day option period, the Remaining Member shall have an option to purchase all, but not less than all, of such Withdrawing Member's Interest at the price set forth in P. 5.03(i)(i)(2) and upon the same terms as provided for an option regarding a voluntary transfer in P. 5.03(a) of this Agreement. Notwithstanding the foregoing, neither the Company nor the Remaining Member may exercise this option unless the Remaining Member has agreed pursuant to P. 10.01(f) to continue the Company's business with a new Member. If the Company and the Remaining Member do not exercise their options, the provisions of P. 5.03(e) and (g) shall apply to the Withdrawing Member. (c) Exercise of Options. (i) Means of Exercise. The Company and the Remaining Member who exercises any option granted by this Article 5 shall do so by giving written notice ("Exercise Notice") of the exercise of their respective options within the time periods provided in this Article 5 to the Member and, in the case of an option upon involuntary transfer, to the Withdrawing Member's Representative. (ii) Voting to Exercise. A Transferor, in its capacity as a Member, shall not be entitled to vote in the Company's determination of whether to exercise any purchase option granted by this Agreement or with respect to any decisions or actions involving the purchase option or the consummation of the exercise thereof. (d) Nonexercise of Options. If the Remaining Member and the Company fail to exercise their purchase options to acquire all of the membership Interests which are proposed to be transferred in compliance with P. 5.03(a) of this Agreement, the Transferor may, within thirty (3) days following their expiration of the option period for the Remaining Member, transfer the Interests to the transferee named in the Transfer Notice, subject to the terms of this Agreement; provided, however, that such Transfer must be upon the terms and for the consideration specified in said Transfer Notice. If the Transfer is not upon the terms or is not to the transferee stated in the Transfer Notice, or is not made within said thirty (30)-days period, or if the Transferor, after the Transfer, reacquires all or any portion of the transferred Units, the initial Transfer shall be void and without legal or other effect. (e) Requirements for Transfer. Subject to any restrictions on transferability required by law (including the Securities Act of 1933, any state securities or "Blue Sky" law, and the rules promulgated thereunder), and subject to the provisions of P. 5.03(a) and (b), each Member shall have the right to Transfer (but not to substitute the assignee as a substitute Member in its place, except in accordance with P. 5.03(g) hereof), by a written instrument, the whole or any part -12- of its Interest, provided that: (i) the transferee is a citizen and resident of the United States, and otherwise not a tax-exempt entity under Section 168(h) of the Code; (ii) the Transferor delivers to the Company and the Remaining Member an unqualified opinion of counsel in form and substance satisfactory to counsel designated by the Remaining Member that neither the Transfer nor any offering in connection therewith violates any provision of any federal or state securities law; (iii) the transferee executes a statement that it is acquiring such Interest or such part thereof for its own account for investment and not with a view to distribution, fractionalization or resale thereof; and (iv) the Company receives a favorable opinion of the Company's legal counsel or such other counsel selected by the Remaining Member that such Transfer would not result in the termination of the Company (within the meaning of Section 708(b) of the Code) or the termination of its status as a partnership under the Code; provided, further, that the Remaining Member may elect to waive the requirement of the opinions of counsel set forth in P. 5.03(e)(ii) and (iv) above should it, in its sole discretion, determine that the cost or time delays involved in procuring such opinions may impede the Company's ability to effect the contemplated Transfer. (f) Effectiveness of Assignment. No Transfer shall be effective unless and until the requirements of P. 5.03(e) are satisfied. The Transfer by a Member of all or part of its Interest shall become effective on the first day of the calendar month immediately succeeding the month in which all of the requirements of this P. 5.03 have been met, and the Company has received from the Transferor a transfer fee sufficient to cover all expenses of the Company connected with such transfer; provided, however, that the Remaining Member may elect to waive this fee in its sole discretion. All distributions prior to the effective date shall be made to the Transferor and all distributions made thereafter shall be made to the transferee. (g) Requirements for Admission. No transferee of the whole or a portion of a Member's Interest shall have the right to become a Member unless and until all of the following conditions are satisfied: (i) a duly executed and acknowledged written instrument of transfer approved by the Remaining Member has been filed with the Company setting forth (A) the intention of the transferee to be admitted as a Member, (B) the notice address of the transferee, and (C) the number of Units transferred by the Transferor to the transferee; (ii) the opinions of counsel described in P. 5.03(e) above are delivered to the Company and the Remaining Member, subject to the Remaining Member's right to waive the delivery of these opinions in its sole discretion; the Transferor and transferee execute and acknowledge, and cause such other Persons to execute and acknowledge, such other instruments and provide such other evidence as the Remaining Member may reasonably deem necessary or desirable to effect such admission, including without limitation: (A) the written acceptance and adoption by the transferee of the provisions of this Agreement including a representation and warranty that the representations and warranties in P. 5.02 are true and correct with respect to the transferee; (B) the transferee's completion of a purchaser qualification questionnaire which will enable counsel for the Company to determine whether such proposed substitution is consistent with the requirements of a private placement -13- exemption from registration under the Securities Act of 1933 and relevant state law; and (C) the transferee's completion, if applicable, of acknowledgment of the use of a purchaser representative, and such representative's completion of a purchaser representative questionnaire which will enable counsel for the Company to determine whether such proposed substitution is consistent with the requirements of a private placement exemption from registration under the Securities Act of 1933 and relevant state law; (iii) the admission is approved by the Remaining Member, the granting or denial of which shall be within the sole and absolute discretion of the Remaining Member; and (iv) a transfer fee has been paid to the Company by the Transferor sufficient to cover all expenses in connection with the transfer and admission, including but not limited to attorney's fees for the legal opinions referred to in P. 5.03(e) and (g), subject to the Remaining Member's right to waive the payment of this fee in its sole discretion. (h) Rights of Mere Assignees. If a transferee of an Interest is not admitted as a Member, it shall not be entitled to inspect the Company's books and records, receive an accounting of Company financial affairs, exercise the voting rights of a member, or otherwise take part in the Company's business or exercise the rights of a Member under this Agreement. (i) Purchase Price and Terms. (i) Purchase Price. If the Company or the Remaining Member exercises its option (the "Optionor"), the purchase price which Optionor shall pay for the Transferor's Membership Interest following the exercise of an option to purchase under P. 5.03(a) or (b) shall be an amount equal to: (1) the purchase price as stated in the Transfer Notice where (a) the proposed transfer is for full and adequate consideration and (b) the transferee identified in the Transfer Notice is not a member of the Transferor's family or an Affiliate of the Transferor; and (2) in all other cases, the value of the Transferor's Membership Interest as mutually agreed upon by the Members. If the parties cannot agree within ten (10) days after the date of the final Exercise Notice, the Purchase price shall be the amount which the Transferor would receive if all the Company Property were sold at its appraised fair market value and the proceeds were applied in accordance with P. 10.03. An independent appraiser ("Qualified Appraiser") experienced in conducting appraisals of assets similar to the Company Property shall conduct an appraisal of all of the Company Property to determine its fair market value ("First Appraisal"). The Optionor shall select a Qualified appraiser to perform the First Appraisal and shall assume the cost of the First Appraisal. If, within five (5) days after receipt of the First Appraisal, the Transferor disputes the value determined by the First Appraisal, the Transferor may obtain, at its own cost, a second appraisal ("Second Appraisal") of the fair market value of the Company Property by a Qualified Appraiser of its choice. If the parties agree, the Second Appraisal shall be used to determine the value of the Company Property. If the two appraisals are performed and the parties cannot agree within ten (10) days which of the appraisals accurately reflects the value of the Company Property, then the two appraisers selected under this subparagraph shall select a Qualified Appraiser to conduct a third appraisal ("Third Appraisal") of the fair market value of the Company Property. The fair market value of the Company Property established by the Third -14- Appraisal shall be final and binding in all respects on all parties. The Optionor and the Transferor shall each pay fifty percent (50%) of the costs of the Third Appraisal. (ii) Payment of Purchase Price and Closing. The closing of any sale and purchase of the Transferor's Membership Interest in the Company shall be within thirty (30) days from the later of (1) the date of the final Exercise Notice, or (2) delivery of the final appraisal performed pursuant to P. 5.03(i)(i). The Optionor shall pay the purchase price (1) at the time and in accordance with the terms and conditions as stated in the Transfer Notice, where the purchase price is determined pursuant to P. 5.03(i)(1), or (2) at the closing in all other cases, unless the parties agree on different terms. The Transferor shall deliver documents satisfactory to the Optionor conveying its Membership Interest free and clear of all liens, claims and encumbrances, any of which may be paid out of the purchase price, with the remainder, if any, paid to the Transferor. If the purchase price is insufficient to satisfy any such liens, the Transferor shall discharge the balance. P. 5.04. Additional Members. Additional Persons may be admitted to the Company as Members and Membership Interests may be created and issued to those Persons and to existing Members upon the approval of all of the Members on such terms and conditions as they may determine at the time of admission. The terms of admission or issuance must specify the Sharing Ratios applicable thereto and may provide for the creation of different classes or groups of Interests having different rights, powers and duties. The creation of any new class or group shall be reflected in an amendment to this Agreement indicating the different rights, powers and duties. The provisions of this P. 5.04 shall not apply to Transfers of Membership Interests. P. 5.05. Interests in Member. A Member that is not a natural person may not cause or permit an ownership interest, direct or indirect, in itself to be disposed of such that, after the disposition: (a) the Company would be considered to have terminated within the meaning of Code ss.708; or (b) without the written consent of the other Member, that Member shall cease to be controlled by substantially the same Persons who control it as of the date of the Member's admission to the Company. For a period of 120 days after notice to the Company of any Member's breach of the provisions of clause (b) of the immediately preceding sentence, the Company shall have the option to buy, and on exercise of that option the breaching Member shall sell, the breaching Member's Membership Interest, at the price determined in accordance with P. 5.03(i)(i)(2). The breaching Member shall deliver documents satisfactory to the Company conveying its Membership Interest free and clear of all liens, claims and encumbrances, any of which may be paid out of the purchase price, with the remainder, if any, paid to the selling Member. If the purchase price is insufficient to satisfy any such liens, the selling Member shall discharge the balance. P. 5.06. Information. (a) In addition to the other rights specifically set forth in this Agreement, each Member is entitled to all information to which that Member is entitled to have access pursuant to the Act under the circumstances and subject to the conditions therein stated. -15- (b) The Members acknowledge that, from time to time, they may receive information from or regarding the Company in the nature of trade secrets or that otherwise is confidential, the release of which may be damaging to the Company or Persons with which it does business. Each Member shall hold in strict confidence any information it receives regarding the Company that is identified as being confidential (and if that information is provided in writing, that is so marked) and may not disclose it to any Person other than another Member, except for disclosures: (i) compelled by law (but the Member must notify the other Members promptly of any request for that information, before disclosing it if practicable); (ii) to advisers or representatives of the Member or Persons to which that Member's Membership Interest may be transferred as permitted by this Agreement, but only if the recipients have agreed to be bound by the provisions of this P. 5.06(b); or (iii) of information that the Member also has received from a source independent of the Company that the Member reasonably believes obtained that information without breach of any obligation of confidentiality. The Members acknowledge that breach of the provisions of this P. 5.06(b) may cause irreparable injury to the Company for which monetary damages are inadequate, difficult to compute, or both. Accordingly, the Members agree that the provisions of this P. 5.06(b) may be enforced by specific performance without posting bond. P. 5.07. Liability to Third Parties. No Member shall, by virtue of its status as a Member or its ownership of an Interest, be liable for the debts, obligations or liabilities of the Company, including but not limited to a judgment decree or order of a court. P. 5.08. Withdrawal. A Member does not have the right or power to withdraw from the Company as a Member. P. 5.09. Lack of Authority. No Member has the authority or power to act for or on behalf of the Company, to do any act that would be binding on the Company, or to incur any expenditures on behalf of the Company, except to the extent that such act or expenditure has been approved by a Majority Interest or such greater interest required by the Agreement, the Articles or applicable law. P. 5.10. Certificates of Interest. Interests shall be represented by certificates of interests in the Company, which shall be in such form as may be approved by the Managers. ARTICLE 6 MANAGEMENT OF COMPANY AND MEETINGS OF MEMBERS P. 6.01. Management. (a) General. The business and affairs of the Company shall be managed by its Managers. The Managers shall direct, manage, and control the business of the Company to the best of their ability. Except for situations in which the approval of the Members is expressly required by this Agreement or by nonwaivable provisions of applicable law, the Managers shall have full and complete authority, power, and discretion to manage and control the business, -16- affairs, and properties of the Company, to make all decisions regarding those matters and to perform any and all other acts or activities customary or incident to the management of the Company's business. At any time when there is more than one Manager, any one Manager may take any action permitted to be taken by the Managers, unless the approval of more than one of the Managers is expressly required pursuant to this Agreement or the Act. (b) Number, Tenure, and Qualifications. The Company shall initially have one Manager, which shall be Iron Mountain Records Management, Inc. The number of Managers of the Company shall be fixed from time to time by the affirmative vote of Members holding at least two-thirds of all Capital Interests in the Company's capital, but in no instance shall there be less than one Manager. Each Manager shall hold office until the next annual meeting of Members or until a successor shall have been elected and qualified. Managers shall be elected by the affirmative vote of Members holding at least a Majority Interest. Managers need not be residents of the State of Delaware or Members of the Company. (c) Certain Powers of Manager. Without limiting the generality of ss.6.01(a) above, the Managers shall have the power and authority, on behalf of the company: (i) to acquire property from any Person as the Managers may determine. The fact that a Manager or Member is directly or indirectly affiliated or connected with any such Person shall not prohibit the Managers from dealing with that Person; (ii) to borrow money for the Company from banks, other lending institutions, the Managers, Members, or affiliates of the Managers or Members on such terms as the Managers deem appropriate, and in connection therewith, to hypothecate, encumber, and grant security interests in the assets of the Company to secure repayment of the borrowed sums. No debt shall be contracted or liability incurred by or on behalf of the Company except by the Managers, or to the extent permitted under the Act, by agents or employees of the Company expressly authorized to contract such debt or incur such liability of the Managers; (iii) to hold and own any Company real and/or personal properties in the name of the Company; (iv) to purchase liability and other insurance to protect the Company's property and business; (v) to invest any Company funds temporarily (by way of example but not limitation) in time deposits, short-term governmental obligations, commercial paper, or other investments; (vi) upon the affirmative vote of the Members holding at least two-thirds of all Interests, to sell or otherwise dispose of all or substantially all of the assets of the Company as part of a single transaction or plan so long as that disposition is not in violation of or a cause of a default under any other agreement to which the Company may be bound; provided, however, -17- that the affirmative vote of the Members shall not be required with respect to any sale or disposition of the Company's assets in the ordinary course of the Company's business; (vii) to execute on behalf of the Company all instruments and documents, including, without limitation: checks; drafts; notes and other negotiable instruments; mortgages, or deeds of trust; security agreements; financing statements; documents providing for the acquisition, mortgage or disposition of the Company's property; assignments; bills of sale; leases; partnership agreements; operating agreements of other limited liability companies; and any other instruments or documents necessary, in the opinion of the Managers, to the business of the Company; (viii)to employ accountants, legal counsel, managing agents, or other experts to perform services for the Company and to compensate them from Company funds; (ix) to enter into any and all other agreements on behalf of the Company, with any other Person for any purpose, in such forms as the Managers may approve; and (x) to do and perform all other acts as any be necessary or appropriate to the conduct of the Company's business. Unless authorized to do so by this Agreement or by a Manager or Managers of the Company, no attorney-in-fact, employee, or other agent of the Company shall have any power or authority to bind the Company in any way, to pledge its credit or to render it liable pecuniarily for any purpose. No Member shall have any power or authority to bind the Company unless the Member has been authorized by the Managers to act as an agent of the Company in accordance with the previous sentence. (d) Liability for Certain Acts. The Managers shall perform their managerial duties in good faith, in a manner they reasonably believe to be in the best interests of the Company, and with such care as an ordinarily prudent person in a like position would use under similar circumstances. A Manager who so performs the duties of Manager shall not have any liability by reason of being or having been a Manager of the Company. A Manager does not, in any way, guarantee the return of the Members' Capital Contributions or a profit for the Members from the operations of the Company. A Manager shall not be liable to the Company or to any Member for any loss or damage sustained by the Company or any Member unless the loss or damage shall have been the result of fraud, deceit, gross negligence, willful misconduct, or a wrongful taking by the Manager. (e) Managers Have No Exclusive Duty to Company. The Managers shall not be required to manage the Company as their sole and exclusive function and they may have other business interests and may engage in other activities in addition to those relating to the Company. Neither the Company nor any Member shall have any right, by virtue of this Agreement, to share or participate in such other investments or activities of the Managers or to the income or proceeds derived therefrom. The Managers shall incur no liability to the Company or to any of the Members as a result of engaging in any other business or venture. -18- (f) Bank Accounts. The Managers may from time to time open bank accounts in the name of the Company, and the Managers shall be the sole signatory thereon, unless the Managers determine otherwise. (g) Indemnity of the Managers, Employees, and Other Agents. To the maximum extent permitted under the Act, the Company shall indemnify the Managers and make advances for expenses. The Company shall indemnify its employees and other agents who are not Managers to the fullest extent permitted by law, provided that the indemnification in any given situation is approved by Members owning a Majority Interest. (h) Resignation. Any Manager of the Company may resign at any time by giving written notice to the Members of the Company. The resignation of any Manager shall take effect upon receipt of that notice or at such later time as shall be specified in the notice; and, unless otherwise specified in the notice, the acceptance of the resignation shall not be necessary to make it effective. The resignation of a Manager who is also a Member shall not affect the Manager's rights as a Member and shall not constitute a withdrawal of a Member. (i) Removal. At a meeting called expressly for that purpose, all or any lesser number of Managers may be removed at any time, with or without cause, by the affirmative vote of Members holding a Majority Interest. The removal of a Manager who is also a Member shall not affect the Manager's rights as a Member and shall not constitute a withdrawal of a Member. (j) Vacancies. Any vacancy occurring for any reason in the number of Managers of the Company may be filled by the affirmative vote of a majority of the remaining Managers then in office, provided that if there are no remaining Managers, the vacancy(ies) shall be filled by the affirmative vote of Members holding a Majority Interest. (i) Any Manager's position to be filled by reason of an increase in the number of Managers shall be filled by the affirmative vote of a majority of the Managers then in office or by an election at an annual meeting or at a special meeting of Members called for that purpose or by the Members' unanimous written consent. (ii) A Manager elected to fill a vacancy shall be elected for the unexpired term of the Manager's predecessor in office and shall hold office until the expiration of that term and until the Manager's successor shall be elected and shall qualify or until the Manager's earlier death, resignation, or removal. (iii) A Manager chosen to fill a position resulting from an increase in the number of Managers shall hold office until the next annual meeting of Members and until a successor shall be elected and shall qualify, or until the Manager's earlier death, resignation, or removal. -19- (k) Compensation. The compensation of the Managers shall be fixed from time to time by an affirmative vote of Members holding at least a Majority Interest and no Manager shall be prevented from receiving compensation because the Manager is also a Member. P. 6.02. Meetings. Meetings of the Members may be called by Members holding not less than twenty-five percent (25%) of the Units. The meeting shall be held at the principal place of business of the Company or as designated in the notice or waivers of notice of the meeting. P. 6.03. Notice. Notice of any meeting of the Members shall be given no fewer than ten days and no more than thirty days prior to the date of the meeting. Notices shall be delivered in the manner set forth in P. 11.02 and shall specify the purpose or purposes for which the meeting is called. The attendance of a Member at any meeting shall constitute a waiver of notice of such meeting, except where a Member attends a meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. P. 6.04. Quorum. A Majority Interest, present in person or represented by proxy, shall constitute a quorum for transaction of business at any meeting of the Members, provided that if less than a Majority Interest are present at said meeting, the holders of a majority of the Units present may adjourn the meeting at any time without further notice. P. 6.05. Manner of Acting. The act of a Majority Interest shall be the act of the Members, unless the act of a greater number is required by this Agreement, the Articles or applicable law. P. 6.06. Action Without Meeting. Unless specifically prohibited by the Articles, any action required to be taken at a meeting of the Members or any other action which may be taken at a meeting of the Members, may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by the holders of Units having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which the holders of all of the Units were present and voting. Prompt notice of the taking of the action without a meeting by less than unanimous consent shall be given in writing to those Members who were entitled to vote but did not consent in writing. P. 6.07. Telephonic Meetings. The Members may participate in and act at any meeting of Members through the use of a conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other. Participation in such meeting shall constitute attendance and presence in person at the meeting of the person or persons so participating. P. 6.08. Proxies. Each Member entitled to vote at a meeting of Members or to express consent or dissent to action in writing without a meeting may authorize another Person or Persons to act for him by proxy. Such proxy shall be deposited at the principal offices of the Company not less than 48 hours before a meeting is held or action is taken, but no proxy shall be valid after eleven months from the date of its execution, unless otherwise provided in the proxy. -20- P. 6.09. Voting of Interests. Each outstanding Unit shall be entitled to one vote upon each matter submitted to a vote at a meeting of Members. P. 6.10. Officers. The officers of the Company shall consist of a President, one or more Vice Presidents, a Treasurer, Controller and a Secretary. The officers shall be appointed by the Managers and shall exercise such powers and perform such duties as are prescribed by the Managers. Any number of offices may be held by the same person, as the Managers may determine, except that no person may simultaneously hold the offices of President and Secretary. P. 6.11. Term of Office. The officers shall hold office for the term for which they were appointed and until their successors are elected and qualified; provided, however, that any officer may be removed with or without cause by the affirmative vote of a Majority Interest. ARTICLE 7 INDEMNIFICATION P. 7.01. Rights to Indemnification. Subject to the limitations and conditions provided in this Article 7 and in the Act, each Person ("Indemnified Person") who was or is made a party or is threatened to be made a party to or is involved in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative, arbitrative or investigative ("Proceeding"), or any appeal in such a Proceeding or any inquiry or investigation that could lead to such a Proceeding, by reason of the fact that he was or is a Member, Manager or an officer of the Company or it was the legal representative of or a manager, director, officer, partner, venturer, proprietor, trustee, employee, agent or similar functionary of a Member, shall be indemnified by the Company against judgments, penalties (including excise and similar taxes and punitive damages), fines, settlements and reasonable costs and expenses (including, without limitation, attorneys' fees) actually incurred by such Indemnified Person in connection with such Proceeding if such Indemnified Person acted in good faith and in a manner if reasonably believed to be in, or not opposed to, the best interest of the Company and, with respect to any criminal action or proceeding, had no reasonable cause to believe its conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the Indemnified Person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Company or, with respect to any criminal action or proceeding that the Indemnified Person had reasonable cause to believe that its conduct was unlawful. P. 7.02. Derivative Claims. Subject to the limitations and conditions provided in this Article 7 and in the Act, the Company shall and does hereby indemnify any Person who was or is a party, or is threatened to be made a party, to any threatened, pending or completed action or suit by or in the right of the Company to procure a judgment in its favor by reason of the fact that such Person is or was a Member, Manager or an officer of the Company, the legal representative of a Member, Manager or officer, or a manager, director, officer, partner, venturer, proprietor, trustee, employee, agent or similar functionary of a Member against expenses (including -21- attorneys' fees) actually and reasonably incurred by such Person in connection with the defense or settlement of such action or suit, if such Person acted in good faith and in a manner it reasonably believed to be in, or not opposed to, the best interests of the Company, provided that no indemnification shall be made in respect of any claim, issue or matter as to which such Person shall have been adjudged to be liable for negligence or misconduct in the performance of its duty to the Company unless and only to the extent that, the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability, but in view of all the circumstances of the case, such Person is fairly and reasonably entitled to indemnify for such expenses as the court shall deem proper. P. 7.03. Success on Merits. To the extent that a Person has been successful, on the merits or otherwise, in the defense of any action, suit or proceeding referred to in P. P. 7.01 or 7.02, or in defense of any claim, issue or matter therein, such Person shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by such Person in connection therewith. P. 7.04. Determinations. Any indemnification under P. P. 7.01 or 7.02 (unless ordered by a court) shall be made by the Company only as authorized in the specific case, upon a determination that indemnification is proper in the circumstances because such person has met the applicable standard of conduct set forth therein. Such determination shall be made (i) by the holders of a majority of the Units held by Members who were not parties to such action, suit or proceedings, or (ii) if such a quorum is not obtainable, or even if obtainable, if a quorum of disinterested Members so directs, by the Company's independent legal counsel in a written opinion. P. 7.05. Survival. Indemnification under this Article 7 shall continue as to a Person who has ceased to serve in the capacity which initially entitled such Person to indemnity hereunder. The rights granted pursuant to this Article 7 shall be deemed contract rights, and no amendment, modification or repeal of this Article 7 shall have the effect of limiting or denying any such rights with respect to actions taken or Proceedings arising prior to any such amendment, modification or repeal. P. 7.06. Advance Payment. The right to indemnification conferred by this Article 7 shall include the right to be paid or reimbursed by the Company for the reasonable expenses incurred in advance of the final disposition of the Proceeding and without any determination as to the Person's ultimate entitlement to indemnification, provided, however, that the payment of such expenses incurred in advance of the final disposition of a Proceeding shall be made only upon delivery to the Company of a written affirmation by such Person of its good faith belief that it has met the standard of conduct necessary for indemnification under this Article 7 and a written undertaking, by or on behalf of such Person to repay all amounts so advanced if it shall ultimately be determined that such Person is not entitled to be indemnified under this Article 7 or otherwise. P. 7.07. Nonexclusivity of Rights. The right to indemnification and the advancement and payment of expenses conferred by this Article 7 shall not be exclusive of any other right which a -22- Person may have or hereafter acquire under any law (common or statutory), provision of the Act, the vote of Members or otherwise. P. 7.08. Insurance. The Company may purchase and maintain insurance, at its expense, to protect itself and any Indemnified Person against any expense, liability or loss, whether or not the Company would have the power to indemnify such Person against such expense, liability or loss under this Article 7. P. 7.09. Savings Clause. If P. P. 7.01, 7.02 or any portion thereof shall be invalidated on any ground by any court of competent jurisdiction, then the Company shall nevertheless indemnify and hold harmless each Indemnified Person as to costs, charges and expenses (including attorneys' fees), judgments, fines and amounts paid in settlement with respect to any action, suit or proceeding, whether civil, criminal, administrative or investigative to the full extent permitted by any applicable portion of this Article 7 that shall not have been invalidated and to the fullest extent permitted by applicable law. ARTICLE 8 BOOKS, RECORDS, REPORTS AND BANK ACCOUNTS P. 8.01. Maintenance of Books and Records. The Company shall keep books and records of accounts and shall keep minutes of the proceedings of its Members at the registered office of the Company or its principal place of business. In addition, the Company shall maintain the following at its registered office or its principal place of business: (a) A current list of the full name and last know business address of each Member, separately identifying the Members in alphabetical order; (b) A copy of the filed Articles and all amendments thereto, together with executed copies of any powers of attorney pursuant to which any document has been executed; (c) Copies of the Company's federal, state and local income tax returns and reports and financial statements, if any, for the three (3) most recent years; (d) Copies of this Agreement and any amendments thereto; and (e) Unless contained in this Agreement, the Articles or in any amendments hereto, a writing setting out: (i) The amount of cash, a description and statement of the agreed value of the other property or services contributed by each Member and which each Member has agreed to contribute; (ii) The items as to which or events on the happening of which any additional contributions agreed to be made by each Member are to be made; -23- (iii) Any right of a Member to receive, or of the Members to make, distributions which include a return of all or any part of the Member's contribution; and (iv) Any events upon the happening of which the Company is to be dissolved and its affairs wound up. Records kept pursuant to this P. 8.01 are subject to inspection and copying at the reasonable request, and at the expense, of any Member during ordinary business hours. P. 8.02. Reports. On or before the 90th day following the end of each fiscal year during the term of the Company, the Company shall cause each Member to be furnished with a federal (and, where applicable, state) income tax reporting Form K-1 or its equivalent and a financial report for the preceding fiscal year which shall include a balance sheet and a profit and loss statement prepared in accordance with generally accepted accounting principles applied on a consistent basis. P. 8.03. Taxable Year and Accounting Method. The Company's taxable and fiscal years shall be the calendar year. the Company shall initially use the accrual method of accounting. P. 8.04. Tax Elections. All elections required or permitted to be made by the Company under the Code shall be made by the Members. In particular: (i) The Company shall elect to deduct expenses incurred in organizing the Company ratably over a 60-month period as provided in Section 709 of the Code. (ii) In case of a Transfer of all or part of any Interest, the Company may elect, in a timely manner pursuant to Section 754 of the Code and pursuant to corresponding provisions of applicable state and local tax laws, to adjust the basis of Company Property pursuant to Sections 734 and 743 of the Code. (iii) The Company shall elect to deduct start-up expenditures ratably over a 60- month period as provided in Section 195 of the Code. (iv) The Company shall not elect to be excluded from the application of the provisions of Subchapter K of Chapter 1 of Subtitle A of the Code or corresponding provisions of state or local law. P. 8.05. Bank Accounts. All funds of the Company are to be deposited in the Company's name in such bank accounts or investment accounts as may be designated by the Managers and shall be withdrawn on the signature of a duly authorized officer of the Managers, or such other Person or Persons as a Majority Interest may authorize. The Company's funds may not be commingled with the funds of any Member or officer of the Company. -24- P. 8.06. "Tax Matters Partner." The Managers shall be the "tax matters partner" of the Company pursuant to Code ss.6231(a)(7). Any one of the Managers is authorized to take such actions as are permitted by Code ss.ss.6221 through 6233. ARTICLE 9 PUT-CALL P. 9.01. Put-Call Arrangement. In the event of an Impasse, each Member shall have the right to make an optional "put-call" offer to the other Member to purchase the other Member's entire Membership Interest. Notwithstanding the above, neither Member may initiate a put-call when there is an outstanding Offer (defined in P. 9.02(a) below) pending. The Member initiating a put-call shall be referred to as the "Offeror" and the other Member shall be referred to as the "Offeree". P. 9.02. Terms of Offer. (a) Written Offer. Upon the terms described in P. 9.01, the Offeror may submit to the Offeree a written offer ("Offer") to purchase the Membership Interest then owned by the Offeree. (b) Aggregate Asset Price. The Offer shall state the aggregate price at which the Offeror would be willing to purchase all the Company Property ("Aggregate Asset Price"); provided, however, that such Aggregate Asset Price shall be at least equal to or greater than the amount necessary (i) to repay all outstanding Company liabilities (including accrued interest), including but not limited to all outstanding loans by Members to the Company and (ii) to return to each Member its aggregate unreturned Adjusted Capital Contribution. (c) Price. The "Price" for the Offeree's Membership Interest shall be the amount which the Offeree would receive if all the Company Property were sold for the Aggregate Asset Price and the proceeds were applied in accordance with P. 10.03. (d) Release from Recourse Obligations. If, at the time an Offer is made, the Offeree or any of its Affiliates are personally liable under any guaranties or other financial undertakings for the repayment or performance of all or part of any third-party loan made to the Company ("Offeree's Recourse Liability"), then the Offer must include the Offeror's written agreement to use its best efforts to obtain the release of Offeree's Recourse Liability and, if required by the holders of the Offeree's Recourse Liability, to substitute acceptable guaranties, letters of credit or other financial undertakings in exchange for such release of Offeree's Recourse Liability. If any lender will not agree to release the Offeree's Recourse Liability, then the Offeror shall protect, defend, indemnify and hold such Offeree, its Affiliates, officers, directors, agents, shareholders, partners, beneficiaries and trustees harmless from any manner of loss, claim, damage or expense arising out of or relating to the Offeree's Recourse Liability from and after the Closing Date (as defined in P. 9.04). -25- P. 9.03. Acceptance/Rejection of Offer. The Offeree shall either accept or reject the Offer, which acceptance or rejection shall be in writing and delivered to the Offeror on or before 10:00 a.m. on the thirtieth (30th) calendar day after the offer is delivered. If the Offeree fails to either accept or reject the Offer on a timely basis, it shall be deemed to have consented to the unagreed action which precipitated the impasse. (a) Acceptance. If the Offeree accepts the Offer, the Offeror shall be deemed the "Buyer" and the Offeree shall be deemed the "Seller". The Put-Call closing (as defined in P. 9.04) shall take place pursuant to P. 9.04 below. Effective immediately upon the delivery to the Offeror of the Offeree's acceptance of the Offer, the Offeror's obligations under the Offer and this Article 9 shall become recourse, absolute, unconditional and irrevocable obligations, and shall not be subject to any terms or conditions other than the default of the Offeree under the Offer. (b) Rejection of Offer. If the Offeree rejects the Offer, the Offeree shall thereafter be deemed the "Buyer" and the Offeror shall be deemed the "Seller". The closing of the transaction described in the Offer shall take place on the Closing Date pursuant to P. 9.04 below. If the Offeree properly rejects the Offer, it shall proceed to purchase form the Offeror, and the Offeror shall sell to the Offeree, the entire Membership Interest owned by the Offeror for a Price equal to the amount which the Offeror would receive if all the Company Property were sold for the Aggregate Asset Price and the proceeds were applied in accordance with P. 10.03. P. 9.04. Put-Call Closing Procedures. The transaction described in the Offer shall close on the earlier of (i) the sixtieth (60th) day after the date the Offer is either accepted or rejected by the Offeree, or (ii) such earlier date as Buyer may elect with ten (10) days prior written notice to Seller ("Put-Call closing" or "Closing Date"). At the Put-Call closing, the following shall occur: (a) The Buyer shall pay to the Seller, in immediately available funds, a sum equal to the Price. (b) The Seller shall deliver to the Buyer a complete and absolute assignment of one hundred percent (100%) of the Seller's Membership Interest ("Assignment"). (c) The Buyer shall satisfy its obligation under P. 9.02(d) above. (d) The Seller shall cause its Affiliates to terminate any agreements with the Company as instructed by Buyer in its sole and absolute discretion, effective from and after the Closing Date, provided that any such Affiliate shall be paid in full on the Closing Date for all services rendered prior to such termination. (e) The buyer and the Seller shall each deliver to the other a release ("Mutual Release") of the other from all acts and conduct of the other relating to the Company or its affairs, occurring or performed during the tem of this Agreement, except that neither the buyer nor the Seller shall be released from any actions (or failures to act) in violation of this Agreement or from any grossly negligent, reckless or intentionally wrongful acts or omissions. -26- From and after delivery the Seller shall have no rights or obligations under this Agreement with respect to the management and operation of the Company Property, or otherwise. P. 9.05. Failure To Perform. (a) Buyer's Failure To Perform. If the Buyer fails to perform as required under P. 9.04, then the Seller shall have the option, exercisable within sixty (60) days after the original Closing Date, to (i) pursue Buyer for specific performance of its obligations as Buyer; or (ii) continue the Company as if no put-call procedure had been implemented except that the Buyer shall be deemed to have consented to the unagreed action which precipitated the Impasse; or (iii) become the Buyer under the defaulted Offer, subject to the same terms and conditions set forth in the Offer with the exceptions that: (1) the Price shall be eighty percent (80%) of the amount which the defaulting party would receive if all the Company Property were sold for the Aggregate Asset Price and the proceeds were applied in accordance with P. 10.03; and (2) the nondefaulting party shall be entitled to select a new Closing Date up to one hundred eighty (180) days after the original Closing Date. (b) Seller's Failure To Perform. If the Seller fails to perform as required under P. 9.04, then: (i) the Seller shall be liable to Buyer, as a recourse obligation, for all actual and consequential damages caused by Seller as a result of its breach, together with all expenses of litigation and attorneys' fees, court costs and expenses; and (ii) the Buyer shall have the option, exercisable within sixty (60) days after the original Closing Date, to either: (1) pursue Seller for specific performance of its obligations as Seller or (2) continue the Company as if no put-call procedure had been implemented except that the Seller shall be deemed to have consented to the unagreed action which precipitated the Impasse; provided, however, that in no event shall the election of either option (or failure to elect) preclude Buyer from pursuing any other remedy available to Buyer as a matter of law or equity, including, but not limited to, the damages described in clause (i) above. P. 9.06. No Withdrawal or Revocation. An Offer shall be irrevocable and shall not be subject to withdrawal or revocation by the Offeror, except by the written agreement of all of the Members. P. 9.07. Decision-Making. Notwithstanding anything to the contrary in this Agreement, at any time during the period after the acceptance or rejection of an Offer and the earlier of (i) the termination of the Offer pursuant to P. 9.05(a)(ii) or (b)(ii)(2) above, as the case may be, or (ii) the Closing Date, the Buyer shall have exclusive control of all decision-making on behalf of the Company (other than any decisions which may have a substantial adverse impact on the financial obligations of the Seller in the event that the Buyer defaults in the purchase of the Seller's Membership Interest). -27- ARTICLE 10 DISSOLUTION, LIQUIDATION AND TERMINATION P. 10.01. Events of Dissolution. The Company shall be dissolved and shall commence winding up its affairs upon the first to occur of the following: (a) December 31, 2025; (b) The vote of Members holding two thirds of the Units; (c) Any event which makes it unlawful or impossible to carry on the Company's business; (d) The sale, disposition or abandonment of all or substantially all of the Company Property; (e) The entry of a decree of judicial dissolution under the Act; or (f) The death, incompetency, retirement, resignation, expulsion, dissolution or bankruptcy of a Member, or any other event which terminates the membership of a Member in the Company, unless within ninety (0) days after such event the Remaining Member agrees to continue the business of the Company with the Representative of the Withdrawing Member or with a new Member admitted to the Company. P. 10.02. Winding Up. Upon the dissolution of the Company, the Members shall wind up the Company's affairs and satisfy the Company's liabilities. The Members shall liquidate all of the Company Property as quickly as possible consistent with obtaining the full fair market value of said Property. During this period, the Company shall continue to operate Company Property and all of the provisions of this Agreement shall remain in effect. The Company shall notice all known creditors and claimants of the dissolution of the Company in accordance with the Act. P. 10.03. Final Distribution. The proceeds from the liquidation of the Company Property shall be distributed as follows: (a) First, to creditors, including Members who are creditors, until all of the Company's debts and liabilities are paid and discharged (or provision is made for payment thereof); and (b) The balance, if any, to the Members, in proportion to their Capital Accounts as of the date of such distribution, after giving effect to all contributions, distributions, and allocations for all periods. -28- P. 10.04. Distributions in Kind. In connection with the termination and liquidation of the Company, the Members shall attempt to sell all of the Property. To the extent that Property is not sold, each Member will receive a pro rata share of any distribution in kind. Any Property distributed in kind upon liquidation of the Company shall be treated as though the Property were sold and the cash proceeds distributed. P. 10.05. No Recourse Against Members. The Members shall look solely to the assets of the Company for the return of their investment, and if the Property remaining after the payment or discharge of the debts and liabilities of the Company is insufficient to return such investment, they shall have no recourse against any other Member. P. 10.06. Purchase by Member. A Member or an Affiliate of a Member may, if it so desires, purchase an item of Property upon liquidation provided that (a) the purchase price is at fair market value as determined by an independent appraiser selected by the other Member, and (b) at least 15 days' advance notice of the proposed sale has been given to the other Member. P. 10.07. Deficit Capital Accounts. Notwithstanding anything to the contrary contained in this Agreement, and notwithstanding any custom or rule of law to the contrary, the deficit, if any, in the Capital Account of any Member upon dissolution of the Company shall not be an asset of the Company and such Member shall not be obligated to contribute such amount to the Company to bring the balance of such Member's Capital Account to zero. P. 10.08. Articles of Dissolution. On completion of the distribution of Company assets as provided herein, the Company is terminated, and the Members (or such other Person or Persons as the Act may require or permit) shall file articles of dissolution with the Secretary of State, cancel any other filings made pursuant to P. 2.05 and take such other actions as may be necessary to terminate the Company. ARTICLE 11 GENERAL PROVISIONS P. 11.01. Entire Agreement; Amendments. This Agreement embodies the entire understanding between the Members concerning the Company and their relationship as Members and supersedes any and all prior negotiations, understandings or agreements. This Agreement may be amended or modified from time to time only by a written instrument adopted, executed and agreed to by all of the Members. P. 11.02. Notices. All notices and demands required or permitted under this Agreement shall be in writing, as follows: (i) by actual delivery of the notice into the hands of the party entitled to receive it; (ii) by mailing such notice by registered or certified mail, return receipt requested, in which case the notice shall be deemed to be given on the date of its mailing; or (iii) by Federal Express or any other overnight carrier, in which case the notice shall be deemed to be given as of the date it is sent. All notices which concern this as follows: -29- If to the Company or Managers: c/o Iron Mountain Records Management, Inc. 745 Atlantic Avenue Boston, Massachusetts 02111 Attn: Eugene B. Doggett, Executive Vice President Copy to: Iron Mountain Records Management, Inc. 745 Atlantic Avenue Boston, Massachusetts 02111 Attn: General Counsel If to the Members: To the address as shown from time to time on the records of the Company. Any Member may specify a different address, which change shall become effective upon receipt of such notice by the Company. P. 11.03. Severability. If any provision of this Agreement or the application of such provision to any Person or circumstance shall be held invalid, the remainder of this Agreement, or the application of such provision to Persons or circumstances other than those as to which it is held invalid, shall not be affected. P. 11.04. Parties Bound. This Agreement shall be binding upon the Members and their respective successors, assigns, heirs, devisees, legal representatives, executors and administrators. P. 11.05. Applicable Law. The laws of the State of Delaware shall govern this Agreement, excluding any conflict of laws rules. The Members irrevocably agree that all actions or proceedings in any way, manner or respect, arising out of or from or related to this Agreement shall be litigated only in courts having situs within the State of Delaware. Each Member hereby consents and submits to the jurisdiction of any local, state or federal court located within said county and state and hereby waives any rights it may have to transfer or change the venue of any such litigation. The prevailing party in any litigation in connection with this Agreement shall be entitled to recover from the other party all costs and expenses, including without limitation fees of attorneys and paralegals, incurred by such party in connection with any such litigation. To the extent permitted by applicable law, the provisions of this Agreement shall override the provisions of the Act to the extent of any inconsistency or contradiction between them. P. 11.06. Partition. Each Member irrevocably waives any right that it may have to maintain any action for partition with respect to Company Property. P. 11.07. Strict Construction. It is the intent of the Members that this Agreement shall be deemed to have been prepared by all of the parties to the end that no Member shall be entitled to -30- the benefit of any favorable interpretation or construction of any term or provision hereof under any rule or law. P. 11.08. Headings. The headings in this Agreement are inserted for convenience and identification only and are in no way intended to describe, interpret, define or limit the scope, extent or intent of this Agreement or any provision. P. 11.09. Counterparts. This Agreement may be executed in multiple counterparts with separate pages, and each such counterpart shall be considered an original, but all of which together shall constitute one and the same instrument. P. 11.10. Pronouns. All pronouns shall be deemed to refer to the masculine, feminine or neuter, singular or plural, as the identify of the person or persons may require. P. 11.11. Effect of Waiver or Consent. A waiver or consent, express or implied, to or of any breach or default by any Person in the performance by that Person of its obligations hereunder or with respect to the Company is not a consent or waiver to or of any other breach or default in the performance by that Person of the same or any other obligations of that Person. Failure on the part of a Person to complain of any act or to declare any Person in default hereunder, irrespective of how long that failure continues, does not constitute a waiver by that Person of its rights with respect to that default. P. 11.12. Further Assurances. Each Member shall execute and deliver any additional documents and instruments and perform any additional acts that may be necessary or appropriate to effectuate and perform the provisions of this Agreement and the transactions contemplated herein. P. 11.13. Indemnification for Breach. To the fullest extent permitted by law, each Member shall indemnify the Company and each other member and hold them harmless from and against all losses, costs, liabilities, damages and expenses (including, without limitation, costs of suit and attorneys' fees) they may incur on account of any material breach by that Member of this Agreement. P. 11.14. Disclosure and Wavier of Conflicts. In connection with the preparation of this Agreement, the Members acknowledge and agree: (i) the attorney that prepared this Agreement ("Attorney") acted as legal counsel to the Company; (ii) the Members have been advised by the Attorney that the interests of the members are opposed to each other and are opposed to the interests of the Company and, accordingly, the Attorney's representation of the Company may not be in the best interests of the Members; and (iii) each of the Members has been advised by the Attorney to retain separate legal counsel. Notwithstanding the foregoing, the Members (i) desire the Attorney to represent the Company; (ii) acknowledge that they have been advised to retain separate counsel and have waived their right to do so; and (iii) jointly and severally forever waive any claim that the Attorney's representation of the Company constitutes a conflict of interest. -31- IN WITNESS WHEREOF, the Members have executed this Agreement as of the date first set forth above. MEMBERS: Iron Mountain Records Management, Inc. By: /s/ Eugene B. Doggett Name: Eugene B. Doggett Title: Executive Vice President Date of Execution: April 24, 1996 Iron Mountain Records Management of Maryland, Inc. By: /s/ Eugene B. Doggett Name: Eugene B. Doggett Title: Executive Vice President Date of Execution: April 24, 1996 -32- EXHIBIT A Name and Address of Each Member Capital Contribution Number of Units - ------------------------------- -------------------- --------------- Iron Mountain Records Management, $1,000.00 50 Inc. 745 Atlantic Avenue Boston, MA 02111 Iron Mountain Records Management $1,000.00 50 of Maryland, Inc. 745 Atlantic Avenue Boston, MA 02111 EX-3.1N 15 ARTICLES OF ORGANIZATION EXHIBIT 3.1N The Commonwealth of Massachusetts William Francis Galvin Secretary of the Commonwealth ONE ASHBURTON PLACE, BOSTON, MASSACHUSETTS 02108 ARTICLES OF ORGANIZATION (UNDER G.L. Ch. 156B) ARTICLE I The name of the corporation is: IRON MOUNTAIN RECORDS MANAGEMENT OF BOSTON, INC. ARTICLE II The purpose of the corporation is to engage in the following business activities: To engage in any activity in which a corporation may lawfully participate under Chapter 156B of the General Laws of Massachusetts, either alone or in a joint venture or as a partner in a partnership, including the records management and storage business. Note: If the space provided under any article or item on this form is insufficient, additions shall be set forth on separate 8 1/2 x 11 sheets of paper leaving a left hand margin of at least 1 inch. Additions to more than one article may be continued on a single sheet so long as each article requiring each such addition is clearly indicated. ARTICLE III The type and classes of stock and the total number of shares and par value, if any, of each type and class of stock which the corporation is authorized to issue is as follows:
WITHOUT PAR VALUE STOCKS WITH PAR VALUE STOCKS ------------------------ --------------------- TYPE NUMBER OF SHARES TYPE NUMBER OF SHARES PAR VALUE ---- ---------------- ---- ---------------- --------- COMMON: 0 COMMON: 1,000 $1.00 PREFERRED: PREFERRED: 0 0 0
ARTICLE IV If more than one type, class or series is authorized, a description of each with, if any, the preferences, voting powers, qualifications, special or relative rights or privileges as to each type and class thereof and any series now established. Not applicable ARTICLE V The restrictions, if any, imposed by the Articles of Organization upon transfer of shares of stock of any class are as follows: None Article VI Other lawful provisions, if any, of the conduct and regulation of business and affairs of the corporation, for its voluntary dissolution, or for limiting, defining, or regulating the powers of the corporation, or of its directors or stockholders, or of any class of stockholder: (if there are no provisions state "NONE".) See Additional Sheets VI A through VI C. Note: The preceding six (6) articles are considered to be permanent and may ONLY be changed by filing appropriate Articles of Amendment. ARTICLE VII The effective date of organization of the corporation shall be the date approved and filed by the Secretary of the Commonwealth. If a later effective date is desired, specify such date which shall not be more than thirty days after the date of filing. The information contained in ARTICLE VIII is NOT a PERMANENT part of the Articles of Organization and may be changed ONLY by filing the appropriate form provided therefor. ARTICLE VIII a. The street address of the corporation IN MASSACHUSETTS is: (post office boxes are not acceptable) 745 Atlantic Avenue, 10th Floor, Boston, Massachusetts 02111 b. The name, residence and post office address (if different) of the directors and officers of the corporation are as follows:
NAME RESIDENCE POST OFFICE ADDRESS President: David S. Wendell 12 Mystic Avenue 745 Atlantic Avenue Winchester, MA 01890 Boston, MA 02111 Treasurer: John P. Lawrence 587 Gay Street 745 Atlantic Avenue Westwood, MA 02090 Boston, MA 02111 Clerk: Garry B. Watzke 9 Peter Circle 745 Atlantic Avenue Marblehead, MA 01945 Boston, MA 02111 Director: C. Richard Reese 203 Hickory Road 745 Atlantic Avenue Weston, MA 02193 Boston, MA 02111
c. The fiscal year (i.e., tax year) of the corporation shall end on the last day of the month of: December d. The name and BUSINESS address of the RESIDENT AGENT of the corporation, if any, is: NONE ARTICLE IX By-laws of the corporation have been duly adopted and the president, treasurer, clerk and directors whose names are set forth above, have been duly elected. IN WITNESS WHEREOF and under the pains and penalties of perjury, I/WE, whose signature(s) appear below as incorporator(s) and whose names and business or residential address(es) ARE CLEARLY TYPED OR PRINTED beneath each signature do hereby associate with the intention of forming this corporation under the provisions of General Laws Chapter 156B and do hereby sign these Articles of Organization as incorporator(s) this 12th day of July, 1996. /s/ Garry B. Watzke Garry B. Watzke, Sole Incorporator Note: If an already-existing corporation is acting an Incorporator, type in the exact name of the corporation, the state or other jurisdiction where is was incorporated, the name of the person signing on behalf of said corporation and the title he/she holds or other authority by which such actions is taken. THE COMMONWEALTH OF MASSACHUSETTS ARTICLES OF ORGANIZATION GENERAL LAWS, CHAPTER 156B, SECTION 12 ----------------------------------------------------------------------- I hereby certify that, upon an examination of these articles of organization, duly submitted to me, it appears that the provisions of the General Laws relative to the organization of corporations have been complied with, and I hereby approve said articles; and the filing fee in the amount of $200.00 having been paid, said articles are deemed to have been filed with me this 12th day of July, 1996. Effective date: /s/ William Francis Galvin William Francis Galvin Secretary of the Commonwealth FILING FEE: 1/10 of 1% of the total amount of the authorized capital stock, but not less than $200.00. For the purpose of filing, shares of stock with a par value less than one dollar or not par stock shall be deemed to have a par value of one dollar per share. PHOTOCOPY OF ARTICLES OF ORGANIZATION TO BE SENT Garry B. Watzke, Esq. 745 Atlantic Avenue, 10th Floor Boston, MA 02111-2735 Telephone:_____________________________________ CONTINUATION SHEET VI A Other Lawful Provisions 6. The following additional provisions are hereby established for the management, conduct and regulation of the business and affairs of the Corporation, and for creating, limiting, defining, and regulating the powers of the Corporation and of its Directors and stockholders: (a) The Board of Directors is authorized and empowered from time to time in its discretion to make, amend or repeal the By-laws in part or in whole, except with respect to any provision thereof which by law or the By-laws requires action by the stockholders. (b) The Board of Directors shall have full power and authority to determine the terms and manner of issue, including but not limited to the consideration therefor, and to issue or cause the issue of all shares of capital stock of the Corporation now or from time to time hereafter authorized. (c) Meetings of the stockholders may be held outside The Commonwealth of Massachusetts at such location within the United States as the Board of Directors may determine. The books of the Corporation may be kept (subject to any provision contained in the statutes) at such place or places within The Commonwealth of Massachusetts as may be designated from time to time by the Board of Directors or in the By-Laws of the Corporation. Elections of Directors need not be by ballot unless the By-Laws of the Corporation shall so provide. (d) Any contract, transaction or act of the Board of Directors purporting to be in behalf of the Corporation which shall be authorized, approved or ratified by the holders of a majority of the outstanding shares of the Corporation's stock at any special meeting duly called for that purpose, or at any annual meeting at which a quorum is present or represented, or by their consent in writing, shall be valid and binding as though authorized, approved and ratified by every shareholder of the Corporation. (e) No director of the Corporation shall be liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director notwithstanding any provision of law imposing such liability; provided, however, this provision shall not eliminate or limit the liability of a director (i) for any breach of the Director's duty or loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under section sixty-one or sixty-two of Chapter 156B or the General Laws, or (iv) for any transaction from which the director derived an improper personal benefit. Each person who shall be, or shall have been, a director or officer of the Corporation, or who shall serve, or shall have served, at its request as a director or officer of another corporation, or as trustee or officer of an association or trust in which the CONTINUATION SHEET VI B Corporation owns stock or shares, or of which the Corporation is a creditor, shall be indemnified by the Corporation against all liabilities and expenses at any time imposed upon or reasonably incurred by him in connection with, arising out of or resulting from any action, suit or proceeding in which he may be involved or with which he may be threatened, by reason of his then serving or theretofore having served as such director, trustee or officer, or by reason of any alleged act or omission by him in any such capacity (including, without limitation, the making of loans to shareholders, if and to the extent performed in conformity with the provisions of these Articles), whether or not he shall be serving as such director, trustee or officer at the time any or all of such liabilities or expenses shall be imposed upon or incurred by him. The matters covered by the foregoing indemnity shall include any amounts paid by any such person in compromise or settlement, if such compromise or settlement shall be approved as in the best interests of the Corporation by resolution of a disinterested majority of the Board of Directors, or by vote of disinterested stockholders, holding a majority of the shares of stock entitled to vote, present or represented at a meeting called for the purpose; but such matters shall not include liabilities or expenses imposed or incurred in connection with any matters as to which such person shall be finally adjudged in such action, suit or proceeding not to have acted in good faith in the reasonable belief that his action was in the best interests of the Corporation. The matters covered by the foregoing indemnity shall also include payment by the Corporation of expenses incurred in defending a civil or criminal action or proceeding in advance of final disposition of such action or proceeding, provided, that the Corporation shall have received an undertaking by the person indemnified to repay such payment if he shall be adjudicated to be not entitled to indemnification under Section 67 of Chapter 156B of the General Laws. Each person who shall be or become a director, trustee or officer as aforesaid shall be deemed to have accepted and to have continued to serve in such office in reliance upon the indemnity herein provided. These indemnity provisions shall be separable, and if any portion hereof shall be finally adjudged to be invalid, such invalidity shall not affect any other portion which can be given effect. These indemnity provisions shall not be exclusive of any other right which any director, trustee or officer may have or hereafter acquire, whether under any by-law, vote of stockholders, agreement, judgment, decree, provision of law, or otherwise, and these indemnity provisions and all other such rights shall be cumulative. (f) No contract or other transaction between the Corporation and any other person, firm or corporation shall, in the absence of fraud, in any way be affected or invalidated, nor shall any officer or director be subject to surcharge with respect to any such contract or transaction, by the fact that such officer or director, or any firm of which any officer or director is a shareholder, officer or director, is a party to, or may be pecuniarily or otherwise interested in, such contract or transaction, provided, that the fact that the individual or such firm or corporation is so interested shall be known to the Board of Directors prior to or shall be disclosed to the Board of Directors at the meeting at which, or prior to the directors' executing their written consents by which, action to authorize, ratify, or approve such contract or transaction shall be taken. Any director of the Corporation may CONTINUATION SHEET VI C vote upon or give his written consent to any contract or other transaction between the Corporation and any subsidiary or affiliated corporation without regard to the fact that he is also a director or officer of such subsidiary or affiliated corporation. (g) Each director and officer of the Corporation shall, in the performance of his duties, be fully protected in relying in good faith upon the books of account of the Corporation, reports made to the Corporation by any of its officers or employees or by counsel, accountants, appraisers or other experts or consultants selected with reasonable care by the directors or officers of the Corporation, or upon other records of the Corporation. (h) Except as may be otherwise provided herein, the Corporation reserves the right to amend, alter, change or repeal any provision contained in these Articles of Organization, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation. (i) No stockholder shall have any right to examine any property or any books, accounts or other writings of the Corporation if there is reasonable ground for belief that such examination will for any reason be adverse to the interests of the Corporation, and a vote of the directors refusing permission to make such examination and setting forth that in the opinion of the directors such examination would be adverse to the interest of the Corporation shall be prima facie evidence that such examination would be adverse to the interests of the Corporation. Every such examination shall be subject to such reasonable regulations as the directors may establish in regard thereto. (j) The directors may specify the manner in which the accounts of the Corporation shall be kept and may determine what constitutes net earnings, profits and surplus, what amounts, if any, shall be reserved for any corporate purpose, and what amounts, if any, shall be declared as dividends. Unless the Board of Directors otherwise specifies, the excess of the consideration received for any share of capital stock over its par value shall be paid-in surplus. All surplus shall be available for any corporate purpose, including the payment of dividends. (k) The purchase or other acquisition or retention by the Corporation of shares of its own capital stock shall not be deemed a reduction of its capital. Upon any reduction of capital or capital stock, no stockholder shall have any right to demand any distribution from the Corporation, except as and to the extent that the stockholders shall so have provided at the time authorizing such reduction. (l) The Corporation shall have the power to be a partner in any business enterprise which it would have power to conduct by itself. EX-3.1P 16 ARTICLES OF INC. DATA ARCHIVE SVCS. MIAMI EXHIBIT 3.1P ARTICLES OF INCORPORATION OF DATA ARCHIVE SERVICES OF MIAMI, INC. THE UNDERSIGNED subscriber to these Articles of Incorporation, being the natural person competent to contract, hereby associate him to form a corporation under the laws of the State of Florida. ARTICLE I NAME The name of this corporation shall be DATA ARCHIVE SERVICES OF MIAMI, INC. ARTICLE II NATURE OF BUSINESS This corporation may engage in any activity or business permitted under the laws of the State of Florida. In addition, this corporation may engage in any or all of the following business activities: 1. To sell, convey, mortgage, pledge, create a security interest in, lease, exchange, transfer and otherwise dispose of all or any part of its property, real or personal, and it assets. 2. In furtherance and not in limitation of the general powers conferred by the laws of the State of Florida and of the objects and purposes hereinbefore stated, it is expressly provided that the Corporation shall also have the following powers, namely: a. To hold, own, mortgage, pledge, bargain, transfer or assign or in any manner dispose of, or to deal in trade goods, wares, merchandise and property of any class or description in any part of the world, including real and personal property. b. To apply for, hold, purchase, acquire or otherwise deal in letters patent, copyrights, trademarks, trade names, secret processes, formulas or inventions, and to work, operate, develop the same, or to carry on any business, manufacturing or otherwise which may directly or indirectly affect those objects or any of them. -2- c. To purchase, hold, sell, assign, transfer, pledge, mortgage or otherwise acquire or dispose of the shares of capital stock or any bonds, securities or other evidence of indebtedness created by any person or corporation of this State or any other State, country, nation or government, and while owner of said stock may exercise all of the rights, privileges of ownership, including the right to vote thereon as natural persons might or could do. d. To loan money on real estate and personal property. e. To enter into, make or perform contracts of any kind, with any persons, associations, corporation, municipalities, body politic, country, territory, state, government or colony or any dependency thereof. f. Without limitation as to amount, to draw, make, accept, endorse, discount, execute and issue promissory notes, drafts, bills, bills of exchange, warrants, bonds, debentures, and all other negotiable or transferable instruments and evidences of indebtedness, whether secured by mortgage, bond or otherwise, as well as to secure the same by mortgage, bond or otherwise. g. To buy and sell real estate, buy and sell equities of whatever nature, to conduct a general brokerage business on all forms or kinds of properties and securities and to act as agents in the buying and selling of mortgages, equities, securities and other forms of negotiable instruments and evidence of indebtedness, whenever secured by mortgage, bond or otherwise. h. To purchase, own, sell, rent, lease, mortgage and to act as agents in buying, selling, owning, renting, leasing and mortgaging properties, whether real and/or personal; to dispose of real estate or personal properties, equities and securities, of whatever nature for cash, credit or otherwise. i. To loan money either for itself or to act as agents in loaning and trying to borrow money and to secure the same in whatever manner in which the Corporation might do and is permissible under the laws of the State of Florida. j. To do any or all of the things herein set forth to the same extent as natural persons might or could do, and in any part of the world, as principals, agents, contractors, subcontractors or otherwise, either along or with any other person, firm, -3- corporation or association; in general to carry on any other business not specifically forbidden by the laws of the State of Florida. ARTICLE III CAPITAL STOCK The aggregate number of shares of capital stock which the corporation has authority to issue is 1,000,000 shares, all of which shall be common stock with a par value of 1 (One) cent per share. Shares of capital stock in this corporation shall be issued initially to the following persons in the amounts set opposite their names: P. Douglas McCraw 500,000 shares William T. Saul 500,000 shares ARTICLE IV INITIAL CAPITAL The amount of capital with which this corporation will begin business is not less than $500.00. ARTICLE V The post office address of the principal office of this corporation shall be: 888 South Andrews Avenue, Suite 301, Fort Lauderdale, Florida, or at such other place as may hereafter be designated by the Board of Directors. The post office address of the registered agent shall be 888 South Andrews Avenue, Suite 301, Fort Lauderdale, Florida 33316, or at such other place as may hereafter be designated by the Board of Directors. The registered agent of this corporation shall be John W. Carry, Esquire, whose business address is and will be identical with the registered office of the corporation. ARTICLE VI This corporation shall have not less than one (1) director initially. The number of directors may increase or decrease from time to time by Bylaws adopted by the shareholders but shall never be less than one. -4- ARTICLE VII The names and post office addresses of the subscribers to these Articles of Incorporation are as follows: NAME ADDRESS P. Douglas McCraw 5300 Powerline Road Fort Lauderdale, Florida 33309 William T. Saul 5300 Powerline Road Fort Lauderdale, Florida 33309 ARTICLE VIII The names and post office address of the initial members of the first Board of Directors are: NAME ADDRESS P. Douglas McCraw 5300 Powerline Road Fort Lauderdale, Florida 33309 William T. Saul 5300 Powerline Road Fort Lauderdale, Florida 33309 ARTICLE IX CONTRACTUAL POWERS In the absence of fraud, no contract or other transaction between this corporation and any other person, firm, association, corporation or partnership, shall be affected or invalidated by the fact than any director or officer of this corporation is pecuniarily or otherwise interested in or is a director or officer of any such firm, association, corporation or partnership, or is a party or pecuniarily or otherwise interested in such contract or other transaction, or is in any way connected with any person, firm, association, corporation or partnership pecuniarily or otherwise interested therein. Any director may vote and may be counted in determining the existence of a quorum at any meeting of the Board of Directors of this corporation for the purposes of authorizing such contract or transaction with like force and effect as if he were not so interested or were not a director, member or officer of such firm, association, corporation or partnership. ARTICLE X PRE-EMPTIVE RIGHTS -5- Each shareholder of the corporation shall be entitled to full pre-emptive rights to acquire his proportional part of any unissued or treasury shares of the corporation, or securities of the corporation convertible into or carrying a right to subscribe to or acquire such shares, which may be issued at any time by the corporation. ARTICLE XI SPECIAL PROVISO Any action taken by the directors of this corporation, which is in their power, taken at a meeting of such directors, shall be valid for all intents and purposes whether or not a lawful notice of said meeting shall have been given to all directors as required by law or the Bylaws of this corporation, if at any time prior to, during or subsequent to such meeting, all directors shall execute a waiver of notice and call of such meeting in writing and providing a majority of the directors shall have approved the action taken at such meeting. Any action by the shareholders of this corporation which is within their power, taken at a meeting of such shareholders, shall be valid for all intents and purposes whether or not a lawful notice shall have been given to all shareholders as required by law or the Bylaws of this corporation, if at any time prior to, during or subsequent to such meeting, all shareholders shall execute a waiver of notice and call of such meeting in writing and providing a majority of the shareholders shall have approved or approve the action taken at such meeting. Nothing in this Article shall be construed to allow any act by the Board of Directors to be approved by less than a majority of the directors, or whenever a greater vote is required by law or by the Bylaws, by that vote. Nothing in this Article shall be construed to allow any act of the shareholders to be approved by less than a majority of the shareholders, or whenever a greater vote is required by law or by the Bylaws, by that vote. ARTICLE XII FURTHER POWERS This corporation shall have the further right and power to, from time to time, determine whether and to what extent and at what times and places, and under what conditions and regulations, the accounts and books of this corporation (other than the stock book) or any of them, shall be open to inspection of shareholders, and no shareholder shall -6- have any right to inspect any account, book or document of this corporation, except as conferred by statute, unless authorized by resolution of the shareholders or by the Board of Directors. The corporation may, in its Bylaws, confer powers upon its Board of Directors or officers, in addition to the foregoing and in addition to the powers authorized and expressly conferred by statute. Both shareholders and directors shall have the power, if the Bylaws so provide, to hold their respective meetings and to have one or more offices within or without the State of Florida, and to keep the books of the corporation (subject to the provisions of statute) outside the State of Florida, at such places as may from time to time be designated by the Board of Directors. The corporation reserves the rights to amend, alter, change or repeal any provision contained in these Articles of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon shareholders herein are granted subject to this reservation. ARTICLE XIII TERM OF EXISTENCE This corporation shall have perpetual existence. IN WITNESS WHEREOF, I have hereunto set my hand and seal at __________, Florida, on this _____ day of _________, 1990. /s/ John W. Carry John W. Carry STATE OF FLORIDA ) COUNTY OF _______ ) BEFORE ME, the undersigned authority, this day personally appeared John W. Carry, to me well known to be the identical person described in and who executed the attached Articles of Incorporation of Data Archive Services of Miami, Inc., and he acknowledged before me that he signed and executed the same for the purposes therein set forth. IN WITNESS WHEREOF, I have hereunto set my hand and official seal at ______________, Florida, on this ____ day of ___________, 1996. _______________________________ -7- Notary Public State of Florida at Large My Commission Expires: -8- REGISTERED AGENT HAVING BEEN NAMED to serve as Registered Agent for Data Archive Services of Miami, Inc., at 20 N.E. 11th Street, Miami, Florida, I hereby agree to act in this capacity and agree to comply with the provisions of Florida Statute relative to keeping said office open. /s/ John W Carry John W. Carry EX-3.2A 17 BY-LAWS IRON MTN RECORDS MGMT, INC Exhibit 3.2A IRON MOUNTAIN RECORDS MANAGEMENT, INC. (a Delaware corporation) BY - LAWS ARTICLE I Offices SECTION 1. Registered Office. The registered office of the Corporation shall be located in the City of Dover, County of Kent, State of Delaware, and the name of the resident agent in charge thereof shall be The Prentice Hall Corporation System, Inc. SECTION 2. Other Offices. The Corporation may also have offices at such other places, within or without the State of Delaware, as the Board of Directors may from time to time appoint or the business of the Corporation may require. ARTICLE II Seal The seal of the Corporation shall, subject to alteration by the Board of Directors, consist of a flat-faced circular die with the word "Delaware", together with the name of the Corporation and the year of incorporation, cut or engraved thereon. ARTICLE III Meetings of Stockholders SECTION 1. Place of Meeting. Meetings of the stockholders shall be held either within or without the State of Delaware at such place as the Board of Directors may fix. SECTION 2. Annual Meetings. The annual meeting of stockholders shall be held on the first day of May of each year, or if such day is a legal holiday, then on the next business day following, at such time as the Board of Directors may fix. SECTION 3. Special Meetings. Special meetings of the stockholders for any purpose or purposes may be called by the President, or by the directors (either by written instrument signed by a majority or by resolution adopted by a vote of the majority), and special meetings shall be called by the President or the Secretary whenever stockholders owning a majority of the capital stock issued, outstanding and entitled to vote so request in writing. Such request of stockholders shall state the purpose or purposes of the proposed meeting. SECTION 4. Notice. Written or printed notice of every meeting of stockholders, annual or special, stating the hour, date and place thereof, and the purpose or purposes in general terms -2- for which the meeting is called shall, not less than ten (10) and not more than sixty (60) days before such meeting, be served upon or mailed to each stockholder entitled to vote thereat, at his address as it appears upon the stock records of the Corporation or, if such stockholder shall have filed with the Secretary of the Corporation a written request that notices intended for him be mailed to some other address, then to the address designated in such request. Notice of the hour, date, place and purpose of any meeting of stockholders may be dispensed with if every stockholder entitled to vote thereat shall attend either in person or by proxy and shall not object to the holding of such meeting for lack of proper notice, or if every absent stockholder entitled to such notice shall in writing, filed with the records of the meeting, either before or after the holding thereof, waive such notice. SECTION 5. Quorum. Except as otherwise provided by law or by the Certificate of Incorporation, the presence in person or by proxy at any meeting of stockholders of the holders of a majority of the shares of the capital stock of the Corporation issued and outstanding and entitled to vote thereat, shall be requisite and shall constitute a quorum. If two or more classes of stock are entitled to vote as separate classes upon any question, then, in the case of each such class, a quorum for the consideration of such question shall, except as otherwise provided by law or by the Certificate of Incorporation, consist of a majority in interest of all stock of that class issued, outstanding and entitled to vote. If a majority or, where a larger quorum is required, such quorum, shall not be represented at any meeting of the stockholders regularly called, the holders of a majority of the shares present or represented and entitled to vote thereat shall have power to adjourn the meeting to another time, or to another time and place, without notice other than announcement of adjournment at the meeting, and there may be successive adjournments for like cause and in like manner until the requisite amount of shares entitled to vote at such meeting shall be represented; provided, however, that if the adjournment is for more than thirty (30) days, notice of the hour, date and place of the adjourned meeting shall be given to each stockholder entitled to vote thereat. Subject to the requirements of law and the Certificate of Incorporation, on any issue on which two or more classes of stock are entitled to vote separately, no adjournment shall be taken with respect to any class for which a quorum is present unless the Chairman of the meeting otherwise directs. At any meeting held to consider matters which were subject to adjournment for want of a quorum at which the requisite amount of shares entitled to vote thereat shall be represented, any business may be transacted which might have been transacted at the meeting as originally noticed. SECTION 6. Votes; Proxies. At each meeting of stockholders, every stockholder of record at the closing of the transfer books, if closed, or on the date set by the Board of Directors for the determination of stockholders entitled to vote at such meeting, shall have one vote for each share of stock entitled to vote which is registered in his name on the books of the Corporation, and, in the election of directors, may vote cumulatively to the extent and in the manner authorized in the Certificate of Incorporation. At each such meeting every stockholder shall be entitled to vote in person, or by proxy appointed by an instrument in writing subscribed by such stockholder and bearing a date not more than three (3) years prior to the meeting in question, unless said instrument provides for a longer period during which it is to remain in force. -3- All elections of directors shall be held by ballot. If the Chairman of the meeting shall so determine, a vote may be taken upon any other matter by ballot and shall be so taken upon the request of any stockholder entitled to vote on such matter. At elections of directors, the Chairman shall appoint two judges of election, who shall first take and subscribe an oath or affirmation faithfully to execute the duties of judges at such meeting with strict impartiality and according to the best of their ability. The judges so appointed shall take charge of the polls and, after the balloting, shall make a certificate of the result of the vote taken. No director or candidate for the office of director shall be appointed as such judge. At any meeting at which a quorum is present, a plurality of the votes properly cast for election to fill any vacancy on the Board of Directors shall be sufficient to elect a candidate to fill such vacancy, and a majority of the votes properly cast upon any other question shall decide the question, except in any case where a larger vote is required by law, the Certificate of Incorporation, these By-laws, or otherwise. SECTION 7. Organization. The Chairman of the Board, if there be one, or in his absence the President, or in the absence of the Chairman and the President, a Vice President, shall call meetings of the stockholders to order and shall act as chairman thereof. The Secretary of the Corporation, if present, shall act as secretary of all meetings of stockholders, and, in his absence, the presiding officer may appoint a secretary. ARTICLE IV Directors SECTION 1. Number. The business and property of the Corporation shall be conducted and managed by a Board of Directors consisting of one or more directors. Directors need not be a stockholder. The number of directors for the ensuing year shall be fixed at each annual meeting of stockholders, but if the number is not so fixed, the number shall remain as it stood immediately prior to such meeting. At any time during any year the whole number of directors may be increased or reduced, in each case by vote of a majority of the stock outstanding and entitled to vote for the election of directors or a majority of the directors in office at the time of such increase or decrease, regardless of whether such majority of directors constitutes a quorum. SECTION 2. Term of Office. Each director shall hold office until the next annual meeting of stockholders and until his successor is duly elected and qualified or until his earlier death or resignation, subject to the right of the stockholders at any time to remove any director or directors as provided in Section 4 of this Article. SECTION 3. Vacancies. If any vacancy shall occur among the directors, or if the number of directors shall at any time be increased, the directors then in office, although less than a quorum, by a majority vote may fill the vacancies or newly-created directorships, or any such vacancies or newly-created directorships may be filled by the stockholders at any meeting. -4- SECTION 4. Removal by Stockholders. The holders of record of the capital stock of the Corporation entitled to vote for the election of directors may in their discretion at any meeting duly called for the purpose, by a majority vote, remove any director or directors and elect a new director or directors in place thereof. SECTION 5. Meetings. Meetings of the Board of Directors shall be held at such place, within or without the State of Delaware, as may from time to time be fixed by resolution of the Board or by the President and as may be specified in the notice or waiver of notice of any meeting. Meetings may be held at any time upon the call of the Chairman of the Board or the President or any two (2) of the directors in office by oral, telegraphic or written notice, duly served or sent or mailed to each director not less than twenty-four (24) hours before such meeting, except that, if mailed, not less than seventy-two (72) hours before such meeting. Meetings may be held at any time and place without notice if all the directors are present and do not object to the holding of such meeting for lack of proper notice or if those not present shall, in writing or by telegram, waive notice thereof. A regular meeting of the Board may be held without notice immediately following the annual meeting of stockholders at the place where such meeting is held. Regular meetings of the Board may also be held without notice at such time and place as shall from time to time be determined by resolution of the Board. SECTION 6. Quorum. A majority of the directors shall constitute a quorum for the transaction of business. If at any meeting of the Board there shall be less than a quorum present, a majority of those present may adjourn the meeting from time to time without notice other than announcement of the adjournment at the meeting, and at such adjourned meeting at which a quorum is present any business may be transacted which might have been transacted at the meeting as originally noticed. SECTION 7. Compensation. Directors shall receive compensation for their services, as such, and for service on any Committee of the Board of Directors, as fixed by resolution of the Board of Directors and for expenses of attendance at each regular or special meeting of the Board or any Committee thereof. Nothing in this Section shall be construed to preclude a director from serving the Corporation in any other capacity and receiving compensation therefor. ARTICLE V Committees of Directors SECTION 1. Executive Committee. The Board of Directors may, by resolution passed by a majority of the whole Board, appoint an Executive Committee of two (2) or more members, to serve during the pleasure of the Board, to consist of such directors as the Board may from time to time designate. The Board of Directors shall designate the Chairman of the Executive Committee. (a) Procedure. The Executive Committee shall, by a vote of a majority of its members, fix its own times and places of meeting, determine the number of its members constituting a quorum for the transaction of business, and prescribe its own rules of procedure, no change in which shall be made save by a majority vote of its members. -5- (b) Responsibilities. During the intervals between the meetings of the Board of Directors, except as otherwise provided by the Board of Directors in establishing such Committee or otherwise, the Executive Committee shall possess and may exercise all the powers of the Board in the management and direction of the business and affairs of the Corporation; provided, however, that the Executive Committee shall not have the power: (i) to amend or authorize the amendment of the Certificate of Incorporation or these By-Laws; (ii) to authorize the issuance of stock; (iii) to authorize the payment of any dividend; (iv) to adopt an agreement of merger or consolidation of the Corporation or to recommend to the stockholders the sale, lease or exchange of all or substantially all the property and business of the Corporation; or (v) to recommend to the stockholders a dissolution of the Corporation. (c) Reports. The Executive Committee shall keep regular minutes of its proceedings, and all action by the Executive Committee shall be reported promptly to the Board of Directors. Such action shall be subject to review, amendment and repeal by the Board, provided that no rights of third parties shall be adversely affected by such review, amendment or repeal. (d) Appointment of Additional Members. In the absence or disqualification of any member of the Executive Committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not constituting a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in place of any such absent or disqualified member. SECTION 2. Audit Committee. The Board of Directors shall appoint an Audit Committee of two (2) or more members who shall not be officers or employees of the Corporation to serve during the pleasure of the Board. The Board of Directors shall designate the Chairman of the Audit Committee. (a) Procedure. The Audit Committee, by a vote of a majority of its members, shall fix its own times and places of meeting, shall determine the number of its members constituting a quorum for the transaction of business, and shall prescribe its own rules of procedure, no change in which shall be made save by a majority vote of its members. -6- (b) Responsibilities. The Audit Committee shall review the annual financial statements of the Corporation prior to their submission to the Board of Directors, shall consult with the Corporation's independent auditors, and may examine and consider such other matters in relation to the internal and external audit of the Corporation's accounts and in relation to the financial affairs of the Corporation and its accounts, including the selection and retention of independent auditors, as the Audit Committee may, in its discretion, determine to be desirable. (c) Reports. The Audit Committee shall keep regular minutes of its proceedings, and all action by the Audit Committee shall, from time to time, be reported to the Board of Directors as it shall direct. (d) Appointment of Additional Members. In the absence or disqualification of any member of the Audit Committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not constituting a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in place of any such absent or disqualified member. SECTION 3. Other Committees. The Board of Directors, by vote of a majority of the directors then in office, may at any time appoint one or more other committees from and outside of its own number. Every such committee must include at least one member of the Board of Directors. The Board may from time to time designate or alter, within the limits permitted by law, the Certificate of Incorporation and this Article, if applicable, the duties, powers and number of members of such other committees or change their membership, and may at any time abolish such other committees or any of them. (a) Procedure. Each committee appointed pursuant to this Section shall, by a vote of a majority of its members, fix its own times and places of meeting, determine the number of its members constituting a quorum for the transaction of business, and prescribe its own rules of procedure, no change in which shall be made save by a majority vote of its members. (b) Responsibilities. Each committee appointed pursuant to this Section shall exercise the powers assigned to it by the Board of Directors in its discretion. (c) Reports. Each committee appointed pursuant to this Section shall keep regular minutes of proceedings, and all action by each such committee shall, from time to time, be reported to the Board of Directors as it shall direct. (d) Appointment of Additional Members. In the absence or disqualification of any member of each committee, appointed pursuant to this Section, the member or members thereof present at any meeting and not disqualified from voting, whether or not constituting a quorum, may unanimously -7- appoint another member of the Board of Directors to act at the meeting in place of any such absent or disqualified member. SECTION 4. Term of Office. Each member of a committee shall hold office until the first meeting of the Board of Directors following the annual meeting of stockholders (or until such other time as the Board of Directors may determine, either in the vote establishing the committee or at the election of such member or otherwise) and until his successor is elected and qualified, or until he sooner dies, resigns, is removed, is replaced by change of membership or becomes disqualified by ceasing to be a Director (where membership on the Board is required), or until the committee is sooner abolished by the Board of Directors. ARTICLE VI Officers SECTION 1. Officers. The Board of Directors shall elect a President, a Secretary and a Treasurer, and, in their discretion, may elect a Chairman of the Board, one or more Executive Vice Presidents, Vice Presidents, Assistant Secretaries and Assistant Treasurers as deemed necessary or appropriate. Such officers shall be elected annually by the Board of Directors at its first meeting following the annual meeting of stockholders, and each shall hold office for the term provided by the vote of the Board, except that each will be subject to removal from office in the discretion of the Board as provided herein. The powers and duties of more than one office may be exercised and performed by the same person. SECTION 2. Vacancies. Any vacancy in any office may be filled for the unexpired portion of the term by the Board of Directors, at any regular or special meeting. SECTION 3. Chairman of the Board. The Chairman of the Board of Directors, if elected, shall be a member of the Board of Directors and shall preside at its meetings. He shall advise and counsel with the President, and shall perform such duties as from time to time may be assigned to him by the Board of Directors. SECTION 4. President. The President shall be the chief executive officer of the Corporation. Subject to the directions of the Board of Directors, he shall have and exercise direct charge of and general supervision over the business and affairs of the Corporation and shall perform all duties incident to the office of the chief executive officer of a corporation and such other duties as from time to time may be assigned to him by the Board of Directors. The President may but need not be a member of the Board of Directors. SECTION 5. Executive Vice Presidents and Vice Presidents. Each Executive Vice President and Vice President shall have and exercise such powers and shall perform such duties as from time to time may be assigned to him by the President. SECTION 6. Secretary. The Secretary shall keep the minutes of all meetings of the stockholders and of the Board of Directors in books provided for the purpose; he shall see that all notices are duly given in accordance with the provisions of law and these By-laws; he shall be custodian of the records and of the corporate seal or seals of the Corporation; he shall see -8- that the corporate seal is affixed to all documents the execution of which, on behalf of the Corporation under its seal, is duly authorized, and, when the seal is so affixed, he may attest the same; he may sign, with the President, an Executive Vice President or a Vice President, certificates of stock of the Corporation; and, in general, he shall perform all duties incident to the office of secretary of a corporation, and such other duties as from time to time may be assigned to him by the Board of Directors. SECTION 7. Assistant Secretaries. The Assistant Secretaries in order of their seniority shall, in the absence or disability of the Secretary, perform the duties and exercise the powers of the Secretary and shall perform such other duties as the Board of Directors shall prescribe or as from time to time may be assigned by the Secretary. SECTION 8. Treasurer. The Treasurer shall have charge of and be responsible for all funds, securities, receipts and disbursements of the Corporation, and shall deposit, or cause to be deposited, in the name of the Corporation, all monies or other valuable effects in such banks, trust companies or other depositaries as shall, from time to time, be selected by the Board of Directors; he may endorse for collection on behalf of the Corporation checks, notes and other obligations; he may sign receipts and vouchers for payments made to the Corporation; he may sign checks of the Corporation, singly or jointly with another person as the Board of Directors may authorize, and pay out and dispose of the proceeds under the direction of the Board; he shall render to the President and to the Board of Directors, whenever requested, an account of the financial condition of the Corporation; he may sign, with the President, or an Executive Vice President or a Vice President, certificates of stock of the Corporation; and in general, shall perform all the duties incident to the office of treasurer of a corporation, and such other duties as from time to time may be assigned to him by the Board of Directors. SECTION 9. Assistant Treasurers. The Assistant Treasurers in order of their seniority shall, in the absence or disability of the Treasurer, perform the duties and exercise the powers of the Treasurer and shall perform such other duties as the Board of Directors shall prescribe or as from time to time may be assigned by the Treasurer. SECTION 10. Subordinate Officers. The Board of Directors may appoint such subordinate officers as it may deem desirable. Each such officer shall hold office for such period, have such authority and perform such duties as the Board of Directors may prescribe. The Board of Directors may, from time to time, authorize any officer to appoint and remove subordinate officers and to prescribe the powers and duties thereof. SECTION 11. Compensation. The Board of Directors shall fix the compensation of all officers of the Corporation. It may authorize any officer, upon whom the power of appointing subordinate officers may have been conferred, to fix the compensation of such subordinate officers. SECTION 12. Removal. Any officer of the Corporation may be removed, with or without cause, by action of the Board of Directors. SECTION 13. Bonds. The Board of Directors may require any officer of the Corporation to give a bond to the Corporation, conditional upon the faithful performance of his -9- duties, with one or more sureties and in such amount as may be satisfactory to the Board of Directors. ARTICLE VII Certificates of Stock SECTION 1. Form and Execution of Certificates. The interest of each stockholder of the Corporation shall be evidenced by a certificate or certificates for shares of stock in such form as the Board of Directors may from time to time prescribe. The certificates of stock of each class shall be consecutively numbered and signed by the President, an Executive Vice President or a Vice President and by the Secretary, an Assistant Secretary, the Treasurer or an Assistant Treasurer of the Corporation, and may be countersigned and registered in such manner as the Board of Directors may by resolution prescribe, and shall bear the corporate seal or a printed or engraved facsimile thereof. Where any such certificate is signed by a transfer agent or transfer clerk acting on behalf of the Corporation, the signatures of any such President, Executive Vice President, Vice President, Treasurer, Assistant Treasurer, Secretary or Assistant Secretary may be facsimiles, engraved or printed. In case any officer or officers, who shall have signed, or whose facsimile signature or signatures shall have been used on, any such certificate or certificates, shall cease to be such officer or officers, whether because of death, resignation or otherwise, before such certificate or certificates shall have been delivered by the Corporation, such certificate or certificates may nevertheless be issued and delivered by the Corporation as though the person or persons who signed such certificate or certificates or whose facsimile signature or signatures shall have been used thereon had not ceased to be such officer or officers. In case the corporate seal which has been affixed to, impressed on, or reproduced in any such certificate or certificates shall cease to be the seal of the Corporation before such certificate or certificates have been delivered by the Corporation, such certificate or certificates may nevertheless be issued and delivered by the Corporation as though the seal affixed thereto, impressed thereon or reproduced therein had not ceased to be the seal of the Corporation. Every certificate for shares of stock which are subject to any restriction on transfer pursuant to law, the Certificate of Incorporation, these By-laws, or any agreement to which the Corporation is a party, shall have the restriction noted conspicuously on the certificate, and shall also set forth, on the face or back, either the full text of the restriction or a statement of the existence of such restriction and (except if such restriction is imposed by law) a statement that the Corporation will furnish a copy thereof to the holder of such certificate upon written request and without charge. Every certificate issued when the Corporation is authorized to issue more than one class or series of stock shall set forth on its face or back either the full text of the preferences, voting powers, qualifications, and special and relative rights of the shares of each class and series authorized to be issued, or a statement of the existence of such preferences, powers, qualifications and rights, and a statement that the Corporation will furnish a copy thereof to the holder of such certificate upon written request and without charge. -10- SECTION 2. Transfer of Shares. The shares of the stock of the Corporation shall be transferred on the books of the Corporation by the holder thereof in person or by his attorney lawfully constituted, upon surrender for cancellation of certificates for the same number of shares, with an assignment and power of transfer endorsed thereon or attached thereto, duly executed, with such proof or guaranty of the authenticity of the signature as the Corporation or its agents may reasonably require. The Corporation shall be entitled to treat the holder of record of any share or shares of stock as the holder in fact thereof and accordingly shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person whether or not it shall have express or other notice thereof, save as expressly provided by law or by the Certificate of Incorporation. It shall be the duty of each stockholder to notify the Corporation of his post office address. SECTION 3. Closing of Transfer Books. The stock transfer books of the Corporation may, if deemed appropriate by the Board of Directors, be closed for such length of time not exceeding fifty (50) days as the Board may determine, preceding the date of any meeting of stockholders or the date for the payment of any dividend or the date for the allotment of rights or the date when any issuance, change, conversion or exchange of capital stock shall go into effect, during which time no transfer of stock on the books of the Corporation may be made. SECTION 4. Dates of Record. If deemed appropriate, the Board of Directors may fix in advance a date for such length of time not exceeding sixty (60) days (and, in the case of any meeting of stockholders, not less than ten (10) days) as the Board may determine, preceding the date of any meeting of stockholders, or the date for the payment of any dividend, or the date for the allotment of rights or the date when any issuance, change, conversion or exchange of capital stock shall go into effect, as a record date for the determination of the stockholders entitled to notice of, and to vote at, any such meeting or entitled to receive payment of any such dividend or to any such allotment of rights, or to exercise the rights in respect of any such issuance, change, conversion or exchange of capital stock, as the case may be, and in such case only such stockholders as shall be stockholders of record on the date so fixed shall be entitled to such notice of, and to vote at, such meeting, or to receive payment of such dividend, or to receive such allotment of rights, or to exercise such rights, as the case may be, notwithstanding any transfer of any stock on the books of the Corporation after any record date fixed as aforesaid. If no such record date is so fixed, the record date shall be determined by applicable law. SECTION 5. Lost or Destroyed Certificates. In case of the loss or destruction of any certificate of stock, a new certificate may be issued under the following conditions: (a) The owner of said certificate shall file with the Secretary or any Assistant Secretary of the Corporation an affidavit giving the facts in relation to the ownership, and in relation to the loss or destruction of said certificate, stating its number and the number of shares represented thereby; such affidavit shall be in such form and contain such statements as shall satisfy the President, any Executive Vice President, Vice President, the Secretary, any Assistant Secretary, the Treasurer or any Assistant Treasurer, that said certificate has been accidentally destroyed or lost, and that a new certificate ought to be issued in lieu thereof. Upon being so -11- satisfied, any such officer shall require such owner to furnish the Corporation a bond in such penal sum and in such form as he may deem advisable, and with a surety or sureties approved by him, to indemnify and save harmless the Corporation from any claim, loss, damage or liability which may be occasioned by the issuance of a new certificate in lieu thereof. Upon such bond being so filed, a new certificate for the same number of shares shall be issued to the owner of the certificate so lost or destroyed; and the transfer agent and registrar, if any, of stock shall countersign and register such new certificate upon receipt of a written order signed by any such officer, and thereupon the Corporation will save harmless said transfer agent and registrar in the premises. In case of the surrender of the original certificate, in lieu of which a new certificate has been issued, or the surrender of such new certificate, for cancellation, the bond of indemnity given as a condition of the issue of such new certificate may be surrendered; or (b) The Board of Directors of the Corporation may by resolution authorize and direct any transfer agent or registrar of stock of the Corporation to issue and register respectively from time to time without further action or approval by or on behalf of the Corporation new certificates of stock to replace certificates reported lost, stolen or destroyed upon receipt of an affidavit of loss and bond of indemnity in form and amount and with surety satisfactory to such transfer agent or registrar in each instance or upon such terms and conditions as the Board of Directors may determine. ARTICLE VIII Execution of Documents SECTION 1. Execution of Checks, Notes, etc. All checks and drafts on the Corporation's bank accounts and all bills of exchange and promissory notes, and all acceptances, obligations and other instruments for the payment of money, shall be signed by such officer or officers, or agent or agents, as shall be thereunto authorized from time to time by the Board of Directors, which may in its discretion authorize any such signatures to be facsimile. SECTION 2. Execution of Contracts, Assignments, etc. Unless the Board of Directors shall have otherwise provided generally or in a specific instance, all contracts, agreements, endorsements, assignments, transfers, stock powers, or other instruments shall be signed by the President, any Executive Vice President, any Vice President, the Secretary, any Assistant Secretary, the Treasurer or any Assistant Treasurer. The Board of Directors may, however, in its discretion, require any or all such instruments to be signed by any two or more of such officers, or may permit any or all of such instruments to be signed by such other officer or officers, agent or agents, as it shall thereunto authorize from time to time. SECTION 3. Execution of Proxies. The President, any Executive Vice President or any Vice President, and the Secretary, the Treasurer, any Assistant Secretary or any Assistant Treasurer, or any other officer designated by the Board of Directors, may sign on behalf of the -12- Corporation proxies to vote upon shares of stock of other companies standing in the name of the Corporation. ARTICLE IX Inspection of Books The Board of Directors shall determine from time to time whether, and if allowed, to what extent and at what time and places and under what conditions and regulations, the accounts and books of the Corporation (except such as may by law be specifically open to inspection) or any of them, shall be open to the inspection of the stockholders, and no stockholder shall have any right to inspect any account or book or document of the Corporation, except as conferred by the laws of the State of Delaware, unless and until authorized so to do by resolution of the Board of Directors or of the stockholders of the Corporation. ARTICLE X Fiscal Year The fiscal year of the Corporation shall be determined from time to time by vote of the Board of Directors. ARTICLE XI Amendments These By-laws may be altered, amended, changed or repealed and new By-laws adopted by the stockholders or by the Board of Directors, in either case at any meeting called for that purpose at which a quorum shall be present. Any by-law, whether made, altered, amended, changed or repealed by the stockholders or the Board of Directors may be repealed, amended, changed, further amended, changed, repealed or reinstated, as the case may be either by the stockholders or by the Board of Directors, as herein provided; except that this Article may be altered, amended, changed or repealed only by vote of the stockholders. ARTICLE XII Indemnification SECTION 1. Indemnification. The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that he is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines, and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interest of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of -13- any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interest of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation; except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable for negligence or misconduct in the performance of his duty to the Corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper. To the extent that a director, officer, employee or agent of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in this Section, or in defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith. SECTION 2. Authorization. Any indemnification under Section 1 of this Article (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances because he has met the applicable standard of conduct set forth in Section 1 of this Article. Such determination shall be made: (a) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceedings, or (b) if such a quorum is not obtainable, or, even if obtainable, a quorum of disinterested directors so directs, by independent legal counsel in written opinion, or (c) by the stockholders. SECTION 3. Expense Advance. Expenses incurred in defending a civil or criminal action, suit or proceeding may be paid by the Corporation in advance of the final disposition of such action, suit or proceeding as authorized by the Board of Directors in the manner provided in Section 2 of this Article upon receipt of an undertaking by or on behalf of the director, officer, employee or agent to repay such amount, unless it shall ultimately be determined that he is entitled to be indemnified by the Corporation as authorized in this Article. SECTION 4. Nonexclusivity. The indemnification provided by this Article shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any by- -14- law, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person. SECTION 5. Insurance. The Corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power to indemnify him against such liability under the provisions of this Article. SECTION 6. "The Corporation". For the purposes of this Article, references to "the Corporation" include all constituent corporations absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers and employees or agents as well as the resulting or surviving corporation so that any person who is or was a director, officer, employee or agent of such a constituent corporation or is or was serving at the request of such constituent corporation as director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise shall stand in the same position under the provisions of this Article with respect to such a constituent corporation if its separate existence had continued. EX-3.2B 18 BY-LAWS METRO BUSINESS ARCHIVES BY-LAWS OF METRO BUSINESS ARCHIVES, INC. (a New York corporation) ------------------ ARTICLE 1 SHAREHOLDERS 1. CERTIFICATES REPRESENTING SHARES. Certificates representing shares shall set forth thereon the statements prescribed by Section 508, and, where applicable, by Sections 505, 616, 620, 709, and 1002, of the Business Corporation Law and by any other applicable provision of law and shall be signed by the Chairman or a Vice-Chairman of the Board of Directors, if any, or by the President or a Vice-President and by the Secretary or an Assistant Secretary or the Treasurer and Assistant Treasurer and may be sealed with the corporate seal or a facsimile thereof. The signatures of the officers upon a certificate may be facsimiles if the certificate is countersigned by a transfer agent or registered by a registrar other than the corporation itself or it's employee. In case any officer who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer at the date of its issue. A certificate representing shares shall not be issued until the full amount of consideration therefor has been paid except as Section 504 of the Business Corporation Law may otherwise permit. The corporation may issue a new certificate for shares in place of any certificate theretofore issued by it, alleged to have been lost or destroyed, and the Board of Directors may require the owner of any lost or destroyed certificate, or his legal representative, to give the corporation a bond sufficient to indemnify the corporation against any claim that may be made against it on account of the alleged loss or destruction of any such certificate or the issuance of any such new certificate. 2. FRACTIONAL SHARE INTERESTS. The corporation may issue certificates for fractions of a share where necessary to effect transactions authorized by the Business Corporation Law which shall entitle the holder, in proportion to his fractional holdings, to exercise voting rights, receive dividends and participate in liquidating distributions; or it may pay in cash the fair value of fractions of a share as of the time when those entitled to receive such fractions are determined; or it may issue scrip in registered or bearer form over the manual or facsimile signature of an officer of the corporation or of its agent, exchangeable as therein provided for full shares, but such scrip shall not entitle the holder to any rights of a shareholder except as therein provided. 3. SHARE TRANSFERS. Upon compliance with provisions restricting the transferability of shares, if any, transfers of shares of the corporation shall be made only on the share record of the corporation by the registered holder thereof, or by his attorney thereunto authorized by power of attorney duly executed and filed with the Secretary of the corporation or with a transfer agent or a registrar, if any, and on surrender of the certificate or certificates for such shares properly endorsed and the payment of all taxes cue thereon. 4. RECORD DATE FOR SHAREHOLDERS. For the purpose of determining the shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or to express consent to or dissent from any proposal without a meeting, or for the purpose of determining shareholders entitled to receive payment of any dividend or the allotment of any rights, or for the purpose of any other action, the directors may fix, in advance, a date as the record date for any such determination of shareholders. Such date shall not be more than fifty days nor less than ten days before the date of such meeting, nor more than fifty days prior to any other action. If no record date is fixed, the record date for the determination of shareholders entitled to notice of or to vote at a meeting of shareholders shall be at the close of the business on the day next preceding the day on which notice is given, or, if no notice is given, the day on which the meeting is held; the record date for determining shareholders for any purpose other than that specified in the preceding clause shall be at the close of business on the day on which the resolution of the directors relating thereto is adopted. When a determination of shareholders of record entitled to notice of or to vote at any meeting of shareholders has been made as provided in this paragraph, such determination shall apply to any adjournment thereof, unless directors fix a new record date under this paragraph f or the adjourned meeting. 5. MEANING OF CERTAIN TERMS. As used herein in respect of the right to notice of a meeting of shareholders or a waiver thereof or to participate or vote thereat or to consent or dissent in writing in lieu of a meeting, as the case may be, the term "share" or "shares" or "shareholder" or "shareholders" refers to an outstanding share or shares and to a holder or holders of record of outstanding shares when the corporation is authorized to issue only one class of shares, and said reference is also intended to include any outstanding share or shares and any holder or holders of record of outstanding shares of any class upon which or upon whom the Certificate of Incorporation confers such rights where there are two or more classes or series of shares or upon which or upon whom the Business Corporation Law confers such rights notwithstanding that the Certificate of Incorporation may provide for more than one class or series of shares, one or more of which are limited or denied such rights thereunder. 6. SHAREHOLDER MEETINGS. - TIME. The annual meeting shall be held on the date fixed, from time to time, by the directors, provided, that the first annual meeting shall be held on a date within thirteen months after the formation of the corporation, and each successive annual meeting shall be held on a date within thirteen months after the date of the preceding annual meeting. A special meeting shall be held on the date fixed by the directors except when the Business Corporation Law confers the right to fix the date upon shareholders. 2 - PLACE. Annual meetings and special meetings shall be held at such place, within or without the State of New York, as the directors may, from time to time, fix. Whenever the directors shall fail to fix such place, or, whenever shareholders entitled to call a special meeting shall call the same, the meeting shall be held at the office of the corporation in the State of New York. - CALL. Annual meetings may be called by the directors or by any officer instructed by the directors to call the meeting. Special meetings may be called in like manner except when the directors are required by the Business Corporation Law to call a meeting, or except when the shareholders are entitled by said Law to demand the call of a meeting. - NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER OF NOTICE. Written notice of all meetings shall be given, stating the place, date, and hour of the meeting, and, unless it is an annual meeting, indicating that it is being issued by or at the direction of the person or persons calling the meeting. The notice of an annual meeting shall state that the meeting is called for the election of directors and for the transaction of other business which may properly come before the meeting, and shall, (if any other action which could be taken at a special meeting is to be taken at such annual meeting) state the purpose or purposes. The notice of a special meeting shall in all instances state the purpose or purposes for which the meeting is called; and, at any such meeting, only such business may be transacted which is related to the purpose or purposes set forth in the notice. If the directors shall adopt, amend, or repeal a bylaw regulating an impending election of directors, the notice of the next meeting for election of directors shall contain the statements prescribed by Section 601(b) of the Business Corporation Law. If any action is proposed to be taken which would, if taken, entitle shareholders to receive payment for their shares, the notice shall include a statement of that purpose and to that effect and shall be accompanied by a copy of Section 623 of the Business Corporation Law or an outline of its material terms. A copy of the notice of any meeting shall be given, personally or by first class mail, not less than ten days nor more than fifty days before the date of the meeting, unless the lapse of the prescribed period of time shall have been waived, to each shareholder at his record address or at such other address which he may have furnished by request in writing to the Secretary of the corporation. Notice by mail shall be deemed to be given when deposited, with postage thereon prepaid, in a post office or official depository under the exclusive care and custody of the United States post office department. If a meeting is adjourned to another time or place, and, if any announcement of the adjourned time or place is made at the meeting, it shall not be necessary to give notice of the adjourned meeting unless the directors, after adjournment, fix a new record date for the adjourned meeting. Notice of a meeting need not be given to any shareholder who submits a signed waiver of notice before or after the meeting. The attendance of a shareholder at a meeting without protesting prior to the conclusion of the meeting the lack of notice of such meeting shall constitute a waiver of notice by him. - SHAREHOLDER LIST AND CHALLENGE. A list of shareholders as of the record date, certified by the Secretary or other officer responsible for its preparation or by the transfer agent, if any, shall be produced at any meeting of shareholders upon the request thereat or prior thereto of any shareholder. If the right to vote at any meeting is challenged, the inspectors of election, if any, or the person presiding thereat, shall require such list of shareholders to be produced as evidence of the right of the persons challenged to vote at such 3 meeting, and all persons who appear from such list to be shareholders entitled to vote thereat may vote at such meeting. - CONDUCT OF MEETING. Meetings of the shareholders shall be presided over by one of the following officers in the order of seniority and if present and acting - the Chairman of the Board, if any, the Vice-Chairman of the Board, if any, the President, a Vice-President, or, if none of the foregoing is in office and present and acting, by a Chairman to be chosen by the shareholders. The Secretary of the corporation, or in his absence, an Assistant Secretary, shall act as secretary of every meeting, but if neither the Secretary nor an Assistant Secretary is present the Chairman of the meeting shall appoint a secretary of the meeting. - PROXY REPRESENTATION. Every shareholder may authorize another person or persons to act for him by proxy in all matters in which a shareholder is entitled to participate, whether by waiving notice of any meeting, voting or participating at a meeting, or expressing consent or dissent without a meeting. Every proxy must be signed by the shareholder or his attorney-in-fact. No proxy shall be valid after the expiration of eleven months from the date thereof unless otherwise provided in the proxy. Every proxy shall be revocable -at the pleasure of the shareholder executing it, except as otherwise provided by the Business Corporation Law. - INSPECTORS - APPOINTMENT. The directors, in advance of any meeting, may, but need not, appoint one or more inspectors to act at the meeting or any adjournment thereof. If an inspector or inspectors are not appointed, the person presiding at the meeting may, but need not, appoint one or more inspectors. In case any person who may be appointed as an inspector fails to appear or act, the vacancy may be filled by appointment made by the directors in advance of the meeting or at the meeting by the person presiding thereat. Each inspector, if any, before entering upon the discharge of his duties, shall take and sign an oath faithfully to execute the duties of inspector at such meeting with strict impartiality and according to the best of his ability. The inspectors, if any, shall determine the number of shares outstanding and the voting power of each, the shares represented at the meeting, the existence of a quorum, the validity and effect of proxies, and shall receive votes, ballots or consents, hear and determine all challenges and questions arising in connection with the right to vote, count and tabulate all votes, ballots or consents, determine the result, and do such acts as are proper to conduct the election or vote with fairness to all shareholders. On request of the person presiding at the meeting or any shareholder, the inspector or inspectors, if any, shall make a report in writing of any challenge, question or matter determined by his or them and execute a certificate of any fact found by him or them. - QUORUM. Except for a special election of directors pursuant to Section 603(b) of the Business Corporation Law, and except as herein otherwise provided, the holders of a majority of the outstanding shares shall constitute a quorum at a meeting of shareholders for the transaction of any business. When a quorum is once present to organize a meeting, it is not broken by the subsequent withdrawal of any shareholders. The shareholders present may adjourn the meeting despite the absence of a quorum. - VOTING. Each share shall entitle the holder thereof to one vote. In the election of directors, a plurality of the votes cast shall elect. Any other action shall be authorized 4 by a majority of the votes cast except where the Business Corporation Law prescribes a different proportion of votes. 