EXHIBIT 10.18
AMENDMENT NO. 3 AND CONSENT TO GUARANTY
AMENDMENT NO. 3 AND CONSENT TO UNCONDITIONAL GUARANTY dated as of January
31, 2000 between IRON MOUNTAIN INCORPORATED, a Delaware corporation (Guarantor)
and IRON MOUNTAIN STATUTORY TRUST - 1998, a Connecticut statutory trust (Owner),
and consented to by each of the Lenders and Agent Bank listed on the signature
pages hereto.
Guarantor and Owner are parties to a certain Unconditional Guaranty dated
as of October 1, 1998, as amended by Amendment and Consent to Guaranty Dated as
July 1, 1999 and by Amendment No. 2 and Consent to Guaranty dated as of October
22, 1999 (the Guaranty) pursuant to which the Guarantor guarantees to Owner and
the Indemnified Parties the Guaranteed Obligations, including, without
limitation, certain obligations of Iron Mountain Records Management, Inc.
(Lessee/Agent) under (i) a Lease Agreement from Owner to Lessee/Agent dated as
of October 1, 1998, as amended (the Lease), and (ii) an Amended and Restated
Agency Agreement between Lessee/Agent and Owner dated as of October 1, 1998, as
amended (the Agency Agreement). Each of the Lease and the Agency Agreement have
been assigned to the Agent Bank pursuant to an Assignment of Lease and Agency
Agreement from Owner to Agent Bank and consented to by Lessee/Agent dated as of
October 1, 1998. Guarantor has requested that Owner, Agent Bank and Lenders
consent to Guarantor's merger with Xxxxxx Xxxxx Corp. and amend the Guaranty
with respect to certain financial covenants and related definitions; and
Guarantor has requested that the Lenders and Agent Bank consent to such changes.
Accordingly, the parties hereto agree as follows:
Section 1. DEFINITIONS. Except as otherwise defined in this Agreement,
terms defined in the Guaranty are used herein as defined therein.
Section 2. CONSENT TO MERGER; CERTAIN DEFINED TERMS. Notwithstanding that
Section 10(d)(x) of the Guaranty requires that Guarantor be the surviving entity
of any merger, Owner, Agent Bank and the Lenders hereby consent and approve of
Guarantor's proposed merger with Xxxxxx Xxxxx Corp., to take place and be
effective on or about January 31, 2000 (the Merger Date), as such merger is
evidenced by the articles of merger attached hereto as EXHIBIT A. As of the
Merger Date, Owner, Agent Bank and the Lenders acknowledge that Xxxxxx Xxxxx
Corp., is the surviving entity of such merger with Guarantor, and as a result of
such merger will be known as "IRON MOUNTAIN INCORPORATED." Owner, Agent Bank and
the Lenders hereby agree that, (i) as of the Merger Date, as used herein, in the
Guaranty and in each other Operative Document, Guarantor shall mean Iron
Mountain Incorporated, a Pennsylvania corporation, formerly known as Xxxxxx
Xxxxx Corp. as survivor by merger with Iron Mountain Incorporated, a Delaware
corporation, and (ii) as of the date hereof, as used in the Guaranty and in each
other Operative Document, reference to the "Credit Agreement" shall be as
defined in Section 3 E hereof.
Section 3. AMENDMENTS. Subject to the terms and conditions contained
herein, the Guaranty is hereby amended as follows:
A. LEVERAGE RATIO. (i) The Leverage Ratio "grid" in Section 10(a)(i) of the
Guaranty is hereby amended to read as follows:
PERIOD LEVERAGE RATIO
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From January 21, 2000 through June 30, 2001 5.75 to 1
From July 1, 2001 through June 30, 2002 5.50 to 1
From July 1, 2002 through June 30, 2003 5.25 to 1
From July 1, 2003 and all times thereafter 5.00 to 1
(ii) Section 10(a)(i)(B) of the Guaranty is hereby deleted in its
entirety.