7. SHAREHOLDER ACTION WITHOUT MEETINGS. Whenever shareholders are required or permitted to take any action by vote, such action may be taken without a meeting on written consent, setting forth the action so taken, signed by the holders of all shares. ARTICLE 2 GOVERNING BOARD 1. FUNCTIONS AMD DEFINITIONS. The business of the corporation shall be managed under the direction of a governing board, which is herein referred to as the "Board of Directors" or "directors" notwithstanding that the members thereof may otherwise bear the titles of trustees, managers, or governors or any other designated title, and notwithstanding that only one director legally constitutes the Board. The word "director" or "directors" likewise herein refers to a member or to members of the governing board notwithstanding the designation of a different official title or titles. The use of the phrase "entire board" herein refers to the total number of directors which the corporation would have if there were no vacancies. 2. QUALIFICATIONS AND NUMBER. Each director shall be at least eighteen years of age. A director need not be a shareholder, a citizen of the United States, or a resident of the State of New York. The initial Board of Directors shall consist of one person. Thereafter the number of directors constituting the entire board shall be at least three, except that, where all the shares are owned beneficially and of record by less than three shareholders, the number of directors may be less than three but not less than the number of such shareholders. Subject to the foregoing limitation and except for the first Board of Directors, such number may be fixed from time to time by action of the shareholders or of the directors, or, if the number is not so fixed, the number shall be . The number of directors may be increased or decreased by action of shareholders or of the directors, provided that any action of the directors to effect such increase or decrease shall require the vote of a majority of the entire Board. No decrease shall shorten the term of any incumbent director. 3. ELECTION AND TERM. The first Board of Directors shall be elected by the incorporator or incorporators and shall hold office until the first annual meeting of shareholders and until their successors have been elected and qualified. Thereafter, directors who are elected at an annual meeting of shareholders, and directors who are elected in the interim by the shareholders to fill vacancies and newly created directorships, shall hold office until the next annual meeting of shareholders and until their successors have been elected and qualified; and directors who are elected in the interim by the directors to fill vacancies and newly created directorships shall hold office until the next meeting of shareholders at which the election of directors is in the regular order of business and until their successors have been elected and qualified. In the interim between annual meetings of shareholders or of special meetings of shareholders called for the election of directors, newly created directorships and any vacancies in the Board of Directors, including vacancies resulting from the removal of directors for cause or without cause, may be filled by the vote of the remaining directors then in office, although less than a quorum exists. 5 4. MEETINGS. - TIME. Meetings shall be held at such time as the Board shall fix, except that the first meeting of a newly elected Board shall be held as soon after its election as the directors may conveniently assemble. - PLACE. Meetings shall be held at such place within or without the State of New York as shall be fixed by the Board. - CALL. No call shall be required for regular meetings for which the time and place have been fixed. Special meetings may be called by or at the direction of the Chairman of the Board, if any, of the President, or of a majority of the directors in office. - NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER. No notice shall be required for regular meetings for which the time and place have been fixed. Written, oral, or any other mode of notice of the time and place shall be given for special meetings in sufficient time for the convenient assembly of the directors thereat. The notice of any meeting need not specify the purpose of the meeting. Any requirement of furnishing a notice shall be waived by any director who signs a waiver of notice before or after the meeting, or who attends the meeting without protesting, prior thereto or at its commencement, the lack of notice to him. - QUORUM AND ACTION. A majority of the entire Board shall constitute a quorum except when a vacancy or vacancies prevents such majority, whereupon a majority of the directors in office shall constitute a quorum, provided such majority shall constitute at least one-third of the entire Board. A majority of the directors present, whether or not a quorum is present, may adjourn a meeting to another time and place. Except as herein otherwise provided, the act of the Board shall be the act, at a meeting duly assembled, by vote of a majority of the directors present at the time of the vote, a quorum being present at such time. Any one or more members of the Board of Directors or of any committee thereof may participate in a meeting of said Board or of any such committee by means of a conference telephone or similar communications equipment allowing all persons participating in the meeting to hear each other at the same time, and participation by such means shall constitute presence in person at the meeting. - CHAIRMAN OF THE MEETING. The Chairman of the Board, if any and if present and acting, shall preside at all meetings. Otherwise, the President, if present and acting, or any other director chosen by the Board, shall preside. 5. REMOVAL OF DIRECTORS. Any or all of the directors may be removed for cause or without cause by the shareholders. One or more of the directors may be removed for cause by the Board of Directors. 6. COMMITTEES. Whenever the Board of Directors shall consist of more than three members, the Board of Directors, by resolution adopted by a majority of the entire Board of Directors, may designate from their number three or more directors to constitute an Executive 6 Committee and other committees, each of which, to the extent provided in the resolution designating it, shall have the authority of the Board of Directors with the exception of any authority the delegation of which is prohibited by Section 712 of the Business Corporation Law. 7. WRITTEN ACTION. Any action required or permitted to be taken by the Board of Directors or by any committee thereof may be taken without a meeting if all of the members of the Board of Directors or of any committee thereof consent in writing to the adoption of a resolution authorizing the action. The resolution and the written consents thereto by the members of the Board of Directors or of any such committee shall be filed with the minutes of the proceeding of the Board of Directors or of any such committee. ARTICLE 3 OFFICERS The directors may elect or appoint a Chairman of the Board of Directors, a President, one or more Vice-Presidents, a Secretary, one or more Assistant Secretaries, a Treasurer, one or more Assistant Treasurers, and such other officers as they may determine. The President may but need not be a director. Any two or more offices may be held by the same person except the offices of President and Secretary, or, when all of the issued and outstanding shares of the corporation are owned by one person, such person may hold all or any combination of offices. Unless otherwise provided in the resolution of election or appointment, each officer shall hold office until the meeting of the Board of Directors following the next annual meeting of shareholders and until his successor has been elected and qualified. Officers shall have the powers and duties defined in the resolutions appointing them. The Board of Directors may remove any officer for cause or without cause. ARTICLE 4 STATUTORY NOTICES TO SHAREHOLDERS The directors may appoint the Treasurer or other fiscal officer and/or the Secretary or any other officer to cause to be prepared and furnished to shareholders entitled thereto any special financial notice and/or any financial statement, as the case may be, which may be required by any provision of law, and which, more specifically, may be required by Sections 510, 511, 515, 516, 517, 519, and 520 of the Business Corporation Law. ARTICLE 5 BOOKS AND RECORDS The corporation shall keep correct and complete books and records of account and shall keep minutes of the proceedings of the shareholders, of the Board of Directors, and/or any committee which the directors may appoint, and shall keep at the office of the corporation in the 7 State of New York or at the office of the transfer agent or registrar, if any, in said state, a record containing the names and addresses of all shareholders, the number and class of shares held by each, and the dates when they respectively became the owners of record thereof. Any of the foregoing books, minutes, or records may be in written form or in any other form capable of being converted into written form within a reasonable time. ARTICLE 6 CORPORATE SEAL The corporate seal, if any, shall be in such form as the Board of Directors shall prescribe. ARTICLE 7 FISCAL YEAR The fiscal year of the corporation shall be fixed, and shall be subject to change from time to time, by the Board of Directors. ARTICLE 8 CONTROL OVER BY-LAWS The shareholders entitled to vote in the election of directors or the directors upon compliance with any statutory requisite may amend or repeal the By-Laws and may adopt new By-Laws, except that the directors may not amend or repeal any By-Law or adopt any new By-Law, the statutory control over which is vested exclusively in the said shareholders or in the incorporators. By-Laws adopted by the incorporators or directors may be amended or repealed by the said shareholders. * * * * * * The undersigned incorporator certifies that he has examined the foregoing By-Laws and has adopted the same as the first By-Laws of the corporation; that said By-Laws contain specific and general provisions, which, in order to be operative, must be adopted by the incorporator or incorporators or the shareholders entitled to vote in the election of directors; and that he has adopted each of said specific and general provisions in accordance with the requirements of the Business Corporation Law. 8 EX-3.2C 19 BY-LAWS CRITERION ATLANTIC PROPERTY INC. Exhibit 3.2C CRITERION ATLANTIC PROPERTY, INC. (a Delaware corporation) BY - LAWS ARTICLE 1 Offices 1.1 Registered Office. The registered office of the Corporation shall be located in the City of Dover, County of Kent, State of Delaware, and the name of the resident agent in charge thereof shall be The Prentice Hall Corporation System, Inc. 1.2 Other Offices. The Corporation may also have offices at such other places, within or without the State of Delaware, as the Board of Directors may from time to time appoint or the business of the Corporation may require. ARTICLE 2 Seal The seal of the Corporation shall, subject to alteration by the Board of Directors, consist of a flat-faced circular die with the word "Delaware", together with the name of the Corporation and the year of incorporation, cut or engraved thereon. ARTICLE 3 Meetings of Stockholders 3.1 Place of Meeting. Meetings of the stockholders shall be held either within or without the State of Delaware at such place as the Board of Directors may fix. 3.2 Annual Meetings. The annual meeting of stockholders shall be held on the thirtieth day of April of each year, or if such day is a legal holiday, then on the next business day following, at such time as the Board of Directors may fix. 3.3 Special Meetings. Special meetings of the stockholders for any purpose or purposes may be called by the President, or by the directors (either by written instrument signed by a majority or by resolution adopted by a vote of the majority), and special meetings shall be called by the President or the Secretary whenever stockholders owning a majority of the capital stock issued, outstanding and entitled to vote so request in writing. Such request of stockholders shall state the purpose or purposes of the proposed meeting. 3.4 Notice. Written or printed notice of every meeting of stockholders, annual or special, stating the hour, date and place thereof, and the purpose or purposes in general terms -2- for which the meeting is called shall, not less than ten (10) and not more than sixty (60) days before such meeting, be served upon or mailed to each stockholder entitled to vote thereat, at his address as it appears upon the stock records of the Corporation or, if such stockholder shall have filed with the Secretary of the Corporation a written request that notices intended for him be mailed to some other address, then to the address designated in such request. Notice of the hour, date, place and purpose of any meeting of stockholders may be dispensed with if every stockholder entitled to vote thereat shall attend either in person or by proxy and shall not object to the holding of such meeting for lack of proper notice, or if every absent stockholder entitled to such notice shall in writing, filed with the records of the meeting, either before or after the holding thereof, waive such notice. 3.5 Quorum. Except as otherwise provided by law or by the Certificate of Incorporation, the presence in person or by proxy at any meeting of stockholders of the holders of a majority of the shares of the capital stock of the Corporation issued and outstanding and entitled to vote thereat, shall be requisite and shall constitute a quorum. If two or more classes of stock are entitled to vote as separate classes upon any question, then, in the case of each such class, a quorum for the consideration of such question shall, except as otherwise provided by law or by the Certificate of Incorporation, consist of a majority in interest of all stock of that class issued, outstanding and entitled to vote. If a majority or, where a larger quorum is required, such quorum, shall not be represented at any meeting of the stockholders regularly called, the holders of a majority of the shares present or represented and entitled to vote thereat shall have power to adjourn the meeting to another time, or to another time and place, without notice other than announcement of adjournment at the meeting, and there may be successive adjournments for like cause and in like manner until the requisite amount of shares entitled to vote at such meeting shall be represented; provided, however, that if the adjournment is for more than thirty (30) days, notice of the hour, date and place of the adjourned meeting shall be given to each stockholder entitled to vote thereat. Subject to the requirements of law and the Certificate of Incorporation, on any issue on which two or more classes of stock are entitled to vote separately, no adjournment shall be taken with respect to any class for which a quorum is present unless the Chairman of the meeting otherwise directs. At any meeting held to consider matters which were subject to adjournment for want of a quorum at which the requisite amount of shares entitled to vote thereat shall be represented, any business may be transacted which might have been transacted at the meeting as originally noticed. 3.6 Votes; Proxies. At each meeting of stockholders, every stockholder of record at the closing of the transfer books, if closed, or on the date set by the Board of Directors for the determination of stockholders entitled to vote at such meeting, shall have one vote for each share of stock entitled to vote which is registered in his name on the books of the Corporation, and, in the election of directors, may vote cumulatively to the extent and in the manner authorized in the Certificate of Incorporation. At each such meeting every stockholder shall be entitled to vote in person, or by proxy appointed by an instrument in writing subscribed by such stockholder and bearing a date not more than three (3) years prior to the meeting in question, unless said instrument provides for a longer period during which it is to remain in force. -3- All elections of directors shall be held by ballot. If the Chairman of the meeting shall so determine, a vote may be taken upon any other matter by ballot and shall be so taken upon the request of any stockholder entitled to vote on such matter. At elections of directors, the Chairman shall appoint two judges of election, who shall first take and subscribe an oath or affirmation faithfully to execute the duties of judges at such meeting with strict impartiality and according to the best of their ability. The judges so appointed shall take charge of the polls and, after the balloting, shall make a certificate of the result of the vote taken. No director or candidate for the office of director shall be appointed as such judge. At any meeting at which a quorum is present, a plurality of the votes properly cast for election to fill any vacancy on the Board of Directors shall be sufficient to elect a candidate to fill such vacancy, and a majority of the votes properly cast upon any other question shall decide the question, except in any case where a larger vote is required by law, the Certificate of Incorporation, these By-laws, or otherwise. 3.7 Organization. The Chairman of the Board, if there be one, or in his absence the President, or in the absence of the Chairman and the President, a Vice President, shall call meetings of the stockholders to order and shall act as chairman thereof. The Secretary of the Corporation, if present, shall act as secretary of all meetings of stockholders, and, in his absence, the presiding officer may appoint a secretary. ARTICLE 4 Directors 4.1 Number. The business and property of the Corporation shall be conducted and managed by a Board of Directors consisting of one or more directors. Directors need not be a stockholder. The number of directors for the ensuing year shall be fixed at each annual meeting of stockholders, but if the number is not so fixed, the number shall remain as it stood immediately prior to such meeting. At any time during any year the whole number of directors may be increased or reduced, in each case by vote of a majority of the stock outstanding and entitled to vote for the election of directors or a majority of the directors in office at the time of such increase or decrease, regardless of whether such majority of directors constitutes a quorum. 4.2 Term of Office. Each director shall hold office until the next annual meeting of stockholders and until his successor is duly elected and qualified or until his earlier death or resignation, subject to the right of the stockholders at any time to remove any director or directors as provided in Section 4 of this Article. 4.3 Vacancies. If any vacancy shall occur among the directors, or if the number of directors shall at any time be increased, the directors then in office, although less than a quorum, by a majority vote may fill the vacancies or newly-created directorships, or any such vacancies or newly-created directorships may be filled by the stockholders at any meeting. -4- 4.4 Removal by Stockholders. The holders of record of the capital stock of the Corporation entitled to vote for the election of directors may in their discretion at any meeting duly called for the purpose, by a majority vote, remove any director or directors and elect a new director or directors in place thereof. 4.5 Meetings. Meetings of the Board of Directors shall be held at such place, within or without the State of Delaware, as may from time to time be fixed by resolution of the Board or by the President and as may be specified in the notice or waiver of notice of any meeting. Meetings may be held at any time upon the call of the Chairman of the Board or the President or any two (2) of the directors in office by oral, telegraphic or written notice, duly served or sent or mailed to each director not less than twenty-four (24) hours before such meeting, except that, if mailed, not less than seventy-two (72) hours before such meeting. Meetings may be held at any time and place without notice if all the directors are present and do not object to the holding of such meeting for lack of proper notice or if those not present shall, in writing or by telegram, waive notice thereof. A regular meeting of the Board may be held without notice immediately following the annual meeting of stockholders at the place where such meeting is held. Regular meetings of the Board may also be held without notice at such time and place as shall from time to time be determined by resolution of the Board. 4.6 Quorum. A majority of the directors shall constitute a quorum for the transaction of business. If at any meeting of the Board there shall be less than a quorum present, a majority of those present may adjourn the meeting from time to time without notice other than announcement of the adjournment at the meeting, and at such adjourned meeting at which a quorum is present any business may be transacted which might have been transacted at the meeting as originally noticed. 4.7 Compensation. Directors shall receive compensation for their services, as such, and for service on any Committee of the Board of Directors, as fixed by resolution of the Board of Directors and for expenses of attendance at each regular or special meeting of the Board or any Committee thereof. Nothing in this Section shall be construed to preclude a director from serving the Corporation in any other capacity and receiving compensation therefor. ARTICLE 5 Committees of Directors 5.1 Executive Committee. The Board of Directors may, by resolution passed by a majority of the whole Board, appoint an Executive Committee of two (2) or more members, to serve during the pleasure of the Board, to consist of such directors as the Board may from time to time designate. The Board of Directors shall designate the Chairman of the Executive Committee. (a) Procedure. The Executive Committee shall, by a vote of a majority of its members, fix its own times and places of meeting, determine the number of its members constituting a quorum for the transaction of business, and prescribe its own rules of procedure, no change in which shall be made save by a majority vote of its members. -5- (b) Responsibilities. During the intervals between the meetings of the Board of Directors, except as otherwise provided by the Board of Directors in establishing such Committee or otherwise, the Executive Committee shall possess and may exercise all the powers of the Board in the management and direction of the business and affairs of the Corporation; provided, however, that the Executive Committee shall not have the power: (i) to amend or authorize the amendment of the Certificate of Incorporation or these By-Laws; (ii) to authorize the issuance of stock; (iii) to authorize the payment of any dividend; (iv) to adopt an agreement of merger or consolidation of the Corporation or to recommend to the stockholders the sale, lease or exchange of all or substantially all the property and business of the Corporation; or (v) to recommend to the stockholders a dissolution of the Corporation. (c) Reports. The Executive Committee shall keep regular minutes of its proceedings, and all action by the Executive Committee shall be reported promptly to the Board of Directors. Such action shall be subject to review, amendment and repeal by the Board, provided that no rights of third parties shall be adversely affected by such review, amendment or repeal. (d) Appointment of Additional Members. In the absence or disqualification of any member of the Executive Committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not constituting a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in place of any such absent or disqualified member. 5.2 Audit Committee. The Board of Directors shall appoint an Audit Committee of two (2) or more members who shall not be officers or employees of the Corporation to serve during the pleasure of the Board. The Board of Directors shall designate the Chairman of the Audit Committee. (a) Procedure. The Audit Committee, by a vote of a majority of its members, shall fix its own times and places of meeting, shall determine the number of its members constituting a quorum for the transaction of business, and shall prescribe its own rules of procedure, no change in which shall be made save by a majority vote of its members. -6- (b) Responsibilities. The Audit Committee shall review the annual financial statements of the Corporation prior to their submission to the Board of Directors, shall consult with the Corporation's independent auditors, and may examine and consider such other matters in relation to the internal and external audit of the Corporation's accounts and in relation to the financial affairs of the Corporation and its accounts, including the selection and retention of independent auditors, as the Audit Committee may, in its discretion, determine to be desirable. (c) Reports. The Audit Committee shall keep regular minutes of its proceedings, and all action by the Audit Committee shall, from time to time, be reported to the Board of Directors as it shall direct. (d) Appointment of Additional Members. In the absence or disqualification of any member of the Audit Committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not constituting a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in place of any such absent or disqualified member. 5.3 Other Committees. The Board of Directors, by vote of a majority of the directors then in office, may at any time appoint one or more other committees from and outside of its own number. Every such committee must include at least one member of the Board of Directors. The Board may from time to time designate or alter, within the limits permitted by law, the Certificate of Incorporation and this Article, if applicable, the duties, powers and number of members of such other committees or change their membership, and may at any time abolish such other committees or any of them. (a) Procedure. Each committee appointed pursuant to this Section shall, by a vote of a majority of its members, fix its own times and places of meeting, determine the number of its members constituting a quorum for the transaction of business, and prescribe its own rules of procedure, no change in which shall be made save by a majority vote of its members. (b) Responsibilities. Each committee appointed pursuant to this Section shall exercise the powers assigned to it by the Board of Directors in its discretion. (c) Reports. Each committee appointed pursuant to this Section shall keep regular minutes of proceedings, and all action by each such committee shall, from time to time, be reported to the Board of Directors as it shall direct. (d) Appointment of Additional Members. In the absence or disqualification of any member of each committee, appointed pursuant to this Section, the member or members thereof present at any meeting and not disqualified from voting, whether or not constituting a quorum, may unanimously -7- appoint another member of the Board of Directors to act at the meeting in place of any such absent or disqualified member. 5.4 Term of Office. Each member of a committee shall hold office until the first meeting of the Board of Directors following the annual meeting of stockholders (or until such other time as the Board of Directors may determine, either in the vote establishing the committee or at the election of such member or otherwise) and until his successor is elected and qualified, or until he sooner dies, resigns, is removed, is replaced by change of membership or becomes disqualified by ceasing to be a Director (where membership on the Board is required), or until the committee is sooner abolished by the Board of Directors. ARTICLE 6 Officers 6.1 Officers. The Board of Directors shall elect a President, a Secretary and a Treasurer, and, in their discretion, may elect a Chairman of the Board, one or more Executive Vice Presidents, Vice Presidents, Assistant Secretaries and Assistant Treasurers as deemed necessary or appropriate. Such officers shall be elected annually by the Board of Directors at its first meeting following the annual meeting of stockholders, and each shall hold office for the term provided by the vote of the Board, except that each will be subject to removal from office in the discretion of the Board as provided herein. The powers and duties of more than one office may be exercised and performed by the same person. 6.2 Vacancies. Any vacancy in any office may be filled for the unexpired portion of the term by the Board of Directors, at any regular or special meeting. 6.3 Chairman of the Board. The Chairman of the Board of Directors, if elected, shall be a member of the Board of Directors and shall preside at its meetings. He shall advise and counsel with the President, and shall perform such duties as from time to time may be assigned to him by the Board of Directors. 6.4 President. The President shall be the chief executive officer of the Corporation. Subject to the directions of the Board of Directors, he shall have and exercise direct charge of and general supervision over the business and affairs of the Corporation and shall perform all duties incident to the office of the chief executive officer of a corporation and such other duties as from time to time may be assigned to him by the Board of Directors. The President may but need not be a member of the Board of Directors. 6.5 Executive Vice Presidents and Vice Presidents. Each Executive Vice President and Vice President shall have and exercise such powers and shall perform such duties as from time to time may be assigned to him by the President. 6.6 Secretary. The Secretary shall keep the minutes of all meetings of the stockholders and of the Board of Directors in books provided for the purpose; he shall see that all notices are duly given in accordance with the provisions of law and these By-laws; he shall be custodian of the records and of the corporate seal or seals of the Corporation; he shall see -8- that the corporate seal is affixed to all documents the execution of which, on behalf of the Corporation under its seal, is duly authorized, and, when the seal is so affixed, he may attest the same; he may sign, with the President, an Executive Vice President or a Vice President, certificates of stock of the Corporation; and, in general, he shall perform all duties incident to the office of secretary of a corporation, and such other duties as from time to time may be assigned to him by the Board of Directors. 6.7 Assistant Secretaries. The Assistant Secretaries in order of their seniority shall, in the absence or disability of the Secretary, perform the duties and exercise the powers of the Secretary and shall perform such other duties as the Board of Directors shall prescribe or as from time to time may be assigned by the Secretary. 6.8 Treasurer. The Treasurer shall have charge of and be responsible for all funds, securities, receipts and disbursements of the Corporation, and shall deposit, or cause to be deposited, in the name of the Corporation, all monies or other valuable effects in such banks, trust companies or other depositaries as shall, from time to time, be selected by the Board of Directors; he may endorse for collection on behalf of the Corporation checks, notes and other obligations; he may sign receipts and vouchers for payments made to the Corporation; he may sign checks of the Corporation, singly or jointly with another person as the Board of Directors may authorize, and pay out and dispose of the proceeds under the direction of the Board; he shall render to the President and to the Board of Directors, whenever requested, an account of the financial condition of the Corporation; he may sign, with the President, or an Executive Vice President or a Vice President, certificates of stock of the Corporation; and in general, shall perform all the duties incident to the office of treasurer of a corporation, and such other duties as from time to time may be assigned to him by the Board of Directors. 6.9 Assistant Treasurers. The Assistant Treasurers in order of their seniority shall, in the absence or disability of the Treasurer, perform the duties and exercise the powers of the Treasurer and shall perform such other duties as the Board of Directors shall prescribe or as from time to time may be assigned by the Treasurer. 6.10 Subordinate Officers. The Board of Directors may appoint such subordinate officers as it may deem desirable. Each such officer shall hold office for such period, have such authority and perform such duties as the Board of Directors may prescribe. The Board of Directors may, from time to time, authorize any officer to appoint and remove subordinate officers and to prescribe the powers and duties thereof. 6.11 Compensation. The Board of Directors shall fix the compensation of all officers of the Corporation. It may authorize any officer, upon whom the power of appointing subordinate officers may have been conferred, to fix the compensation of such subordinate officers. 6.12 Removal. Any officer of the Corporation may be removed, with or without cause, by action of the Board of Directors. -9- 6.13 Bonds. The Board of Directors may require any officer of the Corporation to give a bond to the Corporation, conditional upon the faithful performance of his duties, with one or more sureties and in such amount as may be satisfactory to the Board of Directors. ARTICLE 7 Certificates of Stock 7.1 Form and Execution of Certificates. The interest of each stockholder of the Corporation shall be evidenced by a certificate or certificates for shares of stock in such form as the Board of Directors may from time to time prescribe. The certificates of stock of each class shall be consecutively numbered and signed by the President, an Executive Vice President or a Vice President and by the Secretary, an Assistant Secretary, the Treasurer or an Assistant Treasurer of the Corporation, and may be countersigned and registered in such manner as the Board of Directors may by resolution prescribe, and shall bear the corporate seal or a printed or engraved facsimile thereof. Where any such certificate is signed by a transfer agent or transfer clerk acting on behalf of the Corporation, the signatures of any such President, Executive Vice President, Vice President, Treasurer, Assistant Treasurer, Secretary or Assistant Secretary may be facsimiles, engraved or printed. In case any officer or officers, who shall have signed, or whose facsimile signature or signatures shall have been used on, any such certificate or certificates, shall cease to be such officer or officers, whether because of death, resignation or otherwise, before such certificate or certificates shall have been delivered by the Corporation, such certificate or certificates may nevertheless be issued and delivered by the Corporation as though the person or persons who signed such certificate or certificates or whose facsimile signature or signatures shall have been used thereon had not ceased to be such officer or officers. In case the corporate seal which has been affixed to, impressed on, or reproduced in any such certificate or certificates shall cease to be the seal of the Corporation before such certificate or certificates have been delivered by the Corporation, such certificate or certificates may nevertheless be issued and delivered by the Corporation as though the seal affixed thereto, impressed thereon or reproduced therein had not ceased to be the seal of the Corporation. Every certificate for shares of stock which are subject to any restriction on transfer pursuant to law, the Certificate of Incorporation, these By-laws, or any agreement to which the Corporation is a party, shall have the restriction noted conspicuously on the certificate, and shall also set forth, on the face or back, either the full text of the restriction or a statement of the existence of such restriction and (except if such restriction is imposed by law) a statement that the Corporation will furnish a copy thereof to the holder of such certificate upon written request and without charge. Every certificate issued when the Corporation is authorized to issue more than one class or series of stock shall set forth on its face or back either the full text of the preferences, voting powers, qualifications, and special and relative rights of the shares of each class and series authorized to be issued, or a statement of the existence of such preferences, powers, qualifications and rights, and a statement that the Corporation will furnish a copy thereof to the holder of such certificate upon written request and without charge. -10- 7.2 Transfer of Shares. The shares of the stock of the Corporation shall be transferred on the books of the Corporation by the holder thereof in person or by his attorney lawfully constituted, upon surrender for cancellation of certificates for the same number of shares, with an assignment and power of transfer endorsed thereon or attached thereto, duly executed, with such proof or guaranty of the authenticity of the signature as the Corporation or its agents may reasonably require. The Corporation shall be entitled to treat the holder of record of any share or shares of stock as the holder in fact thereof and accordingly shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person whether or not it shall have express or other notice thereof, save as expressly provided by law or by the Certificate of Incorporation. It shall be the duty of each stockholder to notify the Corporation of his post office address. 7.3 Closing of Transfer Books. The stock transfer books of the Corporation may, if deemed appropriate by the Board of Directors, be closed for such length of time not exceeding fifty (50) days as the Board may determine, preceding the date of any meeting of stockholders or the date for the payment of any dividend or the date for the allotment of rights or the date when any issuance, change, conversion or exchange of capital stock shall go into effect, during which time no transfer of stock on the books of the Corporation may be made. 7.4 Dates of Record. If deemed appropriate, the Board of Directors may fix in advance a date for such length of time not exceeding sixty (60) days (and, in the case of any meeting of stockholders, not less than ten (10) days) as the Board may determine, preceding the date of any meeting of stockholders, or the date for the payment of any dividend, or the date for the allotment of rights or the date when any issuance, change, conversion or exchange of capital stock shall go into effect, as a record date for the determination of the stockholders entitled to notice of, and to vote at, any such meeting or entitled to receive payment of any such dividend or to any such allotment of rights, or to exercise the rights in respect of any such issuance, change, conversion or exchange of capital stock, as the case may be, and in such case only such stockholders as shall be stockholders of record on the date so fixed shall be entitled to such notice of, and to vote at, such meeting, or to receive payment of such dividend, or to receive such allotment of rights, or to exercise such rights, as the case may be, notwithstanding any transfer of any stock on the books of the Corporation after any record date fixed as aforesaid. If no such record date is so fixed, the record date shall be determined by applicable law. 7.5 Lost or Destroyed Certificates. In case of the loss or destruction of any certificate of stock, a new certificate may be issued under the following conditions: (a) The owner of said certificate shall file with the Secretary or any Assistant Secretary of the Corporation an affidavit giving the facts in relation to the ownership, and in relation to the loss or destruction of said certificate, stating its number and the number of shares represented thereby; such affidavit shall be in such form and contain such statements as shall satisfy the President, any Executive Vice President, Vice President, the Secretary, any Assistant Secretary, the Treasurer or any Assistant Treasurer, that said certificate has been accidentally destroyed or lost, and that a new certificate ought to be issued in lieu thereof. Upon being so -11- satisfied, any such officer shall require such owner to furnish the Corporation a bond in such penal sum and in such form as he may deem advisable, and with a surety or sureties approved by him, to indemnify and save harmless the Corporation from any claim, loss, damage or liability which may be occasioned by the issuance of a new certificate in lieu thereof. Upon such bond being so filed, a new certificate for the same number of shares shall be issued to the owner of the certificate so lost or destroyed; and the transfer agent and registrar, if any, of stock shall countersign and register such new certificate upon receipt of a written order signed by any such officer, and thereupon the Corporation will save harmless said transfer agent and registrar in the premises. In case of the surrender of the original certificate, in lieu of which a new certificate has been issued, or the surrender of such new certificate, for cancellation, the bond of indemnity given as a condition of the issue of such new certificate may be surrendered; or (b) The Board of Directors of the Corporation may by resolution authorize and direct any transfer agent or registrar of stock of the Corporation to issue and register respectively from time to time without further action or approval by or on behalf of the Corporation new certificates of stock to replace certificates reported lost, stolen or destroyed upon receipt of an affidavit of loss and bond of indemnity in form and amount and with surety satisfactory to such transfer agent or registrar in each instance or upon such terms and conditions as the Board of Directors may determine. ARTICLE 8 Execution of Documents 8.1 Execution of Checks, Notes, etc. All checks and drafts on the Corporation's bank accounts and all bills of exchange and promissory notes, and all acceptances, obligations and other instruments for the payment of money, shall be signed by such officer or officers, or agent or agents, as shall be thereunto authorized from time to time by the Board of Directors, which may in its discretion authorize any such signatures to be facsimile. 8.2 Execution of Contracts, Assignments, etc. Unless the Board of Directors shall have otherwise provided generally or in a specific instance, all contracts, agreements, endorsements, assignments, transfers, stock powers, or other instruments shall be signed by the President, any Executive Vice President, any Vice President, the Secretary, any Assistant Secretary, the Treasurer or any Assistant Treasurer. The Board of Directors may, however, in its discretion, require any or all such instruments to be signed by any two or more of such officers, or may permit any or all of such instruments to be signed by such other officer or officers, agent or agents, as it shall thereunto authorize from time to time. 8.3 Execution of Proxies. The President, any Executive Vice President or any Vice President, and the Secretary, the Treasurer, any Assistant Secretary or any Assistant Treasurer, or any other officer designated by the Board of Directors, may sign on behalf of the Corporation proxies to vote upon shares of stock of other companies standing in the name of the Corporation. -12- ARTICLE 9 Inspection of Books The Board of Directors shall determine from time to time whether, and if allowed, to what extent and at what time and places and under what conditions and regulations, the accounts and books of the Corporation (except such as may by law be specifically open to inspection) or any of them, shall be open to the inspection of the stockholders, and no stockholder shall have any right to inspect any account or book or document of the Corporation, except as conferred by the laws of the State of Delaware, unless and until authorized so to do by resolution of the Board of Directors or of the stockholders of the Corporation. ARTICLE 10 Fiscal Year The fiscal year of the Corporation shall be determined from time to time by vote of the Board of Directors. ARTICLE 11 Amendments These By-laws may be altered, amended, changed or repealed and new By-laws adopted by the stockholders or by the Board of Directors, in either case at any meeting called for that purpose at which a quorum shall be present. Any by-law, whether made, altered, amended, changed or repealed by the stockholders or the Board of Directors may be repealed, amended, changed, further amended, changed, repealed or reinstated, as the case may be either by the stockholders or by the Board of Directors, as herein provided; except that this Article may be altered, amended, changed or repealed only by vote of the stockholders. ARTICLE 12 Indemnification 12.1 Indemnification. The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that he is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines, and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interest of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best -13- interest of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation; except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable for negligence or misconduct in the performance of his duty to the Corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper. To the extent that a director, officer, employee or agent of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in this Section, or in defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith. 12.2 Authorization. Any indemnification under Section 1 of this Article (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances because he has met the applicable standard of conduct set forth in Section 1 of this Article. Such determination shall be made: (a) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceedings, or (b) if such a quorum is not obtainable, or, even if obtainable, a quorum of disinterested directors so directs, by independent legal counsel in written opinion, or (c) by the stockholders. 12.3 Expense Advance. Expenses incurred in defending a civil or criminal action, suit or proceeding may be paid by the Corporation in advance of the final disposition of such action, suit or proceeding as authorized by the Board of Directors in the manner provided in Section 2 of this Article upon receipt of an undertaking by or on behalf of the director, officer, employee or agent to repay such amount, unless it shall ultimately be determined that he is entitled to be indemnified by the Corporation as authorized in this Article. 12.4 Nonexclusivity. The indemnification provided by this Article shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any by-law, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, and shall continue -14- as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person. 12.5 Insurance. The Corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power to indemnify him against such liability under the provisions of this Article. 12.6 "The Corporation". For the purposes of this Article, references to "the Corporation" include all constituent corporations absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers and employees or agents as well as the resulting or surviving corporation so that any person who is or was a director, officer, employee or agent of such a constituent corporation or is or was serving at the request of such constituent corporation as director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise shall stand in the same position under the provisions of this Article with respect to such a constituent corporation if its separate existence had continued. EX-3.2D 20 BY-LAWS CRITERION PROPERTY, INC Exhibit 3.2D CRITERION PROPERTY, INC. (a Delaware corporation) BY - LAWS ARTICLE I Offices SECTION 1. Registered Office. The registered office of the Corporation shall be located in the City of Dover, County of Kent, State of Delaware, and the name of the resident agent in charge thereof shall be The Prentice Hall Corporation System, Inc. SECTION 2. Other Offices. The Corporation may also have offices at such other places, within or without the State of Delaware, as the Board of Directors may from time to time appoint or the business of the Corporation may require. ARTICLE II Seal The seal of the Corporation shall, subject to alteration by the Board of Directors, consist of a flat-faced circular die with the word "Delaware", together with the name of the Corporation and the year of incorporation, cut or engraved thereon. ARTICLE III Meetings of Stockholders SECTION 1. Place of Meeting. Meetings of the stockholders shall be held either within or without the State of Delaware at such place as the Board of Directors may fix. SECTION 2. Annual Meetings. The annual meeting of stockholders shall be held on the first day of May of each year, or if such day is a legal holiday, then on the next business day following, at such time as the Board of Directors may fix. SECTION 3. Special Meetings. Special meetings of the stockholders for any purpose or purposes may be called by the President, or by the directors (either by written instrument signed by a majority or by resolution adopted by a vote of the majority), and special meetings shall be called by the President or the Secretary whenever stockholders owning a majority of the capital stock issued, outstanding and entitled to vote so request in writing. Such request of stockholders shall state the purpose or purposes of the proposed meeting. SECTION 4. Notice. Written or printed notice of every meeting of stockholders, annual or special, stating the hour, date and place thereof, and the purpose or purposes in general terms -2- for which the meeting is called shall, not less than ten (10) and not more than sixty (60) days before such meeting, be served upon or mailed to each stockholder entitled to vote thereat, at his address as it appears upon the stock records of the Corporation or, if such stockholder shall have filed with the Secretary of the Corporation a written request that notices intended for him be mailed to some other address, then to the address designated in such request. Notice of the hour, date, place and purpose of any meeting of stockholders may be dispensed with if every stockholder entitled to vote thereat shall attend either in person or by proxy and shall not object to the holding of such meeting for lack of proper notice, or if every absent stockholder entitled to such notice shall in writing, filed with the records of the meeting, either before or after the holding thereof, waive such notice. SECTION 5. Quorum. Except as otherwise provided by law or by the Certificate of Incorporation, the presence in person or by proxy at any meeting of stockholders of the holders of a majority of the shares of the capital stock of the Corporation issued and outstanding and entitled to vote thereat, shall be requisite and shall constitute a quorum. If two or more classes of stock are entitled to vote as separate classes upon any question, then, in the case of each such class, a quorum for the consideration of such question shall, except as otherwise provided by law or by the Certificate of Incorporation, consist of a majority in interest of all stock of that class issued, outstanding and entitled to vote. If a majority or, where a larger quorum is required, such quorum, shall not be represented at any meeting of the stockholders regularly called, the holders of a majority of the shares present or represented and entitled to vote thereat shall have power to adjourn the meeting to another time, or to another time and place, without notice other than announcement of adjournment at the meeting, and there may be successive adjournments for like cause and in like manner until the requisite amount of shares entitled to vote at such meeting shall be represented; provided, however, that if the adjournment is for more than thirty (30) days, notice of the hour, date and place of the adjourned meeting shall be given to each stockholder entitled to vote thereat. Subject to the requirements of law and the Certificate of Incorporation, on any issue on which two or more classes of stock are entitled to vote separately, no adjournment shall be taken with respect to any class for which a quorum is present unless the Chairman of the meeting otherwise directs. At any meeting held to consider matters which were subject to adjournment for want of a quorum at which the requisite amount of shares entitled to vote thereat shall be represented, any business may be transacted which might have been transacted at the meeting as originally noticed. SECTION 6. Votes; Proxies. At each meeting of stockholders, every stockholder of record at the closing of the transfer books, if closed, or on the date set by the Board of Directors for the determination of stockholders entitled to vote at such meeting, shall have one vote for each share of stock entitled to vote which is registered in his name on the books of the Corporation, and, in the election of directors, may vote cumulatively to the extent and in the manner authorized in the Certificate of Incorporation. At each such meeting every stockholder shall be entitled to vote in person, or by proxy appointed by an instrument in writing subscribed by such stockholder and bearing a date not more than three (3) years prior to the meeting in question, unless said instrument provides for a longer period during which it is to remain in force. -3- All elections of directors shall be held by ballot. If the Chairman of the meeting shall so determine, a vote may be taken upon any other matter by ballot and shall be so taken upon the request of any stockholder entitled to vote on such matter. At elections of directors, the Chairman shall appoint two judges of election, who shall first take and subscribe an oath or affirmation faithfully to execute the duties of judges at such meeting with strict impartiality and according to the best of their ability. The judges so appointed shall take charge of the polls and, after the balloting, shall make a certificate of the result of the vote taken. No director or candidate for the office of director shall be appointed as such judge. At any meeting at which a quorum is present, a plurality of the votes properly cast for election to fill any vacancy on the Board of Directors shall be sufficient to elect a candidate to fill such vacancy, and a majority of the votes properly cast upon any other question shall decide the question, except in any case where a larger vote is required by law, the Certificate of Incorporation, these By-laws, or otherwise. SECTION 7. Organization. The Chairman of the Board, if there be one, or in his absence the President, or in the absence of the Chairman and the President, a Vice President, shall call meetings of the stockholders to order and shall act as chairman thereof. The Secretary of the Corporation, if present, shall act as secretary of all meetings of stockholders, and, in his absence, the presiding officer may appoint a secretary. ARTICLE IV Directors SECTION 1. Number. The business and property of the Corporation shall be conducted and managed by a Board of Directors consisting of one or more directors. Directors need not be a stockholder. The number of directors for the ensuing year shall be fixed at each annual meeting of stockholders, but if the number is not so fixed, the number shall remain as it stood immediately prior to such meeting. At any time during any year the whole number of directors may be increased or reduced, in each case by vote of a majority of the stock outstanding and entitled to vote for the election of directors or a majority of the directors in office at the time of such increase or decrease, regardless of whether such majority of directors constitutes a quorum. SECTION 2. Term of Office. Each director shall hold office until the next annual meeting of stockholders and until his successor is duly elected and qualified or until his earlier death or resignation, subject to the right of the stockholders at any time to remove any director or directors as provided in Section 4 of this Article. SECTION 3. Vacancies. If any vacancy shall occur among the directors, or if the number of directors shall at any time be increased, the directors then in office, although less than a quorum, by a majority vote may fill the vacancies or newly-created directorships, or any such vacancies or newly-created directorships may be filled by the stockholders at any meeting. -4- SECTION 4. Removal by Stockholders. The holders of record of the capital stock of the Corporation entitled to vote for the election of directors may in their discretion at any meeting duly called for the purpose, by a majority vote, remove any director or directors and elect a new director or directors in place thereof. SECTION 5. Meetings. Meetings of the Board of Directors shall be held at such place, within or without the State of Delaware, as may from time to time be fixed by resolution of the Board or by the President and as may be specified in the notice or waiver of notice of any meeting. Meetings may be held at any time upon the call of the Chairman of the Board or the President or any two (2) of the directors in office by oral, telegraphic or written notice, duly served or sent or mailed to each director not less than twenty-four (24) hours before such meeting, except that, if mailed, not less than seventy-two (72) hours before such meeting. Meetings may be held at any time and place without notice if all the directors are present and do not object to the holding of such meeting for lack of proper notice or if those not present shall, in writing or by telegram, waive notice thereof. A regular meeting of the Board may be held without notice immediately following the annual meeting of stockholders at the place where such meeting is held. Regular meetings of the Board may also be held without notice at such time and place as shall from time to time be determined by resolution of the Board. SECTION 6. Quorum. A majority of the directors shall constitute a quorum for the transaction of business. If at any meeting of the Board there shall be less than a quorum present, a majority of those present may adjourn the meeting from time to time without notice other than announcement of the adjournment at the meeting, and at such adjourned meeting at which a quorum is present any business may be transacted which might have been transacted at the meeting as originally noticed. SECTION 7. Compensation. Directors shall receive compensation for their services, as such, and for service on any Committee of the Board of Directors, as fixed by resolution of the Board of Directors and for expenses of attendance at each regular or special meeting of the Board or any Committee thereof. Nothing in this Section shall be construed to preclude a director from serving the Corporation in any other capacity and receiving compensation therefor. ARTICLE V Committees of Directors SECTION 1. Executive Committee. The Board of Directors may, by resolution passed by a majority of the whole Board, appoint an Executive Committee of two (2) or more members, to serve during the pleasure of the Board, to consist of such directors as the Board may from time to time designate. The Board of Directors shall designate the Chairman of the Executive Committee. (a) Procedure. The Executive Committee shall, by a vote of a majority of its members, fix its own times and places of meeting, determine the number of its members constituting a quorum for the transaction of business, and prescribe its own rules of procedure, no change in which shall be made save by a majority vote of its members. -5- (b) Responsibilities. During the intervals between the meetings of the Board of Directors, except as otherwise provided by the Board of Directors in establishing such Committee or otherwise, the Executive Committee shall possess and may exercise all the powers of the Board in the management and direction of the business and affairs of the Corporation; provided, however, that the Executive Committee shall not have the power: (i) to amend or authorize the amendment of the Certificate of Incorporation or these By-Laws; (ii) to authorize the issuance of stock; (iii) to authorize the payment of any dividend; (iv) to adopt an agreement of merger or consolidation of the Corporation or to recommend to the stockholders the sale, lease or exchange of all or substantially all the property and business of the Corporation; or (v) to recommend to the stockholders a dissolution of the Corporation. (c) Reports. The Executive Committee shall keep regular minutes of its proceedings, and all action by the Executive Committee shall be reported promptly to the Board of Directors. Such action shall be subject to review, amendment and repeal by the Board, provided that no rights of third parties shall be adversely affected by such review, amendment or repeal. (d) Appointment of Additional Members. In the absence or disqualification of any member of the Executive Committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not constituting a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in place of any such absent or disqualified member. SECTION 2. Audit Committee. The Board of Directors shall appoint an Audit Committee of two (2) or more members who shall not be officers or employees of the Corporation to serve during the pleasure of the Board. The Board of Directors shall designate the Chairman of the Audit Committee. (a) Procedure. The Audit Committee, by a vote of a majority of its members, shall fix its own times and places of meeting, shall determine the number of its members constituting a quorum for the transaction of business, and shall prescribe its own rules of procedure, no change in which shall be made save by a majority vote of its members. -6- (b) Responsibilities. The Audit Committee shall review the annual financial statements of the Corporation prior to their submission to the Board of Directors, shall consult with the Corporation's independent auditors, and may examine and consider such other matters in relation to the internal and external audit of the Corporation's accounts and in relation to the financial affairs of the Corporation and its accounts, including the selection and retention of independent auditors, as the Audit Committee may, in its discretion, determine to be desirable. (c) Reports. The Audit Committee shall keep regular minutes of its proceedings, and all action by the Audit Committee shall, from time to time, be reported to the Board of Directors as it shall direct. (d) Appointment of Additional Members. In the absence or disqualification of any member of the Audit Committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not constituting a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in place of any such absent or disqualified member. SECTION 3. Other Committees. The Board of Directors, by vote of a majority of the directors then in office, may at any time appoint one or more other committees from and outside of its own number. Every such committee must include at least one member of the Board of Directors. The Board may from time to time designate or alter, within the limits permitted by law, the Certificate of Incorporation and this Article, if applicable, the duties, powers and number of members of such other committees or change their membership, and may at any time abolish such other committees or any of them. (a) Procedure. Each committee appointed pursuant to this Section shall, by a vote of a majority of its members, fix its own times and places of meeting, determine the number of its members constituting a quorum for the transaction of business, and prescribe its own rules of procedure, no change in which shall be made save by a majority vote of its members. (b) Responsibilities. Each committee appointed pursuant to this Section shall exercise the powers assigned to it by the Board of Directors in its discretion. (c) Reports. Each committee appointed pursuant to this Section shall keep regular minutes of proceedings, and all action by each such committee shall, from time to time, be reported to the Board of Directors as it shall direct. (d) Appointment of Additional Members. In the absence or disqualification of any member of each committee, appointed pursuant to this Section, the member or members thereof present at any meeting and not disqualified from voting, whether or not constituting a quorum, may unanimously -7- appoint another member of the Board of Directors to act at the meeting in place of any such absent or disqualified member. SECTION 4. Term of Office. Each member of a committee shall hold office until the first meeting of the Board of Directors following the annual meeting of stockholders (or until such other time as the Board of Directors may determine, either in the vote establishing the committee or at the election of such member or otherwise) and until his successor is elected and qualified, or until he sooner dies, resigns, is removed, is replaced by change of membership or becomes disqualified by ceasing to be a Director (where membership on the Board is required), or until the committee is sooner abolished by the Board of Directors. ARTICLE VI Officers SECTION 1. Officers. The Board of Directors shall elect a President, a Secretary and a Treasurer, and, in their discretion, may elect a Chairman of the Board, one or more Executive Vice Presidents, Vice Presidents, Assistant Secretaries and Assistant Treasurers as deemed necessary or appropriate. Such officers shall be elected annually by the Board of Directors at its first meeting following the annual meeting of stockholders, and each shall hold office for the term provided by the vote of the Board, except that each will be subject to removal from office in the discretion of the Board as provided herein. The powers and duties of more than one office may be exercised and performed by the same person. SECTION 2. Vacancies. Any vacancy in any office may be filled for the unexpired portion of the term by the Board of Directors, at any regular or special meeting. SECTION 3. Chairman of the Board. The Chairman of the Board of Directors, if elected, shall be a member of the Board of Directors and shall preside at its meetings. He shall advise and counsel with the President, and shall perform such duties as from time to time may be assigned to him by the Board of Directors. SECTION 4. President. The President shall be the chief executive officer of the Corporation. Subject to the directions of the Board of Directors, he shall have and exercise direct charge of and general supervision over the business and affairs of the Corporation and shall perform all duties incident to the office of the chief executive officer of a corporation and such other duties as from time to time may be assigned to him by the Board of Directors. The President may but need not be a member of the Board of Directors. SECTION 5. Executive Vice Presidents and Vice Presidents. Each Executive Vice President and Vice President shall have and exercise such powers and shall perform such duties as from time to time may be assigned to him by the President. SECTION 6. Secretary. The Secretary shall keep the minutes of all meetings of the stockholders and of the Board of Directors in books provided for the purpose; he shall see that all notices are duly given in accordance with the provisions of law and these By-laws; he shall be custodian of the records and of the corporate seal or seals of the Corporation; he shall see -8- that the corporate seal is affixed to all documents the execution of which, on behalf of the Corporation under its seal, is duly authorized, and, when the seal is so affixed, he may attest the same; he may sign, with the President, an Executive Vice President or a Vice President, certificates of stock of the Corporation; and, in general, he shall perform all duties incident to the office of secretary of a corporation, and such other duties as from time to time may be assigned to him by the Board of Directors. SECTION 7. Assistant Secretaries. The Assistant Secretaries in order of their seniority shall, in the absence or disability of the Secretary, perform the duties and exercise the powers of the Secretary and shall perform such other duties as the Board of Directors shall prescribe or as from time to time may be assigned by the Secretary. SECTION 8. Treasurer. The Treasurer shall have charge of and be responsible for all funds, securities, receipts and disbursements of the Corporation, and shall deposit, or cause to be deposited, in the name of the Corporation, all monies or other valuable effects in such banks, trust companies or other depositaries as shall, from time to time, be selected by the Board of Directors; he may endorse for collection on behalf of the Corporation checks, notes and other obligations; he may sign receipts and vouchers for payments made to the Corporation; he may sign checks of the Corporation, singly or jointly with another person as the Board of Directors may authorize, and pay out and dispose of the proceeds under the direction of the Board; he shall render to the President and to the Board of Directors, whenever requested, an account of the financial condition of the Corporation; he may sign, with the President, or an Executive Vice President or a Vice President, certificates of stock of the Corporation; and in general, shall perform all the duties incident to the office of treasurer of a corporation, and such other duties as from time to time may be assigned to him by the Board of Directors. SECTION 9. Assistant Treasurers. The Assistant Treasurers in order of their seniority shall, in the absence or disability of the Treasurer, perform the duties and exercise the powers of the Treasurer and shall perform such other duties as the Board of Directors shall prescribe or as from time to time may be assigned by the Treasurer. SECTION 10. Subordinate Officers. The Board of Directors may appoint such subordinate officers as it may deem desirable. Each such officer shall hold office for such period, have such authority and perform such duties as the Board of Directors may prescribe. The Board of Directors may, from time to time, authorize any officer to appoint and remove subordinate officers and to prescribe the powers and duties thereof. SECTION 11. Compensation. The Board of Directors shall fix the compensation of all officers of the Corporation. It may authorize any officer, upon whom the power of appointing subordinate officers may have been conferred, to fix the compensation of such subordinate officers. SECTION 12. Removal. Any officer of the Corporation may be removed, with or without cause, by action of the Board of Directors. SECTION 13. Bonds. The Board of Directors may require any officer of the Corporation to give a bond to the Corporation, conditional upon the faithful performance of his -9- duties, with one or more sureties and in such amount as may be satisfactory to the Board of Directors. ARTICLE VII Certificates of Stock SECTION 1. Form and Execution of Certificates. The interest of each stockholder of the Corporation shall be evidenced by a certificate or certificates for shares of stock in such form as the Board of Directors may from time to time prescribe. The certificates of stock of each class shall be consecutively numbered and signed by the President, an Executive Vice President or a Vice President and by the Secretary, an Assistant Secretary, the Treasurer or an Assistant Treasurer of the Corporation, and may be countersigned and registered in such manner as the Board of Directors may by resolution prescribe, and shall bear the corporate seal or a printed or engraved facsimile thereof. Where any such certificate is signed by a transfer agent or transfer clerk acting on behalf of the Corporation, the signatures of any such President, Executive Vice President, Vice President, Treasurer, Assistant Treasurer, Secretary or Assistant Secretary may be facsimiles, engraved or printed. In case any officer or officers, who shall have signed, or whose facsimile signature or signatures shall have been used on, any such certificate or certificates, shall cease to be such officer or officers, whether because of death, resignation or otherwise, before such certificate or certificates shall have been delivered by the Corporation, such certificate or certificates may nevertheless be issued and delivered by the Corporation as though the person or persons who signed such certificate or certificates or whose facsimile signature or signatures shall have been used thereon had not ceased to be such officer or officers. In case the corporate seal which has been affixed to, impressed on, or reproduced in any such certificate or certificates shall cease to be the seal of the Corporation before such certificate or certificates have been delivered by the Corporation, such certificate or certificates may nevertheless be issued and delivered by the Corporation as though the seal affixed thereto, impressed thereon or reproduced therein had not ceased to be the seal of the Corporation. Every certificate for shares of stock which are subject to any restriction on transfer pursuant to law, the Certificate of Incorporation, these By-laws, or any agreement to which the Corporation is a party, shall have the restriction noted conspicuously on the certificate, and shall also set forth, on the face or back, either the full text of the restriction or a statement of the existence of such restriction and (except if such restriction is imposed by law) a statement that the Corporation will furnish a copy thereof to the holder of such certificate upon written request and without charge. Every certificate issued when the Corporation is authorized to issue more than one class or series of stock shall set forth on its face or back either the full text of the preferences, voting powers, qualifications, and special and relative rights of the shares of each class and series authorized to be issued, or a statement of the existence of such preferences, powers, qualifications and rights, and a statement that the Corporation will furnish a copy thereof to the holder of such certificate upon written request and without charge. -10- SECTION 2. Transfer of Shares. The shares of the stock of the Corporation shall be transferred on the books of the Corporation by the holder thereof in person or by his attorney lawfully constituted, upon surrender for cancellation of certificates for the same number of shares, with an assignment and power of transfer endorsed thereon or attached thereto, duly executed, with such proof or guaranty of the authenticity of the signature as the Corporation or its agents may reasonably require. The Corporation shall be entitled to treat the holder of record of any share or shares of stock as the holder in fact thereof and accordingly shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person whether or not it shall have express or other notice thereof, save as expressly provided by law or by the Certificate of Incorporation. It shall be the duty of each stockholder to notify the Corporation of his post office address. SECTION 3. Closing of Transfer Books. The stock transfer books of the Corporation may, if deemed appropriate by the Board of Directors, be closed for such length of time not exceeding fifty (50) days as the Board may determine, preceding the date of any meeting of stockholders or the date for the payment of any dividend or the date for the allotment of rights or the date when any issuance, change, conversion or exchange of capital stock shall go into effect, during which time no transfer of stock on the books of the Corporation may be made. SECTION 4. Dates of Record. If deemed appropriate, the Board of Directors may fix in advance a date for such length of time not exceeding sixty (60) days (and, in the case of any meeting of stockholders, not less than ten (10) days) as the Board may determine, preceding the date of any meeting of stockholders, or the date for the payment of any dividend, or the date for the allotment of rights or the date when any issuance, change, conversion or exchange of capital stock shall go into effect, as a record date for the determination of the stockholders entitled to notice of, and to vote at, any such meeting or entitled to receive payment of any such dividend or to any such allotment of rights, or to exercise the rights in respect of any such issuance, change, conversion or exchange of capital stock, as the case may be, and in such case only such stockholders as shall be stockholders of record on the date so fixed shall be entitled to such notice of, and to vote at, such meeting, or to receive payment of such dividend, or to receive such allotment of rights, or to exercise such rights, as the case may be, notwithstanding any transfer of any stock on the books of the Corporation after any record date fixed as aforesaid. If no such record date is so fixed, the record date shall be determined by applicable law. SECTION 5. Lost or Destroyed Certificates. In case of the loss or destruction of any certificate of stock, a new certificate may be issued under the following conditions: (a) The owner of said certificate shall file with the Secretary or any Assistant Secretary of the Corporation an affidavit giving the facts in relation to the ownership, and in relation to the loss or destruction of said certificate, stating its number and the number of shares represented thereby; such affidavit shall be in such form and contain such statements as shall satisfy the President, any Executive Vice President, Vice President, the Secretary, any Assistant Secretary, the Treasurer or any Assistant Treasurer, that said certificate has been accidentally destroyed or lost, and that a new certificate ought to be issued in lieu thereof. Upon being so -11- satisfied, any such officer shall require such owner to furnish the Corporation a bond in such penal sum and in such form as he may deem advisable, and with a surety or sureties approved by him, to indemnify and save harmless the Corporation from any claim, loss, damage or liability which may be occasioned by the issuance of a new certificate in lieu thereof. Upon such bond being so filed, a new certificate for the same number of shares shall be issued to the owner of the certificate so lost or destroyed; and the transfer agent and registrar, if any, of stock shall countersign and register such new certificate upon receipt of a written order signed by any such officer, and thereupon the Corporation will save harmless said transfer agent and registrar in the premises. In case of the surrender of the original certificate, in lieu of which a new certificate has been issued, or the surrender of such new certificate, for cancellation, the bond of indemnity given as a condition of the issue of such new certificate may be surrendered; or (b) The Board of Directors of the Corporation may by resolution authorize and direct any transfer agent or registrar of stock of the Corporation to issue and register respectively from time to time without further action or approval by or on behalf of the Corporation new certificates of stock to replace certificates reported lost, stolen or destroyed upon receipt of an affidavit of loss and bond of indemnity in form and amount and with surety satisfactory to such transfer agent or registrar in each instance or upon such terms and conditions as the Board of Directors may determine. ARTICLE VIII Execution of Documents SECTION 1. Execution of Checks, Notes, etc. All checks and drafts on the Corporation's bank accounts and all bills of exchange and promissory notes, and all acceptances, obligations and other instruments for the payment of money, shall be signed by such officer or officers, or agent or agents, as shall be thereunto authorized from time to time by the Board of Directors, which may in its discretion authorize any such signatures to be facsimile. SECTION 2. Execution of Contracts, Assignments, etc. Unless the Board of Directors shall have otherwise provided generally or in a specific instance, all contracts, agreements, endorsements, assignments, transfers, stock powers, or other instruments shall be signed by the President, any Executive Vice President, any Vice President, the Secretary, any Assistant Secretary, the Treasurer or any Assistant Treasurer. The Board of Directors may, however, in its discretion, require any or all such instruments to be signed by any two or more of such officers, or may permit any or all of such instruments to be signed by such other officer or officers, agent or agents, as it shall thereunto authorize from time to time. SECTION 3. Execution of Proxies. The President, any Executive Vice President or any Vice President, and the Secretary, the Treasurer, any Assistant Secretary or any Assistant Treasurer, or any other officer designated by the Board of Directors, may sign on behalf of the -12- Corporation proxies to vote upon shares of stock of other companies standing in the name of the Corporation. ARTICLE IX Inspection of Books The Board of Directors shall determine from time to time whether, and if allowed, to what extent and at what time and places and under what conditions and regulations, the accounts and books of the Corporation (except such as may by law be specifically open to inspection) or any of them, shall be open to the inspection of the stockholders, and no stockholder shall have any right to inspect any account or book or document of the Corporation, except as conferred by the laws of the State of Delaware, unless and until authorized so to do by resolution of the Board of Directors or of the stockholders of the Corporation. ARTICLE X Fiscal Year The fiscal year of the Corporation shall be determined from time to time by vote of the Board of Directors. ARTICLE XI Amendments These By-laws may be altered, amended, changed or repealed and new By-laws adopted by the stockholders or by the Board of Directors, in either case at any meeting called for that purpose at which a quorum shall be present. Any by-law, whether made, altered, amended, changed or repealed by the stockholders or the Board of Directors may be repealed, amended, changed, further amended, changed, repealed or reinstated, as the case may be either by the stockholders or by the Board of Directors, as herein provided; except that this Article may be altered, amended, changed or repealed only by vote of the stockholders. ARTICLE XII Indemnification SECTION 1. Indemnification. The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that he is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines, and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interest of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of -13- any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interest of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation; except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable for negligence or misconduct in the performance of his duty to the Corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper. To the extent that a director, officer, employee or agent of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in this Section, or in defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith. SECTION 2. Authorization. Any indemnification under Section 1 of this Article (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances because he has met the applicable standard of conduct set forth in Section 1 of this Article. Such determination shall be made: (a) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceedings, or (b) if such a quorum is not obtainable, or, even if obtainable, a quorum of disinterested directors so directs, by independent legal counsel in written opinion, or (c) by the stockholders. SECTION 3. Expense Advance. Expenses incurred in defending a civil or criminal action, suit or proceeding may be paid by the Corporation in advance of the final disposition of such action, suit or proceeding as authorized by the Board of Directors in the manner provided in Section 2 of this Article upon receipt of an undertaking by or on behalf of the director, officer, employee or agent to repay such amount, unless it shall ultimately be determined that he is entitled to be indemnified by the Corporation as authorized in this Article. SECTION 4. Nonexclusivity. The indemnification provided by this Article shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any by- -14- law, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person. SECTION 5. Insurance. The Corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power to indemnify him against such liability under the provisions of this Article. SECTION 6. "The Corporation". For the purposes of this Article, references to "the Corporation" include all constituent corporations absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers and employees or agents as well as the resulting or surviving corporation so that any person who is or was a director, officer, employee or agent of such a constituent corporation or is or was serving at the request of such constituent corporation as director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise shall stand in the same position under the provisions of this Article with respect to such a constituent corporation if its separate existence had continued. EX-3.2E 21 BY-LAWS HOLLYWOOD PROPERTY INC Exhibit 3.2E BYLAWS OF HOLLYWOOD PROPERTY, INC. ARTICLE I Applicability Section 1. Applicability of Bylaws. These Bylaws govern, except as otherwise provided by statute or its Articles of Incorporation, the management of the business and the conduct of the affairs of the Corporation. ARTICLE II Offices Section 1. Principal Executive Office. The location of the principal executive office of the Corporation is 99 Bedford Street, Boston, Massachusetts 02111. Section 2. Other Offices. The Board of Directors may establish other offices at any place or places within or without the State of California. Section 3. Change in Location or Number of Offices. The Board of Directors may change any office from one location to another or eliminate any office or offices. ARTICLE III Meetings of Shareholders Section 1. Place of Meetings. Meetings of the shareholders shall be held at any place within or without the State of California designated by the Board of Directors, or, in the absence of such designation, at the principal executive office of the Corporation. Section 2. Annual Meetings. An annual meeting of the shareholders shall be held within 180 days following the end of the fiscal year of the Corporation at a date and time designated by the Board of Directors. Directors shall be elected at each annual meeting and any other proper business may be transacted thereat. Section 3. Special Meetings. (a) Special meetings of the shareholders may be called by a majority of the Board of Directors, the Chairman of the Board, the President or the holders of shares entitled to cast not less than 10% of the votes at such meeting. (b) Any request for the calling of a special meeting of the shareholders shall (1) be in writing, (2) specify the date and time thereof which date shall be not less than 35 nor more than 60 days after receipt of the request, (3) specify the general nature of the business to be transacted thereat and (4) be given either personally or by first-class mail, postage prepaid, or other means of written communication to the Chairman of the Board, President, any Vice President or Secretary of the Corporation. The officer receiving a proper request to call a special meeting of the shareholders shall cause notice to be given pursuant to the provisions of Section 4 of this article to the shareholders entitled to vote thereat that a meeting will be held at the date and time specified by the person or persons calling the meeting. (c) No business may be transacted at a special meeting unless the general nature thereof was stated in the notice of such meeting. Section 4. Notice of Annual, Special or Adjourned Meetings. (a) Whenever any meeting of the shareholders is to be held, a written notice of such meeting shall be given in the manner described in subdivision (d) of this section not less than 10 nor more than 60 days before the date thereof to each shareholder entitled to vote thereat. The notice shall state the place, date and hour of the meeting and (1) in the case of a special meeting, the general nature of the business to be transacted or (2) in the case of the annual meeting, those matters which the Board of Directors, at the time of the giving of the notice, intend to present for action by the shareholders including, whenever directors are to be elected at a meeting, the names of nominees intended at the time of giving of the notice to be presented by management for election. (b) Any proper matter may be presented at an annual meeting for action, except as is provided in subdivision (f) of Section 601 of the Corporations Code of the State of California. (c) Notice need not be given of an adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken, except that if the adjournment is for more than 45 days or if after the adjournment a new record date is provided for the adjourned meeting, a notice of the adjourned meeting shall be given to each shareholder of record entitled to vote thereat. (d) Notice of any meeting of the shareholders or any report shall be given either personally or by firstclass mail, postage prepaid, or other means of written communication, -2- addressed to the shareholder at his address appearing on the books of the Corporation or given by him to the Corporation for the purpose of notice; or if no such address appears or is given, at the place where the principal executive office of the Corporation is located or by publication at least once in a newspaper of general circulation in the county in which the principal executive office is located. The notice or report shall be deemed to have been given at the time when delivered personally to the recipient or deposited in the mail or sent by other means of written communication. An affidavit of mailing of any notice or report in accordance with the provisions of these Bylaws or the General Corporation Law of the State of California, executed by the secretary, assistant secretary or any transfer agent of the Corporation, shall be prima facie evidence of the giving of the notice or report. (e) If any notice or report addressed to the shareholder at his address appearing on the books of the Corporation is returned to the Corporation by the United States Postal Service marked to indicate that the United States Postal Service is unable to deliver the notice or report to the shareholder at such address, all future notices or reports shall be deemed to have been duly given without further mailing if the same shall be available for the shareholder upon his written demand at the principal executive office of the Corporation for a period of one year from the date of the giving of the notice or report to all other shareholders. Section 5. Record Date. (a) The Board of Directors may fix a time in the future as a record date for the determination of the shareholders (1) entitled to notice of any meeting or to vote thereat, (2) entitled to receive payment of any dividend or other distribution or allotment of any rights or (3) entitled to exercise any rights in respect of any other lawful action. The record date so fixed shall be not more than 60 nor less than 10 days prior to the date of any meeting of the shareholders nor more than 60 days prior to any other action. (b) In the event no record date is fixed: (1) The record date for determining the shareholders entitled to notice of or to vote at a meeting of shareholders shall be at the close of business on the business day next preceding the day on which notice is given or, if notice is waived, at the close of business on the business day next preceding the day on which the meeting is held. (2) The record date for determining shareholders entitled to give consent to corporate action in writing without a meeting, when no prior action by the Board of Directors has been taken, shall be the day on which the first written consent is given. -3- (3) The record date for determining shareholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto, or the 60th day prior to the date of such other action, whichever is later. (c) Only shareholders of record at the close of business on the record date are entitled to notice and to vote or to receive a dividend, distribution or allotment of rights or to exercise the rights, as the case may be, notwithstanding any transfer of any shares on the books of the Corporation after the record date. (d) A determination of shareholders of record entitled to notice of or to vote at a meeting of shareholders shall apply to any adjournment of the meeting unless the Board of Directors fixes a new record date for the adjourned meeting, but the Board shall fix a new record date if the meeting is adjourned for more than 45 days from the date set for the original meeting. Section 6. Quorum; Action at Meetings. (a) A majority of the shares entitled to vote, represented in person or by proxy, shall constitute a quorum at a meeting of the shareholders. (b) Except as provided in subdivision (c) of this section, the affirmative vote of a majority of the shares represented and voting at a duly held meeting at which a quorum is present (which shares voting affirmatively also constitute at least a majority of the required quorum) shall be the act of the shareholders, unless the vote of a greater number is required by Law or the Articles of Incorporation. (c) The shareholders present at a duly called or held meeting at which a quorum is present may continue to transact business until adjournment notwithstanding the withdrawal of enough shareholders to leave less than a quorum, if any action taken (other than adjournment) is approved by at least a majority of the shares required to constitute a quorum. Section 7. Adjournment. Any meeting of the shareholders may be adjourned from time to time whether or not a quorum is present by the vote of a majority of the shares represented thereat either in person or by proxy. At the adjourned meeting the Corporation may transact any business which might have been transacted at the original meeting. Section 8. Validation of Defectively Called, Noticed or Held Meetings. (a) The transactions of any meeting of the shareholders, however called and noticed, and wherever held, are as valid as though had at a meeting duly held after regular call -4- and notice, if a quorum is present either in person or by proxy, and if, either before or after the meeting, each of the persons entitled to vote thereat, not present in person or by proxy, signs a written waiver of notice or a consent to the holding of the meeting or an approval of the minutes thereof. All such waivers, consents and approvals shall be filed with the corporate records or made a part of the minutes of the meeting. (b) Attendance of a person at a meeting shall constitute a waiver of notice of, and presence at, such meeting, except (1) when the person objects, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened and (2) that attendance at a meeting is not a waiver of any right to object to the consideration of any matter required by the General Corporation Law of the State of California to be included in the notice but not so included, if such objection is expressly made at the meeting. (c) Any written waiver of notice shall comply with subdivision (f) of Section 601 of the Corporations Code of the State of California. Section 9. Voting for Election of Directors. (a) Every shareholder complying with subdivision (b) of this section and entitled to vote at any election of directors may cumulate his votes and give one candidate a number of votes equal to the number of directors to be elected multiplied by the number of votes to which his shares are normally entitled, or distribute his votes on the same principle among as many candidates as he thinks fit. (b) No shareholder shall be entitled to cumulate his votes (i.e., cast for any one candidate a number of votes greater than the number of votes which such shareholder normally is entitled to cast) unless such candidate's or candidates' names have been placed in nomination prior to the voting and the shareholder has given notice at the meeting, prior to the voting, of his intention to cumulate his votes. If any one shareholder has given such notice, all shareholders may cumulate their votes for candidates in nomination. (c) Elections for directors may be by voice vote or by ballot unless any shareholder entitled to vote demands election by ballot at the meeting prior to the voting, in which case the vote shall be by ballot. (d) In any election of directors, the candidates receiving the highest number of votes of the shares entitled to be voted for them up to the number of directors to be elected by such shares are elected as directors. Section 10. Proxies. -5- (a) Every person entitled to vote shares may authorize another person or persons to act with respect to such shares by a written proxy signed by him or his attorney-in-fact and filed with the Secretary of the Corporation. A proxy shall be deemed signed if the shareholder's name is placed on the proxy (whether by manual signature, typewriting, telegraphic transmission or otherwise) by him or his attorney-in-fact. (b) Any duly executed proxy shall continue in full force and effect until the expiration of the term specified therein or upon its earlier revocation by the person executing it prior to the vote pursuant thereto (1) by a writing delivered to the Corporation stating that it is revoked, (2) by a subsequent proxy executed by the person executing the proxy or (3) by the attendance at the meeting and voting in person by the person executing the proxy. No proxy shall be valid after the expiration of 11 months from the date thereof unless otherwise provided in the proxy. The date contained on the form of proxy shall be deemed to be the date of its execution. (c) A proxy which states that it is irrevocable is irrevocable for the period specified therein subject to the provisions of subdivisions (e) and (f) of Section 705 of the Corporations Code of the State of California. Section 11. Inspectors of Election. (a) In advance of any meeting of the shareholders, the Board of Directors may appoint either one or three persons (other than nominees for the office of director) as inspectors of election to act at such meeting or any adjournments thereof. If inspectors of election are not so appointed, or if any person so appointed fails to appear or refuses to act, the chairman of any such meeting may, and on the request of any shareholder or his proxy shall, appoint inspectors of election (or persons to replace those who so fail or refuse to act) at the meeting. If appointed at a meeting on the request of one or more shareholders or the proxies thereof, the majority of shares represented in person or by proxy shall determine whether one or three inspectors are to be appointed. (b) The duties of inspectors of election and the manner of performance thereof shall be as prescribed in Section 707 of the Corporations Code of the State of California Section 12. Action by Written Consent. (a) Subject to subdivisions (b) and (c) of this section, any action which may be taken at any annual or special meeting of the shareholders may be taken without a meeting, without a vote and without prior notice, if a consent in writing, setting forth the action so taken, is signed by the holders of outstanding shares having not less than the minimum number of votes which would be necessary to authorize or take such action at a meeting in which all shares entitled to vote thereon were -6- present and voted. All such consents shall be filed with the Secretary of the Corporation and maintained with the corporate records. (b) Except for the election of a director by written consent to fill a vacancy (other than a vacancy created by removal), directors may be elected by written consent only by the unanimous written consent of all shares entitled to vote for the election of directors. In the case of an election of a director by written consent to fill a vacancy (other than a vacancy created by removal), any such election requires the consent of a majority of the outstanding shares entitled to vote. (c) Unless the consents of all shareholders entitled to vote have been solicited in writing, notice of any shareholder approval without a meeting by less than unanimous written consent shall be given as provided in subdivision (b) of Section 603 of the Corporations Code of the State of California. (d) Any shareholder giving a written consent, or his proxyholders, or a personal representative of the shareholder or their respective proxyholders, may revoke the consent by a writing received by the Corporation prior to the time that written consents of the number of shares required to authorize the proposed action have been filed with the Secretary of the Corporation, but may not do so thereafter. Such revocation is effective upon its receipt by the Secretary of the Corporation. ARTICLE IV Directors Section 1. Number of Directors. (a) The authorized number of directors shall be one. Section 2. Election of Directors. Directors shall be elected at each annual meeting of the shareholders. Section 3. Term of Office. Each director, including a director elected to fill a vacancy, shall hold office until the expiration of the term for which he is elected and until a successor has been elected. Section 4. Vacancies. (a) A vacancy in the Board of Directors exists whenever any authorized position of director is not then filled by a duly elected director, whether caused by death, resignation, removal, change in the authorized number of directors or otherwise. (b) Except for a vacancy created by the removal of a director, vacancies on the Board of Directors may be filled by a -7- majority of the directors then in office, whether or not less than a quorum, or by a sole remaining director. A vacancy created by the removal of a director shall be filled only by shareholders. (c) The shareholders may elect a director at any time to fill any vacancy not filled by the directors. Section 5. Removal. (a) The Board of Directors may declare vacant the office of a director who has been declared of unsound mind by an order of court or convicted of a felony. (b) Any or all of the directors may be removed without cause if such removal is approved by a majority of the outstanding shares entitled to vote; provided, however, that no director may be removed (unless the entire Board of Directors is removed) if whenever the votes cast against removal, or not consenting in writing to such removal, would be sufficient to elect such director if voted cumulatively at an election at which the same total number of votes were cast (or, if such action is taken by written consent, all shares entitled to vote were voted) and the entire number of directors authorized at the time of his most recent election were then being elected. (c) Any reduction of the authorized number of directors does not remove any director prior to the expiration of his term of office. Section 6. Resignation. Any director may resign effective upon giving written notice to the Chairman of the Board, the President, the Secretary or the Board of Directors of the Corporation, unless the notice specifies a later time for the effectiveness of such resignation. If the resignation is effective at a future time, a successor may be elected to take office when the resignation becomes effective. Section 7. Fees and Compensation. Directors may be paid for their services in such capacity a sum in such amount, at such times and upon such conditions as may be determined from time to time by resolution of the Board of Directors, and may be reimbursed for their expenses, if any, incurred in such capacity, including (without limitation) expenses of attendance at any meeting of the Board. No such payments shall preclude any director from serving the Corporation in any other capacity and receiving compensation in any manner therefor. ARTICLE V Committees of the Board of Directors -8- Section 1. Designation of Committees. The Board of Directors may, by resolution adopted by a majority of the authorized number of directors, designate (1) one or more committees, each consisting of one or more directors and (2) one or more directors as alternate members of any committee, who may replace any absent member at any meeting thereof. Any member or alternate member of a committee shall serve at the pleasure of the Board. Section 2. Powers of Committees. Any committee, to the extent provided in the resolution of the Board of Directors designating such committee, shall have all the authority of the Board, except with respect to: (a) The approval of any action for which the General Corporation Law of the State of California also requires any action by the shareholders; (b) The filling of vacancies on the Board or in any committee thereof; (c) The fixing of compensation of the directors for serving on the Board or on any committee thereof; (d) The amendment or repeal of these Bylaws or the adoption of new bylaws (e) The amendment or repeal of any resolution of the Board which by its express terms is not so amendable or repealable. (f) A distribution to the shareholders of the Corporation, except at a rate or in a periodic amount or within a price range determined by the Board of Directors; or (g) The designation of other committees of the Board or the appointment of members or alternate members thereof. ARTICLE VI Meetings of the Board of Directors and Committees Thereof Section 1. Place of Meetings. Regular meetings of the Board of Directors shall be held at any place within or without the State of California which has been designated from time to time by the Board, or in the absence of such designation, at the principal executive office of the Corporation. Special meetings of the Board shall be held either at any place within or without the State of California which has been designated in the notice of the meeting or, if not stated in the notice or if there is no notice, at the principal executive office of the Corporation. -9- Section 2. Organization Meeting. An organization meeting shall be held each year immediately following the annual shareholders meeting. Notice of any such meeting is not required. Section 3. Other Regular Meetings. Other regular meetings of the Board of Directors shall be held without call at such time as shall be designated from time to time by the Board. Notice of any such meeting is not required. Section 4. Special Meetings. Special meetings of the Board of Directors may be called at any time for any purpose or purposes by the Chairman of the Board or the President or any vice president or the Secretary or any two directors. Notice shall be given of any special meeting of the Board. Section 5. Notice of Special Meetings. (a) Notice of the time and place of special meetings of the Board of Directors shall be delivered personally or by telephone to each director or sent to each director by first-class mail or telegraph, charges prepaid. Such notice shall be given four days prior to the holding of the special meeting if sent by mail or 48 hours prior to the holding thereof if delivered personally or given by telephone or telegraph. The notice or report shall be deemed to have been given at the time when delivered personally to the recipient or deposited in the mail or sent by other means of written communication. (b) Notice of any special meeting of the Board of Directors need not specify the purpose thereof and need not be given to any director who signs a waiver of notice, whether before or after the meeting, or who attends the meeting without protesting, prior thereto or at its commencement, the lack of notice to him. Section 6. Validation of Defectively Held Meetings. The transactions of any meeting of the Board of Directors, however called and noticed or wherever held, are as valid as though had at a meeting duly held after regular call and notice if a quorum is present and if, either before or after the meeting, each of the directors not present signs a written waiver of notice, a consent to holding the meeting or an approval of the minutes thereof. Such waivers, consents and approvals (1) need not specify the purpose of any meeting of the Board of Directors and (2) shall be filed with the corporate records or made a part of the minutes of the meeting. Section 7. Quorum; Action at Meetings; Telephone Meetings. (a) A majority of the authorized number of directors shall constitute a quorum for the transaction of business. Every act or decision done or made by a majority of the directors present at a meeting duly held at which a quorum is present is the act of the Board of Directors, unless action by a greater -10- proportion of the directors is required by law or the Articles of Incorporation. (b) A meeting at which a quorum is initially present may continue to transact business notwithstanding the withdrawal of directors, if any action taken is approved by at least a majority of the required quorum for such meeting. (c) Members of the Board of Directors may participate in a meeting through use of conference telephone or similar communications equipment so long as all members participating in such meeting can hear one another. Section 8. Adjournment. A majority of the directors present, whether or not a quorum is present, may adjourn any meeting to another time and place. If the meeting is adjourned for more than 24 hours, notice of any adjournment to another time or place shall be given prior to the time of the adjourned meeting to the directors who were not present at the time of the adjournment. Section 9. Action Without a Meeting. Any action required or permitted to be taken by the Board of Directors may be taken without a meeting, if all members of the Board individually or collectively consent in writing to such action. Such written consent or consents shall be filed with the minutes of the proceedings of the Board. Such action by written consent shall have the same force and effect as a unanimous vote of such directors. Section 10. Meetings of and Action by Committees. The provisions of this Article apply to committees of the Board of Directors and action by such committees with such changes in the language of those provisions as are necessary to substitute the committee and its members for the Board and its members. ARTICLE VII Officers Section 1. Officers. The Corporation shall have as officers, a President, a Secretary and a Treasurer. The Treasurer is the chief financial officer of the Corporation unless the Board of Directors has by resolution designated a vice president or other officer to be the chief financial officer. The Corporation may also have at the discretion of the Board, a Chairman of the Board, a Vice Chairman of the Board, one or more vice presidents, one or more assistant secretaries, one or more assistant treasurers and such other officers as may be appointed in accordance with the provisions of Section 3 of this Article. One person may hold two or more offices. Section 2. Election of Officers. The officers of the Corporation, except such officers as may be appointed in -11- accordance with the provisions of Section 3 or Section 5 of this Article, shall be chosen by the Board of Directors. Section 3. Subordinate Officers. Etc. The Board of Directors may appoint by resolution, and may empower the Chairman of the Board, if there be such an officer, or the President, to appoint such other officers as the business of the Corporation may require, each of whom shall hold office for such period, have such authority and perform such duties as are determined from time to time by resolution of the Board or, in the absence of any such determination, as are provided in these Bylaws. Any appointment of an officer shall be evidenced by a written instrument filed with the Secretary of the Corporation and maintained with the corporate records. Section 4. Removal and Resignation. (a) Any officer may be removed, either with or without cause, by the Board of Directors or, except in case of any officer chosen by the Board, by any officer upon whom such power of removal may be conferred by resolution of the Board. (b) Any officer may resign at any time effective upon giving written notice to the Chairman of the Board, President, any vice president or Secretary of the Corporation, unless the notice specifies a later time for the effectiveness of such resignation. Section 5. Vacancies. A vacancy in any office because of death, resignation, removal, disqualification or any other cause shall be filled in the manner prescribed in these Bylaws for regular appointments to such office. Section 6. Chairman of the Board. If there is a Chairman of the Board, he shall, if present, preside at all meetings of the Board of Directors, exercise and perform such other powers and duties as may be from time to time assigned to him by resolution of the Board and, if there is no President, the Chairman of the Board shall be the chief executive officer of the Corporation and have the power and duties set forth in Section 7 of this Article. Section 7. President. Subject to such supervisory powers, if any, as may be given by the Board of Directors to the Chairman of the Board, if there be such an officer, the President shall be the chief executive officer and general manager of the Corporation and shall, subject to the control of the Board, have general supervision, direction and control of the business and affairs of the Corporation. He shall preside at all meetings of the shareholders and, in the absence of the Chairman of the Board, or if there be none, at all meetings of the Board. He shall have the general powers and duties of management usually vested in the office of president of a corporation, and shall have such other powers and duties as may be prescribed from time to time by resolution of the Board. -12- Section 8. Vice President. In the absence or disability of the President, the vice presidents in order of their rank as fixed by the Board of Directors or, if not ranked, the Vice President designated by the Board, shall perform all the duties of the President, and when so acting shall have all the powers of, and be subject to all the restrictions upon, the President. The vice presidents shall have such other powers and perform such other duties as from time to time may be prescribed for them respectively by the Board or as the President may from time to time designate. Section 9. Secretary. (a) The Secretary shall keep or cause to be kept (1) the minute book, (2) the share register and (3) the seal, if any, of the corporation. (b) The Secretary shall give, or cause to be given, notice of all meetings of the shareholders and of the Board of Directors required by these Bylaws or by law to be given, and shall have such other powers and perform such other duties as may be prescribed from time to time by the Board. Section 10. Treasurer. (a) The Treasurer shall keep, or cause to be kept, the books and records of account of the Corporation. (b) The Treasurer shall deposit all monies and other valuables in the name and to the credit of the Corporation with such depositories as may be designated from time to time by resolution of the Board of Directors. He shall disburse the funds of the corporation as may be ordered by the Board of Directors, shall render to the President and the Board, whenever they request it, an account of all his transactions as Treasurer and of the financial condition of the corporation, and shall have such other powers and perform such other duties as may be prescribed from time to time by the Board or as the President may from time to time delegate. ARTICLE VIII Records and Reports Section 1. Minute Book - Maintenance and Inspection. The Corporation shall keep or cause to be kept in written form at its principal executive office or such other place as the Board of Directors may order, a minute book which shall contain a record of all actions by its shareholders, Board or committees of the Board including the time, date and place of each meeting; whether a meeting is regular or special and, if special, how called; the manner of giving notice of each meeting and a copy thereof; the names of those present at each meeting of the Board or committees -13- thereof; the number of shares present or represented at each meeting of the shareholders; the proceedings of all meetings; any written waivers of notice, consents to the holding of a meeting or approvals of the minutes thereof; and written consents for action without a meeting. Section 2. Share Register - Maintenance and Inspection. The Corporation shall keep or cause to be kept at its principal executive office or, if so provided by resolution of the Board of Directors, at the Corporation's transfer agent or registrar, a share register, or a duplicate share register, which shall contain the names of the shareholders and their addresses, the number and classes of shares held by each, the number and date of certificates issued for the same and the number and date of cancellation of every certificate surrendered for cancellation. Section 3. Books and Records of Account - Maintenance and Inspection. The Corporation shall keep or cause to be kept at its principal executive office or such other place as the Board of Directors may order, adequate and correct books and records of account. Section 4. Bylaws - Maintenance and Inspection. The Corporation shall keep at its principal executive office or, in the absence of such office in the State of California, at its principal business office in that state, the original or a copy of the Bylaws as amended to date. Section 5. Annual Report to Shareholders. The annual report to the shareholders described in Section 1501 of the Corporations Code of the State of California is expressly dispensed with, but nothing herein shall be interpreted as prohibiting the Board of Directors from issuing annual or other periodic reports to the shareholders of the Corporation as they see fit. ARTICLE IX Indemnification of Officers, Directors, Employees and Agents Section 1. Right to Indemnification. Each person which was or is a party or is threatened to be made a party to or is involved (as a party, witness or otherwise) in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (hereafter a "Proceeding"), by reason of the fact that he, or a person of whom he is the legal representative, is or was a director, officer, employee or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another foreign or domestic corporation, partnership, joint venture, trust or other enterprise, or was a director, officer, employee or agent of a foreign or domestic corporation that was a predecessor corporation of the Corporation or of -14- another enterprise at the request of such predecessor corporation, including service with respect to employee benefit plans, whether the basis of the Proceeding is alleged action in an official capacity as a director, officer, employee or agent or in any other capacity while serving as a director, officer, employee or agent (hereafter an "Agent"), shall be indemnified and held harmless by the Corporation to the fullest extent authorized by statutory and decisional law, as the same exists or may hereafter be interpreted or amended (but, in the case of any such amendment or interpretation, only to the extent that such amendment or interpretation permits the Corporation to provide broader indemnification rights than were permitted prior thereto) against all expenses, liability and loss (including attorneys' fees, judgments, fines, ERISA excise taxes and penalties, amounts paid or to be paid in settlement, any interest, assessments or other charges imposed thereon, and any federal, state, local or foreign taxes imposed on any Agent as a result of the actual or deemed receipt of any payments under this Article) incurred or suffered by such person in connection with investigating, defending, being a witness in, or participating in (including on appeal), or preparing for any of the foregoing in, any Proceeding (hereafter "Expenses"). The right to indemnification conferred in this Article shall be a contract right. It is the Corporation's intention that these Bylaws provide indemnification in excess of that expressly permitted by Section 317 of the California General Corporation Law, as authorized by the Corporation's Articles of Incorporation. Section 2. Authority to Advance Expenses. Expenses incurred by an officer or director (acting in his capacity as such) in defending a Proceeding shall be paid by the Corporation in advance of the final disposition of such Proceeding, provided, however, that if required by the California General Corporation Law, as amended, such Expenses shall be advanced only upon delivery to the Corporation of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the Corporation as authorized in this Article or otherwise. Expenses incurred by other Agents of the Corporation (or by the directors or officers not acting in their capacity as such, including service with respect to employee benefit plans) may be advanced upon the receipt of a similar undertaking, if required by law, and upon such other terms and conditions as the Board of Directors deems appropriate. Any obligation to reimburse the Corporation for Expense advances shall be unsecured and no interest shall be charged thereon. Section 3. Right of Claimant to Bring Suit. If a claim under Section 1 or 2 of this Article is not paid in full by the Corporation within thirty (30) days after a written claim has been received by the Corporation, the claimant may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall be entitled to be paid also the expense (including attorneys' fees) of prosecuting such claim. It shall -15- be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in defending a Proceeding in advance of its final disposition where the required undertaking has been tendered to the Corporation) that the claimant has not met the standards of conduct that make it permissible under the California General Corporation Law for the Corporation to indemnify the claimant for the amount claimed. The burden of proving such a defense shall be on the Corporation. Neither the failure of the Corporation (including its Board of Directors, independent legal counsel or its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper under the circumstances because he has met the applicable standard of conduct set forth in the California General Corporation Law, nor an actual determination by the Corporation (including its Board of Directors, independent legal counsel, or its stockholders) that the claimant had not met such applicable standard of conduct, shall be a defense to the action or create a presumption that claimant has not met the applicable standard of conduct. Section 4. Provisions Nonexclusive. The rights conferred on any person by this Article shall not be exclusive of any other rights that such person may have or hereafter acquire under any statute, provision of the Articles of Incorporation, agreement, vote of stockholders or disinterested directors, or otherwise, both as to action in an official capacity and as to action in another capacity while holding such office. To the extent that any provision of the Articles, agreement or vote of the stockholders or disinterested directors is inconsistent with these Bylaws, the provision, agreement or vote shall take precedence. Section 5. Authority to Insure. The Corporation may purchase and maintain insurance to protect itself and any Agent against any Expense asserted against or incurred by such person, whether or not the Corporation would have the power to indemnify the Agent against such Expense under applicable law or the provisions of this Article, all as set forth in Section 317 of the California General Corporation Law, as amended. Section 6. Survival of Rights. The rights provided by this Article shall continue as to a person who has ceased to be an Agent and shall inure to the benefit of the heirs, executors and administrators of such person. Section 7. Settlement of Claims. The Corporation shall not be liable to indemnify any Agent under this Article (a) for any amounts paid in settlement of any action or claim effected without the Corporation's written consent, which consent shall not be unreasonably withheld; or (b) for any judicial award, if the Corporation was not given a reasonable and timely opportunity, at its expense, to participate in the defense of such action. -16- Section 8. Effect of Amendment. Any amendment, repeal or modification of this Article shall not adversely affect any right or protection of any Agent existing at the time of such amendment, repeal or modification. Section 9. Subrogation. In the event of payment under this Article, the Corporation shall be subrogated to the extent of such payment to all of the rights of recovery of the Agent, who shall execute all papers required and shall do everything that may be necessary to secure such rights, including the execution of such documents necessary to enable the Corporation effectively to bring suit to enforce such rights. Section 10. No Duplication of Payments. The Corporation shall not be liable under this Article to make any payment in connection with any claim made against the Agent to the extent the Agent has otherwise actually received payment (under any insurance policy, agreement, vote, or otherwise) of the amounts otherwise indemnifiable hereunder. ARTICLE X Miscellaneous Section 1. Checks, Drafts, Etc. All checks, drafts or other orders for payment of money, notes or other evidences of indebtedness, and any assignment or endorsement thereof, issued in the name of or payable to the Corporation, shall be signed or endorsed by such person or persons and in such manner as, from time to time, shall be determined by resolution of the Board of Directors. Section 2. Contracts, Etc. - How Executed. The Board of Directors, except as otherwise provided in these Bylaws, may authorize any officer or officers, agent or agents, to enter into any contract or execute any instrument in the name of and on behalf of the Corporation, and such authority may be general or confined to specific instances; and, unless so authorized or ratified by the Board, no officer, employee or other agent shall have any power or authority to bind the Corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or to any amount. Section 3. Certificates of Stock. All certificates shall be signed in the name of the Corporation by the Chairman of the Board or the President or a vice president and by the Treasurer or an assistant treasurer or the Secretary or an assistant secretary, certifying the number of shares and the class or series thereof owned by the shareholder. Any or all of the signatures on a certificate may be by facsimile signature. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if such person were an -17- officer, transfer agent or registrar at the date of issue. Section 4. Lost Certificates. Except as provided in this section, no new certificate for shares shall be issued in lieu of an old certificate unless the latter is surrendered to the Corporation and cancelled at the same time. The Board of Directors may, in case any share certificate or certificate for any other security is lost, stolen or destroyed, authorize the issuance of a new certificate in lieu thereof, upon such terms and conditions as the Board may require, including provision for indemnification of the Corporation secured by a bond or other adequate security sufficient to protect the Corporation against any claim that may be made against it, including any expense or liability, on account of the alleged loss, theft or destruction of such certificate or the issuance of such new certificate. Section 5. Representation of Shares of Other Corporations. Any person designated by resolution of the Board of Directors or, in the absence of such designation, the Chairman of the Board, the President or any vice president or the Secretary, or any other person authorized by any of the foregoing, is authorized to vote on behalf of the Corporation any and all shares of any other corporation or corporations, foreign or domestic, owned by the Corporation. Section 6. Construction and Definitions. Unless the context otherwise requires, the general provisions, rules of construction and definitions contained in the Corporations Code of the State of California shall govern the construction of these Bylaws. ARTICLE XI Amendments Section 1. Amendments. New bylaws may be adopted or these Bylaws may be amended or repealed by the affirmative vote of a majority of the outstanding shares entitled to vote. Subject to the next preceding sentence, bylaws (other than a bylaw or amendment thereof specifying or changing a fixed number of directors or the maximum or minimum number, or changing from a fixed to a variable board or vice versa) may be adopted, amended or repealed by the Board of Directors. -18- EX-3.2F 22 BY-LAWS IM SAN DIEGO, INC Exhibit 3.2F IM SAN DIEGO, INC. (a Delaware corporation) BY - LAWS ARTICLE 1 Offices 1.1 Registered Office. The registered office of the Corporation shall be located in the City of Dover, County of Kent, State of Delaware, and the name of the resident agent in charge thereof shall be The Prentice Hall Corporation System, Inc. 1.2 Other Offices. The Corporation may also have offices at such other places, within or without the State of Delaware, as the Board of Directors may from time to time appoint or the business of the Corporation may require. ARTICLE 2 Seal The seal of the Corporation shall, subject to alteration by the Board of Directors, consist of a flat-faced circular die with the word "Delaware", together with the name of the Corporation and the year of incorporation, cut or engraved thereon. ARTICLE 3 Meetings of Stockholders 3.1 Place of Meeting. Meetings of the stockholders shall be held either within or without the State of Delaware at such place as the Board of Directors may fix. 3.2 Annual Meetings. The annual meeting of stockholders shall be held on the thirtieth day of April of each year, or if such day is a legal holiday, then on the next business day following, at such time as the Board of Directors may fix. 3.3 Special Meetings. Special meetings of the stockholders for any purpose or purposes may be called by the President, or by the directors (either by written instrument signed by a majority or by resolution adopted by a vote of the majority), and special meetings shall be called by the President or the Secretary whenever stockholders owning a majority of the capital stock issued, outstanding and entitled to vote so request in writing. Such request of stockholders shall state the purpose or purposes of the proposed meeting. 3.4 Notice. Written or printed notice of every meeting of stockholders, annual or special, stating the hour, date and place thereof, and the purpose or purposes in general terms -2- for which the meeting is called shall, not less than ten (10) and not more than sixty (60) days before such meeting, be served upon or mailed to each stockholder entitled to vote thereat, at his address as it appears upon the stock records of the Corporation or, if such stockholder shall have filed with the Secretary of the Corporation a written request that notices intended for him be mailed to some other address, then to the address designated in such request. Notice of the hour, date, place and purpose of any meeting of stockholders may be dispensed with if every stockholder entitled to vote thereat shall attend either in person or by proxy and shall not object to the holding of such meeting for lack of proper notice, or if every absent stockholder entitled to such notice shall in writing, filed with the records of the meeting, either before or after the holding thereof, waive such notice. 3.5 Quorum. Except as otherwise provided by law or by the Certificate of Incorporation, the presence in person or by proxy at any meeting of stockholders of the holders of a majority of the shares of the capital stock of the Corporation issued and outstanding and entitled to vote thereat, shall be requisite and shall constitute a quorum. If two or more classes of stock are entitled to vote as separate classes upon any question, then, in the case of each such class, a quorum for the consideration of such question shall, except as otherwise provided by law or by the Certificate of Incorporation, consist of a majority in interest of all stock of that class issued, outstanding and entitled to vote. If a majority or, where a larger quorum is required, such quorum, shall not be represented at any meeting of the stockholders regularly called, the holders of a majority of the shares present or represented and entitled to vote thereat shall have power to adjourn the meeting to another time, or to another time and place, without notice other than announcement of adjournment at the meeting, and there may be successive adjournments for like cause and in like manner until the requisite amount of shares entitled to vote at such meeting shall be represented; provided, however, that if the adjournment is for more than thirty (30) days, notice of the hour, date and place of the adjourned meeting shall be given to each stockholder entitled to vote thereat. Subject to the requirements of law and the Certificate of Incorporation, on any issue on which two or more classes of stock are entitled to vote separately, no adjournment shall be taken with respect to any class for which a quorum is present unless the Chairman of the meeting otherwise directs. At any meeting held to consider matters which were subject to adjournment for want of a quorum at which the requisite amount of shares entitled to vote thereat shall be represented, any business may be transacted which might have been transacted at the meeting as originally noticed. 3.6 Votes; Proxies. At each meeting of stockholders, every stockholder of record at the closing of the transfer books, if closed, or on the date set by the Board of Directors for the determination of stockholders entitled to vote at such meeting, shall have one vote for each share of stock entitled to vote which is registered in his name on the books of the Corporation, and, in the election of directors, may vote cumulatively to the extent and in the manner authorized in the Certificate of Incorporation. At each such meeting every stockholder shall be entitled to vote in person, or by proxy appointed by an instrument in writing subscribed by such stockholder and bearing a date not more than three (3) years prior to the meeting in question, unless said instrument provides for a longer period during which it is to remain in force. -3- All elections of directors shall be held by ballot. If the Chairman of the meeting shall so determine, a vote may be taken upon any other matter by ballot and shall be so taken upon the request of any stockholder entitled to vote on such matter. At elections of directors, the Chairman shall appoint two judges of election, who shall first take and subscribe an oath or affirmation faithfully to execute the duties of judges at such meeting with strict impartiality and according to the best of their ability. The judges so appointed shall take charge of the polls and, after the balloting, shall make a certificate of the result of the vote taken. No director or candidate for the office of director shall be appointed as such judge. At any meeting at which a quorum is present, a plurality of the votes properly cast for election to fill any vacancy on the Board of Directors shall be sufficient to elect a candidate to fill such vacancy, and a majority of the votes properly cast upon any other question shall decide the question, except in any case where a larger vote is required by law, the Certificate of Incorporation, these By-laws, or otherwise. 3.7 Organization. The Chairman of the Board, if there be one, or in his absence the President, or in the absence of the Chairman and the President, a Vice President, shall call meetings of the stockholders to order and shall act as chairman thereof. The Secretary of the Corporation, if present, shall act as secretary of all meetings of stockholders, and, in his absence, the presiding officer may appoint a secretary. ARTICLE 4 Directors 4.1 Number. The business and property of the Corporation shall be conducted and managed by a Board of Directors consisting of one or more directors. Directors need not be a stockholder. The number of directors for the ensuing year shall be fixed at each annual meeting of stockholders, but if the number is not so fixed, the number shall remain as it stood immediately prior to such meeting. At any time during any year the whole number of directors may be increased or reduced, in each case by vote of a majority of the stock outstanding and entitled to vote for the election of directors or a majority of the directors in office at the time of such increase or decrease, regardless of whether such majority of directors constitutes a quorum. 4.2 Term of Office. Each director shall hold office until the next annual meeting of stockholders and until his successor is duly elected and qualified or until his earlier death or resignation, subject to the right of the stockholders at any time to remove any director or directors as provided in Section 4 of this Article. 4.3 Vacancies. If any vacancy shall occur among the directors, or if the number of directors shall at any time be increased, the directors then in office, although less than a quorum, by a majority vote may fill the vacancies or newly-created directorships, or any such vacancies or newly-created directorships may be filled by the stockholders at any meeting. -4- 4.4 Removal by Stockholders. The holders of record of the capital stock of the Corporation entitled to vote for the election of directors may in their discretion at any meeting duly called for the purpose, by a majority vote, remove any director or directors and elect a new director or directors in place thereof. 4.5 Meetings. Meetings of the Board of Directors shall be held at such place, within or without the State of Delaware, as may from time to time be fixed by resolution of the Board or by the President and as may be specified in the notice or waiver of notice of any meeting. Meetings may be held at any time upon the call of the Chairman of the Board or the President or any two (2) of the directors in office by oral, telegraphic or written notice, duly served or sent or mailed to each director not less than twenty-four (24) hours before such meeting, except that, if mailed, not less than seventy-two (72) hours before such meeting. Meetings may be held at any time and place without notice if all the directors are present and do not object to the holding of such meeting for lack of proper notice or if those not present shall, in writing or by telegram, waive notice thereof. A regular meeting of the Board may be held without notice immediately following the annual meeting of stockholders at the place where such meeting is held. Regular meetings of the Board may also be held without notice at such time and place as shall from time to time be determined by resolution of the Board. 4.6 Quorum. A majority of the directors shall constitute a quorum for the transaction of business. If at any meeting of the Board there shall be less than a quorum present, a majority of those present may adjourn the meeting from time to time without notice other than announcement of the adjournment at the meeting, and at such adjourned meeting at which a quorum is present any business may be transacted which might have been transacted at the meeting as originally noticed. 4.7 Compensation. Directors shall receive compensation for their services, as such, and for service on any Committee of the Board of Directors, as fixed by resolution of the Board of Directors and for expenses of attendance at each regular or special meeting of the Board or any Committee thereof. Nothing in this Section shall be construed to preclude a director from serving the Corporation in any other capacity and receiving compensation therefor. ARTICLE 5 Committees of Directors 5.1 Executive Committee. The Board of Directors may, by resolution passed by a majority of the whole Board, appoint an Executive Committee of two (2) or more members, to serve during the pleasure of the Board, to consist of such directors as the Board may from time to time designate. The Board of Directors shall designate the Chairman of the Executive Committee. (a) Procedure. The Executive Committee shall, by a vote of a majority of its members, fix its own times and places of meeting, determine the number of its members constituting a quorum for the transaction of business, and prescribe its own rules of procedure, no change in which shall be made save by a majority vote of its members. -5- (b) Responsibilities. During the intervals between the meetings of the Board of Directors, except as otherwise provided by the Board of Directors in establishing such Committee or otherwise, the Executive Committee shall possess and may exercise all the powers of the Board in the management and direction of the business and affairs of the Corporation; provided, however, that the Executive Committee shall not have the power: (i) to amend or authorize the amendment of the Certificate of Incorporation or these By-Laws; (ii) to authorize the issuance of stock; (iii) to authorize the payment of any dividend; (iv) to adopt an agreement of merger or consolidation of the Corporation or to recommend to the stockholders the sale, lease or exchange of all or substantially all the property and business of the Corporation; or (v) to recommend to the stockholders a dissolution of the Corporation. (c) Reports. The Executive Committee shall keep regular minutes of its proceedings, and all action by the Executive Committee shall be reported promptly to the Board of Directors. Such action shall be subject to review, amendment and repeal by the Board, provided that no rights of third parties shall be adversely affected by such review, amendment or repeal. (d) Appointment of Additional Members. In the absence or disqualification of any member of the Executive Committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not constituting a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in place of any such absent or disqualified member. 5.2 Audit Committee. The Board of Directors shall appoint an Audit Committee of two (2) or more members who shall not be officers or employees of the Corporation to serve during the pleasure of the Board. The Board of Directors shall designate the Chairman of the Audit Committee. (a) Procedure. The Audit Committee, by a vote of a majority of its members, shall fix its own times and places of meeting, shall determine the number of its members constituting a quorum for the transaction of business, and shall prescribe its own rules of procedure, no change in which shall be made save by a majority vote of its members. -6- (b) Responsibilities. The Audit Committee shall review the annual financial statements of the Corporation prior to their submission to the Board of Directors, shall consult with the Corporation's independent auditors, and may examine and consider such other matters in relation to the internal and external audit of the Corporation's accounts and in relation to the financial affairs of the Corporation and its accounts, including the selection and retention of independent auditors, as the Audit Committee may, in its discretion, determine to be desirable. (c) Reports. The Audit Committee shall keep regular minutes of its proceedings, and all action by the Audit Committee shall, from time to time, be reported to the Board of Directors as it shall direct. (d) Appointment of Additional Members. In the absence or disqualification of any member of the Audit Committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not constituting a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in place of any such absent or disqualified member. 5.3 Other Committees. The Board of Directors, by vote of a majority of the directors then in office, may at any time appoint one or more other committees from and outside of its own number. Every such committee must include at least one member of the Board of Directors. The Board may from time to time designate or alter, within the limits permitted by law, the Certificate of Incorporation and this Article, if applicable, the duties, powers and number of members of such other committees or change their membership, and may at any time abolish such other committees or any of them. (a) Procedure. Each committee appointed pursuant to this Section shall, by a vote of a majority of its members, fix its own times and places of meeting, determine the number of its members constituting a quorum for the transaction of business, and prescribe its own rules of procedure, no change in which shall be made save by a majority vote of its members. (b) Responsibilities. Each committee appointed pursuant to this Section shall exercise the powers assigned to it by the Board of Directors in its discretion. (c) Reports. Each committee appointed pursuant to this Section shall keep regular minutes of proceedings, and all action by each such committee shall, from time to time, be reported to the Board of Directors as it shall direct. (d) Appointment of Additional Members. In the absence or disqualification of any member of each committee, appointed pursuant to this Section, the member or members thereof present at any meeting and not disqualified from voting, whether or not constituting a quorum, may unanimously -7- appoint another member of the Board of Directors to act at the meeting in place of any such absent or disqualified member. 5.4 Term of Office. Each member of a committee shall hold office until the first meeting of the Board of Directors following the annual meeting of stockholders (or until such other time as the Board of Directors may determine, either in the vote establishing the committee or at the election of such member or otherwise) and until his successor is elected and qualified, or until he sooner dies, resigns, is removed, is replaced by change of membership or becomes disqualified by ceasing to be a Director (where membership on the Board is required), or until the committee is sooner abolished by the Board of Directors. ARTICLE 6 Officers 6.1 Officers. The Board of Directors shall elect a President, a Secretary and a Treasurer, and, in their discretion, may elect a Chairman of the Board, one or more Executive Vice Presidents, Vice Presidents, Assistant Secretaries and Assistant Treasurers as deemed necessary or appropriate. Such officers shall be elected annually by the Board of Directors at its first meeting following the annual meeting of stockholders, and each shall hold office for the term provided by the vote of the Board, except that each will be subject to removal from office in the discretion of the Board as provided herein. The powers and duties of more than one office may be exercised and performed by the same person. 6.2 Vacancies. Any vacancy in any office may be filled for the unexpired portion of the term by the Board of Directors, at any regular or special meeting. 6.3 Chairman of the Board. The Chairman of the Board of Directors, if elected, shall be a member of the Board of Directors and shall preside at its meetings. He shall advise and counsel with the President, and shall perform such duties as from time to time may be assigned to him by the Board of Directors. 6.4 President. The President shall be the chief executive officer of the Corporation. Subject to the directions of the Board of Directors, he shall have and exercise direct charge of and general supervision over the business and affairs of the Corporation and shall perform all duties incident to the office of the chief executive officer of a corporation and such other duties as from time to time may be assigned to him by the Board of Directors. The President may but need not be a member of the Board of Directors. 6.5 Executive Vice Presidents and Vice Presidents. Each Executive Vice President and Vice President shall have and exercise such powers and shall perform such duties as from time to time may be assigned to him by the President. 6.6 Secretary. The Secretary shall keep the minutes of all meetings of the stockholders and of the Board of Directors in books provided for the purpose; he shall see that all notices are duly given in accordance with the provisions of law and these By-laws; he shall be custodian of the records and of the corporate seal or seals of the Corporation; he shall see -8- that the corporate seal is affixed to all documents the execution of which, on behalf of the Corporation under its seal, is duly authorized, and, when the seal is so affixed, he may attest the same; he may sign, with the President, an Executive Vice President or a Vice President, certificates of stock of the Corporation; and, in general, he shall perform all duties incident to the office of secretary of a corporation, and such other duties as from time to time may be assigned to him by the Board of Directors. 6.7 Assistant Secretaries. The Assistant Secretaries in order of their seniority shall, in the absence or disability of the Secretary, perform the duties and exercise the powers of the Secretary and shall perform such other duties as the Board of Directors shall prescribe or as from time to time may be assigned by the Secretary. 6.8 Treasurer. The Treasurer shall have charge of and be responsible for all funds, securities, receipts and disbursements of the Corporation, and shall deposit, or cause to be deposited, in the name of the Corporation, all monies or other valuable effects in such banks, trust companies or other depositaries as shall, from time to time, be selected by the Board of Directors; he may endorse for collection on behalf of the Corporation checks, notes and other obligations; he may sign receipts and vouchers for payments made to the Corporation; he may sign checks of the Corporation, singly or jointly with another person as the Board of Directors may authorize, and pay out and dispose of the proceeds under the direction of the Board; he shall render to the President and to the Board of Directors, whenever requested, an account of the financial condition of the Corporation; he may sign, with the President, or an Executive Vice President or a Vice President, certificates of stock of the Corporation; and in general, shall perform all the duties incident to the office of treasurer of a corporation, and such other duties as from time to time may be assigned to him by the Board of Directors. 6.9 Assistant Treasurers. The Assistant Treasurers in order of their seniority shall, in the absence or disability of the Treasurer, perform the duties and exercise the powers of the Treasurer and shall perform such other duties as the Board of Directors shall prescribe or as from time to time may be assigned by the Treasurer. 6.10 Subordinate Officers. The Board of Directors may appoint such subordinate officers as it may deem desirable. Each such officer shall hold office for such period, have such authority and perform such duties as the Board of Directors may prescribe. The Board of Directors may, from time to time, authorize any officer to appoint and remove subordinate officers and to prescribe the powers and duties thereof. 6.11 Compensation. The Board of Directors shall fix the compensation of all officers of the Corporation. It may authorize any officer, upon whom the power of appointing subordinate officers may have been conferred, to fix the compensation of such subordinate officers. 6.12 Removal. Any officer of the Corporation may be removed, with or without cause, by action of the Board of Directors. -9- 6.13 Bonds. The Board of Directors may require any officer of the Corporation to give a bond to the Corporation, conditional upon the faithful performance of his duties, with one or more sureties and in such amount as may be satisfactory to the Board of Directors. ARTICLE 7 Certificates of Stock 7.1 Form and Execution of Certificates. The interest of each stockholder of the Corporation shall be evidenced by a certificate or certificates for shares of stock in such form as the Board of Directors may from time to time prescribe. The certificates of stock of each class shall be consecutively numbered and signed by the President, an Executive Vice President or a Vice President and by the Secretary, an Assistant Secretary, the Treasurer or an Assistant Treasurer of the Corporation, and may be countersigned and registered in such manner as the Board of Directors may by resolution prescribe, and shall bear the corporate seal or a printed or engraved facsimile thereof. Where any such certificate is signed by a transfer agent or transfer clerk acting on behalf of the Corporation, the signatures of any such President, Executive Vice President, Vice President, Treasurer, Assistant Treasurer, Secretary or Assistant Secretary may be facsimiles, engraved or printed. In case any officer or officers, who shall have signed, or whose facsimile signature or signatures shall have been used on, any such certificate or certificates, shall cease to be such officer or officers, whether because of death, resignation or otherwise, before such certificate or certificates shall have been delivered by the Corporation, such certificate or certificates may nevertheless be issued and delivered by the Corporation as though the person or persons who signed such certificate or certificates or whose facsimile signature or signatures shall have been used thereon had not ceased to be such officer or officers. In case the corporate seal which has been affixed to, impressed on, or reproduced in any such certificate or certificates shall cease to be the seal of the Corporation before such certificate or certificates have been delivered by the Corporation, such certificate or certificates may nevertheless be issued and delivered by the Corporation as though the seal affixed thereto, impressed thereon or reproduced therein had not ceased to be the seal of the Corporation. Every certificate for shares of stock which are subject to any restriction on transfer pursuant to law, the Certificate of Incorporation, these By-laws, or any agreement to which the Corporation is a party, shall have the restriction noted conspicuously on the certificate, and shall also set forth, on the face or back, either the full text of the restriction or a statement of the existence of such restriction and (except if such restriction is imposed by law) a statement that the Corporation will furnish a copy thereof to the holder of such certificate upon written request and without charge. Every certificate issued when the Corporation is authorized to issue more than one class or series of stock shall set forth on its face or back either the full text of the preferences, voting powers, qualifications, and special and relative rights of the shares of each class and series authorized to be issued, or a statement of the existence of such preferences, powers, qualifications and rights, and a statement that the Corporation will furnish a copy thereof to the holder of such certificate upon written request and without charge. -10- 7.2 Transfer of Shares. The shares of the stock of the Corporation shall be transferred on the books of the Corporation by the holder thereof in person or by his attorney lawfully constituted, upon surrender for cancellation of certificates for the same number of shares, with an assignment and power of transfer endorsed thereon or attached thereto, duly executed, with such proof or guaranty of the authenticity of the signature as the Corporation or its agents may reasonably require. The Corporation shall be entitled to treat the holder of record of any share or shares of stock as the holder in fact thereof and accordingly shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person whether or not it shall have express or other notice thereof, save as expressly provided by law or by the Certificate of Incorporation. It shall be the duty of each stockholder to notify the Corporation of his post office address. 7.3 Closing of Transfer Books. The stock transfer books of the Corporation may, if deemed appropriate by the Board of Directors, be closed for such length of time not exceeding fifty (50) days as the Board may determine, preceding the date of any meeting of stockholders or the date for the payment of any dividend or the date for the allotment of rights or the date when any issuance, change, conversion or exchange of capital stock shall go into effect, during which time no transfer of stock on the books of the Corporation may be made. 7.4 Dates of Record. If deemed appropriate, the Board of Directors may fix in advance a date for such length of time not exceeding sixty (60) days (and, in the case of any meeting of stockholders, not less than ten (10) days) as the Board may determine, preceding the date of any meeting of stockholders, or the date for the payment of any dividend, or the date for the allotment of rights or the date when any issuance, change, conversion or exchange of capital stock shall go into effect, as a record date for the determination of the stockholders entitled to notice of, and to vote at, any such meeting or entitled to receive payment of any such dividend or to any such allotment of rights, or to exercise the rights in respect of any such issuance, change, conversion or exchange of capital stock, as the case may be, and in such case only such stockholders as shall be stockholders of record on the date so fixed shall be entitled to such notice of, and to vote at, such meeting, or to receive payment of such dividend, or to receive such allotment of rights, or to exercise such rights, as the case may be, notwithstanding any transfer of any stock on the books of the Corporation after any record date fixed as aforesaid. If no such record date is so fixed, the record date shall be determined by applicable law. 7.5 Lost or Destroyed Certificates. In case of the loss or destruction of any certificate of stock, a new certificate may be issued under the following conditions: (a) The owner of said certificate shall file with the Secretary or any Assistant Secretary of the Corporation an affidavit giving the facts in relation to the ownership, and in relation to the loss or destruction of said certificate, stating its number and the number of shares represented thereby; such affidavit shall be in such form and contain such statements as shall satisfy the President, any Executive Vice President, Vice President, the Secretary, any Assistant Secretary, the Treasurer or any Assistant Treasurer, that said certificate has been accidentally destroyed or lost, and that a new certificate ought to be issued in lieu thereof. Upon being so -11- satisfied, any such officer shall require such owner to furnish the Corporation a bond in such penal sum and in such form as he may deem advisable, and with a surety or sureties approved by him, to indemnify and save harmless the Corporation from any claim, loss, damage or liability which may be occasioned by the issuance of a new certificate in lieu thereof. Upon such bond being so filed, a new certificate for the same number of shares shall be issued to the owner of the certificate so lost or destroyed; and the transfer agent and registrar, if any, of stock shall countersign and register such new certificate upon receipt of a written order signed by any such officer, and thereupon the Corporation will save harmless said transfer agent and registrar in the premises. In case of the surrender of the original certificate, in lieu of which a new certificate has been issued, or the surrender of such new certificate, for cancellation, the bond of indemnity given as a condition of the issue of such new certificate may be surrendered; or (b) The Board of Directors of the Corporation may by resolution authorize and direct any transfer agent or registrar of stock of the Corporation to issue and register respectively from time to time without further action or approval by or on behalf of the Corporation new certificates of stock to replace certificates reported lost, stolen or destroyed upon receipt of an affidavit of loss and bond of indemnity in form and amount and with surety satisfactory to such transfer agent or registrar in each instance or upon such terms and conditions as the Board of Directors may determine. ARTICLE 8 Execution of Documents 8.1 Execution of Checks, Notes, etc. All checks and drafts on the Corporation's bank accounts and all bills of exchange and promissory notes, and all acceptances, obligations and other instruments for the payment of money, shall be signed by such officer or officers, or agent or agents, as shall be thereunto authorized from time to time by the Board of Directors, which may in its discretion authorize any such signatures to be facsimile. 8.2 Execution of Contracts, Assignments, etc. Unless the Board of Directors shall have otherwise provided generally or in a specific instance, all contracts, agreements, endorsements, assignments, transfers, stock powers, or other instruments shall be signed by the President, any Executive Vice President, any Vice President, the Secretary, any Assistant Secretary, the Treasurer or any Assistant Treasurer. The Board of Directors may, however, in its discretion, require any or all such instruments to be signed by any two or more of such officers, or may permit any or all of such instruments to be signed by such other officer or officers, agent or agents, as it shall thereunto authorize from time to time. 8.3 Execution of Proxies. The President, any Executive Vice President or any Vice President, and the Secretary, the Treasurer, any Assistant Secretary or any Assistant Treasurer, or any other officer designated by the Board of Directors, may sign on behalf of the Corporation proxies to vote upon shares of stock of other companies standing in the name of the Corporation. -12- ARTICLE 9 Inspection of Books The Board of Directors shall determine from time to time whether, and if allowed, to what extent and at what time and places and under what conditions and regulations, the accounts and books of the Corporation (except such as may by law be specifically open to inspection) or any of them, shall be open to the inspection of the stockholders, and no stockholder shall have any right to inspect any account or book or document of the Corporation, except as conferred by the laws of the State of Delaware, unless and until authorized so to do by resolution of the Board of Directors or of the stockholders of the Corporation. ARTICLE 10 Fiscal Year The fiscal year of the Corporation shall be determined from time to time by vote of the Board of Directors. ARTICLE 11 Amendments These By-laws may be altered, amended, changed or repealed and new By-laws adopted by the stockholders or by the Board of Directors, in either case at any meeting called for that purpose at which a quorum shall be present. Any by-law, whether made, altered, amended, changed or repealed by the stockholders or the Board of Directors may be repealed, amended, changed, further amended, changed, repealed or reinstated, as the case may be either by the stockholders or by the Board of Directors, as herein provided; except that this Article may be altered, amended, changed or repealed only by vote of the stockholders. ARTICLE 12 Indemnification 12.1 Indemnification. The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that he is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines, and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interest of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best -13- interest of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation; except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable for negligence or misconduct in the performance of his duty to the Corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper. To the extent that a director, officer, employee or agent of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in this Section, or in defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith. 12.2 Authorization. Any indemnification under Section 1 of this Article (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances because he has met the applicable standard of conduct set forth in Section 1 of this Article. Such determination shall be made: (a) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceedings, or (b) if such a quorum is not obtainable, or, even if obtainable, a quorum of disinterested directors so directs, by independent legal counsel in written opinion, or (c) by the stockholders. 12.3 Expense Advance. Expenses incurred in defending a civil or criminal action, suit or proceeding may be paid by the Corporation in advance of the final disposition of such action, suit or proceeding as authorized by the Board of Directors in the manner provided in Section 2 of this Article upon receipt of an undertaking by or on behalf of the director, officer, employee or agent to repay such amount, unless it shall ultimately be determined that he is entitled to be indemnified by the Corporation as authorized in this Article. 12.4 Nonexclusivity. The indemnification provided by this Article shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any by-law, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, and shall continue -14- as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person. 12.5 Insurance. The Corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power to indemnify him against such liability under the provisions of this Article. 12.6 "The Corporation". For the purposes of this Article, references to "the Corporation" include all constituent corporations absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers and employees or agents as well as the resulting or surviving corporation so that any person who is or was a director, officer, employee or agent of such a constituent corporation or is or was serving at the request of such constituent corporation as director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise shall stand in the same position under the provisions of this Article with respect to such a constituent corporation if its separate existence had continued. EX-3.2G 23 BY-LAWS IRON MTN INFO PARTNERS INC Exhibit 3.2G IRON MOUNTAIN INFORMATION PARTNERS, INC. (a Delaware corporation) BY - LAWS ARTICLE I Offices SECTION 1. Registered Office. The registered office of the Corporation shall be located in the City of Dover, County of Kent, State of Delaware, and the name of the resident agent in charge thereof shall be The Prentice Hall Corporation System, Inc. SECTION 2. Other Offices. The Corporation may also have offices at such other places, within or without the State of Delaware, as the Board of Directors may from time to time appoint or the business of the Corporation may require. ARTICLE II Seal The seal of the Corporation shall, subject to alteration by the Board of Directors, consist of a flat-faced circular die with the word "Delaware", together with the name of the Corporation and the year of incorporation, cut or engraved thereon. ARTICLE III Meetings of Stockholders SECTION 1. Place of Meeting. Meetings of the stockholders shall be held either within or without the State of Delaware at such place as the Board of Directors may fix. SECTION 2. Annual Meetings. The annual meeting of stockholders shall be held on the first day of May of each year, or if such day is a legal holiday, then on the next business day following, at such time as the Board of Directors may fix. SECTION 3. Special Meetings. Special meetings of the stockholders for any purpose or purposes may be called by the President, or by the directors (either by written instrument signed by a majority or by resolution adopted by a vote of the majority), and special meetings shall be called by the President or the Secretary whenever stockholders owning a majority of the capital stock issued, outstanding and entitled to vote so request in writing. Such request of stockholders shall state the purpose or purposes of the proposed meeting. SECTION 4. Notice. Written or printed notice of every meeting of stockholders, annual or special, stating the hour, date and place thereof, and the purpose or purposes in general terms -2- for which the meeting is called shall, not less than ten (10) and not more than sixty (60) days before such meeting, be served upon or mailed to each stockholder entitled to vote thereat, at his address as it appears upon the stock records of the Corporation or, if such stockholder shall have filed with the Secretary of the Corporation a written request that notices intended for him be mailed to some other address, then to the address designated in such request. Notice of the hour, date, place and purpose of any meeting of stockholders may be dispensed with if every stockholder entitled to vote thereat shall attend either in person or by proxy and shall not object to the holding of such meeting for lack of proper notice, or if every absent stockholder entitled to such notice shall in writing, filed with the records of the meeting, either before or after the holding thereof, waive such notice. SECTION 5. Quorum. Except as otherwise provided by law or by the Certificate of Incorporation, the presence in person or by proxy at any meeting of stockholders of the holders of a majority of the shares of the capital stock of the Corporation issued and outstanding and entitled to vote thereat, shall be requisite and shall constitute a quorum. If two or more classes of stock are entitled to vote as separate classes upon any question, then, in the case of each such class, a quorum for the consideration of such question shall, except as otherwise provided by law or by the Certificate of Incorporation, consist of a majority in interest of all stock of that class issued, outstanding and entitled to vote. If a majority or, where a larger quorum is required, such quorum, shall not be represented at any meeting of the stockholders regularly called, the holders of a majority of the shares present or represented and entitled to vote thereat shall have power to adjourn the meeting to another time, or to another time and place, without notice other than announcement of adjournment at the meeting, and there may be successive adjournments for like cause and in like manner until the requisite amount of shares entitled to vote at such meeting shall be represented; provided, however, that if the adjournment is for more than thirty (30) days, notice of the hour, date and place of the adjourned meeting shall be given to each stockholder entitled to vote thereat. Subject to the requirements of law and the Certificate of Incorporation, on any issue on which two or more classes of stock are entitled to vote separately, no adjournment shall be taken with respect to any class for which a quorum is present unless the Chairman of the meeting otherwise directs. At any meeting held to consider matters which were subject to adjournment for want of a quorum at which the requisite amount of shares entitled to vote thereat shall be represented, any business may be transacted which might have been transacted at the meeting as originally noticed. SECTION 6. Votes; Proxies. At each meeting of stockholders, every stockholder of record at the closing of the transfer books, if closed, or on the date set by the Board of Directors for the determination of stockholders entitled to vote at such meeting, shall have one vote for each share of stock entitled to vote which is registered in his name on the books of the Corporation, and, in the election of directors, may vote cumulatively to the extent and in the manner authorized in the Certificate of Incorporation. At each such meeting every stockholder shall be entitled to vote in person, or by proxy appointed by an instrument in writing subscribed by such stockholder and bearing a date not more than three (3) years prior to the meeting in question, unless said instrument provides for a longer period during which it is to remain in force. -3- All elections of directors shall be held by ballot. If the Chairman of the meeting shall so determine, a vote may be taken upon any other matter by ballot and shall be so taken upon the request of any stockholder entitled to vote on such matter. At elections of directors, the Chairman shall appoint two judges of election, who shall first take and subscribe an oath or affirmation faithfully to execute the duties of judges at such meeting with strict impartiality and according to the best of their ability. The judges so appointed shall take charge of the polls and, after the balloting, shall make a certificate of the result of the vote taken. No director or candidate for the office of director shall be appointed as such judge. At any meeting at which a quorum is present, a plurality of the votes properly cast for election to fill any vacancy on the Board of Directors shall be sufficient to elect a candidate to fill such vacancy, and a majority of the votes properly cast upon any other question shall decide the question, except in any case where a larger vote is required by law, the Certificate of Incorporation, these By-laws, or otherwise. SECTION 7. Organization. The Chairman of the Board, if there be one, or in his absence the President, or in the absence of the Chairman and the President, a Vice President, shall call meetings of the stockholders to order and shall act as chairman thereof. The Secretary of the Corporation, if present, shall act as secretary of all meetings of stockholders, and, in his absence, the presiding officer may appoint a secretary. ARTICLE IV Directors SECTION 1. Number. The business and property of the Corporation shall be conducted and managed by a Board of Directors consisting of one or more directors. Directors need not be a stockholder. The number of directors for the ensuing year shall be fixed at each annual meeting of stockholders, but if the number is not so fixed, the number shall remain as it stood immediately prior to such meeting. At any time during any year the whole number of directors may be increased or reduced, in each case by vote of a majority of the stock outstanding and entitled to vote for the election of directors or a majority of the directors in office at the time of such increase or decrease, regardless of whether such majority of directors constitutes a quorum. SECTION 2. Term of Office. Each director shall hold office until the next annual meeting of stockholders and until his successor is duly elected and qualified or until his earlier death or resignation, subject to the right of the stockholders at any time to remove any director or directors as provided in Section 4 of this Article. SECTION 3. Vacancies. If any vacancy shall occur among the directors, or if the number of directors shall at any time be increased, the directors then in office, although less than a quorum, by a majority vote may fill the vacancies or newly-created directorships, or any such vacancies or newly-created directorships may be filled by the stockholders at any meeting. -4- SECTION 4. Removal by Stockholders. The holders of record of the capital stock of the Corporation entitled to vote for the election of directors may in their discretion at any meeting duly called for the purpose, by a majority vote, remove any director or directors and elect a new director or directors in place thereof. SECTION 5. Meetings. Meetings of the Board of Directors shall be held at such place, within or without the State of Delaware, as may from time to time be fixed by resolution of the Board or by the President and as may be specified in the notice or waiver of notice of any meeting. Meetings may be held at any time upon the call of the Chairman of the Board or the President or any two (2) of the directors in office by oral, telegraphic or written notice, duly served or sent or mailed to each director not less than twenty-four (24) hours before such meeting, except that, if mailed, not less than seventy-two (72) hours before such meeting. Meetings may be held at any time and place without notice if all the directors are present and do not object to the holding of such meeting for lack of proper notice or if those not present shall, in writing or by telegram, waive notice thereof. A regular meeting of the Board may be held without notice immediately following the annual meeting of stockholders at the place where such meeting is held. Regular meetings of the Board may also be held without notice at such time and place as shall from time to time be determined by resolution of the Board. SECTION 6. Quorum. A majority of the directors shall constitute a quorum for the transaction of business. If at any meeting of the Board there shall be less than a quorum present, a majority of those present may adjourn the meeting from time to time without notice other than announcement of the adjournment at the meeting, and at such adjourned meeting at which a quorum is present any business may be transacted which might have been transacted at the meeting as originally noticed. SECTION 7. Compensation. Directors shall receive compensation for their services, as such, and for service on any Committee of the Board of Directors, as fixed by resolution of the Board of Directors and for expenses of attendance at each regular or special meeting of the Board or any Committee thereof. Nothing in this Section shall be construed to preclude a director from serving the Corporation in any other capacity and receiving compensation therefor. ARTICLE V Committees of Directors SECTION 1. Executive Committee. The Board of Directors may, by resolution passed by a majority of the whole Board, appoint an Executive Committee of two (2) or more members, to serve during the pleasure of the Board, to consist of such directors as the Board may from time to time designate. The Board of Directors shall designate the Chairman of the Executive Committee. (a) Procedure. The Executive Committee shall, by a vote of a majority of its members, fix its own times and places of meeting, determine the number of its members constituting a quorum for the transaction of business, and prescribe its own rules of procedure, no change in which shall be made save by a majority vote of its members. -5- (b) Responsibilities. During the intervals between the meetings of the Board of Directors, except as otherwise provided by the Board of Directors in establishing such Committee or otherwise, the Executive Committee shall possess and may exercise all the powers of the Board in the management and direction of the business and affairs of the Corporation; provided, however, that the Executive Committee shall not have the power: (i) to amend or authorize the amendment of the Certificate of Incorporation or these By-Laws; (ii) to authorize the issuance of stock; (iii) to authorize the payment of any dividend; (iv) to adopt an agreement of merger or consolidation of the Corporation or to recommend to the stockholders the sale, lease or exchange of all or substantially all the property and business of the Corporation; or (v) to recommend to the stockholders a dissolution of the Corporation. (c) Reports. The Executive Committee shall keep regular minutes of its proceedings, and all action by the Executive Committee shall be reported promptly to the Board of Directors. Such action shall be subject to review, amendment and repeal by the Board, provided that no rights of third parties shall be adversely affected by such review, amendment or repeal. (d) Appointment of Additional Members. In the absence or disqualification of any member of the Executive Committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not constituting a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in place of any such absent or disqualified member. SECTION 2. Audit Committee. The Board of Directors shall appoint an Audit Committee of two (2) or more members who shall not be officers or employees of the Corporation to serve during the pleasure of the Board. The Board of Directors shall designate the Chairman of the Audit Committee. (a) Procedure. The Audit Committee, by a vote of a majority of its members, shall fix its own times and places of meeting, shall determine the number of its members constituting a quorum for the transaction of business, and shall prescribe its own rules of procedure, no change in which shall be made save by a majority vote of its members. -6- (b) Responsibilities. The Audit Committee shall review the annual financial statements of the Corporation prior to their submission to the Board of Directors, shall consult with the Corporation's independent auditors, and may examine and consider such other matters in relation to the internal and external audit of the Corporation's accounts and in relation to the financial affairs of the Corporation and its accounts, including the selection and retention of independent auditors, as the Audit Committee may, in its discretion, determine to be desirable. (c) Reports. The Audit Committee shall keep regular minutes of its proceedings, and all action by the Audit Committee shall, from time to time, be reported to the Board of Directors as it shall direct. (d) Appointment of Additional Members. In the absence or disqualification of any member of the Audit Committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not constituting a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in place of any such absent or disqualified member. SECTION 3. Other Committees. The Board of Directors, by vote of a majority of the directors then in office, may at any time appoint one or more other committees from and outside of its own number. Every such committee must include at least one member of the Board of Directors. The Board may from time to time designate or alter, within the limits permitted by law, the Certificate of Incorporation and this Article, if applicable, the duties, powers and number of members of such other committees or change their membership, and may at any time abolish such other committees or any of them. (a) Procedure. Each committee appointed pursuant to this Section shall, by a vote of a majority of its members, fix its own times and places of meeting, determine the number of its members constituting a quorum for the transaction of business, and prescribe its own rules of procedure, no change in which shall be made save by a majority vote of its members. (b) Responsibilities. Each committee appointed pursuant to this Section shall exercise the powers assigned to it by the Board of Directors in its discretion. (c) Reports. Each committee appointed pursuant to this Section shall keep regular minutes of proceedings, and all action by each such committee shall, from time to time, be reported to the Board of Directors as it shall direct. (d) Appointment of Additional Members. In the absence or disqualification of any member of each committee, appointed pursuant to this Section, the member or members thereof present at any meeting and not disqualified from voting, whether or not constituting a quorum, may unanimously -7- appoint another member of the Board of Directors to act at the meeting in place of any such absent or disqualified member. SECTION 4. Term of Office. Each member of a committee shall hold office until the first meeting of the Board of Directors following the annual meeting of stockholders (or until such other time as the Board of Directors may determine, either in the vote establishing the committee or at the election of such member or otherwise) and until his successor is elected and qualified, or until he sooner dies, resigns, is removed, is replaced by change of membership or becomes disqualified by ceasing to be a Director (where membership on the Board is required), or until the committee is sooner abolished by the Board of Directors. ARTICLE VI Officers SECTION 1. Officers. The Board of Directors shall elect a President, a Secretary and a Treasurer, and, in their discretion, may elect a Chairman of the Board, one or more Executive Vice Presidents, Vice Presidents, Assistant Secretaries and Assistant Treasurers as deemed necessary or appropriate. Such officers shall be elected annually by the Board of Directors at its first meeting following the annual meeting of stockholders, and each shall hold office for the term provided by the vote of the Board, except that each will be subject to removal from office in the discretion of the Board as provided herein. The powers and duties of more than one office may be exercised and performed by the same person. SECTION 2. Vacancies. Any vacancy in any office may be filled for the unexpired portion of the term by the Board of Directors, at any regular or special meeting. SECTION 3. Chairman of the Board. The Chairman of the Board of Directors, if elected, shall be a member of the Board of Directors and shall preside at its meetings. He shall advise and counsel with the President, and shall perform such duties as from time to time may be assigned to him by the Board of Directors. SECTION 4. President. The President shall be the chief executive officer of the Corporation. Subject to the directions of the Board of Directors, he shall have and exercise direct charge of and general supervision over the business and affairs of the Corporation and shall perform all duties incident to the office of the chief executive officer of a corporation and such other duties as from time to time may be assigned to him by the Board of Directors. The President may but need not be a member of the Board of Directors. SECTION 5. Executive Vice Presidents and Vice Presidents. Each Executive Vice President and Vice President shall have and exercise such powers and shall perform such duties as from time to time may be assigned to him by the President. SECTION 6. Secretary. The Secretary shall keep the minutes of all meetings of the stockholders and of the Board of Directors in books provided for the purpose; he shall see that all notices are duly given in accordance with the provisions of law and these By-laws; he shall be custodian of the records and of the corporate seal or seals of the Corporation; he shall see -8- that the corporate seal is affixed to all documents the execution of which, on behalf of the Corporation under its seal, is duly authorized, and, when the seal is so affixed, he may attest the same; he may sign, with the President, an Executive Vice President or a Vice President, certificates of stock of the Corporation; and, in general, he shall perform all duties incident to the office of secretary of a corporation, and such other duties as from time to time may be assigned to him by the Board of Directors. SECTION 7. Assistant Secretaries. The Assistant Secretaries in order of their seniority shall, in the absence or disability of the Secretary, perform the duties and exercise the powers of the Secretary and shall perform such other duties as the Board of Directors shall prescribe or as from time to time may be assigned by the Secretary. SECTION 8. Treasurer. The Treasurer shall have charge of and be responsible for all funds, securities, receipts and disbursements of the Corporation, and shall deposit, or cause to be deposited, in the name of the Corporation, all monies or other valuable effects in such banks, trust companies or other depositaries as shall, from time to time, be selected by the Board of Directors; he may endorse for collection on behalf of the Corporation checks, notes and other obligations; he may sign receipts and vouchers for payments made to the Corporation; he may sign checks of the Corporation, singly or jointly with another person as the Board of Directors may authorize, and pay out and dispose of the proceeds under the direction of the Board; he shall render to the President and to the Board of Directors, whenever requested, an account of the financial condition of the Corporation; he may sign, with the President, or an Executive Vice President or a Vice President, certificates of stock of the Corporation; and in general, shall perform all the duties incident to the office of treasurer of a corporation, and such other duties as from time to time may be assigned to him by the Board of Directors. SECTION 9. Assistant Treasurers. The Assistant Treasurers in order of their seniority shall, in the absence or disability of the Treasurer, perform the duties and exercise the powers of the Treasurer and shall perform such other duties as the Board of Directors shall prescribe or as from time to time may be assigned by the Treasurer. SECTION 10. Subordinate Officers. The Board of Directors may appoint such subordinate officers as it may deem desirable. Each such officer shall hold office for such period, have such authority and perform such duties as the Board of Directors may prescribe. The Board of Directors may, from time to time, authorize any officer to appoint and remove subordinate officers and to prescribe the powers and duties thereof. SECTION 11. Compensation. The Board of Directors shall fix the compensation of all officers of the Corporation. It may authorize any officer, upon whom the power of appointing subordinate officers may have been conferred, to fix the compensation of such subordinate officers. SECTION 12. Removal. Any officer of the Corporation may be removed, with or without cause, by action of the Board of Directors. SECTION 13. Bonds. The Board of Directors may require any officer of the Corporation to give a bond to the Corporation, conditional upon the faithful performance of his -9- duties, with one or more sureties and in such amount as may be satisfactory to the Board of Directors. ARTICLE VII Certificates of Stock SECTION 1. Form and Execution of Certificates. The interest of each stockholder of the Corporation shall be evidenced by a certificate or certificates for shares of stock in such form as the Board of Directors may from time to time prescribe. The certificates of stock of each class shall be consecutively numbered and signed by the President, an Executive Vice President or a Vice President and by the Secretary, an Assistant Secretary, the Treasurer or an Assistant Treasurer of the Corporation, and may be countersigned and registered in such manner as the Board of Directors may by resolution prescribe, and shall bear the corporate seal or a printed or engraved facsimile thereof. Where any such certificate is signed by a transfer agent or transfer clerk acting on behalf of the Corporation, the signatures of any such President, Executive Vice President, Vice President, Treasurer, Assistant Treasurer, Secretary or Assistant Secretary may be facsimiles, engraved or printed. In case any officer or officers, who shall have signed, or whose facsimile signature or signatures shall have been used on, any such certificate or certificates, shall cease to be such officer or officers, whether because of death, resignation or otherwise, before such certificate or certificates shall have been delivered by the Corporation, such certificate or certificates may nevertheless be issued and delivered by the Corporation as though the person or persons who signed such certificate or certificates or whose facsimile signature or signatures shall have been used thereon had not ceased to be such officer or officers. In case the corporate seal which has been affixed to, impressed on, or reproduced in any such certificate or certificates shall cease to be the seal of the Corporation before such certificate or certificates have been delivered by the Corporation, such certificate or certificates may nevertheless be issued and delivered by the Corporation as though the seal affixed thereto, impressed thereon or reproduced therein had not ceased to be the seal of the Corporation. Every certificate for shares of stock which are subject to any restriction on transfer pursuant to law, the Certificate of Incorporation, these By-laws, or any agreement to which the Corporation is a party, shall have the restriction noted conspicuously on the certificate, and shall also set forth, on the face or back, either the full text of the restriction or a statement of the existence of such restriction and (except if such restriction is imposed by law) a statement that the Corporation will furnish a copy thereof to the holder of such certificate upon written request and without charge. Every certificate issued when the Corporation is authorized to issue more than one class or series of stock shall set forth on its face or back either the full text of the preferences, voting powers, qualifications, and special and relative rights of the shares of each class and series authorized to be issued, or a statement of the existence of such preferences, powers, qualifications and rights, and a statement that the Corporation will furnish a copy thereof to the holder of such certificate upon written request and without charge. -10- SECTION 2. Transfer of Shares. The shares of the stock of the Corporation shall be transferred on the books of the Corporation by the holder thereof in person or by his attorney lawfully constituted, upon surrender for cancellation of certificates for the same number of shares, with an assignment and power of transfer endorsed thereon or attached thereto, duly executed, with such proof or guaranty of the authenticity of the signature as the Corporation or its agents may reasonably require. The Corporation shall be entitled to treat the holder of record of any share or shares of stock as the holder in fact thereof and accordingly shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person whether or not it shall have express or other notice thereof, save as expressly provided by law or by the Certificate of Incorporation. It shall be the duty of each stockholder to notify the Corporation of his post office address. SECTION 3. Closing of Transfer Books. The stock transfer books of the Corporation may, if deemed appropriate by the Board of Directors, be closed for such length of time not exceeding fifty (50) days as the Board may determine, preceding the date of any meeting of stockholders or the date for the payment of any dividend or the date for the allotment of rights or the date when any issuance, change, conversion or exchange of capital stock shall go into effect, during which time no transfer of stock on the books of the Corporation may be made. SECTION 4. Dates of Record. If deemed appropriate, the Board of Directors may fix in advance a date for such length of time not exceeding sixty (60) days (and, in the case of any meeting of stockholders, not less than ten (10) days) as the Board may determine, preceding the date of any meeting of stockholders, or the date for the payment of any dividend, or the date for the allotment of rights or the date when any issuance, change, conversion or exchange of capital stock shall go into effect, as a record date for the determination of the stockholders entitled to notice of, and to vote at, any such meeting or entitled to receive payment of any such dividend or to any such allotment of rights, or to exercise the rights in respect of any such issuance, change, conversion or exchange of capital stock, as the case may be, and in such case only such stockholders as shall be stockholders of record on the date so fixed shall be entitled to such notice of, and to vote at, such meeting, or to receive payment of such dividend, or to receive such allotment of rights, or to exercise such rights, as the case may be, notwithstanding any transfer of any stock on the books of the Corporation after any record date fixed as aforesaid. If no such record date is so fixed, the record date shall be determined by applicable law. SECTION 5. Lost or Destroyed Certificates. In case of the loss or destruction of any certificate of stock, a new certificate may be issued under the following conditions: (a) The owner of said certificate shall file with the Secretary or any Assistant Secretary of the Corporation an affidavit giving the facts in relation to the ownership, and in relation to the loss or destruction of said certificate, stating its number and the number of shares represented thereby; such affidavit shall be in such form and contain such statements as shall satisfy the President, any Executive Vice President, Vice President, the Secretary, any Assistant Secretary, the Treasurer or any Assistant Treasurer, that said certificate has been accidentally destroyed or lost, and that a new certificate ought to be issued in lieu thereof. Upon being so -11- satisfied, any such officer shall require such owner to furnish the Corporation a bond in such penal sum and in such form as he may deem advisable, and with a surety or sureties approved by him, to indemnify and save harmless the Corporation from any claim, loss, damage or liability which may be occasioned by the issuance of a new certificate in lieu thereof. Upon such bond being so filed, a new certificate for the same number of shares shall be issued to the owner of the certificate so lost or destroyed; and the transfer agent and registrar, if any, of stock shall countersign and register such new certificate upon receipt of a written order signed by any such officer, and thereupon the Corporation will save harmless said transfer agent and registrar in the premises. In case of the surrender of the original certificate, in lieu of which a new certificate has been issued, or the surrender of such new certificate, for cancellation, the bond of indemnity given as a condition of the issue of such new certificate may be surrendered; or (b) The Board of Directors of the Corporation may by resolution authorize and direct any transfer agent or registrar of stock of the Corporation to issue and register respectively from time to time without further action or approval by or on behalf of the Corporation new certificates of stock to replace certificates reported lost, stolen or destroyed upon receipt of an affidavit of loss and bond of indemnity in form and amount and with surety satisfactory to such transfer agent or registrar in each instance or upon such terms and conditions as the Board of Directors may determine. ARTICLE VIII Execution of Documents SECTION 1. Execution of Checks, Notes, etc. All checks and drafts on the Corporation's bank accounts and all bills of exchange and promissory notes, and all acceptances, obligations and other instruments for the payment of money, shall be signed by such officer or officers, or agent or agents, as shall be thereunto authorized from time to time by the Board of Directors, which may in its discretion authorize any such signatures to be facsimile. SECTION 2. Execution of Contracts, Assignments, etc. Unless the Board of Directors shall have otherwise provided generally or in a specific instance, all contracts, agreements, endorsements, assignments, transfers, stock powers, or other instruments shall be signed by the President, any Executive Vice President, any Vice President, the Secretary, any Assistant Secretary, the Treasurer or any Assistant Treasurer. The Board of Directors may, however, in its discretion, require any or all such instruments to be signed by any two or more of such officers, or may permit any or all of such instruments to be signed by such other officer or officers, agent or agents, as it shall thereunto authorize from time to time. SECTION 3. Execution of Proxies. The President, any Executive Vice President or any Vice President, and the Secretary, the Treasurer, any Assistant Secretary or any Assistant Treasurer, or any other officer designated by the Board of Directors, may sign on behalf of the -12- Corporation proxies to vote upon shares of stock of other companies standing in the name of the Corporation. ARTICLE IX Inspection of Books The Board of Directors shall determine from time to time whether, and if allowed, to what extent and at what time and places and under what conditions and regulations, the accounts and books of the Corporation (except such as may by law be specifically open to inspection) or any of them, shall be open to the inspection of the stockholders, and no stockholder shall have any right to inspect any account or book or document of the Corporation, except as conferred by the laws of the State of Delaware, unless and until authorized so to do by resolution of the Board of Directors or of the stockholders of the Corporation. ARTICLE X Fiscal Year The fiscal year of the Corporation shall be determined from time to time by vote of the Board of Directors. ARTICLE XI Amendments These By-laws may be altered, amended, changed or repealed and new By-laws adopted by the stockholders or by the Board of Directors, in either case at any meeting called for that purpose at which a quorum shall be present. Any by-law, whether made, altered, amended, changed or repealed by the stockholders or the Board of Directors may be repealed, amended, changed, further amended, changed, repealed or reinstated, as the case may be either by the stockholders or by the Board of Directors, as herein provided; except that this Article may be altered, amended, changed or repealed only by vote of the stockholders. ARTICLE XII Indemnification SECTION 1. Indemnification. The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that he is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines, and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interest of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of -13- any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interest of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation; except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable for negligence or misconduct in the performance of his duty to the Corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper. To the extent that a director, officer, employee or agent of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in this Section, or in defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith. SECTION 2. Authorization. Any indemnification under Section 1 of this Article (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances because he has met the applicable standard of conduct set forth in Section 1 of this Article. Such determination shall be made: (a) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceedings, or (b) if such a quorum is not obtainable, or, even if obtainable, a quorum of disinterested directors so directs, by independent legal counsel in written opinion, or (c) by the stockholders. SECTION 3. Expense Advance. Expenses incurred in defending a civil or criminal action, suit or proceeding may be paid by the Corporation in advance of the final disposition of such action, suit or proceeding as authorized by the Board of Directors in the manner provided in Section 2 of this Article upon receipt of an undertaking by or on behalf of the director, officer, employee or agent to repay such amount, unless it shall ultimately be determined that he is entitled to be indemnified by the Corporation as authorized in this Article. SECTION 4. Nonexclusivity. The indemnification provided by this Article shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any by- -14- law, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person. SECTION 5. Insurance. The Corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power to indemnify him against such liability under the provisions of this Article. SECTION 6. "The Corporation". For the purposes of this Article, references to "the Corporation" include all constituent corporations absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers and employees or agents as well as the resulting or surviving corporation so that any person who is or was a director, officer, employee or agent of such a constituent corporation or is or was serving at the request of such constituent corporation as director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise shall stand in the same position under the provisions of this Article with respect to such a constituent corporation if its separate existence had continued. EX-3.2H 24 BY-LAWS IRON MTN DATA PROTECTION SVCS BY-LAWS of Iron Mountain Data Protection Services, Inc. ARTICLE I Articles of Organization The name and purposes of the Corporation shall be as set forth in the Articles of Organization. These By-Laws, the powers of the Corporation and of its Directors and stockholders, and all matters concerning the conduct and regulation of the business of the Corporation shall be subject to such provisions in regard thereto, if any, as are set forth in the Articles of Organization; and the Articles of Organization, as from time to time amended, are hereby made a part of these By-Laws. All references in these By-Laws to the Articles of Organization shall be construed to mean the Articles of Organization of the Corporation as from time to time amended. ARTICLE II Annual Meeting of Stockholders The annual meeting of stockholders shall be held on the second Thursday in May of each year at such other hour as may be fixed by vote of the Board of Directors or, if the Board shall not fix such hour, as may be determined by the President and set forth in the notice thereof, unless that day be a legal holiday at the site of the meeting, in which case the meeting shall be held at the same hour on the next succeeding business day at the site of the meeting. Purposes for which an annual meeting is to be held, in addition to those prescribed by law, by the Articles of Organization and by these By-Laws, may be specified by the President, or by a vote of a majority of the Directors then in office, or by one or more stockholders who are entitled to vote and who hold in the aggregate at least ten per cent (10%) of the capital stock entitled to vote at the meeting. If such annual meeting is omitted on the day herein provided therefor, a special meeting of stockholders may be held in place thereof and any business transacted or elections held at such special meeting shall have the same effect as if transacted or held at the annual meeting, and, in such case, all references in these By-Laws, except in this Article II and in Article IV, to the annual meeting of stockholders shall be deemed to refer to such special meeting. Any such special meeting shall be called, and the purposes thereof shall be specified in the notice thereof, as provided in Article III. ARTICLE III Special Meetings of Stockholders A special meeting of stockholders may be called at any time by the President or by a majority of the Directors then in office. A special meeting of stockholders shall be called by the Clerk, or in the case of the death, absence, incapacity or refusal of the Clerk, by any other officer, upon written application of one or more stockholders who hold in the aggregate at least ten percent (10%) of the capital stock entitled to vote at the meeting. Such call shall state the time, place and purpose of the meeting. ARTICLE IV Place of Stockholders' Meetings The annual meeting of stockholders and any special meeting of stockholders, by whomever called, shall be held at the principal office of the Corporation in Massachusetts, or at such other place in Massachusetts or within the continental limits of the United States of America as may be determined by the Board of Directors (or, in the event such meeting shall have been called upon the application of stockholders, by such stockholders) and stated in the notice thereof. Any adjourned session of any annual or special meeting of stockholders shall be held within the continental limits of the United States at such place as is designated in the vote of adjournment. ARTICLE V Notice of Stockholders' Meetings A written notice of each annual or special meeting of stockholders, stating the place, date and hour thereof, and the purpose or purposes for which the meeting is to be held, shall be given at least seven (7) days before the meeting to each stockholder entitled to vote thereat, and to each stockholder who, under the Articles of Organization or these By-Laws, is entitled to such notice, by leaving such notice with him or at his residence, or usual place of business, or by mailing it, postage prepaid, addressed to such stockholder at his address as it appears in the records of the Corporation. Such notice shall be given by the Clerk, by any other officer, or by a person designated either by the Clerk or by the person or persons calling the meeting, or by the Board of Directors. No notice of the time, place or purposes of any annual or special meeting of stockholders shall be required to be given to a stockholder if a written waiver of such notice is executed before or after the meeting by such stockholder, or by his attorney thereunto authorized, and filed with the records of the meeting. ARTICLE VI Quorum of Stockholders At any meeting of stockholders, a quorum for the election of any Director or officer, or for the consideration of any question, shall consist of a majority in interest of all stock issued, outstanding and entitled to vote at such election, or upon such question, respectively; except that if two or more classes of stock are entitled to vote as separate classes upon any question, then, in the case of each such class, a quorum for the consideration of such question shall consist of a majority in interest of all stock of that class issued, outstanding and entitled to vote; and except in any case where a larger quorum is required by law, by the Articles of Organization or by these By-laws. Stock owned by the Corporation, if any, shall not be deemed outstanding for this purpose. In any case, any meeting may be adjourned from time to time by a majority of the votes properly cast upon the question, whether or not a quorum is present, and the meeting may be held as adjourned without further notice. When a quorum is present at any meeting, a plurality of the votes properly cast for any office shall elect to such office, except where a larger vote is required by law, by the Articles of Organization or by these By-Laws, and a majority of the votes properly cast upon any other question (or if two or more classes of stock are entitled to vote as separate classes upon such question, then, in the case of each such class, a majority of the votes of such class properly cast upon the question), except in any case where a larger vote is required by law, by the Articles of Organization or by these By-Laws, shall decide the matter. ARTICLE VII Proxies and Voting Except as may be provided in the Articles of Organization, with respect to two or more classes or series of stock, stockholders entitled to vote shall have one vote for each share of stock entitled to vote owned by them and a proportionate vote for each fractional share. No ballot shall be required for such election unless requested by a stockholder present or represented at the meeting and entitled to vote in the election. The Corporation shall not, directly or indirectly, vote upon any share of its own stock. Stockholders entitled to vote may vote either in person or by proxy in writing dated not more than six (6) months before the meeting named therein, which proxies shall be filed with the Clerk of the meeting, or any adjournment thereof, before being voted. Such proxies shall entitle the holders thereof to vote at any adjournment of such meeting, but shall not be valid after the final adjournment of such meeting. Any action to be taken by stockholders may be taken without a meeting if all stockholders entitled to vote on the matter consent to the action by a writing or writings filed with the records of the meetings of stockholders. Such consent shall be treated for all purposes as a vote at a meeting. The Chairman of the Board, if there be one, or in his absence the President, or in absence of both the Chairman of the Board and the President a vice-president, shall call meetings of the stockholders to order and shall act as chairman thereof. The Clerk of the corporation, if present, shall record the proceedings of all meetings of stockholders and, in his absence, the presiding officer may appoint a clerk pro tempore of the meeting. ARTICLE VIII Board of Directors A Board of not fewer than one, nor more than five, Directors shall be elected annually (by ballot if so requested by any stockholder entitled to vote) at the annual meeting of stockholders by such stockholders as have the right to vote at such election; provided that, at any time when the Corporation shall have two or more stockholders, the Board of Directors shall consist of not fewer than two person, and at any time when the Corporation has three or more stockholders, the Board of Directors shall consist of not fewer than three persons. The number of Directors for each corporate year shall initially be fixed by vote at the meeting at which they are elected. Any action which may by law, the Articles of Organization or these By-Laws be taken by a majority of the Board of Directors then in office may be taken by the sole Director when and if the Corporation has only one Director. At any time during any year the number of the Board of Directors may be increased by vote of a majority of the Directors then in office. At any time during any year, the whole number of Directors may be increased or reduced by the stockholders at a meeting called for the purpose and, in the case of a reduction, the particular directorships which shall terminate shall be determined by the stockholders, in each case by vote of a majority of the stock outstanding and entitled to vote for the election of Directors, or, in the case of a reduction which involves the termination of the directorship of an incumbent Director, by such larger vote, if any, as would be required to remove such incumbent from office. Each newly-created directorship resulting from any increase in the number of Directors may be filled in the manner provided in Article XIX. No Director need be a stockholder except as may be otherwise provided by law, by the Articles of Organization or these By-laws. Each Director shall hold office until the next annual meeting of stockholders and until his successor is elected and qualified, or until he sooner dies, resigns or is removed. ARTICLE IX Powers of Directors The business, property and affairs of the Corporation shall be managed by, and be under the control and direction of, the Board of Directors, which shall have and may exercise all the powers of the Corporation except such as are conferred upon the stockholders or other officers by law, by the Articles of Organization or by these By-Laws. Except as may be otherwise specifically provided by law or by vote of the stockholders, the Board of Directors is expressly authorized to issue, from time to time, all or any portion or portions of the capital stock of the Corporation of any class which may have been authorized but not issued or otherwise reserved for issue, to such person or persons and for such consideration (but not less than the par value thereof in case of stock having par value), whether cash, tangible or intangible property, good will, services or expenses, as they may deem best, without first offering (for subscription or sale) such authorized but unissued stock to any present or future stockholders of the Corporation, and generally in their absolute discretion to determine the terms and manner of any disposition of such authorized but unissued stock. The Board of Directors may delegate from time to time to any committee, officer or agent such powers and authority as the law, the Articles of Organization and these By-Laws may permit. The Board of Directors in its discretion may appoint and remove and determine the compensation and duties in addition to those fixed by law, the Articles of Organization and these By-Laws, of all the officers, representatives, agents, employees, and servants of the Corporation. The Board of Directors shall have power to fix a reasonable compensation or fee for the attendance of their members at meetings of the Board. The Board of Directors shall have the power, from time to time, to fix and determine and to vary the amount of working capital of the Corporation and to direct and determine the use and disposition of any surplus or net profits of the Corporation over and above the amount contributed as, or constituting, paid-in capital. The Board of Directors, in its discretion, shall, from time to time, declare what, if any, dividends shall be paid on the stock of the Corporation out of the remaining surplus or net profits, and any dividend so declared shall be payable at such time or times as the Board shall determine. ARTICLE X Committees of Directors The Board of Directors, by vote of a majority of the Directors then in office, may at any time elect from its own number an executive committee and/or one or more other committees, to consist of not fewer than three members, and may from time to time designate or alter, within the limits permitted by this Article X, the duties and powers of such committees or change their membership, and may at any time abolish such committees or any of them. Any committee shall be vested with such powers of the Board of Directors as the Board may determine in the vote establishing such committee or in a subsequent vote of a majority of directors then in office, provided, however, that no such committee shall have any power prohibited by law, or the Articles of Organization, or the power (a) to change the principal office of the Corporation; (b) to amend or authorize the amendment of the Articles of Organization or these By-Laws; (c) to issue stock; (d) to establish and designate series of stock, or fix and determine the relative rights and preferences of any series of stock; (e) to elect officers required by law, the Articles of Organization or these By-Laws to be elected by stockholders or Directors, or to fill vacancies in any such office; (f) to change the number of the Board of Directors or to fill vacancies in the Board of Directors; (g) to remove officers or Directors from office; (h) to authorize the payment of any dividend or distribution to stockholders; (i) to authorize the reacquisition for value of stock of the Corporation; (j) to authorize a merger or consolidation of the Corporation or a sale or other disposition of all or substantially all the property and business of the Corporation; or (k) to authorize the liquidation or dissolution of the Corporation; and provided further, that the fact that a particular power appears in the foregoing enumeration of powers denied to committees of the Board of Directors shall not be construed to over-ride by implication any other provision of the Articles of Organization or these By-Laws limiting or denying to the Board of Directors the right to exercise such power. Each member of a committee shall hold office until the first meeting of the Board of Directors following the next annual meeting of stockholders (or until such other time as the Board of Directors may determine, either in the vote establishing the committee or at the election of such member) and until his successor is elected and qualified, or until he sooner dies, resigns, is removed, is replaced by change of membership or becomes disqualified by ceasing to be a Director, or until the committee is sooner abolished by the Board of Directors. A majority of the members of any committee then in office, but not fewer than two, shall constitute a quorum for the transaction of business, but any meeting may be adjourned from time to time by a majority of the votes cast upon the question, whether or not a quorum is present, and the meeting may be held as adjourned without further notice. Each committee may make rules not inconsistent herewith for the holding and conduct of its meetings, but unless otherwise provided in such rules its meetings shall be held and conducted in the same manner, as nearly as may be, as is provided in these By-Laws for meetings of the Board of Directors. The Board of Directors shall have the power to rescind any vote or resolution of any committee; provided, however, that no rights of third parties shall be impaired by such rescission. ARTICLE XI Meetings of the Board of Directors; Action without a Meeting Regular meetings of the Board of Directors may be held without call or notice at such places and at such times as the Board may from time to time determine; provided, however, that reasonable notice of such determination and of any changes therein is given to each member of the Board then in office. A regular meeting of the Board of Directors for the purpose of electing officers and agents may be held without call or notice immediately after and at the same place as the annual meeting of stockholders, and, if held upon due call or notice, for such other and further purposes as may be specified in such call or notice. Special meetings of the Board of Directors may be held at any time and at any place when called by the President, the Treasurer, the Chairman of the Board, if there be one, or two or more Directors, reasonable notice thereof being given to each Director by the Secretary, or, if there be no Secretary, by the Clerk, or, in the case of death, absence, incapacity or refusal of the Secretary (or the Clerk, as the case may be), by the officer or Directors calling the meeting. In any case, it shall be deemed sufficient notice to a Director to send notice by mail at least forty-eight (48) hours, or by telegram at least twenty-four (24) hours, before the meeting, addressed to him at his usual or last known business or residence address; or to give notice to him in person, either by telephone or by handing him a written notice, at least twenty-four (24) hours before the meeting. Notwithstanding the foregoing, notice of a meeting need not be given to any Director if a written waiver of notice, executed by him before or after the meeting, is filed with the records of the meeting, or to any Director who attends the meeting without protesting prior thereto, or at its commencement, the lack of notice to him. Any action required or permitted to be taken at any meeting of the Directors may be taken without a meeting if a written consent thereto is signed by all the Directors and such written consent is filed with the records of the meetings of the Directors. Such consent shall be treated as a vote at a meeting for all purposes. Such consents may be executed in one or more counterparts and not every Director need sign the same counterpart. ARTICLE XII Quorum of Directors At any meeting of the Board of Directors, a quorum for any election, or for the consideration of any question, shall consist of a majority of the Directors then in office, but any meeting may be adjourned from time to time by a majority of the votes cast upon the question, whether or not a quorum is present, and the meeting may be held as adjourned without further notice. When a quorum is present at any meeting, the votes of a majority of the Directors present shall be requisite and sufficient for election to any office, and a majority of the Directors present shall decide any question brought before such meeting except in any case where a larger vote is required by law, by the Articles of Organization or by these By-Laws. ARTICLE XIII Officers and Agents The officers of the Corporation shall be a President, a Treasurer, a Clerk, and such other officers, which may include a Chairman of the Board, a Secretary, a Controller, one or more Vice Presidents, Assistant Treasurers, Assistant Clerks, or Assistant Controllers, as the Board of Directors may, in its discretion, elect or appoint. The Corporation may also have such agents, if any, as the Board of Directors may, in its discretion, appoint. The President need not be a Director. The Clerk shall be a resident of Massachusetts unless the Corporation has a resident agent appointed for the purpose of receiving service of process. So far as is permitted by law, any two or more offices may be held by the same person. Subject to law, to the Articles of Organization and the other provisions of these By-Laws, each officer shall have, in addition to the duties and powers herein set forth, such duties and powers as are commonly incident to his office and as the Board of Directors may from time to time designate. The President, Treasurer, and Clerk (and the Secretary and Chairman of the Board, if, as the case may be, there be one) shall be elected annually by the Board of Directors at its first meeting following the annual meeting of stockholders, by vote of a majority of the full Board of Directors. Such other officers of the Corporation as may be created in accordance with these By-laws may be filled at such meeting by vote of a majority of the full Board of Directors or any other time by vote of a majority of the Directors then in office. Each officer shall (subject to Article XVIII of these By-laws) hold office until the first meeting of the Board of Directors following the next annual meeting of stockholders and until his successor is elected or appointed and qualified, or until he sooner dies, resigns, is removed, or becomes disqualified. Each agent shall retain his authority at the pleasure of the Board of Directors. Any officer, employee, or agent of the Corporation may be required, as and if determined by the Board of Directors, to give bond for the faithful performance of his duties. ARTICLE XIV President and Vice Presidents; Chairman of the Board The President shall be the chief executive officer of the Corporation and shall have general charge and supervision of the business, property and affairs of the Corporation and such other powers and duties as the Board of Directors may prescribe, subject to the control of the Board of Directors, unless otherwise provided by law, the Articles of Organization, these By-Laws or by specific vote of the Board of Directors. Unless a Chairman of the Board shall have been elected, the President shall preside at all meetings of stockholders and of the Board of Directors at which he is present except as otherwise voted by the Board of Directors. Any Vice President shall have such duties and powers as shall be designated from time to time by the Board of Directors or by the President, and, in any case, shall be responsible to and shall report to the President. In the absence or disability of the President, the Vice President or, if there be more than one, the Vice Presidents in the order of their seniority or as otherwise designated by the Board of Directors, shall have the powers and duties of the President. The Chairman of the Board, if there be one, shall be a member of the Board of Directors and shall preside at its meetings and at the meetings of the stockholders. He shall keep himself informed of the administration of the affairs of the Corporation, shall advise and counsel with the President, and, in the President's absence, with other officers of the Corporation, and shall perform such other duties as may from time to time be assigned to him by the Board of Directors. ARTICLE XV Treasurer and Assistant Treasurer The Treasurer shall be the chief financial officer of the Corporation and shall be in charge of its funds and the disbursements thereof, subject to the President and the Board of Directors, and shall have such duties and powers as are commonly incident to the office of a corporate treasurer and such other duties and powers as may be prescribed from time to time by the Board of Directors or by the President. If no Controller is elected, the Treasurer shall also have the duties and powers of the Controller as provided in these By-Laws. The Treasurer shall be responsible to and shall report to the Board of Directors, but in the ordinary conduct of the Corporation's business, shall be under supervision of the President. Any Assistant Treasurer shall have such duties and powers as shall be prescribed from time to time by the Board of Directors or by the Treasurer, and shall be responsible to and shall report to the Treasurer. In the absence or disability of the Treasurer, the Assistant Treasurer or, if there be more than one, the Assistant Treasurers in their order of seniority or as otherwise designated by the Board of Directors shall have the powers and duties of the Treasurer. ARTICLE XVI Controller If a Controller is elected, he shall be the chief accounting officer of the Corporation and shall be in charge of its books of account and accounting records and of its accounting procedures, and shall have such duties and powers as are commonly incident to the office of a corporate controller and such other duties and powers as may be prescribed from time to time by the Board of Directors or by the President. The Controller shall be responsible to and shall report to the Board of Directors, but in the ordinary conduct of the Corporation's business, shall be under the supervision of the President. Any Assistant Controller shall have duties and powers as shall be prescribed from time to time by the Board of Directors or by the Controller, and shall be responsible to and shall report to the Controller. If the absence or disability of the Controller, the Assistant Controller or, if there be more than one, Assistant Controllers in their order of seniority or as otherwise designated by the Board of Directors, shall have the powers and duties of the Controller. ARTICLE XVII Clerk; Secretary; Assistant Clerk and Assistant Secretary The Clerk shall record all proceedings of the stockholders in books to be kept therefor, and shall have custody of the Corporation's records, documents and valuable papers. In the absence of the Clerk from any such meeting, the Secretary, if any, may act as temporary clerk, and shall record the proceedings thereof in the aforesaid books, or a temporary clerk may be chosen by vote of the meeting. The Clerk shall also keep, or cause to be kept, the stock transfer records of the Corporation which shall contain a complete list of the names and addresses of all stockholders and the amount of stock held by each. Unless the Board of Directors shall otherwise designate, the Clerk or, in his absence, the Assistant Clerk, if any, shall have custody of the corporate seal and be responsible for affixing it to such documents as may be required to be sealed. The Clerk shall have such other duties and powers as are commonly incident to the office of a corporate clerk, and such other duties and powers as may be prescribed from time to time by the Board of Directors or by the President. If no Secretary is elected, the Clerk shall also record all proceedings of the Board of Directors and of any meetings of any committees of the Board, and, in his absence from any such meeting, a temporary clerk shall be chosen who shall record the proceedings thereof. The Secretary shall attend all meetings of the Board of Directors and shall record the proceedings thereat in books provided for that purpose which shall be open during business hours to the inspection of any Director. He shall notify the Directors of the meetings in accordance with these By-Laws and shall have and may exercise such other powers and duties as the Board of Directors may prescribe. In the absence of the Secretary at a meeting of the Board of Directors, a temporary secretary shall be chosen. Any Assistant Clerk and any Assistant Secretary shall have such duties and powers as shall from time to time be designated by the Board of Directors or the Clerk or the Secretary, respectively, and shall be responsible to and shall report to the Clerk and the Secretary, respectively. ARTICLE XVIII Resignations and Removals Any Director or officer may resign at any time by delivering his resignation in writing to the President, the Clerk or the Secretary, or to a meeting of the Board of Directors. The stockholders may, by vote of a majority in interest of the stock issued and outstanding and entitled to vote at an election of Directors, remove any Director or Directors from office with or without cause; provided, however, that the Directors of a class elected by a particular class of stockholders may be removed only by the vote of the holders of a majority of the shares of such class. The Board of Directors may, by vote of the majority of the Directors in office, remove any Director from office with cause, or remove any officer from office, with or without cause. The Board of Directors may, at any time, by vote of a majority of the Directors present and voting, terminate or modify the authority of any agent. No Director or officer resigning and (except where a right to receive compensation for a definite future period shall be expressly provided in a written agreement with the Corporation, duly approved by the Board of Directors) no Director or officer removed shall have any right to any compensation as such Director or officer for any period following his resignation or removal, or any right to damages on account of such removal, whether his compensation be by the month, by the year or otherwise. Any Director or officer may be removed for cause only after reasonable notice and opportunity to be heard before the body proposing to remove him. ARTICLE XIX Vacancies Any vacancy in the Board of Directors, however occurring, including a vacancy resulting from the enlargement of the Board, and any vacancy in any other office, may be filled by the stockholders or, in the absence of stockholder action, by a majority of the Directors then in office. If the office of any member of any committee or of any other office becomes vacant, the Board of Directors may elect or appoint a successor or successors by vote of a majority of the Directors then in office. Each successor as a Director or officer shall hold office for the unexpired term and until his successor shall be elected or appointed and qualified, or until he sooner dies, resigns, is removed or becomes disqualified. The Board of Directors shall have and may exercise all its powers, notwithstanding the existence of one or more vacancies in its number as fixed by either the stockholders or the Directors. ARTICLE XX Capital Stock The authorized amount of the capital stock and the par value, if any, of the shares shall be as fixed in the Articles of Organization. At all times when there are two or more classes of stock, the several classes of stock shall conform to the description and terms, and have the respective preferences, voting powers, restrictions and qualifications set forth in the Articles of Organization. ARTICLE XXI Certificate of Stock Each stockholder shall be entitled to a certificate of the capital stock of the Corporation owned by him, in such form as shall, in conformity to law, be prescribed from time to time by the Board of Directors. Such certificate shall be signed by either the President or a Vice President, and by either the Treasurer or an Assistant Treasurer, and may, but need not be, sealed with the corporate seal; but when any such certificate is signed by a transfer agent or by a registrar other than a Director, officer, or employee of the Corporation, the signature of the President or a Vice President and of the Treasurer or an Assistant Treasurer of the Corporation, or either or both such signatures and such seal upon such certificate, may be facsimile. If any officer who has signed, or whose facsimile signature has been placed on, any such certificate shall have ceased to be such officer before such certificate is issued, the certificate may be issued by the Corporation with the same effect as if he were such officer at the time of issue. Every certificate for shares of stock which are subject to any restriction on transfer pursuant to law, the Articles of Organization, these By-Laws, or any agreement to which the Corporation is a party, shall have the restriction noted conspicuously on the certificate, and shall also set forth, on the face or back, either the full text of the restriction or a statement of the existence of such restriction and (except if such restriction is imposed by law) a statement that the Corporation will furnish a copy thereof to the holder of such certificate upon written request and without charge. Every certificate issued when the Corporation is authorized to issue more than one class or series of stock shall set forth on its face or back either the full text of the preferences, voting powers, qualifications, and special and relative rights of the shares of each class and series authorized to be issued, or a statement of the existence of such preferences, powers, qualifications and rights, and a statement that the Corporation will furnish a copy thereof to the holder of such certificate upon written request and without charge. ARTICLE XXII Transfer of Shares of Stock Subject to the restrictions, if any, stated or noted on the stock certificates, shares of stock may be transferred on the books of the Corporation only by surrender to the Corporation, or its transfer agent, of the certificate therefor, properly endorsed or accompanied by a written assignment or power of attorney properly executed, with all requisite stock transfer stamps affixed, and with such proof of the authenticity and effectiveness of the signature as the Corporation or its transfer agent shall reasonably require. Except as may be otherwise required by law, the Articles of Organization or these By-Laws, the Corporation shall have the right to treat the person registered on the stock transfer books as the owner of any shares of the Corporation's stock as the owner-in-fact thereof for all purposes, including the payment of dividends, liability for assessments, the right to vote with respect thereto and otherwise, and accordingly shall not be bound to recognize any attempted transfer, pledge or other disposition thereof, or any equitable or other claim with respect thereto, whether or not it shall have actual or other notice thereof, until such shares shall have been transferred on the Corporation's books in accordance with these By-Laws. It shall be the duty of each stockholder to notify the Corporation of his post office address. ARTICLE XXIII Transfer Agents and Registrars; Further Regulations The Board of Directors may appoint one or more banks, trust companies or corporations doing a corporate trust business, in good standing under the laws of the United States or any state therein, to act as the Corporation's transfer agent and/or registrar for shares of capital stock, and the Board may make such other and further regulations, not inconsistent with applicable law, as it may deem expedient concerning the issue, transfer and registration of capital stock and stock certificates of the Corporation. ARTICLE XXIV Loss of Certificates In the case of the alleged loss, destruction, or wrongful taking of a certificate of stock, a duplicate certificate may be issued in place thereof upon receipt by the Corporation of such evidence of loss and such indemnity bond, with or without surety, as shall be satisfactory to the President and the Treasurer, or otherwise upon such terms, consistent with law, as the Board of Directors may prescribe. ARTICLE XXV Record Date The Directors may fix in advance a time, which shall not be more than sixty days before the date of any meeting of stockholders or the date for the payment of any dividend or the making of any distribution to stockholders, or the last day on which the consent or dissent of stockholders may be effectively expressed for any purpose, as the record date for determining the stockholders having the right to notice of and to vote at, such meeting and any adjournment thereof, or the right to receive such dividend or distribution, or the right to give such consent or dissent, and in such case, only stockholders of record on such record date shall have such right, notwithstanding any transfer of stock on the books of the Corporation after the record date; or, without fixing such record date, the Directors may, for any such purposes, close the transfer books for all or any part of such period. ARTICLE XXVI Seal The seal of the Corporation shall, subject to alteration by the Board of Directors, consist of a flat-faced circular die with the word "Massachusetts", together with the name of the Corporation and the year of incorporation, cut or engraved thereon. An impression of the seal impressed upon the original copy of these By-Laws shall be deemed conclusively to be the seal adopted by the Board of Directors. ARTICLE XXVII Execution of Papers Except as the Board of Directors may generally or in particular cases otherwise authorize or direct, all deeds, leases, transfers, contracts, proposals, bonds, notes, checks, drafts and other obligations made, accepted or endorsed by the Corporation shall be signed or endorsed on behalf of the Corporation by its President or by one of its Vice Presidents or by its Treasurer. ARTICLE XXVIII Fiscal Year Except as from time to time provided by the Board of Directors, the fiscal year of the Corporation shall end on the December 31 of each year. ARTICLE XXIX Voting Stock in Other Corporations Unless otherwise ordered by the Board of Directors, the President or, in the case of his absence or failure to act, the Treasurer, shall have full power and authority on behalf of the Corporation to attend and to act and to vote at any meetings of stockholders of any corporation in which this Corporation may hold stock, and at any such meeting shall possess and may exercise any and all rights and powers incident to the ownership of such stock and which, as the owner thereof, the Corporation might have possessed and exercised if present. The Board of Directors, by resolution from time to time, or, in the absence thereof, the President, may confer like powers upon any other person or persons as attorneys and proxies of the Corporation. ARTICLE XXX Corporate Records The original or attested copies of the Articles of Organization, By-Laws, and records of all meetings of the incorporators and stockholders, and the stock and transfer records which shall contain the names of all stockholders and the record address and the amount of stock held by each, shall be kept in Massachusetts either at the principal office of the Corporation or at an office of its transfer agent or of the Clerk. Said copies and records need not all be kept in the same office. They shall be available at all reasonable times for inspection by any stockholder for any proper purpose, but not to secure a list of the stockholders for the purpose of selling said list, or copies thereof, or of using the same for a purpose other than in the present interest of the applicant, as a stockholder, relative to the affairs of the Corporation. ARTICLE XXXI Amendments These By-Laws may be altered, amended or repealed, in whole or in part at any time by vote of the stockholders. The Board of Directors, by a majority vote of Directors at the time in office, may alter, amend or repeal these By-Laws in whole or in part, except with respect to any provision hereof which by law, the Articles of Organization or these By-Laws requires action by the stockholders; provided that not later than the time of giving notice of the meeting of stockholders next following the alteration, amendment or repeal of these By-Laws, in whole or in part, notice thereof, stating the substance of such action shall be given to all stockholders entitled to vote on amending these By-Laws. By-Laws adopted by the Directors may be amended by the stockholders. EX-3.2I 25 BY-LAWS IRON MTN RECORDS MGMT MARYLAND BYLAWS OF IRON MOUNTAIN RECORDS MANAGEMENT OF MARYLAND, INC. (a Maryland corporation) ARTICLE 1 STOCKHOLDERS 1. CERTIFICATES REPRESENTING STOCK. Certificates representing shares of stock shall set forth thereon the statements prescribed by Sections 2-207 and 2-211 of the Maryland General Corporation Law and by any other applicable provision of law and shall be signed by the President or the Chairman of the Board, if any, or a Vice-President and countersigned by the Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer and may be sealed with the corporate seal or a facsimile of it or in any other form. The signatures of any such officers may be either manual or facsimile signatures. In case any such officer who has signed manually or by facsimile any such certificate ceases to be such officer before the certificate is issued, it may nevertheless be issued by the corporation with the same effect as if the officer had not ceased to be such officer as of the date of its issue. No certificate representing shares of stock shall be issued for any share of stock until such share is fully paid, except as otherwise authorized by the provisions of Section 2-210 of the Maryland General Corporation Law. The corporation may issue a new certificate of stock in place of any certificate theretofore issued by it, alleged to have been lost, stolen, or destroyed, and the Board of Directors may, in its discretion, require the owner of any such certificate to give bond, with sufficient surety, to the corporation to indemnify it against any loss or claim that may arise by reason of the issuance of a new certificate. Upon compliance with the provisions of Section 2-514 of the Maryland General Corporation Law, the Board of Directors of the corporation may adopt by resolution a procedure by which a stockholder of the corporation may certify in writing to the corporation that any shares registered in the name of the stockholder are held for the account of a specified person other than the stockholder. 2. FRACTIONAL SHARE INTERESTS OR SCRIP. The corporation may, but shall not be obliged to, issue fractional shares of stock, eliminate a fractional interest by rounding off to a full share of stock, arrange for the disposition of a fractional interest by the person entitled to it, pay cash for the fair value of a fractional share of stock determined as of the time when the person entitled to receive it is determined, or issue scrip or other evidence of ownership, and which shall entitle its holder to exchange such scrip or other evidence of ownership aggregating a full share for a certificate which represents the share, but such scrip or other evidence of ownership shall not, unless otherwise provided, entitle the holder to exercise any voting right, or to receive dividends thereon or to participate in any of the assets of the corporation in the event of liquidation. The Board of Directors may impose any reasonable condition on the issuance of scrip or other evidence of ownership, and may cause such scrip or evidence of ownership to be issued subject to the condition that it shall become void if not exchanged for a certificate representing a full share of stock before a specified date or subject to the condition that the shares for which such scrip or evidence of ownership is exchangeable may be sold by the corporation and the proceeds thereof distributed to the holders of such scrip or evidence of ownership, or subject to a provision for forfeiture of such proceeds to the corporation if not claimed within a period of not less than three years from the date the scrip or other evidence of ownership was originally issued. 3. SHARE TRANSFERS. Upon compliance with provisions restricting the transferability of shares of stock, if any, transfers of shares of stock of the corporation shall be made only on the stock transfer books of the corporation by the record holder thereof, or by his attorney thereunto authorized by power of attorney duly executed and filed with the Secretary of the corporation or with a transfer agent or a registrar, if any, and on surrender of the certificate or certificates for such shares of stock properly endorsed and the payment of all taxes due thereon, if any. 4. RECORD DATE FOR STOCKHOLDERS. The Board of Directors may set a record date or direct that the stock transfer books be closed for a stated period for the purpose of making any proper determination with respect to stockholders, including which stockholders are entitled to notice of a meeting, to vote at a meeting, to receive a dividend, or to be allotted other rights; provided, that, except as may be otherwise provided herein, any such record date shall be not more than ninety days before the date on which the action requiring the determination will be taken, that any such closing of the transfer books may not be for a period longer than twenty days, and that, in the case of a meeting of stockholders, any such record date or any such closing of the transfer books shall be at least ten days before the date of the meeting. If a record date is not set, and, if the stock transfer books are not closed, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be the later of either the close of business on the day on which notice of the meeting is mailed or the thirtieth day before the meeting, and the record date for determining stockholders entitled to receive payment of a dividend or an allotment of any rights shall be the close of business on the day on which the resolution of the Board of Directors declaring the dividend or allotment of rights is adopted, but any such payment of a dividend or allotment of rights shall not be made more than sixty days after the date on which the resolution is adopted; and a meeting of stockholders convened on the date for which it was called may be adjourned from time to time without further notice to a date not more than one hundred and twenty days after the original record date. 5. MEANING OF CERTAIN TERMS. As used herein in respect of the right to notice of a meeting of stockholders or a waiver thereof or to participate or vote thereat or to consent or dissent in writing in lieu of a meeting, as the case may be, the term "share of stock" or "shares of stock" or "stockholder" or "stockholders" refers to an outstanding share or shares of stock and to a holder or holders of record of outstanding shares of stock when the corporation is authorized to issue only one class of shares of stock, and said reference is also intended to include any outstanding share or shares of stock and any holder or holders of record of 2 outstanding shares of stock of any class or series upon which or upon whom the Articles of Incorporation confer such rights where there are two or more classes or series of shares or upon which or upon whom the provisions of the Maryland General Corporation Law may confer such rights or the right of dissent notwithstanding that &e Articles of Incorporation may provide for more than one class or series of shares of stock, one or more of which are limited or denied such rights thereunder. 6. STOCKHOLDER MEETINGS. - TIME. The annual meeting of stockholders shall be held on the date fixed, from time to time, by the directors, within the thirty day period commencing with the day of , for the election of directors and the transaction of any business within the powers of the corporation. A special meeting shall be held on the date fixed by the directors - PLACE. Annual meetings and special meetings shall be held at such place, either within the State of Maryland or at such other place within the United States, as the directors may, from time to time, set. Whenever the directors shall fail to set such place, or, whenever stockholders entitled to call a special meeting shall call the same, and a place of meeting is not set, the meeting shall be held at the principal office of the corporation in the State of Maryland. - CALL. Annual meetings may be called by the directors or the President or by any officer instructed by the directors or the President to call the meeting. Except as may be otherwise provided by the provisions of the Maryland General Corporation Law, special meetings may be called in like manner and shall be called by the Secretary whenever the holders of shares entitled to at least twenty-five per cent of all the votes entitled to be cast at such meeting shall make a duly authorized request that such meeting be called. - NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER OF NOTICE. Written notice of all meetings shall be given by the Secretary and shall state the time and place of the meeting. The notice of an annual meeting shall state that the meeting is called for the election of directors and for the transaction of other business which may properly come before the meeting, and shall (if any other action which could be taken at a special meeting is to be taken at such annual meeting) contain any additional statements required in a notice of a special meeting, and shall include a copy of any requisite statements or provisions prescribed by the provisions of the Maryland General Corporation Law; provided, however, that any business of the corporation may be transacted at any annual meeting without being specially noticed unless the provisions of the Maryland General Corporation Law provide otherwise. The notice of a special meeting shall in all instances state the purpose or purposes for which the meeting is called and shall include a copy of any requisite statements or provisions prescribed by the provisions of the Maryland General Corporation Law. Written notice of any meeting shall be given to each stockholder either by mail or personally delivered to him or by leaving it at his residence or usual place of business not less than ten days and not more than ninety days before the date of the meeting. unless any provisions of the Maryland General Corporation Law shall prescribe a different elapsed period of time. to each stockholder at his address appearing on the books of the corporation or the address supplied by him for the purpose of notice. If mailed, notice shall be deemed to be given when deposited in the United States mail addressed to the stockholder at his 3 address as it appears on the records of the corporation with postage thereon prepaid. Whenever any notice of the time, place or purpose of any meeting of stockholders is required to be given under the provisions of the Articles of Incorporation, these Bylaws or of the provisions of the Maryland General Corporation Law, a waiver thereof in writing, signed by the stockholder and filed with the records of the meeting, whether before or after the holding thereof, or his presence in person or by proxy at the meeting shall be deemed equivalent to the giving of such notice to such stockholder. The foregoing requirements of notice shall also apply, whenever the corporation shall have any class of stock which is not entitled to vote, to holders of stock who are not entitled to vote at the meeting, but who are entitled to notice thereof and to dissent from any action taken thereat. - STATEMENT OF AFFAIRS. The President of the corporation, or, if the Board of Directors shall determine otherwise, some other executive officer thereof, shall prepare or cause to be prepared annually a full and correct statement of the affairs of the corporation, including a balance sheet and a financial statement of operations for the preceding fiscal year, which shall be submitted at the Annual Meeting and placed on file within twenty days thereafter at the principal office of the corporation in the State of Maryland. - CONDUCT OF MEETINGS. Meetings of the stockholders shall be presided over by one of the following officers in the order of seniority and if present and acting - the Chairman of the Board, if any, the Vice-Chairman of the Board, if any, the President, a Vice-President, or, if none of the foregoing is in office and present and acting, by a chairman to be chosen by the shareholders. The Secretary of the corporation, or in his absence, an Assistant Secretary, shall act as secretary of every meeting, but if neither the Secretary nor an Assistant Secretary is present the Chairman of the meeting shall appoint a secretary of the meeting. - PROXY REPRESENTATION. Every stockholder may authorize another person or persons to act for him by proxy in all matters in which a stockholder is entitled to participate, whether for the purposes of determining his presence at a meeting, or whether by waiving notice of any meeting, voting or participating at a meeting, or expressing consent or dissent without a meeting, or otherwise. The authorization shall be effected as prescribed by the provisions of Section 2-507 of the Maryland General Corporation Law. - INSPECTORS OF ELECTION. The directors, in advance of any meeting, may, but need not, appoint one or more inspectors to act at the meeting or any adjournment thereof. If an inspector or inspectors are not appointed. the person presiding at the meeting may, but need not, appoint one or more inspectors. In case any person who may be appointed as an inspector fails to appear or act, the vacancy may be filled by appointment made by the directors in advance of the meeting or at the meeting by the person presiding thereat. Each inspector, if any, before entering upon the discharge of his duties, shall take and sign an oath faithfully to execute the duties of inspector at such meeting with strict impartiality and according to the best of his ability. The inspectors, if any, shall determine the number of shares outstanding and the voting power of each, the shares represented at the meeting, the existence of a quorum, the validity and effect of proxies, and shall receive voles, ballots or consents, hear and determine all challenges and questions arising in connection with the right to vote, count and tabulate all votes, ballots or consents, determine the result, and do such acts as are proper to conduct the election or vote with fairness to all stockholders. On request of the person presiding at the meeting or any stockholder, 4 the inspector or inspectors, if any, shall make a report in writing of any challenge, question or matter determined by him or them and execute a certificate of any fact found by him or them. - QUORUM. Except as may otherwise be required by the provisions of the Maryland General Corporation Law, the Articles of Incorporation, or these Bylaws, the presence in person or by proxy at a meeting of the stockholders entitled to cast at least a majority of the votes entitled to be cast at the meeting shall constitute a quorum. - VOTING. Each share of stock shall entitle the holder thereof to one vote except in the election of directors, at which each said vote may be cast for as many persons as there are directors to be elected. Except as may otherwise be provided in the provisions of the Maryland General Corporation Law. The Articles of Incorporation or these Bylaws, a majority of all the votes cast at a meeting of stockholders at which a quorum is present shall be sufficient to approve any matter which may properly come before the meeting. A plurality of all the votes cast at a meeting of stockholders at which a quorum is present is sufficient to elect a director. 7. INFORMAL ACTION. Any action required or permitted to be taken at any meeting of stockholders may be taken without a meeting if the following are filed with the records of the meeting: an unanimous written consent which sets forth the action and is signed by each stockholder entitled to vote on the matter, and, as applicable, a written waiver of any right to dissent signed by each stockholder entitled to notice of the meeting but not entitled to vote at it. ARTICLE 2 BOARD OF DIRECTORS 1. FUNCTIONS AND DEFINITION. The business and the affairs of the corporation shall be managed by or under the direction of its Board of Directors. All powers of the corporation may be exercised by or under authority of said Board of Directors. The use of the phrase "entire board" herein refers to the total number of directors which the corporation would have if there were no vacancies. 2. QUALIFICATIONS AND NUMBER. Each director shall be a natural person of full age. A director need not be a stockholder. a citizen of the United States, or a resident of the State of Maryland. The initial Board of Directors shall consist of persons, which is the number set forth in the Articles of Incorporation. Thereafter the number of directors constituting the entire board shall be at least three, except that when the number of stockholders is fewer than three, the number of directors may be the same as the number of said stockholders. Except for the first Board of Directors, such number may be set from time to time by action of the stockholders or of a majority of the entire Board of Directors or, if the number is not so set, the number shall be . The number of directors may be increased or decreased by an amendment to these Bylaws, provided, however, that the tenure of office of a director shall not be affected by any decrease in the number of directors. 3. ELECTION AND TERM. The first Board of Directors shall consist of the directors named in the Articles of Incorporation and shall hold office until the first annual 5 meeting of stockholders or until their successors have been elected and qualified. Thereafter, directors who are elected at an annual meeting of stockholders, and directors who are elected in the interim to fill vacancies and newly created directorships, shall hold office until the next annual meeting of stockholders and until their successors have been elected and qualified. In the interim between annual meetings of stockholders or of special meetings of stockholders called for the election of directors newly created directorships and any vacancies in the Board of Directors, including vacancies resulting from the removal of directors by the stockholders which have not been filled by said stockholders, may be filled by the Board of Directors. Newly created directorships filled by the Board of Directors shall be by action of a majority of the entire Board of Directors. All other vacancies to be filled by the Board of Directors may be filled by a majority of the remaining members of the Board of Directors, whether or not sufficient to constitute a quorum. 4. MEETINGS. - TIME. Meetings shall be held at such time as the Board shall set, except that the first meeting of a newly elected Board shall be held as soon after its election as the directors may conveniently assemble. - PLACE. Meetings shall be held at such place within or without the State of Maryland as shall be set by the Board. - CALL. No call shall be required for regular meetings for which the time and place have been fixed. Special meetings may be called by or at the direction of the Chairman of the Board, if any, of the President, or of a majority of the directors in office. - NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER. No notice shall be required for regular meetings for which the time and place have been fixed. Written, oral, or any other mode of notice of the time and place shall be given for special meetings in sufficient time for the convenient assembly of the directors thereat. The notice of any meeting need not specify the business to be transacted or the purpose of the meeting. Whenever any notice of the time, place. or purpose of any meeting of directors or any committee thereof is required to be given under the provisions of the Maryland General Corporation Law or of these Bylaws, a waiver thereof in writing, signed by the director or committee member entitled to such notice and filed with the records of the meeting. whether before or after the meeting, or presence at the meeting, shall be deemed equivalent to the giving of such notice to such director or such committee member. - QUORUM AND ACTION. A majority sf the entire Board of Directors shall constitute a quorum except when a vacancy or vacancies prevents such majority, whereupon a majority of the directors in office shall constitute a quorum, provided such majority shall constitute at least one-third of the entire Board and, in no event, less than two directors provided, that whenever the entire Board of Directors consists of one director, that one director shall constitute a quorum. Except as in the Articles of Incorporation and herein otherwise provided and, except as in provisions of The Maryland General Corporation Law otherwise provided, the action of the directors present at a meeting at which a quorum is present shall be the action of the Board of Directors. Members of the Board of Directors or of a committee thereof may participate 6 in a meeting by means of a conference telephone or similar communications equipment if all persons participating in the meeting can hear each other at the same time; and participation by such means shall constitute presence in person at a meeting. - CHAIRMAN OF THE MEETING. The Chairman of the Board, if any and if present and acting, shall preside at all meetings. Otherwise, the President, if present and acting, or any other director chosen by the Board. shall preside. 