B. INTEREST COVERAGE RATIO. The Interest Coverage Ratio "grid" in Section
10(a)(ii) of the Guaranty is hereby amended to read as follows:
INTEREST COVERAGE
PERIOD RATIO
------ -----
From January 21, 2000 through June 30, 2001 1.75 to 1
From July 1, 2001 through June 30, 2002 2.00 to 1
From July 1, 2002 through June 30, 2003 2.25 to 1
From July 1, 2003 and all times thereafter 2.50 to 1
C. FIXED CHARGES COVERAGE RATIO. The Fixed Charges Coverage Ratio "grid" in
Section 10(a)(iii) of the Guaranty is hereby
amended to read as follows:
FIXED CHARGES
PERIOD COVERAGE RATIO
------ --------------
From January 21, 2000 through June 30, 2001 1.00 to 1
From July 1, 2001 through June 30, 2003 1.10 to 1
From July 1, 2003 and at all times thereafter 1.20 to 1
D. LIENS. Section 10(a)(iv) of the Guaranty is hereby deleted in its
entirety and replaced as follows:
"The Guarantor will not, and will not permit any of its Subsidiaries to,
create or suffer to exist any Lien upon any property or assets, now owned or
hereafter acquired, securing any
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Indebtedness or other obligation, except: (i) the Liens created pursuant to the
Security Documents; (ii) the Liens existing on the Effective Date set forth in
Schedule III to the Credit Agreement and Liens arising out of the refinancing,
extension, renewal or refunding of any Indebtedness secured by any Lien set
forth on Schedule III to the Credit Agreement, PROVIDED that the principal
amount of such Indebtedness is not increased and is not secured by any
additional assets; (iii) (A) Liens contemplated by clauses (ii), (iv), (v) and
(vii) of the definition of Permitted Indebtedness; and (B) Liens securing
Acquired Debt, provided that such Liens cover only those assets that were
covered by such Liens prior to the relevant acquisition; (iv) attachment,
judgment or other similar Liens arising in connection with litigation or other
legal proceedings, PROVIDED that either (A) the claims in respect of such Liens
are fully covered by insurance or (B) the execution or other enforcement of such
Liens is effectively stayed and the claims secured thereby are in an amount not
to exceed $3,000,000 in the aggregate and are being contested in good faith by
appropriate proceedings diligently prosecuted; (v) Liens on properties or assets
of an Excluded Subsidiary securing Indebtedness of such Excluded Subsidiary
permitted under the Credit Agreement; (vi) other Liens arising in the ordinary
course of the business of the Guarantor or such Subsidiary which are not
incurred in connection with the borrowing of money or the obtaining of advances
or credit and which do not materially detract from the value of its property or
assets or materially impair the use thereof in the operation of its business;
(vii) Liens securing Indebtedness permitted by clause (v) of Section 9.08 of the
Credit Agreement, PROVIDED that such Liens extend only to the assets of any
Excluded Subsidiary incurring such Indebtedness as a primary obligor (and not as
a guarantor) or Capital Stock of such Excluded Subsidiary; and (viii) Liens on
property leased pursuant to the Synthetic Lease Obligations permitted by clause
(vi) of Section 9.08 of the Credit Agreement."
E. DEFINITIONS.
(i) Section 10(c) of the Guaranty is hereby amended by inserting the
following definitions (or, in the case of any definition for a term that is
defined in the Guaranty before giving effect to this Agreement, by amending and
restating such definition to read as set forth below):
"CAPITAL EXPENDITURES" shall mean capital expenditures by the Guarantor or
any of its Subsidiaries during the relevant period determined in accordance with
GAAP.
"CAPITAL STOCK" shall mean, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated, whether
voting or nonvoting) of such Person's capital stock or other ownership
interests, including, without limitation, all common stock and all preferred
stock.
"CREDIT AGREEMENT" shall mean the Third Amended and Restated Credit
Agreement dated as of January 21, 2000 in the amount of up to $400,000,000
among Guarantor and the other parties thereto, as amended, amended and
restated, modified, extended, refinanced or supplemented from time to time,
except to the extent that the Operative Documents refer to it as in effect on
the date hereof.