5. REMOVAL OF DIRECTORS. Any or all of the directors may be removed, with or without cause, pursuant to the provisions of Section 2-406 of the Maryland General Corporation Law. 6. COMMITTEES. The Board of Directors may appoint from among its members an Executive Committee and other committees composed of two or more directors, and may delegate to such committee or committees any of the powers of the Board of Directors except such powers as may not be delegated under the provisions of the Maryland General Corporation Law. In the absence of any member of any such committee, the members thereof present at any meeting, whether or not they constitute a quorum, may appoint a member of the Board of Directors to act in the place of such absent member. 7. INFORMAL ACTION. Any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if a written consent to such action is signed by all members of the Board of Directors or any such committee, as the case may be, and such written consent is filed with the minutes of proceedings of the Board or any such committee. ARTICLE 3 OFFICERS The corporation shall have a President, a Secretary, and a Treasurer and may have a Chairman of the Board. a Vice-Chairman of the Board and one or more Vice-Presidents, who shall be elected by the Board of Directors, and may also have such other officers, assistant officers, and agents as the Board of Directors shall authorize from time to time, each of whom shall be elected or appointed in the manner prescribed by the Board of Directors. Any two or more offices, except those of President and Vice-President, may be held by the same person, but no person shall execute, acknowledge or verify any instrument in more than one capacity, if such instrument is required by law to be executed, acknowledged or verified by more than one officer. Unless otherwise provided in the resolution of election or appointment, each officer shall hold office until the meeting of the Board of Directors following the next annual meeting of stockholders and until his successor has been elected or appointed and qualified. The officers and agents of the corporation shall have the authority and perform the duties in the management of the corporation as determined by the resolution electing or appointing them. 7 Any officer or agent may be removed by the Board of Directors whenever, in its judgment, the best interests of the corporation will be served thereby. ARTICLE 4 PRINCIPAL OFFICE - RESIDENT AGENT - STOCK LEDGER The address of the initial principal office of the corporation in the State of Maryland and the name and the address of the initial resident agent of the corporation in the State of Maryland are set forth in the Articles of Incorporation. The corporation shall maintain, at its principal office in the State of Maryland or at a business office or an agency of the corporation an original or duplicate stock ledger containing the name and address of each stockholder and the number of shares of each class held by each stockholder. Such stock ledger may be in written form or any other form capable of being converted into written form within a reasonable time for visual inspection. The corporation shall keep at its principal office in the State of Maryland the original or a certified copy of the Bylaws, including all amendments thereto, and shall duly file thereat the annual statement of affairs of the corporation. ARTICLE 5 CORPORATE SEAL The corporate seal shall have inscribed thereon the name of the corporation and shall be in such form and contain such other words and/or figures as the Board of Directors shall determine or the law require. ARTICLE 6 FISCAL YEAR The fiscal year of the corporation shall be fixed, and shall be subject to change, by the Board of Directors. ARTICLE 7 CONTROL OVER BYLAWS The power to adopt, alter, amend, and repeal the Bylaws is vested in the Board of Directors of the corporation. I HEREBY CERTIFY that the foregoing is a full, true and correct copy of the Bylaws of ________________, a Maryland corporation, as in effect on the date hereof. 8 WITNESS my hand and the seal of the corporation. Dated: ------------------------------ Secretary of 9 WAIVER OF NOTICE OF ORGANIZATION MEETING OF DIRECTORS OF WE, THE UNDERSIGNED, being all of the directors named in the Articles of Incorporation of the above-named corporation, do hereby severally waive notice l ] of the time and place of the organization meeting 2] of directors of said corporation, and consent that the meeting be held at on the _____ day of ______, 19__, at __.M., for the purpose of adopting Bylaws and electing officers and for the transaction of such other business as may come before the meeting. Dated: ------------------------- ------------------------- ------------------------- 1] In lieu of a waiver, at least 3 days' written notice must be given. [2-109] 2] In lieu of a meeting, all of the directors may act in writing. [2-408] EX-3.2J 26 BY-LAWS IRON MTN RECORDS MGMT OHIO REGULATIONS OF IRON MOUNTAIN RECORDS MANAGEMENT OF OHIO, INC. (an Ohio corporation) ARTICLE I SHAREHOLDERS 1. CERTIFICATES REPRESENTING SHARES. Certificates representing shares shall be signed by the Chairman of the Board, if any, or the President or a Vice-President and by the Secretary, an Assistant Secretary, the Treasurer, or an Assistant Treasurer of the corporation, shall certify the number and class of shares represented thereby, and shall set forth the statements prescribed by Section 1701.25 of the Revised Code of Ohio ("General Corporation Law"). When any such certificate is countersigned by an incorporated transfer agent or registrar, the signature of any of said officers of the corporation may be facsimile, engraved, stamped, or printed. Although any officer of the corporation whose manual or facsimile signature is affixed to such a certificate ceases to be such officer before the certificate is delivered, such certificate nevertheless shall be effective in all respects when delivered. A certificate representing shares shall not be executed or delivered until the share or shares represented thereby are fully paid. The corporation may issue a new certificate for shares in place of any certificate theretofore issued by it, alleged to have been lost, stolen, or destroyed, and the Board of Directors may require the owner of any lost, stolen, or destroyed certificate, or his legal representative, to give the corporation a bond sufficient to indemnify the corporation against any claim that may be made against it on account of the alleged loss, theft, or destruction of any such certificate or the issuance of any such new certificate. 2. FRACTIONAL SHARE INTERESTS. The corporation may but need not execute and deliver a certificate for or including a fraction of a share; or, in lieu thereof, may pay to the person otherwise entitled to become a holder of a fraction of a share an amount in cash specified as the value thereof in a resolution of the Directors, or other agreement or instrument pursuant to which such fraction of a share would otherwise be issued, or, if not so specified, then the amount determined for such purpose by the Directors or the amount realized upon sale of such fraction of a share; or provide reasonable means to afford to such person the opportunity, on specified terms and conditions, to purchase or sell fractional interests in shares, to the exclusion of all rights he might otherwise have; or execute and deliver registered or bearer scrip over the manual or facsimile signature of an officer of the corporation or of its agent for that purpose, exchangeable as therein provided for full shares, but such scrip shall not entitle the holder to any rights as a shareholder except as therein provided. The scrip may provide that it shall become void unless the rights of the holders are exercised within a specified period and may contain any other provisions that the corporation deems advisable. Whenever any such scrip ceases to be exchangeable for full shares, the shares that would otherwise have been issuable as therein provided shall be deemed to be treasury shares unless the scrip contains other provision for their disposition. 3. SHARE TRANSFERS. Upon compliance with provisions restricting the transferability of shares, if any, transfers of shares of the corporation shall be made only on the books of the corporation by the registered holder thereof, or by his attorney thereunto authorized by power of attorney duly executed and filed with the Secretary of the corporation or with an incorporated transfer agent or a registrar, if any, and on surrender of the certificate or certificates for such shares properly endorsed and the payment of all taxes due thereon, if any. 4. RECORD DATE FOR SHAREHOLDERS. For any lawful purpose, including, without limitation, the determination of the shareholders who are entitled to: (1) receive notice of or to vote at a meeting of shareholders; (2) receive payment of any dividend or distribution; (3) receive or exercise rights of purchase of or subscription for, or exchange or conversion of, shares or other securities, subject to contract rights with respect thereto; or (4) participate in the execution of written consents, waivers, or releases, the Board of Directors may fix a record date which shall not be a date earlier than the date on which the record date is fixed and, in the cases provided for in clauses (1), (2), and (3) above, shall not be more than sixty days, preceding the date of the meeting of the shareholders, or the date fixed for the payment of any dividend or distribution, or the date fixed for the receipt or the exercise of rights, as the case may be. The record date for the purpose of clause (1) above, shall continue to be the record date for all adjournments of such meeting unless the Directors shall fix another date, and, in case a new record date is so fixed, notice thereof and of the date to which the meeting shall have been adjourned shall be given to the shareholders of record as of said date in accordance with the same requirements as those applying to a meeting newly called. 5. MEANING OF CERTAIN TERMS. As used in these Regulations in respect of the right to notice of a meeting of shareholders or a waiver thereof or to participate or vote thereat or to execute a consent, waiver, or release, or to register dissent, as the case may be, the term "share" or "shares" or "shareholder" or "shareholders" refers to an outstanding share or shares and to a holder or holders of record of outstanding shares when the corporation is authorized to issue only one class of shares and said reference is also intended to include any outstanding share or shares and any holder or holders of record of outstanding shares of any class upon which or upon whom the Articles of Incorporation confer such rights where there are two or more classes or series of shares or upon which or upon whom the General Corporation Law confers such rights notwithstanding that the Articles of Incorporation may provide for 2 more than one class or series of shares, one or more of which are limited or denied such rights thereunder. Except for subscriptions received by the incorporators, and except as the contract of subscription may otherwise provide, a subscriber for shares for which the subscription price has not been fully paid shall not be deemed to be a shareholder and the shares so subscribed shall not be deemed to be outstanding shares. 6. SHAREHOLDER MEETINGS. - TIME. The annual meeting for the election of directors, the consideration of reports to be laid before the meeting, and for such other purposes as shall be stated in the notice of the meeting, shall be held on a date designated by the Board of Directors. In the absence of such designation, the annual meeting shall be held on the first Monday of the fourth month fol lowing the close of the fiscal year of the corporation. A special meeting shall be held on the date designated by the directors. - PLACE. Annual meetings and special meetings shall be held at such place within or without the State of Ohio as the Board of Directors shall fix, or, if the Board of Directors shall fail to fix such place, then at the principal office of the corporation in Ohio. - CALL. Annual and special meetings may be called by the directors, by the Chairman of the Board, if any, the President, a Vice-President if the President is unable to act, the Secretary, by any officer instructed by the directors to call the meeting, or by the holders of not less than fifty per cent of the shares. - NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER OF NOTICE. Written notice stating the time, place, and purposes of each meeting, shall be delivered not less than seven days (or not less than any such other minimum period of days as may be prescribed by the General Corporation Law) nor more than sixty days before the date of the meeting, either personally or by mail by or at the direction of the directors, the Chairman of the Board, if any, the President, the Secretary or the officer or persons calling the meeting, to each shareholder. If mailed, such notice shall be addressed to the shareholder at his address as it appears on the records of the corporation, with postage prepaid. The notice of any annual or special meeting shall also include, or be accompanied by, any additional statements, information, or documents prescribed by the General Corporation Law. Notice of the time, place, and purposes of any meeting of shareholders may be waived in writing, either before or after the holding of such meeting, by any shareholder. The attendance of any shareholder at any such meeting without protesting, prior to or at the commencement of the meeting, the lack of proper notice shall be deemed to be a waiver by him of notice of such meeting. Notice of adjournment of a meeting need not be given if the time and place to which it is adjourned are fixed and announced at such meeting. 3 - ANNUAL FINANCIAL STATEMENT. At the annual meeting of shareholders, or the meeting held in lieu thereof, the corporation shall lay before the shareholders the financial statement prescribed by Section 1701.38 of the General Corporation Law. - VOTING LIST. Upon request of any shareholder at any meeting of shareholders, there shall be produced at such meeting an alphabetically arranged list, or classified lists, of shareholders of record as of the applicable record date, who are entitled to vote, showing their respective addresses and the number and class of shares held by each. Such list or lists when certified by the officer or agent in charge of the transfer of shares shall be prima-facie evidence of the facts shown therein. - - CONDUCT OF MEETING. Meetings of the shareholders shall be presided over by one of the following officers in the order of seniority and if present and acting - the Chairman of the Board, if any, the Vice-Chairman of the Board, if any, the President, a Vice-President or, if none of the foregoing is in office and present and acting, by a chairman to be chosen by the shareholders. The Secretary of the corporation, or in his absence, an Assistant Secretary, shall act as secretary of every meeting, but, if neither the Secretary nor an Assistant Secretary is present and acting, the Chairman of the meeting shall appoint a secretary of the meeting. - PROXY REPRESENTATION. A person who is entitled to attend a shareholders' meeting, to vote thereat, or to execute consents, waivers, or releases, may be represented at such meeting or vote thereat, and execute consents, waivers, and releases, and exercise any of his other rights, by proxy or proxies appointed by a writing signed by such person. A telegram or cablegram appearing to have been transmitted by such person, or a photographic, photostatic, or equivalent reproduction of a writing, appointing a proxy is a sufficient writing. No appointment of a proxy shall be valid after the expiration of eleven months after it is made unless the writing specifies the date on which it is to expire or the length of time it is to continue in force. Every proxy shall be revocable at the pleasure of the person executing it except as otherwise provided by the General Corporation Law. - INSPECTORS OF ELECTION. The directors, in advance of any meeting of shareholders, may appoint inspectors of election to act at such meeting or any adjournment thereof. If inspectors are not so appointed, the officer acting as Chairman of any such meeting may make such appointment. In case any person who may be appointed as inspector fails to appear or to act, the vacancy may be filled by appointment made by the directors in advance of the meeting, or at the meeting by the officer acting as Chairman. If inspectors are appointed and, if there are three or more inspectors, the decision, act, or certificate of a majority of them shall be effective in all respects as the decision, act, or certificate of all. The inspectors, if any, shall determine the number of shares outstanding, the voting rights with respect to each, the shares represented at the meeting, the existence of a quorum, and the authenticity, validity, and effect of proxies; receive votes, ballots, if any, consents, waivers, or releases; hear and determine all challenges and questions arising in connection with the vote; count and tabulate all votes, consents, waivers, and releases; determine and announce the result; and to do such acts as are proper to conduct the election or vote with fairness to all shareholders. On request, the inspectors, if any, shall make a report in writing of any challenge, question, or matter determined by them and execute a certificate of any fact found by them. 4 - QUORUM. The holders of a majority of the outstanding shares shall constitute a quorum at a meeting of shareholders for the transaction of any business. The holders of a majority of the shares represented at a meeting, whether or not a quorum is present, may adjourn such meeting from time to time. - VOTING. Unless and until the Articles of Incorporation are amended as permitted by division (B)(10) of Section 1701.69 of the General Corporation Law, shareholders shall be entitled to cumulate their votes in the election of directors upon compliance with the provisions of Section 1701.55 of the General Corporation Law. Except in the case of such cumulative voting, each share shall entitle the holder thereof to one vote. In the election of directors, the candidates receiving the greatest number of votes at a meeting at which a quorum is present shall be elected. Any action which would otherwise require for its authorization, under the General Corporation Law, more than a majority, but less than all, of the voting power of shareholders or more than a majority, but less than all, of the shareholders entitled to vote, as the case may be, shall be authorized, pursuant to the provisions of the Articles of Incorporation as authorized by Section 1701.52 of the General Corporation Law, by at least a majority of the voting power of the shareholders or by at least a majority of the shareholders entitled to vote, as the case may be. Any action for which the General Corporation Law does not prescribe the proportion of voting power required to authorize the same shall be authorized by at least a majority of the voting power represented at a meeting at which a quorum is present. All other actions shall be authorized by the proportion of voting power or by the proportion of votes of shareholders entitled to vote, as the case may be, in the manner prescribed by the General Corporation Law, the Articles of Incorporation, or these Regulations. 7. WRITTEN ACTION. Any action which may be authorized or taken at a meeting of the shareholders may be authorized or taken without a meeting with the affirmative vote or approval of, and in a writing or writings signed by, all the shareholders who would be entitled to notice of a meeting of the shareholders held for such purpose, which writing or writings shall be filed with or entered upon the records of the corporation. ARTICLE II DIRECTORS 1. FUNCTIONS, DEFINITION, AND COMPENSATION. The business and affairs of the corporation shall be managed by a Board of Directors. The use of the phrase full Board in these Regulations refers to the whole authorized number of directors fixed in these Regulations. The directors, by the affirmative vote of a majority of those in office, and irrespective of any financial or personal interest of any of them, shall have authority to establish reasonable compensation, which may include pension, disability, and death benefits for services to the corporation by directors and officers, or to delegate such authority to one or more officers or directors. 2. QUALIFICATIONS AND NUMBER. A director need not be a shareholder, a United States citizen, or a resident of the State of Ohio. The initial Board of Directors shall consist of = = persons = = . Thereafter the number of directors constituting the full board shall be at least three, except that, where all the shares are owned of record by less than three shareholders, the number of directors may be less than three but not less than the number of such shareholders. Subject to the foregoing limitation, such number may be changed by an increase or decrease thereof from time to time. Any change in such fixed number may be effected by action of shareholders by an amendment to these Regulations or by the vote of the holders of at least a majority of the shares which are represented at a meeting called for the purpose of electing 5 directors, at which a quorum is present. Except as may otherwise be provided by the Articles of Incorporation, the number of directors may also be changed by action of the directors. No reduction in the number of directors shall have the effect of shortening the term of any incumbent director. Until sooner changed, the number of persons constituting each succeeding Board of Directors shall be = =. 3. ELECTION AND TERM. The initial Board of Directors shall consist of the person or persons elected at the first meeting of shareholders of the corporation and shall hold office until the first annual meeting of shareholders and until his or their successors have been elected and qualified, or until his or their earlier resignation, removal from office, or death. Thereafter, directors who are elected at an annual meeting of shareholders, and directors who are elected in the interim to fill vacancies and newly created directorships, shall hold office until the next annual meeting of shareholders and until their successors have been elected and qualified, or until his or their earlier resignation, removal from office, or death. In the interim between annual meetings of shareholders or of special meetings of shareholders called for the election of directors, newly created directorships and any vacancies in the Board of Directors, including vacancies resulting from the removal of directors which are not filled at the meeting of shareholders at which any such removal has been effected, may be filled by the affirmative vote of a majority of the remaining directors, though less than a majority of the full Board of Directors. 4. MEETINGS. - TIME. Meetings shall be held at such time as the Board shall fix, except that the first meeting of a newly elected Board shall be held as soon after its election as the directors may conveniently assemble. - PLACE. Meetings shall be held at such place within or without the State of Ohio as shall be fixed by the Board. - CALL. Meetings may be called by the Chairman of the Board if any, by the President, by any Vice-President, or by any two directors if the Board consists of three or more directors. - NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER. Except for regular meetings for which the time has been fixed, written notice of the time and place of each meeting of directors shall be given to each director either by personal delivery or by mail, telegram, or cablegram at least two days before the meeting. Such notice may but need not specify the purposes of the meeting. Notice of adjournment of a meeting need not be given if the time and place to which it is adjourned are fixed and announced at such meeting. Notice of the time, place, and purposes of any meeting of directors may be waived in writing, either before or after the holding of such meeting, by any director. Whenever any notice of the time, place, and purposes of a meeting is required to be given to any director, a waiver thereof in writing signed by any such director, whether before or after the holding of such meeting, shall be equivalent to the giving of such notice. The attendance of any director at any such meeting without protesting, prior to or at the commencement of the meeting, the lack of proper notice shall be deemed to be a waiver by him of notice of such meeting. 6 - QUORUM AND ACTION. A majority of the full Board of Directors shall constitute a quorum. A majority of the directors present, whether or not a quorum exists, may adjourn a meeting to another time and place. Notice of any such adjourned meeting shall be given to the directors who were not present at the time of the adjournment, and, unless the time and place of the adjourned meeting are announced at the time of the adjournment, to the other directors. Except as in these Regulations or in any Directors' Bylaws otherwise provided, the act of a majority of the directors present at a meeting at which a quorum is present shall be the act of the Board. Meetings of the directors or of any committee thereof may be held through any communications equipment if all the persons participating can hear each other; and participation in a meeting through such communications equipment shall constitute presence at any such meeting. - CHAIRMAN OF THE MEETING. The Chairman of the Board, if any and if present and acting, shall preside at all meetings. Otherwise, the President, if present and acting, or any other director chosen by the Board, shall preside. 5. REMOVAL OF DIRECTORS. All directors, or all the directors of a particular class, if any, or any individual director may be removed from office, without assigning any cause, in accordance with the provisions of Section 1701.58 of the General Corporation Law. 6. COMMITTEES. Whenever the number of directors shall be no more than three, the Board of Directors may, in its discretion, by resolution, designate three or more directors to constitute an Executive Committee or other committees, which shall have and may exercise such powers of the Board of Directors in the management of the corporation as shall be conferred or authorized by the resolutions appointing them. Such committee or committees shall act only during the intervals between meetings of the directors and shall not have the power to fill vacancies among the directors or in any such committee. A majority of such committee may determine its action and fix the time and place of its meetings, unless the Board of Directors shall otherwise provide. Any such committee may act by a majority of its members at a meeting or by a writing or writings signed by all of its members. The Board of Directors shall have power at any time to fill vacancies in, to change the membership of, or to discharge such committee. 7. WRITTEN ACTION. Any action which may be authorized or taken at a meeting of directors or of any committee thereof may be authorized or taken without a meeting with the affirmative vote or approval of, and in a writing or writings signed by all of the directors, or by all of the members of the committee in the case of a committee. ARTICLE III OFFICERS The Board of Directors, initially and as soon as may be after the election thereof held in each year, shall elect a President, a Secretary, and a Treasurer, and from time to time may elect a Chairman of the Boards a Vice-Chairman of the Board, one or more Vice-Presidents, and such Assistant Secretaries, Assistant Treasurers, and such other officers, agents, and employees as it 7 may deem proper. Any two or more offices may be held by the same person, but no officer shall execute, acknowledge, or verify any instrument in more than one capacity if such instrument is required by law or by the Articles of Incorporation, the Regulations, or the Directors' Bylaws, if any, to be executed, acknowledged, or verified by two or more officers. The Chairman of the Board, if any, and the Vice-Chairman of the=Board, if any, shall be elected from among the directors. Unless the resolution electing an officer otherwise provides, no other officer need be a director in order to qualify. The term of office of all officers shall be one year and until their respective successors are elected and qualify, unless the resolution electing them shall specify a shorter or longer term, but any officer may be removed from office, either with or without cause, at any time by the Board of Directors. Officers shall have the powers and duties defined in the resolutions appointing them. Any officer, or any agent elected or appointed by the Board of Directors, may be removed by the Board whenever in its judgment the best interests of the corporation will be served thereby. ARTICLE IV STATUTORY NOTICES TO SHAREHOLDERS The directors may appoint the Treasurer or other fiscal officer and/or the Secretary or any other officer to cause to be prepared and furnished to shareholders entitled thereto any special financial notice and/or any financial statement, as the case may be, which may be required by any provision of law, and which, more specifically, may be required by Section 1701.33 of the General Corporation Law. ARTICLE V PRINCIPAL OFFICE, STATUTORY AGENT, BOOKS AND RECORDS The location of the principal office of the corporation in the State of Ohio is set forth in the original Articles of Incorporation, and the name and the address of the statutory agent of the corporation are set forth in the initial Appointment of Statutory Agent filed with the original Articles of Incorporation. The corporation shall keep correct and complete books and records of account and shall keep minutes of the proceedings of the shareholders, of the Board of Directors, and of committees of the incorporators, of directors, if any, and shall keep records of its shareholders, showing the names and addresses of all shareholders and the number and class of shares issued or transferred of record to or by them from time to time. ARTICLE VI CORPORATE SEAL 8 The corporate seal shall be in such form as the Board of Directors shall prescribe. ARTICLE VII FISCAL YEAR The fiscal year of the corporation shall be fixed, and shall be subject to change, by the Board of Directors. ARTICLE VIII CONTROL OVER REGULATIONS The Regulations of the corporation shall be subject to alteration, amendment or repeal, and new Regulations not inconsistent with any provision of the Articles of Incorporation or the General Corporation Law may be made, either by the affirmative vote of the holders of shares entitling them to exercise a majority of the voting power of the corporation, at any annual or special meeting of the shareholders, or, without such meeting, by the written consent of the holders of shares entitling them to exercise a majority of the voting power. If the Regulations are altered, amended, or repealed, or new Regulations are adopted, without a meeting of the shareholders, the Secretary of the corporation shall mail a copy of the alteration, amendment, or repeal of the new Regulations to each shareholder who would have been entitled to vote thereon or consent thereto, but who did not participate in such action. ARTICLE IX DIRECTORS' BYLAWS For their own government, directors may adopt Bylaws not inconsistent with the Articles of Incorporation or these Regulations. I HEREBY CERTIFY that the foregoing is a full, true, and correct copy of the Regulations of ______, an Ohio corporation, as in effect on the date hereof. WITNESS my hand and the seal of the corporation. Dated: ------------------------------------------ Secretary of Iron Mountain Records Management of Ohio, Inc. (SEAL) 9 EX-3.2K 27 BY-LAWS IRON MTN WILMINGTON DE Exhibit 3.2K IRON MOUNTAIN WILMINGTON, INC. (a Delaware corporation) BY - LAWS ARTICLE I Offices SECTION 1. Registered Office. The registered office of the Corporation shall be located in the City of Dover, County of Kent, State of Delaware, and the name of the resident agent in charge thereof shall be The Prentice Hall Corporation System, Inc. SECTION 2. Other Offices. The Corporation may also have offices at such other places, within or without the State of Delaware, as the Board of Directors may from time to time appoint or the business of the Corporation may require. ARTICLE II Seal The seal of the Corporation shall, subject to alteration by the Board of Directors, consist of a flat-faced circular die with the word "Delaware", together with the name of the Corporation and the year of incorporation, cut or engraved thereon. ARTICLE III Meetings of Stockholders SECTION 1. Place of Meeting. Meetings of the stockholders shall be held either within or without the State of Delaware at such place as the Board of Directors may fix. SECTION 2. Annual Meetings. The annual meeting of stockholders shall be held on the first day of May of each year, or if such day is a legal holiday, then on the next business day following, at such time as the Board of Directors may fix. SECTION 3. Special Meetings. Special meetings of the stockholders for any purpose or purposes may be called by the President, or by the directors (either by written instrument signed by a majority or by resolution adopted by a vote of the majority), and special meetings shall be called by the President or the Secretary whenever stockholders owning a majority of the capital stock issued, outstanding and entitled to vote so request in writing. Such request of stockholders shall state the purpose or purposes of the proposed meeting. SECTION 4. Notice. Written or printed notice of every meeting of stockholders, annual or special, stating the hour, date and place thereof, and the purpose or purposes in general terms -2- for which the meeting is called shall, not less than ten (10) and not more than sixty (60) days before such meeting, be served upon or mailed to each stockholder entitled to vote thereat, at his address as it appears upon the stock records of the Corporation or, if such stockholder shall have filed with the Secretary of the Corporation a written request that notices intended for him be mailed to some other address, then to the address designated in such request. Notice of the hour, date, place and purpose of any meeting of stockholders may be dispensed with if every stockholder entitled to vote thereat shall attend either in person or by proxy and shall not object to the holding of such meeting for lack of proper notice, or if every absent stockholder entitled to such notice shall in writing, filed with the records of the meeting, either before or after the holding thereof, waive such notice. SECTION 5. Quorum. Except as otherwise provided by law or by the Certificate of Incorporation, the presence in person or by proxy at any meeting of stockholders of the holders of a majority of the shares of the capital stock of the Corporation issued and outstanding and entitled to vote thereat, shall be requisite and shall constitute a quorum. If two or more classes of stock are entitled to vote as separate classes upon any question, then, in the case of each such class, a quorum for the consideration of such question shall, except as otherwise provided by law or by the Certificate of Incorporation, consist of a majority in interest of all stock of that class issued, outstanding and entitled to vote. If a majority or, where a larger quorum is required, such quorum, shall not be represented at any meeting of the stockholders regularly called, the holders of a majority of the shares present or represented and entitled to vote thereat shall have power to adjourn the meeting to another time, or to another time and place, without notice other than announcement of adjournment at the meeting, and there may be successive adjournments for like cause and in like manner until the requisite amount of shares entitled to vote at such meeting shall be represented; provided, however, that if the adjournment is for more than thirty (30) days, notice of the hour, date and place of the adjourned meeting shall be given to each stockholder entitled to vote thereat. Subject to the requirements of law and the Certificate of Incorporation, on any issue on which two or more classes of stock are entitled to vote separately, no adjournment shall be taken with respect to any class for which a quorum is present unless the Chairman of the meeting otherwise directs. At any meeting held to consider matters which were subject to adjournment for want of a quorum at which the requisite amount of shares entitled to vote thereat shall be represented, any business may be transacted which might have been transacted at the meeting as originally noticed. SECTION 6. Votes; Proxies. At each meeting of stockholders, every stockholder of record at the closing of the transfer books, if closed, or on the date set by the Board of Directors for the determination of stockholders entitled to vote at such meeting, shall have one vote for each share of stock entitled to vote which is registered in his name on the books of the Corporation, and, in the election of directors, may vote cumulatively to the extent and in the manner authorized in the Certificate of Incorporation. At each such meeting every stockholder shall be entitled to vote in person, or by proxy appointed by an instrument in writing subscribed by such stockholder and bearing a date not more than three (3) years prior to the meeting in question, unless said instrument provides for a longer period during which it is to remain in force. -3- All elections of directors shall be held by ballot. If the Chairman of the meeting shall so determine, a vote may be taken upon any other matter by ballot and shall be so taken upon the request of any stockholder entitled to vote on such matter. At elections of directors, the Chairman shall appoint two judges of election, who shall first take and subscribe an oath or affirmation faithfully to execute the duties of judges at such meeting with strict impartiality and according to the best of their ability. The judges so appointed shall take charge of the polls and, after the balloting, shall make a certificate of the result of the vote taken. No director or candidate for the office of director shall be appointed as such judge. At any meeting at which a quorum is present, a plurality of the votes properly cast for election to fill any vacancy on the Board of Directors shall be sufficient to elect a candidate to fill such vacancy, and a majority of the votes properly cast upon any other question shall decide the question, except in any case where a larger vote is required by law, the Certificate of Incorporation, these By-laws, or otherwise. SECTION 7. Organization. The Chairman of the Board, if there be one, or in his absence the President, or in the absence of the Chairman and the President, a Vice President, shall call meetings of the stockholders to order and shall act as chairman thereof. The Secretary of the Corporation, if present, shall act as secretary of all meetings of stockholders, and, in his absence, the presiding officer may appoint a secretary. ARTICLE IV Directors SECTION 1. Number. The business and property of the Corporation shall be conducted and managed by a Board of Directors consisting of one or more directors. Directors need not be a stockholder. The number of directors for the ensuing year shall be fixed at each annual meeting of stockholders, but if the number is not so fixed, the number shall remain as it stood immediately prior to such meeting. At any time during any year the whole number of directors may be increased or reduced, in each case by vote of a majority of the stock outstanding and entitled to vote for the election of directors or a majority of the directors in office at the time of such increase or decrease, regardless of whether such majority of directors constitutes a quorum. SECTION 2. Term of Office. Each director shall hold office until the next annual meeting of stockholders and until his successor is duly elected and qualified or until his earlier death or resignation, subject to the right of the stockholders at any time to remove any director or directors as provided in Section 4 of this Article. SECTION 3. Vacancies. If any vacancy shall occur among the directors, or if the number of directors shall at any time be increased, the directors then in office, although less than a quorum, by a majority vote may fill the vacancies or newly-created directorships, or any such vacancies or newly-created directorships may be filled by the stockholders at any meeting. -4- SECTION 4. Removal by Stockholders. The holders of record of the capital stock of the Corporation entitled to vote for the election of directors may in their discretion at any meeting duly called for the purpose, by a majority vote, remove any director or directors and elect a new director or directors in place thereof. SECTION 5. Meetings. Meetings of the Board of Directors shall be held at such place, within or without the State of Delaware, as may from time to time be fixed by resolution of the Board or by the President and as may be specified in the notice or waiver of notice of any meeting. Meetings may be held at any time upon the call of the Chairman of the Board or the President or any two (2) of the directors in office by oral, telegraphic or written notice, duly served or sent or mailed to each director not less than twenty-four (24) hours before such meeting, except that, if mailed, not less than seventy-two (72) hours before such meeting. Meetings may be held at any time and place without notice if all the directors are present and do not object to the holding of such meeting for lack of proper notice or if those not present shall, in writing or by telegram, waive notice thereof. A regular meeting of the Board may be held without notice immediately following the annual meeting of stockholders at the place where such meeting is held. Regular meetings of the Board may also be held without notice at such time and place as shall from time to time be determined by resolution of the Board. SECTION 6. Quorum. A majority of the directors shall constitute a quorum for the transaction of business. If at any meeting of the Board there shall be less than a quorum present, a majority of those present may adjourn the meeting from time to time without notice other than announcement of the adjournment at the meeting, and at such adjourned meeting at which a quorum is present any business may be transacted which might have been transacted at the meeting as originally noticed. SECTION 7. Compensation. Directors shall receive compensation for their services, as such, and for service on any Committee of the Board of Directors, as fixed by resolution of the Board of Directors and for expenses of attendance at each regular or special meeting of the Board or any Committee thereof. Nothing in this Section shall be construed to preclude a director from serving the Corporation in any other capacity and receiving compensation therefor. ARTICLE V Committees of Directors SECTION 1. Executive Committee. The Board of Directors may, by resolution passed by a majority of the whole Board, appoint an Executive Committee of two (2) or more members, to serve during the pleasure of the Board, to consist of such directors as the Board may from time to time designate. The Board of Directors shall designate the Chairman of the Executive Committee. (a) Procedure. The Executive Committee shall, by a vote of a majority of its members, fix its own times and places of meeting, determine the number of its members constituting a quorum for the transaction of business, and prescribe its own rules of procedure, no change in which shall be made save by a majority vote of its members. -5- (b) Responsibilities. During the intervals between the meetings of the Board of Directors, except as otherwise provided by the Board of Directors in establishing such Committee or otherwise, the Executive Committee shall possess and may exercise all the powers of the Board in the management and direction of the business and affairs of the Corporation; provided, however, that the Executive Committee shall not have the power: (i) to amend or authorize the amendment of the Certificate of Incorporation or these By-Laws; (ii) to authorize the issuance of stock; (iii) to authorize the payment of any dividend; (iv) to adopt an agreement of merger or consolidation of the Corporation or to recommend to the stockholders the sale, lease or exchange of all or substantially all the property and business of the Corporation; or (v) to recommend to the stockholders a dissolution of the Corporation. (c) Reports. The Executive Committee shall keep regular minutes of its proceedings, and all action by the Executive Committee shall be reported promptly to the Board of Directors. Such action shall be subject to review, amendment and repeal by the Board, provided that no rights of third parties shall be adversely affected by such review, amendment or repeal. (d) Appointment of Additional Members. In the absence or disqualification of any member of the Executive Committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not constituting a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in place of any such absent or disqualified member. SECTION 2. Audit Committee. The Board of Directors shall appoint an Audit Committee of two (2) or more members who shall not be officers or employees of the Corporation to serve during the pleasure of the Board. The Board of Directors shall designate the Chairman of the Audit Committee. (a) Procedure. The Audit Committee, by a vote of a majority of its members, shall fix its own times and places of meeting, shall determine the number of its members constituting a quorum for the transaction of business, and shall prescribe its own rules of procedure, no change in which shall be made save by a majority vote of its members. -6- (b) Responsibilities. The Audit Committee shall review the annual financial statements of the Corporation prior to their submission to the Board of Directors, shall consult with the Corporation's independent auditors, and may examine and consider such other matters in relation to the internal and external audit of the Corporation's accounts and in relation to the financial affairs of the Corporation and its accounts, including the selection and retention of independent auditors, as the Audit Committee may, in its discretion, determine to be desirable. (c) Reports. The Audit Committee shall keep regular minutes of its proceedings, and all action by the Audit Committee shall, from time to time, be reported to the Board of Directors as it shall direct. (d) Appointment of Additional Members. In the absence or disqualification of any member of the Audit Committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not constituting a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in place of any such absent or disqualified member. SECTION 3. Other Committees. The Board of Directors, by vote of a majority of the directors then in office, may at any time appoint one or more other committees from and outside of its own number. Every such committee must include at least one member of the Board of Directors. The Board may from time to time designate or alter, within the limits permitted by law, the Certificate of Incorporation and this Article, if applicable, the duties, powers and number of members of such other committees or change their membership, and may at any time abolish such other committees or any of them. (a) Procedure. Each committee appointed pursuant to this Section shall, by a vote of a majority of its members, fix its own times and places of meeting, determine the number of its members constituting a quorum for the transaction of business, and prescribe its own rules of procedure, no change in which shall be made save by a majority vote of its members. (b) Responsibilities. Each committee appointed pursuant to this Section shall exercise the powers assigned to it by the Board of Directors in its discretion. (c) Reports. Each committee appointed pursuant to this Section shall keep regular minutes of proceedings, and all action by each such committee shall, from time to time, be reported to the Board of Directors as it shall direct. (d) Appointment of Additional Members. In the absence or disqualification of any member of each committee, appointed pursuant to this Section, the member or members thereof present at any meeting and not disqualified from voting, whether or not constituting a quorum, may unanimously -7- appoint another member of the Board of Directors to act at the meeting in place of any such absent or disqualified member. SECTION 4. Term of Office. Each member of a committee shall hold office until the first meeting of the Board of Directors following the annual meeting of stockholders (or until such other time as the Board of Directors may determine, either in the vote establishing the committee or at the election of such member or otherwise) and until his successor is elected and qualified, or until he sooner dies, resigns, is removed, is replaced by change of membership or becomes disqualified by ceasing to be a Director (where membership on the Board is required), or until the committee is sooner abolished by the Board of Directors. ARTICLE VI Officers SECTION 1. Officers. The Board of Directors shall elect a President, a Secretary and a Treasurer, and, in their discretion, may elect a Chairman of the Board, one or more Executive Vice Presidents, Vice Presidents, Assistant Secretaries and Assistant Treasurers as deemed necessary or appropriate. Such officers shall be elected annually by the Board of Directors at its first meeting following the annual meeting of stockholders, and each shall hold office for the term provided by the vote of the Board, except that each will be subject to removal from office in the discretion of the Board as provided herein. The powers and duties of more than one office may be exercised and performed by the same person. SECTION 2. Vacancies. Any vacancy in any office may be filled for the unexpired portion of the term by the Board of Directors, at any regular or special meeting. SECTION 3. Chairman of the Board. The Chairman of the Board of Directors, if elected, shall be a member of the Board of Directors and shall preside at its meetings. He shall advise and counsel with the President, and shall perform such duties as from time to time may be assigned to him by the Board of Directors. SECTION 4. President. The President shall be the chief executive officer of the Corporation. Subject to the directions of the Board of Directors, he shall have and exercise direct charge of and general supervision over the business and affairs of the Corporation and shall perform all duties incident to the office of the chief executive officer of a corporation and such other duties as from time to time may be assigned to him by the Board of Directors. The President may but need not be a member of the Board of Directors. SECTION 5. Executive Vice Presidents and Vice Presidents. Each Executive Vice President and Vice President shall have and exercise such powers and shall perform such duties as from time to time may be assigned to him by the President. SECTION 6. Secretary. The Secretary shall keep the minutes of all meetings of the stockholders and of the Board of Directors in books provided for the purpose; he shall see that all notices are duly given in accordance with the provisions of law and these By-laws; he shall be custodian of the records and of the corporate seal or seals of the Corporation; he shall see -8- that the corporate seal is affixed to all documents the execution of which, on behalf of the Corporation under its seal, is duly authorized, and, when the seal is so affixed, he may attest the same; he may sign, with the President, an Executive Vice President or a Vice President, certificates of stock of the Corporation; and, in general, he shall perform all duties incident to the office of secretary of a corporation, and such other duties as from time to time may be assigned to him by the Board of Directors. SECTION 7. Assistant Secretaries. The Assistant Secretaries in order of their seniority shall, in the absence or disability of the Secretary, perform the duties and exercise the powers of the Secretary and shall perform such other duties as the Board of Directors shall prescribe or as from time to time may be assigned by the Secretary. SECTION 8. Treasurer. The Treasurer shall have charge of and be responsible for all funds, securities, receipts and disbursements of the Corporation, and shall deposit, or cause to be deposited, in the name of the Corporation, all monies or other valuable effects in such banks, trust companies or other depositaries as shall, from time to time, be selected by the Board of Directors; he may endorse for collection on behalf of the Corporation checks, notes and other obligations; he may sign receipts and vouchers for payments made to the Corporation; he may sign checks of the Corporation, singly or jointly with another person as the Board of Directors may authorize, and pay out and dispose of the proceeds under the direction of the Board; he shall render to the President and to the Board of Directors, whenever requested, an account of the financial condition of the Corporation; he may sign, with the President, or an Executive Vice President or a Vice President, certificates of stock of the Corporation; and in general, shall perform all the duties incident to the office of treasurer of a corporation, and such other duties as from time to time may be assigned to him by the Board of Directors. SECTION 9. Assistant Treasurers. The Assistant Treasurers in order of their seniority shall, in the absence or disability of the Treasurer, perform the duties and exercise the powers of the Treasurer and shall perform such other duties as the Board of Directors shall prescribe or as from time to time may be assigned by the Treasurer. SECTION 10. Subordinate Officers. The Board of Directors may appoint such subordinate officers as it may deem desirable. Each such officer shall hold office for such period, have such authority and perform such duties as the Board of Directors may prescribe. The Board of Directors may, from time to time, authorize any officer to appoint and remove subordinate officers and to prescribe the powers and duties thereof. SECTION 11. Compensation. The Board of Directors shall fix the compensation of all officers of the Corporation. It may authorize any officer, upon whom the power of appointing subordinate officers may have been conferred, to fix the compensation of such subordinate officers. SECTION 12. Removal. Any officer of the Corporation may be removed, with or without cause, by action of the Board of Directors. SECTION 13. Bonds. The Board of Directors may require any officer of the Corporation to give a bond to the Corporation, conditional upon the faithful performance of his -9- duties, with one or more sureties and in such amount as may be satisfactory to the Board of Directors. ARTICLE VII Certificates of Stock SECTION 1. Form and Execution of Certificates. The interest of each stockholder of the Corporation shall be evidenced by a certificate or certificates for shares of stock in such form as the Board of Directors may from time to time prescribe. The certificates of stock of each class shall be consecutively numbered and signed by the President, an Executive Vice President or a Vice President and by the Secretary, an Assistant Secretary, the Treasurer or an Assistant Treasurer of the Corporation, and may be countersigned and registered in such manner as the Board of Directors may by resolution prescribe, and shall bear the corporate seal or a printed or engraved facsimile thereof. Where any such certificate is signed by a transfer agent or transfer clerk acting on behalf of the Corporation, the signatures of any such President, Executive Vice President, Vice President, Treasurer, Assistant Treasurer, Secretary or Assistant Secretary may be facsimiles, engraved or printed. In case any officer or officers, who shall have signed, or whose facsimile signature or signatures shall have been used on, any such certificate or certificates, shall cease to be such officer or officers, whether because of death, resignation or otherwise, before such certificate or certificates shall have been delivered by the Corporation, such certificate or certificates may nevertheless be issued and delivered by the Corporation as though the person or persons who signed such certificate or certificates or whose facsimile signature or signatures shall have been used thereon had not ceased to be such officer or officers. In case the corporate seal which has been affixed to, impressed on, or reproduced in any such certificate or certificates shall cease to be the seal of the Corporation before such certificate or certificates have been delivered by the Corporation, such certificate or certificates may nevertheless be issued and delivered by the Corporation as though the seal affixed thereto, impressed thereon or reproduced therein had not ceased to be the seal of the Corporation. Every certificate for shares of stock which are subject to any restriction on transfer pursuant to law, the Certificate of Incorporation, these By-laws, or any agreement to which the Corporation is a party, shall have the restriction noted conspicuously on the certificate, and shall also set forth, on the face or back, either the full text of the restriction or a statement of the existence of such restriction and (except if such restriction is imposed by law) a statement that the Corporation will furnish a copy thereof to the holder of such certificate upon written request and without charge. Every certificate issued when the Corporation is authorized to issue more than one class or series of stock shall set forth on its face or back either the full text of the preferences, voting powers, qualifications, and special and relative rights of the shares of each class and series authorized to be issued, or a statement of the existence of such preferences, powers, qualifications and rights, and a statement that the Corporation will furnish a copy thereof to the holder of such certificate upon written request and without charge. -10- SECTION 2. Transfer of Shares. The shares of the stock of the Corporation shall be transferred on the books of the Corporation by the holder thereof in person or by his attorney lawfully constituted, upon surrender for cancellation of certificates for the same number of shares, with an assignment and power of transfer endorsed thereon or attached thereto, duly executed, with such proof or guaranty of the authenticity of the signature as the Corporation or its agents may reasonably require. The Corporation shall be entitled to treat the holder of record of any share or shares of stock as the holder in fact thereof and accordingly shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person whether or not it shall have express or other notice thereof, save as expressly provided by law or by the Certificate of Incorporation. It shall be the duty of each stockholder to notify the Corporation of his post office address. SECTION 3. Closing of Transfer Books. The stock transfer books of the Corporation may, if deemed appropriate by the Board of Directors, be closed for such length of time not exceeding fifty (50) days as the Board may determine, preceding the date of any meeting of stockholders or the date for the payment of any dividend or the date for the allotment of rights or the date when any issuance, change, conversion or exchange of capital stock shall go into effect, during which time no transfer of stock on the books of the Corporation may be made. SECTION 4. Dates of Record. If deemed appropriate, the Board of Directors may fix in advance a date for such length of time not exceeding sixty (60) days (and, in the case of any meeting of stockholders, not less than ten (10) days) as the Board may determine, preceding the date of any meeting of stockholders, or the date for the payment of any dividend, or the date for the allotment of rights or the date when any issuance, change, conversion or exchange of capital stock shall go into effect, as a record date for the determination of the stockholders entitled to notice of, and to vote at, any such meeting or entitled to receive payment of any such dividend or to any such allotment of rights, or to exercise the rights in respect of any such issuance, change, conversion or exchange of capital stock, as the case may be, and in such case only such stockholders as shall be stockholders of record on the date so fixed shall be entitled to such notice of, and to vote at, such meeting, or to receive payment of such dividend, or to receive such allotment of rights, or to exercise such rights, as the case may be, notwithstanding any transfer of any stock on the books of the Corporation after any record date fixed as aforesaid. If no such record date is so fixed, the record date shall be determined by applicable law. SECTION 5. Lost or Destroyed Certificates. In case of the loss or destruction of any certificate of stock, a new certificate may be issued under the following conditions: (a) The owner of said certificate shall file with the Secretary or any Assistant Secretary of the Corporation an affidavit giving the facts in relation to the ownership, and in relation to the loss or destruction of said certificate, stating its number and the number of shares represented thereby; such affidavit shall be in such form and contain such statements as shall satisfy the President, any Executive Vice President, Vice President, the Secretary, any Assistant Secretary, the Treasurer or any Assistant Treasurer, that said certificate has been accidentally destroyed or lost, and that a new certificate ought to be issued in lieu thereof. Upon being so -11- satisfied, any such officer shall require such owner to furnish the Corporation a bond in such penal sum and in such form as he may deem advisable, and with a surety or sureties approved by him, to indemnify and save harmless the Corporation from any claim, loss, damage or liability which may be occasioned by the issuance of a new certificate in lieu thereof. Upon such bond being so filed, a new certificate for the same number of shares shall be issued to the owner of the certificate so lost or destroyed; and the transfer agent and registrar, if any, of stock shall countersign and register such new certificate upon receipt of a written order signed by any such officer, and thereupon the Corporation will save harmless said transfer agent and registrar in the premises. In case of the surrender of the original certificate, in lieu of which a new certificate has been issued, or the surrender of such new certificate, for cancellation, the bond of indemnity given as a condition of the issue of such new certificate may be surrendered; or (b) The Board of Directors of the Corporation may by resolution authorize and direct any transfer agent or registrar of stock of the Corporation to issue and register respectively from time to time without further action or approval by or on behalf of the Corporation new certificates of stock to replace certificates reported lost, stolen or destroyed upon receipt of an affidavit of loss and bond of indemnity in form and amount and with surety satisfactory to such transfer agent or registrar in each instance or upon such terms and conditions as the Board of Directors may determine. ARTICLE VIII Execution of Documents SECTION 1. Execution of Checks, Notes, etc. All checks and drafts on the Corporation's bank accounts and all bills of exchange and promissory notes, and all acceptances, obligations and other instruments for the payment of money, shall be signed by such officer or officers, or agent or agents, as shall be thereunto authorized from time to time by the Board of Directors, which may in its discretion authorize any such signatures to be facsimile. SECTION 2. Execution of Contracts, Assignments, etc. Unless the Board of Directors shall have otherwise provided generally or in a specific instance, all contracts, agreements, endorsements, assignments, transfers, stock powers, or other instruments shall be signed by the President, any Executive Vice President, any Vice President, the Secretary, any Assistant Secretary, the Treasurer or any Assistant Treasurer. The Board of Directors may, however, in its discretion, require any or all such instruments to be signed by any two or more of such officers, or may permit any or all of such instruments to be signed by such other officer or officers, agent or agents, as it shall thereunto authorize from time to time. SECTION 3. Execution of Proxies. The President, any Executive Vice President or any Vice President, and the Secretary, the Treasurer, any Assistant Secretary or any Assistant Treasurer, or any other officer designated by the Board of Directors, may sign on behalf of the -12- Corporation proxies to vote upon shares of stock of other companies standing in the name of the Corporation. ARTICLE IX Inspection of Books The Board of Directors shall determine from time to time whether, and if allowed, to what extent and at what time and places and under what conditions and regulations, the accounts and books of the Corporation (except such as may by law be specifically open to inspection) or any of them, shall be open to the inspection of the stockholders, and no stockholder shall have any right to inspect any account or book or document of the Corporation, except as conferred by the laws of the State of Delaware, unless and until authorized so to do by resolution of the Board of Directors or of the stockholders of the Corporation. ARTICLE X Fiscal Year The fiscal year of the Corporation shall be determined from time to time by vote of the Board of Directors. ARTICLE XI Amendments These By-laws may be altered, amended, changed or repealed and new By-laws adopted by the stockholders or by the Board of Directors, in either case at any meeting called for that purpose at which a quorum shall be present. Any by-law, whether made, altered, amended, changed or repealed by the stockholders or the Board of Directors may be repealed, amended, changed, further amended, changed, repealed or reinstated, as the case may be either by the stockholders or by the Board of Directors, as herein provided; except that this Article may be altered, amended, changed or repealed only by vote of the stockholders. ARTICLE XII Indemnification SECTION 1. Indemnification. The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that he is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines, and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interest of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of -13- any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interest of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation; except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable for negligence or misconduct in the performance of his duty to the Corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper. To the extent that a director, officer, employee or agent of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in this Section, or in defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith. SECTION 2. Authorization. Any indemnification under Section 1 of this Article (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances because he has met the applicable standard of conduct set forth in Section 1 of this Article. Such determination shall be made: (a) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceedings, or (b) if such a quorum is not obtainable, or, even if obtainable, a quorum of disinterested directors so directs, by independent legal counsel in written opinion, or (c) by the stockholders. SECTION 3. Expense Advance. Expenses incurred in defending a civil or criminal action, suit or proceeding may be paid by the Corporation in advance of the final disposition of such action, suit or proceeding as authorized by the Board of Directors in the manner provided in Section 2 of this Article upon receipt of an undertaking by or on behalf of the director, officer, employee or agent to repay such amount, unless it shall ultimately be determined that he is entitled to be indemnified by the Corporation as authorized in this Article. SECTION 4. Nonexclusivity. The indemnification provided by this Article shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any by- -14- law, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person. SECTION 5. Insurance. The Corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power to indemnify him against such liability under the provisions of this Article. SECTION 6. "The Corporation". For the purposes of this Article, references to "the Corporation" include all constituent corporations absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers and employees or agents as well as the resulting or surviving corporation so that any person who is or was a director, officer, employee or agent of such a constituent corporation or is or was serving at the request of such constituent corporation as director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise shall stand in the same position under the provisions of this Article with respect to such a constituent corporation if its separate existence had continued. EX-3.2L 28 BY-LAWS DATA STORAGE SYSTEMS, INC Exhibit 3.2L BYLAWS OF DATA STORAGE SYSTEMS, INC. ARTICLE I Applicability Section 1. Applicability of Bylaws. These Bylaws govern, except as otherwise provided by statute or its Articles of Incorporation, the management of the business and the conduct of the affairs of the Corporation. ARTICLE II Offices Section 1. Principal Executive Office. The location of the principal executive office of the Corporation is 745 Atlantic Avenue, Boston, Massachusetts 02111. Section 2. Other Offices. The Board of Directors may establish other offices at any place or places within or without the State of California. Section 3. Change in Location or Number of Offices. The Board of Directors may change any office from one location to another or eliminate any office or offices. ARTICLE III Meetings of Shareholders Section 1. Place of Meetings. Meetings of the shareholders shall be held at any place within or without the State of California designated by the Board of Directors, or, in the absence of such designation, at the principal executive office of the Corporation. Section 2. Annual Meetings. An annual meeting of the shareholders shall be held within 180 days following the end of the fiscal year of the Corporation at a date and time designated by the Board of Directors. Directors shall be elected at each annual meeting and any other proper business may be transacted thereat. Section 3. Special Meetings. (a) Special meetings of the shareholders may be called by a majority of the Board of Directors, the Chairman of the Board, the President or the holders of shares entitled to cast not less than 10% of the votes at such meeting. (b) Any request for the calling of a special meeting of the shareholders shall (1) be in writing, (2) specify the date and time thereof which date shall be not less than 35 nor more than 60 days after receipt of the request, (3) specify the general nature of the business to be transacted thereat and (4) be given either personally or by first-class mail, postage prepaid, or other means of written communication to the Chairman of the Board, President, any Vice President or Secretary of the Corporation. The officer receiving a proper request to call a special meeting of the shareholders shall cause notice to be given pursuant to the provisions of Section 4 of this article to the shareholders entitled to vote thereat that a meeting will be held at the date and time specified by the person or persons calling the meeting. (c) No business may be transacted at a special meeting unless the general nature thereof was stated in the notice of such meeting. Section 4. Notice of Annual, Special or Adjourned Meetings. (a) Whenever any meeting of the shareholders is to be held, a written notice of such meeting shall be given in the manner described in subdivision (d) of this section not less than 10 nor more than 60 days before the date thereof to each shareholder entitled to vote thereat. The notice shall state the place, date and hour of the meeting and (1) in the case of a special meeting, the general nature of the business to be transacted or (2) in the case of the annual meeting, those matters which the Board of Directors, at the time of the giving of the notice, intend to present for action by the shareholders including, whenever directors are to be elected at a meeting, the names of nominees intended at the time of giving of the notice to be presented by management for election. (b) Any proper matter may be presented at an annual meeting for action, except as is provided in subdivision (f) of Section 601 of the Corporations Code of the State of California. (c) Notice need not be given of an adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken, except that if the adjournment is for more than 45 days or if after the adjournment a new record date is provided for the adjourned meeting, a notice of the adjourned meeting shall be given to each shareholder of record entitled to vote thereat. (d) Notice of any meeting of the shareholders or any report shall be given either personally or by firstclass mail, postage prepaid, or other means of written communication, -2- addressed to the shareholder at his address appearing on the books of the Corporation or given by him to the Corporation for the purpose of notice; or if no such address appears or is given, at the place where the principal executive office of the Corporation is located or by publication at least once in a newspaper of general circulation in the county in which the principal executive office is located. The notice or report shall be deemed to have been given at the time when delivered personally to the recipient or deposited in the mail or sent by other means of written communication. An affidavit of mailing of any notice or report in accordance with the provisions of these Bylaws or the General Corporation Law of the State of California, executed by the secretary, assistant secretary or any transfer agent of the Corporation, shall be prima facie evidence of the giving of the notice or report. (e) If any notice or report addressed to the shareholder at his address appearing on the books of the Corporation is returned to the Corporation by the United States Postal Service marked to indicate that the United States Postal Service is unable to deliver the notice or report to the shareholder at such address, all future notices or reports shall be deemed to have been duly given without further mailing if the same shall be available for the shareholder upon his written demand at the principal executive office of the Corporation for a period of one year from the date of the giving of the notice or report to all other shareholders. Section 5. Record Date. (a) The Board of Directors may fix a time in the future as a record date for the determination of the shareholders (1) entitled to notice of any meeting or to vote thereat, (2) entitled to receive payment of any dividend or other distribution or allotment of any rights or (3) entitled to exercise any rights in respect of any other lawful action. The record date so fixed shall be not more than 60 nor less than 10 days prior to the date of any meeting of the shareholders nor more than 60 days prior to any other action. (b) In the event no record date is fixed: (1) The record date for determining the shareholders entitled to notice of or to vote at a meeting of shareholders shall be at the close of business on the business day next preceding the day on which notice is given or, if notice is waived, at the close of business on the business day next preceding the day on which the meeting is held. (2) The record date for determining shareholders entitled to give consent to corporate action in writing without a meeting, when no prior action by the Board of Directors has been taken, shall be the day on which the first written consent is given. -3- (3) The record date for determining shareholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto, or the 60th day prior to the date of such other action, whichever is later. (c) Only shareholders of record at the close of business on the record date are entitled to notice and to vote or to receive a dividend, distribution or allotment of rights or to exercise the rights, as the case may be, notwithstanding any transfer of any shares on the books of the Corporation after the record date. (d) A determination of shareholders of record entitled to notice of or to vote at a meeting of shareholders shall apply to any adjournment of the meeting unless the Board of Directors fixes a new record date for the adjourned meeting, but the Board shall fix a new record date if the meeting is adjourned for more than 45 days from the date set for the original meeting. Section 6. Quorum; Action at Meetings. (a) A majority of the shares entitled to vote, represented in person or by proxy, shall constitute a quorum at a meeting of the shareholders. (b) Except as provided in subdivision (c) of this section, the affirmative vote of a majority of the shares represented and voting at a duly held meeting at which a quorum is present (which shares voting affirmatively also constitute at least a majority of the required quorum) shall be the act of the shareholders, unless the vote of a greater number is required by Law or the Articles of Incorporation. (c) The shareholders present at a duly called or held meeting at which a quorum is present may continue to transact business until adjournment notwithstanding the withdrawal of enough shareholders to leave less than a quorum, if any action taken (other than adjournment) is approved by at least a majority of the shares required to constitute a quorum. Section 7. Adjournment. Any meeting of the shareholders may be adjourned from time to time whether or not a quorum is present by the vote of a majority of the shares represented thereat either in person or by proxy. At the adjourned meeting the Corporation may transact any business which might have been transacted at the original meeting. Section 8. Validation of Defectively Called, Noticed or Held Meetings. (a) The transactions of any meeting of the shareholders, however called and noticed, and wherever held, are as valid as though had at a meeting duly held after regular call -4- and notice, if a quorum is present either in person or by proxy, and if, either before or after the meeting, each of the persons entitled to vote thereat, not present in person or by proxy, signs a written waiver of notice or a consent to the holding of the meeting or an approval of the minutes thereof. All such waivers, consents and approvals shall be filed with the corporate records or made a part of the minutes of the meeting. (b) Attendance of a person at a meeting shall constitute a waiver of notice of, and presence at, such meeting, except (1) when the person objects, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened and (2) that attendance at a meeting is not a waiver of any right to object to the consideration of any matter required by the General Corporation Law of the State of California to be included in the notice but not so included, if such objection is expressly made at the meeting. (c) Any written waiver of notice shall comply with subdivision (f) of Section 601 of the Corporations Code of the State of California. Section 9. Voting for Election of Directors. (a) Every shareholder complying with subdivision (b) of this section and entitled to vote at any election of directors may cumulate his votes and give one candidate a number of votes equal to the number of directors to be elected multiplied by the number of votes to which his shares are normally entitled, or distribute his votes on the same principle among as many candidates as he thinks fit. (b) No shareholder shall be entitled to cumulate his votes (i.e., cast for any one candidate a number of votes greater than the number of votes which such shareholder normally is entitled to cast) unless such candidate's or candidates' names have been placed in nomination prior to the voting and the shareholder has given notice at the meeting, prior to the voting, of his intention to cumulate his votes. If any one shareholder has given such notice, all shareholders may cumulate their votes for candidates in nomination. (c) Elections for directors may be by voice vote or by ballot unless any shareholder entitled to vote demands election by ballot at the meeting prior to the voting, in which case the vote shall be by ballot. (d) In any election of directors, the candidates receiving the highest number of votes of the shares entitled to be voted for them up to the number of directors to be elected by such shares are elected as directors. Section 10. Proxies. -5- (a) Every person entitled to vote shares may authorize another person or persons to act with respect to such shares by a written proxy signed by him or his attorney-in-fact and filed with the Secretary of the Corporation. A proxy shall be deemed signed if the shareholder's name is placed on the proxy (whether by manual signature, typewriting, telegraphic transmission or otherwise) by him or his attorney-in-fact. (b) Any duly executed proxy shall continue in full force and effect until the expiration of the term specified therein or upon its earlier revocation by the person executing it prior to the vote pursuant thereto (1) by a writing delivered to the Corporation stating that it is revoked, (2) by a subsequent proxy executed by the person executing the proxy or (3) by the attendance at the meeting and voting in person by the person executing the proxy. No proxy shall be valid after the expiration of 11 months from the date thereof unless otherwise provided in the proxy. The date contained on the form of proxy shall be deemed to be the date of its execution. (c) A proxy which states that it is irrevocable is irrevocable for the period specified therein subject to the provisions of subdivisions (e) and (f) of Section 705 of the Corporations Code of the State of California. Section 11. Inspectors of Election. (a) In advance of any meeting of the shareholders, the Board of Directors may appoint either one or three persons (other than nominees for the office of director) as inspectors of election to act at such meeting or any adjournments thereof. If inspectors of election are not so appointed, or if any person so appointed fails to appear or refuses to act, the chairman of any such meeting may, and on the request of any shareholder or his proxy shall, appoint inspectors of election (or persons to replace those who so fail or refuse to act) at the meeting. If appointed at a meeting on the request of one or more shareholders or the proxies thereof, the majority of shares represented in person or by proxy shall determine whether one or three inspectors are to be appointed. (b) The duties of inspectors of election and the manner of performance thereof shall be as prescribed in Section 707 of the Corporations Code of the State of California Section 12. Action by Written Consent. (a) Subject to subdivisions (b) and (c) of this section, any action which may be taken at any annual or special meeting of the shareholders may be taken without a meeting, without a vote and without prior notice, if a consent in writing, setting forth the action so taken, is signed by the holders of outstanding shares having not less than the minimum number of votes which would be necessary to authorize or take such action at a meeting in which all shares entitled to vote thereon were -6- present and voted. All such consents shall be filed with the Secretary of the Corporation and maintained with the corporate records. (b) Except for the election of a director by written consent to fill a vacancy (other than a vacancy created by removal), directors may be elected by written consent only by the unanimous written consent of all shares entitled to vote for the election of directors. In the case of an election of a director by written consent to fill a vacancy (other than a vacancy created by removal), any such election requires the consent of a majority of the outstanding shares entitled to vote. (c) Unless the consents of all shareholders entitled to vote have been solicited in writing, notice of any shareholder approval without a meeting by less than unanimous written consent shall be given as provided in subdivision (b) of Section 603 of the Corporations Code of the State of California. (d) Any shareholder giving a written consent, or his proxyholders, or a personal representative of the shareholder or their respective proxyholders, may revoke the consent by a writing received by the Corporation prior to the time that written consents of the number of shares required to authorize the proposed action have been filed with the Secretary of the Corporation, but may not do so thereafter. Such revocation is effective upon its receipt by the Secretary of the Corporation. ARTICLE IV Directors Section 1. Number of Directors. (a) The authorized number of directors shall be one. Section 2. Election of Directors. Directors shall be elected at each annual meeting of the shareholders. Section 3. Term of Office. Each director, including a director elected to fill a vacancy, shall hold office until the expiration of the term for which he is elected and until a successor has been elected. Section 4. Vacancies. (a) A vacancy in the Board of Directors exists whenever any authorized position of director is not then filled by a duly elected director, whether caused by death, resignation, removal, change in the authorized number of directors or otherwise. (b) Except for a vacancy created by the removal of a director, vacancies on the Board of Directors may be filled by a -7- majority of the directors then in office, whether or not less than a quorum, or by a sole remaining director. A vacancy created by the removal of a director shall be filled only by shareholders. (c) The shareholders may elect a director at any time to fill any vacancy not filled by the directors. Section 5. Removal. (a) The Board of Directors may declare vacant the office of a director who has been declared of unsound mind by an order of court or convicted of a felony. (b) Any or all of the directors may be removed without cause if such removal is approved by a majority of the outstanding shares entitled to vote; provided, however, that no director may be removed (unless the entire Board of Directors is removed) if whenever the votes cast against removal, or not consenting in writing to such removal, would be sufficient to elect such director if voted cumulatively at an election at which the same total number of votes were cast (or, if such action is taken by written consent, all shares entitled to vote were voted) and the entire number of directors authorized at the time of his most recent election were then being elected. (c) Any reduction of the authorized number of directors does not remove any director prior to the expiration of his term of office. Section 6. Resignation. Any director may resign effective upon giving written notice to the Chairman of the Board, the President, the Secretary or the Board of Directors of the Corporation, unless the notice specifies a later time for the effectiveness of such resignation. If the resignation is effective at a future time, a successor may be elected to take office when the resignation becomes effective. Section 7. Fees and Compensation. Directors may be paid for their services in such capacity a sum in such amount, at such times and upon such conditions as may be determined from time to time by resolution of the Board of Directors, and may be reimbursed for their expenses, if any, incurred in such capacity, including (without limitation) expenses of attendance at any meeting of the Board. No such payments shall preclude any director from serving the Corporation in any other capacity and receiving compensation in any manner therefor. ARTICLE V Committees of the Board of Directors -8- Section 1. Designation of Committees. The Board of Directors may, by resolution adopted by a majority of the authorized number of directors, designate (1) one or more committees, each consisting of one or more directors and (2) one or more directors as alternate members of any committee, who may replace any absent member at any meeting thereof. Any member or alternate member of a committee shall serve at the pleasure of the Board. Section 2. Powers of Committees. Any committee, to the extent provided in the resolution of the Board of Directors designating such committee, shall have all the authority of the Board, except with respect to: (a) The approval of any action for which the General Corporation Law of the State of California also requires any action by the shareholders; (b) The filling of vacancies on the Board or in any committee thereof; (c) The fixing of compensation of the directors for serving on the Board or on any committee thereof; (d) The amendment or repeal of these Bylaws or the adoption of new bylaws (e) The amendment or repeal of any resolution of the Board which by its express terms is not so amendable or repealable. (f) A distribution to the shareholders of the Corporation, except at a rate or in a periodic amount or within a price range determined by the Board of Directors; or (g) The designation of other committees of the Board or the appointment of members or alternate members thereof. ARTICLE VI Meetings of the Board of Directors and Committees Thereof Section 1. Place of Meetings. Regular meetings of the Board of Directors shall be held at any place within or without the State of California which has been designated from time to time by the Board, or in the absence of such designation, at the principal executive office of the Corporation. Special meetings of the Board shall be held either at any place within or without the State of California which has been designated in the notice of the meeting or, if not stated in the notice or if there is no notice, at the principal executive office of the Corporation. -9- Section 2. Organization Meeting. An organization meeting shall be held each year immediately following the annual shareholders meeting. Notice of any such meeting is not required. Section 3. Other Regular Meetings. Other regular meetings of the Board of Directors shall be held without call at such time as shall be designated from time to time by the Board. Notice of any such meeting is not required. Section 4. Special Meetings. Special meetings of the Board of Directors may be called at any time for any purpose or purposes by the Chairman of the Board or the President or any vice president or the Secretary or any two directors. Notice shall be given of any special meeting of the Board. Section 5. Notice of Special Meetings. (a) Notice of the time and place of special meetings of the Board of Directors shall be delivered personally or by telephone to each director or sent to each director by first-class mail or telegraph, charges prepaid. Such notice shall be given four days prior to the holding of the special meeting if sent by mail or 48 hours prior to the holding thereof if delivered personally or given by telephone or telegraph. The notice or report shall be deemed to have been given at the time when delivered personally to the recipient or deposited in the mail or sent by other means of written communication. (b) Notice of any special meeting of the Board of Directors need not specify the purpose thereof and need not be given to any director who signs a waiver of notice, whether before or after the meeting, or who attends the meeting without protesting, prior thereto or at its commencement, the lack of notice to him. Section 6. Validation of Defectively Held Meetings. The transactions of any meeting of the Board of Directors, however called and noticed or wherever held, are as valid as though had at a meeting duly held after regular call and notice if a quorum is present and if, either before or after the meeting, each of the directors not present signs a written waiver of notice, a consent to holding the meeting or an approval of the minutes thereof. Such waivers, consents and approvals (1) need not specify the purpose of any meeting of the Board of Directors and (2) shall be filed with the corporate records or made a part of the minutes of the meeting. Section 7. Quorum; Action at Meetings; Telephone Meetings. (a) A majority of the authorized number of directors shall constitute a quorum for the transaction of business. Every act or decision done or made by a majority of the directors present at a meeting duly held at which a quorum is present is the act of the Board of Directors, unless action by a greater -10- proportion of the directors is required by law or the Articles of Incorporation. (b) A meeting at which a quorum is initially present may continue to transact business notwithstanding the withdrawal of directors, if any action taken is approved by at least a majority of the required quorum for such meeting. (c) Members of the Board of Directors may participate in a meeting through use of conference telephone or similar communications equipment so long as all members participating in such meeting can hear one another. Section 8. Adjournment. A majority of the directors present, whether or not a quorum is present, may adjourn any meeting to another time and place. If the meeting is adjourned for more than 24 hours, notice of any adjournment to another time or place shall be given prior to the time of the adjourned meeting to the directors who were not present at the time of the adjournment. Section 9. Action Without a Meeting. Any action required or permitted to be taken by the Board of Directors may be taken without a meeting, if all members of the Board individually or collectively consent in writing to such action. Such written consent or consents shall be filed with the minutes of the proceedings of the Board. Such action by written consent shall have the same force and effect as a unanimous vote of such directors. Section 10. Meetings of and Action by Committees. The provisions of this Article apply to committees of the Board of Directors and action by such committees with such changes in the language of those provisions as are necessary to substitute the committee and its members for the Board and its members. ARTICLE VII Officers Section 1. Officers. The Corporation shall have as officers, a President, a Secretary and a Treasurer. The Treasurer is the chief financial officer of the Corporation unless the Board of Directors has by resolution designated a vice president or other officer to be the chief financial officer. The Corporation may also have at the discretion of the Board, a Chairman of the Board, a Vice Chairman of the Board, one or more vice presidents, one or more assistant secretaries, one or more assistant treasurers and such other officers as may be appointed in accordance with the provisions of Section 3 of this Article. One person may hold two or more offices. Section 2. Election of Officers. The officers of the Corporation, except such officers as may be appointed in -11- accordance with the provisions of Section 3 or Section 5 of this Article, shall be chosen by the Board of Directors. Section 3. Subordinate Officers. Etc. The Board of Directors may appoint by resolution, and may empower the Chairman of the Board, if there be such an officer, or the President, to appoint such other officers as the business of the Corporation may require, each of whom shall hold office for such period, have such authority and perform such duties as are determined from time to time by resolution of the Board or, in the absence of any such determination, as are provided in these Bylaws. Any appointment of an officer shall be evidenced by a written instrument filed with the Secretary of the Corporation and maintained with the corporate records. Section 4. Removal and Resignation. (a) Any officer may be removed, either with or without cause, by the Board of Directors or, except in case of any officer chosen by the Board, by any officer upon whom such power of removal may be conferred by resolution of the Board. (b) Any officer may resign at any time effective upon giving written notice to the Chairman of the Board, President, any vice president or Secretary of the Corporation, unless the notice specifies a later time for the effectiveness of such resignation. Section 5. Vacancies. A vacancy in any office because of death, resignation, removal, disqualification or any other cause shall be filled in the manner prescribed in these Bylaws for regular appointments to such office. Section 6. Chairman of the Board. If there is a Chairman of the Board, he shall, if present, preside at all meetings of the Board of Directors, exercise and perform such other powers and duties as may be from time to time assigned to him by resolution of the Board and, if there is no President, the Chairman of the Board shall be the chief executive officer of the Corporation and have the power and duties set forth in Section 7 of this Article. Section 7. President. Subject to such supervisory powers, if any, as may be given by the Board of Directors to the Chairman of the Board, if there be such an officer, the President shall be the chief executive officer and general manager of the Corporation and shall, subject to the control of the Board, have general supervision, direction and control of the business and affairs of the Corporation. He shall preside at all meetings of the shareholders and, in the absence of the Chairman of the Board, or if there be none, at all meetings of the Board. He shall have the general powers and duties of management usually vested in the office of president of a corporation, and shall have such other powers and duties as may be prescribed from time to time by resolution of the Board. -12- Section 8. Vice President. In the absence or disability of the President, the vice presidents in order of their rank as fixed by the Board of Directors or, if not ranked, the Vice President designated by the Board, shall perform all the duties of the President, and when so acting shall have all the powers of, and be subject to all the restrictions upon, the President. The vice presidents shall have such other powers and perform such other duties as from time to time may be prescribed for them respectively by the Board or as the President may from time to time designate. Section 9. Secretary. (a) The Secretary shall keep or cause to be kept (1) the minute book, (2) the share register and (3) the seal, if any, of the corporation. (b) The Secretary shall give, or cause to be given, notice of all meetings of the shareholders and of the Board of Directors required by these Bylaws or by law to be given, and shall have such other powers and perform such other duties as may be prescribed from time to time by the Board. Section 10. Treasurer. (a) The Treasurer shall keep, or cause to be kept, the books and records of account of the Corporation. (b) The Treasurer shall deposit all monies and other valuables in the name and to the credit of the Corporation with such depositories as may be designated from time to time by resolution of the Board of Directors. He shall disburse the funds of the corporation as may be ordered by the Board of Directors, shall render to the President and the Board, whenever they request it, an account of all his transactions as Treasurer and of the financial condition of the corporation, and shall have such other powers and perform such other duties as may be prescribed from time to time by the Board or as the President may from time to time delegate. ARTICLE VIII Records and Reports Section 1. Minute Book - Maintenance and Inspection. The Corporation shall keep or cause to be kept in written form at its principal executive office or such other place as the Board of Directors may order, a minute book which shall contain a record of all actions by its shareholders, Board or committees of the Board including the time, date and place of each meeting; whether a meeting is regular or special and, if special, how called; the manner of giving notice of each meeting and a copy thereof; the names of those present at each meeting of the Board or committees -13- thereof; the number of shares present or represented at each meeting of the shareholders; the proceedings of all meetings; any written waivers of notice, consents to the holding of a meeting or approvals of the minutes thereof; and written consents for action without a meeting. Section 2. Share Register - Maintenance and Inspection. The Corporation shall keep or cause to be kept at its principal executive office or, if so provided by resolution of the Board of Directors, at the Corporation's transfer agent or registrar, a share register, or a duplicate share register, which shall contain the names of the shareholders and their addresses, the number and classes of shares held by each, the number and date of certificates issued for the same and the number and date of cancellation of every certificate surrendered for cancellation. Section 3. Books and Records of Account - Maintenance and Inspection. The Corporation shall keep or cause to be kept at its principal executive office or such other place as the Board of Directors may order, adequate and correct books and records of account. Section 4. Bylaws - Maintenance and Inspection. The Corporation shall keep at its principal executive office or, in the absence of such office in the State of California, at its principal business office in that state, the original or a copy of the Bylaws as amended to date. Section 5. Annual Report to Shareholders. The annual report to the shareholders described in Section 1501 of the Corporations Code of the State of California is expressly dispensed with, but nothing herein shall be interpreted as prohibiting the Board of Directors from issuing annual or other periodic reports to the shareholders of the Corporation as they see fit. ARTICLE IX Indemnification of Officers, Directors, Employees and Agents Section 1. Right to Indemnification. Each person which was or is a party or is threatened to be made a party to or is involved (as a party, witness or otherwise) in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (hereafter a "Proceeding"), by reason of the fact that he, or a person of whom he is the legal representative, is or was a director, officer, employee or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another foreign or domestic corporation, partnership, joint venture, trust or other enterprise, or was a director, officer, employee or agent of a foreign or domestic corporation that was a predecessor corporation of the Corporation or of -14- another enterprise at the request of such predecessor corporation, including service with respect to employee benefit plans, whether the basis of the Proceeding is alleged action in an official capacity as a director, officer, employee or agent or in any other capacity while serving as a director, officer, employee or agent (hereafter an "Agent"), shall be indemnified and held harmless by the Corporation to the fullest extent authorized by statutory and decisional law, as the same exists or may hereafter be interpreted or amended (but, in the case of any such amendment or interpretation, only to the extent that such amendment or interpretation permits the Corporation to provide broader indemnification rights than were permitted prior thereto) against all expenses, liability and loss (including attorneys' fees, judgments, fines, ERISA excise taxes and penalties, amounts paid or to be paid in settlement, any interest, assessments or other charges imposed thereon, and any federal, state, local or foreign taxes imposed on any Agent as a result of the actual or deemed receipt of any payments under this Article) incurred or suffered by such person in connection with investigating, defending, being a witness in, or participating in (including on appeal), or preparing for any of the foregoing in, any Proceeding (hereafter "Expenses"). The right to indemnification conferred in this Article shall be a contract right. It is the Corporation's intention that these Bylaws provide indemnification in excess of that expressly permitted by Section 317 of the California General Corporation Law, as authorized by the Corporation's Articles of Incorporation. Section 2. Authority to Advance Expenses. Expenses incurred by an officer or director (acting in his capacity as such) in defending a Proceeding shall be paid by the Corporation in advance of the final disposition of such Proceeding, provided, however, that if required by the California General Corporation Law, as amended, such Expenses shall be advanced only upon delivery to the Corporation of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the Corporation as authorized in this Article or otherwise. Expenses incurred by other Agents of the Corporation (or by the directors or officers not acting in their capacity as such, including service with respect to employee benefit plans) may be advanced upon the receipt of a similar undertaking, if required by law, and upon such other terms and conditions as the Board of Directors deems appropriate. Any obligation to reimburse the Corporation for Expense advances shall be unsecured and no interest shall be charged thereon. Section 3. Right of Claimant to Bring Suit. If a claim under Section 1 or 2 of this Article is not paid in full by the Corporation within thirty (30) days after a written claim has been received by the Corporation, the claimant may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall be entitled to be paid also the expense (including attorneys' fees) of prosecuting such claim. It shall -15- be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in defending a Proceeding in advance of its final disposition where the required undertaking has been tendered to the Corporation) that the claimant has not met the standards of conduct that make it permissible under the California General Corporation Law for the Corporation to indemnify the claimant for the amount claimed. The burden of proving such a defense shall be on the Corporation. Neither the failure of the Corporation (including its Board of Directors, independent legal counsel or its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper under the circumstances because he has met the applicable standard of conduct set forth in the California General Corporation Law, nor an actual determination by the Corporation (including its Board of Directors, independent legal counsel, or its stockholders) that the claimant had not met such applicable standard of conduct, shall be a defense to the action or create a presumption that claimant has not met the applicable standard of conduct. Section 4. Provisions Nonexclusive. The rights conferred on any person by this Article shall not be exclusive of any other rights that such person may have or hereafter acquire under any statute, provision of the Articles of Incorporation, agreement, vote of stockholders or disinterested directors, or otherwise, both as to action in an official capacity and as to action in another capacity while holding such office. To the extent that any provision of the Articles, agreement or vote of the stockholders or disinterested directors is inconsistent with these Bylaws, the provision, agreement or vote shall take precedence. Section 5. Authority to Insure. The Corporation may purchase and maintain insurance to protect itself and any Agent against any Expense asserted against or incurred by such person, whether or not the Corporation would have the power to indemnify the Agent against such Expense under applicable law or the provisions of this Article, all as set forth in Section 317 of the California General Corporation Law, as amended. Section 6. Survival of Rights. The rights provided by this Article shall continue as to a person who has ceased to be an Agent and shall inure to the benefit of the heirs, executors and administrators of such person. Section 7. Settlement of Claims. The Corporation shall not be liable to indemnify any Agent under this Article (a) for any amounts paid in settlement of any action or claim effected without the Corporation's written consent, which consent shall not be unreasonably withheld; or (b) for any judicial award, if the Corporation was not given a reasonable and timely opportunity, at its expense, to participate in the defense of such action. -16- Section 8. Effect of Amendment. Any amendment, repeal or modification of this Article shall not adversely affect any right or protection of any Agent existing at the time of such amendment, repeal or modification. Section 9. Subrogation. In the event of payment under this Article, the Corporation shall be subrogated to the extent of such payment to all of the rights of recovery of the Agent, who shall execute all papers required and shall do everything that may be necessary to secure such rights, including the execution of such documents necessary to enable the Corporation effectively to bring suit to enforce such rights. Section 10. No Duplication of Payments. The Corporation shall not be liable under this Article to make any payment in connection with any claim made against the Agent to the extent the Agent has otherwise actually received payment (under any insurance policy, agreement, vote, or otherwise) of the amounts otherwise indemnifiable hereunder. ARTICLE X Miscellaneous Section 1. Checks, Drafts, Etc. All checks, drafts or other orders for payment of money, notes or other evidences of indebtedness, and any assignment or endorsement thereof, issued in the name of or payable to the Corporation, shall be signed or endorsed by such person or persons and in such manner as, from -16- time to time, shall be determined by resolution of the Board of Directors. Section 2. Contracts, Etc. - How Executed. The Board of Directors, except as otherwise provided in these Bylaws, may authorize any officer or officers, agent or agents, to enter into any contract or execute any instrument in the name of and on behalf of the Corporation, and such authority may be general or confined to specific instances; and, unless so authorized or ratified by the Board, no officer, employee or other agent shall have any power or authority to bind the Corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or to any amount. Section 3. Certificates of Stock. All certificates shall be signed in the name of the Corporation by the Chairman of the Board or the President or a vice president and by the Treasurer or an assistant treasurer or the Secretary or an assistant secretary, certifying the number of shares and the class or series thereof owned by the shareholder. Any or all of the signatures on a certificate may be by facsimile signature. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if such person were an -17- officer, transfer agent or registrar at the date of issue. Section 4. Lost Certificates. Except as provided in this section, no new certificate for shares shall be issued in lieu of an old certificate unless the latter is surrendered to the Corporation and cancelled at the same time. The Board of Directors may, in case any share certificate or certificate for any other security is lost, stolen or destroyed, authorize the issuance of a new certificate in lieu thereof, upon such terms and conditions as the Board may require, including provision for indemnification of the Corporation secured by a bond or other adequate security sufficient to protect the Corporation against any claim that may be made against it, including any expense or liability, on account of the alleged loss, theft or destruction of such certificate or the issuance of such new certificate. Section 5. Representation of Shares of Other Corporations. Any person designated by resolution of the Board of Directors or, in the absence of such designation, the Chairman of the Board, the President or any vice president or the Secretary, or any other person authorized by any of the foregoing, is authorized to vote on behalf of the Corporation any and all shares of any other corporation or corporations, foreign or domestic, owned by the Corporation. Section 6. Construction and Definitions. Unless the context otherwise requires, the general provisions, rules of construction and definitions contained in the Corporations Code of the State of California shall govern the construction of these Bylaws. ARTICLE XI Amendments Section 1. Amendments. New bylaws may be adopted or these Bylaws may be amended or repealed by the affirmative vote of a majority of the outstanding shares entitled to vote. Subject to the next preceding sentence, bylaws (other than a bylaw or amendment thereof specifying or changing a fixed number of directors or the maximum or minimum number, or changing from a fixed to a variable board or vice versa) may be adopted, amended or repealed by the Board of Directors. -18- EX-3.2M 29 LIMITED LIABILITY CO. AGREEMENT OF IRON MTN. MGT. EXHIBIT 3.2M LIMITED LIABILITY COMPANY AGREEMENT OF IRON MOUNTAIN RECORDS MANAGEMENT OF MISSOURI LLC A Delaware Limited Liability Company This Limited Liability Company Agreement of Iron Mountain Records Management of Missouri LLC (this "Agreement"), dated as of April 24, 1996, is adopted by and executed and agreed to by Iron Mountain Records Management, Inc. and Iron Mountain Records Management of Maryland, Inc. (individually, a "Member" and collectively referred to as the "Members"). ARTICLE 1 DEFINITIONS P. 1.01. Definition. The following terms shall have the following meanings when used in this Agreement: "Act" means the Delaware Limited Liability Company Act and any successor statute, as amended form time to time. "Adjusted Capital Account Deficit" means the Capital Account maintained for each Member as of the end of each fiscal year of the Company after giving effect to the following adjustments: (a) Increased by any amounts which the Member is obligated to restore under the stands set forth in Treas. Reg. ss. 1.704-1(b)(2)(ii)(c) or is deemed obligated to restore under Treas. Reg. ss. 1.704-2(g)(1) (relating to minimum gains) and Treas. Reg. ss. 1.704-2(i))(5) (relating to member minimum gains); and (b) Decreased by: (i) All losses and deductions that, as of the end of the applicable fiscal year, are reasonably expected to be allocated to the Member in years subsequent to the applicable fiscal year under Code ss.ss. 704(e)(2) and 706(d) and under Treas. Reg. ss. 1.751-1(b)(ii); and (ii) Distributions that are reasonably expected to be made to the applicable Member to the extent that such distributions exceed offsetting increases in the applicable Member's Capital Account that are reasonably expected to occur during (or prior to) the year in which such distributions are reasonably expected to be made. Notwithstanding anything to the contrary contained herein, an Adjusted Capital Account Deficit shall be determined in accordance with Treas. Reg. ss. 1.704-1(b)(2)(ii)(d). "Adjusted Capital Contribution" means, as of any day, a Member's Capital Contribution adjusted as follows: (a) Increased by the amount of any Company liabilities which, in connection with distributions pursuant to P. P. 4.06 or 10.03, are assumed by such Member or are secured by any Company Property distributed to such Member; and (b) Reduced by the amount of cash and the fair market value (as determined by the Members) of any Company Property distributed to such Member pursuant to P. P. 4.06 and 10.03 and the amount of any liabilities of such Member assumed by the Company or which are secured by any Property contributed by such member to the Company. In the event any Person transfers all or any portion of its Interest, the transferee shall succeed to the Adjusted Capital Contribution of the transferor to the extent it relates to the transferred Interest. "Affiliate" of another Person means: (a) any entity or individual that directly or indirectly controls or holds the power to vote 10% or more of the outstanding voting securities of the Person in question; (b) any Person 10% or more of whose voting securities are directly or indirectly owned, controlled or held with power to vote, by such other Person; (c) any Person directly or indirectly controlling, controlled by, or under common control with such other Person; (d) any officer, director or partner of such other Person; and (e) if such other Person is an officer, director or partner, any company for which such Person acts in any such capacity. "Agreed Value" of any Contributed Property means the fair market value of the property at the time of contribution as determined by the Members; provided, however, that the Agreed Value of any Property deemed contributed to the Company for federal income tax purposes upon termination and reconstitution thereof pursuant to Code ss. 708 shall be determined in accordance with P. 3.06. Subject to P. 3.06, in the event that more than a single item of Property is contributed to the Company in a single or integrated transaction, the Members shall use such method as they deem reasonable and appropriate to allocate the aggregate Agreed Value of Contributed Properties among each separate property in proportion to the respective fair market value of each item of such Property. "Articles" means the Certificate of Formation filed for the Company in accordance with the Act. "Bankruptcy" means, with respect to any Member: (i) an assignment for the benefit of creditors; (ii) a voluntary petition in bankruptcy; (iii) adjudication as a bankrupt or insolvent; (iv) the filing of a petition or answer seeking any reorganization, arrangement, composition, readjustment, liquidation or similar relief under any statute, regulation or law; (v) the filing of an answer or other pleading admitting or failing to contest the material allegations of a petition filed against the Member in any proceeding of this nature; or (vi) seeking, consenting to, or acquiescing in the appointment of a trustee, receiver, or liquidator of such Member's properties or of all or any substantial part of the Member's properties. "Book-Tax Disparity" shall mean with respect to any item of Contributed Property or Revalued Property, as of the date of any determination, the difference between the Carrying Value of such Contributed Property or Revalued Property and the adjusted basis thereof for federal income tax -2- purposes as of such date. A Member's share of the Company's Book-Tax Disparities in all of its Contributed Property and Revalued Property will be reflected by the difference between such Member's Capital Account balance, as maintained pursuant to Article 3, and the balance of such Member's Capital Account computed as if it had been maintained strictly in accordance with federal income tax accounting principles. "Capital Contributions" means the total amount of capital contributed by a Member to the Company, as determined from time to time, which shall include the Net Agreed Value of any Contributed Property. "Carrying Value" means: a) With respect to a Contributed property, the Agreed Value of such Property reduced (but not below zero) by all depreciation, depletion (computed as a separate item of deduction), amortization and cost recovery deductions charged to the Members' Capital Accounts; b) With respect to a Revalued Property, the fair market value of such Property at the time of revaluation, as determined by the Members in accordance with P. 3.07 hereof, reduced (but not below zero) by all depreciation, depletion, amortization and cost recovery deductions charged to the Members' Capital Accounts; and c) With respect to any other Company Property, the adjusted basis of such Property for federal income tax purposes, all as of the time of determination. The Carrying Value of any Property shall be adjusted from time to time in accordance with P. 3.07 hereof. "Code" means the Internal Revenue Code of 1986 and any successor statute, as amended from time to time. "Company" means Iron Mountain Records Management of Missouri LLC, a Delaware limited liability company. "Company Property" or "Property" means all properties, assets and rights of any type owned by the Company. "Contributed Property" means any property contributed to the Company at any time or from time to time (or deemed contributed to the Company upon a termination and reconstitution thereof under Code ss. 708). Once the Carrying Value of Contributed Property has been adjusted pursuant to P. 3.07 hereof, such property shall be deemed Revalued Property and shall no longer be deemed Contributed Property. "Corporation Act" means the Delaware General Corporation Law and any successor statute, as amended from time to time. -3- "Impasse" means the failure of a Member to consent to or approve any of the following actions, after any such action has been proposed by the other Member: (i) to sell or exchange all or any substantial part of the Company Property; (ii) to change the Company's purpose or the purpose for which the Company Property is owned; (iii) to refinance any of the Company's indebtedness; (iv) to incur more than Fifty Thousand Dollars ($50,000) of indebtedness in the aggregate; or (v) to raise any additional capital for the Company and/or issue any additional Membership Interests. An Impasse shall be considered to have occurred if the Members are unable to agree with respect to any of the foregoing actions within ten (10) days after any such action has been proposed. "Limited Liability Company Agreement" means this Agreement as it may from time to time be amended. "Majority Interest" means one or more Members holding more than 50% of the Units. "Member" means each Person identified as such in the introductory paragraph and each Person hereafter admitted to the Company as a Member as provided in this Agreement. The Members' Interests are set forth on attached and incorporated Exhibit "A". "Membership Interest" or "Interest" means the membership interest or interest of a member in the Company, including the right to any and all benefits to which such member may be entitled in accordance with this Agreement, and the obligations as provided in this Agreement and the Act. "Net Agreed Value" means, as follows: (a) In the case of any Contributed Property, the Agreed Value of such property net of liabilities either assumed by the Company upon such contribution or to which such property is subject when contributed to the Company, as determined in accordance with Code ss.752; and (b) In the case of any property distributed to a Member, the Company's Carrying Value of such property at the time such property is distributed, net of any indebtedness either assumed by such distributee Member upon such distribution or to which such property is subject at the time of distribution determined in accordance with Code ss.752. "Net Cash Receipts" means the gross cash proceeds from the operation of the Company's business less the portion thereof used to establish reserves for or to pay Company expenses, debt payments and capital expenditures. "Net Cash Receipts" shall include any net cash proceeds from the sale or disposition of company Property and from the refinancing of indebtedness of the Company, shall be increased by any reduction of reserves previously established by the Members, and shall not be reduced by depreciation, cost recovery, amortization or similar noncash deductions. "Person" means any individual, corporation, trust, partnership, joint venture, limited liability company or other entity. -4- "Proceeding" has the meaning given that term in P. 7.01. "Profits" and "Losses" mean, for each fiscal year, an amount equal to the Company's taxable income or loss for such year, determined in accordance with Code ss.703(a) (including all items required to be stated separately) with the following adjustments: (a) Any income exempt from federal income tax shall be included; (b) Any expenditures of the Company described in Code ss.705(a)(2)(B) (including expenditures treated as such pursuant to Treas. Reg. ss.1.704-1(b)(2)(iv)(i)) shall be subtracted; (c) In the event any Company Property is revalued pursuant to P. 3.07, the amount of such adjustment shall be taken into account in determining gain or loss from the disposition of such Property; (d) Any items which are specially allocated pursuant to P. 4.02 or 4.03 shall not be taken into account in computing Profits or Losses; (e) Gain or loss resulting from any disposition of Company Property with respect to which gain or loss is recognized for federal income tax purposes shall be computed by reference to the Carrying Value of the Property disposed of, notwithstanding that the adjusted tax basis of such Property differs from its Carrying Value; and (f) In the case of Company Property having a Book-Tax Disparity, in lieu of depreciation, amortization or other cost recovery deductions allowable under the Code ("Tax Depreciation"), there shall be taken into account for each Property a depreciation allowance which bears the same ratio to its initial Agreed Value (or, with respect to Revalued Property, its initial Carrying Value) as the Tax Depreciation for such year bears to its beginning adjusted tax basis. "Representative" shall mean the legally appointed guardian of a mentally incapacitated Member, the conservator of a mentally incapacitated Member's assets or the legally appointed and qualified executor or personal representative of the estate of a deceased Member. In the event no such guardian, executor or personal representative is appointed, then the Representative shall mean the spouse of such incapacitated or deceased Member, or if such Member does not have a spouse or the spouse is not then living or is unable ro unwilling to act, such Member's then living lineal descendants who are willing and capable of acting, one at a time in descending order of age but in no event younger than 21 years of age or, if none, such Member's then-living lineal ancestors who are willing and capable of acting, one at a time and in ascending order of age. "Revalued Property" shall mean any Property the Carrying Value of which has been adjusted in accordance with P. 3.07(a) or (b). If a Revalued Property is deemed distributed by, and recontributed to, the Company for federal income tax purposes upon a termination of the Company pursuant to Code ss.708, such Property shall constitute a Contributed Property until the Carrying Value of such Property is subsequently adjusted (if at all) pursuant to P. 3.07(a) or (b). -5- "Sharing Ratio" shall mean the ratio in which the Members share in all Profits, Losses and distributions to the Members. The Sharing Ratio for each Member shall be the same percentage that such Member's Units bear to all outstanding Units. "Transfer" means, with respect to an Interest, a sale, assignment, gift or any other disposition by a Member, whether voluntary, involuntary or by operation of law. "Transferor" means a Member who proposes to make a voluntary Transfer of its Interest, a Withdrawing Member, or the Representative of a Withdrawing Member. "Treasury Regulations", Treas. Reg. or "Reg.") means the income tax regulations promulgated under the Code as amended from time to time (including corresponding provisions of succeeding regulations). "Unit" means an Interest representing a Capital Contribution $10,000 to the Company. "Unrealized Gain" attributable to any item of Company Property means, as of any date of determination, the excess, if any, of (a) the fair market value of such Property (as determined under P. 3.07 hereof) as of such date, over (b) the Carrying Value of such Property as of such date (prior to any adjustment to be made pursuant to P. 3.07) as of such date. "Unrealized Loss" attributable to any item of Company Property means, as of any date of determination, the excess, if any, of (a) the Carrying Value of such Property as of such date (prior to any adjustment to be made pursuant to P. 3.07 as of such date), over (b) the fair market value of such Property (as determined under P. 3.07) as of such date. "Withdrawing Member" has the meaning given that term in P. 5.03(b). ARTICLE 2 ORGANIZATION P. 2.01. Formation. The Company has been organized as a Delaware limited liability company under and pursuant to the Act and a certificate of formation for the Company has been filed with the Secretary of State of Delaware. The rights and obligations of the Members shall be as set forth in the Act except as this Agreement expressly provides otherwise. P. 2.02. Name. The name of the Company is "Iron Mountain Records Management of Missouri LLC" and all Company business shall be conducted in that name or such other name as the Members may select from time to time and which is in compliance with all applicable laws. P. 2.03. Registered Office and Registered Agent and Principal Office. The registered office of the Company required by the Act to be maintained in the State of Delaware shall be the office of the initial registered agent named in the Certificate of Formation or such other office as the Members may designate from time to time in the manner provided by law. The registered agent -6- of the Company in the State of Delaware shall be the initial registered agent named in the Articles or such other Person or Persons as the Members may designate from time to time. The principal office of the Company shall be at such place as the Members may designate from time to time, and the Company shall maintain records there as required by the Act. P. 2.04. Purposes. The purposes of the Company shall be to provide records management and storage services and to undertake all such other activities and businesses as may be undertaken by a limited liability company under the Act. P. 2.05. Foreign Qualification. The Company shall not engage in any business outside the State of Delaware unless and until the Company has complied with the requirements necessary to qualify the Company as a foreign limited liability company in the other jurisdiction. P. 2.06. Term. The Company commenced on the date of issuance of its certificate of formation and shall continue in existence until December 31, 2025 or such earlier time as may be determined in accordance with the terms of the Agreement. P. 2.07. Recapitalization, Acquisitions, Restructuring and Mergers. The Company may participate in or be a party to any recapitalization, acquisition, restructuring or merger in accordance with and as allowed by the Act or the Corporation Act. P. 2.08. Entity Declaration. The Company shall not be a general partnership, a limited partnership or a joint venture, and no Member shall be considered a partner or joint venturer of or with any other Member, for any purposes other than for federal and state tax purposes, and this Agreement shall not be construed otherwise. ARTICLE 3 CAPITAL CONTRIBUTIONS AND CAPITAL ACCOUNTS P. 3.01. Initial Contributions. The Members shall make Capital Contributions to the Company in cash in the amount set forth in attached and incorporated Exhibit "A." P. 3.02. Subsequent Contributions. No Member shall be obligated to make any Capital Contributions to the Company other than those set forth on Exhibit "A." P. 3.03. Return of Capital Contributions. Each Member agrees not to withdraw as a member of the Company and, except as expressly provided herein, no Member shall be entitled to the return of any part of its Capital Contributions or to be paid interest in respect to either its Capital Account or its Capital Contributions. An unpaid Capital Contribution is not a liability of the Company or of any Member. P. 3.04. Loans by Members. Any Member may, but is not obligated to, loan to the Company such sums as the Members determine to be appropriate for the conduct of the Company's business. Any such loans shall bear interest at one percent (1%) above the prime rate of interest -7- charged from time to time by The Chase Manhattan Bank (National Association) and shall be on such other terms as the Members may agree. All loans shall be repaid in full before any distributions are made to the Members. P. 3.05. Capital Accounts. A separate Capital Account shall be maintained for each Member in accordance with Treas. Reg. ss.1.704-1(b)(2)(iv). Subject to the requirements of Treas. Reg. ss.704-1(b)(2)(iv), each Capital Account: (a) shall be credited with: (i) all cash contributions of such Members to the Company; (ii) the Net Agreed Value of Contributed Property, (iii) such Member's share of the Company's Profits; (iv) the amount of any liabilities of the Company assumed by such Member (other than liabilities included in the netting process of Subparagraph (b)(ii) below or increases in the Member's share of the Company's liabilities determined in accordance with the provisions of Code ss.752); and (v) the amount of any basis increase in Company Property attributable to investment credit recapture allocated to such Member; and (b) shall be debited for: (i) distributions of cash to such Member; (ii) the Net Agreed Value of Company Property distributed to such Member, (iii) such Member's share of the Company's Losses (including expenditures which can neither be capitalized nor deducted for tax purposes, organization and syndication expenses not subject to amortization, and loss on sale or disposition of Company Property, whether or not disallowed under the rules of Code ss.ss.267 or 707, but excluding losses or deductions described in Treas. Reg. ss.1.704-1(b)(4)(i) or (iii)); (iv) the amount of any liabilities of such Member assumed by the Company (other than liabilities already included in the netting process of Subparagraph (a)(ii) above or decreases in the Member's share of the Company's liabilities determined in accordance with the provisions of Code ss.752); and (v) the amount of any basis decrease in Company Property attributable to investment credit recapture allocated to such Member. P. 3.06. Capital Accounts Upon Sale or Exchange of Membership Interests. Upon the sale or exchange of an Interest, the following shall apply: (i) if such sale or exchange causes a termination of the Company in accordance with Code ss.708(b)(1)(B), the Company's Property shall be deemed to have been distributed to the Members in a liquidation of the Company and to have been recontributed to a new Company, and the Capital Accounts of the Members shall be redetermined in accordance with P. 3.07, or (ii) if such sale or exchange does not cause a termination of the Company in accordance with Code ss.708(b)(1)(B), the Capital Account of the selling or exchanging Member will be transferred to the transferee on a pro rata basis. P. 3.07. Revaluation of Capital Accounts Upon Occurrence of Certain Events. (a) Contributions. In accordance with the provisions of Treas. Reg. ss.1.704- 1(b)(2)(iv)(f), if after the initial capital is contributed pursuant to P. 3.01, money or property in other than a de minimis amount is contributed to the Company in exchange for an Interest, the Capital Accounts of the Members and Carrying Values of all the Company's Property (determined immediately prior to such issuance) shall be adjusted to reflect the Unrealized Gain or Unrealized Loss attributable to each such Company Property as if such Unrealized Gain or -8- Unrealized Loss had been recognized on a sale of each such item of Company Property immediately prior to such issuance and had been allocated to the Members in accordance with Article 4. In determining the Unrealized Gain or Unrealized Loss, the fair market value of Company Property shall be as determined by the Members. (b) Distributions. In accordance with the provisions of Treas. Reg. ss.1.704- 1(b)(2)(iv)(f), if money or Company Property in other than a de minimis amount is distributed (including any deemed distribution under P. 3.06(i)) to a Member in exchange for or part of an Interest, the Capital Accounts of the Members and the Carrying Values of all the Company's Property (determined immediately prior to such distribution) shall be adjusted to reflect the Unrealized Gain or Unrealized Loss attributable to each item of Company Property as if such Unrealized Gain or Unrealized Loss had been recognized on a sale of each such item of Company Property immediately prior to such distribution and had been allocated to the Members in accordance with Article 4. In determining the Unrealized Gain or Unrealized Loss, the fair market value of the distributed Property shall be as determined by the Members. ARTICLE 4 ALLOCATIONS AND DISTRIBUTIONS P. 4.01. Allocation of Profits and Losses. After giving effect to the special allocations set forth in P. P. 4.02 and 4.03, Profits and Losses for each fiscal year shall be allocated among the Members in accordance with the Sharing Ratio. P. 4.02. Special Allocations. Items of income, gain, loss and deduction shall be allocated in accordance with the provisions of this P. 4.02 without regard to the allocation provision contained in P. 4.01 in the following order: (a) Qualified Income Offset. If any Member's Capital Account is unexpectedly adjusted for, or such Member is unexpectedly allocated or there is unexpectedly distributed to such Member, any item described in Treas. Reg. ss.1.704-1(b)(2)(ii)(d)(4)-(6), and such treatment creates or increases a Member's Adjusted Capital Account Deficit, then without regard to the allocations provided in P. 4.01, the Company shall allocate to such member items of Company income and gain (consisting of a pro rata portion of each item of Company income, including gross income, and gain for such year) in an amount and manner sufficient to eliminate such Adjusted Capital Account Deficit as quickly as possible. (b) Gross Income Allocation. In the event that a Member has a deficit Capital Account at the end of any Company fiscal year which is in excess of the sum of (i) the amount the Member is obligated to restore pursuant to any provision of this Agreement, and (ii) the amount the Member is deemed to be obligated to restore pursuant to Treas. Reg. ss.1.704-2(g) and (i)(5), the Member shall be specially allocated items of Company income and gain in the amount of such excess as quickly as possible, provided that an allocation pursuant to this paragraph shall be made if and to the extent that the Member would have a deficit Capital Account in excess of -9- such sum after all other allocations provided for in this P. 4.02 have been tentatively made as if this P. 4.02(b) were not in this Agreement. P. 4.03. Curative Allocations. The allocations set forth in P. 4.02 ("Regulatory Allocations") are intended to comply with certain requirements of Treas. Reg. ss.1.704-1(b). Notwithstanding any other provision of Article 4 (other than Regulatory Allocations), the Regulatory Allocations shall be taken into account in allocating other profits, losses and items of income, gain, loss and deduction among the Members so that, to the extent possible, the net amount of such allocations of other profits, losses and other items and the Regulatory Allocations to each member shall be equal to the amount that would have been allocated if the Regulatory Allocations had not occurred. P. 4.04. Code Sections 704(c) Allocations. In accordance with Code ss.704(c), income, gain, loss and deduction concerning any Contributed Property shall, solely for tax purposes, be allocated among the Members to take account of any variation between the adjusted tax basis of such property and the Agreed Value of such property upon contribution. If the value of any Company Property is adjusted under P. 3.07 of this Agreement, subsequent allocations of income, gain, loss and deduction with respect to such asset shall take account of any variation between the adjusted tax basis of such asset for federal income tax purposes and its Carrying Value in the same manner as under Code ss.704(c). Allocations under this P. 4.04 are solely for purposes of federal income taxes and shall not affect or be taken into account in computing any Member's Capital Account. P. 4.05. Allocations Concerning Transferred Interests. Unless the Code requires otherwise, any Profits or Losses allocable to an interest which has been transferred during any year shall be allocated among the Persons who were holders of such Interest during such year by taking into account their varying interests during such taxable year in accordance with Code ss.706(d) and using any convention selected by the Members. P. 4.06. Distributions of Net Cash Receipts. Except as otherwise provided in P. 10.03, Net Cash Receipts, if any, shall be distributed to the Members within thirty (30) days after the end of each fiscal year, in the following order and priority: (a) First, pro rata to the Members in proportion to their Units, an amount equal to their Adjusted Capital Contributions, and (b) The balance to the Members in accordance with the Sharing Ratio. ARTICLE 5 MEMBERSHIP; DISPOSITIONS OF INTERESTS P. 5.01. Initial Members. The initial members of the Company are the Persons executing this Agreement as Members as of the date of this Agreement, each of which is admitted to the -10- Company as a Member effective contemporaneously with the execution by such Person of this Agreement. P. 5.02. Representations and Warranties. Each Member hereby represents and warrants to the Company and to each other Member that (a) if that Member is a corporation, it is duly organized, validly existing, and in good standing under the law of the state of its incorporation and is duly qualified and in good standing as a foreign corporation in the jurisdiction of its principal place of business (if not incorporated therein); (b) if that Member is a limited liability company, it is duly organized, validly existing, and (if applicable) in good standing under the law of the state of its organization and is duly qualified and (if applicable) in good standing as a foreign limited liability company in the jurisdiction of its principal place of business (if not organized therein); (c) if that Member is a partnership, trust, or other entity, it is duly formed, validly existing, and (if applicable) in good standing under the law of the state of its formation, and if required by law is duly qualified to do business and (if applicable) in good standing in the jurisdiction of its principal place of business (if not formed therein), and the representations and warranties in clauses (a)-(c), as applicable, are true and correct with respect to each partner (other than limited partners), trustee, or other member thereof; (d) the Member has full corporate, limited liability company, partnership, trust, or other applicable power and authority to execute and agree to this Agreement and to perform its obligations hereunder and all necessary actions by the board of directors, shareholders, members, partners, trustees, beneficiaries, or other Persons necessary for the due authorization, execution, delivery, and performance of this Agreement by that Member have been duly taken; (e) the Member has duly executed and delivered this Agreement; (f) the Member's authorization, execution, delivery, and performance of this Agreement does not conflict with (i) any law, rule or court order applicable to that Member, (ii) that Member's articles of incorporation, bylaws, partnership agreement, Agreement or articles of organization, or (iii) any other agreement or arrangement to which that Member is a party or by which it is bound. P. 5.03. Restrictions on Transfer of Membership Interests. (a) Voluntary Transfer. If a Member intends to Transfer any Membership Interests it owns to any Person other than the Company, it shall give written notice to the Company and the nonselling Member ("Remaining Member") of its intention to do so ("Transfer Notice"). The Transfer Notice, in addition to stating the Member's intention to Transfer its Membership Interests, shall state: (i) the number of Units it desires to Transfer; (ii) the name, business and residence address of the proposed transferee; and (iii) whether or not the Transfer is made at arm's length for full and valuable consideration and, if so, the amount of the consideration and the other terms of the sale. For sixty (60) days following the Company's receipt of the Transfer Notice (the "Company Option Period"), the Company shall have the option to purchase all or any portion of the Membership Interests which are proposed to be transferred, for the price and upon the terms set form in P. 5.03(i), and if the Company does not exercise its option to purchase all, but not less than all, of such Membership Interests within said sixty (60)-day period, the Remaining Member for a period of fifteen (15) days after the expiration of the Company Option Period shall have an option to purchase all of the membership Interests which have not been purchased by the Company, at the price and upon the terms set forth in P. 5.03(i). -11- (b) Involuntary Transfers. In the event of the death, incompetency, bankruptcy, withdrawal or dissolution of a Member (a "Withdrawing Member"), (i) for a period of ninety (90) days after the Company receives actual notice thereof, the Company shall have the option to purchase all or any portion of the Withdrawing Member's Interest, for the price and upon the terms set forth in P. 5.03(i). If the Company does not exercise its option to purchase all of the Withdrawing Member's Interest, for a period ending fifteen (15) days after the close of the Company's 90-day option period, the Remaining Member shall have an option to purchase all, but not less than all, of such Withdrawing Member's Interest at the price set forth in P. 5.03(i)(i)(2) and upon the same terms as provided for an option regarding a voluntary transfer in P. 5.03(a) of this Agreement. Notwithstanding the foregoing, neither the Company nor the Remaining Member may exercise this option unless the Remaining Member has agreed pursuant to P. 10.01(f) to continue the Company's business with a new Member. If the Company and the Remaining Member do not exercise their options, the provisions of P. 5.03(e) and (g) shall apply to the Withdrawing Member. (c) Exercise of Options. (i) Means of Exercise. The Company and the Remaining Member who exercises any option granted by this Article 5 shall do so by giving written notice ("Exercise Notice") of the exercise of their respective options within the time periods provided in this Article 5 to the Member and, in the case of an option upon involuntary transfer, to the Withdrawing Member's Representative. (ii) Voting to Exercise. A Transferor, in its capacity as a Member, shall not be entitled to vote in the Company's determination of whether to exercise any purchase option granted by this Agreement or with respect to any decisions or actions involving the purchase option or the consummation of the exercise thereof. (d) Nonexercise of Options. If the Remaining Member and the Company fail to exercise their purchase options to acquire all of the membership Interests which are proposed to be transferred in compliance with P. 5.03(a) of this Agreement, the Transferor may, within thirty (3) days following their expiration of the option period for the Remaining Member, transfer the Interests to the transferee named in the Transfer Notice, subject to the terms of this Agreement; provided, however, that such Transfer must be upon the terms and for the consideration specified in said Transfer Notice. If the Transfer is not upon the terms or is not to the transferee stated in the Transfer Notice, or is not made within said thirty (30)-days period, or if the Transferor, after the Transfer, reacquires all or any portion of the transferred Units, the initial Transfer shall be void and without legal or other effect. (e) Requirements for Transfer. Subject to any restrictions on transferability required by law (including the Securities Act of 1933, any state securities or "Blue Sky" law, and the rules promulgated thereunder), and subject to the provisions of P. 5.03(a) and (b), each Member shall have the right to Transfer (but not to substitute the assignee as a substitute Member in its place, except in accordance with P. 5.03(g) hereof), by a written instrument, the whole or any part -12- of its Interest, provided that: (i) the transferee is a citizen and resident of the United States, and otherwise not a tax-exempt entity under Section 168(h) of the Code; (ii) the Transferor delivers to the Company and the Remaining Member an unqualified opinion of counsel in form and substance satisfactory to counsel designated by the Remaining Member that neither the Transfer nor any offering in connection therewith violates any provision of any federal or state securities law; (iii) the transferee executes a statement that it is acquiring such Interest or such part thereof for its own account for investment and not with a view to distribution, fractionalization or resale thereof; and (iv) the Company receives a favorable opinion of the Company's legal counsel or such other counsel selected by the Remaining Member that such Transfer would not result in the termination of the Company (within the meaning of Section 708(b) of the Code) or the termination of its status as a partnership under the Code; provided, further, that the Remaining Member may elect to waive the requirement of the opinions of counsel set forth in P. 5.03(e)(ii) and (iv) above should it, in its sole discretion, determine that the cost or time delays involved in procuring such opinions may impede the Company's ability to effect the contemplated Transfer. (f) Effectiveness of Assignment. No Transfer shall be effective unless and until the requirements of P. 5.03(e) are satisfied. The Transfer by a Member of all or part of its Interest shall become effective on the first day of the calendar month immediately succeeding the month in which all of the requirements of this P. 5.03 have been met, and the Company has received from the Transferor a transfer fee sufficient to cover all expenses of the Company connected with such transfer; provided, however, that the Remaining Member may elect to waive this fee in its sole discretion. All distributions prior to the effective date shall be made to the Transferor and all distributions made thereafter shall be made to the transferee. (g) Requirements for Admission. No transferee of the whole or a portion of a Member's Interest shall have the right to become a Member unless and until all of the following conditions are satisfied: (i) a duly executed and acknowledged written instrument of transfer approved by the Remaining Member has been filed with the Company setting forth (A) the intention of the transferee to be admitted as a Member, (B) the notice address of the transferee, and (C) the number of Units transferred by the Transferor to the transferee; (ii) the opinions of counsel described in P. 5.03(e) above are delivered to the Company and the Remaining Member, subject to the Remaining Member's right to waive the delivery of these opinions in its sole discretion; the Transferor and transferee execute and acknowledge, and cause such other Persons to execute and acknowledge, such other instruments and provide such other evidence as the Remaining Member may reasonably deem necessary or desirable to effect such admission, including without limitation: (A) the written acceptance and adoption by the transferee of the provisions of this Agreement including a representation and warranty that the representations and warranties in P. 5.02 are true and correct with respect to the transferee; (B) the transferee's completion of a purchaser qualification questionnaire which will enable counsel for the Company to determine whether such proposed substitution is consistent with the requirements of a private placement -13- exemption from registration under the Securities Act of 1933 and relevant state law; and (C) the transferee's completion, if applicable, of acknowledgment of the use of a purchaser representative, and such representative's completion of a purchaser representative questionnaire which will enable counsel for the Company to determine whether such proposed substitution is consistent with the requirements of a private placement exemption from registration under the Securities Act of 1933 and relevant state law; (iii) the admission is approved by the Remaining Member, the granting or denial of which shall be within the sole and absolute discretion of the Remaining Member; and (iv) a transfer fee has been paid to the Company by the Transferor sufficient to cover all expenses in connection with the transfer and admission, including but not limited to attorney's fees for the legal opinions referred to in P. 5.03(e) and (g), subject to the Remaining Member's right to waive the payment of this fee in its sole discretion. (h) Rights of Mere Assignees. If a transferee of an Interest is not admitted as a Member, it shall not be entitled to inspect the Company's books and records, receive an accounting of Company financial affairs, exercise the voting rights of a member, or otherwise take part in the Company's business or exercise the rights of a Member under this Agreement. (i) Purchase Price and Terms. (i) Purchase Price. If the Company or the Remaining Member exercises its option (the "Optionor"), the purchase price which Optionor shall pay for the Transferor's Membership Interest following the exercise of an option to purchase under P. 5.03(a) or (b) shall be an amount equal to: (1) the purchase price as stated in the Transfer Notice where (a) the proposed transfer is for full and adequate consideration and (b) the transferee identified in the Transfer Notice is not a member of the Transferor's family or an Affiliate of the Transferor; and (2) in all other cases, the value of the Transferor's Membership Interest as mutually agreed upon by the Members. If the parties cannot agree within ten (10) days after the date of the final Exercise Notice, the Purchase price shall be the amount which the Transferor would receive if all the Company Property were sold at its appraised fair market value and the proceeds were applied in accordance with P. 10.03. An independent appraiser ("Qualified Appraiser") experienced in conducting appraisals of assets similar to the Company Property shall conduct an appraisal of all of the Company Property to determine its fair market value ("First Appraisal"). The Optionor shall select a Qualified appraiser to perform the First Appraisal and shall assume the cost of the First Appraisal. If, within five (5) days after receipt of the First Appraisal, the Transferor disputes the value determined by the First Appraisal, the Transferor may obtain, at its own cost, a second appraisal ("Second Appraisal") of the fair market value of the Company Property by a Qualified Appraiser of its choice. If the parties agree, the Second Appraisal shall be used to determine the value of the Company Property. If the two appraisals are performed and the parties cannot agree within ten (10) days which of the appraisals accurately reflects the value of the Company Property, then the two appraisers selected under this subparagraph shall select a Qualified Appraiser to conduct a third appraisal ("Third Appraisal") of the fair market value of the Company Property. The fair market value of the Company Property established by the Third -14- Appraisal shall be final and binding in all respects on all parties. The Optionor and the Transferor shall each pay fifty percent (50%) of the costs of the Third Appraisal. (ii) Payment of Purchase Price and Closing. The closing of any sale and purchase of the Transferor's Membership Interest in the Company shall be within thirty (30) days from the later of (1) the date of the final Exercise Notice, or (2) delivery of the final appraisal performed pursuant to P. 5.03(i)(i). The Optionor shall pay the purchase price (1) at the time and in accordance with the terms and conditions as stated in the Transfer Notice, where the purchase price is determined pursuant to P. 5.03(i)(1), or (2) at the closing in all other cases, unless the parties agree on different terms. The Transferor shall deliver documents satisfactory to the Optionor conveying its Membership Interest free and clear of all liens, claims and encumbrances, any of which may be paid out of the purchase price, with the remainder, if any, paid to the Transferor. If the purchase price is insufficient to satisfy any such liens, the Transferor shall discharge the balance. P. 5.04. Additional Members. Additional Persons may be admitted to the Company as Members and Membership Interests may be created and issued to those Persons and to existing Members upon the approval of all of the Members on such terms and conditions as they may determine at the time of admission. The terms of admission or issuance must specify the Sharing Ratios applicable thereto and may provide for the creation of different classes or groups of Interests having different rights, powers and duties. The creation of any new class or group shall be reflected in an amendment to this Agreement indicating the different rights, powers and duties. The provisions of this P. 5.04 shall not apply to Transfers of Membership Interests. P. 5.05. Interests in Member. A Member that is not a natural person may not cause or permit an ownership interest, direct or indirect, in itself to be disposed of such that, after the disposition: (a) the Company would be considered to have terminated within the meaning of Code ss.708; or (b) without the written consent of the other Member, that Member shall cease to be controlled by substantially the same Persons who control it as of the date of the Member's admission to the Company. For a period of 120 days after notice to the Company of any Member's breach of the provisions of clause (b) of the immediately preceding sentence, the Company shall have the option to buy, and on exercise of that option the breaching Member shall sell, the breaching Member's Membership Interest, at the price determined in accordance with P. 5.03(i)(i)(2). The breaching Member shall deliver documents satisfactory to the Company conveying its Membership Interest free and clear of all liens, claims and encumbrances, any of which may be paid out of the purchase price, with the remainder, if any, paid to the selling Member. If the purchase price is insufficient to satisfy any such liens, the selling Member shall discharge the balance. P. 5.06. Information. (a) In addition to the other rights specifically set forth in this Agreement, each Member is entitled to all information to which that Member is entitled to have access pursuant to the Act under the circumstances and subject to the conditions therein stated. -15- (b) The Members acknowledge that, from time to time, they may receive information from or regarding the Company in the nature of trade secrets or that otherwise is confidential, the release of which may be damaging to the Company or Persons with which it does business. Each Member shall hold in strict confidence any information it receives regarding the Company that is identified as being confidential (and if that information is provided in writing, that is so marked) and may not disclose it to any Person other than another Member, except for disclosures: (i) compelled by law (but the Member must notify the other Members promptly of any request for that information, before disclosing it if practicable); (ii) to advisers or representatives of the Member or Persons to which that Member's Membership Interest may be transferred as permitted by this Agreement, but only if the recipients have agreed to be bound by the provisions of this P. 5.06(b); or (iii) of information that the Member also has received from a source independent of the Company that the Member reasonably believes obtained that information without breach of any obligation of confidentiality. The Members acknowledge that breach of the provisions of this P. 5.06(b) may cause irreparable injury to the Company for which monetary damages are inadequate, difficult to compute, or both. Accordingly, the Members agree that the provisions of this P. 5.06(b) may be enforced by specific performance without posting bond. P. 5.07. Liability to Third Parties. No Member shall, by virtue of its status as a Member or its ownership of an Interest, be liable for the debts, obligations or liabilities of the Company, including but not limited to a judgment decree or order of a court. P. 5.08. Withdrawal. A Member does not have the right or power to withdraw from the Company as a Member. P. 5.09. Lack of Authority. No Member has the authority or power to act for or on behalf of the Company, to do any act that would be binding on the Company, or to incur any expenditures on behalf of the Company, except to the extent that such act or expenditure has been approved by a Majority Interest or such greater interest required by the Agreement, the Articles or applicable law. P. 5.10. Certificates of Interest. Interests shall be represented by certificates of interests in the Company, which shall be in such form as may be approved by the Managers. ARTICLE 6 MANAGEMENT OF COMPANY AND MEETINGS OF MEMBERS P. 6.01. Management. (a) General. The business and affairs of the Company shall be managed by its Managers. The Managers shall direct, manage, and control the business of the Company to the best of their ability. Except for situations in which the approval of the Members is expressly required by this Agreement or by nonwaivable provisions of applicable law, the Managers shall have full and complete authority, power, and discretion to manage and control the business, -16- affairs, and properties of the Company, to make all decisions regarding those matters and to perform any and all other acts or activities customary or incident to the management of the Company's business. At any time when there is more than one Manager, any one Manager may take any action permitted to be taken by the Managers, unless the approval of more than one of the Managers is expressly required pursuant to this Agreement or the Act. (b) Number, Tenure, and Qualifications. The Company shall initially have one Manager, which shall be Iron Mountain Records Management, Inc. The number of Managers of the Company shall be fixed from time to time by the affirmative vote of Members holding at least two-thirds of all Capital Interests in the Company's capital, but in no instance shall there be less than one Manager. Each Manager shall hold office until the next annual meeting of Members or until a successor shall have been elected and qualified. Managers shall be elected by the affirmative vote of Members holding at least a Majority Interest. Managers need not be residents of the State of Delaware or Members of the Company. (c) Certain Powers of Manager. Without limiting the generality of ss.6.01(a) above, the Managers shall have the power and authority, on behalf of the company: (i) to acquire property from any Person as the Managers may determine. The fact that a Manager or Member is directly or indirectly affiliated or connected with any such Person shall not prohibit the Managers from dealing with that Person; (ii) to borrow money for the Company from banks, other lending institutions, the Managers, Members, or affiliates of the Managers or Members on such terms as the Managers deem appropriate, and in connection therewith, to hypothecate, encumber, and grant security interests in the assets of the Company to secure repayment of the borrowed sums. No debt shall be contracted or liability incurred by or on behalf of the Company except by the Managers, or to the extent permitted under the Act, by agents or employees of the Company expressly authorized to contract such debt or incur such liability of the Managers; (iii) to hold and own any Company real and/or personal properties in the name of the Company; (iv) to purchase liability and other insurance to protect the Company's property and business; (v) to invest any Company funds temporarily (by way of example but not limitation) in time deposits, short-term governmental obligations, commercial paper, or other investments; (vi) upon the affirmative vote of the Members holding at least two-thirds of all Interests, to sell or otherwise dispose of all or substantially all of the assets of the Company as part of a single transaction or plan so long as that disposition is not in violation of or a cause of a default under any other agreement to which the Company may be bound; provided, however, -17- that the affirmative vote of the Members shall not be required with respect to any sale or disposition of the Company's assets in the ordinary course of the Company's business; (vii) to execute on behalf of the Company all instruments and documents, including, without limitation: checks; drafts; notes and other negotiable instruments; mortgages, or deeds of trust; security agreements; financing statements; documents providing for the acquisition, mortgage or disposition of the Company's property; assignments; bills of sale; leases; partnership agreements; operating agreements of other limited liability companies; and any other instruments or documents necessary, in the opinion of the Managers, to the business of the Company; (viii)to employ accountants, legal counsel, managing agents, or other experts to perform services for the Company and to compensate them from Company funds; (ix) to enter into any and all other agreements on behalf of the Company, with any other Person for any purpose, in such forms as the Managers may approve; and (x) to do and perform all other acts as any be necessary or appropriate to the conduct of the Company's business. Unless authorized to do so by this Agreement or by a Manager or Managers of the Company, no attorney-in-fact, employee, or other agent of the Company shall have any power or authority to bind the Company in any way, to pledge its credit or to render it liable pecuniarily for any purpose. No Member shall have any power or authority to bind the Company unless the Member has been authorized by the Managers to act as an agent of the Company in accordance with the previous sentence. (d) Liability for Certain Acts. The Managers shall perform their managerial duties in good faith, in a manner they reasonably believe to be in the best interests of the Company, and with such care as an ordinarily prudent person in a like position would use under similar circumstances. A Manager who so performs the duties of Manager shall not have any liability by reason of being or having been a Manager of the Company. A Manager does not, in any way, guarantee the return of the Members' Capital Contributions or a profit for the Members from the operations of the Company. A Manager shall not be liable to the Company or to any Member for any loss or damage sustained by the Company or any Member unless the loss or damage shall have been the result of fraud, deceit, gross negligence, willful misconduct, or a wrongful taking by the Manager. (e) Managers Have No Exclusive Duty to Company. The Managers shall not be required to manage the Company as their sole and exclusive function and they may have other business interests and may engage in other activities in addition to those relating to the Company. Neither the Company nor any Member shall have any right, by virtue of this Agreement, to share or participate in such other investments or activities of the Managers or to the income or proceeds derived therefrom. The Managers shall incur no liability to the Company or to any of the Members as a result of engaging in any other business or venture. -18- (f) Bank Accounts. The Managers may from time to time open bank accounts in the name of the Company, and the Managers shall be the sole signatory thereon, unless the Managers determine otherwise. (g) Indemnity of the Managers, Employees, and Other Agents. To the maximum extent permitted under the Act, the Company shall indemnify the Managers and make advances for expenses. The Company shall indemnify its employees and other agents who are not Managers to the fullest extent permitted by law, provided that the indemnification in any given situation is approved by Members owning a Majority Interest. (h) Resignation. Any Manager of the Company may resign at any time by giving written notice to the Members of the Company. The resignation of any Manager shall take effect upon receipt of that notice or at such later time as shall be specified in the notice; and, unless otherwise specified in the notice, the acceptance of the resignation shall not be necessary to make it effective. The resignation of a Manager who is also a Member shall not affect the Manager's rights as a Member and shall not constitute a withdrawal of a Member. (i) Removal. At a meeting called expressly for that purpose, all or any lesser number of Managers may be removed at any time, with or without cause, by the affirmative vote of Members holding a Majority Interest. The removal of a Manager who is also a Member shall not affect the Manager's rights as a Member and shall not constitute a withdrawal of a Member. (j) Vacancies. Any vacancy occurring for any reason in the number of Managers of the Company may be filled by the affirmative vote of a majority of the remaining Managers then in office, provided that if there are no remaining Managers, the vacancy(ies) shall be filled by the affirmative vote of Members holding a Majority Interest. (i) Any Manager's position to be filled by reason of an increase in the number of Managers shall be filled by the affirmative vote of a majority of the Managers then in office or by an election at an annual meeting or at a special meeting of Members called for that purpose or by the Members' unanimous written consent. (ii) A Manager elected to fill a vacancy shall be elected for the unexpired term of the Manager's predecessor in office and shall hold office until the expiration of that term and until the Manager's successor shall be elected and shall qualify or until the Manager's earlier death, resignation, or removal. (iii) A Manager chosen to fill a position resulting from an increase in the number of Managers shall hold office until the next annual meeting of Members and until a successor shall be elected and shall qualify, or until the Manager's earlier death, resignation, or removal. -19- (k) Compensation. The compensation of the Managers shall be fixed from time to time by an affirmative vote of Members holding at least a Majority Interest and no Manager shall be prevented from receiving compensation because the Manager is also a Member. P. 6.02. Meetings. Meetings of the Members may be called by Members holding not less than twenty-five percent (25%) of the Units. The meeting shall be held at the principal place of business of the Company or as designated in the notice or waivers of notice of the meeting. P. 6.03. Notice. Notice of any meeting of the Members shall be given no fewer than ten days and no more than thirty days prior to the date of the meeting. Notices shall be delivered in the manner set forth in P. 11.02 and shall specify the purpose or purposes for which the meeting is called. The attendance of a Member at any meeting shall constitute a waiver of notice of such meeting, except where a Member attends a meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. P. 6.04. Quorum. A Majority Interest, present in person or represented by proxy, shall constitute a quorum for transaction of business at any meeting of the Members, provided that if less than a Majority Interest are present at said meeting, the holders of a majority of the Units present may adjourn the meeting at any time without further notice. P. 6.05. Manner of Acting. The act of a Majority Interest shall be the act of the Members, unless the act of a greater number is required by this Agreement, the Articles or applicable law. P. 6.06. Action Without Meeting. Unless specifically prohibited by the Articles, any action required to be taken at a meeting of the Members or any other action which may be taken at a meeting of the Members, may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by the holders of Units having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which the holders of all of the Units were present and voting. Prompt notice of the taking of the action without a meeting by less than unanimous consent shall be given in writing to those Members who were entitled to vote but did not consent in writing. P. 6.07. Telephonic Meetings. The Members may participate in and act at any meeting of Members through the use of a conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other. Participation in such meeting shall constitute attendance and presence in person at the meeting of the person or persons so participating. P. 6.08. Proxies. Each Member entitled to vote at a meeting of Members or to express consent or dissent to action in writing without a meeting may authorize another Person or Persons to act for him by proxy. Such proxy shall be deposited at the principal offices of the Company not less than 48 hours before a meeting is held or action is taken, but no proxy shall be valid after eleven months from the date of its execution, unless otherwise provided in the proxy. -20- P. 6.09. Voting of Interests. Each outstanding Unit shall be entitled to one vote upon each matter submitted to a vote at a meeting of Members. P. 6.10. Officers. The officers of the Company shall consist of a President, one or more Vice Presidents, a Treasurer, Controller and a Secretary. The officers shall be appointed by the Managers and shall exercise such powers and perform such duties as are prescribed by the Managers. Any number of offices may be held by the same person, as the Managers may determine, except that no person may simultaneously hold the offices of President and Secretary. P. 6.11. Term of Office. The officers shall hold office for the term for which they were appointed and until their successors are elected and qualified; provided, however, that any officer may be removed with or without cause by the affirmative vote of a Majority Interest. ARTICLE 7 INDEMNIFICATION P. 7.01. Rights to Indemnification. Subject to the limitations and conditions provided in this Article 7 and in the Act, each Person ("Indemnified Person") who was or is made a party or is threatened to be made a party to or is involved in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative, arbitrative or investigative ("Proceeding"), or any appeal in such a Proceeding or any inquiry or investigation that could lead to such a Proceeding, by reason of the fact that he was or is a Member, Manager or an officer of the Company or it was the legal representative of or a manager, director, officer, partner, venturer, proprietor, trustee, employee, agent or similar functionary of a Member, shall be indemnified by the Company against judgments, penalties (including excise and similar taxes and punitive damages), fines, settlements and reasonable costs and expenses (including, without limitation, attorneys' fees) actually incurred by such Indemnified Person in connection with such Proceeding if such Indemnified Person acted in good faith and in a manner if reasonably believed to be in, or not opposed to, the best interest of the Company and, with respect to any criminal action or proceeding, had no reasonable cause to believe its conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the Indemnified Person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Company or, with respect to any criminal action or proceeding that the Indemnified Person had reasonable cause to believe that its conduct was unlawful. P. 7.02. Derivative Claims. Subject to the limitations and conditions provided in this Article 7 and in the Act, the Company shall and does hereby indemnify any Person who was or is a party, or is threatened to be made a party, to any threatened, pending or completed action or suit by or in the right of the Company to procure a judgment in its favor by reason of the fact that such Person is or was a Member, Manager or an officer of the Company, the legal representative of a Member, Manager or officer, or a manager, director, officer, partner, venturer, proprietor, trustee, employee, agent or similar functionary of a Member against expenses (including -21- attorneys' fees) actually and reasonably incurred by such Person in connection with the defense or settlement of such action or suit, if such Person acted in good faith and in a manner it reasonably believed to be in, or not opposed to, the best interests of the Company, provided that no indemnification shall be made in respect of any claim, issue or matter as to which such Person shall have been adjudged to be liable for negligence or misconduct in the performance of its duty to the Company unless and only to the extent that, the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability, but in view of all the circumstances of the case, such Person is fairly and reasonably entitled to indemnify for such expenses as the court shall deem proper. P. 7.03. Success on Merits. To the extent that a Person has been successful, on the merits or otherwise, in the defense of any action, suit or proceeding referred to in P. P. 7.01 or 7.02, or in defense of any claim, issue or matter therein, such Person shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by such Person in connection therewith. P. 7.04. Determinations. Any indemnification under P. P. 7.01 or 7.02 (unless ordered by a court) shall be made by the Company only as authorized in the specific case, upon a determination that indemnification is proper in the circumstances because such person has met the applicable standard of conduct set forth therein. Such determination shall be made (i) by the holders of a majority of the Units held by Members who were not parties to such action, suit or proceedings, or (ii) if such a quorum is not obtainable, or even if obtainable, if a quorum of disinterested Members so directs, by the Company's independent legal counsel in a written opinion. P. 7.05. Survival. Indemnification under this Article 7 shall continue as to a Person who has ceased to serve in the capacity which initially entitled such Person to indemnity hereunder. The rights granted pursuant to this Article 7 shall be deemed contract rights, and no amendment, modification or repeal of this Article 7 shall have the effect of limiting or denying any such rights with respect to actions taken or Proceedings arising prior to any such amendment, modification or repeal. P. 7.06. Advance Payment. The right to indemnification conferred by this Article 7 shall include the right to be paid or reimbursed by the Company for the reasonable expenses incurred in advance of the final disposition of the Proceeding and without any determination as to the Person's ultimate entitlement to indemnification, provided, however, that the payment of such expenses incurred in advance of the final disposition of a Proceeding shall be made only upon delivery to the Company of a written affirmation by such Person of its good faith belief that it has met the standard of conduct necessary for indemnification under this Article 7 and a written undertaking, by or on behalf of such Person to repay all amounts so advanced if it shall ultimately be determined that such Person is not entitled to be indemnified under this Article 7 or otherwise. P. 7.07. Nonexclusivity of Rights. The right to indemnification and the advancement and payment of expenses conferred by this Article 7 shall not be exclusive of any other right which a -22- Person may have or hereafter acquire under any law (common or statutory), provision of the Act, the vote of Members or otherwise. P. 7.08. Insurance. The Company may purchase and maintain insurance, at its expense, to protect itself and any Indemnified Person against any expense, liability or loss, whether or not the Company would have the power to indemnify such Person against such expense, liability or loss under this Article 7. P. 7.09. Savings Clause. If P. P. 7.01, 7.02 or any portion thereof shall be invalidated on any ground by any court of competent jurisdiction, then the Company shall nevertheless indemnify and hold harmless each Indemnified Person as to costs, charges and expenses (including attorneys' fees), judgments, fines and amounts paid in settlement with respect to any action, suit or proceeding, whether civil, criminal, administrative or investigative to the full extent permitted by any applicable portion of this Article 7 that shall not have been invalidated and to the fullest extent permitted by applicable law. ARTICLE 8 BOOKS, RECORDS, REPORTS AND BANK ACCOUNTS P. 8.01. Maintenance of Books and Records. The Company shall keep books and records of accounts and shall keep minutes of the proceedings of its Members at the registered office of the Company or its principal place of business. In addition, the Company shall maintain the following at its registered office or its principal place of business: (a) A current list of the full name and last know business address of each Member, separately identifying the Members in alphabetical order; (b) A copy of the filed Articles and all amendments thereto, together with executed copies of any powers of attorney pursuant to which any document has been executed; (c) Copies of the Company's federal, state and local income tax returns and reports and financial statements, if any, for the three (3) most recent years; (d) Copies of this Agreement and any amendments thereto; and (e) Unless contained in this Agreement, the Articles or in any amendments hereto, a writing setting out: (i) The amount of cash, a description and statement of the agreed value of the other property or services contributed by each Member and which each Member has agreed to contribute; (ii) The items as to which or events on the happening of which any additional contributions agreed to be made by each Member are to be made; -23- (iii) Any right of a Member to receive, or of the Members to make, distributions which include a return of all or any part of the Member's contribution; and (iv) Any events upon the happening of which the Company is to be dissolved and its affairs wound up. Records kept pursuant to this P. 8.01 are subject to inspection and copying at the reasonable request, and at the expense, of any Member during ordinary business hours. P. 8.02. Reports. On or before the 90th day following the end of each fiscal year during the term of the Company, the Company shall cause each Member to be furnished with a federal (and, where applicable, state) income tax reporting Form K-1 or its equivalent and a financial report for the preceding fiscal year which shall include a balance sheet and a profit and loss statement prepared in accordance with generally accepted accounting principles applied on a consistent basis. P. 8.03. Taxable Year and Accounting Method. The Company's taxable and fiscal years shall be the calendar year. the Company shall initially use the accrual method of accounting. P. 8.04. Tax Elections. All elections required or permitted to be made by the Company under the Code shall be made by the Members. In particular: (i) The Company shall elect to deduct expenses incurred in organizing the Company ratably over a 60-month period as provided in Section 709 of the Code. (ii) In case of a Transfer of all or part of any Interest, the Company may elect, in a timely manner pursuant to Section 754 of the Code and pursuant to corresponding provisions of applicable state and local tax laws, to adjust the basis of Company Property pursuant to Sections 734 and 743 of the Code. (iii) The Company shall elect to deduct start-up expenditures ratably over a 60- month period as provided in Section 195 of the Code. (iv) The Company shall not elect to be excluded from the application of the provisions of Subchapter K of Chapter 1 of Subtitle A of the Code or corresponding provisions of state or local law. P. 8.05. Bank Accounts. All funds of the Company are to be deposited in the Company's name in such bank accounts or investment accounts as may be designated by the Managers and shall be withdrawn on the signature of a duly authorized officer of the Managers, or such other Person or Persons as a Majority Interest may authorize. The Company's funds may not be commingled with the funds of any Member or officer of the Company. -24- P. 8.06. "Tax Matters Partner." The Managers shall be the "tax matters partner" of the Company pursuant to Code ss.6231(a)(7). Any one of the Managers is authorized to take such actions as are permitted by Code ss.ss.6221 through 6233. ARTICLE 9 PUT-CALL P. 9.01. Put-Call Arrangement. In the event of an Impasse, each Member shall have the right to make an optional "put-call" offer to the other Member to purchase the other Member's entire Membership Interest. Notwithstanding the above, neither Member may initiate a put-call when there is an outstanding Offer (defined in P. 9.02(a) below) pending. The Member initiating a put-call shall be referred to as the "Offeror" and the other Member shall be referred to as the "Offeree". P. 9.02. Terms of Offer. (a) Written Offer. Upon the terms described in P. 9.01, the Offeror may submit to the Offeree a written offer ("Offer") to purchase the Membership Interest then owned by the Offeree. (b) Aggregate Asset Price. The Offer shall state the aggregate price at which the Offeror would be willing to purchase all the Company Property ("Aggregate Asset Price"); provided, however, that such Aggregate Asset Price shall be at least equal to or greater than the amount necessary (i) to repay all outstanding Company liabilities (including accrued interest), including but not limited to all outstanding loans by Members to the Company and (ii) to return to each Member its aggregate unreturned Adjusted Capital Contribution. (c) Price. The "Price" for the Offeree's Membership Interest shall be the amount which the Offeree would receive if all the Company Property were sold for the Aggregate Asset Price and the proceeds were applied in accordance with P. 10.03. (d) Release from Recourse Obligations. If, at the time an Offer is made, the Offeree or any of its Affiliates are personally liable under any guaranties or other financial undertakings for the repayment or performance of all or part of any third-party loan made to the Company ("Offeree's Recourse Liability"), then the Offer must include the Offeror's written agreement to use its best efforts to obtain the release of Offeree's Recourse Liability and, if required by the holders of the Offeree's Recourse Liability, to substitute acceptable guaranties, letters of credit or other financial undertakings in exchange for such release of Offeree's Recourse Liability. If any lender will not agree to release the Offeree's Recourse Liability, then the Offeror shall protect, defend, indemnify and hold such Offeree, its Affiliates, officers, directors, agents, shareholders, partners, beneficiaries and trustees harmless from any manner of loss, claim, damage or expense arising out of or relating to the Offeree's Recourse Liability from and after the Closing Date (as defined in P. 9.04). -25- P. 9.03. Acceptance/Rejection of Offer. The Offeree shall either accept or reject the Offer, which acceptance or rejection shall be in writing and delivered to the Offeror on or before 10:00 a.m. on the thirtieth (30th) calendar day after the offer is delivered. If the Offeree fails to either accept or reject the Offer on a timely basis, it shall be deemed to have consented to the unagreed action which precipitated the impasse. (a) Acceptance. If the Offeree accepts the Offer, the Offeror shall be deemed the "Buyer" and the Offeree shall be deemed the "Seller". The Put-Call closing (as defined in P. 9.04) shall take place pursuant to P. 9.04 below. Effective immediately upon the delivery to the Offeror of the Offeree's acceptance of the Offer, the Offeror's obligations under the Offer and this Article 9 shall become recourse, absolute, unconditional and irrevocable obligations, and shall not be subject to any terms or conditions other than the default of the Offeree under the Offer. (b) Rejection of Offer. If the Offeree rejects the Offer, the Offeree shall thereafter be deemed the "Buyer" and the Offeror shall be deemed the "Seller". The closing of the transaction described in the Offer shall take place on the Closing Date pursuant to P. 9.04 below. If the Offeree properly rejects the Offer, it shall proceed to purchase form the Offeror, and the Offeror shall sell to the Offeree, the entire Membership Interest owned by the Offeror for a Price equal to the amount which the Offeror would receive if all the Company Property were sold for the Aggregate Asset Price and the proceeds were applied in accordance with P. 10.03. P. 9.04. Put-Call Closing Procedures. The transaction described in the Offer shall close on the earlier of (i) the sixtieth (60th) day after the date the Offer is either accepted or rejected by the Offeree, or (ii) such earlier date as Buyer may elect with ten (10) days prior written notice to Seller ("Put-Call closing" or "Closing Date"). At the Put-Call closing, the following shall occur: (a) The Buyer shall pay to the Seller, in immediately available funds, a sum equal to the Price. (b) The Seller shall deliver to the Buyer a complete and absolute assignment of one hundred percent (100%) of the Seller's Membership Interest ("Assignment"). (c) The Buyer shall satisfy its obligation under P. 9.02(d) above. (d) The Seller shall cause its Affiliates to terminate any agreements with the Company as instructed by Buyer in its sole and absolute discretion, effective from and after the Closing Date, provided that any such Affiliate shall be paid in full on the Closing Date for all services rendered prior to such termination. (e) The buyer and the Seller shall each deliver to the other a release ("Mutual Release") of the other from all acts and conduct of the other relating to the Company or its affairs, occurring or performed during the tem of this Agreement, except that neither the buyer nor the Seller shall be released from any actions (or failures to act) in violation of this Agreement or from any grossly negligent, reckless or intentionally wrongful acts or omissions. -26- From and after delivery the Seller shall have no rights or obligations under this Agreement with respect to the management and operation of the Company Property, or otherwise. P. 9.05. Failure To Perform. (a) Buyer's Failure To Perform. If the Buyer fails to perform as required under P. 9.04, then the Seller shall have the option, exercisable within sixty (60) days after the original Closing Date, to (i) pursue Buyer for specific performance of its obligations as Buyer; or (ii) continue the Company as if no put-call procedure had been implemented except that the Buyer shall be deemed to have consented to the unagreed action which precipitated the Impasse; or (iii) become the Buyer under the defaulted Offer, subject to the same terms and conditions set forth in the Offer with the exceptions that: (1) the Price shall be eighty percent (80%) of the amount which the defaulting party would receive if all the Company Property were sold for the Aggregate Asset Price and the proceeds were applied in accordance with P. 10.03; and (2) the nondefaulting party shall be entitled to select a new Closing Date up to one hundred eighty (180) days after the original Closing Date. (b) Seller's Failure To Perform. If the Seller fails to perform as required under P. 9.04, then: (i) the Seller shall be liable to Buyer, as a recourse obligation, for all actual and consequential damages caused by Seller as a result of its breach, together with all expenses of litigation and attorneys' fees, court costs and expenses; and (ii) the Buyer shall have the option, exercisable within sixty (60) days after the original Closing Date, to either: (1) pursue Seller for specific performance of its obligations as Seller or (2) continue the Company as if no put-call procedure had been implemented except that the Seller shall be deemed to have consented to the unagreed action which precipitated the Impasse; provided, however, that in no event shall the election of either option (or failure to elect) preclude Buyer from pursuing any other remedy available to Buyer as a matter of law or equity, including, but not limited to, the damages described in clause (i) above. P. 9.06. No Withdrawal or Revocation. An Offer shall be irrevocable and shall not be subject to withdrawal or revocation by the Offeror, except by the written agreement of all of the Members. P. 9.07. Decision-Making. Notwithstanding anything to the contrary in this Agreement, at any time during the period after the acceptance or rejection of an Offer and the earlier of (i) the termination of the Offer pursuant to P. 9.05(a)(ii) or (b)(ii)(2) above, as the case may be, or (ii) the Closing Date, the Buyer shall have exclusive control of all decision-making on behalf of the Company (other than any decisions which may have a substantial adverse impact on the financial obligations of the Seller in the event that the Buyer defaults in the purchase of the Seller's Membership Interest). -27- ARTICLE 10 DISSOLUTION, LIQUIDATION AND TERMINATION P. 10.01. Events of Dissolution. The Company shall be dissolved and shall commence winding up its affairs upon the first to occur of the following: (a) December 31, 2025; (b) The vote of Members holding two thirds of the Units; (c) Any event which makes it unlawful or impossible to carry on the Company's business; (d) The sale, disposition or abandonment of all or substantially all of the Company Property; (e) The entry of a decree of judicial dissolution under the Act; or (f) The death, incompetency, retirement, resignation, expulsion, dissolution or bankruptcy of a Member, or any other event which terminates the membership of a Member in the Company, unless within ninety (0) days after such event the Remaining Member agrees to continue the business of the Company with the Representative of the Withdrawing Member or with a new Member admitted to the Company. P. 10.02. Winding Up. Upon the dissolution of the Company, the Members shall wind up the Company's affairs and satisfy the Company's liabilities. The Members shall liquidate all of the Company Property as quickly as possible consistent with obtaining the full fair market value of said Property. During this period, the Company shall continue to operate Company Property and all of the provisions of this Agreement shall remain in effect. The Company shall notice all known creditors and claimants of the dissolution of the Company in accordance with the Act. P. 10.03. Final Distribution. The proceeds from the liquidation of the Company Property shall be distributed as follows: (a) First, to creditors, including Members who are creditors, until all of the Company's debts and liabilities are paid and discharged (or provision is made for payment thereof); and (b) The balance, if any, to the Members, in proportion to their Capital Accounts as of the date of such distribution, after giving effect to all contributions, distributions, and allocations for all periods. -28- P. 10.04. Distributions in Kind. In connection with the termination and liquidation of the Company, the Members shall attempt to sell all of the Property. To the extent that Property is not sold, each Member will receive a pro rata share of any distribution in kind. Any Property distributed in kind upon liquidation of the Company shall be treated as though the Property were sold and the cash proceeds distributed. P. 10.05. No Recourse Against Members. The Members shall look solely to the assets of the Company for the return of their investment, and if the Property remaining after the payment or discharge of the debts and liabilities of the Company is insufficient to return such investment, they shall have no recourse against any other Member. P. 10.06. Purchase by Member. A Member or an Affiliate of a Member may, if it so desires, purchase an item of Property upon liquidation provided that (a) the purchase price is at fair market value as determined by an independent appraiser selected by the other Member, and (b) at least 15 days' advance notice of the proposed sale has been given to the other Member. P. 10.07. Deficit Capital Accounts. Notwithstanding anything to the contrary contained in this Agreement, and notwithstanding any custom or rule of law to the contrary, the deficit, if any, in the Capital Account of any Member upon dissolution of the Company shall not be an asset of the Company and such Member shall not be obligated to contribute such amount to the Company to bring the balance of such Member's Capital Account to zero. P. 10.08. Articles of Dissolution. On completion of the distribution of Company assets as provided herein, the Company is terminated, and the Members (or such other Person or Persons as the Act may require or permit) shall file articles of dissolution with the Secretary of State, cancel any other filings made pursuant to P. 2.05 and take such other actions as may be necessary to terminate the Company. ARTICLE 11 GENERAL PROVISIONS P. 11.01. Entire Agreement; Amendments. This Agreement embodies the entire understanding between the Members concerning the Company and their relationship as Members and supersedes any and all prior negotiations, understandings or agreements. This Agreement may be amended or modified from time to time only by a written instrument adopted, executed and agreed to by all of the Members. P. 11.02. Notices. All notices and demands required or permitted under this Agreement shall be in writing, as follows: (i) by actual delivery of the notice into the hands of the party entitled to receive it; (ii) by mailing such notice by registered or certified mail, return receipt requested, in which case the notice shall be deemed to be given on the date of its mailing; or (iii) by Federal Express or any other overnight carrier, in which case the notice shall be deemed to be given as of the date it is sent. All notices which concern this as follows: -29- If to the Company or Managers: c/o Iron Mountain Records Management, Inc. 745 Atlantic Avenue Boston, Massachusetts 02111 Attn: Eugene B. Doggett, Executive Vice President Copy to: Iron Mountain Records Management, Inc. 745 Atlantic Avenue Boston, Massachusetts 02111 Attn: General Counsel If to the Members: To the address as shown from time to time on the records of the Company. Any Member may specify a different address, which change shall become effective upon receipt of such notice by the Company. P. 11.03. Severability. If any provision of this Agreement or the application of such provision to any Person or circumstance shall be held invalid, the remainder of this Agreement, or the application of such provision to Persons or circumstances other than those as to which it is held invalid, shall not be affected. P. 11.04. Parties Bound. This Agreement shall be binding upon the Members and their respective successors, assigns, heirs, devisees, legal representatives, executors and administrators. P. 11.05. Applicable Law. The laws of the State of Delaware shall govern this Agreement, excluding any conflict of laws rules. The Members irrevocably agree that all actions or proceedings in any way, manner or respect, arising out of or from or related to this Agreement shall be litigated only in courts having situs within the State of Delaware. Each Member hereby consents and submits to the jurisdiction of any local, state or federal court located within said county and state and hereby waives any rights it may have to transfer or change the venue of any such litigation. The prevailing party in any litigation in connection with this Agreement shall be entitled to recover from the other party all costs and expenses, including without limitation fees of attorneys and paralegals, incurred by such party in connection with any such litigation. To the extent permitted by applicable law, the provisions of this Agreement shall override the provisions of the Act to the extent of any inconsistency or contradiction between them. P. 11.06. Partition. Each Member irrevocably waives any right that it may have to maintain any action for partition with respect to Company Property. P. 11.07. Strict Construction. It is the intent of the Members that this Agreement shall be deemed to have been prepared by all of the parties to the end that no Member shall be entitled to -30- the benefit of any favorable interpretation or construction of any term or provision hereof under any rule or law. P. 11.08. Headings. The headings in this Agreement are inserted for convenience and identification only and are in no way intended to describe, interpret, define or limit the scope, extent or intent of this Agreement or any provision. P. 11.09. Counterparts. This Agreement may be executed in multiple counterparts with separate pages, and each such counterpart shall be considered an original, but all of which together shall constitute one and the same instrument. P. 11.10. Pronouns. All pronouns shall be deemed to refer to the masculine, feminine or neuter, singular or plural, as the identify of the person or persons may require. P. 11.11. Effect of Waiver or Consent. A waiver or consent, express or implied, to or of any breach or default by any Person in the performance by that Person of its obligations hereunder or with respect to the Company is not a consent or waiver to or of any other breach or default in the performance by that Person of the same or any other obligations of that Person. Failure on the part of a Person to complain of any act or to declare any Person in default hereunder, irrespective of how long that failure continues, does not constitute a waiver by that Person of its rights with respect to that default. P. 11.12. Further Assurances. Each Member shall execute and deliver any additional documents and instruments and perform any additional acts that may be necessary or appropriate to effectuate and perform the provisions of this Agreement and the transactions contemplated herein. P. 11.13. Indemnification for Breach. To the fullest extent permitted by law, each Member shall indemnify the Company and each other member and hold them harmless from and against all losses, costs, liabilities, damages and expenses (including, without limitation, costs of suit and attorneys' fees) they may incur on account of any material breach by that Member of this Agreement. P. 11.14. Disclosure and Wavier of Conflicts. In connection with the preparation of this Agreement, the Members acknowledge and agree: (i) the attorney that prepared this Agreement ("Attorney") acted as legal counsel to the Company; (ii) the Members have been advised by the Attorney that the interests of the members are opposed to each other and are opposed to the interests of the Company and, accordingly, the Attorney's representation of the Company may not be in the best interests of the Members; and (iii) each of the Members has been advised by the Attorney to retain separate legal counsel. Notwithstanding the foregoing, the Members (i) desire the Attorney to represent the Company; (ii) acknowledge that they have been advised to retain separate counsel and have waived their right to do so; and (iii) jointly and severally forever waive any claim that the Attorney's representation of the Company constitutes a conflict of interest. -31- IN WITNESS WHEREOF, the Members have executed this Agreement as of the date first set forth above. MEMBERS: Iron Mountain Records Management, Inc. By: /s/ Eugene B. Doggett Name: Eugene B. Doggett Title: Executive Vice President Date of Execution: April 24, 1996 Iron Mountain Records Management of Maryland, Inc. By: /s/ Eugene B. Doggett Name: Eugene B. Doggett Title: Executive Vice President Date of Execution: April 24, 1996 -32- EXHIBIT A Name and Address of Each Member Capital Contribution Number of Units - ------------------------------- -------------------- --------------- Iron Mountain Records Management, $1,000.00 50 Inc. 745 Atlantic Avenue Boston, MA 02111 Iron Mountain Records Management $1,000.00 50 of Maryland, Inc. 745 Atlantic Avenue Boston, MA 02111 EX-3.2N 30 BY-LAWS OF IRON MTN RECORDS MGMT OF BOSTON Exhibit 3.2N BY-LAWS of Iron Mountain Records Management of Boston, Inc. ARTICLE I Articles of Organization The name and purposes of the Corporation shall be as set forth in the Articles of Organization. These By-Laws, the powers of the Corporation and of its Directors and stockholders, and all matters concerning the conduct and regulation of the business of the Corporation shall be subject to such provisions in regard thereto, if any, as are set forth in the Articles of Organization; and the Articles of Organization, as from time to time amended, are hereby made a part of these By-Laws. All references in these By-Laws to the Articles of Organization shall be construed to mean the Articles of Organization of the Corporation as from time to time amended. ARTICLE II Annual Meeting of Stockholders The annual meeting of stockholders shall be held on the second Thursday in May of each year at such other hour as may be fixed by vote of the Board of Directors or, if the Board shall not fix such hour, as may be determined by the President and set forth in the notice thereof, unless that day be a legal holiday at the site of the meeting, in which case the meeting shall be held at the same hour on the next succeeding business day at the site of the meeting. Purposes for which an annual meeting is to be held, in addition to those prescribed by law, by the Articles of Organization and by these By-Laws, may be specified by the President, or by a vote of a majority of the Directors then in office, or by one or more stockholders who are entitled to vote and who hold in the aggregate at least ten per cent (10%) of the capital stock entitled to vote at the meeting. If such annual meeting is omitted on the day herein provided therefor, a special meeting of stockholders may be held in place thereof and any business transacted or elections held at such special meeting shall have the same effect as if transacted or held at the annual meeting, and, in such case, all references in these By-Laws, except in this Article II and in Article IV, to the annual meeting of stockholders shall be deemed to refer to such special meeting. Any such special meeting shall be called, and the purposes thereof shall be specified in the notice thereof, as provided in Article III. ARTICLE III Special Meetings of Stockholders A special meeting of stockholders may be called at any time by the President or by a majority of the Directors then in office. A special meeting of stockholders shall be called by the Clerk, or in the case of the death, absence, incapacity or refusal of the Clerk, by any other officer, upon written application of one or more stockholders who hold in the aggregate at least ten percent (10%) of the capital stock entitled to vote at the meeting. Such call shall state the time, place and purpose of the meeting. ARTICLE IV Place of Stockholders' Meetings The annual meeting of stockholders and any special meeting of stockholders, by whomever called, shall be held at the principal office of the Corporation in Massachusetts, or at such other place in Massachusetts or within the continental limits of the United States of America as may be determined by the Board of Directors (or, in the event such meeting shall have been called upon the application of stockholders, by such stockholders) and stated in the notice thereof. Any adjourned session of any annual or special meeting of stockholders shall be held within the continental limits of the United States at such place as is designated in the vote of adjournment. ARTICLE V Notice of Stockholders' Meetings A written notice of each annual or special meeting of stockholders, stating the place, date and hour thereof, and the purpose or purposes for which the meeting is to be held, shall be given at least seven (7) days before the meeting to each stockholder entitled to vote thereat, and to each stockholder who, under the Articles of Organization or these By-Laws, is entitled to such notice, by leaving such notice with him or at his residence, or usual place of business, or by mailing it, postage prepaid, addressed to such stockholder at his address as it appears in the records of the Corporation. Such notice shall be given by the Clerk, by any other officer, or by a person designated either by the Clerk or by the person or persons calling the meeting, or by the Board of Directors. No notice of the time, place or purposes of any annual or special meeting of stockholders shall be required to be given to a stockholder if a written waiver of such notice is executed before or after the meeting by such stockholder, or by his attorney thereunto authorized, and filed with the records of the meeting. ARTICLE VI Quorum of Stockholders At any meeting of stockholders, a quorum for the election of any Director or officer, or for the consideration of any question, shall consist of a majority in interest of all stock issued, outstanding and entitled to vote at such election, or upon such question, respectively; except that if two or more classes of stock are entitled to vote as separate classes upon any question, then, in the case of each such class, a quorum for the consideration of such question shall consist of a majority in interest of all stock of that class issued, outstanding and entitled to vote; and except in any case where a larger quorum is required by law, by the Articles of Organization or by these By-Laws. Stock owned by the Corporation, if any, shall not be deemed outstanding for this purpose. In any case, any meeting may be adjourned from time to time by a majority of the votes properly cast upon the question, whether or not a quorum is present, and the meeting may be held as adjourned without further notice. When a quorum is present at any meeting, a plurality of the votes properly cast for any office shall elect to such office, except where a larger vote is required by law, by the Articles of Organization or by these By-Laws, and a majority of the votes properly cast upon any other question (or if two or more classes of stock are entitled to vote as separate classes upon such question, then, in the case of each such class, a majority of the votes of such class properly cast upon the question), except in any case where a larger vote is required by law, by the Articles of Organization or by these By-Laws, shall decide the matter. ARTICLE VII Proxies and Voting Except as may be provided in the Articles of Organization, with respect to two or more classes or series of stock, stockholders entitled to vote shall have one vote for each share of stock entitled to vote owned by them and a proportionate vote for each fractional share. No ballot shall be required for such election unless requested by a stockholder present or represented at the meeting and entitled to vote in the election. The Corporation shall not, directly or indirectly, vote upon any share of its own stock. Stockholders entitled to vote may vote either in person or by proxy in writing dated not more than six (6) months before the meeting named therein, which proxies shall be filed with the Clerk of the meeting, or any adjournment thereof, before being voted. Such proxies shall entitle the holders thereof to vote at any adjournment of such meeting, but shall not be valid after the final adjournment of such meeting. Any action to be taken by stockholders may be taken without a meeting if all stockholders entitled to vote on the matter consent to the action by a writing or writings filed with the records of the meetings of stockholders. Such consent shall be treated for all purposes as a vote at a meeting. The Chairman of the Board, if there be one, or in his absence the President, or in absence of both the Chairman of the Board and the President a vice-president, shall call meetings of the stockholders to order and shall act as chairman thereof. The Clerk of the corporation, if present, shall record the proceedings of all meetings of stockholders and, in his absence, the presiding officer may appoint a clerk pro tempore of the meeting. ARTICLE VIII Board of Directors A Board of not fewer than one, nor more than five, Directors shall be elected annually (by ballot if so requested by any stockholder entitled to vote) at the annual meeting of stockholders by such stockholders as have the right to vote at such election; provided that, at any time when the Corporation shall have two or more stockholders, the Board of Directors shall consist of not fewer than two person, and at any time when the Corporation has three or more stockholders, the Board of Directors shall consist of not fewer than three persons. The number of Directors for each corporate year shall initially be fixed by vote at the meeting at which they are elected. Any action which may by law, the Articles of Organization or these By-Laws be taken by a majority of the Board of Directors then in office may be taken by the sole Director when and if the Corporation has only one Director. At any time during any year the number of the Board of Directors may be increased by vote of a majority of the Directors then in office. At any time during any year, the whole number of Directors may be increased or reduced by the stockholders at a meeting called for the purpose and, in the case of a reduction, the particular directorships which shall terminate shall be determined by the stockholders, in each case by vote of a majority of the stock outstanding and entitled to vote for the election of Directors, or, in the case of a reduction which involves the termination of the directorship of an incumbent Director, by such larger vote, if any, as would be required to remove such incumbent from office. Each newly-created directorship resulting from any increase in the number of Directors may be filled in the manner provided in Article XIX. No Director need be a stockholder except as may be otherwise provided by law, by the Articles of Organization or these By- Laws. Each Director shall hold office until the next annual meeting of stockholders and until his successor is elected and qualified, or until he sooner dies, resigns or is removed. ARTICLE IX Powers of Directors The business, property and affairs of the Corporation shall be managed by, and be under the control and direction of, the Board of Directors, which shall have and may exercise all the powers of the Corporation except such as are conferred upon the stockholders or other officers by law, by the Articles of Organization or by these By-Laws. Except as may be otherwise specifically provided by law or by vote of the stockholders, the Board of Directors is expressly authorized to issue, from time to time, all or any portion or portions of the capital stock of the Corporation of any class which may have been authorized but not issued or otherwise reserved for issue, to such person or persons and for such consideration (but not less than the par value thereof in case of stock having par value), whether cash, tangible or intangible property, good will, services or expenses, as they may deem best, without first offering (for subscription or sale) such authorized but unissued stock to any present or future stockholders of the Corporation, and generally in their absolute discretion to determine the terms and manner of any disposition of such authorized but unissued stock. The Board of Directors may delegate from time to time to any committee, officer or agent such powers and authority as the law, the Articles of Organization and these By-Laws may permit. The Board of Directors in its discretion may appoint and remove and determine the compensation and duties in addition to those fixed by law, the Articles of Organization and these By-Laws, of all the officers, representatives, agents, employees, and servants of the Corporation. The Board of Directors shall have power to fix a reasonable compensation or fee for the attendance of their members at meetings of the Board. The Board of Directors shall have the power, from time to time, to fix and determine and to vary the amount of working capital of the Corporation and to direct and determine the use and disposition of any surplus or net profits of the Corporation over and above the amount contributed as, or constituting, paid-in capital. The Board of Directors, in its discretion, shall, from time to time, declare what, if any, dividends shall be paid on the stock of the Corporation out of the remaining surplus or net profits, and any dividend so declared shall be payable at such time or times as the Board shall determine. ARTICLE X Committees of Directors The Board of Directors, by vote of a majority of the Directors then in office, may at any time elect from its own number an executive committee and/or one or more other committees, to consist of not fewer than three members, and may from time to time designate or alter, within the limits permitted by this Article X, the duties and powers of such committees or change their membership, and may at any time abolish such committees or any of them. Any committee shall be vested with such powers of the Board of Directors as the Board may determine in the vote establishing such committee or in a subsequent vote of a majority of directors then in office, provided, however, that no such committee shall have any power prohibited by law, or the Articles of Organization, or the power (a) to change the principal office of the Corporation; (b) to amend or authorize the amendment of the Articles of Organization or these By-Laws; (c) to issue stock; (d) to establish and designate series of stock, or fix and determine the relative rights and preferences of any series of stock; (e) to elect officers required by law, the Articles of Organization or these By-Laws to be elected by stockholders or Directors, or to fill vacancies in any such office; (f) to change the number of the Board of Directors or to fill vacancies in the Board of Directors; (g) to remove officers or Directors from office; (h) to authorize the payment of any dividend or distribution to stockholders; (i) to authorize the reacquisition for value of stock of the Corporation; (j) to authorize a merger or consolidation of the Corporation or a sale or other disposition of all or substantially all the property and business of the Corporation; or (k) to authorize the liquidation or dissolution of the Corporation; and provided further, that the fact that a particular power appears in the foregoing enumeration of powers denied to committees of the Board of Directors shall not be construed to over-ride by implication any other provision of the Articles of Organization or these By-Laws limiting or denying to the Board of Directors the right to exercise such power. Each member of a committee shall hold office until the first meeting of the Board of Directors following the next annual meeting of stockholders (or until such other time as the Board of Directors may determine, either in the vote establishing the committee or at the election of such member) and until his successor is elected and qualified, or until he sooner dies, resigns, is removed, is replaced by change of membership or becomes disqualified by ceasing to be a Director, or until the committee is sooner abolished by the Board of Directors. A majority of the members of any committee then in office, but not fewer than two, shall constitute a quorum for the transaction of business, but any meeting may be adjourned from time to time by a majority of the votes cast upon the question, whether or not a quorum is present, and the meeting may be held as adjourned without further notice. Each committee may make rules not inconsistent herewith for the holding and conduct of its meetings, but unless otherwise provided in such rules its meetings shall be held and conducted in the same manner, as nearly as may be, as is provided in these By-Laws for meetings of the Board of Directors. The Board of Directors shall have the power to rescind any vote or resolution of any committee; provided, however, that no rights of third parties shall be impaired by such rescission. ARTICLE XI Meetings of the Board of Directors; Action without a Meeting Regular meetings of the Board of Directors may be held without call or notice at such places and at such times as the Board may from time to time determine; provided, however, that reasonable notice of such determination and of any changes therein is given to each member of the Board then in office. A regular meeting of the Board of Directors for the purpose of electing officers and agents may be held without call or notice immediately after and at the same place as the annual meeting of stockholders, and, if held upon due call or notice, for such other and further purposes as may be specified in such call or notice. Special meetings of the Board of Directors may be held at any time and at any place when called by the President, the Treasurer, the Chairman of the Board, if there be one, or two or more Directors, reasonable notice thereof being given to each Director by the Secretary, or, if there be no Secretary, by the Clerk, or, in the case of death, absence, incapacity or refusal of the Secretary (or the Clerk, as the case may be), by the officer or Directors calling the meeting. In any case, it shall be deemed sufficient notice to a Director to send notice by mail at least forty-eight (48) hours, or by telegram at least twenty- four (24) hours, before the meeting, addressed to him at his usual or last known business or residence address; or to give notice to him in person, either by telephone or by handing him a written notice, at least twenty-four (24) hours before the meeting. Notwithstanding the foregoing, notice of a meeting need not be given to any Director if a written waiver of notice, executed by him before or after the meeting, is filed with the records of the meeting, or to any Director who attends the meeting without protesting prior thereto, or at its commencement, the lack of notice to him. Any action required or permitted to be taken at any meeting of the Directors may be taken without a meeting if a written consent thereto is signed by all the Directors and such written consent is filed with the records of the meetings of the Directors. Such consent shall be treated as a vote at a meeting for all purposes. Such consents may be executed in one or more counterparts and not every Director need sign the same counterpart. ARTICLE XII Quorum of Directors At any meeting of the Board of Directors, a quorum for any election, or for the consideration of any question, shall consist of a majority of the Directors then in office, but any meeting may be adjourned from time to time by a majority of the votes cast upon the question, whether or not a quorum is present, and the meeting may be held as adjourned without further notice. When a quorum is present at any meeting, the votes of a majority of the Directors present shall be requisite and sufficient for election to any office, and a majority of the Directors present shall decide any question brought before such meeting except in any case where a larger vote is required by law, by the Articles of Organization or by these By-Laws. ARTICLE XIII Officers and Agents The officers of the Corporation shall be a President, a Treasurer, a Clerk, and such other officers, which may include a Chairman of the Board, a Secretary, a Controller, one or more Vice Presidents, Assistant Treasurers, Assistant Clerks, or Assistant Controllers, as the Board of Directors may, in its discretion, elect or appoint. The Corporation may also have such agents, if any, as the Board of Directors may, in its discretion, appoint. The President need not be a Director. The Clerk shall be a resident of Massachusetts unless the Corporation has a resident agent appointed for the purpose of receiving service of process. So far as is permitted by law, any two or more offices may be held by the same person. Subject to law, to the Articles of Organization and the other provisions of these By-Laws, each officer shall have, in addition to the duties and powers herein set forth, such duties and powers as are commonly incident to his office and as the Board of Directors may from time to time designate. The President, Treasurer, and Clerk (and the Secretary and Chairman of the Board, if, as the case may be, there be one) shall be elected annually by the Board of Directors at its first meeting following the annual meeting of stockholders, by vote of a majority of the full Board of Directors. Such other officers of the Corporation as may be created in accordance with these By-Laws may be filled at such meeting by vote of a majority of the full Board of Directors or any other time by vote of a majority of the Directors then in office. Each officer shall (subject to Article XVIII of these By- Laws) hold office until the first meeting of the Board of Directors following the next annual meeting of stockholders and until his successor is elected or appointed and qualified, or until he sooner dies, resigns, is removed, or becomes disqualified. Each agent shall retain his authority at the pleasure of the Board of Directors. Any officer, employee, or agent of the Corporation may be required, as and if determined by the Board of Directors, to give bond for the faithful performance of his duties. ARTICLE XIV President and Vice Presidents; Chairman of the Board The President shall be the chief executive officer of the Corporation and shall have general charge and supervision of the business, property and affairs of the Corporation and such other powers and duties as the Board of Directors may prescribe, subject to the control of the Board of Directors, unless otherwise provided by law, the Articles of Organization, these By-Laws or by specific vote of the Board of Directors. Unless a Chairman of the Board shall have been elected, the President shall preside at all meetings of stockholders and of the Board of Directors at which he is present except as otherwise voted by the Board of Directors. Any Vice President shall have such duties and powers as shall be designated from time to time by the Board of Directors or by the President, and, in any case, shall be responsible to and shall report to the President. In the absence or disability of the President, the Vice President or, if there be more than one, the Vice Presidents in the order of their seniority or as otherwise designated by the Board of Directors, shall have the powers and duties of the President. The Chairman of the Board, if there be one, shall be a member of the Board of Directors and shall preside at its meetings and at the meetings of the stockholders. He shall keep himself informed of the administration of the affairs of the Corporation, shall advise and counsel with the President, and, in the President's absence, with other officers of the Corporation, and shall perform such other duties as may from time to time be assigned to him by the Board of Directors. ARTICLE XV Treasurer and Assistant Treasurer The Treasurer shall be the chief financial officer of the Corporation and shall be in charge of its funds and the disbursements thereof, subject to the President and the Board of Directors, and shall have such duties and powers as are commonly incident to the office of a corporate treasurer and such other duties and powers as may be prescribed from time to time by the Board of Directors or by the President. If no Controller is elected, the Treasurer shall also have the duties and powers of the Controller as provided in these By-Laws. The Treasurer shall be responsible to and shall report to the Board of Directors, but in the ordinary conduct of the Corporation's business, shall be under supervision of the President. Any Assistant Treasurer shall have such duties and powers as shall be prescribed from time to time by the Board of Directors or by the Treasurer, and shall be responsible to and shall report to the Treasurer. In the absence or disability of the Treasurer, the Assistant Treasurer or, if there be more than one, the Assistant Treasurers in their order of seniority or as otherwise designated by the Board of Directors shall have the powers and duties of the Treasurer. ARTICLE XVI Controller If a Controller is elected, he shall be the chief accounting officer of the Corporation and shall be in charge of its books of account and accounting records and of its accounting procedures, and shall have such duties and powers as are commonly incident to the office of a corporate controller and such other duties and powers as may be prescribed from time to time by the Board of Directors or by the President. The Controller shall be responsible to and shall report to the Board of Directors, but in the ordinary conduct of the Corporation's business, shall be under the supervision of the President. Any Assistant Controller shall have duties and powers as shall be prescribed from time to time by the Board of Directors or by the Controller, and shall be responsible to and shall report to the Controller. If the absence or disability of the Controller, the Assistant Controller or, if there be more than one, Assistant Controllers in their order of seniority or as otherwise designated by the Board of Directors, shall have the powers and duties of the Controller. ARTICLE XVII Clerk; Secretary; Assistant Clerk and Assistant Secretary The Clerk shall record all proceedings of the stockholders in books to be kept therefor, and shall have custody of the Corporation's records, documents and valuable papers. In the absence of the Clerk from any such meeting, the Secretary, if any, may act as temporary clerk, and shall record the proceedings thereof in the aforesaid books, or a temporary clerk may be chosen by vote of the meeting. The Clerk shall also keep, or cause to be kept, the stock transfer records of the Corporation which shall contain a complete list of the names and addresses of all stockholders and the amount of stock held by each. Unless the Board of Directors shall otherwise designate, the Clerk or, in his absence, the Assistant Clerk, if any, shall have custody of the corporate seal and be responsible for affixing it to such documents as may be required to be sealed. The Clerk shall have such other duties and powers as are commonly incident to the office of a corporate clerk, and such other duties and powers as may be prescribed from time to time by the Board of Directors or by the President. If no Secretary is elected, the Clerk shall also record all proceedings of the Board of Directors and of any meetings of any committees of the Board, and, in his absence from any such meeting, a temporary clerk shall be chosen who shall record the proceedings thereof. The Secretary shall attend all meetings of the Board of Directors and shall record the proceedings thereat in books provided for that purpose which shall be open during business hours to the inspection of any Director. He shall notify the Directors of the meetings in accordance with these By-Laws and shall have and may exercise such other powers and duties as the Board of Directors may prescribe. In the absence of the Secretary at a meeting of the Board of Directors, a temporary secretary shall be chosen. Any Assistant Clerk and any Assistant Secretary shall have such duties and powers as shall from time to time be designated by the Board of Directors or the Clerk or the Secretary, respectively, and shall be responsible to and shall report to the Clerk and the Secretary, respectively. ARTICLE XVIII Resignations and Removals Any Director or officer may resign at any time by delivering his resignation in writing to the President, the Clerk or the Secretary, or to a meeting of the Board of Directors. The stockholders may, by vote of a majority in interest of the stock issued and outstanding and entitled to vote at an election of Directors, remove any Director or Directors from office with or without cause; provided, however, that the Directors of a class elected by a particular class of stockholders may be removed only by the vote of the holders of a majority of the shares of such class. The Board of Directors may, by vote of the majority of the Directors in office, remove any Director from office with cause, or remove any officer from office, with or without cause. The Board of Directors may, at any time, by vote of a majority of the Directors present and voting, terminate or modify the authority of any agent. No Director or officer resigning and (except where a right to receive compensation for a definite future period shall be expressly provided in a written agreement with the Corporation, duly approved by the Board of Directors) no Director or officer removed shall have any right to any compensation as such Director or officer for any period following his resignation or removal, or any right to damages on account of such removal, whether his compensation be by the month, by the year or otherwise. Any Director or officer may be removed for cause only after reasonable notice and opportunity to be heard before the body proposing to remove him. ARTICLE XIX Vacancies Any vacancy in the Board of Directors, however occurring, including a vacancy resulting from the enlargement of the Board, and any vacancy in any other office, may be filled by the stockholders or, in the absence of stockholder action, by a majority of the Directors then in office. If the office of any member of any committee or of any other office becomes vacant, the Board of Directors may elect or appoint a successor or successors by vote of a majority of the Directors then in office. Each successor as a Director or officer shall hold office for the unexpired term and until his successor shall be elected or appointed and qualified, or until he sooner dies, resigns, is removed or becomes disqualified. The Board of Directors shall have and may exercise all its powers, notwithstanding the existence of one or more vacancies in its number as fixed by either the stockholders or the Directors. ARTICLE XX Capital Stock The authorized amount of the capital stock and the par value, if any, of the shares shall be as fixed in the Articles of Organization. At all times when there are two or more classes of stock, the several classes of stock shall conform to the description and terms, and have the respective preferences, voting powers, restrictions and qualifications set forth in the Articles of Organization. ARTICLE XXI Certificate of Stock Each stockholder shall be entitled to a certificate of the capital stock of the Corporation owned by him, in such form as shall, in conformity to law, be prescribed from time to time by the Board of Directors. Such certificate shall be signed by either the President or a Vice President, and by either the Treasurer or an Assistant Treasurer, and may, but need not be, sealed with the corporate seal; but when any such certificate is signed by a transfer agent or by a registrar other than a Director, officer, or employee of the Corporation, the signature of the President or a Vice President and of the Treasurer or an Assistant Treasurer of the Corporation, or either or both such signatures and such seal upon such certificate, may be facsimile. If any officer who has signed, or whose facsimile signature has been placed on, any such certificate shall have ceased to be such officer before such certificate is issued, the certificate may be issued by the Corporation with the same effect as if he were such officer at the time of issue. Every certificate for shares of stock which are subject to any restriction on transfer pursuant to law, the Articles of Organization, these By-Laws, or any agreement to which the Corporation is a party, shall have the restriction noted conspicuously on the certificate, and shall also set forth, on the face or back, either the full text of the restriction or a statement of the existence of such restriction and (except if such restriction is imposed by law) a statement that the Corporation will furnish a copy thereof to the holder of such certificate upon written request and without charge. Every certificate issued when the Corporation is authorized to issue more than one class or series of stock shall set forth on its face or back either the full text of the preferences, voting powers, qualifications, and special and relative rights of the shares of each class and series authorized to be issued, or a statement of the existence of such preferences, powers, qualifications and rights, and a statement that the Corporation will furnish a copy thereof to the holder of such certificate upon written request and without charge. ARTICLE XXII Transfer of Shares of Stock Subject to the restrictions, if any, stated or noted on the stock certificates, shares of stock may be transferred on the books of the Corporation only by surrender to the Corporation, or its transfer agent, of the certificate therefor, properly endorsed or accompanied by a written assignment or power of attorney properly executed, with all requisite stock transfer stamps affixed, and with such proof of the authenticity and effectiveness of the signature as the Corporation or its transfer agent shall reasonably require. Except as may be otherwise required by law, the Articles of Organization or these By-Laws, the Corporation shall have the right to treat the person registered on the stock transfer books as the owner of any shares of the Corporation's stock as the owner-in-fact thereof for all purposes, including the payment of dividends, liability for assessments, the right to vote with respect thereto and otherwise, and accordingly shall not be bound to recognize any attempted transfer, pledge or other disposition thereof, or any equitable or other claim with respect thereto, whether or not it shall have actual or other notice thereof, until such shares shall have been transferred on the Corporation's books in accordance with these By-Laws. It shall be the duty of each stockholder to notify the Corporation of his post office address. ARTICLE XXIII Transfer Agents and Registrars; Further Regulations The Board of Directors may appoint one or more banks, trust companies or corporations doing a corporate trust business, in good standing under the laws of the United States or any state therein, to act as the Corporation's transfer agent and/or registrar for shares of capital stock, and the Board may make such other and further regulations, not inconsistent with applicable law, as it may deem expedient concerning the issue, transfer and registration of capital stock and stock certificates of the Corporation. ARTICLE XXIV Loss of Certificates In the case of the alleged loss, destruction, or wrongful taking of a certificate of stock, a duplicate certificate may be issued in place thereof upon receipt by the Corporation of such evidence of loss and such indemnity bond, with or without surety, as shall be satisfactory to the President and the Treasurer, or otherwise upon such terms, consistent with law, as the Board of Directors may prescribe. ARTICLE XXV Record Date The Directors may fix in advance a time, which shall not be more than sixty days before the date of any meeting of stockholders or the date for the payment of any dividend or the making of any distribution to stockholders, or the last day on which the consent or dissent of stockholders may be effectively expressed for any purpose, as the record date for determining the stockholders having the right to notice of and to vote at, such meeting and any adjournment thereof, or the right to receive such dividend or distribution, or the right to give such consent or dissent, and in such case, only stockholders of record on such record date shall have such right, notwithstanding any transfer of stock on the books of the Corporation after the record date; or, without fixing such record date, the Directors may, for any such purposes, close the transfer books for all or any part of such period. ARTICLE XXVI Seal The seal of the Corporation shall, subject to alteration by the Board of Directors, consist of a flat-faced circular die with the word "Massachusetts", together with the name of the Corporation and the year of incorporation, cut or engraved thereon. An impression of the seal impressed upon the original copy of these By-Laws shall be deemed conclusively to be the seal adopted by the Board of Directors. ARTICLE XXVII Execution of Papers Except as the Board of Directors may generally or in particular cases otherwise authorize or direct, all deeds, leases, transfers, contracts, proposals, bonds, notes, checks, drafts and other obligations made, accepted or endorsed by the Corporation shall be signed or endorsed on behalf of the Corporation by its President or by one of its Vice Presidents or by its Treasurer. ARTICLE XXVIII Fiscal Year Except as from time to time provided by the Board of Directors, the fiscal year of the Corporation shall end on the December 31 of each year. ARTICLE XXIX Voting Stock in Other Corporations Unless otherwise ordered by the Board of Directors, the President or, in the case of his absence or failure to act, the Treasurer, shall have full power and authority on behalf of the Corporation to attend and to act and to vote at any meetings of stockholders of any corporation in which this Corporation may hold stock, and at any such meeting shall possess and may exercise any and all rights and powers incident to the ownership of such stock and which, as the owner thereof, the Corporation might have possessed and exercised if present. The Board of Directors, by resolution from time to time, or, in the absence thereof, the President, may confer like powers upon any other person or persons as attorneys and proxies of the Corporation. ARTICLE XXX Corporate Records The original or attested copies of the Articles of Organization, By-Laws, and records of all meetings of the incorporators and stockholders, and the stock and transfer records which shall contain the names of all stockholders and the record address and the amount of stock held by each, shall be kept in Massachusetts either at the principal office of the Corporation or at an office of its transfer agent or of the Clerk. Said copies and records need not all be kept in the same office. They shall be available at all reasonable times for inspection by any stockholder for any proper purpose, but not to secure a list of the stockholders for the purpose of selling said list, or copies thereof, or of using the same for a purpose other than in the present interest of the applicant, as a stockholder, relative to the affairs of the Corporation. ARTICLE XXXI Amendments These By-Laws may be altered, amended or repealed, in whole or in part at any time by vote of the stockholders. The Board of Directors, by a majority vote of Directors at the time in office, may alter, amend or repeal these By-Laws in whole or in part, except with respect to any provision hereof which by law, the Articles of Organization or these By-Laws requires action by the stockholders; provided that not later than the time of giving notice of the meeting of stockholders next following the alteration, amendment or repeal of these By-Laws, in whole or in part, notice thereof, stating the substance of such action shall be given to all stockholders entitled to vote on amending these By-Laws. By-Laws adopted by the Directors may be amended by the stockholders. EX-3.2O 31 BY-LAWS DATA ARCHIVE SERVICES INC. Exhibit 3.2O BYLAWS OF DATA ARCHIVE SERVICES, INC. (a Florida corporation) ARTICLE I SHAREHOLDERS 1. SHARE CERTIFICATES. Certificates evidencing fully-paid shares of the corporation shall set forth thereon the statements prescribed by Section 607.0625 of the Florida Business Corporation Act ("Business Corporation Act") and by any other applicable provision of law, must be signed, either manually or in facsimile, by any one of the following officers: the President, a Vice President, the Secretary, an Assistant Secretary, the Treasurer, an Assistant Treasurer, or by any officer designated by the Board of Directors, and may bear the corporate seal or its facsimile. If the person who signed, either manually or in facsimile, a share certificate no longer holds office when the certificate is issued, the certificate is nevertheless valid. 2. FRACTIONAL SHARES OR SCRIP. The corporation may issue fractions of a share or pay in money the fair value of fractions of a share; make arrangements, or provide reasonable opportunity, for any person entitled to or holding a fractional interest in a share to sell such fractional interest or to purchase such additional fractional interests as may be necessary to acquire a full share; and issue scrip in registered or bearer form, over the manual or facsimile signature of an officer of the corporation or its agent, entitling the holder to receive a full share upon surrendering enough scrip to equal a full share. Each certificate representing scrip must be conspicuously labeled "scrip" and must contain the information required by of Section 607.0625 of the Business Corporation Act. The holder of a fractional share is entitled to exercise the rights of a shareholder, including the right to vote, to receive dividends, and to participate in the assets of the corporation upon liquidation. The holder of scrip is not entitled to any of these rights unless the scrip provides for them. The Board of Directors may authorize the issuance of scrip subject to any condition considered desirable, including (a) that the scrip will become void if not exchanged for full shares before a specified date; and (b) that the shares for which the scrip is exchangeable may be sold and the proceeds paid to the scripholders. 3. SHARE TRANSFERS. Upon compliance with any provisions restricting the transferability of shares that may be set forth in the articles of incorporation, these Bylaws, or any written agreement in respect thereof, transfers of shares of the corporation shall be made only on the books of the corporation by the registered holder thereof, or by his attorney thereunto authorized by power of attorney duly executed and filed with the Secretary of the corporation, or with a transfer agent or a registrar and on surrender of the certificate or certificates for such shares properly endorsed and the payment of all taxes thereon, if any. Except as may be otherwise provided by law or these Bylaws, the person in whose name shares stand on the books of the corporation shall be deemed the owner thereof for all purposes as regards the corporation; provided that whenever any transfer of shares shall be made for collateral security, and not absolutely, such fact, if known to the Secretary of the corporation, shall be so expressed in the entry of transfer. 4. RECORD DATE FOR SHAREHOLDERS. For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders to demand a special meeting, or to take any other action. the Board of Directors, of the corporation may fix a date as the record date for any such determination of shareholders, such date in any case to be not more than seventy days before the meeting or action requiring such determination of shareholders. A determination of shareholders entitled to notice of or to vote at a shareholders' meeting is effective for any adjournment of the meeting unless the Board of Directors fixes a new record date, which it must do if the meeting is adjourned to a date more than one hundred twenty days after the date fixed for the original meeting. 5. MEANING OF CERTAIN TERMS. As used herein in respect of the right to notice of a meeting of shareholders or a waiver thereof or to participate or vote thereat or to consent or dissent in writing in lieu of a meeting, as the case may be, the term "share" or "shares" or "shareholder" or "shareholders' refers to an outstanding share or shares and to a holder or holders of record of outstanding shares when the corporation is authorized to issue only one class of shares, and said reference is also intended to include any outstanding share or shares and any holder or holders of record of outstanding shares of any class upon which or upon whom the articles of incorporation confer such rights where there are two or more classes or series of shares or upon which or upon whom the Business Corporation Act confers such rights notwithstanding that the articles of incorporation may provide for more than one class or series of shares, one or more of which are limited or denied such rights thereunder. 6. SHAREHOLDER MEETINGS. - TIME. The annual meeting shall be held on the date fixed from time to time by the directors. A special meeting shall be held on the date fixed from time to time by the directors except where the Business Corporation Act confers the right to call a special meeting upon the shareholders. - PLACE. Annual meetings and special meetings shall be held at such place in or out of the State of Florida as the directors shall from time to time fix. - CALL. Annual meetings may be called by the directors or the Chairman of the Board of Directors, the Vice Chairman of the Board of Directors, the President, or the Secretary or by any officer instructed by the directors or the President to call the meeting. Special meetings may be called in like manner. - NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER OF NOTICE. The corporation shall notify shareholders of the date, time, and place of each annual and special -2- shareholders' meeting. Such notice shall be no fewer than ten nor more than sixty days before the meeting date. Unless the Business Corporation Act or the articles of incorporation require otherwise, notice of an annual meeting need not include a description of the purpose or purposes for which the meeting is called. Notice shall be given in the manner provided in Section 607.0141 of the Business Corporation Act, by or at the direction of the President, the Secretary, or the officer or persons calling the meeting. Notice of a special meeting must include a description of the purpose or purposes for which the meeting is called. Unless the Business Corporation Act or the articles of incorporation require otherwise, the corporation is required to give notice only to shareholders entitled to vote at the meeting. A shareholder may waive any notice required by the Business Corporation Act, the articles of incorporation, or the Bylaws before or after the date and time stated in the notice. The waiver must be in writing, be signed by the shareholder entitled to the notice, and be delivered to the corporation for inclusion in the minutes or filing with the corporate records. A shareholder's attendance at a meeting waives objection to lack of notice or defective notice of the meeting, unless the shareholder at the beginning of the meeting objects to holding the meeting or transacting business at the meeting; or waives objection to consideration of a particular matter at the meeting that is not within the purpose or purposes described in the meeting notice, unless the shareholder objects to considering the matter when it is presented. - VOTING LIST FOR MEETING. After fixing a record date for a meeting, the corporation shall prepare an alphabetical list of the names of all its shareholders who are entitled to notice of a shareholders' meeting, arranged by voting group, with the address of and number and class and series, if any of shares held by each shareholder. The shareholders' list must be available for inspection by any shareholder, for a period of ten days prior to the meeting or such shorter time as exists between the record date and the meeting and continuing through the meeting at the corporation's principal office, or at a place identified in the meeting notice in the city where the meeting will be held, or at the office of the corporation's transfer agent or registrar. A shareholder, his agent or attorney is entitled on written demand to inspect the list subject to the requirements of Section 607.1602(3) of the Business Corporation Act, to copy the list, during regular business hours and at his expense, during the period it is available for inspection. The corporation shall make the shareholders' list available at the meeting, and any shareholder, or his agent or attorney is entitled to inspect the list at any time during the meeting or any adjournment. - CONDUCT OF MEETING. Meetings of the shareholders shall be presided over by one of the following officers in the order of seniority and if present and acting - the Chairman of the Board, if any, the Vice Chairman of the Board, if any, the President, a Vice President, if any, or, if none of the foregoing is in office and present and acting, by a chairman to be chosen by the shareholders. The Secretary of the corporation, or in his absence, an Assistant Secretary, shall act as secretary of every meeting, but, if neither the Secretary nor an Assistant Secretary is present, the chairman of the meeting shall appoint a secretary of the meeting. - PROXY REPRESENTATION. A shareholder may appoint a proxy to vote or otherwise act for him by signing an appointment form, either personally or by his attorney-in fact. An appointment of a proxy is effective when received by the Secretary or other officer or agent authorized to tabulate votes. An appointment is valid for up to eleven months, unless a -3- longer period is expressly provided in the appointment form. An appointment of a proxy is revocable by the shareholder unless the appointment form conspicuously states that it is irrevocable and the appointment is coupled with an interest. - SHARES HELD BY NOMINEES. The corporation may establish a procedure by which the beneficial owner of shares that are registered in the name of a nominee is recognized by the corporation as the shareholder. The extent of this recognition may be determined in the procedure. - QUORUM. Unless the articles of incorporation or the Business Corporation Act provides otherwise, a majority of the votes entitled to be cast on a matter by a voting group constitutes a quorum of that voting group for action on that matter. Shares entitled to vote as a separate voting group may take action on a matter at a meeting only if a quorum of those shares exists with respect to that matter. Once a share is represented for any purpose at a meeting, it is deemed present for quorum purposes for the remainder of the meeting and for any adjournment of that meeting unless a new record date is or must be set for that adjourned meeting. - VOTING. Directors are elected by a plurality of the votes cast by the shares entitled to vote in the election at a meeting at which a quorum is present. If a quorum exists, action on a matter, other than the election of directors, by a voting group is approved if the votes cast within the voting group favoring the action exceed the votes cast opposing the action, unless the articles of incorporation or the Business Corporation Act requires a greater number of affirmative votes. 7. ACTION WITHOUT MEETING. Unless otherwise provided in the articles of incorporation, action required or permitted by the provisions of the Business Corporation Act to be taken at an annual or special meeting of shareholders may be taken without a meeting, without prior notice, and without a vote if the action is taken by the holders of outstanding stock of each voting group entitled to vote thereon having not less than the minimum number of votes with respect to each voting group that would be necessary to authorize or take such action at a meeting at which all voting groups and shares entitled to vote thereon were present and voted. In order to be effective the action must be evidenced by one or more written consents describing the action taken, dated and signed by approving shareholders having the requisite number of each voting group entitled to vote thereon, and delivered to the corporation by delivery to its principal office in the State of Florida, its principal place of business, the corporate Secretary, or another officer or agent of the corporation having custody of the book in which proceedings of meetings of shareholders are recorded. No written consent shall be effective to take the corporate action referred to therein, unless within sixty days of the date of the earliest dated consent delivered in the manner required by Section 607.0704 of the Business Corporation Act, written consents signed by holders of shares having the number of votes required to take action are delivered to the corporation by delivery as set forth in Section 607.0704 of the Florida Business Corporation Act. Action under this paragraph be subject to the requirements of Section 607.0704 of the Business Corporation Act. -4- ARTICLE II BOARD OF DIRECTORS 1. FUNCTIONS GENERALLY - COMPENSATION. All corporate powers shall be exercised by or under the authority of, and the business and affairs of the corporation managed under the direction of, a Board of Directors. The Board may fix the compensation of directors. 2. QUALIFICATIONS AND NUMBER. A director need not be a shareholder, a citizen of the United States, or a resident of the State of Florida. The initial Board of Directors shall consist of __ persons, which shall be the number of directors until changed. Thereafter, the number of directors shall not be less than __ nor more than ____ . The number of directors may be fixed or changed from time to time by the shareholders. If not so fixed, the number shall be ___ . The number of directors shall never be less than one. 3. TERMS AND VACANCIES. The terms of the initial directors of the corporation expire at the first shareholders meeting at which directors are elected. The terms of all other directors expire at the next annual shareholders' meeting following their election. A decrease in the number of directors does not shorten an incumbent director's term. The term of a director elected to fill a vacancy expires at the next shareholders' meeting at which directors are elected. Despite the expiration of a director's term, the director continues to serve until his successor is elected and qualifies or until there is a decrease in the number of directors. Whenever a vacancy occurs on the Board of Directors, including a vacancy resulting from an increase in the number of directors, it may be filled by the affirmative vote of a majority of the remaining directors, though less than a quorum of the Board of Directors, or by the shareholders, unless the articles of incorporation provide otherwise. 4. MEETINGS. - TIME. Meetings shall be held at such time as the Board shall fix, except that the first meeting of a newly elected Board shall be held as soon after its election as the directors may conveniently assemble. - PLACE. The Board of Directors may hold regular or special meetings in or out of the State of Florida at such place as shall be fixed by the Board. - CALL. No call shall be required for regular meetings for which the time and place have been fixed. Special meetings may be called by or at the direction of the Chairman of the Board, if any, the Vice Chairman of the Board, if any, of the President, or of a majority of the directors in office. - NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER. Regular meetings of the Board of Directors may be held without notice of the date, time, place, or purpose of the meeting. Written, or oral, notice of the time and place shall be given for special meetings in sufficient time for the convenient assembly of the directors thereat. The notice of a special meeting need not describe the purpose of the meeting. Notice of a meeting of the Board of -5- Directors need not be given to any director who signs a waiver of notice either before or after the meeting. Attendance of a director at a meeting shall constitute a waiver of notice of such meeting and a waiver of any and all objection to the place of the meeting, the time of the meeting, sr the manner in which it has been called or convened, except when a director states, at the beginning of the meeting or promptly upon arrival at the meeting, any objection to the transaction of business because the meeting is not lawfully called or convened. - QUORUM AND ACTION. A quorum of the Board of Directors consists of a majority of the number of directors prescribed in or fixed in accordance with these Bylaws. If a quorum is present when a vote is taken, the affirmative vote of a majority of directors present is the act of the Board of Directors. The Board of Directors may permit any or all directors to participate in a regular or special meeting by, or conduct the meeting through use of, any means of communication by which all directors participating may simultaneously hear each other during the meeting. A director participating in a meeting by this means is deemed to be present in person at the meeting. - CHAIRMAN OF THE MEETING. Meetings of the Board of Directors shall be presided over by the following directors in the order of seniority and if present and acting the Chairman of the Board, if any, the Vice Chairman of the Board, if any, the President, or any other director chosen by the Board. 5. REMOVAL OF DIRECTORS. The shareholders may remove one or more directors with or without cause pursuant lo the provisions of Section 607.0808 of the Business Corporation Act. 6. COMMITTEES The Board of Directors by resolution adopted by a majority of the full Board of Directors, may designate from among its members an executive committee and one or more other committees each of which, to the extent provided in such resolution or in the articles of incorporation or the Bylaws, shall have and may exercise all the authority of the Board of Directors, except such authority as may not be delegated under the Business Corporation Act. Each committee may have two or more members, who serve at the pleasure of the Board of Directors. The provisions of Sections 607.0822, 607.0823, and 607.0824 of the Business Corporation Act, which govern meetings, notice and waiver of notice, and quorum and voting requirements, apply to committees and their members as well. 7. ACTION WITHOUT MEETING. Action required or permitted by the Business Corporation Act to be taken at a Board of Directors' meeting or committee meeting may be taken without a meeting if the action is taken by all members of the Board or of the committee. The action must be evidenced by one or more written consents describing the action taken, signed by each director or committee member. Action taken under this paragraph is effective when the last director signs the consent, unless the consent specifies a different effective date. -6- ARTICLE III OFFICERS The corporation shall have a President, and a Secretary, and such other officers as may be deemed necessary, who may be appointed by the directors. The same individual may simultaneously hold more than one office in the corporation. A duly appointed officer may appoint one or more officers or assistant officers if authorized by the Board of Directors. Each officer of the corporation has the authority and shall perform the duties prescribed by the Board of Directors or by direction of an officer authorized by the Board of Directors to prescribe the duties of other officers; provided, that the Secretary shall have the responsibility for preparation and custody of minutes of the directors' and shareholders' meetings and for authenticating records of the corporation. The Board of Directors may remove any officer at any time with or without cause. ARTICLE IV REGISTERED OFFICE AND AGENT The address of the initial registered office of the corporation and the name of the initial registered agent of the corporation are set forth in the original articles of incorporation. ARTICLE V CORPORATE SEAL The corporate seal shall have inscribed thereon the name of the corporation and shall be in such form and contain such other words and/or figures as the Board of Directors shall determine or the law require. ARTICLE VI FISCAL YEAR The fiscal year of the corporation shall be fixed, and shall be subject to change, by the Board of Directors. -7- ARTICLE VII CONTROL OVER BYLAWS The Board of Directors may amend or repeal these Bylaws unless the articles of incorporation or the Business Corporation Act reserves this power exclusively to the shareholders in whole or in part, or the shareholders in amending or repealing the Bylaws generally or a particular Bylaw provision provide expressly that the Board of Directors may not amend or repeal the Bylaws, generally or that Bylaw provision. The shareholders may amend or repeal these Bylaws even though the Bylaws may also be amended or repealed by the Board of Directors. No provision of this Article shall be construed as purporting to negate the requirements of Section 607.1201 of the Business Corporation Act. I HEREBY CERTIFY that the foregoing is a full, true, and correct copy of the Bylaws of , a corporation of the State of Florida, as in effect on the date hereof. WITNESS my hand and seal of the corporation. Dated: ----------------------------------------- Secretary of (SEAL) -8- EX-3.2P 32 BY-LAWS DATA ARCHIVE SERVICES OF MIAMI, INC. Exhibit 3.2P BYLAWS OF DATA ARCHIVE SERVICES OF MIAMI, INC. (a Florida corporation) ARTICLE I SHAREHOLDERS 1. SHARE CERTIFICATES. Certificates evidencing fully-paid shares of the corporation shall set forth thereon the statements prescribed by Section 607.0625 of the Florida Business Corporation Act ("Business Corporation Act") and by any other applicable provision of law, must be signed, either manually or in facsimile, by any one of the following officers: the President, a Vice President, the Secretary, an Assistant Secretary, the Treasurer, an Assistant Treasurer, or by any officer designated by the Board of Directors, and may bear the corporate seal or its facsimile. If the person who signed, either manually or in facsimile, a share certificate no longer holds office when the certificate is issued, the certificate is nevertheless valid. 