"DOLLARS," "US$" and "$" shall mean lawful money of the United States of
America.
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"EBITDA" shall mean, for any period, the sum (without duplication),
determined on a consolidated basis for the Guarantor and its Subsidiaries, of
(a) net income for such period PLUS (b) to the extent deducted in determining
net income for such period, the sum of (i) depreciation and amortization
(including deferred financing costs, organization costs, goodwill and
non-compete amortization) for such period, (ii) other non-cash expenses for such
period, (iii) Interest Expense for such period, (iv) provision for income taxes
for such period, (v) extraordinary, unusual or non-recurring losses or other
items (including without limitation losses arising from any natural disasters)
for such period determined in accordance with GAAP, (vi) non-compete expenses
for such period to the extent not capitalized in accordance with GAAP and (vii)
losses on sales of fixed assets not in the ordinary course of business for such
period after giving effect to any related charges for, reductions of or
provisions for taxes thereon MINUS (c) to the extent included in the calculation
of net income for such period, the sum of (i) other income (including interest
income) for such period, (ii) extraordinary, unusual or non-recurring gains or
other items for such period determined in accordance with GAAP and (iii) gains
on sales of fixed assets not in the ordinary course of business for such period
after giving effect to any related charges for, reductions of or provisions for
taxes thereon.
For the purposes of calculating the ratios set forth in Section 10 hereof
there may, at the Guarantor's option (such option to be consistently applied
with respect to each transaction), be included in EBITDA for any relevant
period, on a PRO FORMA basis (adjusted to give effect to expenses that will not
be ongoing), the net income (and the additions and subtractions thereto referred
to above) for such period of any Person (or assets) acquired after the
commencement of such period in connection with (i) the Xxxxxx Merger and (ii)
any Permitted Acquisition or any acquisition pursuant to Section 9.14(viii)(b)
of the Credit Agreement having Acquisition Consideration, in the case of any
such Permitted Acquisition, or an aggregate amount of consideration paid, in the
case of such acquisition pursuant to Section 9.14(viii)(b) of the Credit
Agreement, of more than $500,000. The net income (and the related additions and
subtractions) of the Person or assets acquired pursuant to such acquisition for
such period shall be calculated by reference to the most recent available
quarterly financial statements of the acquired business, annualized.
"EFFECTIVE DATE" shall have the meaning assigned to such term in the Credit
Agreement.
"EXCLUDED SUBSIDIARY" shall mean any Subsidiary of the Guarantor
principally engaged in the records and information management business or
related activities organized outside of the United States of America.
"FIXED CHARGES" shall mean for any period the sum of (i) Scheduled
Amortization for such period PLUS (ii) Interest Expense for such period PLUS
(iii) 50% of the total Capital Expenditures (total Capital Expenditures being
calculated for this purpose to exclude replacement Capital Expenditures made
with the proceeds of insurance) for such period PLUS (iv) the aggregate amount
of non-compete expenses for such period to the extent not capitalized in
accordance with GAAP.
"FUNDED INDEBTEDNESS" shall mean, without duplication, (a) Indebtedness
(other than in respect of Synthetic Lease Obligations) that matures or otherwise
becomes due more than one year after the incurrence thereof or is extendible,
renewable or refundable, at the option of the
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obligor, to a date more than one year after the incurrence thereof (including
the current portion thereof), (b) Indebtedness outstanding under the Credit
Agreement and (c) Synthetic Lease Obligations and any Guarantees by the
Guarantor thereof.
"GAAP" shall mean generally accepted accounting principles as in effect
from time to time in the United States of America consistently applied.
"XXXXXX MERGER" shall have the meaning assigned to such term in the Credit
Agreement.