2. FRACTIONAL SHARES OR SCRIP. The corporation may issue fractions of a share or pay in money the fair value of fractions of a share; make arrangements, or provide reasonable opportunity, for any person entitled to or holding a fractional interest in a share to sell such fractional interest or to purchase such additional fractional interests as may be necessary to acquire a full share; and issue scrip in registered or bearer form, over the manual or facsimile signature of an officer of the corporation or its agent, entitling the holder to receive a full share upon surrendering enough scrip to equal a full share. Each certificate representing scrip must be conspicuously labeled "scrip" and must contain the information required by of Section 607.0625 of the Business Corporation Act. The holder of a fractional share is entitled to exercise the rights of a shareholder, including the right to vote, to receive dividends, and to participate in the assets of the corporation upon liquidation. The holder of scrip is not entitled to any of these rights unless the scrip provides for them. The Board of Directors may authorize the issuance of scrip subject to any condition considered desirable, including (a) that the scrip will become void if not exchanged for full shares before a specified date; and (b) that the shares for which the scrip is exchangeable may be sold and the proceeds paid to the scripholders. 3. SHARE TRANSFERS. Upon compliance with any provisions restricting the transferability of shares that may be set forth in the articles of incorporation, these Bylaws, or any written agreement in respect thereof, transfers of shares of the corporation shall be made only on the books of the corporation by the registered holder thereof, or by his attorney thereunto authorized by power of attorney duly executed and filed with the Secretary of the corporation, or with a transfer agent or a registrar and on surrender of the certificate or certificates for such shares properly endorsed and the payment of all taxes thereon, if any. Except as may be otherwise provided by law or these Bylaws, the person in whose name shares stand on the books of the corporation shall be deemed the owner thereof for all purposes as regards the corporation; provided that whenever any transfer of shares shall be made for collateral security, and not absolutely, such fact, if known to the Secretary of the corporation, shall be so expressed in the entry of transfer. 4. RECORD DATE FOR SHAREHOLDERS. For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders to demand a special meeting, or to take any other action. the Board of Directors, of the corporation may fix a date as the record date for any such determination of shareholders, such date in any case to be not more than seventy days before the meeting or action requiring such determination of shareholders. A determination of shareholders entitled to notice of or to vote at a shareholders' meeting is effective for any adjournment of the meeting unless the Board of Directors fixes a new record date, which it must do if the meeting is adjourned to a date more than one hundred twenty days after the date fixed for the original meeting. 5. MEANING OF CERTAIN TERMS. As used herein in respect of the right to notice of a meeting of shareholders or a waiver thereof or to participate or vote thereat or to consent or dissent in writing in lieu of a meeting, as the case may be, the term "share" or "shares" or "shareholder" or "shareholders' refers to an outstanding share or shares and to a holder or holders of record of outstanding shares when the corporation is authorized to issue only one class of shares, and said reference is also intended to include any outstanding share or shares and any holder or holders of record of outstanding shares of any class upon which or upon whom the articles of incorporation confer such rights where there are two or more classes or series of shares or upon which or upon whom the Business Corporation Act confers such rights notwithstanding that the articles of incorporation may provide for more than one class or series of shares, one or more of which are limited or denied such rights thereunder. 6. SHAREHOLDER MEETINGS. - TIME. The annual meeting shall be held on the date fixed from time to time by the directors. A special meeting shall be held on the date fixed from time to time by the directors except where the Business Corporation Act confers the right to call a special meeting upon the shareholders. - PLACE. Annual meetings and special meetings shall be held at such place in or out of the State of Florida as the directors shall from time to time fix. - CALL. Annual meetings may be called by the directors or the Chairman of the Board of Directors, the Vice Chairman of the Board of Directors, the President, or the Secretary or by any officer instructed by the directors or the President to call the meeting. Special meetings may be called in like manner. - NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER OF NOTICE. The corporation shall notify shareholders of the date, time, and place of each annual and special -2- shareholders' meeting. Such notice shall be no fewer than ten nor more than sixty days before the meeting date. Unless the Business Corporation Act or the articles of incorporation require otherwise, notice of an annual meeting need not include a description of the purpose or purposes for which the meeting is called. Notice shall be given in the manner provided in Section 607.0141 of the Business Corporation Act, by or at the direction of the President, the Secretary, or the officer or persons calling the meeting. Notice of a special meeting must include a description of the purpose or purposes for which the meeting is called. Unless the Business Corporation Act or the articles of incorporation require otherwise, the corporation is required to give notice only to shareholders entitled to vote at the meeting. A shareholder may waive any notice required by the Business Corporation Act, the articles of incorporation, or the Bylaws before or after the date and time stated in the notice. The waiver must be in writing, be signed by the shareholder entitled to the notice, and be delivered to the corporation for inclusion in the minutes or filing with the corporate records. A shareholder's attendance at a meeting waives objection to lack of notice or defective notice of the meeting, unless the shareholder at the beginning of the meeting objects to holding the meeting or transacting business at the meeting; or waives objection to consideration of a particular matter at the meeting that is not within the purpose or purposes described in the meeting notice, unless the shareholder objects to considering the matter when it is presented. - VOTING LIST FOR MEETING. After fixing a record date for a meeting, the corporation shall prepare an alphabetical list of the names of all its shareholders who are entitled to notice of a shareholders' meeting, arranged by voting group, with the address of and number and class and series, if any of shares held by each shareholder. The shareholders' list must be available for inspection by any shareholder, for a period of ten days prior to the meeting or such shorter time as exists between the record date and the meeting and continuing through the meeting at the corporation's principal office, or at a place identified in the meeting notice in the city where the meeting will be held, or at the office of the corporation's transfer agent or registrar. A shareholder, his agent or attorney is entitled on written demand to inspect the list subject to the requirements of Section 607.1602(3) of the Business Corporation Act, to copy the list, during regular business hours and at his expense, during the period it is available for inspection. The corporation shall make the shareholders' list available at the meeting, and any shareholder, or his agent or attorney is entitled to inspect the list at any time during the meeting or any adjournment. - CONDUCT OF MEETING. Meetings of the shareholders shall be presided over by one of the following officers in the order of seniority and if present and acting - the Chairman of the Board, if any, the Vice Chairman of the Board, if any, the President, a Vice President, if any, or, if none of the foregoing is in office and present and acting, by a chairman to be chosen by the shareholders. The Secretary of the corporation, or in his absence, an Assistant Secretary, shall act as secretary of every meeting, but, if neither the Secretary nor an Assistant Secretary is present, the chairman of the meeting shall appoint a secretary of the meeting. - PROXY REPRESENTATION. A shareholder may appoint a proxy to vote or otherwise act for him by signing an appointment form, either personally or by his attorney-in fact. An appointment of a proxy is effective when received by the Secretary or other officer or agent authorized to tabulate votes. An appointment is valid for up to eleven months, unless a -3- longer period is expressly provided in the appointment form. An appointment of a proxy is revocable by the shareholder unless the appointment form conspicuously states that it is irrevocable and the appointment is coupled with an interest. - SHARES HELD BY NOMINEES. The corporation may establish a procedure by which the beneficial owner of shares that are registered in the name of a nominee is recognized by the corporation as the shareholder. The extent of this recognition may be determined in the procedure. - QUORUM. Unless the articles of incorporation or the Business Corporation Act provides otherwise, a majority of the votes entitled to be cast on a matter by a voting group constitutes a quorum of that voting group for action on that matter. Shares entitled to vote as a separate voting group may take action on a matter at a meeting only if a quorum of those shares exists with respect to that matter. Once a share is represented for any purpose at a meeting, it is deemed present for quorum purposes for the remainder of the meeting and for any adjournment of that meeting unless a new record date is or must be set for that adjourned meeting. - VOTING. Directors are elected by a plurality of the votes cast by the shares entitled to vote in the election at a meeting at which a quorum is present. If a quorum exists, action on a matter, other than the election of directors, by a voting group is approved if the votes cast within the voting group favoring the action exceed the votes cast opposing the action, unless the articles of incorporation or the Business Corporation Act requires a greater number of affirmative votes. 7. ACTION WITHOUT MEETING. Unless otherwise provided in the articles of incorporation, action required or permitted by the provisions of the Business Corporation Act to be taken at an annual or special meeting of shareholders may be taken without a meeting, without prior notice, and without a vote if the action is taken by the holders of outstanding stock of each voting group entitled to vote thereon having not less than the minimum number of votes with respect to each voting group that would be necessary to authorize or take such action at a meeting at which all voting groups and shares entitled to vote thereon were present and voted. In order to be effective the action must be evidenced by one or more written consents describing the action taken, dated and signed by approving shareholders having the requisite number of each voting group entitled to vote thereon, and delivered to the corporation by delivery to its principal office in the State of Florida, its principal place of business, the corporate Secretary, or another officer or agent of the corporation having custody of the book in which proceedings of meetings of shareholders are recorded. No written consent shall be effective to take the corporate action referred to therein, unless within sixty days of the date of the earliest dated consent delivered in the manner required by Section 607.0704 of the Business Corporation Act, written consents signed by holders of shares having the number of votes required to take action are delivered to the corporation by delivery as set forth in Section 607.0704 of the Florida Business Corporation Act. Action under this paragraph be subject to the requirements of Section 607.0704 of the Business Corporation Act. -4- ARTICLE II BOARD OF DIRECTORS 1. FUNCTIONS GENERALLY - COMPENSATION. All corporate powers shall be exercised by or under the authority of, and the business and affairs of the corporation managed under the direction of, a Board of Directors. The Board may fix the compensation of directors. 2. QUALIFICATIONS AND NUMBER. A director need not be a shareholder, a citizen of the United States, or a resident of the State of Florida. The initial Board of Directors shall consist of __ persons, which shall be the number of directors until changed. Thereafter, the number of directors shall not be less than __ nor more than ____ . The number of directors may be fixed or changed from time to time by the shareholders. If not so fixed, the number shall be ___ . The number of directors shall never be less than one. 3. TERMS AND VACANCIES. The terms of the initial directors of the corporation expire at the first shareholders meeting at which directors are elected. The terms of all other directors expire at the next annual shareholders' meeting following their election. A decrease in the number of directors does not shorten an incumbent director's term. The term of a director elected to fill a vacancy expires at the next shareholders' meeting at which directors are elected. Despite the expiration of a director's term, the director continues to serve until his successor is elected and qualifies or until there is a decrease in the number of directors. Whenever a vacancy occurs on the Board of Directors, including a vacancy resulting from an increase in the number of directors, it may be filled by the affirmative vote of a majority of the remaining directors, though less than a quorum of the Board of Directors, or by the shareholders, unless the articles of incorporation provide otherwise. 4. MEETINGS. - TIME. Meetings shall be held at such time as the Board shall fix, except that the first meeting of a newly elected Board shall be held as soon after its election as the directors may conveniently assemble. - PLACE. The Board of Directors may hold regular or special meetings in or out of the State of Florida at such place as shall be fixed by the Board. - CALL. No call shall be required for regular meetings for which the time and place have been fixed. Special meetings may be called by or at the direction of the Chairman of the Board, if any, the Vice Chairman of the Board, if any, of the President, or of a majority of the directors in office. - NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER. Regular meetings of the Board of Directors may be held without notice of the date, time, place, or purpose of the meeting. Written, or oral, notice of the time and place shall be given for special meetings in sufficient time for the convenient assembly of the directors thereat. The notice of a special meeting need not describe the purpose of the meeting. Notice of a meeting of the Board of -5- Directors need not be given to any director who signs a waiver of notice either before or after the meeting. Attendance of a director at a meeting shall constitute a waiver of notice of such meeting and a waiver of any and all objection to the place of the meeting, the time of the meeting, sr the manner in which it has been called or convened, except when a director states, at the beginning of the meeting or promptly upon arrival at the meeting, any objection to the transaction of business because the meeting is not lawfully called or convened. - QUORUM AND ACTION. A quorum of the Board of Directors consists of a majority of the number of directors prescribed in or fixed in accordance with these Bylaws. If a quorum is present when a vote is taken, the affirmative vote of a majority of directors present is the act of the Board of Directors. The Board of Directors may permit any or all directors to participate in a regular or special meeting by, or conduct the meeting through use of, any means of communication by which all directors participating may simultaneously hear each other during the meeting. A director participating in a meeting by this means is deemed to be present in person at the meeting. - CHAIRMAN OF THE MEETING. Meetings of the Board of Directors shall be presided over by the following directors in the order of seniority and if present and acting the Chairman of the Board, if any, the Vice Chairman of the Board, if any, the President, or any other director chosen by the Board. 5. REMOVAL OF DIRECTORS. The shareholders may remove one or more directors with or without cause pursuant lo the provisions of Section 607.0808 of the Business Corporation Act. 6. COMMITTEES The Board of Directors by resolution adopted by a majority of the full Board of Directors, may designate from among its members an executive committee and one or more other committees each of which, to the extent provided in such resolution or in the articles of incorporation or the Bylaws, shall have and may exercise all the authority of the Board of Directors, except such authority as may not be delegated under the Business Corporation Act. Each committee may have two or more members, who serve at the pleasure of the Board of Directors. The provisions of Sections 607.0822, 607.0823, and 607.0824 of the Business Corporation Act, which govern meetings, notice and waiver of notice, and quorum and voting requirements, apply to committees and their members as well. 7. ACTION WITHOUT MEETING. Action required or permitted by the Business Corporation Act to be taken at a Board of Directors' meeting or committee meeting may be taken without a meeting if the action is taken by all members of the Board or of the committee. The action must be evidenced by one or more written consents describing the action taken, signed by each director or committee member. Action taken under this paragraph is effective when the last director signs the consent, unless the consent specifies a different effective date. -6- ARTICLE III OFFICERS The corporation shall have a President, and a Secretary, and such other officers as may be deemed necessary, who may be appointed by the directors. The same individual may simultaneously hold more than one office in the corporation. A duly appointed officer may appoint one or more officers or assistant officers if authorized by the Board of Directors. Each officer of the corporation has the authority and shall perform the duties prescribed by the Board of Directors or by direction of an officer authorized by the Board of Directors to prescribe the duties of other officers; provided, that the Secretary shall have the responsibility for preparation and custody of minutes of the directors' and shareholders' meetings and for authenticating records of the corporation. The Board of Directors may remove any officer at any time with or without cause. ARTICLE IV REGISTERED OFFICE AND AGENT The address of the initial registered office of the corporation and the name of the initial registered agent of the corporation are set forth in the original articles of incorporation. ARTICLE V CORPORATE SEAL The corporate seal shall have inscribed thereon the name of the corporation and shall be in such form and contain such other words and/or figures as the Board of Directors shall determine or the law require. ARTICLE VI FISCAL YEAR The fiscal year of the corporation shall be fixed, and shall be subject to change, by the Board of Directors. -7- ARTICLE VII CONTROL OVER BYLAWS The Board of Directors may amend or repeal these Bylaws unless the articles of incorporation or the Business Corporation Act reserves this power exclusively to the shareholders in whole or in part, or the shareholders in amending or repealing the Bylaws generally or a particular Bylaw provision provide expressly that the Board of Directors may not amend or repeal the Bylaws, generally or that Bylaw provision. The shareholders may amend or repeal these Bylaws even though the Bylaws may also be amended or repealed by the Board of Directors. No provision of this Article shall be construed as purporting to negate the requirements of Section 607.1201 of the Business Corporation Act. I HEREBY CERTIFY that the foregoing is a full, true, and correct copy of the Bylaws of , a corporation of the State of Florida, as in effect on the date hereof. WITNESS my hand and seal of the corporation. Dated: ----------------------------------------- Secretary of (SEAL) -8- EX-4.2 33 INSTRUMENTS DEFINING RIGHTS OF SECURITY HOLDERS Draft of September 10, 1996 =============================================================================== IRON MOUNTAIN INCORPORATED __% SENIOR SUBORDINATED NOTES DUE 2006 _________________ INDENTURE Dated as of _________, 1996 _________________ ____________________________________________ Trustee =============================================================================== NYMAIN01 Doc: 159158_2 CROSS-REFERENCE TABLE* Trust Indenture Act Section Indenture Section 310 (a)(1)............................................. 7.10 (a)(2)............................................. 7.10 (a)(3) ............................................ N.A. (a)(4)............................................. N.A. (a)(5)............................................. 7.10 (b) ............................................... 7.10 (c) ............................................... N.A. 311 (a) ............................................... 7.11 (b) ............................................... 7.11 (c) ............................................... N.A. 312 (a)................................................ 2.05 (b)................................................ 12.03 (c) ............................................... 12.03 313 (a) ............................................... 7.06 (b)(1) ............................................ N.A. (b)(2) ............................................ 7.06;7.07 (c) ............................................... 7.06;12.02 (d)................................................ 7.06 314 (a) ............................................... 4.03;12.02 (b) ............................................... N.A. (c)(1) ............................................ 12.04 (c)(2) ............................................ 12.04 (c)(3) ............................................ N.A. (d)................................................ N.A. (e) .............................................. 12.05 (f)................................................ N.A. 315 (a)................................................ 7.01 (b)................................................ 7.05,12.02 (c) .............................................. 7.01 (d)................................................ 7.01 (e)................................................ 6.11 316 (a)(last sentence) ................................ 2.09 (a)(1)(A).......................................... 6.05 (a)(1)(B) ......................................... 6.04 (a)(2) ............................................ N.A. (b) ............................................... 6.07 (c) ............................................... 2.13 317 (a)(1) ............................................ 6.08 (a)(2)............................................. 6.09 (b) ............................................... 2.04 318 (a)................................................ 12.01 (b)................................................ N.A. (c)................................................ 12.01 N.A. means not applicable. *This Cross-Reference Table is not part of this Indenture. NYMAIN01 Doc: 159158_2 -i- TABLE OF CONTENTS Page ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE...................................................... 1 Section 1.01. Definitions........................................ 1 Section 1.02. Other Definitions.................................. 14 Section 1.03. Incorporation by Reference of Trust Indenture Act.. 15 Section 1.04. Rules of Construction.............................. 16 ARTICLE 2 THE NOTES......................................................... 16 Section 2.01. Form and Dating.................................... 16 Section 2.02. Execution and Authentication....................... 16 Section 2.03. Registrar and Paying Agent......................... 17 Section 2.04. Paying Agent to Hold Money in Trust................ 18 Section 2.05. Lists of Holders of the Notes...................... 18 Section 2.06. Transfer and Exchange.............................. 18 Section 2.07. Replacement Notes.................................. 19 Section 2.08. Outstanding Notes.................................. 20 Section 2.09. Treasury Notes..................................... 20 Section 2.10. Temporary Notes.................................... 20 Section 2.11. Cancellation....................................... 21 Section 2.12. Defaulted Interest................................. 21 Section 2.13. Record Date........................................ 21 Section 2.14. CUSIP Number....................................... 21 Section 2.15. Computation of Interest............................ 22 ARTICLE 3 REDEMPTION AND OFFERS TO PURCHASE................................. 22 Section 3.01. Notices to Trustee................................. 22 Section 3.02. Selection of Notes to Be Redeemed.................. 22 Section 3.03. Notice of Redemption............................... 22 Section 3.04. Effect of Notice of Redemption..................... 23 Section 3.05. Deposit of Redemption Price........................ 23 Section 3.06. Notes Redeemed in Part............................. 24 Section 3.07. Optional Redemption................................ 24 Section 3.08. Mandatory Redemption............................... 24 Section 3.09. Asset Sale Offers.................................. 25 ARTICLE 4 COVENANTS......................................................... 27 Section 4.01. Payment of Notes................................... 27 NYMAIN01 Doc: 159158_2 -ii- TABLE OF CONTENTS (cont.) Page Section 4.02. Maintenance of Office or Agency.................... 27 Section 4.03. Reports............................................ 28 Section 4.04. Compliance Certificate............................. 28 Section 4.05. Taxes.............................................. 29 Section 4.06. Stay, Extension and Usury Laws..................... 29 Section 4.07. Restricted Payments................................ 29 Section 4.08. Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries............................ 31 Section 4.09. Incurrence of Indebtedness and Issuance of Preferred Stock.................................... 32 Section 4.10. Asset Sales........................................ 33 Section 4.11. Transactions with Affiliates....................... 34 Section 4.12. Liens.............................................. 35 Section 4.13. Additional Subsidiary Guarantees................... 35 Section 4.14. Offer to Purchase Upon Change of Control........... 36 Section 4.15. Corporate Existence................................ 37 Section 4.16. Certain Senior Subordinated Debt................... 38 Section 4.17. Designation of unrestricted subsidiaries........... 38 ARTICLE 5 SUCCESSORS........................................................ 39 Section 5.01. Merger, Consolidation, or Sale of Assets........... 39 Section 5.02. Successor Corporation Substituted.................. 39 ARTICLE 6 CERTAIN DEFAULT PROVISIONS........................................ 40 Section 6.01. Events of Default.................................. 40 Section 6.02. Acceleration....................................... 42 Section 6.03. Other Remedies..................................... 43 Section 6.04. Waiver of Past Defaults............................ 43 Section 6.05. Control by Majority................................ 43 Section 6.06. Limitation on Suits................................ 43 Section 6.07. Rights of Holders of Notes to Receive Payment...... 44 Section 6.08. Collection Suit by Trustee......................... 44 Section 6.09. Trustee May File Proofs of Claim................... 44 Section 6.10. Priorities......................................... 45 Section 6.11. Undertaking for Costs.............................. 45 ARTICLE 7 TRUSTEE .......................................................... 46 Section 7.01. Duties of Trustee.................................. 46 NYMAIN01 Doc: 159158_2 -iii- TABLE OF CONTENTS (cont.) Page Section 7.02. Rights of Trustee.................................... 47 Section 7.03. Individual Rights of Trustee......................... 48 Section 7.04. Trustee's Disclaimer................................. 48 Section 7.05. Notice of Defaults................................... 48 Section 7.06. Reports by Trustee to Holders of the Notes........... 48 Section 7.07. Compensation and Indemnity........................... 49 Section 7.08. Replacement of Trustee............................... 50 Section 7.09. Successor Trustee by Merger, etc..................... 51 Section 7.10. Eligibility; Disqualification........................ 51 Section 7.11. Preferential Collection of Claims Against Company.... 51 ARTICLE 8 LEGAL DEFEASANCE AND COVENANT DEFEASANCE............................ 51 Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance........................................... 51 Section 8.02. Legal Defeasance and Discharge....................... 51 Section 8.03. Covenant Defeasance.................................. 52 Section 8.04. Conditions to Legal or Covenant Defeasance........... 52 Section 8.05. Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous Provisions............. 54 Section 8.06. Repayment to Company................................. 54 Section 8.07. Reinstatement........................................ 55 ARTICLE 9 AMENDMENT, SUPPLEMENT AND WAIVER ................................... 55 Section 9.01. Without Consent of Holders of Notes.................. 55 Section 9.02. With Consent of Holders of Notes..................... 56 Section 9.03. Compliance with Trust Indenture Act.................. 57 Section 9.04. Revocation and Effect of Consents.................... 57 Section 9.05. Notation on or Exchange of Notes..................... 58 Section 9.06. Trustee to Sign Amendments, etc...................... 58 ARTICLE 10 SUBORDINATION....................................................... 58 Section 10.01. Agreement to Subordinate............................. 58 Section 10.02. Liquidation; Dissolution; Bankruptcy................. 58 Section 10.03. Default on Designated Senior Debt.................... 59 Section 10.04. Acceleration of Notes................................ 60 Section 10.05. When Distribution Must be Paid Over.................. 60 Section 10.06. Notice By Company.................................... 60 Section 10.07. Subrogation.......................................... 61 NYMAIN01 Doc: 159158_2 -iv- TABLE OF CONTENTS (cont.) Page Section 10.08. Relative Rights.................................... 61 Section 10.09. Subordination May Not Be Impaired by Company....... 61 Section 10.10. Distribution or Notice to Representative........... 61 Section 10.11. Rights of Trustee and Paying Agent................. 62 Section 10.12. Authorization to Effect Subordination.............. 62 Section 10.13. Amendments......................................... 62 ARTICLE 11 SUBSIDIARY GUARANTEES............................................. 62 Section 11.01. Subsidiary Guarantee............................... 62 Section 11.02. Subordination...................................... 64 Section 11.03. Liquidation; Dissolution; Bankruptcy............... 64 Section 11.04. Default on Senior Debt of the Guarantor............ 65 Section 11.05. Acceleration of Notes.............................. 66 Section 11.06. When Distribution Must Be Paid Over................ 66 Section 11.07. Notice by a Guarantor.............................. 66 Section 11.08. Subrogation........................................ 66 Section 11.09. Relative Rights.................................... 67 Section 11.10. Subordination May Not Be Impaired By Any Guarantor. 67 Section 11.11. Distribution or Notice to Representative........... 67 Section 11.12. Rights of Trustee and Paying Agent................. 68 Section 11.13. Authorization to Effect Subordination.............. 68 Section 11.14. Amendments......................................... 68 Section 11.15. Limitation of Guarantor's Liability................ 68 Section 11.16. Restricted Subsidiaries May Consolidate, etc., on Certain Term.................................... 69 Section 11.17. Releases Following Sale of Assets or Designation as Unrestricted Subsidiary......................... 69 ARTICLE 12 MISCELLANEOUS..................................................... 70 Section 12.01. Trust Indenture Act Controls...................... 70 Section 12.02. Notices........................................... 70 Section 12.03. Communication by Holders of Notes with Other Holders of Notes.................................. 71 Section 12.04. Certificate and Opinion as to Conditions Precedent 71 Section 12.05. Statements Required in Certificate or Opinion..... 71 Section 12.06. Rules by Trustee and Agents....................... 72 Section 12.07. No Personal Liability of Directors, Officers, Employees and Stockholders........................ 72 NYMAIN01 Doc: 159158_2 -v- TABLE OF CONTENTS (cont.) Page Section 12.08. Governing Law....................................... 72 Section 12.09. No Adverse Interpretation of Other Agreements....... 72 Section 12.10. Successors.......................................... 72 Section 12.11. Severability........................................ 73 Section 12.12. Counterpart Originals............................... 73 Section 12.13. Table of Contents, Headings, etc.................... 73 EXHIBITS Exhibit A FORM OF NOTE Exhibit B FORM OF SUPPLEMENTAL INDENTURE Exhibit C FORM OF NOTATION ON NOTE RELATING TO GUARANTEE NYMAIN01 Doc: 159158_2 -vi- INDENTURE dated as of ________, 1996 among Iron Mountain Incorporated, a Delaware corporation (the "Company") and First Bank National Association, as trustee (the "Trustee"). The Company and the Trustee agree as follows for the benefit of each other and for the equal and ratable benefit of the Holders of the __% Senior Subordinated Notes due 2006: ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE SECTION 1.01. DEFINITIONS. "Acquired Debt" means, with respect to any specified Person, (a) Indebtedness of any other Person existing at the time such other Person merged with or into or became a Subsidiary of such specified Person, including Indebtedness incurred in connection with, or in contemplation of, such other Person merging with or into or becoming a Subsidiary of such specified Person and (b) Indebtedness encumbering any asset acquired by such specified Person. "Acquisition EBITDA" means, as of any date of determination, with respect to an Acquisition EBITDA Entity, the sum of (a) EBITDA of such Acquisition EBITDA Entity for its last fiscal quarter for which financial statements are available at such date of determination, multiplied by four (or if such quarterly statements are not available, EBITDA for the most recent fiscal year for which financial statements are available), plus (b) projected quantifiable improvements in operating results (on an annualized basis) due to cost reductions calculated in good faith by the Company or one of its Restricted Subsidiaries, as certified by an Officers' Certificate filed with the Trustee, without giving effect to any operating losses of the acquired Person. "Acquisition EBITDA Entity" means, as of any date of determination, a business or Person (a) which has been acquired by the Company or one of its Restricted Subsidiaries and with respect to which financial results on a consolidated basis with the Company have not been made available for an entire fiscal quarter or (b) which is to be acquired in whole or in part with Indebtedness, the incurrence of which will require the calculation on such date of the Acquisition EBITDA of such Acquisition EBITDA Entity for purposes of Section 4.09 hereof. "Adjusted EBITDA" means, as of any date of determination and without duplication, the sum of (a) EBITDA of the Company and its Restricted Subsidiaries for the most recent fiscal quarter for which internal financial statements are available at such date of determination, multiplied by four, and (b) Acquisition EBITDA of each business or Person that is an Acquisition EBITDA Entity as of such date of determination, multiplied by a fraction, the numerator of which is three minus the number of months (and/or any portion thereof ) in such most recent fiscal quarter for which the financial results of such Acquisition EBITDA Entity are included in the EBITDA of the Company and its Restricted Subsidiaries under clause (a) above, and (ii) the NYMAIN01 Doc: 159158_2 denominator of which is three. The effects of unusual or non-recurring items in respect of the Company, a Restricted Subsidiary or an Acquisition EBITDA Entity occurring in any period shall be excluded in the calculation of Adjusted EBITDA. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, "control" (including, with correlative meanings, the terms "controlling," "controlled by" and "under common control with"), as used with respect to any Person, will mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise; provided, however, that beneficial ownership of 10% or more of the voting securities of a Person shall be deemed to be control. "Agent" means any Registrar, Paying Agent or co-registrar. "Bankruptcy Law" means Title 11, U.S. Code or any similar federal or state law for the relief of debtors. "Board of Directors" means the Board of Directors of the Company, or any authorized committee of the Board of Directors. "Business Day" means any day other than a Legal Holiday. "Capital Lease Obligation" means, at the time any determination thereof is to be made, the amount of the liability in respect of a capital lease that would at such time be so required to be capitalized on the balance sheet in accordance with GAAP. "Capital Stock" means any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock, including, without limitation, with respect to partnerships, partnership interests (whether general or limited) and any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, such partnership. "Cash Equivalents" means (a) securities with maturities of one year or less from the date of acquisition, issued, fully guaranteed or insured by the United States Government or any agency thereof, (b) certificates of deposit, time deposits, overnight bank deposits, bankers acceptances and repurchase agreements issued by a Qualified Issuer having maturities of 270 days or less from the date of acquisition, (c) commercial paper of an issuer rated at least A-2 by Standard & Poor's Rating Group, a division of McGraw Hill, Inc., or P-2 by Moody's Investors Service, or carrying an equivalent rating by a nationally recognized rating agency if both of the two named rating agencies cease publishing ratings of investments and having maturities of 270 days or less from the date of acquisition, (d) money market accounts or funds with or issued by Qualified Issuers and (e) Investments in money market funds substantially all of the assets of which are comprised of securities and other obligations of the types described in clauses (a) through (c) above. NYMAIN01 Doc: 159158_2 2 "Change of Control" means the occurrence of any of the following events: (a) any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than the Principal Stockholders (or any of them), is or becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of more than a majority of the voting power of all classes of Voting Stock of the Company; (b) the Company consolidates with, or merges with or into, another Person or conveys, transfers, leases or otherwise disposes of all or substantially all of its assets to any Person, or any Person consolidates with, or merges with or into, the Company, in any such event pursuant to a transaction in which the outstanding Voting Stock of the Company is converted into or exchanged for cash, securities or other property, other than any such transaction where (i) the outstanding Voting Stock of the Company is not converted or exchanged at all (except to the extent necessary to reflect a change in the jurisdiction of incorporation) or is converted into or exchanged for (A) Voting Stock (other than Disqualified Stock) of the surviving or transferee Person or (B) cash, securities and other property (other than Capital Stock described in the foregoing clause (A)) of the surviving or transferee Person in an amount that could be paid as a Restricted Payment pursuant to Section 4.07 hereof and (ii) immediately after such transaction, no "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than the Principal Stockholders (or any of them), is the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of more than a majority of the total outstanding Voting Stock of the surviving or transferee Person; (c) during any consecutive two-year period, individuals who at the beginning of such period constituted the Board of Directors (together with any new directors whose election to such Board of Directors, or whose nomination for election by the stockholders of the Company, was approved by a vote of 662/3% of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Directors then in office; or (d) the Company is liquidated or dissolved or adopts a plan of liquidation or dissolution other than in a transaction which complies with the provisions described under "Consolidation, Merger and Sale of Assets." "Chrysler Notes" means the 13.42% Senior Subordinated Notes due December 41, 2000 in the original principal amount of $15.0 million issued by Iron Mountain Information Services, Inc. to Chrysler Capital Corporation. NYMAIN01 Doc: 159158_2 3 "Company" means the party named as such in this Indenture until a successor replaces it pursuant to this Indenture and thereafter means the successor. "Consolidated Adjusted Net Income" means, for any period, the net income (or net loss) of the Company and its Restricted Subsidiaries for such period as determined on a consolidated basis in accordance with GAAP, adjusted to the extent included in calculating such net income or loss by excluding (a) any net after-tax extraordinary gains or losses (less all fees and expenses relating thereto), (b) any net after-tax gains or losses (less all fees and expenses relating thereto) attributable to Asset Sales, (c) the portion of net income (or loss) of any Person (other than the Company or a Restricted Subsidiary), including Unrestricted Subsidiaries, in which the Company or any Restricted Subsidiary has an ownership interest, except to the extent of the amount of dividends or other distributions actually paid to the Company or any Restricted Subsidiary in cash dividends or distributions by such Person during such period, and (d) the net income (or loss) of any Person combined with the Company or any Restricted Subsidiary on a "pooling of interests" basis attributable to any period prior to the date of combination. "Consolidated Income Tax Expense" means, for any period, the provision for federal, state, local and foreign income taxes of the Company and its Restricted Subsidiaries for such period as determined on a consolidated basis in accordance with GAAP. "Consolidated Interest Expense" means, for any period, without duplication, the sum of (a) the amount which, in conformity with GAAP, would be set forth opposite the caption "interest expense" (or any like caption) on a consolidated statement of operations of the Company and its Restricted Subsidiaries for such period, including, without limitation, (i) amortization of debt discount, (ii) the net cost of interest rate contracts (including amortization of discounts), (iii) the interest portion of any deferred payment obligation, (iv) amortization of debt issuance costs and (v) the interest component of Capital Lease Obligations of the Company and its Restricted Subsidiaries, plus (b) all interest on any Indebtedness of any other Person guaranteed and paid by the Company or any of its Restricted Subsidiaries; provided, however, that Consolidated Interest Expense will not include any gain or loss from extinguishment of debt, including write-off of debt issuance costs. "Consolidated Non-Cash Charges" means, for any period, the aggregate depreciation, amortization and other non-cash expenses of the Company and its Restricted Subsidiaries reducing Consolidated Adjusted Net Income for such period, determined on a consolidated basis in accordance with GAAP (excluding any such non-cash charge that requires an accrual of or reserve for cash charges for any future period). "Corporate Trust Office of the Trustee" will be at the address of the Trustee specified in Section 12.02 hereof or such other address as to which the Trustee may give notice to the Company. "Credit Agent" means The Chase Manhattan Bank, in its capacity as administrative agent for the lenders party to the Credit Agreement, or any successor or successors party thereto. NYMAIN01 Doc: 159158_2 4 "Credit Agreement" means the Credit Agreement dated as of December 10, 1990, as amended and restated as of April 15, 1993, and as further amended and restated as of January 31, 1995, among the Company, the lenders party thereto and the Credit Agent, as the same may be refunded, replaced or refinanced by the New Credit Facility, and in each case as amended, restated, supplemented, modified, renewed, refunded, increased, extended, replaced or refinanced from time to time. "Custodian" means any receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law. "Default" means any event that is or with the passage of time or the giving of notice or both would be an Event of Default. "Depositary" means, with respect to Notes issuable in whole or in part in the form of one or more Global Notes, a clearing agency registered under the Exchange Act that is designated to act as Depositary for such Notes as contemplated by Section 2.01. "Designated Senior Debt" means (a) Senior Bank Debt and (b) other Senior Debt the principal amount of which is $50.0 million or more at the date of designation by the Company in a written instrument delivered to the Trustee; provided that Senior Debt designated as Designated Senior Debt pursuant to clause (b) shall cease to be Designated Senior Debt at any time that the aggregate principal amount thereof outstanding is $10.0 million or less. "Disqualified Stock" means any Capital Stock which, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the Holder thereof, in whole or in part, in each case on or prior to the stated maturity of the Notes. "distribution" means, for purposes of Articles 10 and 11, a distribution consisting of cash, securities or other property, by set-off or otherwise. "Dollars" and "$" mean lawful money of the United States of America. "EBITDA" means for any period Consolidated Adjusted Net Income for such period increased by (a) Consolidated Interest Expense for such period, plus (b) Consolidated Income Tax Expense for such period, plus (c) Consolidated Non-Cash Charges for such period. "Equity Interests" means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock). "Equity Proceeds" means (a) with respect to Equity Interests (or debt securities converted into Equity Interests) issued or sold for cash Dollars, the aggregate amount of such cash Dollars and (b) with respect to Equity Interests (or debt securities converted into Equity Interests) NYMAIN01 Doc: 159158_2 5 issued or sold for any consideration other than cash Dollars, the aggregate Market Price thereof computed on the date of the issuance or sale thereof. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Excluded Restricted Subsidiary" means any Wholly Owned Restricted Subsidiary principally engaged in the records management business domiciled outside the United States of America if the issuance of a Subsidiary Guarantee by such Subsidiary would, as determined in a resolution of the Board of Directors set forth in an Officers' Certificate delivered to the Trustee, create a tax disadvantage that is material in relation to the aggregate amount of the Company's and any Restricted Subsidiary's Investment or proposed Investment therein. "Existing Indebtedness" means Indebtedness of the Company and its Subsidiaries (other than under the Credit Agreement) in existence on the date of this Indenture, until such amounts are repaid. "GAAP" means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession, which are in effect on the date of this Indenture. "Global Note" means a Note that evidences all or part of the Notes and is authenticated and delivered to, and registered in the name of, the Depositary for the Notes or a nominee thereof. "Government Securities" means direct obligations of, or obligations guaranteed by, the United States of America for the payment of which guarantee or obligations the full faith and credit of the United States of America is pledged. "Guarantee" means, as applied to any obligation, (a) a guarantee (other than by endorsement of negotiable instruments for collection in the ordinary course of business), direct or indirect, in any manner, of any part or all of such obligation and (b) an agreement, direct or indirect, contingent or otherwise, the practical effect of which is to assure in any way the payment or performance (or payment of damages in the event of non-performance) of all or any part of such obligation, including, without limiting the foregoing, the obligation to reimburse amounts drawn down under letters of credit securing such obligations. "Hedging Obligations" means, with respect to any Person, the obligations of such Person under (a) interest rate swap agreements, interest rate cap agreements and interest rate collar agreements and (b) other agreements or arrangements designed to protect such Person against fluctuations in interest rates. "Holder" means a Person in whose name a Note is registered. NYMAIN01 Doc: 159158_2 6 "Indebtedness" means (without duplication), with respect to any Person, whether recourse is to all or a portion of the assets of such Person, and whether or not contingent, (a) every obligation of such Person for money borrowed, (b) every obligation of such Person evidenced by bonds, debentures, notes or other similar instruments, (c) every reimbursement obligation of such Person with respect to letters of credit, bankers' acceptances or similar facilities issued for the account of such Person, (d) every obligation of such Person issued or assumed as the deferred purchase price of property or services, (e) every Capital Lease Obligation and every obligation of such Person in respect of Sale and Leaseback Transactions that would be required to be capitalized on the balance sheet in accordance with GAAP, (f) all Disqualified Stock of such Person valued at the greater of its voluntary or involuntary maximum fixed repurchase price, plus accrued and unpaid dividends (unless included in such maximum repurchase price), (g) all obligations of such Person under or with respect to Hedging Obligations which would be required to be reflected on the balance sheet as a liability of such Person in accordance with GAAP and (h) every obligation of the type referred to in clauses (a) through (g) of another Person and dividends of another Person the payment of which, in either case, such Person has guaranteed. For purposes of this definition, the "maximum fixed repurchase price" of any Disqualified Stock that does not have a fixed repurchase price will be calculated in accordance with the terms of such Disqualified Stock as if such Disqualified Stock were repurchased on any date on which Indebtedness is required to be determined pursuant to this Indenture, and if such price is based upon, or measured by, the fair market value of such Disqualified Stock, such fair market value will be determined in good faith by the board of directors of the issuer of such Disqualified Stock. Notwithstanding the foregoing, trade accounts payable and accrued liabilities arising in the ordinary course of business and any liability for federal, state or local taxes or other taxes owed by such Person will not be considered Indebtedness for purposes of this definition. The amount outstanding at any time of any Indebtedness issued with original issue discount is the aggregate principal amount at maturity of such Indebtedness, less the remaining unamortized portion of the original issue discount of such Indebtedness at such time, as determined in accordance with GAAP. "Indenture" means this Indenture, as amended or supplemented from time to time. "Investments" means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the forms of loans (including Guarantees), advances or capital contributions (excluding commission, travel and similar advances to officers and employees made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities and all other items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP. "Issuance Date" means the closing date for the sale and original issuance of the Notes. "Legal Holiday" means a Saturday, a Sunday or a day on which banking institutions in the City of New York or at a place of payment are authorized by law, regulation or executive order to remain closed. If a payment date is a Legal Holiday at a place of payment, payment may be made at that place on the next succeeding day that is not a Legal Holiday, and no interest will accrue for the intervening period. NYMAIN01 Doc: 159158_2 7 "Leverage Ratio" means, at any date, the ratio of (a) the aggregate principal amount of Indebtedness of the Company and its Restricted Subsidiaries outstanding as of the most recent available quarterly or annual balance sheet to (b) Adjusted EBITDA, after giving pro forma effect, without duplication, to (i) the incurrence, repayment or retirement of any Indebtedness by the Company or its Restricted Subsidiaries since the last day of the most recent full fiscal quarter of the Company, (ii) if the Leverage Ratio is being determined in connection with the incurrence of Indebtedness by the Company or a Restricted Subsidiary, such Indebtedness to be incurred, and (iii) the Indebtedness to be incurred in connection with the acquisition of any Acquisition EBITDA Entity. "Lien" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law (including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code, or equivalent statutes, of any jurisdiction). "Market Price" means, (a) with respect to the calculation of Equity Proceeds from the issuance or sale of debt securities which have been converted into Equity Interests, the value received upon the original issuance or sale of such converted debt securities, as determined reasonably and in good faith by the Board of Directors, and (b) with respect to the calculation of Equity Proceeds from the issuance or sale of Equity Interests, the average of the daily closing prices for such Equity Interests for the 20 consecutive trading days preceding the date of such computation. The closing price for each day will be (a) if such Equity Interests are then listed or admitted to trading on the New York Stock Exchange, the closing price on the NYSE Consolidated Tape (or any successor consolidated tape reporting transactions on the New York Stock Exchange) or, if such composite tape is not in use or does not report transactions in such Equity Interests, or if such Equity Interests are listed on a stock exchange other than the New York Stock Exchange (including for this purpose the Nasdaq National Market), the last reported sale price regular way for such day, or in case no such reported sale takes place on such day, the average of the closing bid and asked prices regular way for such day, in each case on the principal national securities exchange on which such Equity Interests are listed or admitted to trading (which will be the national securities exchange on which the greatest number of such Equity Interests have been traded during such 20 consecutive trading days), or (b) if such Equity Interests are not listed or admitted to trading on any such exchange, the average of the closing bid and asked prices thereof in the over-the-counter market as reported by the National Association of Securities Dealers Automated Quotation System or any successor system, or if not included therein, the average of the closing bid and asked prices thereof furnished by two members of the National Association of Securities Dealers selected reasonably and in good faith by the Board of Directors for that purpose. In the absence of one or more such quotations, the Market Price for such Equity Interests will be determined reasonably and in good faith by the Board of Directors. "Net Proceeds" means the aggregate cash proceeds received by the Company or any of its Restricted Subsidiaries in respect of any Asset Sale, which amount is equal to the excess, if any, of (a) the cash received by the Company or such Restricted Subsidiary (including any cash NYMAIN01 Doc: 159158_2 8 payments received by way of deferred payment pursuant to, or monetization of, a note or installment receivable or otherwise, but only as and when received) in connection with such disposition over (b) the sum of (i) the amount of any Indebtedness which is secured by such asset and which is required to be repaid in connection with the disposition thereof, plus (ii) the reasonable out-of-pocket expenses incurred by the Company or such Restricted Subsidiary, as the case may be, in connection with such disposition or in connection with the transfer of such amount from such Restricted Subsidiary to the Company, plus (iii) provisions for taxes, including income taxes, attributable to the disposition of such asset or attributable to required prepayments or repayments of Indebtedness with the proceeds thereof, plus (iv) if the Company does not first receive a transfer of such amount from the relevant Restricted Subsidiary with respect to the disposition of an asset by such Restricted Subsidiary and such Restricted Subsidiary intends to make such transfer as soon as practicable, the out-of-pocket expenses and taxes that the Company reasonably estimates will be incurred by the Company or such Restricted Subsidiary in connection with such transfer at the time such transfer is expected to be received by the Company (including, without limitation, withholding taxes on the remittance of such amount). "Notes" means the __% Senior Subordinated Notes due 2006, as amended or supplemented from time to time pursuant to the terms hereof, that are issued under this Indenture. "Obligations" means any principal, interest (including post-petition interest, whether or not allowed as a claim in any proceeding), penalties, fees, costs, expenses, indemnifications, reimbursements, damages and other liabilities payable under or in connection with any Indebtedness. "Officer" means, with respect to any Person, the Chairman of the Board, the Chief Executive Officer, the President, the Chief Operating Officer, the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller, the Secretary or any Vice-President of such Person. "Officers' Certificate" means a certificate signed, unless otherwise specified, by any two of the Chairman of the Board, a Vice Chairman of the Board, the President, the Chief Financial Officer, the Controller or an Executive Vice President of the Company, and delivered to the Trustee, that meets the requirements of Section 12.05 hereof. "Opinion of Counsel" means an opinion from legal counsel who is reasonably acceptable to the Trustee, that meets the requirements of Section 12.05 hereof. The counsel may be an employee of or counsel to the Company, any Subsidiary of the Company or the Trustee. "Permitted Investments" means (a) any Investments in the Company or in a Restricted Subsidiary (other than an Excluded Restricted Subsidiary) of the Company, including without limitation the Guarantee of Indebtedness permitted under Section 4.09 hereof; (b) any Investments in Cash Equivalents; (c) Investments by the Company or any Restricted Subsidiary of the Company in a Person, if as a result of such Investment (i) such Person becomes a Restricted Subsidiary (other than an Excluded Restricted Subsidiary) of the Company or (ii) such Person is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its NYMAIN01 Doc: 159158_2 9 assets to, or is liquidated into, the Company or a Restricted Subsidiary (other than an Excluded Restricted Subsidiary) of the Company; (d) Investments in assets (including accounts and notes receivable) owned or used in the ordinary course of business; (e) Investments for any purpose related to the Company's records management business in an aggregate outstanding principal amount not to exceed $10.0 million; and (f) Investments by the Company or a Restricted Subsidiary (other than an Excluded Restricted Subsidiary) in one or more Excluded Restricted Subsidiaries, the aggregate outstanding amount of which does not exceed 10% of the consolidated assets of the Company and its Restricted Subsidiaries. "Permitted Liens" means: (a) Liens existing as of the Issuance Date; (b) Liens on property or assets of the Company or any Restricted Subsidiary securing Senior Debt; (c) Liens on any property or assets of a Restricted Subsidiary granted in favor of the Company or any Wholly Owned Restricted Subsidiary; (d) Liens securing the Notes or the Subsidiary Guarantees; (e) any interest or title of a lessor under any Capital Lease Obligation or Sale and Leaseback Transaction so long as the Indebtedness, if any, secured by such Lien does not exceed the principal amount of Indebtedness permitted under Section 4.09 hereof; (f) Liens securing Acquired Debt created prior to (and not in connection with or in contemplation of) the incurrence of such Indebtedness by the Company or any Restricted Subsidiary; provided that such Lien does not extend to any property or assets of the Company or any Restricted Subsidiary other than the assets acquired in connection with the incurrence of such Acquired Debt; (g) Liens securing Hedging Obligations permitted to be incurred pursuant to clause (g) of Section 4.09 hereof; (h) Liens arising from purchase money mortgages and purchase money security interests, or in respect of the construction of property or assets, incurred in the ordinary course of the business of the Company or a Restricted Subsidiary; provided that (i) the related Indebtedness is not secured by any property or assets of the Company or any Restricted Subsidiary other than the property and assets so acquired or constructed and (ii) the Lien securing such Indebtedness is created within 60 days of such acquisition or construction; (i) statutory Liens or landlords' and carriers', warehousemen's, mechanics', suppliers', materialmen's, repairmen's or other like Liens arising in NYMAIN01 Doc: 159158_2 10 the ordinary course of business and with respect to amounts not yet delinquent or being contested in good faith by appropriate proceedings, if a reserve or other appropriate provision, if any, as is then required in conformity with GAAP has been made therefor; (j) Liens for taxes, assessments, government charges or claims with respect to amounts not yet delinquent or that are being contested in good faith by appropriate proceedings diligently conducted, if a reserve or other appropriate provision, if any, as is required in conformity with GAAP has been made therefor; (k) Liens incurred or deposits made to secure the performance of tenders, bids, leases, statutory obligations, surety and appeal bonds, government contracts, performance bonds and other obligations of a like nature incurred in the ordinary course of business (other than contracts for the payment of money); (l) easements, rights-of-way, restrictions and other similar charges or encumbrances not interfering in any material respect with the business of the Company or any Restricted Subsidiary incurred in the ordinary course of business; (m) Liens arising by reason of any judgment, decree or order of any court so long as such Lien is adequately bonded and any appropriate legal proceedings that may have been duly initiated for the review of such judgment, decree or order shall not have been finally terminated or the period within which such proceedings may be initiated shall not have expired; (n) Liens arising under options or agreements to sell assets; (o) other Liens securing obligations incurred in the ordinary course of business, which obligations do not exceed $1.0 million in the aggregate at any one time outstanding; and (p) any extension, renewal or replacement, in whole or in part, of any Lien described in the foregoing clauses (a) through (o); provided that any such extension, renewal or replacement does not extend to any additional property or assets. "Person" means any individual, corporation, limited liability company, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, or any government or any agency or political subdivision thereof. "Principal Stockholders" means each of Vincent J. Ryan, Schooner Capital Corporation, C. Richard Reese, Eugene B. Doggett, and their respective Affiliates. NYMAIN01 Doc: 159158_2 11 "Qualified Equity Offering" means an offering of Capital Stock, other than Disqualified Stock, of the Company for Dollars, whether registered or exempt from registration under the Securities Act. "Qualified Issuer" means (a) any lender party to the Credit Agreement or (b) any commercial bank (i) which has capital and surplus in excess of $500,000,000 and (ii) the outstanding short-term debt securities of which are rated at least A-2 by Standard & Poor's Rating Group, a division of McGraw-Hill, Inc. or at least P-2 by Moody's Investors Service, or carry an equivalent rating by a nationally recognized rating agency if both of the two named rating agencies cease publishing ratings of investments. "Qualifying Sale and Leaseback Transaction" means any Sale and Leaseback Transaction between the Company or any of its Restricted Subsidiaries and any bank, insurance company or other lender or investor providing for the leasing to the Company or such Restricted Subsidiary of any property (real or personal) which has been or is to be sold or transferred by the Company or such Restricted Subsidiary to such lender or investor or to any Person to whom funds have been or are to be advanced by such lender or investor and where the property in question has been constructed or acquired after the date of this Indenture. "Refinancing Indebtedness" means new Indebtedness incurred or given in exchange for, or the proceeds of which are used to repay, redeem, defease, extend, refinance, renew, replace or refund, other Indebtedness; provided, however, that (a) the principal amount of such new Indebtedness shall not exceed the principal amount of Indebtedness so repaid, redeemed, defeased, extended, refinanced, renewed, replaced or refunded (plus the amount of fees, premiums, consent fees, prepayment penalties and expenses incurred in connection therewith); (b) such Refinancing Indebtedness shall have a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of the Indebtedness so repaid, redeemed, defeased, extended, refinanced, renewed, replaced or refunded or shall mature after _______, 2006; (c) to the extent such Refinancing Indebtedness refinances Indebtedness that has a final maturity date occurring after ________, 2006, such new Indebtedness shall have a final scheduled maturity not earlier than the final scheduled maturity of the Indebtedness so repaid, redeemed, defeased, extended, refinanced, renewed, replaced or refunded and shall not permit redemption at the option of the holder earlier than the earliest date of redemption at the option of the holder of the Indebtedness so repaid, redeemed, defeased, extended, refinanced, renewed, replaced or refunded; (d) to the extent such Refinancing Indebtedness refinances Indebtedness subordinate to the Notes, such Refinancing Indebtedness shall be subordinated in right of payment to the Notes and to the extent such Refinancing Indebtedness refinances Notes or Indebtedness pari passu with the Notes, such Refinancing Indebtedness shall be pari passu with or subordinated in right of payment to the Notes, in each case on terms at least as favorable to the holders of Notes as those contained in the documentation governing the Indebtedness so repaid, redeemed, defeased, extended, refinanced, renewed, replaced or refunded; and (e) with respect to Refinancing Indebtedness incurred by a Restricted Subsidiary, such Refinancing Indebtedness shall rank no more senior, and shall be at least as subordinated, in right of payment to the Subsidiary Guarantee of such Restricted Subsidiary as the Indebtedness being extended, refinanced, renewed, replaced or refunded. NYMAIN01 Doc: 159158_2 12 "Representative" means, for purposes of Articles 10 and 11, the Credit Agent or other agent, trustee or representative for any Senior Debt of the Company or, with respect to any Restricted Subsidiary, for any Senior Debt of such Restricted Subsidiary. "Responsible Officer" when used with respect to the Trustee, means any officer within the Corporate Trust Administration of the Trustee (or any successor group of the Trustee) or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject. "Restricted Subsidiary" means (a) each direct or indirect Subsidiary of the Company existing on the date of this Indenture and (b) any other direct or indirect Subsidiary of the Company formed, acquired or existing after the date of this Indenture, in each case which is not designated by the Board of Directors as an "Unrestricted Subsidiary." "SEC" means the Securities and Exchange Commission. "Securities Act" means the Securities Act of 1933, as amended. "Sale and Leaseback Transaction" means any transaction or series of related transactions pursuant to which a Person sells or transfers any property or asset in connection with the leasing, or the resale against installment payments, of such property or asset to the seller or transferor. "Senior Bank Debt" means all Obligations outstanding under or in connection with the Credit Agreement (including Guarantees of such Obligations by Subsidiaries of the Company). "Senior Debt" means (a) the Senior Bank Debt and (b) any other Indebtedness permitted to be incurred by the Company or any Restricted Subsidiary, as the case may be, under the terms of this Indenture, unless the instrument under which such Indebtedness is incurred expressly provides that it is on a parity with or subordinated in right of payment to the Notes. Notwithstanding anything to the contrary in the foregoing, Senior Debt shall not include (i) any liability for federal, state, local or other taxes owed or owing by the Company, (ii) any Indebtedness of the Company to any of its Subsidiaries or other Affiliates, (iii) any trade payables or (iv) any Indebtedness that is incurred in violation of this Indenture. "Significant Subsidiary" means any Subsidiary that would be a "significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act, as such Regulation is in effect on the date hereof. "Subsidiary" means, with respect to any Person, any corporation, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, NYMAIN01 Doc: 159158_2 13 managers or trustees thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of such Person or a combination thereof. "Subsidiary Guarantee" means a Guarantee of a Guarantor pursuant to Article 11 hereof. "TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss. 77aaa-77bbbb) as in effect on the date on which this Indenture is qualified under the TIA. "Trustee" means the party named as such above until a successor replaces it in accordance with the applicable provisions of this Indenture and thereafter means the successor serving hereunder. "Unrestricted Subsidiary" means (a) any Subsidiary that is designated by the Board of Directors as an Unrestricted Subsidiary in accordance with Section 4.17 hereof and (b) any Subsidiary of an Unrestricted Subsidiary. "Voting Stock" means any class or classes of Capital Stock pursuant to which the holders thereof have the general voting power under ordinary circumstances to elect at least a majority of the board of directors, managers or trustees of any Person (irrespective of whether or not, at the time, stock of any other class or classes has, or might have, voting power by reason of the happening of any contingency). "Weighted Average Life to Maturity" means, when applied to any Indebtedness at any date, the number of years obtained by dividing (a) the sum of the products obtained by multiplying (x) the amount of each then remaining installment, sinking fund, serial maturity or other required payment of principal, including payment at final maturity, in respect thereof, by (y) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment, by (b) the then outstanding principal amount of such Indebtedness. "Wholly Owned Restricted Subsidiary" means any Restricted Subsidiary of the Company all of the outstanding Capital Stock or other ownership interests of which (other than director's qualifying shares) shall at the time be owned by the Company or by one of more Wholly Owned Restricted Subsidiaries of the Company. SECTION 1.02. OTHER DEFINITIONS. Defined in Term Section "Affiliate Transaction"....................................... 4.11 "Asset Sale".................................................. 4.10 "Asset Sale Offer"............................................ 4.10 "Benefitted Party"............................................ 11.01 "Change of Control Offer"..................................... 4.14 NYMAIN01 Doc: 159158_2 14 "Change of Control Payment"................................... 4.14 "Change of Control Payment Date".............................. 4.14 "Covenant Defeasance"......................................... 8.03 "Commencement Date"........................................... 4.10 "Event of Default"............................................ 6.01 "Excess Proceeds"............................................. 4.10 "Guarantor"................................................... 11.01 "incur"....................................................... 4.09 "Legal Defeasance" ........................................... 8.02 "Non-Monetary Default"........................................ 10.03 "Offer Amount"................................................ 3.09 "Offer Period"................................................ 3.09 "Paying Agent"................................................ 2.03 "Payment Blockage Notice"..................................... 10.03 "Payment Default"............................................. 10.03 "Purchase Date"............................................... 3.09 "Registrar"................................................... 2.03 "Restricted Payments"......................................... 4.07 "Separation Date"............................................. 2.06 SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT. Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture, other than those provisions of the TIA that may be excluded herein, which provision shall be excluded to the extent specifically excluded in this Indenture. The following TIA terms used in this Indenture have the following meanings: "indenture securities" means the Notes and the Subsidiary Guarantees, if any; "indenture security holder" means a Holder of a Note; "indenture to be qualified" means this Indenture; "indenture trustee" or "institutional trustee" means the Trustee; "obligor" on the Notes means the Company, the Guarantors and any successor obligor upon the Notes or any Subsidiary Guarantee, as the case may be. All other terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by a rule or regulation promulgated by the SEC under the TIA have the meanings so assigned to them. NYMAIN01 Doc: 159158_2 15 SECTION 1.04. RULES OF CONSTRUCTION. Unless the context otherwise requires: (1) a term has the meaning assigned to it; (2) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP; (3) "or" is not exclusive; (4) words in the singular include the plural, and in the plural include the singular; (5) provisions apply to successive events and transactions; and (6) references to sections of or rules under the Securities Act or the Exchange Act shall be deemed to include substitute, replacement or successor sections or rules adopted by the SEC from time to time. ARTICLE 2 THE NOTES SECTION 2.01. FORM AND DATING. The Notes and the Trustee's certificate of authentication shall be substantially in the form of Exhibit A hereto, the terms of which are incorporated in and made a part of this Indenture. The notation on each Note relating to the Subsidiary Guarantees shall be substantially in the form set forth on Exhibit C, which is part of this Indenture. The Notes may have notations, legends or endorsements approved as to form by the Company and required by law, stock exchange rule, agreements to which the Company or each Restricted Subsidiary is subject, or usage. Each Note shall be dated the date of its authentication. The Notes shall be issuable only in denominations of $1,000 and integral multiples thereof. The Notes may, at the option of the Company, be issuable in whole or in part in the form of one or more Global Notes and, in such case, the Depositary or Depositaries for such Global Note or Global Notes shall be designated by the Company in an Officers' Certificate delivered to the Trustee on or prior to the Issuance Date. Every Global Note authenticated and delivered hereunder will bear a legend substantially in the form thereof set forth on Exhibit A hereto. SECTION 2.02. EXECUTION AND AUTHENTICATION. Two Officers of the Company shall sign the Notes for the Company by manual or facsimile signature. The Company's seal shall be reproduced on the Notes and may be in NYMAIN01 Doc: 159158_2 16 facsimile form. An Officer of each Guarantor shall sign the Subsidiary Guarantee for such Guarantor by manual or facsimile signature. If an Officer of the Company or a Guarantor whose signature is on a Note or a Subsidiary Guarantee, as the case may be, no longer holds that office at the time the Note is authenticated, the Note or the Subsidiary Guarantee, as the case may be, shall nevertheless be valid. A Note shall not be valid until authenticated by the manual signature of the Trustee. The signature of the Trustee shall be conclusive evidence that the Note has been authenticated under this Indenture. The form of Trustee's certificate of authentication to be borne by the Notes shall be substantially as set forth in Exhibit A hereto. The Trustee shall, upon a written order of the Company signed by two Officers of the Company, authenticate Notes for original issue up to an aggregate principal amount stated in paragraph 4 of the Notes. The aggregate principal amount of Notes outstanding at any time shall not exceed $__,000,000 except as provided in Section 2.07 hereof. The Trustee may appoint an authenticating agent acceptable to the Company to authenticate Notes. Unless limited by the terms of such appointment, an authenticating agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as an Agent to deal with the Company or any Guarantor or an Affiliate of the Company or any Guarantor. SECTION 2.03. REGISTRAR AND PAYING AGENT. The Company shall maintain (i) an office or agency where Notes may be presented for registration of transfer or for exchange (including any co-registrar, the "Registrar") and (ii) an office or agency where Notes may be presented for payment ("Paying Agent"). The Registrar shall keep a register of the Notes and of their transfer and exchange. The Company may appoint one or more co-registrars and one or more additional paying agents. The term "Paying Agent" includes any additional paying agent. The Company may change any Paying Agent, Registrar or co-registrar without prior notice to any Holder of a Note. The Company shall notify the Trustee and the Trustee shall notify the Holders of the Notes of the name and address of any Agent not a party to this Indenture. The Company or any Guarantor may act as Paying Agent, Registrar or co-registrar. The Company shall enter into an appropriate agency agreement with any Agent not a party to this Indenture, which shall be subject to any obligations imposed by the provisions of the TIA. The agreement shall implement the provisions of this Indenture that relate to such Agent. The Company shall notify the Trustee of the name and address of any such Agent. If the Company fails to maintain a Registrar or Paying Agent, or fails to give the foregoing notice, the Trustee shall act as such, and shall be entitled to appropriate compensation in accordance with Section 7.07 hereof. The Company initially appoints the Trustee as Registrar, Paying Agent and agent for service of notices and demands in connection with the Notes. NYMAIN01 Doc: 159158_2 17 SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST. The Company shall require each Paying Agent other than the Trustee to agree in writing that the Paying Agent shall hold in trust for the benefit of the Holders of the Notes or the Trustee all money held by the Paying Agent for the payment of principal of, premium, if any, and interest on the Notes, and shall notify the Trustee of any Default by the Company or the Guarantors in making any such payment. While any such Default continues, the Trustee may require a Paying Agent to pay all money held by it to the Trustee. The Company at any time may require a Paying Agent to pay all money held by it to the Trustee. Upon payment over to the Trustee, the Paying Agent (if other than the Company or a Guarantor) shall have no further liability for the money delivered to the Trustee. If the Company or a Guarantor acts as Paying Agent, it shall segregate and hold in a separate trust fund for the benefit of the Holders of the Notes, subject to Article 10 hereof, all money held by it as Paying Agent. Upon any bankruptcy or reorganization proceeding relating to the Company or a Guarantor, the Trustee shall serve as Paying Agent for the Notes. SECTION 2.05. LISTS OF HOLDERS OF THE NOTES. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Holders of the Notes and shall otherwise comply with TIA ss. 312(a). If the Trustee is not the Registrar, the Company and/or the Guarantors shall furnish to the Trustee at least seven Business Days before each interest payment date and at such other times as the Trustee may request in writing a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of Holders of the Notes, including the aggregate principal amount of the Notes held by each thereof, and the Company and each Guarantor shall otherwise comply with TIA ss. 312(a). SECTION 2.06. TRANSFER AND EXCHANGE. When Notes are presented to the Registrar with a request to register the transfer or to exchange them for an equal principal amount of Notes of other denominations, the Registrar shall register the transfer or make the exchange if its requirements for such transactions are met; provided, however, that any Note presented or surrendered for registration of transfer or exchange shall be duly endorsed or accompanied by a written instruction of transfer in form satisfactory to the Registrar and the Trustee duly executed by the Holder thereof or by his attorney duly authorized in writing. To permit registrations of transfer and exchanges, the Company shall issue and the Trustee shall authenticate Notes at the Registrar's request, subject to such rules as the Trustee may reasonably require. Neither the Company nor the Registrar shall be required to (a) issue, register the transfer of or exchange Notes during a period beginning at the opening of business on a Business Day 15 days before the day of any selection of Notes for redemption under Section 3.02 hereof and ending at the close of business on the day of selection or (b) register the transfer of or exchange any Note so selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part. NYMAIN01 Doc: 159158_2 18 No service fee shall be charged to any Holder of a Note for any registration of transfer or exchange (except as otherwise expressly permitted herein), but the Company may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than such transfer tax or similar governmental charge payable upon exchanges pursuant to Sections 2.10, 3.06 or 9.05 hereof, which shall be paid by the Company). Prior to due presentment to the Trustee for registration of the transfer of any Note, the Trustee, any Agent, the Company and each Guarantor may deem and treat the Person in whose name any Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of, premium, if any, and interest on such Note and for all other purposes whatsoever, whether or not such Note is overdue, and none of the Trustee, any Agent, the Company or any Guarantor shall be affected by notice to the contrary. Notwithstanding any other provision in this Indenture, no Global Note may be transferred to, or registered or exchanged for Notes registered in the name of, any Person other than the Depositary for such Global Note or any nominee thereof, and no such transfer may be registered, unless (a) such Depositary (i) notifies the Company that it is unwilling or unable to continue as Depositary for such Global Note or (ii) ceases to be a clearing agency registered under the Exchange Act, (b) the Company delivers to the Trustee an Officers' Certificate stating that such Global Note shall be so transferable, registrable, and exchangeable, and such transfers shall be registrable, or (c) there shall have occurred and be continuing an Event of Default with respect to the Notes evidenced by such Global Note. Notwithstanding any other provision in this Indenture, a Global Note to which the restriction set forth in the preceding sentence shall have ceased to apply may be transferred only to, and may be registered and exchanged for Notes registered only in the name or names of, such Person or Persons as the Depositary for such Global Note shall have directed and no transfer thereof other than such a transfer may be registered. Every Note authenticated and delivered upon registration of transfer of, or in exchange for or in lieu of, a Global Note to which the restriction set forth in the first sentence of this paragraph shall apply, whether pursuant to this Section 2.06 or otherwise, shall be authenticated and delivered in the form of, and shall be, a Global Note. SECTION 2.07. REPLACEMENT NOTES. If any mutilated Note is surrendered to the Trustee, or the Company and the Trustee receive evidence to their satisfaction of the destruction, loss or theft of any Note, the Company shall issue and the Trustee, upon the written order of the Company signed by two Officers of the Company, shall authenticate a replacement Note (accompanied by a notation of the Subsidiary Guarantees duly endorsed by each Guarantor) if the Trustee's requirements for replacements of Notes are met. If required by the Trustee, the Company or the Guarantors, an indemnity bond must be supplied by the Holder that is sufficient in the judgment of the Trustee, the Company and the Guarantors to protect the Company, the Guarantors, the Trustee, any Agent or any authenticating agent from any loss which any of them may suffer if a Note is replaced. Each of the Company, the Guarantors and the Trustee may charge for its expenses in replacing a Note. NYMAIN01 Doc: 159158_2 19 Every replacement Note is an additional obligation of the Company and the Guarantors and shall be entitled to all of the benefits of this Indenture equally and ratably with all other Notes duly issued hereunder. SECTION 2.08. OUTSTANDING NOTES. The Notes outstanding at any time are all the Notes authenticated by the Trustee except for those canceled by it, those delivered to it for cancellation and those described in this Section 2.08 as not outstanding. If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Note is held by a bona fide purchaser. If the principal amount of any Note is considered paid under Section 4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue. Subject to Section 2.09 hereof, a Note does not cease to be outstanding because the Company, a Guarantor, a Subsidiary of the Company or a Guarantor or an Affiliate of the Company or a Guarantor holds the Note. SECTION 2.09. TREASURY NOTES. In determining whether the Holders of the required principal amount of Notes have concurred in any direction, waiver or consent, Notes owned by the Company, any Guarantor, any of their respective Subsidiaries or any Affiliate of the Company or any Guarantor shall be considered as though not outstanding, except that for purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Notes which the Trustee knows to be so owned shall be so considered. Notwithstanding the foregoing, Notes that are to be acquired by the Company, any Guarantor, any Subsidiary of the Company or any Guarantor or an Affiliate of the Company or any Guarantor pursuant to an exchange offer, tender offer or other agreement shall not be deemed to be owned by the Company, such Guarantor, a Subsidiary of the Company or such Guarantor or an Affiliate of the Company or such Guarantor until legal title to such Notes passes to the Company, such Guarantor, such Subsidiary or such Affiliate, as the case may be. SECTION 2.10. TEMPORARY NOTES. Until definitive Notes are ready for delivery, the Company may prepare and the Trustee shall authenticate temporary Notes (accompanied by a notation of the Subsidiary Guarantees duly endorsed by each Guarantor). Temporary Notes shall be substantially in the form of definitive Notes but may have variations that the Company and the Trustee consider appropriate for temporary Notes. Without unreasonable delay, the Company shall prepare and the Trustee, upon receipt of the written order of the Company signed by two Officers of the Company, shall authenticate definitive Notes (accompanied by a notation of the Subsidiary Guarantees duly endorsed by each Guarantor) in exchange for temporary Notes. Until such exchange, temporary Notes shall be entitled to the same rights, benefits and privileges as definitive Notes. NYMAIN01 Doc: 159158_2 20 SECTION 2.11. CANCELLATION. The Company at any time may deliver Notes to the Trustee for cancellation. The Registrar and Paying Agent shall forward to the Trustee any Notes surrendered to them for registration of transfer, exchange or payment. The Trustee shall cancel all Notes surrendered for registration of transfer, exchange, payment, replacement or cancellation and shall destroy canceled Notes (subject to the record retention requirement of the Exchange Act), unless the Company directs canceled Notes to be returned to it. The Company may not issue new Notes to replace Notes that it has redeemed or paid or that have been delivered to the Trustee for cancellation. All canceled Notes held by the Trustee shall be destroyed and certification of their destruction delivered to the Company, unless by a written order, signed by two Officers of the Company, the Company shall direct that canceled Notes be returned to it. SECTION 2.12. DEFAULTED INTEREST. If the Company and the Guarantors default in a payment of interest on the Notes, the Company or any such Guarantor (to the extent of its obligations under its Subsidiary Guarantee) shall pay the defaulted interest in any lawful manner plus, to the extent lawful, interest payable on the defaulted interest, to the Persons who are Holders of the Notes on a subsequent special record date, which date shall be at the earliest practicable date but in all events at least five Business Days prior to the payment date, in each case at the rate provided in the Notes and in Section 4.01 hereof. The Company shall fix or cause to be fixed each such special record date and payment date, and shall, promptly thereafter, notify the Trustee of any such date. At least 15 days before the special record date, the Company (or the Trustee, in the name of and at the expense of the Company) shall mail to Holders of the Notes a notice that states the special record date, the related payment date and the amount of such interest to be paid. SECTION 2.13. RECORD DATE. The record date for purposes of determining the identity of Holders of the Notes entitled to vote or consent to any action by vote or consent authorized or permitted under this Indenture shall be determined as provided for in TIA ss. 316(c). SECTION 2.14. CUSIP NUMBER. The Company in issuing the Notes may use a "CUSIP" number and, if it does so, the Trustee shall use the CUSIP number in notices of redemption or exchange as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness or accuracy of the CUSIP number printed in the notice or on the Notes and that reliance may be placed only on the other identification numbers printed on the Notes. The Company will promptly notify the Trustee of any change in the CUSIP number. NYMAIN01 Doc: 159158_2 21 SECTION 2.15. COMPUTATION OF INTEREST. Interest will be computed on the basis of a 360-day year consisting of twelve 30-day months. ARTICLE 3 REDEMPTION AND OFFERS TO PURCHASE SECTION 3.01. NOTICES TO TRUSTEE. If the Company elects to redeem Notes pursuant to the optional redemption provisions of Section 3.07 hereof, it shall furnish to the Trustee, at least 45 days but not more than 60 days before a redemption date, an Officers' Certificate setting forth (i) the Section of this Indenture pursuant to which the redemption shall occur, (ii) the redemption date, (iii) the principal amount of Notes to be redeemed and (iv) the redemption price. SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED. If less than all of the Notes are to be redeemed at any time, the Trustee shall select the Notes to be redeemed among the applicable Holders of the Notes in compliance with the requirements of the principal national securities exchange, if any, on which the Notes are listed or, if the Notes are not so listed, on a pro rata basis, by lot or in accordance with any other method the Trustee considers fair and appropriate, provided that no Notes of $1,000 or less shall be redeemed in part. In the event of partial redemption by lot, the particular Notes to be redeemed shall be selected, unless otherwise provided herein, not less than 30 nor more than 60 days prior to the redemption date by the Trustee from the outstanding Notes not previously called for redemption. The Trustee shall promptly notify the Company in writing of the Notes selected for redemption and, in the case of any Note selected for partial redemption, the principal amount thereof to be redeemed. Notes and portions of Notes selected shall be in amounts of $1,000 or whole multiples of $1,000; except that if all of the Notes of a Holder are to be redeemed, the entire outstanding amount of Notes held by such Holder, even if not a multiple of $1,000, shall be redeemed. Except as provided in the preceding sentence, provisions of this Indenture that apply to Notes called for redemption also apply to portions of Notes called for redemption. SECTION 3.03. NOTICE OF REDEMPTION. At least 30 days but not more than 60 days before a redemption date, the Company shall mail or cause to be mailed, by first class mail, a notice of redemption to each Holder whose Notes are to be redeemed at its registered address. The notice shall identify the Notes to be redeemed and shall state: (a) the redemption date; NYMAIN01 Doc: 159158_2 22 (b) the redemption price (including accrued interest to the redemption date); (c) if any Note is being redeemed in part, the portion of the principal amount of such Note to be redeemed and that, after the redemption date upon surrender of such Note, a new Note or Notes in principal amount equal to the unredeemed portion shall be issued upon cancellation of the original Note; (d) the name and address of the Paying Agent; (e) that Notes called for redemption must be surrendered to the Paying Agent to collect the redemption price; (f) that, unless the Company defaults in making such redemption payment, interest on Notes called for redemption shall cease to accrue on and after the redemption date; (g) the paragraph of the Notes and/or Section of this Indenture pursuant to which the Notes called for redemption are being redeemed; and (h) that no representation is made as to the correctness or accuracy of the CUSIP number, if any, listed in such notice or printed on the Notes. At the Company's request, the Trustee shall give the notice of redemption in the Company's name and at its expense; provided, however, that the Company shall have delivered to the Trustee, at least 45 days prior to the redemption date, an Officers' Certificate requesting that the Trustee give such notice and setting forth the information to be stated in such notice as provided in the preceding paragraph. SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION. Once notice of redemption is mailed in accordance with Section 3.03 hereof, Notes called for redemption become irrevocably due and payable on the redemption date at the redemption price. A notice of redemption may not be conditional. On and after the redemption date, unless the Company defaults in the payment of the redemption price, interest will cease to accrue on the Notes or portions thereof called for redemption and all rights of Holders with respect to such Notes will terminate except for the right to receive payment of the redemption price upon surrender for redemption. SECTION 3.05. DEPOSIT OF REDEMPTION PRICE. One Business Day prior to the redemption date, the Company shall deposit with the Trustee or with the Paying Agent money sufficient to pay the redemption price of and accrued interest on all Notes to be redeemed on that date. The Trustee or the Paying Agent shall promptly return to the Company any money deposited with the Trustee or the Paying Agent by the Company in excess of the amounts necessary to pay the redemption price of, and accrued interest on, all Notes to be redeemed. NYMAIN01 Doc: 159158_2 23 If the Company complies with the provisions of the preceding paragraph, on and after the redemption date, interest shall cease to accrue on the Notes or the portions of Notes called for redemption, whether or not such Notes are presented for payment. If a Note is redeemed on or after an interest record date but on or prior to the related interest payment date, then any accrued and unpaid interest shall be paid to the Person in whose name such Note was registered at the close of business on such record date. If any Note called for redemption shall not be so paid upon surrender for redemption because of the failure of the Company to comply with the preceding paragraph, interest shall be paid on the unpaid principal, from the redemption date until such principal is paid, and to the extent lawful on any interest not paid on such unpaid principal, in each case at the rate provided in the Notes and in Section 4.01 hereof. SECTION 3.06. NOTES REDEEMED IN PART. Upon surrender of a Note that is redeemed in part, the Company shall issue and, upon the Company's written request, the Trustee shall authenticate for the Holder at the expense of the Company a new Note (accompanied by a notation of the Subsidiary Guarantees duly endorsed by each Guarantor) equal in principal amount to the unredeemed portion of the Note surrendered. SECTION 3.07. OPTIONAL REDEMPTION. The Notes shall not be redeemable at the Company's option prior to ______, 2001. Thereafter, the Notes shall be subject to redemption at the option of the Company, in whole or in part, upon not less than 30 nor more than 60 days' notice, at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest thereon to the applicable redemption date, if redeemed during the twelve-month period beginning on ______ of the years indicated below: Year Percentage 2001..................................................... ___.__% 2002..................................................... ___.__% 2003..................................................... ___.__% 2004 and thereafter...................................... 100.00% Notwithstanding the foregoing, at any time prior to ______, 1999, the Company may redeem up to 35% of the initial principal amount of the Notes originally issued with the net proceeds of one or more Qualified Equity Offerings at a redemption price equal to ___% of the principal amount of such Notes, plus accrued and unpaid interest, if any, to the date of redemption; provided, that at least 65% of the principal amount of Notes originally issued remains outstanding immediately after the occurrence of any such redemption and that such redemption occurs within 60 days following the closing of any such Qualified Equity Offering. SECTION 3.08. MANDATORY REDEMPTION. NYMAIN01 Doc: 159158_2 24 Except as set forth below under Section 4.10 and Section 4.14 hereof, the Company shall not be required to make sinking fund or redemption payments with respect to the Notes. SECTION 3.09. ASSET SALE OFFERS. In the event that the Company shall commence an Asset Sale Offer pursuant to Section 4.10 hereof, it shall follow the procedures specified below: The Asset Sale Offer shall remain open for 20 Business Days after the Commencement Date relating to such Asset Sale Offer, except to the extent required to be extended by applicable law (as so extended, the "Offer Period"). No later than one Business Day after the termination of the Offer Period (the "Purchase Date"), the Company shall purchase the principal amount (the "Offer Amount") of Notes required to be purchased in such Asset Sale Offer pursuant to Sections 3.02 and 4.10 hereof or, if less than the Offer Amount has been tendered, all Notes tendered in response to the Asset Sale Offer. If the Purchase Date is on or after an interest payment record date and on or before the related interest payment date, any interest accrued to such Purchase Date shall be paid to the Person in whose name a Note is registered at the close of business on such record date, and no additional interest shall be payable to Holders who tender Notes pursuant to the Asset Sale Offer. On the Commencement Date of any Asset Sale Offer, the Company shall send or cause to be sent, by first class mail, a notice to each of the Holders, with a copy to the Trustee. Such notice, which shall govern the terms of the Asset Sale Offer, shall contain all instructions and materials necessary to enable the Holders to tender Notes pursuant to the Asset Sale Offer and shall state: (1) that the Asset Sale Offer is being made pursuant to this Section 3.09 and Section 4.10 hereof and the length of time the Asset Sale Offer shall remain open; (2) the Offer Amount, the Purchase Price and the Purchase Date; (3) that any Note not tendered or accepted for payment shall continue to accrue interest; (4) that, unless the Company defaults in the payment of the Purchase Price, any Note accepted for payment pursuant to the Asset Sale Offer shall cease to accrue interest after the Purchase Date; (5) that Holders electing to have a Note purchased pursuant to any Asset Sale Offer shall be required to surrender the Note, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Note completed, to the Company, a depositary, if appointed by the Company, or a Paying Agent at the address specified in the notice prior to the close of business on the Business Day preceding the Purchase Date; NYMAIN01 Doc: 159158_2 25 (6) that Holders shall be entitled to withdraw their election if the Company, depositary or Paying Agent, as the case may be, receives, not later than the close of business on the Business Day preceding the termination of the Offer Period, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Note the Holder delivered for purchase and a statement that such Holder is withdrawing his election to have the Note purchased; (7) that, if the aggregate principal amount of Notes surrendered by Holders exceeds the Offer Amount, the Trustee shall select the Notes to be purchased on a pro rata basis (with such adjustments as may be deemed appropriate by the Company so that only Notes in denominations of $1,000, or integral multiples thereof, shall be purchased); and (8) that Holders whose Notes were purchased only in part shall be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered. On or before 12:00 p.m. on each Purchase Date, the Company shall irrevocably deposit with the Trustee or Paying Agent in immediately available funds the aggregate Purchase Price with respect to a principal amount of Notes equal to the Offer Amount, together with accrued interest thereon, if any, to be held for payment in accordance with the terms of this Section 3.09. On the Purchase Date, the Company shall, to the extent lawful, (i) accept for payment, on a pro rata basis to the extent necessary, an aggregate principal amount equal to the Offer Amount of Notes tendered pursuant to the Asset Sale Offer, or if less than the Offer Amount has been tendered, all Notes or portions thereof tendered, (ii) deliver or cause the Paying Agent or depositary, as the case may be, to deliver to the Trustee Notes so accepted and (iii) deliver to the Trustee an Officers' Certificate stating that such Notes or portions thereof were accepted for payment by the Company in accordance with the terms of this Section 3.09. The Company, depositary or Paying Agent, as the case may be, shall promptly (but in any case not later than three Business Days after the Purchase Date) mail or deliver to each tendering Holder an amount equal to the Purchase Price with respect to the Notes tendered by such Holder and accepted by the Company for purchase, and the Company shall promptly issue a new Note, and the Trustee shall authenticate and mail or deliver such new Note, to such Holder, equal in principal amount to any unpurchased portion of such Holder's Notes surrendered. Any Note not accepted in the Asset Sale Offer shall be promptly mailed or delivered by the Company to the Holder thereof. The Company shall publicly announce in a newspaper of general circulation the results of the Asset Sale Offer on the Purchase Date. The Asset Sale Offer shall be made by the Company in compliance with all applicable laws, including, without limitation, Regulation 14E of the Exchange Act and the rules thereunder, to the extent applicable, and all other applicable federal and state securities laws. Each purchase pursuant to this Section 3.09 shall be made pursuant to the provisions of the second paragraph of Section 3.05 hereof to the extent applicable. NYMAIN01 Doc: 159158_2 26 In the event the amount of Excess Proceeds to be applied to an Asset Sale Offer would result in the purchase of a principal amount of Notes which is not evenly divisible by $1,000, the Trustee shall promptly refund to the Company the portion of such Excess Proceeds that is not necessary to purchase the immediately lesser principal amount of Notes that is so divisible. ARTICLE 4 COVENANTS SECTION 4.01. PAYMENT OF NOTES. The Company shall pay or cause to be paid the principal of, premium, if any, and interest on the Notes on the dates and in the manner provided in the Notes. Principal, premium, if any, and interest shall be considered paid on the date due if the Paying Agent, if other than the Company or a Restricted Subsidiary, holds as of 10:00 a.m. Eastern Time on the due date money deposited by the Company in immediately available funds and designated for and sufficient to pay all principal, premium, if any, and interest then due. The Company shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal at the rate equal to 1% per annum in excess of the then applicable interest rate on the Notes to the extent lawful; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest (without regard to any applicable grace period) at the same rate to the extent lawful. SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY. The Company shall maintain in the Borough of Manhattan, the City of New York, an office or agency (which may be an office of the Trustee or an affiliate of the Trustee, Registrar or co-registrar) where Notes may be surrendered for registration of transfer or for exchange and where notices and demands to or upon the Company or any Restricted Subsidiary in respect of the Notes and this Indenture may be served. The Company shall give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee. The Company may also from time to time designate one or more other offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in the Borough of Manhattan, the City of New York for such purposes. The Company shall give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency. The Company hereby designates the Corporate Trust Office of the Trustee as one such office or agency of the Company in accordance with Section 2.03 hereof. NYMAIN01 Doc: 159158_2 27 SECTION 4.03. REPORTS. Whether or not required by the rules and regulations of the SEC, so long as any Notes are outstanding, the Company will furnish to the Holders of Notes (i) all quarterly and annual financial information that would be required to be contained in a filing with the SEC on Forms 10- Q and 10-K if the Company were required to file such Forms, including a "Management's Discussion and Analysis of Financial Condition and Results of Operations" and, with respect to the annual information only, a report thereon by the Company's certified independent accountants and (ii) all financial information that would be required to be included in a Form 8-K filed with the SEC if the Company were required to file such reports. In addition, whether or not required by the rules and regulations of the SEC, the Company will file a copy of all such information and reports with the SEC for public availability (unless the SEC will not accept such a filing) and make such information available to investors who request it in writing. Notwithstanding anything to the contrary contained herein, the Trustee shall have no duty to review such documents for purposes of determining compliance with any provisions of this Indenture. SECTION 4.04. COMPLIANCE CERTIFICATE. (a) The Company shall deliver to the Trustee, within 90 days after the end of each fiscal year, an Officers' Certificate stating that a review of the activities of the Company and its Subsidiaries during the preceding fiscal year has been made under the supervision of the signing Officers with a view to determining whether the Company and each Restricted Subsidiary has kept, observed, performed and fulfilled its obligations under this Indenture (including with respect to any Restricted Payments made during such year, the basis upon which the calculations required by Section 4.07 hereof were computed, which calculations may be based on the Company's latest available financial statements), and further stating, as to each such Officer signing such certificate, that to the best of his or her knowledge, the Company and each Restricted Subsidiary has kept, observed, performed and fulfilled each and every covenant contained in this Indenture and is not in default in the performance or observance of any of the terms, provisions and conditions of this Indenture (or, if a Default or Event of Default shall have occurred, describing all such Defaults or Events of Default of which he or she may have knowledge and what action the Company and each Restricted Subsidiary, as the case may be, is taking or proposes to take with respect thereto) and that to the best of his or her knowledge no event has occurred and remains in existence by reason of which payments on account of the principal of or interest, if any, on the Notes is prohibited or if such event has occurred, a description of the event and what action the Company and each Restricted Subsidiary, as the case may be, is taking or proposes to take with respect thereto. (b) So long as not contrary to the then current recommendations of the American Institute of Certified Public Accountants, the year-end financial statements delivered pursuant to Section 4.03 hereof shall be accompanied by a written statement of the Company's independent public accountants (who shall be a firm of established national reputation) that in making the examination necessary for certification of such financial statements, nothing has come to their attention that would lead them to believe that the Company has violated any provisions of Article 4 or Article 5 hereof or, if any such violation has occurred, specifying the nature and period of NYMAIN01 Doc: 159158_2 28 existence thereof, it being understood that such accountants shall not be liable directly or indirectly to any Person for any failure to obtain knowledge of any such violation. (c) The Company shall, so long as any of the Notes are outstanding, deliver to the Trustee, forthwith upon any Officer becoming aware of any Default or Event of Default, an Officers' Certificate specifying such Default or Event of Default and what action the Company is taking or proposes to take with respect thereto. SECTION 4.05. TAXES. The Company shall pay, and shall cause each of its Subsidiaries to pay, prior to delinquency, all material taxes, assessments, and governmental levies except (i) such as are contested in good faith and by appropriate proceedings or (ii) the nonpayment of which would not materially adversely affect the business, condition (financial or otherwise), operations, performance or properties of the Company and its Subsidiaries, taken as a whole. SECTION 4.06. STAY, EXTENSION AND USURY LAWS. Each of the Company and the Guarantors covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Indenture; and each of the Company and the Guarantors (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it shall not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but shall suffer and permit the execution of every such power as though no such law has been enacted. SECTION 4.07. RESTRICTED PAYMENTS. The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly: (a) declare or pay any dividend or make any distribution on account of the Company's or any of its Restricted Subsidiaries' Equity Interests (other than dividends or distributions payable in Equity Interests (other than Disqualified Stock) of the Company or such Restricted Subsidiary or dividends or distributions payable to the Company or any Restricted Subsidiary); (b) purchase, redeem or otherwise acquire or retire for value any Equity Interests of the Company or any Restricted Subsidiary or other Affiliate of the Company (other than any such Equity Interests owned by the Company or any Restricted Subsidiary); (c) purchase, redeem or otherwise acquire or retire prior to scheduled maturity for value any Indebtedness that is subordinated in right of payment to the Notes; or (d) make any Investment other than a Permitted Investment (all such payments and other actions set forth in clauses (a) through (d) above being collectively referred to as "Restricted Payments"), unless, at the time of such Restricted Payment: NYMAIN01 Doc: 159158_2 29 (i) no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof; and (ii) the Company would, at the time of such Restricted Payment and after giving pro forma effect thereto, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the test set forth in the first paragraph of Section 4.09 hereof; and (iii)such Restricted Payment, together with the aggregate of all other Restricted Payments made by the Company and its Restricted Subsidiaries after the date of this Indenture is less than (x) the cumulative EBITDA of the Company, minus 1.75 times the cumulative Consolidated Interest Expense of the Company, in each case for the period (taken as one accounting period) from June 30, 1996, to the end of the Company's most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment, plus (y) the aggregate net Equity Proceeds received by the Company from the issuance or sale since the date of this Indenture of Equity Interests of the Company or of debt securities of the Company that have been converted into such Equity Interests (other than Equity Interests or convertible debt securities sold to a Restricted Subsidiary of the Company and other than Disqualified Stock or debt securities that have been converted into Disqualified Stock), plus (z) $2.0 million. The foregoing provisions will not prohibit (A) the payment of any dividend within 60 days after the date of declaration thereof, if at said date of declaration such payment would have complied with the provisions of this Indenture; (B) the redemption, repurchase, retirement or other acquisition or retirement for value of any Equity Interests of the Company in exchange for, or with the net cash proceeds of, the substantially concurrent sale (other than to a Restricted Subsidiary of the Company) of other Equity Interests of the Company (other than any Disqualified Stock); (C) the defeasance, redemption, repurchase, retirement or other acquisition or retirement for value of Indebtedness that is subordinated or pari passu in right of payment to the Notes in exchange for, or with the net cash proceeds of, a substantially concurrent issuance and sale (other than to a Restricted Subsidiary of the Company) of Equity Interests of the Company (other than Disqualified Stock); (D) the defeasance, redemption, repurchase, retirement or other acquisition or retirement for value of Indebtedness that is subordinated or pari passu in right of payment to the Notes in exchange for, or with the net cash proceeds of, a substantially concurrent issue and sale (other than to the Company or any of its Restricted Subsidiaries) of Refinancing Indebtedness; (E) the repurchase of any Indebtedness subordinated or pari passu in right of payment to the Notes at a purchase price not greater than 101% of the principal amount of such Indebtedness in the event of a Change of Control in accordance with provisions similar to the covenant set forth in Section 4.14 hereof, provided that prior to or contemporaneously with such repurchase the Company has made the Change of Control Offer as provided in such covenant with respect to the Notes and has repurchased all Notes validly tendered for payment in connection with such Change of Control Offer; (F) the prepayment of the Chrysler Notes, together with premium and interest thereon; (G) the prepayment of $450,000 of junior subordinated notes originally issued by the Company to First Document Storage, Inc. in connection with a 1990 acquisition, together with interest thereon; and (H) additional payments to current or former employees or directors of the Company for repurchases of stock, stock options or other equity interests, provided that the NYMAIN01 Doc: 159158_2 30 aggregate amount of all such payments under this clause (H) does not exceed $500,000 in any year and $2.0 million in the aggregate. The Restricted Payments described in clauses (B), (C), (E) and (H) of the immediately preceding paragraph will be Restricted Payments that will be permitted to be taken in accordance with such paragraph but will reduce the amount that would otherwise be available for Restricted Payments under clause (iii) of the first paragraph of this section, and the Restricted Payments described in clauses (A), (D), (F) and (G) of the immediately preceding paragraph will be Restricted Payments that will be permitted to be taken in accordance with such paragraph and will not reduce the amount that would otherwise be available for Restricted Payments under clause (iii) of the first paragraph of this section. If an Investment results in the making of a Restricted Payment, the aggregate amount of all Restricted Payments deemed to have been made as calculated under the foregoing provision will be reduced by the amount of any net reduction in such Investment (resulting from the payment of interest or dividends, loan repayment, transfer of assets or otherwise) to the extent such net reduction is not included in the Company's EBITDA; provided, however, that the total amount by which the aggregate amount of all Restricted Payments may be reduced may not exceed the lesser of (a) the cash proceeds received by the Company and its Restricted Subsidiaries in connection with such net reduction and (b) the initial amount of such Investment. If the aggregate amount of all Restricted Payments calculated under the foregoing provision includes an Investment in an Unrestricted Subsidiary or other Person that thereafter becomes a Restricted Subsidiary, such Investment will no longer be counted as a Restricted Payment for purposes of calculating the aggregate amount of Restricted Payments. For the purpose of making any calculations under this Indenture, (a) an Investment will include the fair market value of the net assets of any Restricted Subsidiary at the time that such Restricted Subsidiary is designated an Unrestricted Subsidiary and will exclude the fair market value of the net assets of any Unrestricted Subsidiary that is designated as a Restricted Subsidiary, (b) any property transferred to or from an Unrestricted Subsidiary will be valued at fair market value at the time of such transfer, provided that, in each case, the fair market value of an asset or property is as determined by the Board of Directors in good faith, and (c) subject to the foregoing, the amount of any Restricted Payment, if other than cash, will be determined by the Board of Directors, whose good faith determination will be conclusive. The Board of Directors may designate a Restricted Subsidiary to be an Unrestricted Subsidiary in compliance with Section 4.17 hereof. Upon such designation, all outstanding Investments by the Company and its Restricted Subsidiaries (except to the extent repaid in cash) in the Subsidiary so designated will be deemed to be Restricted Payments made at the time of such designation and will reduce the amount available for Restricted Payments under the first paragraph of this Section 4.07. Such designation will only be permitted if such Restricted Payment would be permitted at such time and if such Restricted Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. NYMAIN01 Doc: 159158_2 31 SECTION 4.08. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED SUBSIDIARIES. The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any encumbrance or restriction on the ability of any Restricted Subsidiary to (a) (i) pay dividends or make any other distributions to the Company or any of its Restricted Subsidiaries (A) on its Capital Stock or (B) with respect to any other interest or participation in, or measured by, its profits, or (ii) pay any Indebtedness owed to the Company or any of its Restricted Subsidiaries, (b) make loans or advances to the Company or any of its Restricted Subsidiaries or (c) transfer any of its properties or assets to the Company or any of its Restricted Subsidiaries, except for such encumbrances or restrictions existing under or by reason of (1) Existing Indebtedness as in effect on the date of this Indenture, (2) the Credit Agreement as in effect as of the date of this Indenture, and any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancing thereof, provided that such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are no more restrictive in the aggregate with respect to such dividend and other payment restrictions than those contained in the Credit Agreement as in effect on the date of this Indenture, (3) this Indenture and the Notes, (4) applicable law, (5) any instrument governing Indebtedness or Capital Stock of a Person acquired by the Company or any of its Restricted Subsidiaries as in effect at the time of such acquisition (except to the extent such Indebtedness was incurred in connection with or in contemplation of such acquisition), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired, provided that the EBITDA of such Person is not taken into account in determining whether such acquisition was permitted by the terms of this Indenture, (6) customary non-assignment provisions in leases entered into in the ordinary course of business and consistent with past practices, (7) restrictions on the transfer of property subject to purchase money or capitalized lease obligations otherwise permitted by clause (e) of Section 4.09 hereof, or (8) permitted Refinancing Indebtedness, provided that the restrictions contained in the agreements governing such Refinancing Indebtedness are no more restrictive in the aggregate than those contained in the agreements governing the Indebtedness being refinanced. SECTION 4.09. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK. The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guaranty or otherwise become directly or indirectly liable with respect to (collectively, "incur") any Indebtedness (including Acquired Debt) and the Company will not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that the Company may incur Indebtedness and may permit a Restricted Subsidiary to incur Indebtedness if at the time of such incurrence and after giving effect thereto the Leverage Ratio would be less than 6.0 to 1.0. The foregoing limitations will not apply to (a) the incurrence by the Company or any Restricted Subsidiary of Senior Bank Debt in an aggregate amount not to exceed $25.0 million at any one time outstanding, (b) the issuance by the Restricted Subsidiaries of Subsidiary Guarantees, NYMAIN01 Doc: 159158_2 32 (c) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness, (d) the issuance by the Company of the Notes, (e) the incurrence by the Company and its Restricted Subsidiaries of Capital Lease Obligations and/or additional Indebtedness constituting purchase money obligations up to an aggregate of $2.5 million at any one time outstanding, provided that the Liens securing such Indebtedness constitute Permitted Liens, (f) the incurrence of Indebtedness between (i) the Company and its Restricted Subsidiaries and (ii) the Restricted Subsidiaries, (g) Hedging Obligations that are incurred for the purpose of fixing or hedging interest rate risk with respect to any floating rate Indebtedness that is permitted by the terms of this Indenture to be outstanding, (h) the incurrence by the Company and its Restricted Subsidiaries of Indebtedness arising out of letters of credit, performance bonds, surety bonds and bankers' acceptances incurred in the ordinary course of business up to an aggregate of $2.0 million at any one time outstanding, (i) the incurrence by the Company and its Restricted Subsidiaries of Indebtedness consisting of guarantees, indemnities or obligations in respect of purchase price adjustments in connection with the acquisition or disposition of assets, including, without limitation, shares of Capital Stock, and (j) the incurrence by the Company and its Restricted Subsidiaries of Refinancing Indebtedness issued in exchange for, or the proceeds of which are used to repay, redeem, defease, extend, refinance, renew, replace or refund, Indebtedness referred to in clauses (b) through (e) above, and this clause (j). SECTION 4.10. ASSET SALES. The Company will not, and will not permit any of its Restricted Subsidiaries to, (a) sell, lease, convey or otherwise dispose of any assets (including by way of a Sale and Leaseback Transaction, but excluding a Qualifying Sale and Leaseback Transaction) other than sales of inventory in the ordinary course of business (provided that the sale, lease, conveyance or other disposition of all or substantially all of the assets of the Company will be governed by the provisions of Section 4.14 hereof and/or the provisions of Section 5.01 hereof, and not by the provisions of this Section 4.10), or (b) issue or sell Equity Interests of any of its Restricted Subsidiaries, that, in the case of either clause (a) or (b) above, whether in a single transaction or a series of related transactions, (i) have a fair market value in excess of $1.0 million, or (ii) result in Net Proceeds in excess of $1.0 million (each of the foregoing, an "Asset Sale"), unless (x) the Company (or the Restricted Subsidiary, as the case may be) receives consideration at the time of such Asset Sale at least equal to the fair market value (evidenced by an Officers' Certificate delivered to the Trustee, and for Asset Sales having a fair market value or resulting in net proceeds in excess of $5.0 million, evidenced by a resolution of the Board of Directors set forth in an Officers' Certificate delivered to the Trustee) of the assets sold or otherwise disposed of and (y) at least 75% of the consideration therefor received by the Company or such Restricted Subsidiary is in the form of cash or like-kind assets (in each case as determined in good faith by the Company, evidenced by a resolution of the Board of Directors and certified by an Officers' Certificate filed with the Trustee); provided, however, that the amount of (A) any liabilities (as shown on the Company's or such Restricted Subsidiary's most recent balance sheet or in the notes thereto) of the Company or such Restricted Subsidiary (other than liabilities that are by their terms subordinated to the Notes or any Subsidiary Guarantee) that are assumed by the transferee of any such assets and (B) any notes or other obligations received by the Company or such Restricted Subsidiary from such transferee that are immediately converted by the Company or such Restricted NYMAIN01 Doc: 159158_2 33 Subsidiary into cash (to the extent of the cash received) or Cash Equivalents, shall be deemed to be cash for purposes of this provision; and provided, further, that the 75% limitation referred to in the foregoing clause (y) shall not apply to any Asset Sale in which the cash portion of theconsideration received therefrom is equal to or greater than what the after-tax proceeds would have been had such Asset Sale complied with the aforementioned 75% limitation. A transfer of assets or issuance of Equity Interests by the Company to a Wholly Owned Restricted Subsidiary or by a Wholly Owned Restricted Subsidiary to the Company or to another Wholly Owned Restricted Subsidiary will not be deemed to be an Asset Sale. Within 360 days of any Asset Sale, the Company may, at its option, apply an amount equal to the Net Proceeds from such Asset Sale either (a) to permanently reduce Senior Debt, or (b) to an investment in a Restricted Subsidiary or in another business or capital expenditure or other long-term/tangible assets, in each case, in the same or a similar line of business as the Company or any of its Restricted Subsidiaries was engaged in on the date of this Indenture or in businesses similar or reasonably related thereto. Pending the final application of any such Net Proceeds, the Company may temporarily reduce Senior Bank Debt or otherwise invest such Net Proceeds in any manner that is not prohibited by this Indenture. Any Net Proceeds from such Asset Sale that are not applied or invested as provided in the first sentence of this paragraph will be deemed to constitute "Excess Proceeds." When the aggregate amount of Excess Proceeds exceeds $5.0 million, the Company shall make an offer to all Holders of Notes (an "Asset Sale Offer") to purchase the maximum principal amount of Notes that may be purchased out of the Excess Proceeds, at an offer price in cash in an amount equal to 100% of the principal amount thereof plus accrued and unpaid interest, if any, to the date of purchase, in accordance with the procedures set forth in this Indenture. To the extent that the aggregate amount of Notes tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Company may use any remaining Excess Proceeds for general corporate purposes. If the aggregate principal amount of Notes surrendered by Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select the Notes to be purchased on a pro rata basis. Upon completion of such offer to purchase, the amount of Excess Proceeds shall be reset at zero. An Asset Sale Offer shall be made pursuant to the provisions of Section 3.09 hereof. No later than the date which is five Business Days after the date on which the aggregate amount of Excess Proceeds exceeds $5 million, the Company shall notify the Trustee of such Asset Sale Offer and provide the Trustee with an Officers' Certificate setting forth the calculations used in determining the amount of Net Proceeds to be applied to the purchase of Securities. The Company shall commence or cause to be commenced the Asset Sale Offer on a date no later than 15 Business Days after such notice (the "Commencement Date"). SECTION 4.11. TRANSACTIONS WITH AFFILIATES. The Company will not, and will not permit any of its Restricted Subsidiaries to, sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into any contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate (each of the foregoing, an "Affiliate Transaction"), unless (a) such Affiliate Transaction is on terms that are no less favorable to the Company or the relevant NYMAIN01 Doc: 159158_2 34 Restricted Subsidiary than those that would have been obtained in a comparable transaction by the Company or such Restricted Subsidiary with a non-Affiliated Person and (b) the Company delivers to the Trustee (i) with respect to any Affiliate Transaction involving aggregate payments in excessof $1.0 million, a resolution of the Board of Directors set forth in an Officers' Certificate certifying that such Affiliate Transaction complies with clause (a) above and such Affiliate Transaction is approved by a majority of the disinterested members of the Board of Directors and (ii) with respect to any Affiliate Transaction involving aggregate payments in excess of $5.0 million, an opinion as to the fairness to the Company or such Restricted Subsidiary from a financial point of view issued by an investment banking firm of national standing; provided, however, that (A) any employment agreement entered into by the Company or any of its Restricted Subsidiaries in the ordinary course of business and consistent with the past practice of the Company or such Restricted Subsidiary, (B) transactions between or among the Company and/or its Restricted Subsidiaries, (C) transactions permitted by the provisions of Section 4.07 hereof and (D) the grant of stock, stock options or other equity interests to employees and directors of the Company in accordance with duly adopted Company stock grant, stock option and similar plans, in each case, shall not be deemed Affiliate Transactions; and further provided that (1) the provisions of clause (b) shall not apply to sales of inventory by the Company or any Restricted Subsidiary to any Affiliate in the ordinary course of business and (2) the provisions of clause (b)(ii) shall not apply to loans or advances to the Company or any Restricted Subsidiary from, or equity investments in the Company or any Restricted Subsidiary by, any Affiliate to the extent permitted by Section 4.09 hereof. SECTION 4.12. LIENS. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume or suffer to exist any Lien (other than a Permitted Lien) upon any property or assets now owned or hereafter acquired, or any income, profits or proceeds therefrom, or assign or otherwise convey any right to receive income therefrom, unless (a) in the case of any Lien securing any Indebtedness that is subordinate to the Notes, the Notes are secured by a Lien on such property, assets or proceeds that is senior in priority to such Lien and (b) in the case of any other Lien, the Notes are equally and ratably secured with the obligation or liability secured by such Lien. SECTION 4.13. ADDITIONAL SUBSIDIARY GUARANTEES. If any entity (other than an Excluded Restricted Subsidiary) shall become a Restricted Subsidiary after the date of this Indenture, then such Restricted Subsidiary shall execute a Subsidiary Guarantee and deliver an opinion of counsel with respect thereto, in accordance with the terms of this Indenture. No Restricted Subsidiary shall consolidate with or merge with or into (whether or not such Restricted Subsidiary is the surviving Person), another Person (other than the Company) whether or not affiliated with such Restricted Subsidiary unless (a) subject to the provisions of the following paragraph, the Person formed by or surviving any such consolidation or merger (if other than such Restricted Subsidiary) assumes all the obligations of such Restricted Subsidiary under NYMAIN01 Doc: 159158_2 35 its Subsidiary Guarantee, if any, pursuant to a supplemental indenture in form and substance reasonably satisfactory to the Trustee; (b) immediately after giving effect to such transaction, no Default or Event of Default exists; and (c) such Restricted Subsidiary, or any Person formed byor surviving any such consolidation or merger, would be permitted to incur, immediately after giving effect to such transaction, at least $1.00 of additional Indebtedness pursuant to Section 4.09 hereof. In the event of (a) a sale or other disposition of all of the assets of any Guarantor by way of merger, consolidation or otherwise, (b) a sale or other disposition of all of the capital stock of any Guarantor, or (c) the designation of a Guarantor as an Unrestricted Subsidiary in accordance with the terms of Section 4.17, then such Guarantor (in the event of a sale or other disposition, by way of such a merger, consolidation or otherwise, of all of the capital stock of such Guarantor, or in the event of the designation of such Guarantor as an Unrestricted Subsidiary) or the corporation acquiring the property (in the event of a sale or other disposition of all of the assets of such Guarantor) shall be released and relieved of any obligations under its Subsidiary Guarantee; provided that the Net Proceeds of such sale or other disposition are applied in accordance with the applicable provisions of this Indenture. SECTION 4.14. OFFER TO PURCHASE UPON CHANGE OF CONTROL. Upon the occurrence of a Change of Control, each Holder of Notes will have the right to require the Company to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of such Holder's Notes pursuant to the offer described below (the "Change of Control Offer") at an offer price in cash equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest, if any, to but excluding the date of purchase (the "Change of Control Payment"). Within 30 calendar days following any Change of Control, the Company will mail a notice to each Holder stating: (a) that the Change of Control Offer is being made pursuant to this Section 4.14 and that all Notes tendered will be accepted for payment; (b) the purchase price and the purchase date, which will be no earlier than 30 calendar days nor later than 60 calendar days from the date such notice is mailed (the "Change of Control Payment Date"); (c) that any Note not tendered will continue to accrue interest; (d) that, unless the Company defaults in the payment of the Change of Control Payment, all Notes accepted for payment pursuant to the Change of Control Offer will cease to accrue interest on and after the Change of Control Payment Date; (e) that Holders electing to have any Notes purchased pursuant to a Change of Control Offer will be required to surrender the Notes, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Notes completed, to the Paying Agent at the NYMAIN01 Doc: 159158_2 36 address specified in such notice prior to the close of business on the fifth Business Day preceding the Change of Control Payment Date; (f) that Holders will be entitled to withdraw their election if the Paying Agent receives, not later than the close of business on the second Business Day preceding the Change of Control Payment Date, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of Notes delivered for purchase, and a statement that such Holder is withdrawing his election to have such Notes purchased; and (g) that Holders whose Notes are being purchased only in part will be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered, which unpurchased portion must be equal to $1,000 in principal amount or an integral multiple thereof. The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable to the repurchase of the Notes in connection with a Change of Control. On the Change of Control Payment Date, the Company will, to the extent lawful, (a) accept for payment Notes or portions thereof tendered pursuant to the Change of Control Offer, (b) deposit with the Paying Agent an amount equal to the Change of Control Payment in respect of all Notes or portions thereof so tendered and (c) deliver or cause to be delivered to the Trustee the Notes so accepted together with an Officers' Certificate stating the Notes or portions thereof tendered to the Company. The Paying Agent will promptly mail to each Holder of Notes so accepted the Change of Control Payment for such Notes, and the Trustee will promptly authenticate and mail to each Holder a new Note equal in principal amount to any unpurchased portion of the Notes surrendered, if any; provided that each such new Note will be in a principal amount of $1,000 or an integral multiple thereof. Prior to complying with the provisions of this Section 4.14, but in any event within 90 calendar days following a Change of Control, the Company shall either repay all outstanding Senior Debt or obtain the requisite consents, if any, under all agreements governing outstanding Senior Debt to permit the repurchase of Notes required by this Section 4.14. The Company shall publicly announce in The Wall Street Journal, or if no longer published, a national newspaper of general circulation the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date. SECTION 4.15. CORPORATE EXISTENCE. Subject to Article 5 and Article 11 hereof, as the case may be, the Company and each of the Restricted Subsidiaries shall do or cause to be done all things necessary to preserve and keep in full force and effect (i) its corporate existence, and the corporate, partnership or other existence of each of their Subsidiaries, in accordance with the respective organizational documents (as the same may be amended from time to time) of the Company, any such Restricted Subsidiary or any such Subsidiary, as the case may be, and (ii) the rights (charter and statutory), licenses and franchises of the Company, the Restricted Subsidiaries and their respective Subsidiaries; provided, however, that the Company and the Restricted Subsidiaries shall not be required to preserve any NYMAIN01 Doc: 159158_2 37 such right, license or franchise, or the corporate, partnership or other existence of any of their respective Subsidiaries, if an officer of the Company shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company, the Restricted Subsidiaries and their Subsidiaries, taken as a whole and that the loss thereof is not adverse in any material respect to the Holders of the Notes. SECTION 4.16. CERTAIN SENIOR SUBORDINATED DEBT. Notwithstanding the provisions of Section 4.09 hereof, (a) the Company shall not incur any Indebtedness that is subordinated or junior in right of payment to any Senior Debt of the Company and senior in any respect in right of payment to the Notes, and (b) the Company shall not permit any Restricted Subsidiary to incur any Indebtedness that is subordinated or junior in right of payment to its Senior Debt and senior in any respect in right of payment to its Subsidiary Guarantee. SECTION 4.17. DESIGNATION OF UNRESTRICTED SUBSIDIARIES. The Board of Directors may designate any Subsidiary (including any Restricted Subsidiary or any newly acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary so long as: (i) neither the Company nor any Restricted Subsidiary is directly or indirectly liable for any Indebtedness of such Subsidiary; (ii) no default with respect to any Indebtedness of such Subsidiary would permit (upon notice, lapse of time or otherwise) any holder of any other Indebtedness of the Company or any Restricted Subsidiary to declare a default on such other Indebtedness or cause the payment thereof to be accelerated or payable prior to its stated maturity; (iii) any Investment in such Subsidiary deemed to be made as a result of designating such Subsidiary an Unrestricted Subsidiary will not violate the provisions of Section 4.07 hereof; (iv) neither the Company nor any Restricted Subsidiary has a contract, agreement, arrangement, understanding or obligation of any kind, whether written or oral, with such Subsidiary other than (A) those that might be obtained at the time from Persons who are not Affiliates of the Company or (B) administrative, tax sharing and other ordinary course contracts, agreements, arrangements and understandings or obligations entered into in the ordinary course of business; and (v) neither the Company nor any Restricted Subsidiary has any obligation to subscribe for additional shares of Capital Stock or other Equity Interests in such Subsidiary, or to maintain or preserve such Subsidiary's financial condition or to cause such Subsidiary to achieve certain levels of operating results, other than as permitted under Section 4.07 hereof. Notwithstanding the foregoing, the Company may not designate as an Unrestricted Subsidiary any Subsidiary which, on the date of this Indenture, is a Significant Subsidiary, and may not sell, transfer or otherwise dispose of any properties or assets of any such Significant Subsidiary to an Unrestricted Subsidiary, other than in the ordinary course of business. The Board of Directors may designate any Unrestricted Subsidiary as a Restricted Subsidiary; provided that such designation will be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of any outstanding Indebtedness of such Unrestricted Subsidiary and such designation will only be permitted if (i) such Indebtedness is permitted under Section 4.09 hereof and (ii) no Default or Event of Default would occur as a result of such designation. NYMAIN01 Doc: 159158_2 38 ARTICLE 5 SUCCESSORS SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ASSETS. The Company shall not consolidate or merge with or into (whether or not the Company is the surviving corporation), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties or assets in one or more related transactions, to another Person unless (a) the Company is the surviving corporation or the entity or the Person formed by or surviving any such consolidation or merger (if other than the Company) or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made is a corporation organized or existing under the laws of the United States, any state thereof or the District of Columbia; (b) the Person formed by or surviving any such consolidation or merger (if other than the Company) or the Person to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made assumes all the obligations of the Company under the Notes and this Indenture pursuant to a supplemental indenture in a form reasonably satisfactory to the Trustee; (c) immediately after such transaction no Default or Event of Default exists; and (d) the Company or any Person formed by or surviving any such consolidation or merger, or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made will, at the time of such transaction and after giving pro forma effect thereto, be permitted to incur at least $1.00 of additional Indebtedness pursuant to the first paragraph of Section 4.09 hereof. SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED. Upon any consolidation or merger, or any sale, assignment, transfer, lease, conveyance or other disposition of all or substantially all of the assets of the Company or the Company and its Subsidiaries on a consolidated basis in accordance with Section 5.01 hereof, the successor corporation formed by such consolidation or into or with which the Company is merged or to which such sale, assignment, transfer, lease, conveyance or other disposition is made shall succeed to, and be substituted for (so that from and after the date of such consolidation, merger, sale, lease, conveyance or other disposition, the provisions of this Indenture referring to the "Company" shall refer instead to the successor corporation and not to the Company), and may exercise every right and power of the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein; provided, however, that the predecessor Company shall not be relieved from the obligation to pay the principal of and interest on the Notes except in the case of a sale of all of the Company's assets that meets the requirements of Section 5.01 hereof. NYMAIN01 Doc: 159158_2 39 ARTICLE 6 CERTAIN DEFAULT PROVISIONS SECTION 6.01. EVENTS OF DEFAULT. An "Event of Default" occurs if: (a) the Company and the Guarantors default in the payment of interest on the Notes (whether or not prohibited by the subordination provisions of Article 10 or Article 11 hereof, as the case may be) when the same becomes due and payable and such default continues for a period of 30 days; (b) the Company and the Guarantors default in the payment of principal of or premium, if any, on the Notes (whether or not prohibited by the subordination provisions of Article 10 or Article 11 hereof, as the case may be) when the same becomes due and payable at maturity, upon redemption (including in connection with an offer to purchase) or otherwise; (c) the Company fails to comply with the provisions of Section 4.14 hereof; (d) the Company or the Guarantors fail to comply with any of their other respective agreements or covenants in, or provisions of, the Notes, the Subsidiary Guarantees or this Indenture and the Default continues for the period and after the notice specified below; (e) a default occurs under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of its Restricted Subsidiaries (or the payment of which is Guaranteed by the Company or any of its Restricted Subsidiaries), whether such Indebtedness or Guarantee now exists or shall be created hereafter if (i) such default results in the acceleration of such Indebtedness prior to its express maturity or shall constitute a default in the payment of such Indebtedness at final maturity of such Indebtedness and (ii) the principal amount of such Indebtedness that has been accelerated or not paid at maturity, together with the principal amount of any other Indebtedness that has been accelerated or not paid at maturity, exceeds $5.0 million; (f) a final judgment or final judgments for the payment of money are entered by a court or courts of competent jurisdiction against the Company or any of its Restricted Subsidiaries and such judgments remain unpaid, undischarged or unstayed for a period of 60 days, provided that the aggregate of all such unpaid, undischarged or unstayed judgments exceeds $5.0 million; (g) except as otherwise permitted hereunder, any Subsidiary Guarantee issued by a Guarantor shall be held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or any Guarantor (or its successors or NYMAIN01 Doc: 159158_2 40 assigns), or any Person acting on behalf of any Guarantor (or its successors or assigns), shall deny or disaffirm its obligations in writing under its Subsidiary Guarantee; (h) the Company or any of its Restricted Subsidiaries that is a Significant Subsidiary: (i) commences a voluntary case, (ii) consents to the entry of an order for relief against it in an involuntary case, (iii) consents to the appointment of a Custodian of it or for all or substantially all of its property, (iv) makes a general assignment for the benefit of its creditors, or (v) admits in writing its inability generally to pay its debts as the same become due, in each case, pursuant to or within the meaning of any Bankruptcy Law; or (i) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: (i) is for relief against the Company or any Restricted Subsidiary that is a Significant Subsidiary of the Company in an involuntary case, (ii) appoints a Custodian of the Company or any Restricted Subsidiary that is a Significant Subsidiary of the Company or for all or substantially all of the property of the Company or any Restricted Subsidiary that is a Significant Subsidiary of the Company, or (iii)orders the liquidation of the Company or any Restricted Subsidiary that is a Significant Subsidiary of the Company, and such order or decree remains unstayed and in effect for 60 consecutive days. A Default under clause (d) is not an Event of Default until the Trustee notifies the Company, or the Holders of at least 25% in principal amount of the then outstanding Notes notify the Company and the Trustee, of the Default and the Company does not cure the Default within 60 days after receipt of the notice. The notice must specify the Default, demand that it be remedied and state that the notice is a "Notice of Default." In the case of any Event of Default pursuant to the provisions of this Section 6.01 occurring by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Company with the intention of avoiding payment of the premium that the Company would have NYMAIN01 Doc: 159158_2 41 had to pay if the Company then had elected to redeem the Notes pursuant to Section 3.07 hereof,an equivalent premium shall also become and be immediately due and payable to the extent permitted by law upon acceleration of the Notes as provided below, anything in this Indenture or in the Notes to the contrary notwithstanding. If an Event of Default occurs prior to ______, [2004] by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Company with the intention of avoiding the prohibition on redemption of the Notes prior to ______, [2004] pursuant to Section 3.07 hereof, then the premium payable for purposes of this paragraph for each of the years beginning on ______ of the years set forth below shall be as set forth in the following table expressed as a percentage of the amount that would otherwise be due but for the provisions of this sentence, plus accrued interest, if any, to the date of payment: Year Percentage 1996...................................... ___% 1997...................................... ___% 1998...................................... ___% 1999...................................... ___% 2000...................................... ___% 2001...................................... ___% 2002...................................... ___% 2003...................................... ___% 2004...................................... ___% SECTION 6.02. ACCELERATION. If an Event of Default (other than an Event of Default specified in clauses (h)(i) through (h)(iv) and (i) of Section 6.01 hereof relating to the Company or any Significant Subsidiary) occurs and is continuing, the Trustee by notice to the Company, or the Holders of at least 25% in principal amount of the then outstanding Notes by notice to the Company and the Trustee may declare the unpaid principal of and any accrued interest on all the Notes to be due and payable. Upon such declaration the principal and interest shall be due and payable immediately (together with the premium referred to in Section 6.01 hereof, if applicable); provided, however, that if any Obligation with respect to Senior Bank Debt is outstanding pursuant to the Credit Agreement upon a declaration of acceleration of the Notes, the principal, premium, if any, and interest on the Notes will not be payable until the earlier of (1) the day which is five Business Days after written notice of acceleration is received by the Company and the Credit Agent, and (2) the date of acceleration of the Indebtedness under the Credit Agreement. If an Event of Default specified in clauses (h)(i) through (h)(iv) or (i) of Section 6.01 hereof relating to the Company or any Significant Subsidiary occurs, such an amount shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holder. In the event of a declaration of acceleration of the Notes because an Event of Default has occurred and is continuing as a result of the acceleration of any Indebtedness described in Section 6.01(e) hereof, the declaration of acceleration of the Notes shall be automatically annulled if the holders of any Indebtedness described in Section 6.01(e) have rescinded the declaration of acceleration in respect of such Indebtedness within 30 days of the date of such declaration and if (a) the NYMAIN01 Doc: 159158_2 42 annulment of the acceleration of the Notes would not conflict with any judgment or decree of a competent jurisdiction, and (b) all existing Events of Default, except non-payment of principal or interest on the Notes that became due solely because of the acceleration of the Notes, have been cured or waived. SECTION 6.03. OTHER REMEDIES. If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of principal, premium, if any, and interest on the Notes or to enforce the performance of any provision of the Notes or this Indenture. The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder of a Note in exercising any right or remedy upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. All remedies are cumulative to the extent permitted by law. SECTION 6.04. WAIVER OF PAST DEFAULTS. Holders of not less than a majority in aggregate principal amount of the Notes then outstanding by notice to the Trustee may on behalf of the Holders of all of the Notes waive an existing Default or Event of Default and its consequences hereunder, except a continuing Default or Event of Default in the payment of the principal of, premium, if any, or interest on, the Notes (including in connection with an offer to purchase) (provided, however, that the Holders of a majority in aggregate principal amount of the then outstanding Notes may rescind an acceleration and its consequences, including any related payment default that resulted from such acceleration). Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon. SECTION 6.05. CONTROL BY MAJORITY. Holders of a majority in principal amount of the then outstanding Notes may direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee or exercising any trust or power conferred on it. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture that the Trustee determines may be unduly prejudicial to the rights of other Holders of Notes or that may involve the Trustee in personal liability. SECTION 6.06. LIMITATION ON SUITS. A Holder of a Note may pursue a remedy with respect to this Indenture or the Notes if, and only if: NYMAIN01 Doc: 159158_2 43 (a) the Holder of a Note gives to the Trustee written notice of a continuing Event of Default or the Trustee receives such notice from the Company; (b) the Holders of at least 25% in principal amount of the then outstanding Notes make a written request to the Trustee to pursue the remedy; (c) such Holder of a Note or Holders of Notes offer and, if requested, provide to the Trustee indemnity satisfactory to the Trustee against any loss, liability or expense; (d) the Trustee does not comply with the request within 60 days after receipt of the request and the offer and, if requested, the provision of indemnity; and (e) during such 60-day period the Holders of a majority in principal amount of the then outstanding Notes do not give the Trustee a direction inconsistent with the request. A Holder of a Note may not use this Indenture to prejudice the rights of another Holder of a Note or to obtain a preference or priority over another Holder of a Note. Nothing contained in this Section 6.06 shall affect the right of a Holder of a Note to sue for enforcement of any overdue payment thereon. SECTION 6.07. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT. Subject to Articles 10 and 11 hereof, notwithstanding any other provision of this Indenture, the right of any Holder of a Note to receive payment of principal of, premium, if any, and interest on the Note, on or after the respective due dates expressed in the Note (including in connection with a Purchase Offer), or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder. SECTION 6.08. COLLECTION SUIT BY TRUSTEE. If an Event of Default specified in Section 6.01(a) or (b) hereof occurs and is continuing, the Trustee is authorized to recover judgment in its own name and as trustee of an express trust against the Company for the whole amount of principal of, premium, if any, and interest remaining unpaid on the Notes and interest on overdue principal and, to the extent lawful, interest and such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel. SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM. The Trustee is authorized to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and the Holders of the Notes allowed in any judicial proceedings relative to the Company NYMAIN01 Doc: 159158_2 44 (or any other obligor upon the Notes, including the Guarantors), its creditors or its property and shall be entitled and empowered to collect, receive and distribute any money or other property payable or deliverable on any such claims and any custodian in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee, and in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.07 hereof. To the extent that the payment of any such compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.07 hereof out of the estate in any such proceeding, shall be denied for any reason, payment of the same shall be secured by a Lien on, and shall be paid out of, any and all distributions, dividends, money, securities and other properties that the Holders may be entitled to receive in such proceeding whether in liquidation or under any plan of reorganization or arrangement or otherwise. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding. SECTION 6.10. PRIORITIES. If the Trustee collects any money pursuant to this Article, it shall pay out the money in the following order: First: to the Trustee, its agents and attorneys for amounts due under Section 7.07 hereof, including payment of all compensation, expense and liabilities incurred, and all advances made, by the Trustee and the costs and expenses of collection; Second: to the holders of Senior Debt of the Company or the Restricted Subsidiaries, as the case may be, to the extent required by Article 10 or Article 11 hereof, as applicable; Third: to Holders of Notes for amounts due and unpaid on the Notes for principal, premium, if any, and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal, premium, if any, and interest, respectively; and Fourth: to the Company or to such party as a court of competent jurisdiction shall direct. The Trustee may fix a record date and payment date for any payment to Holders of Notes pursuant to this Section 6.10. NYMAIN01 Doc: 159158_2 45 SECTION 6.11. UNDERTAKING FOR COSTS. In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as a Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys' fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section does not apply to a suit by the Trustee, a suit by a Holder of a Note pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in principal amount of the then outstanding Notes. ARTICLE 7 TRUSTEE SECTION 7.01. DUTIES OF TRUSTEE. (a) If an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in its exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. (b) Except during the continuance of an Event of Default: (i) the duties of the Trustee shall be determined solely by the express provisions of this Indenture and the Trustee need perform only those duties that are specifically set forth in this Indenture and no others, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (ii) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. However, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture. (c) The Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that: (i) this paragraph does not limit the effect of paragraph (b) of this Section; (ii) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and NYMAIN01 Doc: 159158_2 46 (iii) the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.05 hereof. (d) Whether or not therein expressly so provided, every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b), and (c) of this Section. (e) No provision of this Indenture shall require the Trustee to expend or risk its own funds or incur any liability. The Trustee shall be under no obligation to exercise any of its rights and powers under this Indenture at the request of any Holders, unless such Holder shall have offered to the Trustee security and indemnity satisfactory to it against any loss, liability or expense. (f) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law. (g) Except with respect to Sections 4.01 and 4.04 herein, the Trustee shall have no duty to inquire as to the performance of the Company's covenants in Article 4 hereof. In addition, the Trustee shall not be deemed to have knowledge of any Default or Event of Default except (i) any Event of Default occurring pursuant to Sections 6.01(a), 6.01(b), 4.01 and 4.04 herein or (ii) any Default or Event of Default of which the Trustee shall have received written notification or obtained actual knowledge. SECTION 7.02. RIGHTS OF TRUSTEE. (a) The Trustee may conclusively rely upon any document believed by it to be genuine and to have been signed or presented by the proper Person. The Trustee need not investigate any fact or matter stated in the document. (b) Before the Trustee acts or refrains from acting, it may require an Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officers' Certificate or Opinion of Counsel. The Trustee may consult with counsel and the written advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection from liability in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon. (c) The Trustee may act through its attorneys and agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care. (d) The Trustee shall not be liable for any action it takes or omits to take in good faith that it believes to be authorized or within the rights or powers conferred upon it by this Indenture. (e) Unless otherwise specifically provided in this Indenture, any demand, request, direction or notice from the Company shall be sufficient if signed by an Officer of the Company. NYMAIN01 Doc: 159158_2 47 (f) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities that might be incurred by it in compliance with such request or direction. SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE. The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Company, any Restricted Subsidiary or any Affiliate of the Company or any Restricted Subsidiary with the same rights it would have if it were not Trustee. However, in the event that the Trustee acquires any conflicting interest it must eliminate such conflict within 90 days, apply to the SEC for permission to continue as trustee or resign. Any Agent may do the same with like rights and duties. The Trustee is also subject to Sections 7.10 and 7.11 hereof. SECTION 7.04. TRUSTEE'S DISCLAIMER. The Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture or the Notes, it shall not be accountable for the Company's use of the proceeds from the Notes or any money paid to the Company or upon the Company's direction under any provision of this Indenture, it shall not be responsible for the use or application of any money received by any Paying Agent other than the Trustee, and it shall not be responsible for any statement or recital herein or any statement in the Notes or any other document in connection with the sale of the Notes or pursuant to this Indenture other than its certificate of authentication. SECTION 7.05. NOTICE OF DEFAULTS. If a Default or Event of Default occurs and is continuing and if it is known to the Trustee, the Trustee shall mail to the Holders of the Notes a notice of the Default or Event of Default within 90 days after it occurs. Except in the case of a Default or Event of Default in payment of principal of, premium, if any, or interest on any Note, the Trustee may withhold the notice if and so long as a committee of its Responsible Officers in good faith determines that withholding the notice is in the interests of the Holders of the Notes. SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES. Within 60 days after each May 15 beginning with the May 15 following the date of this Indenture, and for so long as Notes remain outstanding, the Trustee shall mail to the Holders of the Notes a brief report dated as of such reporting date that complies with TIA ss. 313(a) (but if no event described in TIA ss. 313(a) has occurred within the twelve months preceding the reporting date, no report need be transmitted). The Trustee also shall comply with TIA ss. 313(b)(2). The Trustee shall also transmit by mail all reports as required by TIA ss. 313(c). A copy of each report at the time of its mailing to the Holders of Notes shall be mailed to the Company and filed with the SEC and each stock exchange on which the Notes are listed in NYMAIN01 Doc: 159158_2 48 accordance with TIA ss. 313(d). The Company shall promptly notify the Trustee when the Notes are listed on any stock exchange. SECTION 7.07. COMPENSATION AND INDEMNITY. The Company and the Restricted Subsidiaries shall pay to the Trustee from time to time reasonable compensation for its acceptance of this Indenture and services hereunder. The Trustee's compensation shall not be limited by any law on compensation of a trustee of an express trust. The Company and the Restricted Subsidiaries shall reimburse the Trustee promptly upon request for all reasonable disbursements, advances and expenses incurred or made by it in addition to the compensation for its services. Such expenses shall include the reasonable compensation, disbursements and expenses of the Trustee's agents and counsel. The Company and the Restricted Subsidiaries shall indemnify the Trustee against any and all losses, liabilities or expenses incurred by it arising out of or in connection with the acceptance or administration of its duties under this Indenture, including the costs and expenses of enforcing this Indenture against the Company and the Restricted Subsidiaries (including this Section 7.07), and defending itself against any claim (whether asserted by the Company, any Restricted Subsidiary or any Holder or any other person) or liability in connection with the exercise or performance of any of its powers or duties hereunder, except to the extent any such loss, liability or expense may be attributable to its negligence or bad faith. The Trustee shall notify the Company promptly of any claim for which it may seek indemnity. Failure by the Trustee to so notify the Company shall not relieve the Company and the Restricted Subsidiaries of their obligations hereunder. The Company and the Restricted Subsidiaries shall defend the claim and the Trustee shall cooperate in the defense. The Trustee may have separate counsel and the Company and the Restricted Subsidiaries shall pay the reasonable fees and expenses of such counsel. The Company and the Restricted Subsidiaries need not pay for any settlement made without their consent, which consent shall not be unreasonably withheld. The obligations of the Company and the Restricted Subsidiaries under this Section 7.07 shall survive the satisfaction and discharge of this Indenture. To secure the Company's and the Restricted Subsidiaries' payment obligations in this Section, the Trustee shall have a Lien prior to the Notes on all money or property held or collected by the Trustee, except that held in trust to pay principal and interest on particular Notes. Such Lien shall survive the satisfaction and discharge of this Indenture. When the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.01(h) or (i) hereof occurs, the expenses and the compensation for the services (including the fees and expenses of its agents and counsel) are intended to constitute expenses of administration under any Bankruptcy Law. The Trustee shall comply with the provisions of TIA ss. 313(b)(2) to the extent applicable. NYMAIN01 Doc: 159158_2 49 SECTION 7.08. REPLACEMENT OF TRUSTEE. A resignation or removal of the Trustee and appointment of a successor Trustee shall become effective only upon the successor Trustee's acceptance of appointment as provided in this Section. The Trustee may resign in writing at any time and be discharged from the trust hereby created by so notifying the Company. The Holders of Notes of a majority in principal amount of the then outstanding Notes may remove the Trustee by so notifying the Trustee and the Company in writing. The Company may remove the Trustee if: (a) the Trustee fails to comply with Section 7.10 hereof; (b) the Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with respect to the Trustee under any Bankruptcy Law; (c) a Custodian or public officer takes charge of the Trustee or its property; or (d) the Trustee becomes incapable of acting. If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Company shall promptly appoint a successor Trustee. Within one year after the successor Trustee takes office, the Holders of a majority in principal amount of the then outstanding Notes may appoint a successor Trustee to replace the successor Trustee appointed by the Company. If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company, any Restricted Subsidiary, or the Holders of Notes of at least 10% in principal amount of the then outstanding Notes may petition any court of competent jurisdiction for the appointment of a successor Trustee. If the Trustee, after written request by any Holder of a Note who has been a Holder of a Note for at least six months, fails to comply with Section 7.10 hereof, such Holder of a Note may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Thereupon, the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee shall mail a notice of its succession to Holders of the Notes. The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee, provided all sums owing to the Trustee hereunder have been paid and subject to the Lien provided for in Section 7.07 hereof. Notwithstanding replacement of the Trustee pursuant to this Section 7.08, the Company's and the Restricted Subsidiaries' obligations under Section 7.07 hereof shall continue for the benefit of the retiring Trustee. NYMAIN01 Doc: 159158_2 50 SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC. If the Trustee consolidates, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation, the successor corporation without any further act shall be the successor Trustee. SECTION 7.10. ELIGIBILITY; DISQUALIFICATION. There shall at all times be a Trustee hereunder that is a corporation organized and doing business under the laws of the United States of America or of any state thereof that is authorized under such laws to exercise corporate trustee power, that is subject to supervision or examination by federal or state authorities and that has a combined capital and surplus of at least $50 million as set forth in its most recent published annual report of condition. This Indenture shall always have a Trustee who satisfies the requirements of TIA ss. 310(a)(1), (2) and (5). The Trustee is subject to TIA ss. 310(b). SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY. The Trustee is subject to TIA ss. 311(a), excluding any creditor relationship listed in TIA ss. 311(b). A Trustee who has resigned or been removed shall be subject to TIA ss. 311(a) to the extent indicated therein. ARTICLE 8 LEGAL DEFEASANCE AND COVENANT DEFEASANCE SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE. The Company may, at the option of its Board of Directors evidenced by a resolution set forth in an Officers' Certificate, at any time, elect to have either Section 8.02 or 8.03 hereof be applied to all outstanding Notes upon compliance with the conditions set forth below in this Article Eight. SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE. Upon the Company's exercise under Section 8.01 hereof of the option applicable to this Section 8.02, each of the Company and the Guarantors, if any, shall, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, be deemed to have been discharged from its obligations with respect to all outstanding Notes and Subsidiary Guarantees on the date the conditions set forth below are satisfied (hereinafter, "Legal Defeasance"). For this purpose, Legal Defeasance means that the Company shall be deemed to have paid and discharged the entire Indebtedness represented by the outstanding Notes, which shall thereafter be deemed to be "outstanding" only for the purposes of Section 8.05 hereof and the other Sections of this Indenture referred to in (a) and (b) below, and to have satisfied all its other obligations under such Notes NYMAIN01 Doc: 159158_2 51 and this Indenture (and the Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging the same), except for the following provisions which shall survive until otherwise terminated or discharged hereunder: (a) the rights of Holders of outstanding Notes to receive solely from the trust fund described in Section 8.04 hereof, and as more fully set forth in such Section, payments in respect of the principal of, premium, if any, and interest on such Notes when such payments are due, (b) the Company's and Guarantors' obligations with respect to such Notes under Article 2 and Section 4.02 hereof, (c) the rights, powers, trusts, duties and immunities of the Trustee hereunder and the Company's and the Guarantors' obligations in connection therewith and (d) this Article Eight. Subject to compliance with this Article Eight, the Company may exercise its option under this Section 8.02 notwithstanding the prior exercise of its option under Section 8.03 hereof. SECTION 8.03. COVENANT DEFEASANCE. Upon the Company's exercise under Section 8.01 hereof of the option applicable to this Section 8.03, each of the Company and the Guarantors, if any, shall, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, be released from its obligations under the covenants contained in Sections 4.05, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.14, 4.15, 4.16, 4.17 and Article V hereof with respect to the outstanding Notes and Subsidiary Guarantees on and after the date the conditions set forth below are satisfied (hereinafter, "Covenant Defeasance"), and the Notes shall thereafter be deemed not "outstanding" for the purposes of any direction, waiver, consent or declaration or act of Holders (and the consequences of any thereof) in connection with such covenants, but shall continue to be deemed "outstanding" for all other purposes hereunder (it being understood that such Notes shall not be deemed outstanding for accounting purposes). For this purpose, Covenant Defeasance means that, with respect to the outstanding Notes, the Company may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document and such omission to comply shall not constitute a Default or an Event of Default under Section 6.01 hereof, but, except as specified above, the remainder of this Indenture, such Notes and the Subsidiary Guarantees, if any, shall be unaffected thereby. In addition, upon the Company's exercise under Section 8.01 hereof of the option applicable to this Section 8.03 hereof, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, Sections 6.01(c) through 6.01(f) and Section 6.01(h) and 6.01(i) hereof shall not constitute Events of Default. SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE. The following shall be the conditions to the application of either Section 8.02 or 8.03 hereof to the outstanding Notes: In order to exercise either Legal Defeasance or Covenant Defeasance: (a) the Company must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders, cash in United States dollars, non-callable Government Securities, or a NYMAIN01 Doc: 159158_2 52 combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, premium, if any, and interest on the outstanding Notes on the stated date for payment thereof or on the applicable redemption date, as the case may be, of such principal or installment of principal of, premium, if any, or interest on the outstanding Notes; (b) in the case of an election under Section 8.02 hereof, the Company shall have delivered to the Trustee an Opinion of Counsel in the United States (which counsel may be an employee of the Company or any Subsidiary of the Company) reasonably acceptable to the Trustee confirming that (A) the Company has received from, or there has been published by, the Internal Revenue Service a ruling or (B) since the Issuance Date, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred; (c) in the case of an election under Section 8.03 hereof, the Company shall have delivered to the Trustee an Opinion of Counsel in the United States (which counsel may be an employee of the Company or any Subsidiary of the Company) reasonably acceptable to the Trustee confirming that the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred; (d) no Default or Event of Default shall have occurred and be continuing on the date of such deposit or, insofar as Sections 6.01(h) and 6.01(i) hereof are concerned, at any time in the period ending on the 91st day after the date of deposit (or greater period of time in which any such deposit of trust funds may remain subject to Bankruptcy Law insofar as those apply to the deposit by the Company); (e) such Legal Defeasance or Covenant Defeasance shall not result in a breach or violation of, or constitute a default under, any material agreement or instrument (other than this Indenture) to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound; (f) the Company shall have delivered to the Trustee an Opinion of Counsel to the effect that after the 91st day following the deposit, the trust funds will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally; (g) the Company shall have delivered to the Trustee an Officers' Certificate stating that the deposit was not made by the Company with the intent of preferring the Holders of NYMAIN01 Doc: 159158_2 53 Notes over any other creditors of the Company with the intent of defeating, hindering, delaying or defrauding creditors of the Company or others; and (h) the Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for or relating to the Legal Defeasance or the Covenant Defeasance have been complied with. SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST; OTHER MISCELLANEOUS PROVISIONS. Subject to Section 8.06 hereof, all money and non-callable Government Securities (including the proceeds thereof) deposited with the Trustee (or other qualifying trustee, collectively for purposes of this Section 8.05, the "Trustee") pursuant to Section 8.04 hereof in respect of the outstanding Notes shall be held in trust and applied by the Trustee, in accordance with the provisions of such Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as Paying Agent) as the Trustee may determine, to the Holders of such Notes of all sums due and to become due thereon in respect of principal, premium, if any, and interest, but such money need not be segregated from other funds except to the extent required by law. The Company and the Guarantors shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the cash or non-callable Government Securities deposited pursuant to Section 8.04 hereof or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of the outstanding Notes. Anything in this Article Eight to the contrary notwithstanding, the Trustee shall deliver or pay to the Company from time to time upon the request of the Company any money or non-callable Government Securities held by it as provided in Section 8.04 hereof which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee (which may be the opinion delivered under Section 8.04(a) hereof), are in excess of the amount thereof that would then be required to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance. SECTION 8.06. REPAYMENT TO COMPANY. Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of, premium, if any, or interest, if any, on any Note and remaining unclaimed for two years after such principal, and premium, if any, or interest, if any, have become due and payable shall be paid to the Company on its request or (if then held by the Company) shall be discharged from such trust; and the Holder of such Note shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the NYMAIN01 Doc: 159158_2 54 Company cause to be published once, in The New York Times and The Wall Street Journal (national edition), notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such notification or publication, any unclaimed balance of such money then remaining will be repaid to the Company. SECTION 8.07. REINSTATEMENT. If the Trustee or Paying Agent is unable to apply any United States dollars or non-callable Government Securities in accordance with Section 8.02 or 8.03 hereof, as the case may be, by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Company's and the Restricted Subsidiaries' obligations under this Indenture, the Notes and the Subsidiary Guarantees shall be revived and reinstated as though no deposit had occurred pursuant to Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is permitted to apply all such money in accordance with Section 8.02 or 8.03 hereof, as the case may be; provided, however, that, if the Company and the Restricted Subsidiaries make any payment of principal of, premium, if any, or interest, if any, on any Note following the reinstatement of its obligations, the Company and the Restricted Subsidiaries shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money held by the Trustee or Paying Agent. ARTICLE 9 AMENDMENT, SUPPLEMENT AND WAIVER SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF NOTES. Notwithstanding Section 9.02 of this Indenture, the Company, the Guarantors and the Trustee may amend or supplement this Indenture or the Notes without the consent of any Holder of a Note: (a) to cure any ambiguity, defect or inconsistency; (b) to provide for uncertificated Notes in addition to or in place of certificated Notes; (c) to provide for the assumption of the Company's or any Guarantor's obligations to the Holders of the Notes in the case of a merger or consolidation pursuant to Article Five or Article 11 hereof, as the case may be; (d) to make any change that would provide any additional rights or benefits to the Holders of the Notes (including providing for additional Subsidiary Guarantees pursuant to Section 4.13 hereof) or that does not materially adversely affect the legal rights hereunder of any Holder of the Note; or NYMAIN01 Doc: 159158_2 55 (e) to comply with requirements of the SEC in order to effect or maintain the qualification of this Indenture under the TIA. Upon the request of the Company accompanied by a resolution of its Board of Directors authorizing the execution of any such amended or supplemental Indenture, and upon receipt by the Trustee of the documents described in Section 7.02 hereof, the Trustee shall join with the Company and the Guarantors in the execution of any amended or supplemental Indenture authorized or permitted by the terms of this Indenture and to make any further appropriate agreements and stipulations that may be therein contained, but the Trustee shall not be obligated to enter into such amended or supplemental Indenture that affects its own rights, duties or immunities under this Indenture or otherwise. SECTION 9.02. WITH CONSENT OF HOLDERS OF NOTES. Except as provided below in this Section 9.02, the Company, the Guarantors and the Trustee may amend or supplement this Indenture or the Notes with the consent of the Holders of at least a majority in principal amount of the Notes then outstanding (including consents obtained in connection with a tender offer or exchange offer for the Notes), and, subject to Sections 6.04 and 6.07 hereof, any existing Default or Event of Default (other than a Default or Event of Default in the payment of the principal of, premium, if any, or interest on the Notes, except a payment default resulting from an acceleration that has been rescinded) or compliance with any provision of this Indenture or the Notes may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Notes (including consents obtained in connection with a tender offer or exchange offer for the Notes). Upon the request of the Company accompanied by a resolution of its Board of Directors authorizing the execution of any such amended or supplemental Indenture, and upon the filing with the Trustee of evidence reasonably satisfactory to the Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by the Trustee of the documents described in Section 7.02 hereof, the Trustee shall join with the Company and the Guarantors in the execution of such amended or supplemental Indenture unless such amended or supplemental Indenture affects the Trustee's own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such amended or supplemental Indenture. It shall not be necessary for the consent of the Holders of Notes under this Section 9.02 to approve the particular form of any proposed amendment or waiver, but it shall be sufficient if such consent approves the substance thereof. After an amendment, supplement or waiver under this Section becomes effective, the Company shall mail to the Holders of Notes affected thereby a notice briefly describing the amendment, supplement or waiver. Any failure of the Company to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such amended or supplemental Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a majority in aggregate principal amount of the Notes then outstanding may waive compliance in NYMAIN01 Doc: 159158_2 56 a particular instance by the Company or any Guarantor with any provision of this Indenture, the Note or the Subsidiary Guarantees. However, without the consent of each Holder affected, an amendment or waiver may not (with respect to any Notes held by a non-consenting Holder): (a) reduce the principal amount of Notes whose Holders must consent to an amendment, supplement or waiver; (b) reduce the principal of or change the fixed maturity of any Note or alter any of the provisions with respect to the redemption of the Notes in a manner adverse to the Holders of the Notes; (c) reduce the rate of or change the time for payment of interest, including default interest, on any Note; (d) waive a Default or Event of Default in the payment of principal of or premium, if any, or interest on the Notes (except a rescission of acceleration of the Notes by the Holders of at least a majority in aggregate principal amount of the then outstanding Notes and a waiver of the payment default that resulted from such acceleration); (e) make any Note payable in money other than that stated in the Notes; (f) make any change in the provisions of this Indenture relating to waivers of past Defaults or the rights of Holders of Notes to receive payments of principal of or premium, if any, or interest on the Notes; (g) waive a redemption payment with respect to any Note (other than a payment required by Section 4.10 or Section 4.14 hereof); (h) except pursuant to Article 4, Article 8 and Article 11 hereof, release any Guarantor from its obligations under its Subsidiary Guarantee, or change any Subsidiary Guarantee in any manner that would materially adversely affect the Holders; or (i) make any change in Section 6.04 or 6.07 hereof or in the foregoing amendment and waiver provisions. SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT. Every amendment or supplement to this Indenture or the Notes shall be set forth in a amended or supplemental Indenture that complies with the TIA as then in effect. SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS. Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder of a Note is a continuing consent by the Holder of a Note and every subsequent Holder of a Note or portion of a Note that evidences the same debt as the consenting Holder's Note, even if notation NYMAIN01 Doc: 159158_2 57 of the consent is not made on any Note. However, any such Holder of a Note or subsequent Holder of a Note may revoke the consent as to its Note if the Trustee receives written notice of revocation before the date the waiver, supplement or amendment becomes effective. An amendment, supplement or waiver becomes effective in accordance with its terms and thereafter binds every Holder. SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES. The Trustee may place an appropriate notation about an amendment, supplement or waiver on any Note thereafter authenticated. The Company in exchange for all Notes may issue and the Trustee shall authenticate new Notes (accompanied by a notation of the Subsidiary Guarantees duly endorsed by the Restricted Subsidiaries) that reflect the amendment, supplement or waiver. Failure to make the appropriate notation or issue a new Note shall not affect the validity and effect of such amendment, supplement or waiver. SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC. The Trustee shall sign any amended or supplemental Indenture authorized pursuant to this Article Nine if the amendment or supplement does not adversely affect the rights, duties, liabilities or immunities of the Trustee. The Company and the Guarantors may not sign an amendment or supplemental Indenture until the Board of Directors of the Company and each of the Guarantors approves it. In executing any amended or supplemental indenture, the Trustee shall be entitled to receive and (subject to Section 7.01 hereof) shall be fully protected in relying upon, an Officer's Certificate and an Opinion of Counsel stating that the execution of such amended or supplemental indenture is authorized or permitted by this Indenture. ARTICLE 10 SUBORDINATION SECTION 10.01. AGREEMENT TO SUBORDINATE. The Company, the Trustee and each Holder by accepting a Note agrees, that the indebtedness and obligations evidenced by the Note are subordinated in right of payment, to the extent and in the manner provided in this Article, to the prior payment in full, in cash, of all Obligations with respect to Senior Debt of the Company (whether outstanding on the date hereof or hereafter created, incurred, assumed or guaranteed), and that the subordination is for the benefit of the holders of Senior Debt of the Company. SECTION 10.02. LIQUIDATION; DISSOLUTION; BANKRUPTCY. Upon any payment or distribution to creditors of the Company in a liquidation or dissolution of the Company or in a bankruptcy, reorganization, insolvency, receivership or similar NYMAIN01 Doc: 159158_2 58 proceeding relating to the Company or its property, in an assignment for the benefit of creditors or any marshaling of the Company's assets and liabilities: (1) holders of Senior Debt of the Company shall be entitled to receive payment in full in cash of all Obligations due in respect of such Senior Debt of the Company (including interest after the commencement of any such proceeding at the rate specified in the applicable Senior Debt of the Company, whether or not allowed as a claim in such proceeding) before Holders shall be entitled to receive any payment or distribution from the Company with respect to the Notes; and (2) until all Obligations with respect to Senior Debt of the Company (as provided in subsection (1) above) are paid in full in cash, any payment or distribution to which the Trustee or any Holder would be entitled but for this Article shall be made to holders of Senior Debt of the Company, as their interests may appear. SECTION 10.03. DEFAULT ON DESIGNATED SENIOR DEBT. The Company may not make any payment or distribution upon or in respect of the Notes, including, without limitation, by way of set-off or otherwise, or redeem (or make a deposit in redemption of), defease or acquire any of the Notes, for cash, properties or securities if: (i) a default in the payment of any principal, premium, if any, or interest or other Obligations (a "Payment Default") with respect to Senior Debt of the Company occurs and is continuing; or (ii) a default (other than a Payment Default) or any event that, after notice or passage of time would become a default (a "Non-Monetary Default"), on Senior Debt of the Company occurs and is continuing that then permits holders of the Senior Debt of the Company to accelerate its maturity and the Trustee receives a notice of the default (a "Payment Blockage Notice") from a Person who may give it pursuant to Section 10.11 hereof. Any number of such Payment Blockage Notices may be given, provided, however, that (i) not more than one Payment Blockage Notice may be commenced during any period of 360 consecutive days and (ii) any Non-Monetary Default that existed or was continuing on the date of delivery of any such notice to the Trustee (to the extent the holder of Designated Senior Debt, or such trustee or agent, giving such Payment Blockage Notice had knowledge of the same) shall not be the basis for a subsequent Payment Blockage Notice, unless such default has been cured or waived for a period of not less than 90 days. The Company may and shall resume payments on and distributions in respect of the Notes and all Obligations with respect thereto, and may acquire such Notes or Obligations upon the earlier of: (1) in the case of a payment default, the date upon which such default is cured or waived, or NYMAIN01 Doc: 159158_2 59 (2) in the case of a Non-Monetary Default, on the earlier of the date on which such Non-Monetary Default is cured or waived or 179 days after the date on which the applicable Payment Blockage Notice is received, if the maturity of such Senior Debt of the Company has not been accelerated, if this Article 10 otherwise permits the payment, distribution or acquisition at the time thereof. SECTION 10.04. ACCELERATION OF NOTES. If payment of the Notes is accelerated because of an Event of Default, the Company shall promptly notify Representatives of the holders of Senior Debt of the Company of the acceleration. SECTION 10.05. WHEN DISTRIBUTION MUST BE PAID OVER. In the event that the Trustee or any Holder receives from the Company any payment of any Obligations with respect to the Notes at a time when the Trustee or such Holder, as applicable, has actual knowledge that such payment is prohibited by Section 10.02 or 10.03 hereof, such payment shall be held by the Trustee or such Holder in trust for the benefit of, and shall be paid forthwith over and delivered upon written request to, the holders of Senior Debt of the Company, as their interests may appear, or their Representative under the indenture or other agreement (if any) pursuant to which Senior Debt of the Company may have been issued, as their respective interests may appear, for application to the payment of all Obligations with respect to Senior Debt of the Company remaining unpaid to the extent necessary to pay such Obligations in full in accordance with their terms, after giving effect to any concurrent payment or distribution to or for the holders of Senior Debt of the Company. With respect to the holders of Senior Debt of the Company, the Trustee undertakes to perform only such obligations on the part of the Trustee as are specifically set forth in this Article 10, and no implied covenants or obligations with respect to the holders of Senior Debt of the Company shall be read into this Indenture against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Debt of the Company, and shall not be liable to any such holders if the Trustee shall pay over or distribute to or on behalf of Holders or the Company or any other Person money or assets to which any holders of Senior Debt of the Company shall be entitled by virtue of this Article 10, except if such payment is made as a result of the willful misconduct or gross negligence of the Trustee. SECTION 10.06. NOTICE BY COMPANY. The Company shall promptly notify the Trustee and the Paying Agent of any facts known to the Company that would cause a payment of any Obligations with respect to the Notes to violate this Article, but failure to give such notice shall not affect the subordination of the Notes to the Senior Debt of the Company as provided in this Article. NYMAIN01 Doc: 159158_2 60 SECTION 10.07. SUBROGATION. After all Obligations with respect to Senior Debt of the Company are paid in full, in cash, and until the Notes are paid in full, Holders shall be subrogated (equally and ratably with all other Indebtedness pari passu with the Notes) to the rights of holders of Senior Debt of the Company to receive distributions applicable to Senior Debt of the Company to the extent that distributions otherwise payable to the Holders have been applied to the payment of Senior Debt of the Company. A distribution made under this Article to holders of Senior Debt of the Company that otherwise would have been made to Holders is not, as between the Company and Holders, a payment by the Company on the Notes. SECTION 10.08. RELATIVE RIGHTS. This Article defines the relative rights of Holders and holders of Senior Debt of the Company. Nothing in this Indenture shall: (1) impair, as between the Company and Holders, the obligation of the Company, which is absolute and unconditional, to pay principal of and interest on the Notes in accordance with their terms; (2) affect the relative rights of Holders and creditors of the Company other than their rights in relation to holders of Senior Debt of the Company; or (3) prevent the Trustee or any Holder from exercising its available remedies upon a Default or Event of Default, subject to the rights of holders and owners of Senior Debt of the Company to receive distributions and payments otherwise payable to Holders. If the Company fails because of this Article 10 to pay principal of, premium or interest on a Note on the due date, the failure is still a Default or Event of Default. SECTION 10.09. SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY. No right of any holder of Senior Debt of the Company to enforce the subordination of the Indebtedness evidenced by the Notes shall be impaired by any act or failure to act by the Company or any Holder or by the failure of the Company or any Holder to comply with this Indenture. SECTION 10.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE. Whenever a distribution is to be made or a notice given to holders of Senior Debt of the Company, the distribution may be made and the notice given to their Representative. Upon any payment or distribution of assets of the Company referred to in this Article 10, the Trustee and the Holders shall be entitled to rely upon any order or decree made by any court of competent jurisdiction or upon any certificate of such Representative or of the liquidating NYMAIN01 Doc: 159158_2 61 trustee or agent or other Person making any distribution to the Trustee or to the Holders for the purpose of ascertaining the Persons entitled to participate in such distribution, the holders of the Senior Debt of the Company and other Indebtedness of the Company, the amount or amounts thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article 10. SECTION 10.11. RIGHTS OF TRUSTEE AND PAYING AGENT. Notwithstanding the provisions of this Article 10 or any other provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts that would prohibit the making of any payment or distribution by the Trustee, and the Trustee and the Paying Agent may continue to make payments on the Notes, unless the Trustee shall have received at its Corporate Trust Office at least one Business Day prior to the date of such payment a Payment Blockage Notice. Only the holders or the Representative of holders of Designated Senior Debt of the Company may give a Payment Blockage Notice. Nothing in this Article 10 shall impair the claims of, or payments to, the Trustee under or pursuant to Section 7.07 hereof. The Trustee in its individual or any other capacity may hold Senior Debt of the Company with the same rights it would have if it were not Trustee. Any Agent may do the same with like rights. SECTION 10.12. AUTHORIZATION TO EFFECT SUBORDINATION. Each Holder of a Note by the Holder's acceptance thereof authorizes and directs the Trustee on the Holder's behalf to take such action as may be necessary or appropriate to effectuate the subordination as provided in this Article 10, and appoints the Trustee to act as the Holder's attorney-in-fact for any and all such purposes. If the Trustee does not file a proper proof of claim or proof of debt in the form required in any proceeding referred to in Section 6.09 hereof at least 30 days before the expiration of the time to file such claim, the Representatives of the Senior Debt of the Company are hereby authorized to file an appropriate claim for and on behalf of the Holders of the Notes. SECTION 10.13. AMENDMENTS. The provisions of this Article 10 shall not be amended or modified without the written consent of the holders of all Senior Debt of the Company. ARTICLE 11 SUBSIDIARY GUARANTEES SECTION 11.01. SUBSIDIARY GUARANTEE. Each Subsidiary that is a signatory hereto and each Restricted Subsidiary of the Company which in accordance with Section 4.13 hereof is required to guarantee the obligations of the NYMAIN01 Doc: 159158_2 62 Company under the Notes (each, a "Guarantor"), upon execution of a counterpart of this Indenture, hereby jointly and severally unconditionally guarantees to each Holder of a Note authenticated and delivered by the Trustee irrespective of the validity or enforceability of this Indenture, the Notes or the obligations of the Company under this Indenture or the Notes, that: (i) the principal of and interest on the Notes will be paid in full when due, whether at the maturity or interest payment or mandatory redemption date, by acceleration, call for redemption or otherwise, and interest on the overdue principal of and interest, if any, on the Notes and all other obligations of the Company to the Holders or the Trustee under this Indenture or the Notes will be promptly paid in full or performed, all in accordance with the terms of this Indenture and the Notes; and (ii) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, they will be paid in full when due or performed in accordance with the terms of the extension or renewal, whether at maturity, by acceleration or otherwise. Failing payment when due of any amount so guaranteed for whatever reason, each Guarantor will be obligated to pay the same whether or not such failure to pay has become an Event of Default which could cause acceleration pursuant to Section 6.02 hereof. Each Guarantor agrees that this is a guarantee of payment not a guarantee of collection. Each Guarantor hereby agrees that its obligations with regard to this Subsidiary Guarantee shall be joint and several, unconditional, irrespective of the validity or enforceability of the Notes or the obligations of the Company under this Indenture, the absence of any action to enforce the same, the recovery of any judgment against the Company or any other obligor with respect to this Indenture, the Notes or the obligations of the Company under this Indenture or the Notes, any action to enforce the same or any other circumstances (other than complete performance) which might otherwise constitute a legal or equitable discharge or defense of a Guarantor. Each Guarantor further, to the extent permitted by law, waives and relinquishes all claims, rights and remedies accorded by applicable law to guarantors and agrees not to assert or take advantage of any such claims, rights or remedies, including but not limited to: (a) any right to require the Trustee, the Holders or the Company (each, a "Benefitted Party") to proceed against the Company or any other Person or to proceed against or exhaust any security held by a Benefitted Party at any time or to pursue any other remedy in any Benefitted Party's power before proceeding against such Guarantor; (b) the defense of the statute of limitations in any action hereunder or in any action for the collection of any Indebtedness or the performance of any obligation hereby guaranteed; (c) any defense that may arise by reason of the incapacity, lack of authority, death or disability of any other Person or the failure of a Benefitted Party to file or enforce a claim against the estate (in administration, bankruptcy or any other proceeding) of any other Person; (d) demand, protest and notice of any kind including but not limited to notice of the existence, creation or incurring of any new or additional Indebtedness or obligation or of any action or non-action on the part of such Guarantor, the Company, any Benefitted Party, any creditor of such Guarantor, the Company or on the part of any other Person whomsoever in connection with any Indebtedness or obligations hereby guaranteed; (e) any defense based upon an election of remedies by a Benefitted Party, including but not limited to an election to proceed against such Guarantor for reimbursement; (f) any defense based upon any statute or rule of law which provides that the obligation of a surety must be neither larger in amount nor in other respects more burdensome than that of the principal; (g) any defense arising because of a Benefitted Party's election, in any proceeding instituted under Bankruptcy Law, of the application of 11 U.S.C. Section 1111(b)(2); or (h) any defense based on NYMAIN01 Doc: 159158_2 63 any borrowing or grant of a security interest under 11 U.S.C. Section 364. Each Guarantor hereby covenants that its Subsidiary Guarantee will not be discharged except by complete performance of the obligations contained in its Subsidiary Guarantee and this Indenture. If any Holder or the Trustee is required by any court or otherwise to return to either the Company or any Guarantor, or any Custodian acting in relation to either the Company or such Guarantor, any amount paid by the Company or such Guarantor to the Trustee or such Holder, the applicable Subsidiary Guarantees, to the extent theretofore discharged, shall be reinstated and be in full force and effect. Each Guarantor agrees that it will not be entitled to any right of subrogation in relation to the Holders in respect of any obligations guaranteed hereby until payment in full of all obligations guaranteed hereby. Each Guarantor further agrees that, as between such Guarantor, on the one hand, and the Holders and the Trustee, on the other hand, (i) the maturity of the obligations guaranteed hereby may be accelerated as provided in Section 6.02 hereof for the purposes of this Subsidiary Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration as to the Company or any other obligor on the Notes of the obligations guaranteed hereby, and (ii) in the event of any declaration of acceleration of those obligations as provided in Section 6.02 hereof, those obligations (whether or not due and payable) will forthwith become due and payable by such Guarantor for the purpose of this Subsidiary Guarantee. SECTION 11.02. SUBORDINATION. Each Guarantor, the Trustee, and each Holder by accepting a Note agrees, that the Indebtedness evidenced by the Subsidiary Guarantees is subordinated in right of payment, to the extent and in the manner provided in this Article 11, to the prior payment in full, in cash, of all Obligations with respect to Senior Debt of such Guarantor (whether outstanding on the date hereof or hereafter created, incurred, assumed or guaranteed), and that the subordination is for the benefit of the holders of Senior Debt of such Guarantor. SECTION 11.03. LIQUIDATION; DISSOLUTION; BANKRUPTCY. Upon any payment or distribution to creditors of any Guarantor in a liquidation or dissolution of such Guarantor or in a bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to such Guarantor or its property, in an assignment for the benefit of creditors or any marshaling of such Guarantor's assets and liabilities: (1) holders of Senior Debt of such Guarantor shall be entitled to receive payment in full in cash of all Obligations due in respect of such Senior Debt of such Guarantor (including interest after the commencement of any such proceeding at the rate specified in the applicable Senior Debt of such Guarantor, whether or not allowed as a claim in such proceeding) before the Holders shall be entitled to receive any payment or distribution from the Guarantor with respect to such Guarantor's Subsidiary Guarantee; and NYMAIN01 Doc: 159158_2 64 (2) until all Obligations with respect to Senior Debt of such Guarantor (as provided in subsection (1) above) are paid in full in cash, any payment or distribution to which the Trustee or any Holder would be entitled but for this Article shall be made to holders of Senior Debt of such Guarantor, as their interests may appear. SECTION 11.04. DEFAULT ON SENIOR DEBT OF THE GUARANTOR. No Guarantor shall make any payment or distribution upon or in respect of the Notes or its Subsidiary Guarantee, including, without limitation, by way of set-off or otherwise, or redeem (or make a deposit in redemption of), defease or acquire any of the Notes, for cash, properties or securities if: (i) a Payment Default with respect to Senior Debt of such Guarantor occurs and is continuing; or (ii) a Non-Monetary Default on Senior Debt of such Guarantor occurs and is continuing that then permits holders of the Senior Debt of such Guarantor to accelerate its maturity and the Trustee receives a Payment Blockage Notice from a Person who may give it pursuant to Section 11.12 hereof. Any number of such Payment Blockage Notices may be given, provided, however, that (i) not more than one Payment Blockage Notice may be commenced during any period of 360 consecutive days and (ii) any default or event of default that existed or was continuing on the date of delivery of any Payment Blockage Notice to the Trustee (to the extent the holder of Designated Senior Debt, or such trustee or agent, giving such Payment Blockage Notice had knowledge of the same) shall not be the basis for a subsequent Payment Blockage Notice pursuant to Section 11.12 herein, unless such default has been cured or waived for a period of not less than 90 consecutive days. Each Guarantor may and shall resume payments on and distributions in respect of its Subsidiary Guarantee, the Notes and all Obligations with respect thereto, and may acquire such Notes or Obligations upon the earlier of: (1) in the case of a payment default, the date upon which such default is cured or waived, or (2) in the case of a Non-Monetary Default, on the earlier of the date on which such Non-Monetary Default is cured or waived or 179 days after the date on which the applicable Payment Blockage Notice is received, if the maturity of such Senior Debt of such Guarantor has not been accelerated, if this Article 11 otherwise permits the payment, distribution or acquisition at the time thereof. NYMAIN01 Doc: 159158_2 65 SECTION 11.05. ACCELERATION OF NOTES. If payment of the Notes is accelerated because of an Event of Default, each Guarantor shall promptly notify the Representative of the holders of Senior Debt of such Guarantor of the acceleration. SECTION 11.06. WHEN DISTRIBUTION MUST BE PAID OVER. In the event that the Trustee or any Holder receives from a Guarantor any payment of any Obligations with respect to the Notes or the Subsidiary Guarantees at a time when the Trustee or such Holder, as applicable, has actual knowledge that such payment is prohibited by Section 11.03 or 11.04 hereof, such payment shall be held by the Trustee or such Holder, in trust for the benefit of, and shall be paid forthwith over and delivered upon written request to, the holders of Senior Debt of such Guarantor, as their interests may appear, or their Representative under the indenture or other agreement (if any) pursuant to which Senior Debt of such Guarantor may have been issued, as their respective interests may appear, for application to the payment of all Obligations with respect to Senior Debt of such Guarantor remaining unpaid to the extent necessary to pay such Obligations in full in accordance with their terms, after giving effect to any concurrent payment or distribution to or for the holders of Senior Debt of such Guarantor. With respect to the holders of Senior Debt of any Guarantor, the Trustee undertakes to perform only such obligations on the part of the Trustee as are specifically set forth in this Article 11, and no implied covenants or obligations with respect to the holders of Senior Debt of such Guarantor shall be read into this Indenture against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Debt of such Guarantor, and shall not be liable to any such holders if the Trustee shall pay over or distribute to or on behalf of Holders or the Company or any other Person money or assets to which any holders of Senior Debt of such Guarantor shall be entitled by virtue of this Article 11, except if such payment is made as a result of the willful misconduct or gross negligence of the Trustee. SECTION 11.07. NOTICE BY A GUARANTOR. Each Guarantor shall promptly notify the Trustee and the Paying Agent of any facts known to such Guarantor that would cause a payment of any Obligations with respect to the Notes or its Subsidiary Guarantee to violate this Article, but failure to give such notice shall not affect the subordination of its Subsidiary Guarantee or of the Notes to the Senior Debt of such Guarantor as provided in this Article. SECTION 11.08. SUBROGATION. With respect to any Guarantor, after all Obligations with respect to Senior Debt of such Guarantor is paid in full, in cash, and until the Notes are paid in full, Holders shall be subrogated (equally and ratably with all other Indebtedness pari passu with such Guarantor's Subsidiary Guarantee) to the rights of holders of Senior Debt of such Guarantor to receive distributions applicable to Senior Debt of such Guarantor to the extent that distributions otherwise payable to NYMAIN01 Doc: 159158_2 66 the Holders have been applied to the payment of Senior Debt of such Guarantor. A distribution made under this Article to holders of Senior Debt of such Guarantor that otherwise would have been made to Holders is not, as between such Guarantor and Holders, a payment by such Guarantor on the Notes or the Subsidiary Guarantee. SECTION 11.09. RELATIVE RIGHTS. This Article defines the relative rights of Holders and holders of Senior Debt of such Guarantor. Nothing in this Indenture shall: (1) impair, as between such Guarantor and the Holders, the obligation of such Guarantor, which is absolute and unconditional, to pay principal of and interest on the Notes in accordance with the terms of the Subsidiary Guarantee; (2) affect the relative rights of Holders and creditors of such Guarantor other than their rights in relation to holders of Senior Debt of such Guarantor; or (3) prevent the Trustee or any Holder from exercising its available remedies upon a Default or Event of Default, subject to the rights of holders of Senior Debt of such Guarantor set forth herein to receive distributions and payments otherwise payable to Holders. If any Guarantor fails because of this Article 11 to pay principal of, premium or interest on a Note on the due date, the failure is still a Default or Event of Default. SECTION 11.10. SUBORDINATION MAY NOT BE IMPAIRED BY ANY GUARANTOR. With respect to any Guarantor, no right of any holder of Senior Debt of such Guarantor to enforce the subordination of the Indebtedness evidenced by the Subsidiary Guarantee shall be impaired by any act or failure to act by such Guarantor or any Holder or by failure of such Guarantor or any Holder to comply with this Indenture. SECTION 11.11. DISTRIBUTION OR NOTICE TO REPRESENTATIVE. With respect to any Guarantor, whenever a distribution is to be made or a notice given to holders of Senior Debt of such Guarantor, the distribution may be made and the notice given to their Representative. Upon any payment or distribution of assets of any Guarantor referred to in this Article 11, the Trustee and the Holders shall be entitled to rely upon any order or decree made by any court of competent jurisdiction or upon any certificate of such Representative or of the liquidating trustee or agent or other Person making any distribution to the Trustee or to the Holders for the purpose of ascertaining the Persons entitled to participate in such distribution, the holders of the Senior Debt of such Guarantor and other Indebtedness of such Guarantor, the amount or amounts thereof NYMAIN01 Doc: 159158_2 67 or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article 11. SECTION 11.12. RIGHTS OF TRUSTEE AND PAYING AGENT. Notwithstanding the provisions of this Article 11 or any other provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts that would prohibit the making of any payment or distribution by the Trustee, and the Trustee and the Paying Agent may continue to make payments on the Notes, unless the Trustee shall have received at its Corporate Trust Office at least one Business Day prior to the date of such payment a Payment Blockage Notice. Only the Representative of holders of Designated Senior Debt may give a Payment Blockage Notice. Nothing in this Article 11 shall impair the claims of, or payments to, the Trustee under or pursuant to Section 7.07 hereof. With respect to any Guarantor, the Trustee in its individual or any other capacity may hold Senior Debt of such Guarantor with the same rights it would have if it were not Trustee. Any Agent may do the same with like rights. SECTION 11.13. AUTHORIZATION TO EFFECT SUBORDINATION. Each Holder of a Note by the Holder's acceptance thereof authorizes and directs the Trustee on the Holder's behalf to take such action as may be necessary or appropriate to effectuate the subordination as provided in this Article 11, and appoints the Trustee to act as the Holder's attorney-in-fact for any and all such purposes. If the Trustee does not file a proper proof of claim or proof of debt in the form required in any proceeding relative to any Guarantor referred to in Section 6.09 hereof at least 30 days before the expiration of the time to file such claim, the Representatives of Senior Debt of such Guarantor are hereby authorized to file an appropriate claim for and on behalf of the Holders of the Notes. SECTION 11.14. AMENDMENTS. With respect to any Guarantor, the provisions of Section 11.02 through 11.14 hereof shall not be amended or modified without the written consent of the holders of all Senior Debt of such Guarantor. SECTION 11.15. LIMITATION OF GUARANTOR'S LIABILITY. Each Guarantor and, by its acceptance hereof, the Trustee and each Holder hereby confirm that it is its intention that the Subsidiary Guarantee of such Guarantor not constitute a fraudulent transfer or conveyance for purposes of the Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar federal or state law to the extent applicable to any Subsidiary Guarantee. To effectuate the foregoing intention, each such person hereby irrevocably agrees that the obligation of such Guarantor under its Subsidiary Guarantee under this Article 11 shall be limited to the maximum amount as will, after giving effect to such maximum amount and all other (contingent or other) liabilities of such Guarantor that are relevant NYMAIN01 Doc: 159158_2 68 under such laws, and after giving effect to any collections from, rights to receive contribution from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under this Article 11, result in the obligations of such Guarantor in respect of such maximum amount not constituting a fraudulent transfer or conveyance under said laws. The Trustee and each Holder by accepting the benefits hereof, confirms its intention that, in the event of a bankruptcy, reorganization or other similar proceeding of the Company or any Guarantor in which concurrent claims are made upon such Guarantor hereunder, to the extent such claims will not be fully satisfied, each such claimant with a valid claim against the Company shall be entitled to a ratable share of all payments by such Guarantor in respect of such concurrent claims. SECTION 11.16. RESTRICTED SUBSIDIARIES MAY CONSOLIDATE, ETC., ON CERTAIN TERMS. No Guarantor shall consolidate with or merge with or into (whether or not such Guarantor is the surviving Person), another Person whether or not it is affiliated with such Guarantor unless (i) subject to the provisions of Section 11.17 hereof, the Person formed by or surviving any such consolidation or merger (if other than such Guarantor) assumes all the obligations of such Guarantor pursuant to a supplemental indenture in form reasonably satisfactory to the Trustee, under its Subsidiary Guarantee, the Notes and this Indenture, (ii) immediately after giving effect to such transaction, no Default or Event of Default exists, and (iii) such Guarantor, or any Person formed by or surviving any such consolidation or merger, will be permitted to incur, immediately after giving effect to such transaction, at least $1.00 of additional Indebtedness pursuant to the first paragraph of Section 4.09 hereof. In case of any such consolidation, merger, sale or conveyance and upon the assumption by the successor corporation, by supplemental indenture, executed and delivered to the Trustee and satisfactory in form to the Trustee, of the Subsidiary Guarantee in this Indenture and the due and punctual performance and observance of all of the covenants and conditions of this Indenture to be performed by the Guarantor, such successor corporation shall succeed to and be substituted for the Guarantor with the same effect as if it had been named herein as a Guarantor. SECTION 11.17. RELEASES FOLLOWING SALE OF ASSETS OR DESIGNATION AS UNRESTRICTED SUBSIDIARY. In the event of (a) a sale or other disposition of all or substantially all of the assets of any Guarantor, by way of merger, consolidation or otherwise, or (b) a sale or other disposition of all of the capital stock of any Guarantor, or (c) the designation of a Restricted Subsidiary as an Unrestricted Subsidiary in accordance with the terms of Section 4.17 hereof, then such Guarantor (in the event of a sale or other disposition, by way of such a merger, consolidation or otherwise, of all of the capital stock of such Guarantor, or in the event of the designation of such Guarantor as an Unrestricted Subsidiary) or the corporation acquiring the property (in the event of a sale or other disposition of all or substantially all of the assets of such Guarantor) shall be released and relieved of its obligations under its Subsidiary Guarantee; provided that the Net Proceeds of such sale or other disposition are applied in accordance with Section 4.10 hereof. NYMAIN01 Doc: 159158_2 69 ARTICLE 12 MISCELLANEOUS SECTION 12.01. TRUST INDENTURE ACT CONTROLS. If any provision of this Indenture limits, qualifies or conflicts with the duties imposed by TIA ss.318(c), the imposed duties shall control. SECTION 12.02. NOTICES. Any notice or communication by the Company, the Restricted Subsidiaries or the Trustee to the others is duly given if in writing and delivered in Person or mailed by first class mail (registered or certified, return receipt requested), telex, telecopier or overnight air courier guaranteeing next day delivery, to the others' address: If to the Company or any Restricted Subsidiary: Iron Mountain Incorporated 745 Atlantic Avenue Boston, MA 02111 Attention: President Telecopier No.: (617) 350-7881 With a copy to: Sullivan & Worcester LLP One Post Office Square Boston, MA 02109 Telecopier No.: (617) 338-2880 Attention: William J. Curry, Esq. If to the Trustee: First Bank National Association c/o First Trust National Association 180 East Fifth Street St. Paul, MN 55101 Telecopier No.: (612) 244-0711 Attention: Richard Prokosch, 2nd Floor The Company, the Restricted Subsidiaries or the Trustee, by notice to the others may designate additional or different addresses for subsequent notices or communications. NYMAIN01 Doc: 159158_2 70 All notices and communications (other than those sent to Holders) shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when answered back, if telexed; when receipt acknowledged, if telecopied; and the next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery. Any notice or communication to a Holder shall be mailed by first class mail, certified or registered, return receipt requested, or by overnight air courier guaranteeing next day delivery to its address shown on the register kept by the Registrar. Any notice or communication shall also be so mailed to any Person described in TIA ss. 313(c), to the extent required by the TIA. Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders. If a notice or communication is mailed in the manner provided above within the time prescribed, it is duly given, whether or not the addressee receives it. If the Company or any Restricted Subsidiary mails a notice or communication to Holders, it shall mail a copy to the Trustee and each Agent at the same time. SECTION 12.03. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES. Holders may communicate pursuant to TIA ss. 312(b) with other Holders with respect to their rights under this Indenture or the Notes. The Company, the Restricted Subsidiaries, the Trustee, the Registrar and anyone else shall have the protection of TIA ss. 312(c). SECTION 12.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT. Upon any request or application by the Company or the Restricted Subsidiaries to the Trustee to take any action under this Indenture, the Company or the Restricted Subsidiaries shall furnish to the Trustee: (a) an Officers' Certificate in form and substance reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 12.05 hereof) stating that, in the opinion of the signers, all conditions precedent and covenants provided for in this Indenture relating to the proposed action have been satisfied; and (b) an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 12.05 hereof) stating that, in the opinion of such counsel, all such conditions precedent and covenants have been satisfied. SECTION 12.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION. Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than a certificate provided pursuant to TIA ss. 314(a)(4)) shall comply with the provisions of TIA ss. 314(e) and shall include: NYMAIN01 Doc: 159158_2 71 (a) a statement that the Person making such certificate or opinion has read such covenant or condition; (b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (c) a statement that, in the opinion of such Person, he or she has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been satisfied; and (d) a statement as to whether or not, in the opinion of such Person, such condition or covenant has been satisfied. SECTION 12.06. RULES BY TRUSTEE AND AGENTS. The Trustee may make reasonable rules for action by or at a meeting of Holders. The Registrar or Paying Agent may make reasonable rules and set reasonable requirements for its functions. SECTION 12.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS. No past, present or future director, officer, employee, incorporator or stockholder of the Company or any Restricted Subsidiary, as such, shall have any liability for any obligations of the Company or any Restricted Subsidiary under the Notes, the Subsidiary Guarantees, this Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of Notes by accepting a Note and the related Subsidiary Guarantees waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes and the Subsidiary Guarantees. SECTION 12.08. GOVERNING LAW. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS INDENTURE, THE NOTES AND THE SUBSIDIARY GUARANTEES. SECTION 12.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS. This Indenture may not be used to interpret any other indenture, loan or debt agreement of the Company or its Subsidiaries or of any other Person. Any such indenture, loan or debt agreement may not be used to interpret this Indenture. SECTION 12.10. SUCCESSORS. NYMAIN01 Doc: 159158_2 72 All agreements of the Company and the Restricted Subsidiaries in this Indenture and the Notes and the Subsidiary Guarantees, as the case may be, shall bind their respective successors. All agreements of the Trustee in this Indenture shall bind its successors. SECTION 12.11. SEVERABILITY. In case any provision in this Indenture, in the Notes or in the Subsidiary Guarantees shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 12.12. COUNTERPART ORIGINALS. The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. SECTION 12.13. TABLE OF CONTENTS, HEADINGS, ETC. The Table of Contents, Cross-Reference Table and Headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part of this Indenture and shall in no way modify or restrict any of the terms or provisions hereof. [Signatures on following page] NYMAIN01 Doc: 159158_2 73 SIGNATURES Dated as of _________, 1996 IRON MOUNTAIN INCORPORATED By: -------------------------------- Name: Title: Dated as of _________, 1996 __________________________________, as Trustee By: --------------------------------- Name: Title: By: --------------------------------- Name: Title: NYMAIN01 Doc: 159158_2 74 EXHIBIT A (Face of Note) __% Senior Subordinated Notes due 2006 No. $__________ IRON MOUNTAIN INCORPORATED promises to pay to ____________________________________ or registered assigns, the principal sum of ________________________________ Dollars on ______, 2006. Interest Payment Dates: ________ and ________. Record Dates: ________ and ________. Dated: _______________ __, 1996 [Every Global Note authenticated and delivered hereunder will bear a legend in substantially the following form:] [This Note is a Global Note within the meaning of the Indenture hereinafter referred to and is registered in the name of a Depositary or a nominee thereof. This Note may not be transferred to, or registered or exchanged for Notes registered in the name of, any Person other than the Depositary or a nominee thereof, and no such transfer may be registered, except in the limited circumstances described in the Indenture. Every Note authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, this Note will be a Global Note subject to the foregoing, except in such limited circumstances.] IRON MOUNTAIN INCORPORATED By:____________________________________ Name: CUSIP No. __________ Title: By:____________________________________ Name: Title: This is one of the Notes referred to in the within-mentioned Indenture: First Bank National Association, as Trustee By: _______________________ Authorized Officer NYMAIN01 Doc: 159158_2 A-1 (Back of Note) __% SENIOR SUBORDINATED NOTE DUE 2006 Capitalized terms used herein have the meanings assigned to them in the Indenture (as defined below) unless otherwise indicated. 1. Interest. Iron Mountain Incorporated, a Delaware corporation (the "Company"), promises to pay interest on the principal amount of this Note at the rate and in the manner specified below. The Company shall pay in cash interest on the principal amount of this Note at the rate per annum of __%. The Company will pay interest semi-annually in arrears on ________ and ________ of each year, commencing on ________, 1997 or if any such day is not a Business Day (as defined in the Indenture), on the next succeeding Business Day (each an "Interest Payment Date"), to Holders of record on the immediately preceding ________ and _________. Interest will be computed on the basis of a 360-day year consisting of twelve 30-day months. Interest shall accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of the original issuance of the Notes. To the extent lawful, the Company shall pay interest on overdue principal at the rate of 1% per annum in excess of the then applicable interest rate on the Notes; it shall pay interest on overdue installments of interest (without regard to any applicable grace periods) at the same rate to the extent lawful. 2. Method of Payment. The Company will pay interest on the Notes (except defaulted interest) to the Persons who are registered Holders of Notes at the close of business on the record date next preceding the Interest Payment Date, even if such Notes are canceled after such record date and on or before such Interest Payment Date. The Company will pay principal and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts. The Company, however, may pay principal, premium, if any, and interest by check payable in such money. It may mail an interest check to a Holder's registered address. 3. Paying Agent and Registrar. Initially, the Trustee will act as Paying Agent and Registrar. The Company may change any Paying Agent, Registrar or co-registrar without notice to any Holder. The Company or any Restricted Subsidiary may act in any such capacity. 4. Indenture. The Company issued the Notes under an Indenture dated as of ________, 1996 (the "Indenture") between the Company, the Restricted Subsidiaries named therein and the Trustee. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S. Code ss.ss. 77aaa-77bbbb) as in effect on the date of the Indenture. The Notes are subject to all such terms, and Holders of NYMAIN01 Doc: 159158_2 A-2 the Notes are referred to the Indenture and such act for a statement of such terms. The terms of the Indenture shall govern any inconsistencies between the Indenture and the Notes. The Notes are unsecured general obligations of the Company limited to $___,000,000 in aggregate principal amount. 5. Optional Redemption. The Company shall not have the option to redeem the Notes pursuant to Section 3.07 of the Indenture prior to _________, 2001. Thereafter, the Company shall have the option to redeem the Notes, in whole or in part, upon not less than 30 nor more than 60 days' notice, at the redemption prices (expressed as percentages of the principal amount) set forth below, plus accrued and unpaid interest thereon to the applicable redemption date, if redeemed during the 12 month period beginning on ________ 15 of the years indicated below: Year Percentage 2001..................................................... ___.__% 2002..................................................... ___.__% 2003..................................................... ___.__% 2004 and thereafter...................................... 100.00% Notwithstanding the foregoing, at any time prior to ________, 1999, the Company may redeem up to 35% of the initial principal amount of the Notes originally issued with the net proceeds of one or more Qualified Equity Offerings at a redemption price equal to ___% of the principal amount of such Notes, plus accrued and unpaid interest, if any, to the date of redemption; provided, that at least 65% of the principal amount of Notes originally issued remains outstanding immediately after the occurrence of any such redemption and that such redemption occurs within 60 days following the closing of any such Qualified Equity Offering. 6. Mandatory Redemption. Except as described in paragraph 7 below, the Company shall not be required to make sinking fund or redemption payments with respect to the Notes. 7. Redemption or Repurchase at Option of Holder. This Note is subject to purchase at the option of the Holder upon the circumstances set forth in Section 3.09 and 4.14 of the Indenture. 8. Notice of Redemption. Notice of redemption shall be mailed at least 30 days but not more than 60 days before the redemption date to each Holder of Notes to be redeemed at its registered address. Notes may be redeemed in part but only in whole multiples of $1,000, unless all of the Notes held by a Holder are to be redeemed. On and after the redemption date, interest ceases to accrue on Notes or portions of them called for redemption. 9. Subordination. The Notes are subordinated to Senior Debt (as defined in the Indenture) (whether outstanding on the date of the Indenture or thereafter created, incurred, NYMAIN01 Doc: 159158_2 A-3 assumed or guaranteed) and all Obligations (as defined in the Indenture) with respect thereto. To the extent provided in the Indenture, Senior Debt must be paid in full in cash before the Notes may be paid. The Company agrees, and each Holder by accepting a Note agrees, to the subordination and authorizes the Trustee to give it effect. 10. Denominations, Transfer, Exchange. The Notes are in registered form without coupons in denominations of $1,000 and integral multiples of $1,000. The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. The Registrar need not exchange or register the transfer of any Note or portion of a Note selected for redemption. Also, it need not exchange or register the transfer of any Notes for a period of 15 days before a selection of Notes to be redeemed, or during the period between a record date and the corresponding Interest Payment Date. 11. Persons Deemed Owners. Prior to due presentment to the Trustee for registration of the transfer of this Note, the Trustee, any Agent, the Company and the Guarantors may deem and treat the Person in whose name this Note is registered as its absolute owner for the purpose of receiving payment of principal of, premium, if any, and interest on this Note and for all other purposes whatsoever, whether or not this Note is overdue, and none of the Trustee, any Agent, the Company or any Guarantor shall be affected by notice to the contrary. The registered holder of a Note shall be treated as its owner for all purposes. 12. Amendments and Waivers. Subject to certain exceptions, the Indenture or the Notes may be amended with the consent of the Holders of at least a majority in principal amount of the then outstanding Notes (including consents obtained in connection with a tender offer or exchange offer for Notes), and any existing default or compliance with any provision of the Indenture or the Notes may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Notes (including consents obtained in connection with a tender offer or exchange offer for Notes). Without the consent of any Holder, the Indenture or the Notes may be amended to cure any ambiguity, defect or inconsistency, to provide for uncertificated Notes in addition to or in place of certificated Notes, to provide for assumption of the Company's or any Restricted Subsidiary's obligations to Holders in the case of a merger or consolidation or to make any change that would provide any additional rights or benefits to the Holders or that does not adversely affect the rights of any Holder under the Indenture or to comply with the requirements of the Commission in order to effect or maintain the qualification of the Indenture under the Trust Indenture Act. 13. Defaults and Remedies. Events of Default include: default for 30 days in the payment when due of interest on the Notes (whether or not prohibited by the subordination provisions of the Indenture); default in payment when due of principal of or premium, if any, on the Notes (whether or not prohibited by the subordination provisions of the Indenture); failure by the Company to comply with Section 4.14 of the Indenture; failure by the Company or the Restricted Subsidiaries for 60 days after notice from the Trustee or the Holders of not less than NYMAIN01 Doc: 159158_2 A-4 25% of the aggregate principal amount of the Notes outstanding to comply with any of its other agreements in the Indenture or the Notes; default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of its Restricted Subsidiaries (or the payment of which is guaranteed by the Company or any of its Restricted Subsidiaries) whether such Indebtedness or Guarantee now exists, or is created after the date of the Indenture, if (a) such default results in the acceleration of such Indebtedness prior to its express maturity or shall constitute a default in the payment of such Indebtedness at final maturity of such Indebtedness and (b) the principal amount of such Indebtedness that has been accelerated or not paid at maturity, together with the principal amount of any other Indebtedness that has been accelerated or not paid at maturity, exceeds $5.0 million; failure by the Company or any of its Subsidiaries to pay final judgments aggregating in excess of $5.0 million, which judgments remain unpaid, undischarged or unstayed for a period of 60 days; except as permitted by the Indenture, any Subsidiary Guarantee issued by a Restricted Subsidiary shall be held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or any Restricted Subsidiary, or any Person acting on behalf of any Restricted Subsidiary, shall deny or disaffirm its obligations under its Subsidiary Guarantees; and certain events of bankruptcy or insolvency with respect to the Company or any of its Subsidiaries. If any Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare all the Notes to be due and payable immediately, except that in the case of an Event of Default arising from certain events of bankruptcy or insolvency, relating to the Company or any Significant Subsidiary, all outstanding Notes will become due and payable without further action or notice; provided, however, that if any Obligation with respect to Senior Bank Debt is outstanding pursuant to the Credit Agreement upon a declaration of acceleration of the Notes, the principal, premium, if any, and interest on the Notes will not be payable until the earlier of (1) the day which is five Business Days after written notice of acceleration is received by the Company and the Credit Agent, and (2) the date of acceleration of the Indebtedness under the Credit Agreement. Holders of the Notes may not enforce the Indenture or the Notes except as provided in the Indenture. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of the Notes notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal or interest) if it determines that withholding notice is in their interest. The Company must furnish an annual compliance certificate to the Trustee. 14. Subsidiary Guarantees. Payment of principal of, premium, if any, and interest (including interest on overdue principal, premium, if any, and interest, if lawful) on the Notes is guaranteed on an unsecured, senior subordinated basis by the Guarantors pursuant to Article 11 of the Indenture. 15. Trustee Dealings with Company. The Trustee under the Indenture, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Company, any Restricted Subsidiary or their respective Affiliates, and may otherwise deal with the Company, any Restricted Subsidiary or their respective Affiliates, as if it were not Trustee. NYMAIN01 Doc: 159158_2 A-5 16. No Recourse Against Others. No past, present or future director, officer, employee, incorporator or stockholder, as such, of the Company or any Restricted Subsidiary shall have any liability for any obligations of the Company or any Restricted Subsidiary under the Notes, the Subsidiary Guarantees or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. Each Holder by accepting a Note and the related Subsidiary Guarantees, if any, waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Notes. 17. Authentication. This Note shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent. 18. Abbreviations. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act). 19. CUSIP Numbers. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Notes and has directed the Trustee to use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. 20. Governing Law. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THE INDENTURE, THE NOTES AND THE GUARANTEES, IF ANY. The Company will furnish to any Holder upon written request and without charge a copy of the Indenture. Request may be made to: Iron Mountain Incorporated 745 Atlantic Avenue Boston, MA 602111 Telecopier No.: (617) 350-7881 Attention: Chief Financial Officer NYMAIN01 Doc: 159158_2 A-6 ASSIGNMENT FORM To assign this Note, fill in the form below: (I) or (we) assign and transfer this Note to _______________________________________________________________________________ (Insert assignee's soc. sec. or tax I.D. no.) _______________________________________________________________________________ _______________________________________________________________________________ _______________________________________________________________________________ _______________________________________________________________________________ (Print or type assignee's name, address and zip code) and irrevocably appoint _______________________________________________________ to transfer this Note on the books of the Company. The agent may substitute another to act for him. _______________________________________________________________________________ Date: ____________________________ Your Signature: ___________________________ (Sign exactly as your name appears on the face of this Note) Signature Guarantee. NYMAIN01 Doc: 159158_2 A-7 OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Note purchased by the Company pursuant to Section 4.10 or 4.14 of the Indenture, check the box below: [ ] Section 4.10 [ ] Section 4.14 If you want to elect to have only part of the Note purchased by the Company pursuant to Section 4.10 or Section 4.14 of the Indenture, state the amount you elect to have purchased: $____________ Date: __________________ Your Signature: _______________________ (Sign exactly as your name appears on the Note) Tax Identification No.: _______________ Signature Guarantee. NYMAIN01 Doc: 159158_2 A-8 EXHIBIT B FORM OF SUPPLEMENTAL INDENTURE TO BE DELIVERED BY FUTURE RESTRICTED SUBSIDIARIES SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated as of ________________, between __________________ (the "Restricted Subsidiary"), a subsidiary of Iron Mountain Incorporated (or its successor), a Delaware corporation (the "Company"), and ______________________________, a national banking association, as trustee under the indenture referred to below (the "Trustee"). W I T N E S S E T H WHEREAS, Iron Mountain Incorporated, a Delaware corporation has heretofore executed and delivered to the Trustee an indenture (the "Indenture"), dated as of ________, 1996, providing for the issuance of an aggregate principal amount of $___,000,000 of __% Senior Subordinated Notes due 2006 (the "Notes"); WHEREAS, Section 4.13 of the Indenture provides that under certain circumstances the Company is required to cause the Restricted Subsidiary to execute and deliver to the Trustee a supplemental indenture pursuant to which the Restricted Subsidiary shall unconditionally guarantee all of the Company's obligations under the Notes pursuant to a Subsidiary Guarantee on the terms and conditions set forth herein; and WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture. NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Restricted Subsidiary and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows: 1. CAPITALIZED TERMS. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture. 2. AGREEMENT TO GUARANTEE. The Restricted Subsidiary hereby agrees that its obligations to the Holder and the Trustee pursuant to this Subsidiary Guarantee shall be as expressly set forth in Article 11 of the Indenture and in such other provisions of the Indenture as are applicable to Restricted Subsidiaries, and reference is made to the Indenture for the precise terms of this Supplemental Indenture. The terms of Article 11 of the Indenture and such other provisions of the Indenture as are applicable to Restricted Subsidiaries are incorporated herein by reference. 3. EXECUTION AND DELIVERY OF SUBSIDIARY GUARANTEES. (a) To evidence its Subsidiary Guarantee set forth in this Supplemental Indenture, the Restricted Subsidiary hereby agrees that a notation of such Subsidiary Guarantee substantially NYMAIN01 Doc: 159158_2 B-1 in the form of Exhibit C to the Indenture shall be endorsed by an Officer of such Restricted Subsidiary on each Note authenticated and delivered by the Trustee after the date hereof. (b) Notwithstanding the foregoing, the Restricted Subsidiary hereby agrees that its Subsidiary Guarantee set forth herein shall remain in full force and effect notwithstanding any failure to endorse on each Note a notation of such Subsidiary Guarantee. (c) If an Officer whose signature is on this Supplemental Indenture or on the Subsidiary Guarantee no longer holds that office at the time the Trustee authenticates the Note on which a Subsidiary Guarantee is endorsed, the Subsidiary Guarantee shall be valid nevertheless. (d) The delivery of any Note by the Trustee, after the authentication thereof under the Indenture, shall constitute due delivery of the Subsidiary Guarantee set forth in this Supplemental Indenture on behalf of the Restricted Subsidiary. 4. NO RECOURSE AGAINST OTHERS. No past, present or future director, officer, employee, incorporator, stockholder of the Restricted Subsidiary, as such, shall have any liability for any obligations of the Company or any Restricted Subsidiary under the Notes, any Subsidiary Guarantee, the Indenture or this Supplemental Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of the Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. 5. NEW YORK LAW TO GOVERN. The internal law of the State of New York shall govern and be used to construe this Supplemental Indenture and the Subsidiary Guarantee. 