(ii) Section 10(c) of the Guaranty is hereby amended by deleting
therefrom the following definitions: "ARCUS UK," "FOREIGN LEVERAGE RATIO,"
"LARGE VOLUME ACCOUNT CAPITALIZED EXPENDITURES," "MAINTENANCE CAPITAL
EXPENDITURES," "PERMITTED INVESTMENT," "POND JOINT VENTURE," "POND TRANSACTION"
and "QUALIFYING SALE-LEASEBACK TRANSACTION."
Section 4. CONDITIONS OF EFFECTIVENESS. This Agreement shall become
effective as of the date hereof when, and only when, the Owner, the Lenders and
the Agent Bank shall have received a counterpart of this Agreement duly executed
by the parties hereto and payment of an amendment fee pursuant to a letter sent
by the Agent Bank to the Guarantor dated as of January 24, 2000.
Section 5. REPRESENTATIONS AND WARRANTIES. As of the date hereof, Guarantor
hereby represents and warrants to Owner, Agent Bank, the Lenders and their
respective counsel that:
A. the representations and warranties made by Guarantor in each Operative
Document to which it is a party are correct on and as of the date hereof, as
though made on and as of such date (or, if any such representation or warranty
is expressly stated to have been made as of a specific date, as of such specific
date);
B. no event has occurred and is continuing under any Operative Document
that constitutes a Default or an Event of Default; and
C. it shall deliver, or cause to be delivered, on the Merger Date to Owner,
Agent Bank and the Lenders, (i) a certificate of Iron Mountain Incorporated,
formerly known as Xxxxxx Xxxxx Corp., in the form attached hereto as SCHEDULE 1;
and (ii) an opinion of counsel to Iron Mountain Incorporated, formerly known as
Xxxxxx Xxxxx Corp., stating that said certificate in the preceding clause (i)
has been duly authorized, executed and delivered by, and is enforceable against,
Iron Mountain Incorporated, formerly known as Xxxxxx Xxxxx Corp., in accordance
with its terms and such opinion shall otherwise be in form and substance
satisfactory to the Owner, Agent Bank and the Lenders.
Section 6. MISCELLANEOUS. Except as herein provided, the Guaranty and each
of the other Operative Documents shall remain unchanged and in full force and
effect. Upon the effectiveness of this Agreement, on and after the date hereof,
each reference in any Operative Document to the Guaranty shall mean and be a
reference to the Guaranty as amended hereby. This Agreement may be executed in
any number of counterparts, all of which taken together shall constitute one and
the same instrument and any of the parties hereto may execute this Agreement by
signing any such counterpart. This Agreement shall be governed by, and construed
in accordance with, the law of the Commonwealth of
Massachusetts.
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IN WITNESS WHEREOF, the parties hereunto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
GUARANTOR:
IRON MOUNTAIN INCORPORATED
By: /s/ X.X. Xxxxxxxx
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Name: X.X. Xxxxxxxx
Title: VP, Treasurer
LENDERS:
THE BANK OF NOVA SCOTIA, as Agent
Bank and as a Lender
By: /s/ X.X. Xxxxxxx
-------------------------------
Name: /s/ X.X. Xxxxxxx
Title: Authorized Signatory
UNION BANK OF CALIFORNIA, N.A.
By: /s/ Xxxxx X. Xxxxxxx
-------------------------------
Name: XXXXX X. XXXXXXX
Title: Vice President
FLEET NATIONAL BANK
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
BANKBOSTON, N.A.
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
CITIZENS BANK OF
MASSACHUSETTS,
SUCCESSOR TO USTRUST
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------
Name: Xxxxxxx, X.X.
Title: Vice President
OWNER:
IRON MOUNTAIN STATUTORY TRUST-1998
By: First Union National Bank, not
in its individual capacity,
but solely as trustee
By: /s/ W. Xxxxxxx Xxxxxx
----------------------------
Name: W. Xxxxxxx Xxxxxx
Title: Vice President
The following exhibits and schedules have been omitted and will be
supplementally furnished to the Securities and Exchange Commission upon
request:
EXHIBIT A ARTICLES OF MERGER
SCHEDULE 1 CERTIFICATE OF IRON MOUNTAIN INCORPORATED