6. COUNTERPARTS The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. NYMAIN01 Doc: 159158_2 B-2 7. EFFECT OF HEADINGS. The Section headings herein are for convenience only and shall not affect the construction hereof. IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed and attested, all as of the date first above written. Dated: ____________, ____ [Restricted Subsidiary] By: ___________________________ Name: Title: Dated: ____________, ____ ____________________________, as Trustee By: ___________________________ Name: Title: NYMAIN01 Doc: 159158_2 B-3 EXHIBIT C FORM OF NOTATION ON SENIOR SUBORDINATED NOTE RELATING TO SUBSIDIARY GUARANTEE Each Guarantor set forth below and each Restricted Subsidiary of the Company which in accordance with Section 4.13 of the Indenture is required to guarantee the obligations of the Company under the Notes, upon execution of a counterpart of the Indenture, jointly and severally unconditionally guarantees (i) the due and punctual payment of the principal of and interest on the Notes, whether at the maturity or interest payment or mandatory redemption date, by acceleration, call for redemption or otherwise, and of interest on the overdue principal of and interest, if any, on the Notes and all other obligations of the Company to the Holders or the Trustee under the Indenture or the Notes and (ii) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, that the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at maturity, by acceleration or otherwise. The obligations of each Guarantor to the Holder and to the Trustee pursuant to this Subsidiary Guarantee and the Indenture are as expressly set forth in Article 11 of the Indenture and in such other provisions of the Indenture as are applicable to Guarantors, and reference is hereby made to such Indenture for the precise terms of this Subsidiary Guarantee. The terms of Article 11 of the Indenture and such other provisions of the Indenture as are applicable to Guarantors are incorporated herein by reference. This Subsidiary Guaranty is subject to release as described in Sections 4.13 and 11.17 of the Indenture, and the obligations of each Guarantor under this Subsidiary Guaranty and the Indenture are limited as provided in Section 11.15 of the Indenture. This is a continuing guarantee and shall remain in full force and effect and shall be binding upon each Guarantor and its successors and assigns until full and final payment of all of the Company's obligations under the Notes and the Indenture and shall inure to the benefit of the successors and assigns of the Trustee and the Holders and, in the event of any transfer or assignment of rights by any Holder or the Trustee, the rights and privileges herein conferred upon that party shall automatically extend to and be vested in such transferee or assignee, all subject to the terms and conditions hereof. This is a guarantee of payment and not a guarantee of collection. This Subsidiary Guarantee shall not be valid or obligatory for any purpose until the certificate of authentication on the Note upon which this Subsidiary Guarantee is noted shall have been executed by the Trustee under the Indenture by the manual signature of one of its authorized officers. [RESTRICTED SUBSIDIARY] By:________________________________________ Name: Title: NYMAIN01 Doc: 159158_2 C-1 EX-10.3A 34 AMENDMENT NO. 3 [CONFORMED COPY] AMENDMENT NO. 3 AMENDMENT NO. 3 dated as of August 29, 1996 among: IRON MOUNTAIN INCORPORATED, a corporation duly organized and validly existing under the laws of the State of Delaware (formerly known as Iron Mountain Information Services, Inc., the "Company"); each of the lenders listed on the signature pages hereof under the caption "LENDERS" (individually, a "Lender" and, collectively, the "Lenders"); and THE CHASE MANHATTAN BANK (successor in interest of The Chase Manhattan Bank (National Association)), as Agent for the Lenders (in such capacity, the "Agent"). The Company, the Lenders and the Agent are parties to a Credit Agreement dated as of December 10, 1990, as amended and restated as of April 15, 1993, and as further amended and restated as of January 31, 1995 (as in effect on the date hereof, the "Credit Agreement"), providing, subject to the terms and conditions thereof, for extensions of credit (by making of loans and issuing letters of credit) to be made by said Lenders to the Company in an aggregate principal or face amount not exceeding, initially, $125,000,000. The Company and the Lenders wish to amend the Credit Agreement in certain respects. Accordingly, the parties hereto hereby agree as follows: Section 1. Definitions. Except as otherwise defined in this Amendment No. 3, terms defined in the Credit Agreement are used herein as defined therein. Section 2. Amendments. Subject to the satisfaction of the conditions precedent specified in Section 4 below, but effective as of the date hereof, the Credit Agreement is hereby amended as follows: A. General. References in the Credit Agreement to "this Agreement" (and indirect references such as "hereunder", "hereby", "herein" and "hereof") shall be deemed to be references to the Credit Agreement as amended hereby. References in the Credit Agreement to "the Notes" shall be deemed to include reference to the New Notes under and as defined in Section 4(B) hereof. B. Definitions. Section 1.01 of the Credit Agreement shall be amended by adding the following new definitions (to the extent such definitions are not presently set forth in said Section 1.01) and amending in their entirety the following - 2 - definitions (to the extent such definitions are presently set forth in said Section 1.01), as follows: "Acquisition Revolving Credit Commitment" shall mean, as to any Lender, the obligation of such Lender to make Acquisition Revolving Credit Loans on and subject to the terms and conditions hereof up to an aggregate principal amount at any one time outstanding equal to the amount set opposite its name on the signature pages to Amendment No. 3 under the heading "Acquisition Revolving Credit Commitment" and, as to all Lenders, $55,000,000." "Amendment No. 3" means Amendment No. 3 hereto dated as of August 29, 996. C. Acquisition Revolving Credit Loans. Section 2.01(d) of the Credit Agreement shall be amended by substituting "$55,000,000" for "$50,000,000" therein. Section 3. Representations and Warranties. The Company represents and warrants to the Lenders that, both before and after giving effect to each of the amendments set forth in Section 2 hereof: (a) no Default has occurred and is continuing; and (b) the representations and warranties made by each of the Company and the Subsidiary Guarantors in each Basic Document to which it is a party (other than the representations and warranties set forth in Sections 8.10 and 8.17 of the Credit Agreement) are true on and as of the date hereof, with the same force and effect as if made on and as of such date and as if each reference in the Basic Documents to "this Agreement" or "the Credit Agreement" included reference to this Amendment No. 3. Section 4. Conditions Precedent. As provided in Section 2 above, the amendments to the Credit Agreement set forth in said Section 2 shall become effective, as of the date hereof, upon the satisfaction of the following conditions precedent: A. Execution by All Parties. This Amendment No. 3 shall have been executed and delivered by each of the parties hereto. - 3 - B. New Notes. The Company shall have delivered to the Agent for each of the Lenders whose Acquisition Revolving Credit Commitment is increasing pursuant to this Amendment No. 3 (each such Lender, an "Increasing Lender") a promissory note of the Company in substantially the form of Exhibit B-2 to the Credit Agreement, dated the Second Restatement Date, payable to the order of such Increasing Lender in a principal amount equal to its Acquisition Revolving Credit Commitment as increased hereby and otherwise duly completed, and each of such promissory notes (a "New Note") delivered to the Increasing Lenders shall constitute a "Note" under the Credit Agreement. C. Acquisition Revolving Credit Loans. The Company shall have borrowed from, and each of the Lenders having Acquisition Revolving Credit Commitments shall have made Acquisition Revolving Credit Loans to, the Company and (notwithstanding the provisions of Section 5.02 of the Credit Agreement requiring that prepayments of Acquisition Revolving Credit Loans be made ratably in accordance with the Acquisition Revolving Credit Commitments of the Lenders) the Company shall have prepaid the Acquisition Revolving Credit Loans made by the other Lenders in such amounts as shall be necessary, together with accrued interest, accrued commitment fee and any amounts payable under Section 6.05 of the Credit Agreement, so that after giving effect to such Acquisition Revolving Credit Loans and prepayments, the Acquisition Revolving Credit Loans (including, without limitation, the Types and Interest Periods thereof) shall be held by the Lenders pro rata in accordance with the respective amounts of their Acquisition Revolving Credit Commitments as in effect after giving effect to this Amendment No. 3. D. Documents. The Agent shall have received the following documents, each of which shall be satisfactory to the Agent in form and substance: (1) Corporate Documents. Certified copies of the charter and by-laws (or equivalent documents) of the Company and each Subsidiary Guarantor (or, in the alternative, a certification to the effect that none of such documents has been modified since delivery thereof pursuant to the Credit Agreement or the previous - 4 - amendments thereto) and of all corporate authority for the Company and each Subsidiary Guarantor (including, without limitation, board of director resolutions and evidence of the incumbency of officers for the Company and each Subsidiary Guarantor) with respect to the execution, delivery and performance of this Amendment No. 3 and the Credit Agreement and the loans under the Credit Agreement as amended hereby, the New Notes and each other document to be delivered by the Company from time to time in connection with the Credit Agreement (and the Agent and each Lender may conclusively rely on such certificate until it receives notice in writing from the Company to the contrary). (2) Opinions. A favorable opinion of Sullivan & Worcester, counsel for the Company, as to such matters as the Agent may reasonably request; and a favorable opinion of Milbank, Tweed, Hadley & McCloy, special New York counsel to the Agent. (3) Other Documents. Such other documents as the Agent or any Lender or special New York counsel to the Agent may reasonably request. Section 5. Miscellaneous. Except as herein provided, the Credit Agreement shall remain unchanged and in full force and effect. This Amendment No. 3 may be executed in any number of counterparts, all of which taken together shall constitute one and the same amendatory instrument and any of the parties hereto may execute this Amendment No. 3 by signing any such counterpart. This Amendment No. 3 shall be governed by, and construed in accordance with, the law of the State of New York. - 5 - IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 3 to be duly executed and delivered as of the day and year first above written. THE COMPANY IRON MOUNTAIN INCORPORATED (formerly known as Iron Mountain Information Services, Inc.) By /s/ Eugene Doggett Title: EVP & CFO Acquisition Revolving Credit Commitment THE LENDERS $12,269,230.76 THE CHASE MANHATTAN BANK (successor in interest of The Chase Manhattan Bank (National Association)) By /s/ Edward McNulty Title: Vice President $ 8,000,000.00 FLEET NATIONAL BANK By /s/ Michael A. Palmer Title: Vice President - 6 - $ 2,826,923.08 THE SUMITOMO BANK, LTD., CHICAGO BRANCH By /s/ Daniel G. Eastman Title: Vice President & Manager By /s/ Stephen O'Sullivan Title: Assistant Vice President $ 6,865,384.62 THE FIRST NATIONAL BANK OF BOSTON By /s/ Virgiana W. Dennett Title: Vice President $ 5,250,000.00 SHAWMUT BANK, N.A. By /s/ Michael A. Palmer Title: Vice President $ 2,423,076.92 BANK OF IRELAND GRAND CAYMAN BRANCH By /s/ Patty Dowling Title: Account Manager $ 5,250,000.00 THE BANK OF NEW YORK By /s/ Daniel Black Title: Senior Vice President - 7 - $ 6,057,692.31 CIBC INC. By /s/ Lorain Granburg Title: Director, CIBC Wood Gundy Securities Corp., as Agent $ - 0 - CRESCENT/MACH I PARTNERS, L.P. By its General Partner CRESCENT CAPITAL MACH I CORPORATION By its attorney-in-fact CRESCENT CAPITAL CORPORATION By /s/ Mark L. Gold Title: Managing Director $6,057,692.31 SENIOR DEBT PORTFOLIO By: Boston Management and Research, as Investment Advisor By /s/ Barbara Campbell Title: Assistant Treasurer $ - 0 - VAN KAMPEN AMERICAN CAPITAL PRIME RATE INCOME TRUST By /s/ Jeffrey W. Maillet Title: Sr. Vice President - Portfolio Manager THE AGENT THE CHASE MANHATTAN BANK (successor in interest of The - 8 - Chase Manhattan Bank (National Association)) By /s/ Edward McNulty Title: Vice President AGREED: CRITERION ATLANTIC PROPERTY, INC. By /s/ Eugene Doggett Title: EVP CRITERION PROPERTY, INC. By /s/ Eugene Doggett Title: EVP HOLLYWOOD PROPERTY, INC. By /s/ Eugene Doggett Title: EVP IM SAN DIEGO, INC. By /s/ Eugene Doggett Title: EVP - 9 - IRON MOUNTAIN DATA PROTECTION SERVICES, INC. (Delaware) By /s/ Eugene Doggett Title: EVP IRON MOUNTAIN DATA PROTECTION SERVICES, INC. (Massachusetts) By /s/ Eugene Doggett Title: EVP IRON MOUNTAIN INFORMATION PARTNERS, INC. By /s/ Eugene Doggett Title: EVP IRON MOUNTAIN RECORDS MANAGEMENT, INC. By /s/ Eugene Doggett Title: EVP IRON MOUNTAIN RECORDS MANAGEMENT OF MARYLAND, INC. By /s/ Eugene Doggett Title: EVP - 10 - IRON MOUNTAIN RECORDS MANAGEMENT OF OHIO, INC. By /s/ Eugene Doggett Title: EVP METRO BUSINESS ARCHIVES, INC. By /s/ Eugene Doggett Title: EVP EX-10.23 35 ASSET AND PURCHASE AND SALE AGREEMENT ASSET PURCHASE AND SALE AGREEMENT among IRON MOUNTAIN RECORDS MANAGEMENT, INC. as Buyer MOHAWK BUSINESS RECORD STORAGE, INC. as Seller and Michael M. Rabin, Richard K. Ladin, Herman Ladin and Sidney Ladin as stockholders of Seller As of September 6, 1996 TABLE OF CONTENTS ARTICLE I............................................................1 DEFINITIONS..................................................1 ARTICLE II...........................................................4 SALE AND PURCHASE OF SUBJECT ASSETS..........................4 ARTICLE III..........................................................8 REPRESENTATIONS AND WARRANTIES OF SELLER AND STOCKHOLDERS....8 ARTICLE IV..........................................................14 REPRESENTATIONS AND WARRANTIES OF BUYER.....................14 ARTICLE V...........................................................15 PRE-CLOSING AGREEMENTS......................................15 ARTICLE VI..........................................................18 CONDITIONS PRECEDENT TO OBLIGATION OF BUYER TO CLOSE........18 ARTICLE VII.........................................................20 CONDITIONS PRECEDENT TO OBLIGATION OF SELLER................20 ARTICLE VIII........................................................21 THE CLOSING.................................................21 ARTICLE IX..........................................................22 POST-CLOSING MATTERS........................................22 ARTICLE X...........................................................23 TERMINATION.................................................23 ARTICLE XI..........................................................24 INDEMNIFICATION.............................................24 ARTICLE XII.........................................................29 MISCELLANEOUS PROVISIONS....................................29 TABLE OF CONTENTS (cont'd.) Schedule 1.10 A Principal Items of Owned Tangible Assets Schedule 3.4 Authorizations Schedule 3.5 Encumbrances Schedule 3.6 Contracts Schedule 3.8 Litigation; Claims Schedule 3.9 Permits, Licenses Schedule 3.10 List of Environmental Reports Schedule 3.13 Benefit Plans Schedule 3.15 Customers Terminating/Seeking Bids Schedule 3.17 Employee Information Schedule 3.22 Transactions with Interested Persons Exhibit 6.3 Noncompetition and Confidentiality Agreement Exhibit 6.4 Form of Lease Exhibit 6.9 Opinion of Seller's Counsel Exhibit 6.10 Seller's Shelving Plan Exhibit 7.4 Opinion of Buyer's General Counsel ASSET PURCHASE AND SALE AGREEMENT THIS AGREEMENT ("Agreement") is made as of the 6th day of September, 1996 by and among Iron Mountain Records Management, Inc., a Delaware corporation ("Buyer"), Mohawk Business Record Storage, Inc., a Minnesota corporation ("Seller") and Michael M. Rabin, Richard K. Ladin, Herman Ladin and Sidney Ladin, individuals (each a "Stockholder" and collectively, the "Stockholders"). RECITALS A. Seller is engaged in the business of providing records management and storage services and records destruction services in the metropolitan area of Minneapolis, Minnesota principally under the trade name "Mohawk Business Record Storage". B. Buyer desires to purchase, and Seller desires to sell, substantially all the assets of the Business (as hereinafter defined) on the terms and subject to the conditions contained in this Agreement. C. Stockholders join in this Agreement to confirm certain representations, warranties and agreements of Seller herein and to indemnify Buyer in connection with certain matters. In consideration of the mutual covenants and agreements set forth herein, and for other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, Seller, Stockholders and Buyer, intending to be legally bound, agree as follows: ARTICLE I DEFINITIONS For purposes of this Agreement, certain terms used in this Agreement and not otherwise defined herein shall have the meanings designated below: Section 1.1 Agreement means all or any part of this Agreement, including schedules, exhibits, and appendices, as any of the foregoing may be amended, modified or supplemented in writing from time to time. Section 1.2 Business means the paper and magnetic media records management and storage, electronic vaulting and records destruction businesses conducted by Seller in metropolitan Minneapolis, Minnesota under the trade name "Mohawk Business Record Storage". Section 1.3 Closing means the occasion upon which the transactions contemplated by this Agreement are carried out by the delivery of documents, payment of funds and other actions contemplated herein, as described in Article VIII. Section 1.4 Closing Date shall be November 1, 1996, or such other date as the parties may agree. Section 1.5 Effective Time means 12:00 a.m. in Minneapolis, Minnesota on the Closing Date. Section 1.6 Encumbrances means any and all encumbrances, mortgages, security interests, liens, Taxes, claims, liabilities, options, commitments, charges, restrictions or other obligations of whatsoever kind, quantity or nature, whether accrued, absolute, contingent or otherwise, which affect title to the Subject Assets. Section 1.7 Excluded Assets means (i) Seller's cash and cash equivalents and sums in checking and depository accounts, (ii) Stockholders' personal automobiles owned or leased by Seller (which are identified on a separate document delivered by Seller to Buyer), (iii) corporate records not relating to the Business, and (iv) refunds for taxes and insurance premiums. Section 1.8 Knowledge or the phrases "to the knowledge of" or "to the best of Seller's knowledge", when used in reference to Seller, means (except as otherwise stated herein) matters actually known by Michael M. Rabin, Richard K. Ladin, Herman Ladin or Sidney Ladin after reasonable investigation. Section 1.9 Leased Premises means the following buildings occupied by Seller in which the Business is operated: (i) 9715 James Avenue South, Minneapolis, Minnesota owned by Ladin Properties, an affiliate of Seller; (ii) 10951 Hampshire Street, Minneapolis, Minnesota, owned by Ladin Properties,; (iii) 9450 Bloomington Freeway, Minneapolis, Minnesota, owned by GRL Properties, an affiliate of Seller; and (iv) 9500 Bloomington Freeway, Minneapolis, Minnesota, owned by GRL Properties. Section 1.10 Subject Assets means all of Seller's assets and properties of whatever kind, character and description, and whether tangible, intangible, real, personal or mixed, and wherever located, except for the Excluded Assets. The Subject Assets, which assets constitute all the assets, property and equipment owned by Seller or any subsidiary of Seller and regularly used in the Business (other than the Excluded Assets), include the following Tangible Assets and Interests: A. Tangible Assets means all tangible property used in the Business, such as inventory; computers, computer peripherals and maintenance manuals; word processors; typewriters and other business machines; automobiles, trucks and other vehicles; warehouse equipment; lifts; pallet jacks; racking and shelving; shredders, balers and other equipment used in the destruction processing business; furniture, furnishings, and office equipment; and supplies. Principal items of Tangible Assets, including vehicles, are listed on Schedule 1.10A. B. Interests means all intangible property used in the Business to the extent assignable, including rights, privileges, benefits and interests under all contracts, agreements, consents, licenses and files and correspondence related thereto; computer software used or useful in the Business (including software licensed to Seller by Vault Star and Data Flex); permits or certificates of occupancy; agreements, leases and arrangements with respect to intangible or tangible property or interests therein; confidentiality and non-competition agreements with employees, whether oral or written; consents; agreements with suppliers and customers; deposits held by contract parties, including any lease deposits; rights to refunds (other than refunds which are Excluded Assets); prepaid expenses; accounts receivable; equity interests held by Seller in any business entity in any form of records management business; Seller's rights in and to the trade name "Mohawk Business Record Storage"; all financial and operating records related to the Business; and any sales agent or sales affiliate agreements used in connection with the Business. Buyer acknowledges that where an Interest is represented by a contract right, Buyer's failure to assume such contract may mean that the Interest associated therewith will not be available to Buyer. Section 1.11 Taxes means any and all taxes, sums or amounts assessed or assessable, levied and due by any federal, state or county or other local governmental authority or agency, including without limitation, real and personal property taxes, income taxes, whether measured by gross or net income or profit, franchise, excise, sales and use taxes, employee withholding, social security, unemployment taxes and any other taxes required to be paid by Seller, including interest and penalties in respect thereof whether disputed or not, and whether accrued, contingent, due, absolute, deferred, unknown or other, together with any and all penalties, interests and additions to all such taxes, sums or amounts. (ARTICLE II COMMENCES ON THE NEXT PAGE) ARTICLE II SALE AND PURCHASE OF SUBJECT ASSETS Section 2.1 Sale and Transfer. A. The Sale. Subject to the terms and conditions set forth in this Agreement, Seller shall sell, convey, transfer, assign and deliver to Buyer, and Buyer shall purchase and receive from Seller, at the Closing, free and clear of all Encumbrances, all of the Subject Assets. Section 2.2 Purchase Price; Assumption of Certain Obligations. A. Purchase Price. The Purchase Price to be paid by Buyer for all the Subject Assets shall be Twenty Million Two Hundred Twelve Thousand Five Hundred Dollars ($20,212,500) (the "Initial Payment"), plus two contingent payments in the maximum amount of Two Million Dollars ($2,000,000) each (the "Contingent Payments"), payable under the circumstances described in Section 2.2.C. The aggregate of the Initial Payment and the Contingent Payments, adjusted as provided in Sections 2.2.E, is hereinafter referred to as the "Purchase Price", and shall be paid in United States currency. B. Payment of Purchase Price. The Initial Payment shall be payable to Seller at the Closing by wire transfer of immediately available funds to such account as Seller shall designate in writing not less than two business days prior to the Closing Date. C. Contingent Payments. The two Contingent Payments shall be payable by Purchaser, if at all, as follows: (i) The 1997 Contingent Payment shall be payable on February 28, 1998 if Eligible Revenues (as hereinafter defined) during calendar year 1997 ("1997 Eligible Revenues") are at least $8,731,000; no 1997 Contingent Payment shall be payable if 1997 Eligible Revenues are less than $8,731,000. If 1997 Eligible Revenues are $8,731,000, the 1997 Contingent Payment shall be One Dollar ($1.00); and if 1997 Eligible Revenues are at least $9,582,000, the 1997 Contingent Payment shall be Two Million Dollars. If 1997 Eligible Revenues are greater than $8,731,000 but less than $9,582,000, the 1997 Contingent Payment shall be $1.00 plus $2.35 for each dollar of 1997 Eligible Revenues in excess of $8,731,000. In no event shall the 1997 Contingent Payment exceed $2,000,000. (ii) The 1998 Contingent Payment shall be payable on February 28, 1999 if Eligible Revenues during calendar year 1998 ("1998 Eligible Revenues") are at least $9,604,000; no Contingent Payment shall be payable if 1998 Eligible Revenues are less than $9,604,000. If 1998 Eligible Revenues are $9,604,000, the 1998 Contingent Payment shall be One Dollar ($1.00); and if 1998 Eligible Revenues are at least $10,540,00, the 1998 Contingent Payment shall be Two Million Dollars ($2,000,000). If 1998 Eligible Revenues are greater than $9,604,000, but less than $10,540,000, the 1998 Contingent Payment shall be $1.00 plus $2.14 for each dollar of 1998 Eligible Revenues in excess of $9,604,000. The 1998 Contingent Payment shall not exceed $2,000,000; provided, that if Seller earned only a portion of the maximum 1997 Contingent Payment, but earns the maximum 1998 Contingent Payment, Buyer shall pay Seller the unpaid portion of the maximum 1997 Contingent Payment on January 31, 1999. (iii) For purposes of this section, "Eligible Revenues" means revenues of the Business from storage and service of records, but excluding revenues derived from destructions and sales of recyclable materials. Eligible Revenues shall be determined using accounting practices and policies consistent with those used by Seller to determine such revenues in 1996 prior to the Closing. Eligible Revenues shall not include revenues from customers of any other records management service provider in the Minneapolis area acquired by Buyer. (iv) Seller (or, in the event Seller has been dissolved, one of the Stockholders appointed by the other Stockholders) or its representative shall have the right to examine the books and records of Buyer to audit the determination of Eligible Revenues reported by Buyer in respect of 1997 and 1998. Such examination in respect of each year shall be commenced not later than the June 30 next following the date upon which a Contingent is paid or to be paid, and shall be conducted during normal business hours upon reasonable notice to Buyer. Buyer shall give Seller reasonable access to its relevant books and records for purposes of such examination. Any such examination shall be conducted in such a manner as not to interfere unreasonably with the business or operations of Buyer and shall be completed within 90 days of its commencement, and any information provided to Seller during such examination shall be subject to Section 5.2 hereof. Any dispute arising from such examination shall be settled by arbitration in accordance with Section 11.5. D. Limited Assumption of Contracts and Obligations. Buyer shall assume no obligations or liabilities of Seller other than the following. Buyer shall assume and perform: (i) all obligations of Seller arising or accruing after the Effective Time in respect of Seller's contracts, agreements and arrangements with its customers providing for storage of business records at customary rates; (ii) Seller's obligations under the equipment leases listed on Schedule 3.5 which relate or are properly accruable to periods after the Effective Time; and. (iii) If and to the extent Buyer employs Seller's employees, Buyer shall assume Seller's obligations under employment agreements, provided that Seller has disclosed to Buyer all such employment agreements, and further provided that Buyer shall have the right to negotiate with Seller's former employees to amend any such employment terms or, if no agreement can be reached, terminate the employment of any such employees. E. Seller to Pay Pre-Closing Expenses; Purchase Price Adjustments. (i) Seller shall be responsible for and pay when due all costs and expenses of operating the Business accrued or accruable prior to the Effective Time. (ii) With respect to ongoing expenses the billing period for which extends across the Closing Date, Buyer and Seller shall make Closing Date adjustments to the Purchase Price so that Seller bears the costs of operating the Business properly accruable under generally accepted accounting principles ("GAAP") in respect of the period prior to the Closing Date and Buyer bears the cost thereof properly accruable under GAAP in respect of the period commencing on the Closing Date and thereafter. (iii) Buyer shall receive a credit against the Purchase Price for storage and services to be performed after the Closing Date for which Seller has received payment prior to the Closing Date. (iv) The Purchase Price shall be increased by an amount equal to the sum of all advances made by Seller prior to the Closing which have not been reimbursed to Seller as of that date. For purposes of this section, "advances" shall mean any amounts paid by Seller for the benefit of or on behalf of a customer which, in the ordinary course, is reimbursable to Seller by such customer (for example, freight or delivery charges). Seller shall prepare and deliver to Buyer at or prior to Closing a list of all advances outstanding as of that date together with such documentation as is necessary to collect reimbursement therefor from the relevant customer. (v) In the event that Seller's accounts receivable as of the Closing Date (excluding customary levels of doubtful accounts) aggregate less than $700,000, the Purchase Price shall be reduced by the shortfall between such amount and the actual amount as of the Closing Date; provided, that Seller's account receivables from National Records Center Consortium ("NRCC") shall in no event be deemed a doubtful account even if NRCC should take the position it refuses to pay such amount. Section 2.3 Allocation. The Purchase Price shall be allocated among the Subject Assets as set forth on Schedule 2.3, and the parties shall report the transactions contemplated hereby in a manner consistent with such allocation for tax purposes. Section 2.4 Seller's Employees. Buyer intends to offer employment to all of Seller's employees; provided that Buyer shall not be obligated to offer employment to any employee of Seller in connection with the acquisition of the Subject Assets, and such acquisition shall not grant any employee of Seller a right of continued employment with Buyer. Any of Seller's employees offered employment by Buyer shall be employed on substantially the same terms as their employment with Seller. For a period of one year after the Closing Date, Seller shall not offer conflicting employment to any person who accepts employment with Buyer. Section 2.5 Post-Closing Adjustment Date. Buyer and Seller shall make all proration adjustments and payments arising under Sections 2.2E, to the extent known, on the Closing Date. On January 15, 1997, Buyer and Seller shall make any additional net adjustment by payment of one to the other to effect a final adjustment in the Purchase Price. If any adjustments are at that date not determined, Buyer and Seller shall agree in a writing as to the date and method of settlement of such undetermined amounts. Section 2.6 Escrow Agreement. (a) On or prior to the date of this Agreement, Buyer and Seller have executed an Escrow Agreement with the law firm of Siegel, Brill, Greupner & Duffy, P. A., Minneapolis, Minnesota, as escrow agent (the "Escrow Agent"). Within one business day after this Agreement has been executed, Buyer shall deliver to the Escrow Agent the sum of One Million Dollars (the "Escrow Deposit") to be held in escrow pursuant to the terms hereof. (b) In the event Buyer fails to close the transactions contemplated by this Agreement after public disclosure of this transaction (whether by inclusion of information concerning this transaction in the Registration Statement described in Section 5.2(b), publication with respect to any filing in respect of this transaction under the HSR Act (as hereinafter defined) in the Federal register, or otherwise) on or before the Closing Date, for any reason other than (i) Seller's inability or refusal to deliver title to the Subject Assets free and clear of Encumbrances, (ii) Seller's inability or refusal to deliver evidence that the transactions were properly authorized by Seller, (iii) the failure or refusal of the landlords to execute and deliver under the leases described in Section 6.4, or (iv) the failure or refusal of one or more persons to execute the Noncompetition and Confidentiality Agreements described in Section 6.3, the Escrow Agent shall pay the Escrow Deposit, together with interest earned thereon, to Seller as liquidated damages. Except as provided in the preceding sentence, Buyer waives any and all of the conditions precedent to its obligation to close, whether set forth in Article VI or otherwise, the satisfaction of which is required prior to Seller's right to receive the Escrow Deposit; and payment of the Escrow Deposit shall be made hereunder without regard to Buyer's termination of, or right to terminate, this Agreement. Notwithstanding the foregoing, in the event that Buyer has not received notification of clearance under the HSR Act by November 1, 1996, Buyer may elect by written notice to Seller to extend the Closing Date to December 1, 1996, and in such event the Escrow Deposit shall continue to be held in escrow pursuant to the terms hereof until the earlier of the Closing or such date. (c) It is agreed and understood that the Escrow Deposit is intended to compensate Seller for any damages which it may sustain as a result of Buyer's public disclosure of this transaction, as provided in 2.6(b) above, without regard to whether there are demonstrable damages. The right of Seller to retain the Escrow Deposit hereunder is independent of and in addition to such rights and remedies as Seller may have at law or in equity or otherwise for Buyer's failure or refusal to close the transactions contemplated by this Agreement, none of which rights or remedies shall be affected or diminished hereby; provided that Seller shall not be entitled to damages in excess of the Escrow Deposit unless Seller shall have satisfied, or shall have been in a position to satisfy, all of the conditions to Buyer's obligations to close in Article VI on or prior to the Closing Date. (ARTICLE III COMMENCES ON THE NEXT PAGE) ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER AND STOCKHOLDERS Seller and Stockholders jointly and severally represent and warrant to Buyer as follows as of the date hereof: Section 3.1 Organization and Good Standing. Seller is a corporation duly organized, validly existing and in good standing under the laws of the State of Minnesota, and has all requisite corporate power and authority to own, operate, sell and lease its properties and to carry on its business as presently conducted. Seller has all requisite corporate power and authority to execute and deliver, and perform its obligations under, this Agreement. Seller is not required by the nature or location of the Subject Assets to be qualified to do business as a foreign corporation in any jurisdiction where failure to so qualify would have a material adverse impact on the Business. Section 3.2 Authorization. The execution and delivery of this Agreement and performance by Seller of its obligations hereunder, and all transactions contemplated hereby, have been duly and validly authorized by all necessary corporate action. This Agreement has been, and the other agreements and documents required to be delivered by Seller, in accordance with the provisions hereof (the "Seller's Documents") will be, duly executed and delivered on behalf of Seller, by duly authorized officers of Seller; and this Agreement constitutes, and the Seller's Documents when executed and delivered will constitute, the valid and binding obligations of Seller, enforceable in accordance with their respective terms, except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization or similar laws from time to time in effect affecting creditor's rights generally and by legal and equitable limitations on the availability of specific remedies. Section 3.3 Compliance With Other Instruments. Neither the execution and delivery by Seller of this Agreement and the Seller's Documents, nor the consummation by Seller of the transactions contemplated hereby and thereby, will, with or without the giving of notice or passage of time, or both, be contrary to or violate, breach, or constitute a default under, or permit the termination or acceleration of maturity of, or result in the imposition of any lien, claim or encumbrance upon any property or asset of Seller pursuant to any provision of, any note, bond, indenture, mortgage, deed of trust, evidence of indebtedness or lease agreement, other agreement or instrument or any judgment, order, injunction or decree by which Seller is bound, to which either is a party, or to which the assets of Seller is subject and which will continue in force after the Closing; nor is the effectiveness or enforceability of this Agreement or such other documents adversely affected by any provision of the corporate charter or by-laws of Seller. Section 3.4 No Governmental or Other Authorization Required. No authorization or approval of, or filing with, any governmental agency, authority or other body or any other third persons will be required in connection with Seller's execution and delivery of this Agreement or the consummation by either of the transactions contemplated hereby and thereby other than (i) as required by the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), (ii) as set forth in Schedule 3.4, (iii) the consent of any customers pursuant to their contracts, (iv) the consent of any suppliers of goods or services to Seller whose contracts with Seller are assumed by Buyer, and (v) the consent of the directors and stockholders of Seller (which have previously been obtained).. Section 3.5 Title to Subject Assets; Sufficiency. Seller has, or at Closing will have, good and marketable title to all the Subject Assets, free and clear of all Encumbrances except as set forth on Schedule 3.5, which Schedule identifies leases for vehicles and equipment as well as Encumbrances. Seller is not a party to, nor are the Subject Assets subject to, any judgment, judicial order, writ, injunction or decree that materially adversely affects the Subject Assets or the use thereof by Seller. The Subject Assets (other than the Excluded Assets) include all assets regularly used by Seller in the operation of the Business. Section 3.6 Contracts and Other Interests. (a) Except as disclosed on Schedule 3.6, Part A, all material contracts (including all customer contracts) are in full force and effect, valid and enforceable in accordance with their respective terms against Seller and, to Seller's knowledge, against the other parties thereto, and there are no existing defaults of Seller or events of default that, with the giving of notice or lapse of time, or both, would constitute defaults of Seller under any material contracts, nor are material amendments pending with respect to any material contracts. (b) Except as set forth on Schedule 3.6, Part B, all of Seller's customers have executed storage and service agreements with Seller pursuant to which Seller's liability in the event of the loss or destruction of, or damage to, stored material is limited to $2.00 per carton or other storage unit. (c) Schedule 3.6, Part C lists Seller's ten largest paper customers and ten largest magnetic media customers (measured by storage revenue during the six-month period ended March 31, 1996). Seller has delivered a copy or its contract with each such customer to Buyer. (d) Seller has no oral agreements with customers which require Seller to provide storage or services at no charge or at rates significantly below the average rates for such services set forth in Seller's written customer contracts, except for immaterial discounts and/or free services provided as incentives to certain accounts. Section 3.7 Taxes. Seller has filed all federal, state and local income tax returns, and Seller has filed all excise or franchise tax returns, real estate and personal property tax returns, sales and use tax returns and other tax returns (including returns in respect of withholding and unemployment tax), required to be filed by it and has paid all taxes owing by it, including any interest and penalties thereon, except taxes which have not yet accrued or otherwise become due for which adequate provision has been made. Section 3.8 Litigation; Claims; Defaults. Except as set forth in Schedule 3.8, Seller has not been served with any currently effective summons or complaint and there is no action or suit, equitable or legal, to which Seller is a party, nor any administrative, arbitration or other proceeding pending or, to Seller's knowledge, threatened against Seller in respect of the Subject Assets or the Business. Except as set forth on Schedule 3.8, during the past six months Seller has not received any material written assertions from customers of the Business to the effect that their materials stored with Seller have been lost, damaged or inappropriately destroyed or that such customers are being billed inaccurately for storage of materials or records. Seller is not in default with respect to any currently effective judgment, order, writ, injunction, decree, demand or assessment issued by any court or of any federal, state, municipal or other governmental agency, board, commission, bureau, instrumentality or department and applicable to Seller. Seller is not charged or to Seller's knowledge (without investigation other than inquiry of employees of Seller whose responsibilities place them in a position to be aware of such matters) threatened with or under investigation with respect to, any violation of any provision of any federal, state, municipal or other law or administrative rule or regulation with respect to the Subject Assets or the Business. Section 3.9 Compliance with Laws. Seller has complied, and through the Closing will continue to comply, in all material respects with federal, state and local laws, rules and regulations applicable to the Business and the Subject Assets. Seller possesses such certificates, authorities or permits issued by the appropriate local, state or federal regulatory agencies or bodies as are necessary to conduct the Business in all material respects, all of which are listed on Schedule 3.9; and Seller has not received any written notice of proceedings relating to the revocation or modification of any such certificate, authority or permit. Seller shall not be liable, however, for any assertion by governmental authorities that the transfer of the Subject Assets pursuant to this Agreement gives rise to a right on the part of governmental authorities to apply regulations or ordinances to the Subject Assets which were previously not applicable because the relevant regulation or ordinance was adopted after the Subject Asset was constructed or acquired. Section 3.10 Certain Environmental Matters. Seller is operating and has operated the Business in the Leased Premises in material compliance with all applicable local, state and federal environmental laws, regulations and ordinances, including, but not limited to, the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. ss.ss.9601 et seq. ("CERCLA"), the Resource Conservation and Recovery Act, 42 U.S.C. ss.ss.6901 et seq., the Clean Water Act, 33 U.S.C. ss.ss.1251 et seq., and the environmental laws and regulations of the State of Minnesota as such statute or regulation has been amended from time to time ("Environmental Laws and Regulations"). Seller has not knowingly accepted for storage, and to the best of its knowledge does not store, any nitrate film or any hazardous substance or hazardous material in the Leased Premises except for de minimis amounts used in the ordinary course of business. Seller has never knowingly caused the release from the Leased Premises of an amount of any hazardous substance or hazardous material into the environment which release would constitute a material violation of any Environmental Laws and Regulations. For purposes of this paragraph, "hazardous substance", "release" and "environment" shall have the same meanings as those terms are defined by Section 101 of CERCLA, 42 U.S.C. ss.9601, and "hazardous material" shall have the same meaning as those terms are defined by Environmental Laws and Regulations. Seller does not own, lease, rent or otherwise utilize any underground storage tanks in connection with the Business, and, to the best of Seller's knowledge, there are no waste tanks, containers, cylinders, drums or cans buried, stored or deposited in or at the Leased Premises. To the best of Seller's knowledge (without having conducted an investigation), the Leased Premises do not contain (i) any asbestos, (ii) any polychlorinated biphenyl (PCB) substances or (iii) any waste petroleum products. Seller has delivered to Buyer copies of all environmental surveys in Seller's possession related to the Leased Premises, all of which are identified in Schedule 3.10. Section 3.11 No Inconsistent Agreements. Seller has not entered into any letter of intent, preliminary agreement or other agreement, written or oral, with any other party which would be inconsistent with the terms of this Agreement. Section 3.12 Financial Statements. Seller has previously delivered to Buyer Seller's annual income and expense statement and balance sheet for the years ended December 31, 1995 and 1994 and for the six months ended June 30, 1996 (the "Financial Statements"). The Financial Statements are true, correct and complete in all material respects for the periods covered and fairly present the results of operation of the Business for the periods covered. The Financial Statements for the years ended December 31, 1995 and 1994 were prepared pursuant to GAAP; the Financial Statements for the six months ended June 30, 1996 were prepared on a basis consistent with the Financial Statements for the year ended December 31, 1995, except for accruals normally performed at year-end, such as bonuses and profit-sharing, and other customary year-end adjustments and other adjustments required by GAAP. Section 3.13 ERISA Plans. Schedule 3.13 lists the Employee Pension Benefit Plans or Employee Welfare Benefit Plans, as each term is defined in the Employee Retirement Income Security Act of 1974, maintained by Seller for the employees of the Business. Section 3.14 Condition of Subject Assets. All the material tangible Subject Assets are at present, and will be as of the Closing Date, in good operating condition, normal wear and tear excepted, and, Seller has not received written notice of any violation of the Occupational Safety and Health Act with respect thereto, or rules and regulations issued thereunder. Section 3.15 Absence of Certain Changes. Except as disclosed on Schedule 3.15, since January 1, 1996, none of Seller's customers whose business averaged in excess of $1,000 per month for the six months ending June 30, 1996 has terminated or indicated in writing (or, to the best of Seller's knowledge, orally) an intention to terminate its business with, or reduce the volume of its business with, Seller. Except as otherwise stated in Schedule 3.15, to Seller's knowledge (without investigation other than inquiry of employees of Seller whose responsibilities place them in a position to be aware of such matters), Seller has no customers whose storage business is or has within 90 days prior to the date of this Agreement been the subject of competitive bidding procedures. Section 3.16 No Material Undisclosed Liabilities. Except as described in this Agreement or reflected in the Financial Statements, there is no liability or obligation of Seller related to the operation of the Business, whether accrued, absolute or contingent, other than liabilities and obligations that have been incurred in the ordinary course of business consistent with past practice since June 30, 1996 and are not material in the aggregate to the Business. Section 3.17 Personnel Information. Schedule 3.17 lists the names of all full- and part-time employees of Seller (or leased employees utilized by Seller) who perform services for the Business and sets forth a brief job description or title and compensation for each such person. Schedule 3.17 also sets forth a list of all written and oral employment and noncompetition agreements with Seller's employees employed in the Business. Section 3.18 Patents, Trademarks, Etc. Except for the trade names "Mohawk Business Records Storage", which is an unregistered trade name used by Seller, Seller has no trademarks, service marks, trade names, copyrights, computer programs or programs rights, patents, licenses or other similar intangible property rights and interests which it uses in connection with the Business. Section 3.19 Labor Relations. During the past three years there has not been, and there is not now, any strike, labor dispute, slow down, stoppage, or other material interference with or impairment by labor of the business of Seller pending or, to the knowledge of Seller (without investigation), threatened or contemplated against or directly affecting the Business. Seller's employees are not represented by any labor or trade union, nor, to the knowledge of Seller, has there been any attempt to organize Seller's employees during the two-year period prior to the date hereof. Section 3.20 Insurance. There is in force comprehensive general liability and casualty insurance for the Subject Assets and the Business which, in the reasonable opinion of Seller, is appropriate and adequate coverage for such assets and operations. Section 3.21 Trade Secrets and Customer Lists. Seller has received no written claims challenging its right to use any trade secrets, customer lists, intellectual property and operating methods required for or incident to the operation of the Business. To the best of its knowledge (without investigation), Seller is not using or in any way making use of any confidential information or trade secrets of any third party, including without limitation, a former employer of any present or past employee or Seller. Section 3.22 Transactions with Interested Persons. Except as set forth on Schedule 3.22, Seller is not an affiliate of any customer, competitor or supplier of the Business, or any organization which has a material contract or arrangement with the Business. Section 3.23 Records Services and Storage. Substantially all items received and stored by Seller on behalf of customers (singly or in the aggregate) are held in storage by Seller and are locatable and accessible without extraordinary effort except for items withdrawn or destroyed at the respective customer's request. The stored items for which customers are billed exist and, in all material respects, can be accounted for. Section 3.24 Filing; Destructions, Etc. Seller has shelved or refiled all records received for filing or refiling more than five business days prior to the date hereof. Seller has completed all destructions and other inventory and special-service projects for which Seller has received payment. Section 3.25 Business in Ordinary Course. From June 30, 1996 until the date hereof, the Business has been conducted in the ordinary course in accordance with past practice. Without limiting the generality of the foregoing, Seller has not, since June 30, 1996 (i) mortgaged or pledged any of its property or assets; (ii) sold, assigned, transferred or waived rights with respect to any material part of the Subject Assets (except in the ordinary course of business); (iii) entered into or adopted any employee benefit plan or any employment or severance agreement, or increased in any manner the compensation or fringe benefits of its officers or employees (except in the ordinary course of business and consistent with past practice or pursuant to pre-existing agreements or as required by law); (iv) changed its billing, accounts payable, collections or other cash management practices; or (v) agreed to take any of the foregoing actions. Section 3.26 No Material Adverse Change. There has been no material adverse change in the Subject Assets (including, without limitation, loss of or damage to a material amount or part of the Subject Assets) or the results of operation (including operating cash flow), other than possible industry-wide changes, as to which Seller makes no representation, between June 30, 1996 and the date hereof; provided that Seller makes no representation that Seller's NRCC contracts will not be terminated or cancelled prior to the Closing Date. (ARTICLE IV COMMENCES ON THE NEXT PAGE) ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER Buyer hereby represents and warrants to Seller as follows: Section 4.1 Organization and Good Standing. Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. Buyer possesses all requisite corporate power and authority to own, operate and lease its properties and carry on its business, and to execute and deliver, and perform its obligations under, this Agreement. Section 4.2 Authorization. The execution and delivery of this Agreement and performance by Buyer of its obligations hereunder, and all transactions contemplated hereby, have been duly and validly authorized by all necessary corporate action. This Agreement has been, and the other agreements and documents required to be delivered by Buyer in accordance with the provisions hereof (the "Buyer's Documents") will be, duly executed and delivered on behalf of Buyer by duly authorized officers of Buyer; and this Agreement constitutes, and Buyer's Documents when executed and delivered will constitute, the valid and binding obligations of Buyer, enforceable in accordance with their respective terms, except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization or similar laws from time to time in effect affecting creditor's rights generally and by legal and equitable limitations on the availability of specific remedies. Section 4.3 Compliance with Other Instruments. Neither the execution and delivery by Buyer of this Agreement and the Buyer's Documents, nor the consummation by Buyer of the transactions contemplated hereby and thereby, will, with or without the giving of notice or passage of time, or both, be contrary to or violate, breach, or constitute a default under, or permit the termination or acceleration of maturity of, or result in the imposition of any lien, claim or encumbrance on any property or asset of Buyer pursuant to any provision of, any note, bond, indenture, mortgage, deed of trust, evidence of indebtedness or lease agreement, other agreement or instrument or any judgment, order, injunction or decree by which Buyer is bound, to which Buyer is a party, or to which the assets of Buyer are subject; nor is the effectiveness or enforceability of this Agreement or such other documents adversely affected by any provision of the certificate of incorporation or by-laws of Buyer. Section 4.4 Litigation. There is no action, suit or proceeding pending or, to the knowledge of Buyer, threatened against Buyer which might interfere with its ability to consummate the transactions contemplated hereunder. Section 4.5 No Governmental or Other Authorization Required. Except as required by the HSR Act, no authorization or approval of, or filing with, any governmental agency, authority or other body or any other third persons will be required in connection with Buyer's execution and delivery of this Agreement and Buyer's Documents or its consummation of the transactions contemplated hereby and thereby. Section 4.6 Funding for Transaction. Buyer has, or will have prior to the Closing Date, sufficient funds available to it, either from the proceeds of the sale of Senior Subordinated Notes pursuant to the Registration Statement (as defined in Section 5.2(d) or an amendment to its current Credit Agreement, to carry out the transactions contemplated by this Agreement. (ARTICLE V COMMENCES ON THE NEXT PAGE) ARTICLE V PRE-CLOSING AGREEMENTS Section 5.1 Access to Information and Facilities. Seller shall afford Buyer and its representatives full access during normal business hours to all facilities, properties, books, accounts, records, contracts and documents of or relating to the Business in Seller's possession or control, subject to reasonable requirements that Buyer not interfere with the operations and activity of the Business. Buyer shall conduct its examinations off Seller's premises unless Seller agrees otherwise. Section 5.2 Confidentiality. (a) Seller and Buyer shall not use or disclose to others, or permit the use or disclosure of, any and all non-public information furnished by each to the other (including confidential information transmitted by each to its representatives, accountants, counsel, advisors or bankers) in the course of negotiations relating to this Agreement and the business and financial reviews and investigations referred to in this Agreement, except to their respective officers, directors, employees and representatives who need to know such information in connection with this Agreement or except to the extent that any such information may become generally available to the public other than through the actions of the parties or any other person under a duty of confidentiality. Such obligation of confidentiality extends to the additional financial statements described in Section 5.3. (b) Notwithstanding the foregoing, (i) Buyer's parent, Iron Mountain Incorporated ("IMI"), shall have the right to include disclosure regarding the transactions contemplated by this Agreement in amendments to the Registration Statement on Form S-1 (Registration No. 333-10359) which IMI has filed with the Securities and Exchange Commission in respect of Senior Subordinated Notes (as amended from time to time, the "Registration Statement") and in any other registration statement, filing or other report which IMI, Buyer or any of their respective affiliates files with the Securities and Exchange Commission or the National Association of Securities Dealers, including in each case any financial and other information concerning Seller and the transactions contemplated hereby required in connection therewith; (ii) disclosure of such information may be made to the extent required by judicial or regulatory process, and reviews by financial institutions which are lenders to either party; and (iii) such information may be used to the extent necessary as evidence in or in connection with any pending or threatened litigation relating to this Agreement or any transaction contemplated hereby. (c) In the event that the sale contemplated by this Agreement is not consummated for any reason, each party agrees to return to the other party all materials containing nonpublic information provided by the other immediately on request. The confidentiality obligation set forth in this Section 5.2 shall survive termination of this Agreement. (d) Each party agrees that the confidential information of the other party is unique and that its release or misuse in contravention of the terms of this Agreement may not be compensable in monetary damages and that the non-breaching party shall be entitled to seek appropriate injunctive relief therefor. In connection therewith the parties waive the claim or defense that an adequate remedy exists at law or that a bond is necessary. Section 5.3 Additional Financial Statements. In the event that IMI, Buyer or any of their respective affiliates is required by any law (including securities laws), statute or regulation to file or disclose financial information (including filings related to the registration of securities of IMI, Buyer or any of their respective affiliates) related to the Business which is in addition to information prepared by Seller and previously delivered to Buyer, Seller shall make available to Buyer any relevant information related to the Business or the Subject Assets not previously delivered to Buyer and otherwise cooperate with Buyer, at Buyer's expense, in preparing such information. If requested by Buyer, Seller shall use commercially reasonable efforts to obtain Seller's auditors' consent to Buyer's use of financial statements which they have audited, or shall consent to Seller's auditors' preparing required audits for Buyer; and Buyer shall have the right to file and disclose such information as required by any such law, statute or regulation, including, without limitation, as contemplated by Section 5.2(b) hereof. Section 5.4 Communications to Seller's Employees. Buyer and Seller shall mutually agree on the timing and content of a program of communications to employees and customers of the Business in respect of the transactions contemplated hereby; provided that Seller may elect to inform its employees of the pending transaction if it determines such disclosure is necessary or desirable. Section 5.5 Continued Efforts. Seller shall use commercially reasonable efforts to (a) cause to be fulfilled and satisfied all of the conditions to the Closing which are the responsibility of Seller; (b) cause to be performed all of the matters required upon the Closing which are the responsibility of Seller; and (c) take such steps and do such acts as may be necessary to make all of its warranties and representations true and correct as of the Closing Date with the same effect as if the same had been made, and this Agreement had been dated, as of the Closing Date. Buyer shall use commercially reasonable efforts to (a) cause to be fulfilled and satisfied all of the conditions to the Closing which are the responsibility of Buyer; (b) cause to be performed all of the matters required upon the Closing which are the responsibility of Buyer; and (c) take such steps and do such acts as may be necessary to make all of its warranties and representations true and correct as of the Closing with the same effect as if the same had been made, and this Agreement had been dated, as of the Closing Date. Section 5.6 Operation of Business Prior to Closing. From the date hereof until the Closing Date, Seller shall conduct the Business in the ordinary course consistent with past practice, and shall use its commercially reasonable efforts to maintain and service the Business, to keep available the services of present employees and agents and to maintain existing business relationships. Without limiting the generality of the foregoing, Seller shall not take any of the actions described in clauses (i) through (v) of Section 3.25. Section 5.7 HSR Act Filing. Prior to the date hereof, Buyer and Seller have each filed a Notification and Report Form with the Federal Trade Commission and the Antitrust Division of the United States Department of Justice under the HSR Act; each shall file any related materials that it may be required to file, shall use its commercially reasonable best efforts to obtain an early termination of the applicable waiting period, and shall make any further filings pursuant thereto that may be necessary, proper or advisable in connection therewith. Section 5.8 New Building. Seller has advised Buyer that Seller anticipates all four of its present buildings which constitute the Leased Premises to be filled to capacity by December 31, 1996, and that, in order to plan for its expansion requirements efficiently, Seller may select an additional warehouse facility on or prior to the Closing. Seller will consult with Buyer in connection with the leasing of an additional facility, and will not enter a lease for a new facility without Buyer's prior written consent (which will not be unreasonably withheld or delayed). Any new building lease will provide for the assignment and assumption of such lease by Buyer at Closing, but Buyer shall not be required to assume any lease that it has not previously approved in writing. At the Closing, Buyer shall reimburse Seller for all tenant improvement expenditures Seller has made in respect of the new building (provided Buyer has reviewed and approved the budget therefor).. (ARTICLE VI COMMENCES ON THE NEXT PAGE) ARTICLE VI CONDITIONS PRECEDENT TO OBLIGATION OF BUYER TO CLOSE The obligation of Buyer to purchase the Subject Assets and carry out the other transactions contemplated hereby are, unless waived in writing by Buyer, subject to the satisfaction, on the Closing Date, of the following conditions: Section 6.1 Accuracy of Representations and Performance of Seller. The representations and warranties of Seller contained in this Agreement shall be true and correct in all material respects at and as of the Closing Date with the same force and effect as though made on and as of such date, except to the extent that such representations and warranties are updated pursuant to updated Schedules provided by Seller or shall be incorrect as of the Closing Date because of events or changes occurring in the ordinary course of business of Seller or as otherwise permitted by this Agreement, none of which, singly or in the aggregate, constitutes a material adverse change; each and all of the conditions and covenants to be performed or satisfied by Seller hereunder at or prior to the Closing Date shall have been duly performed or satisfied in all material respects; and Seller shall have furnished Buyer with a certificate to that effect. Section 6.2 Absence of Certain Litigation. On the Closing Date, no suit, action or other proceeding, or injunction or final judgment relating thereto, shall be threatened in writing or pending before any court or governmental or regulatory official or agency, in which it is sought to restrain or prohibit or to obtain damages or other relief in connection with this Agreement or the consummation of the transactions contemplated hereby (provided that any such suit, action or other proceeding which would not have a material effect on the transactions contemplated hereby shall not constitute a failure to satisfy this condition), and no investigation that might result in any such suit, action or proceeding shall be pending. Section 6.3 Noncompetition and Nondisclosure Agreement. Seller, Michael M. Rabin, Richard K. Ladin, Sidney Ladin and Herman Ladin shall have each executed and delivered a Noncompetition and Confidentiality Agreement in the form of Exhibit 6.3. Section 6.4 Leases. Buyer shall have entered into leases for the following buildings: (a) 9715 James Avenue South, Minneapolis, Minnesota, and 10951 Hampshire Street, Minneapolis, Minnesota, both owned by Ladin Properties, for which the aggregate monthly base rent will be $42,382 per month for the first five years after the Closing Date; and (b) 9450 and 9500 Bloomington Freeway, Minneapolis, Minnesota, both owned by GRL Properties, for which the aggregate monthly base rent will be $38,962 per month for the first five years after the Closing Date; and The term of each lease will be fifteen years, and Buyer shall have two five-year extension options. Rent for years 6 through 10 under each lease will be increased by 10% over rent for the first five years, and rent for years 11 through 15 will be increased by 10% over the rent for years 6 through 10. Rent in each option period will be increased by 10% over the rent for the prior five-year period. Under each lease the landlord will be responsible for maintenance and repair of the roof and other structural elements of the building, and the tenant will be responsible for maintenance and repair of other building components and parking areas and exterior lighting systems. Tenant will be responsible for property taxes and operating costs. Each lease will be substantially in the form of Exhibit 6.4. The parties may elect to have separate leases for each building, in which event the base rent above will be allocated between the buildings under each lease on a pro rata basis or on another basis mutually acceptable to the parties. Section 6.5 Software Providers. Vault Star and DataFlex shall have consented in writing to Buyer's continued use of its software in connection with the Business for a transition period after the Closing. Section 6.6 Evidence of Corporate Approval. Seller shall deliver certified copies of resolutions of its Board of Directors and stockholders pertaining to the authorization of this Agreement and the consummation of the transactions contemplated hereby, and a certificate executed by its secretary or assistant secretary as to the due election, qualification and incumbency and valid signature of the person or persons authorized to sign this Agreement or any document, instrument or certificate to be delivered hereunder. Section 6.7 Encumbrances. Seller shall have delivered evidence reasonably satisfactory to Buyer of the satisfaction and release of any Encumbrances affecting, or security interests or liens encumbering, the Subject Assets. Section 6.8 No Material Adverse Change. There shall have been no material adverse change in the Subject Assets (including, without limitation, loss of or damage to a material amount or part of the Subject Assets) or the results of operations (including operating cash flow) between June 30, 1996 and the Closing Date; provided that Seller's loss or prospective loss of storage under [NRCC Contracts] occasioned by this transaction shall in no event be deemed a material adverse change. Section 6.9 Opinion of Seller's Counsel. Seller shall have delivered the opinion of Seller's counsel, Siegel, Brill, Greupner & Duffy, P. A., in the form of Exhibit 6.9 hereto. Section 6.10 Shelving. Seller shall have completed installation of, and paid for, the shelving program under which Seller planned to spend approximately $350,000 for additional shelving in the Hampshire Street building, a copy of which is attached hereto as Exhibit 6.10. Section 6.11 HSR Act. All applicable waiting periods (and any extensions thereof) under the HSR Act shall have expired or otherwise terminated. Section 6.12 Further Documents. Seller shall have executed and delivered to Buyer such documents, instruments, agreements, and certificates as may reasonably be needed to carry out the transactions contemplated by this Agreement, including such documents, instruments and agreements as Buyer's general counsel may reasonably request in connection therewith. (ARTICLE VII COMMENCES ON THE NEXT PAGE) ARTICLE VII CONDITIONS PRECEDENT TO OBLIGATION OF SELLER The obligation of Seller to sell, assign, transfer and deliver the Subject Assets to Buyer hereunder and to carry out the other transactions contemplated hereby are, unless waived in writing by Seller, subject to the satisfaction at or prior to the Closing Date of the following conditions: Section 7.1 Accuracy of Representations and Performance of Conditions. The representations and warranties of Buyer contained in this Agreement shall be true and correct in all material respects at and as of the Closing Date with the same force and effect as though made on and as of such Date; each and all of the conditions and covenants to be performed or satisfied by Buyer hereunder at or prior to the Closing Date shall have been duly performed or satisfied in all material respects; and Buyer shall have furnished Seller and with Buyer's certificate to that effect. Section 7.2 Approval. Buyer shall deliver certified copies of resolutions adopted by Buyer's Board of Directors pertaining to the authorization of this Agreement and the consummation of the transactions contemplated herein, and a certificate executed by the secretary or assistant secretary of Buyer as to the due election, qualification and incumbency and valid signatures of its officers authorized to sign this Agreement or any document or certificates to be delivered under it. Section 7.3 Absence of Certain Litigation. On the Closing Date, no suit, action or other proceeding, or injunction or final judgment relating thereto, shall be threatened or pending before any court or governmental or regulatory official or agency, in which it is sought to restrain or prohibit or to obtain damages or other relief in connection with this Agreement or the consummation of the transactions contemplated hereby, and no investigation that might result in any such suit, action or proceeding shall be pending. Section 7.4 Opinion of Buyer's General Counsel. Buyer's General Counsel shall have delivered his opinion in the form of Exhibit 7.4 hereto. Section 7.5 HSR Act. All applicable waiting periods (and any extensions thereof) under the HSR Act shall have expired or otherwise terminated. Section 7.6 Offers to Employ. Buyer shall have submitted written offers of employment to Michael Rabin and Richard K. Ladin for management positions in the acquired Business. Each offer will be for one year, with compensation at $104,000, and with a bonus potential of $36,000 based on meeting the 1997 operating budget, which will be agreed upon. Each agreement will provide for Buyer to pay a monthly expense amount of $500 to cover auto-related expenses and cellular telephone charges. Reasonable work-related travel and entertainment expenses will be reimbursed, and each will participate in Buyer's benefits programs customary for their positions. Section 7.7 Further Documents. Buyer shall have executed and delivered to Seller such documents, instruments, agreements, and certificates as may reasonably be needed to carry out the transactions contemplated by this Agreement, including such documents, instruments, agreements as Seller's counsel may reasonably request in connection therewith. (ARTICLE VIII COMMENCES ON THE NEXT PAGE) ARTICLE VIII THE CLOSING Section 8.1 Closing and Closing Provisions. The Closing shall be effected by delivery of documents at the office of Siegel, Brill, Greupner & Duffy, 1300 Washington Square, Minneapolis, Minnesota 55401, and payment of the Purchase Price as provided herein or in such other manner and at such place as the parties may agree. Section 8.2 Deliveries by Seller and Stockholders. At or prior to the Closing, Seller and Stockholders shall execute and deliver to Buyer all of the matters, certificates and other documents designated as conditions precedent and deliveries precedent to Buyer's obligation to close under this Agreement or to carry out the transactions contemplated hereby. Section 8.3 Deliveries by Buyer. At the Closing Buyer shall deliver to Seller the Initial Payment of the Purchase Price, subject to adjustments as permitted by this Agreement, in the manner and form provided for in this Agreement, and all the certificates and other documents designated as conditions precedent and deliveries precedent to Seller's obligation to close under this Agreement. (ARTICLE IX COMMENCES ON NEXT PAGE) ARTICLE IX POST-CLOSING MATTERS Section 9.1 Records of the Business. For a period of four years following the Closing Date or for such longer period as the statute of limitations applicable to claims for taxes relating to the Business for any period through the Closing Date shall be extended (through voluntary extension or otherwise), Buyer shall grant to Seller and its representatives, at Seller's request, access to and the right to make copies of those records and documents which report the conduct of the Business or the results thereof as may be necessary in connection with Seller's affairs or the Business, at Buyer's customary fees therefor. If Seller notifies Buyer that Seller requires retention of such records beyond four years, Seller shall have the right to take such records or pay Buyer's customary storage charges for such post-four-year period. Seller shall, for at least two years after the Closing Date, retain copies of all records of the Business retained by Seller, and shall grant access thereto to Buyer upon reasonable request. Section 9.2 Public Announcement. Except as provided in Section 5.2(b), no party shall issue any press release or make any public announcement relating to the subject matter of this Agreement without the prior written approval of the other party; provided, however, that after the Closing the parties may (i) make appropriate announcements to customers of the Business, and (ii) make a public announcement to the effect that the transaction has occurred (without any financial information), each after consultation with, and approval of, the other party; and provided further that either party may make any public disclosure it believes in good faith is required by applicable law or any listing or trading agreement concerning its publicly-traded securities. Section 9.3 Right of First Refusal. In the event that during the five-year period commencing with the Closing Date Buyer receives an offer to purchase the Business which Buyer intends to accept, Buyer shall so notify Seller in writing within ten (10) days after determination to accept such offer. Seller shall have fifteen (15) business days in which to deliver notice to Buyer that Seller elects to purchase the Business at the same price and upon the same terms as described in Buyer's notice, and Seller shall thereupon have the right and obligation to purchase the Business for such price and upon such terms. If Seller fails to exercise this right of first refusal within said period, Buyer may at any time thereafter within 180 days after the end of the fifteen-day period sell the Business upon the same or substantially similar terms and at the same price or within three percent thereof and this right of first refusal shall terminate upon any such sale. If the proposed sale of the Business is not consummated within the 180 day period, Seller shall again have a right of first refusal in connection with any offer which Buyer intends to accept. This right of first refusal shall not be exercisable by Seller upon a transfer by Buyer of the Business to any corporation, trust, partnership or other entity controlling, controlled by or under common control with Buyer, nor shall it apply to any sale of the Business together with other records storage businesses of Buyer as a single or integrated transaction, but this right of first refusal shall survive such transfer. This right of first offer may be exercised by Seller or any person designated by Seller. (ARTICLE X COMMENCES ON THE NEXT PAGE) ARTICLE X TERMINATION Section 10.1 Termination of Agreement. The parties may terminate this Agreement as provided below: (i) Buyer and Seller may terminate this Agreement by mutual written consent at any time prior to the Closing; (ii) Buyer may terminate this Agreement by giving written notice to Seller at any time prior to the Closing (A) in the event Seller has breached any material representation, warranty, or covenant contained in this Agreement in any material respect, Buyer has notified Seller of the breach, and the breach has continued without cure for a period of 20 days after the notice of breach or (B) if the Closing shall not have occurred on or before December 31, 1996, by reason of the failure of any condition precedent under Article VI hereof (unless the failure results primarily from Buyer itself breaching any representation, warranty, or covenant contained in this Agreement); and (iii) Seller may terminate this Agreement by giving written notice to Buyer at any time prior to the Closing (A) in the event Buyer has breached any material representation, warranty, or covenant contained in this Agreement in any material respect, Seller has notified Buyer of the breach, and the breach has continued without cure for a period of 20 days after the notice of breach or (B) if the Closing shall not have occurred on or before December 31, 1996, by reason of the failure of any condition precedent under Article VII hereof (unless the failure results primarily from Seller itself breaching any representation, warranty, or covenant contained in this Agreement). Section 10.2 Effect of Termination. If either party terminates this Agreement pursuant to Section 10.1, all rights and obligations of the parties hereunder, other than the confidentiality obligation set forth in Section 5.2, shall terminate without any liability of any party to any other party (except for any liability of any party then in breach). In addition, if the Agreement is terminated and the transactions contemplated hereby are not completed by December 31, 1996 because of the failure or inability of Seller to satisfy the four conditions set forth in Section 2.6(b), Buyer shall be entitled to return of the Escrow Deposit together with interest earned thereon. Section 10.3 Risk of Loss. Prior to Closing the risk of loss, damage or destruction with respect to the Subject Assets shall be borne solely by Seller. If at the Closing Date the Subject Assets shall have suffered loss, damage or destruction to an extent which materially affects the value thereof, and such loss is not adequately covered by insurance or materially impairs Seller's ability to conduct the Business, Buyer shall have the right at its election to terminate this Agreement, or complete the transactions with such adjustment of the Purchase Price as may be agreed in good faith between Buyer and Seller. (ARTICLE XI COMMENCES ON THE NEXT PAGE) ARTICLE XI INDEMNIFICATION Section 11.1 General Indemnification Obligation of Seller and Stockholders. From and after the Closing, Seller and Stockholders shall reimburse, indemnify and hold harmless Buyer and its successors and assigns (each an "Indemnified Buyer Party") against and in respect of: (a) any and all damages (excluding consequential damages, lost profits, lost business opportunities and incidental damages), losses, deficiencies, liabilities, costs and expenses (including assessments, legal fees, litigation costs, fines and judgments) incurred or suffered by any Indemnified Buyer Party that result from, relate to or arise out of: (i) any and all liabilities and obligations of Seller of any nature whatsoever (including liabilities for Taxes) arising from or incurred in the operation of the Business prior to the Closing Date, except for those liabilities and obligations of Seller which Buyer specifically assumes pursuant to this Agreement; (ii) other than as described at (iii) below, any and all actions, suits, claims or legal, administrative, arbitration, governmental or other proceedings or investigations against any Indemnified Buyer Party to the extent relating to Seller or the Business to the extent (and only to the extent) the reason therefor or subject thereof arose or occurred prior to the Closing Date or which result from or arise out of any action or inaction prior to the Closing Date of Seller or any director, officer, employee, agent, representative or subcontractor of Seller, except for those which Buyer specifically assumes pursuant to this Agreement; (iii) any cost, claim, expense or liability (including legal fees and costs of litigation) which Buyer may incur or with which Buyer may be threatened in writing by a customer in excess of $2.00 per carton, linear foot of open-shelf files, disk pack or other storage unit in connection with lost, damaged or destroyed records of customers with which Seller did not, as of the Closing Date, have a contract which limited Seller's liability in the event of loss, damage or destruction to such amount, provided that Seller shall not be required to indemnify Buyer in respect of any loss, damage or destruction which (i) relates to new cartons moved into the Leased Premises after the Closing Date, (ii) Seller is able to demonstrate occurred after the Closing Date or (iii) occurs after Buyer has picked up, retrieved, moved or otherwise physically dealt with a lost, damaged or destroyed carton; and (iv) any material misrepresentation, breach of warranty or nonfulfillment of any agreement or covenant on the part of Seller under this Agreement, or any material misrepresentation in or omission from any certificate, schedule, statement, document or instrument furnished to Buyer at the Closing pursuant hereto. (b) The liability of the Stockholders hereunder shall be several and not joint. Each Stockholder's liability in respect of any claims hereunder shall be that proportionate share of the claim equal to the percentage of all the issued and outstanding stock of Seller owned by such Stockholder on the date hereof. Notwithstanding anything herein contained to the contrary, Seller and Stockholder shall have no obligations to Buyer under Section 11.1 with respect to any claim of which Buyer gives notice to Seller or Stockholder later than the last day of the twelfth month after the Closing Date, except with respect to (i) federal, state and local taxes where the applicable statute of limitations exceeds twelve months, in which case notice must be given not later than thirty (30) days following the expiration of the relevant statute of limitations, and (ii) claims related to consensual liens affecting the Subject Assets, with respect to which notice of claims may be given at any time within ninety days after such liens are discovered by Buyer. Notwithstanding any other provision herein contained, Seller and Stockholders shall not have any indemnification obligation with respect to the first $50,000 of total claims incurred under Section 11.1. In no event shall Seller's or Stockholders' indemnification obligation exceed the sum of $1,500,000, provided that there shall be no limit on indemnification obligations related to taxes or consensual liens affecting the Subject Assets. In case any event shall occur which would otherwise entitle either party to assert a claim for indemnification hereunder, no loss shall be deemed to have been sustained by such party to the extent of (i) any tax savings realized by such party with respect thereto, or (ii) any after-tax proceeds received by such party from any third party, including but not limited to any insurance carrier. Section 11.2 General Indemnification Obligation of Buyer. From and after the Closing, Buyer will reimburse, indemnify and hold harmless Seller and Stockholders and their successors or assigns (an "Indemnified Seller Party") against and in respect of: (a) any and all damages (excluding consequential damages, lost profits, lost business opportunities and incidental damages), losses, deficiencies, liabilities, costs and expenses (including assessments, legal fees, litigation costs, fines and judgments) incurred or suffered by any Indemnified Seller Party that result from, relate to or arise out of: (i) any and all liabilities and obligations of Seller which have been specifically assumed by Buyer pursuant to this Agreement; (ii) any and all liabilities and obligations arising from or incurred in the operation of the Business after the Closing Date; (iii) any and all actions, suits, claims or legal, administrative, arbitration, governmental or other proceedings or investigations against any Indemnified Seller Party to the extent relating to Buyer or the Business to the extent (and only to the extent) the reason therefor or subject thereof arose or occurred after the Closing Date or which result from or arise out of any action or inaction after the Closing Date of Buyer or any director, officer, employee, agent, representative or subcontractor of Buyer; and (iv) any material misrepresentation, breach of warranty or non-fulfillment of any agreement or covenant on the part of Buyer under this Agreement, or any material misrepresentation in or omission from any certificate, schedule, statement, document or instrument furnished to Seller pursuant hereto or in connection with the negotiation, execution or performance of this Agreement. Notwithstanding anything herein contained to the contrary, Buyer shall have no obligations to Seller or Stockholders under Section 11.2(a)(iv) with respect to any claim of which Seller gives notice to Buyer later than the last day of the twelfth month after the Closing Date. In case any event shall occur which would otherwise entitle either party to assert a claim for indemnification hereunder, no loss shall be deemed to have been sustained by such party to the extent of (i) any tax savings realized by such party with respect thereto, or (ii) any after-tax proceeds received by such party from any third party, including but not limited to any insurance carrier. Section 11.3 Method of Asserting Claims, Etc. In the event that any claim or demand for which Seller or Stockholders (the "Indemnifying Party") would be liable to an Indemnified Buyer Party hereunder is asserted against or sought to be collected from an Indemnified Buyer Party by a third party, the Indemnified Buyer Party shall promptly notify Seller of such claim or demand, specifying the nature of such claim or demand and the amount or the estimated amount thereof to the extent then feasible, which estimate shall not be conclusive of the final amount of such claim and demand (the "Claim Notice"). Indemnifying Party shall have thirty days from the personal delivery or mailing of the Claim Notice (the "Notice Period") to notify the Indemnified Buyer Party (A) whether or not it disputes its liability to the Indemnified Buyer Party hereunder with respect to such claim or demand and (B) notwithstanding any such dispute, whether or not it desires, at its sole cost and expense, to defend the Indemnified Buyer Party against any such claim or demand. (a) If Indemnifying Party disputes its obligation to indemnify Buyer with respect to such claim or demand or the amount thereof (whether or not Indemnifying Party desires to defend the Indemnified Buyer Party against such claim or demand as provided in paragraphs (b) and (c) below), such dispute shall be resolved in accordance with Section 11.5 hereof. Pending the resolution of any dispute by Indemnifying Party of its liability with respect to any claim or demand, such claim or demand shall not be settled without the prior written consent of both Buyer and Seller, which consent shall not be unreasonably withheld or delayed. (b) In the event that Indemnifying Party notifies the Indemnified Buyer Party within the Notice Period that it desires to defend the Indemnified Buyer Party against such claim or demand then, except as hereinafter provided, Indemnifying Party shall have the right to defend the Indemnified Buyer Party, at the Indemnifying Party's sole cost and expense, by appropriate proceedings, which proceedings shall be promptly settled or prosecuted by it to a final conclusion in such a manner as to avoid any risk of Indemnified Buyer Party becoming subject to further liability in respect of such matter; provided, however, Indemnifying Party shall not, without the prior written consent of the Indemnified Buyer Party (which consent shall not be unreasonably withheld or delayed), consent to the entry of any judgment against the Indemnified Buyer Party or enter into any settlement or compromise which does not include, as an unconditional term thereof, the giving by the claimant or plaintiff to the Indemnified Buyer Party of a release, in form and substance satisfactory to the Indemnified Buyer Party, as the case may be, from all liability in respect of such claim or litigation. If any Indemnified Buyer Party desires to participate in, but not control, any such defense or settlement, it may do so at its sole cost and expense. (c) (i) If Indemnifying Party elects not to defend the Indemnified Buyer Party against such claim or demand, whether by not giving the Indemnified Buyer Party timely notice as provided above or otherwise, then the amount of any such claim or demand as reduced to judgment or settlement, or if the same be defended by Indemnifying Party or by the Indemnified Buyer Party (but none of the Indemnified Buyer Party shall have any obligation to defend any such claim or demand), then that portion thereof as to which such defense is unsuccessful, in each case, shall be conclusively deemed to be a liability of Indemnifying Party hereunder, unless Indemnifying Party shall have disputed its liability to the Indemnified Buyer Party hereunder, as provided in (a) above, in which event such dispute shall be resolved as provided in Section 11.5 hereof. (ii) In the event an Indemnified Buyer Party should have a claim against Indemnifying Party hereunder that does not involve a claim or demand being asserted against or sought to be collected from it by a third party, the Indemnified Buyer Party shall promptly send a Claim Notice with respect to such claim to Indemnifying Party. If Indemnifying Party disputes its liability with respect to such claim or demand, such dispute shall be resolved in accordance with Section 11.5 hereof. (d) All claims for indemnification by an Indemnified Seller Party under this Agreement shall be asserted and resolved under the procedures set forth above substituting in the appropriate place "Indemnified Seller Party" for "Indemnified Buyer Party", "Buyer" for "Indemnifying Party" and variations thereof. Section 11.4 Payment. Upon the determination of liability under Section 11.3 or 11.5 hereof, the appropriate party shall pay to the other, as the case may be, within ten days after such determination, the amount of any claim for indemnification made hereunder. In the event that the indemnified party is not paid in full for any such claim pursuant to the foregoing provisions promptly after the other party's obligation to indemnify has been determined in accordance herewith, it shall have the right, notwithstanding any other rights that it may have against any other person, firm or corporation, to set off the unpaid amount of any such claim against any amounts owed by it under any agreements entered into pursuant to this Agreement. Upon the payment in full of any claim, either by setoff or otherwise, the entity making payment shall be subrogated to the rights of the indemnified party against any person, firm or corporation with respect to the subject matter of such claim. Section 11.5 Arbitration. (i) All disputes under this Article XI or otherwise arising under this Agreement shall be settled by arbitration in Minneapolis, Minnesota, before three arbitrators pursuant to the rules of the American Arbitration Association. Arbitration may be commenced at any time by any party hereto giving written notice to each other party to a dispute that such dispute has been referred to arbitration under this Section 11.5. The arbitrators shall be selected by the joint agreement of Seller and Buyer, but if they do not so agree within 20 days after the date of the notice referred to above, the selection shall be made pursuant to the rules from the panels of arbitrators maintained by such Association. Any award rendered by the arbitrators shall be conclusive and binding upon the parties hereto and not subject to appeal; provided, however, that any such award shall be accompanied by a written opinion of the arbitrators giving the reasons for the award. This provision for arbitration shall be specifically enforceable by the parties and the decision of the arbitrators in accordance herewith shall be final and binding and there shall be no right of appeal therefrom. In any such action the arbitrators shall be specifically authorized to award all or a portion of its attorneys' fees and costs to a prevailing party or to cause such party to bear his or its own fees and costs. (ii) To the extent that arbitration may not be legally permitted by applicable law or statute, and the parties to any dispute hereunder do not at the time of such dispute mutually agree to submit such dispute to arbitration, any party may commence a civil action in a court of appropriate jurisdiction to solve disputes hereunder. Nothing contained in this Section 11.5 shall prevent the parties from settling any dispute by mutual agreement at any time. Section 11.6 Compliance with Bulk Sales Law. Buyer and Seller hereby waive compliance by Seller with the bulk sales law and any other similar laws in any applicable jurisdiction in respect of the transactions contemplated by this Agreement. Seller and Stockholders shall indemnify Buyer from, and hold it harmless against, any liabilities, damages, costs and expenses resulting from or arising out of (i) the parties' failure to comply with any of such laws in respect of the transactions contemplated by this Agreement, or (ii) any action brought or levy made as a result thereof, other than those liabilities which have been expressly assumed, on such terms as expressly assumed, by Buyer pursuant to this Agreement. Section 11.7 Other Rights and Remedies Not Affected. Except as otherwise specifically provided, the indemnification rights of the parties under this Article XI are such parties' sole rights and remedies under this Agreement and with respect to disputes arising herefrom, and are in lieu of, and not in addition to, rights and remedies a party may otherwise have at law or in equity. (ARTICLE XII COMMENCES ON THE NEXT PAGE) ARTICLE XII MISCELLANEOUS PROVISIONS Section 12.1 Commissions. Each party represents and warrants that it has dealt with no broker or finder in connection with this Agreement and, insofar as it knows, no broker or other person is entitled to any commission or finder's fee in connection with the consummation of the transactions contemplated by this Agreement. Section 12.2 Expenses. Except as otherwise provided herein, each of the parties shall pay all costs and expenses incurred or to be incurred by it in the negotiation and preparation of this Agreement and in closing and carrying out the transactions contemplated by this Agreement. Section 12.3 Headings; Schedules. The subject headings of the sections and subsections of this Agreement are included only for purposes of convenience, and shall not affect the construction or interpretation of any of its provisions. Any disclosure made by Seller in a Schedule hereto shall be deemed a disclosure on all Schedules hereto. Section 12.4 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Signatures on this Agreement delivered by fax or telecopier shall be considered original signatures for purposes of effectiveness of this Agreement. Section 12.5 Rights of Parties. Nothing in this Agreement, whether express or implied, is intended to confer any rights or remedies under or by reason of this Agreement on any persons other than the parties to it and their respective successors and assigns, nor is anything in this Agreement intended to relieve or discharge the obligation or liability of any third person to any party to this Agreement, nor shall any provision give any third persons any right of subrogation or action against any party to this Agreement. Section 12.6 Assignment. Except as provided in the following paragraph, the rights and obligations of the parties to this Agreement or any interest in this Agreement shall not be assigned, transferred, hypothecated, pledged or otherwise disposed of without the prior written consent of the nonassigning party which consent may be withheld in such party's sole discretion. Buyer shall have the right to assign to a wholly-owned subsidiary of Buyer its rights and obligations under this Agreement; provided that such assignment shall not release Buyer from its obligations hereunder, and Buyer shall remain fully liable for all of Buyer's obligations hereunder, including without limitation the payment of the entire Purchase Price (including contingent elements thereof). Section 12.7 Survival of Representations and Warranties. All representations, warranties, covenants and agreements shall survive the Closing until the end of the twelfth month after the Closing Date, except for ongoing agreements to indemnify the other party for post-Closing actions. Section 12.8 Notices. All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed to have been duly given on the date of service if delivered by telecopier (with notice of receipt), or if served personally on the party to whom notice is to be given; or if delivered by overnight private carrier, on the date of delivery; or on the third day after mailing if mailed to the party to whom notice is to be given by first class mail, certified, postage prepaid, and properly addressed as following: To Seller: Mohawk Business Record Storage, Inc. 9715 James Avenue South Minneapolis, Minnesota 55431-2577 Attention: Richard K. Ladin, Chief Executive Officer Telecopier: (612) 888-8445 With a copy (which shall not constitute notice but which is nonetheless required for notice) to: James P. Greupner, Esq. Siegel, Brill, Greupner & Duffy, P. A. 1300 Washington Square 100 Washington Avenue South Minneapolis, Minnesota 55401 Telecopier: (612) 330-6501 To Buyer: Iron Mountain Records Management, Inc. 745 Atlantic Avenue 10th Floor Boston, Massachusetts 02111-2735 Attention: John F. Kenny, Jr. Telecopier: (617) 350-7881 With a copy (which shall not constitute notice but which is nonetheless required for notice) to: Garry B. Watzke, Esq. 745 Atlantic Avenue 10th Floor Boston, Massachusetts 02111-2735 Telecopier: (617) 350-7881 Any party may change its address for purposes of this paragraph by giving the other parties written notice of the new address in the manner set for above. If Seller notifies Buyer after the Closing that Seller has been dissolved, Seller may direct Buyer to send notices to a designated representative of the Stockholders. Section 12.9 Applicable Law and Remedies. The terms, conditions and other provisions of this Agreement and any documents or instruments delivered in connection with it shall be governed and construed according to the internal laws of the State of Minnesota (other than the choice of law rules thereof) except as to matters of law concerning the internal corporate affairs of any corporate entity which is a party to or the subject of this Agreement, and as to those matters, the jurisdiction under which such entity derives its powers shall govern. All remedies at law, in equity, by statute or otherwise shall be cumulative and may be enforced concurrently or from time to time and, subject to the express terms of this Agreement, the election of any remedy or remedies shall not constitute a waiver of the right to pursue any other available remedies. The parties agree that all disputes arising under this Agreement shall be settled through arbitration procedures as described in Section 11.5. Section 12.10 Additional Instruments and Assistance. Each party hereto shall from time to time execute and deliver such further instruments, provide additional information and render such further assistance as the other party or its counsel may reasonably request in order to complete and perfect the transactions contemplated herein. Section 12.11 Severability. If any provision of this Agreement is held or deemed to be invalid or unenforceable to any extent when applied to any person or circumstance, such invalidity or unenforceability shall not affect the remaining provisions of this Agreement; the remaining provisions hereof and the enforcement of such provision with respect to other persons or circumstances, or to another extent, shall not be affected thereby and each provision hereof shall be enforced to the fullest extent allowed by law. Moreover, the invalid or inoperative provision shall be reformed and construed so that it shall be valid and enforceable to the maximum extent permitted. Section 12.12 Pronouns and Terms. In this Agreement, the singular shall include the plural, the plural the singular, and the use of any gender shall include all genders. Section 12.13 Taxes. The party which customarily bears the economic burden thereof shall pay any Minnesota sales taxes imposed on the transaction. Buyer shall pay any other transfer and conveyance taxes and title, recording, transfer and similar fees payable or assessable in connection with the sale and transfer contemplated by this Agreement. Buyer and Seller shall each pay its portion prorated as of the Effective Time of state and local ad valorem taxes on the Business. Seller's federal tax identification number is 41-1269120. Buyer's federal tax identification number is 04-3038590. Section 12.14 Disclosure. No representation or warranty made by either party in this Agreement contains any untrue statement of a material fact or omits to state a material fact necessary to make the statement of facts contained within it not materially misleading. Section 12.15 Entire Agreement, Amendments and Waivers. This Agreement, together with all Exhibits and Schedules hereto, constitutes the entire agreement among the parties pertaining to the subject matter hereof and supersedes all prior and contemporaneous agreements, understandings, negotiations and discussions, whether oral or written, of the parties (including the letter of intent dated July 12, 1996), and there are no representations, warranties or other agreements among the parties in connection with the subject matter hereof except as set forth specifically herein or contemplated hereby. No supplement, modification or waiver of this Agreement shall be binding unless executed in writing by the party to be bound thereby. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provision hereof (whether or not similar), nor shall such waiver constitute a continuing waiver unless otherwise expressly provided. IN WITNESS WHEREOF, the parties to this Agreement have duly executed it on the date first above written. Mohawk Business Record Storage, Inc. Iron Mountain Records Management, Inc. By _______________________________ By ___________________________________ Richard K. Ladin C. Richard Reese Chief Executive Officer Chief Executive Officer Stockholders: - ---------------------------------- Michael M. Rabin - ---------------------------------- Richard K. Ladin - ---------------------------------- Herman Ladin - ---------------------------------- Sidney Ladin EX-12 36 STATEMENT RE: COMPUTATION OF RATIOS Exhibit 12 IRON MOUNTAIN INCORPORATED STATEMENT OF THE CALCULATION OF RATIO OF EARNINGS OF FIXED CHARGES (Dollars in thousands)
Year Ended December 31, ------------------------------------------------------------------- 1991 1992 1993 1994 1995 ----------- ---------- ---------- ---------- ------------ Earnings: Income (Loss) from Operations before Provision for Income Taxes $(1,292) $ 3,682 $ 3,656 $ 3,241 $ 1,945 Add: Fixed Charges 11,689 12,079 12,430 13,472 17,058 ------- ------- ------- ------- ------- $10,397 $15,761 $16,086 $16,713 $19,003 ======= ======= ======= ======= ======= Fixed Charges: Interest Expense $ 8,612 $ 8,412 $ 8,203 $ 8,954 $11,838 Interest Portion of Rent Expense 3,077 3,667 4,227 4,518 5,220 ------- ------- ------- ------- ------- $11,689 $12,079 $12,430 $13,472 $17,058 ======= ======= ======= ======= ======= Ratio of Earnings to Fixed Charges 0.9x(1) 1.3x 1.3x 1.2x 1.1x ======= ======= ======= ======= =======
Pro Forma ------------------------------- For the For the Six Months Ended Year Six Months June 30, Ended Ended -------------------------------- December 31, June 30, 1995 1996 1995 1996 --------------- -------------- ------------ --------- Earnings: Income (Loss) from Operations before Provision for Income Taxes $1,051 $ 1,585 $(1,576) $ (358) Add: Fixed Charges 8,338 9,520 26,162 13,272 ------ ------- ------- ------ $9,389 $11,105 $24,586 $12,914 ====== ======= ======= ======= Fixed Charges: Interest Expense $5,936 $ 6,385 $19,403 $ 9,699 Interest Portion of Rent Expense 2,402 3,135 6,759 3,573 ------ ------- ------- ------ $8,338 $ 9,520 $26,162 $13,272 ====== ======= ======= ======= Ratio of Earnings to Fixed Charges 1.1x 1.2x 0.9x(2) 0.9x(3) ====== ======= ======= =======
(1) The Company reported a pretax loss for the fiscal year ended December 31, 1991. For such period the Company would have needed to generate additional income from continuing operations, before provision for income taxes, of $1,292 to cover its fixed charges of $11,689. (2) On a pro forma basis, the Company would have needed to generate additional income from continuing operations, before provision for income taxes, of $1,576 to cover its fixed charges of $26,162. (3) On a pro forma basis, the Company would have needed to generate additional income from continuing operations, before provision for income taxes, of $358 to cover its fixed charges of $13,272. EX-23.2 37 CONSENTS OF EXPERTS AND COUNSEL Exhibit 23.2 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the use of our reports covering the audited historical financial statements and schedule of Iron Mountain Incorporated and the audited historical financial statements of Data Storage Systems, Inc., DKA Industries, Inc. d/b/a Systems Record Storage, Mohawk Business Record Storage, Inc. and Security Archives Corporation, and to all references to our Firm included in or made a part of this registration statement. Arthur Andersen LLP Los Angeles, California San Jose, California Orlando, Florida Minneapolis, Minnesota September 6, 1996 EX-23.3 38 CONSENTS OF EXPERTS AND COUNSEL Exhibit 23.3 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the use of our report and to all references to our Firm included in or made a part of this registration statement. /s/ Wolpoff & Company, LLP Baltimore, Maryland September 6, 1996 EX-23.4 39 CONSENTS OF EXPERTS AND COUNSEL Exhibit 23.4 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the use of our report and to all references to our Firm included in or made a part of this registration statement. /s/ Morrison and Smith Tuscaloosa, Alabama September 6, 1996 EX-23.5 40 CONSENTS OF EXPERTS AND COUNSEL Exhibit 23.5 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the use of our report and to all references to our Firm included in or made a part of this registration statement. /s/ Geo. S. Olive & Co. LLC Indianapolis, Indiana September 6, 1996 EX-23.6 41 CONSENTS OF EXPERTS AND COUNSEL Exhibit 23.6 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the use of our report and to all references to our Firm included in or made a part of this registration statement. /s/ Robert F. Gayton, CPA Natick, Massachusetts September 6, 1996 EX-23.7 42 CONSENTS OF EXPERTS AND COUNSEL Exhibit 23.7 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the use of our report and to all references to our Firm included in or made a part of this registration statement. /s/ Perless, Roth, Jonas & Hartney, CPAs, PA Miami, Florida September 6, 1996 EX-23.8 43 CONSENTS OF EXPERTS AND COUNSEL Exhibit 23.8 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the use of our report and to all references to our Firm included in or made a part of this registration statement. /s/ Rothstein, Kass & Company, P.C. Roseland, New Jersey September 6, 1996 EX-24 44 POWER OF ATTORNEY Exhibit 24 POWER OF ATTORNEY The undersigned hereby constitutes and appoints C. Richard Reese, David S. Wendell and Eugene B. Doggett, and each of them, to sign for him, and in his name in the capacity indicated below, the Registration Statement on Form S-1 relating to the Senior Subordinated Notes due 2006 of Iron Mountain Incorporated (File No. 333-10359) for the purpose of registering such securities under the Securities Act of 1933, as amended, and any and all amendments thereto, including without limitation any registration statement or post-effective amendment thereof filed under and meeting the requirements of Rule 462(b) under the Securities Act, hereby ratifying and confirming his signature as it may be signed by said attorneys to such Registration Statement and any and all amendments thereto. Signature Title Date /s/ Constantin R. Boden Director September 6, 1996 - ------------------------- ----------------- Constantin R. Boden EX-25 45 STATEMENT OF ELIGIBILITY OF TRUSTEE SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------- FORM T-1 Statement of Eligibility and Qualification Under the Trust Indenture Act of 1939 of a Corporation Designated to Act as Trustee FIRST BANK NATIONAL ASSOCIATION (Exact name of Trustee as specified in its charter) United States 41-0256895 (State of Incorporation) (I.R.S. Employer Identification No.) First Trust Center 180 East Fifth Street St. Paul, Minnesota 55101 (Address of Principal Executive Offices) (Zip Code) Iron Mountain Incorporated (Exact name of registrant as specified in its charter) Delaware 04-3107342 (State of Incorporation) (I.R.S. Employer Identification No.) 745 Atlantic Avenue Boston MA 02111 (Address of Principal Executive Offices) (Zip Code) % Senior Subordinated Notes due 2006 (Title of the Indenture Securities) GENERAL 1. General Information Furnish the following information as to the Trustee. (a) Name and address of each examining or supervising authority to which it is subject. Comptroller of the Currency Washington, D.C. (b) Whether it is authorized to exercise corporate trust powers. Yes 2. AFFILIATIONS WITH OBLIGOR AND UNDERWRITERS If the obligor or any underwriter for the obligor is an affiliate of the Trustee, describe each such affiliation. None See Note following Item 16. Items 3-15 are not applicable because to the best of the Trustee's knowledge the obligor is not in default under any Indenture for which the Trustee acts as Trustee. 16. LIST OF EXHIBITS List below all exhibits filed as a part of this statement of eligibility and qualification. Each of the exhibits listed below is incorporated by reference from registration number 33-90786. 1. Copy of Articles of Association. 2. Copy of Certificate of Authority to Commence Business. 3. Authorization of the Trustee to exercise corporate trust powers (included in Exhibits 1 and 2; no separate instrument). 4. Copy of existing By-Laws. 5. Copy of each Indenture referred to in Item 4. N/A. 6. The consents of the Trustee required by Section 321(b) of the act. 7. Copy of the latest report of condition of the Trustee published pursuant to law or the requirements of its supervising or examining authority. NOTE The answers to this statement insofar as such answers relate to what persons have been underwriters for any securities of the obligors within three years prior to the date of filing this statement, or what persons are owners of 10% or more of the voting securities of the obligors, or affiliates, are based upon information furnished to the Trustee by the obligors. While the Trustee has no reason to doubt the accuracy of any such information, it cannot accept any responsibility therefor. SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939, the Trustee, First Bank National Association, an Association organized and existing under the laws of the United States, has duly caused this statement of eligibility and qualification to be signed on its behalf by the undersigned, thereunto duly authorized, and its seal to be hereunto affixed and attested, all in the City of Saint Paul and State of Minnesota on the 5th day of September, 1996. FIRST BANK NATIONAL ASSOCIATION [SEAL] /s/ Richard Prokosch -------------------------- Richard Prokosch Trust Officer /s/ Kathe Barrett ------------------------ Kathe Barrett Assistant Secretary EXHIBIT 6 CONSENT In accordance with Section 321(b) of the Trust Indenture Act of 1939, the undersigned, FIRST BANK NATIONAL ASSOCIATION hereby consents that reports of examination of the undersigned by Federal, State, Territorial or District authorities may be furnished by such authorities to the Securities and Exchange Commission upon its request therefor. Dated: September 5, 1996 FIRST BANK NATIONAL ASSOCIATION /s/ Richard Prokosch ------------------------------ Richard Prokosch Trust Officer AMENDED AND RESTATED ARTICLES OF ASSOCIATION FIRST BANK NATIONAL ASSOCIATION FIRST. The title of this Association, which shall carry on the business of banking under the laws of the United States, shall be "First Bank National Association." SECOND. The main office of the Association shall be in the City of Minneapolis, County of Hennepin, State of Minnesota. The general business of the Association shall be conducted at its main office and branches. THIRD. The Board of Directors of this Association shall consist of not less than five nor more than twenty-five members. At any meeting of the shareholders held for the purpose of electing Directors, or changing the number thereof, the number of Directors may be determined by a majority of the votes cast by the shareholders in person or by proxy. Between meetings of the shareholders held for the purpose of electing Directors, the Board of Directors by a majority vote of the full Board may increase the size of the Board by not more than four Directors in any one year, but not to more than a total of twenty-five Directors, and fill any vacancy so created in the Board. A majority of the Board of Directors shall be necessary to constitute a quorum for the transaction of business at any Directors' meeting. Each Director, during the full term of his directorship, shall own a minimum of $1,000 par value of stock of this Association, or any equivalent interest in stock of First Bank System, Inc. FOURTH. The regular annual meeting of the shareholders of this Association shall be held at its main banking house, or other convenient place duly authorized by the Board of Directors, on such day of each year as is specified therefor in the By-laws, but if no election is held on that day, it may be held on any subsequent day according to such lawful rules as may be prescribed by the Board of Directors. FIFTH. The authorized amount of capital stock of this Association shall be divided into 3,500,000 shares of common stock at the par value of Fifty Dollars ($50.00) each; but said capital stock may be increased or decreased from time to time, in accordance with the provisions of the laws of the United States. If the capital stock is increased by the sale of additional shares thereof, each shareholder shall be entitled to subscribe for such additional share in proportion to the number of shares of said capital stock owned by him at the time the increase is authorized by the shareholders, unless another time subsequent to the date of the shareholders' meeting is specified in a resolution adopted by the shareholders at the time the increase is authorized. The Board of Directors shall have the power to prescribe a reasonable period of time within which the preemptive rights to subscribe to the new shares of capital stock must be exercised. If the capital stock is increased by a stock dividend, each shareholder shall be entitled to his proportionate amount of such increase in accordance with the number of shares of capital stock owned by him at the time the increase is authorized by the shareholders, unless another time subsequent to the date of the shareholders' meeting is specified in a resolution adopted by the shareholders at the time the increase is authorized. The Association, and at any time and from time to time, may authorize and issue debt obligations, whether or not subordinated, without the approval of the shareholders. In the event said debt obligations are convertible to capital stock of the Association, each shareholder shall be entitled to subscribe for such additional shares in proportion to the number of shares of capital stock owned by him one month prior to the issuance of capital stock in satisfaction of said convertible debt obligations. SIXTH. The Board of Directors shall appoint one of its members President of this Association, who shall be Chairman of the Board, unless the Board appoints another director to be the Chairman. The Board may also appoint one or more of its members to serve as Vice Chairman. The Board shall have the power to appoint such officers and employees as may be required to transact the business of this Association; to fix the salaries to be paid to such officers and employees of this Association; and to dismiss any of such officers or employees and appoint others to take their place. The Board of Directors shall have the power to define the duties of officers and employees of this Association and to require adequate bonds from them for the faithful performance of their duties; to regulate the manner in which any increase of the capital of the Association shall be made; to make all By-laws that may be lawful for the general regulation of the business of this Association and the management of its affairs; and generally to do and perform all acts that may be lawful for a Board of Directors to do and perform. SEVENTH. The Board of Directors shall have the power to change the location of the main office of this Association to any other place within the limits of the City of Minneapolis, Minnesota, without the approval of the shareholders of this Association but subject to the approval of the Comptroller of the Currency; and shall have the power to change the location of any branch or branches of this Association to any other location, without the approval of the shareholders of this Association but subject to the approval of the Comptroller of the Currency. EIGHTH. This Association shall have succession from the date of its organization certificate until such time as it be dissolved by the act of its shareholders in accordance with the provisions of the banking laws of the United States, or until its franchise becomes forfeited by reason of violation of law, or until terminated by either a general or a special act of Congress, or until its affairs be placed in the hands of a receiver and finally wound up by him. NINTH. The Board of Directors of this Association, or any three or more shareholders owning, in the aggregate, not less than ten per centum of the stock of this Association, may call a special meeting of shareholders at any time; provided, however, that unless otherwise provided by law, not less than ten days prior to the date fixed for any such meeting, a notice of the time, place, and purpose of the meeting shall be given by first-class mail, postage prepaid, to all shareholders of record of this Association at their respective addresses as shown upon the books of the Association. TENTH. Any action required to be taken at a meeting of the shareholders or directors of or any action which may be taken at a meeting of shareholders or directors may be taken without a meeting if consent in writing, setting forth the action as taken shall be signed by all the shareholders or directors entitled to vote with respect to the matter thereof. Such action shall be effective on the date on which the last signature is place on the writing, or such earlier date as is set forth therein. ELEVENTH. Meetings of the Board of Directors or shareholders, regular or special, may be held by means of conference telephone or similar communication equipment by means of which all persons participating in the meeting can simultaneously hear each other, and participation in such meeting by such aforementioned means shall constitute presence in person at such meeting. TWELFTH. (a) Any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than any action by or in the right of the Corporation) by reason of the fact that he is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall be indemnified by the Corporation, unless similar indemnification is provided by such other corporation, partnership, joint venture, trust or other enterprise (any funds received by any person as a result of the provisions of this Article being deemed an advance against his receipt of any such other indemnification from any such other corporation, partnership, joint venture, trust or other enterprise), against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interest of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person seeking indemnification did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interest of the corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. (b) Any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that such person is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other corporation, partnership, joint venture, trust or other enterprise shall be indemnified by the Corporation, unless similar indemnification is provided by such other corporation, partnership, joint venture, trust or other enterprise (any funds received by any person as a result of the provisions of this Article being deemed an advance against his receipt of any such other indemnification from any such other corporation, partnership, joint venture, trust or other enterprise), against expenses (including attorneys' fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interest of the corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Court of Chancery of the State of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all of the circumstances of the case, such person is fairly and reasonably entitled to indemnify for such expenses which the Court of Chancery or such other court shall deem proper. (c) To the extent that a director, officer, employee or agent of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in paragraphs (a) and (b), or in defense of any claim, issue or matter therein, such person shall be indemnified by the Corporation against expenses (including attorneys' fees) actually and reasonably incurred by such person in connection therewith. (d) Except as set forth in paragraph (c) of this Article, any indemnification under paragraphs (a) and (b) of this Article (unless ordered by the court), shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances because such person has met the applicable standard of conduct set forth in paragraphs (a) and (b) of this Article. Such determination shall be made (1) by a majority vote of the directors who are not parties to such action, suit or proceeding, even though less than a quorum, or (2) if there are no such directors, of if such directors so direct, by independent legal counsel in a written opinion, or (3) by the stockholders. (e) Expenses (including attorneys' fees) incurred by an officer or director in defending any civil, criminal, administrative or investigative action, suit or proceeding may be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of any undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the Corporation. Such expenses (including attorneys' fees) incurred by other employees and agents may be so paid upon such terms and conditions, if any, as the Board of Directors deems appropriate. (f) The indemnification and advancement of expenses provided by this Article shall not be deemed exclusive of any other rights to which those seeking indemnification or seeking advancement of expenses may be entitled under any by-law, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in an official capacity and as to action in another capacity while holding such office. (g) By action of the Board of Directors, notwithstanding any interest of the directors in the action, the Corporation may purchase and maintain insurance, in such amounts as the Board of Directors deems appropriate, on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the Corporation shall have the power to indemnify him against such liability under the provisions of this Article. (h) For purpose of this Article, references to "the Corporation" shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under this Article with respect to the resulting or surviving corporation as he would have with respect to such constituent corporation if its separate existence had continued. (i) For purposes of this Article, references to "other enterprises" shall include employee benefit plans; reference to "fines" shall include any excise taxes assessed on a person with respect to an employee benefit plan; and references to "serving at the request of the Corporation" shall include any service as a director, officer, employee or agent of the corporation which imposes duties on, or involves services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner he reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner "not opposed to the best interests of the Corporation" as referred to in this Article. (j) The indemnification and advancement of expenses hereby provided shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such person. THIRTEENTH. These Articles of Association may be amended at any regular or special meeting of the shareholders by the affirmative vote of the holders of a majority of the stock of this Association, unless the vote of the holders of a greater amount of stock is required by law and in that case by the vote of the holders of such greater amount. The notice of any shareholders' meeting at which an amendment to the Articles of Association of this Association is to be considered shall be given as hereinabove set forth. IN WITNESS WHEREOF, we have hereunto set our hands as of the 23rd day of February, 1995. /s/ John F. Grundhofer /s/ Philip G. Heasley - --------------------------------- ------------------------------------ John F. Grundhofer Philip G. Heasley /s/ William F. Farley /s/ Richard A. Zona - --------------------------------- ------------------------------------ William F. Farley Richard A. Zona /s/ Daniel C. Rohr /s/ Michael J. O'Rourke - --------------------------------- ------------------------------------ Daniel C. Rohr Michael J. O'Rourke /s/ J. Robert Hoffmann - --------------------------------- J. Robert Hoffmann BYLAWS OF FIRST BANK NATIONAL ASSOCIATION ARTICLE I. MEETINGS OF SHAREHOLDERS The regular annual meeting of the shareholders for the election of directors and for the transaction of such other business as properly may come before the meeting shall be held at the main banking house of the Association in the City of Minneapolis, Minnesota, or other convenient place duly authorized by the Board of Directors (hereinafter referred to as the "Board"), on the last Thursday in February of each year at 9:30 o'clock A.M. of said day, or such other date or time which the Board may designate at any Board meeting held prior to the required date for sending notice of the annual meeting to the shareholders. The holders of a majority of the outstanding shares entitled to vote, and represented at any annual or special meeting of the shareholders, may choose persons to act as Chairman and as Secretary of the meeting. ARTICLE II. BOARD OF DIRECTORS Section 1. Number. As provided in the Articles of Association, the Board of this Association shall consist of not less than five nor more than twenty-five members. At any meeting of the shareholders held for the purpose of electing directors, or changing the number thereof, the number of directors may be determined by a majority of the votes cast by the shareholders in person or by proxy. Any vacancy occurring in the Board shall be filled by the remaining directors. Between meetings of the shareholders held for the purpose of electing directors, the Board by a majority vote of the full Board may increase the size of the Board by not more than four directors in any one year, but not to more than a total of twenty-five directors, and fill any vacancy so created in the Board. All directors shall hold office until their successors are elected and qualified. Section 2. Powers. The Board shall have and may exercise all of the powers granted to or conferred upon it by the Articles of Association and Bylaws of the Association and by law. The Board may appoint from time to time one or more committees for any purposes and with such powers as the Board may determine. Section 3. Organization. The President or the Chairman of the Board shall notify the directors-elect of their election and of the time at which they are required to meet for the purpose of organizing the new Board. If, at the time fixed for such meeting, there is not a quorum in attendance, the members present may adjourn from time to time until a quorum is secured, and no business shall be transacted until a majority of the directors-elect shall have taken the oath of office prescribed by law and shall otherwise duly qualified. The Board shall appoint one of its members President of this Association, who shall be Chairman of the Board, but the Board may appoint a Director in lieu of the President, to be Chairman of the Board, in which case the latter shall preside at all meetings and shall perform such other duties as may be designated by the Board. If a Chairman of the Board is so appointed in lieu of the President, in his absence the President shall preside at meetings of the Board. In the absence of a presiding officer, the Board shall appoint a Chairman pro tem. The Board shall appoint a recording officer who shall keep a record of the meetings and proceedings of the Board. The recording officer need not be a member of the Board. Section 4. Meetings. The regular meetings of the Board shall consist of the annual meeting following the annual election of directors by the shareholders, and quarterly meetings which shall be held at such place and at such time as the Chairman or President from time to time may designate. When the date of any regular meeting of the Board falls on a holiday, the meeting shall be held on the next ensuing business day other than a Saturday, or on such day and at such time as may have been ordered. Special meetings of the Board shall be held at any time upon the call of the Chairman of the Board, a Vice Chairman, the President, or the acting Chief Executive Officer, or upon written request of any three (3) directors. Notice of all meetings of the Board, whether regular or special, shall be given to each director either orally in person or by mail, telegraph or telephone, on or before the day of the meeting. Meetings of the Board or shareholders may be held by conference telephone or similar communication device by means of which all persons participating in the meeting can simultaneously hear each other. Participating in such a meeting shall constitute presence in person at such meeting. Section 5. Quorum. A majority of all the qualified directors shall constitute a quorum and shall be necessary for the transaction of business, but, if at any meeting there shall be less than a quorum present, a majority of those present may adjourn the meeting from time to time until a quorum is in attendance. Section 6. Advisory Board of Directors. The Board may appoint persons, who need not be shareholders or directors, to -2- serve as advisory directors on an Advisory Board of Directors established to serve this bank or a group of affiliated banks of which this bank is one. An advisory director shall have such power and duties as may be determined by the Board, provided that advisory directors shall have no power to vote on matters presented to the Board for final decision and, provided further, that the Board's responsibility for the affairs of the Association shall in no respect be delegated or diminished. Section 7. Directors' Fees, etc. The Board shall have the power to fix and vote fees and compensation to directors and advisory directors of the Association for their services as directors and advisory directors, and also for their services as member of any committee or committees of the Association contemplated by these Bylaws or otherwise created or appointed by the Board, the Executive Committee, or the President of the Association. Nothing herein contained shall be construed to preclude any director or advisory director from serving the Association in any other capacity and being paid compensation therefor by the Association. ARTICLE III. OFFICERS Section 1. Officers. The Board may elect a Chairman of the Board of Directors and one (1) or more Vice Chairmen. The Board shall also elect a President. The Board shall elect, as appropriate, such additional officers as it may determine, including Executive Vice Presidents or Senior Vice Presidents. The Chief Executive Officer or in the absence of the Chief Executive Officer, the President, may appoint such other officers necessary to conduct the affairs of the Association. Section 2. Chief Executive Officer. The Board of Directors may designate a Chief Executive Officer of the Association, who shall be either the President or Chairman of the Board. The Board may also designate an officer or director to serve as acting Chief Executive Officer in the absence or incapacity of the Chief Executive Officer. Subject to the law and the control of the Board and the Executive Committee, the Chief Executive Officer, or, in the absence of the Chief Executive Officer, the President shall have authority to manage the affairs and business of the Association and prescribe and define the duties of its officers, agents and employees. Section 3. Term of Office. Any officer elected by the Board shall hold his office for the current year for which the Board by which he is elected was elected, unless he shall resign, become disqualified or be removed. The Chairman, Vice Chairman, and President can be removed by action of a majority of the Board. All other elected officers can be removed by order -3- of the Chief Executive Officer, or in his absence, the President. Any other officer shall hold his office at the pleasure of the Chief Executive Officer, or, in his absence, the President. Section 4. Bonds. All officers, agents or employees as the business of the Association may require, shall give bond with surety to be approved and in a sum to be fixed by the Board or the Chairman or the President, conditioned upon the faithful and honest discharge of their respective duties. ARTICLE IV. STOCK CERTIFICATES Section 1. Forms. Certificates of stock, signed by any elected officer and any other officer, shall be issued to the shareholders, and each certificate shall state upon its face that such stock is transferable only upon the books of the Association. Section 2. Transfers. Certificates of stock of this Association shall be assignable and transferable only on the books of this Association subject to the restrictions and provisions of the national banking laws, and a transfer book shall be provided in which all assignments and transfers of stock shall be made. When stock is transferred, the certificates representing the same shall be returned to the bank, canceled and preserved, and new certificates issued. Section 3. Dividends. Transfers of stock shall not be suspended preparatory to the declaration of dividends; and, unless an agreement to the contrary shall be expressed in the assignment or assignments, dividends shall be paid to the shareholders in whose name the stock shall stand at the date of declaration of dividends. ARTICLE V. MINUTE BOOK The organization papers of this Association, the Bylaws as revised or amended from time to time and the proceedings of all regular and special meetings of the shareholders and the directors shall be recorded in a minute book or books. All reports of committees required to be made to the Board shall be recorded in a minute book or shall be filed by the recording officer. The minutes of each meeting of the shareholders and the Board shall be signed by the recording officer and approved by the Chairman of the meeting. -4- ARTICLE VI. CONVEYANCES, CONTRACTS, ETC. All transfers and conveyances of real estate, mortgages, and transfers, endorsements or assignments of stock, bonds, notes, debentures or other negotiable instruments, securities or personal property shall be signed by any elected or appointed officer. All checks, drafts, certificates of deposit, mortgage satisfactions, releases, all types of loans, all obligations of the Association, and all funds of the Association held in its own or in a fiduciary capacity may be paid out by an order, draft or check bearing the manual or facsimile signature of any elected or appointed officer of the Association or of such other employees or agents as may be designated by the Chief Executive Officer or the President. All other instruments not hereinabove specifically provided for, whether to be executed in a fiduciary capacity or otherwise, may be signed on behalf of the Association by any officer thereof. The Secretary of the Association or other proper officer may execute and certify that required action or authority has been given or has taken place by resolution of the Board under this Bylaw without the necessity of further action by the Board. ARTICLE VII. SEAL The following is an impression of the seal if this Association. ARTICLE VIII. INDEMNIFICATION OF DIRECTORS, OFFICERS, AND EMPLOYEES Section 1. The Association shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending, or completed action, or proceeding, whether civil, criminal, administrative, or investigative -5- (other than an action by or in the right of the pertinent corporation) by reason of the fact that he is or was a director, advisory director or officer of the Association, or is or was serving at the request of the Association as a director or officer of another corporation, partnership, joint venture, trust, or other enterprise, against expenses (including attorneys' fees), judgments, and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit, or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interest of the pertinent corporation. The termination of any action, suit, or proceeding by judgment, order, settlement, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the pertinent corporation. Section 2. The Association shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending, or completed action or suit by or in the right of the pertinent corporation to procure a judgment in its favor by reason of the fact that he is or was a director, advisory director or officer of the Association, or is or was serving at the request of the Association as a director or officer of another corporation, partnership, joint venture, trust, or other enterprise, against expenses, (including attorney's fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the pertinent corporation and except that no indemnification shall be made in respect to any claim, issue, or matter as to which such person shall have been adjudged to be liable for negligence or misconduct in the performance of his duty to the pertinent corporation unless and only to the extent that the court in which such action or suit was brought shall determine upon application that despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnify for such expenses which such court shall deem proper. Section 3. To the extent that a director, advisory director, or officer has been successful on the merits or otherwise in defense of any action, suit, or proceeding referred to in Sections 1 or 2 of this Article, or in defense of any claim, issue, or matter therein, he shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith. -6- Section 4. Any indemnification under Sections 1 and 2 of this Article (unless ordered by a court) shall be made by the Association only upon a determination that indemnification of the director, advisory director, or officer is proper in the circumstances because he has met the applicable standards of conduct set fourth in said Sections 1 and 2. Such determination shall be made: (a) by the Board of the Association by a majority vote of a quorum consisting of directors who were not parties to such action, suit, or proceeding; or (b) if such a quorum is not obtainable, or, even if obtainable, a quorum of disinterested directors so directs, by independent legal counsel (who may be regular counsel for the Association or pertinent corporation) in a written opinion; or (c) by the stockholders of the Association. Section 5. Expenses incurred by any person who may have a right of indemnification under this Article in defending a civil or criminal action, suit, or proceeding may be paid by the Association in advance of the final disposition of such action, suit, or proceeding as authorized by its Board upon receipt of an undertaking by or on behalf of such person, to repay such amount unless it shall ultimately be determined that he is entitled to be indemnified by the Association pursuant to this Article. Section 6. The indemnification provided by this Article is in addition to and independent of and shall not be deemed exclusive of any other rights to which any person may be entitled under any certificate of incorporation, articles of incorporation, articles of association, bylaw, agreement, vote of stockholders, or disinterested directors, or otherwise, both as to action in his official capacity and as to action in another while holding such office, and shall continue as to a person who has ceased to be a director, advisory director, or officer and shall inure to the benefit of the heirs, executors, and administrators of such a person; provided, that any indemnification realized other than under this Article shall apply as a credit against any indemnification provided by this Article. Section 7. The Association may purchase and maintain insurance on behalf of any person who is or was a director, advisory director, officer, employee, or agent of the Association, or is or was serving at the request of the Association as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise, against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, if the Association would have the power to indemnify him against such liability under the provisions of the Article or of applicable law, if and whenever the Board of the Association deems it to be in the best interest of the Association to do so. -7- Section 8. For purposes of this Article and indemnification hereunder, any person who is or was a director or officer of any other corporation of which the Association owns or controls or at the time owned or controlled directly or indirectly a majority of the shares of stock entitled to vote for election of directors of such other corporation shall be conclusively presumed to be serving or to have served as such director or officer at the request of the Association. Section 9. The Association may provide indemnification under this Article to any employee or agent of the Association or of any other corporation of which the Association owns or controls or at the time owned or controlled directly or indirectly a majority of the shares of stock entitled to vote for election of directors or to any director, officer, employee, or agent of any other corporation, partnership, joint venture, trust, or other enterprise in which the Association)'n has or at the time had an interest as an owner, creditor, or otherwise, if and whenever the Board of the Association deems it in the best interest of the Association to do so. Section 10. The Association may, to the fullest extent permitted by applicable law from time to time in effect, indemnify any and all persons whom the Association shall have power to indemnify under said law from and against any and all of the expenses, liabilities, or other matters referred to in or covered by said law, if and whenever the Board of the Association deems it to be in the best interest of the Association to do so. ARTICLE IX. AMENDMENTS These Bylaws, or any of them, may be added to, altered, amended or repealed by the Board at any regular or special meeting of the Board. -----END PRIVACY-ENHANCED MESSAGE-----