UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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IRON MOUNTAIN INCORPORATED | ||||
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IRON MOUNTAIN INCORPORATED
745 Atlantic Avenue
Boston, Massachusetts 02111
NOTICE OF 20042005 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 27, 200426, 2005
To the Shareholders of
IRON MOUNTAIN INCORPORATED:
Iron Mountain Incorporated will hold its 20042005 Annual Meeting of Shareholders at the offices of Sullivan & Worcester LLP, One Post Office Square, 21st21st Floor, Boston, Massachusetts, on May 27, 200426, 2005 at 10:00 a.m. local time for the following purposes:
Attached to this notice is a Proxy Statement relating to the proposals to be considered at the Annual Meeting. The Board of Directors has fixed the close of business on April 5, 20048, 2005 as the record date for the determination of shareholders entitled to receive notice of and to vote at the Annual Meeting or at any adjournment or postponement thereof. In the event that the Annual Meeting is adjourned for at least 15 days due to the absence of a quorum, those shareholders entitled to vote who attend the adjourned meeting, although otherwise less than a quorum, shall constitute a quorum for the purpose of acting upon any matter set forth in this notice except with regard to Item 3 as set forth in the accompanying proxy statement.
Your vote is important regardless of the number of shares you own. The Company requests that you complete, sign, date and return the enclosed proxy card without delay in the enclosed postage-paid return envelope, even if you now plan to attend the Annual Meeting. You may revoke your proxy at any time prior to its exercise by delivering written notice or another duly executed proxy bearing a later date to the Secretary of the Company, or by attending the Annual Meeting and voting in person.
All shareholders are cordially invited to attend the Annual Meeting.
By order of the Board of Directors,
GARRY B.WATZKE,Secretary
By order of the Board of Directors, | ||
GARRY B. WATZKE,Secretary |
Boston, Massachusetts
April 22, 200427, 2005
IRON MOUNTAIN INCORPORATED
745 ATLANTIC AVENUE
BOSTON, MASSACHUSETTS 02111
PROXY STATEMENT
FOR THE 2005 ANNUAL MEETING OF SHAREHOLDERS
To be held on May 27, 200426, 2005
This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors (the "Board") of Iron Mountain Incorporated ("Iron Mountain" or the "Company") for use at the Annual Meeting of Shareholders (the "Annual Meeting") to be held on May 27, 200426, 2005 (the "Annual Meeting") or at any adjournment or postponement thereof.
The Company's Annual Report to Shareholders for the year ended December 31, 20032004 is being mailed to shareholders with the mailing of this Proxy Statementproxy statement on or about April 22, 2004.27, 2005.
Iron Mountain will bear all costs of solicitation of proxies. Brokers, banks, custodians and other fiduciaries will be requested to forward proxy soliciting materials to the beneficial owners of shares held of record by such persons, and the Company will reimburse them for their reasonable out-of-pocket expenses incurred in connection with the distribution of such proxy materials. Solicitation of proxies by mail may be supplemented by telephone, telecopier or personal solicitation by directors, officers or other regular employees of the Company (who will not receive any additional compensation for any solicitation of proxies), as well as the firm of Georgeson Shareholder, which has been retained by the Company to assist in the solicitation for a fee of approximately $7,500 plus reasonable expenses.
Revocability of Proxies
Any shareholder giving a proxy in the enclosed form has the power to revoke it at any time before it is exercised. You may revoke your proxy by delivering to the Secretary of the Company at the address given above a written notice of revocation or another duly executed proxy bearing a later date. You may also revoke your proxy by attending the Annual Meeting and voting in person.
Record Date, Voting and Share Ownership
Iron Mountain's common stock, $0.01 par value per share (the "Common Stock"), is the only class of voting securities outstanding and entitled to vote at the Annual Meeting. As of the close of business on April 5, 2004,8, 2005, the record date for the determination of shareholders entitled to notice of and to vote at the Annual Meeting, 85,843,184130,335,595 shares of Common Stock were outstanding and entitled to vote. Each share is entitled to one vote on each matter.
The presence at the Annual Meeting, in person or by proxy, of shareholders entitled to cast at least a majority of the votes that all shareholders are entitled to cast at the Annual Meeting will constitute a quorum. Shares represented by a properly signed and returned proxy will be treated as present at the Annual Meeting for purposes of determining a quorum, without regard to whether the proxy is marked as casting a vote or abstaining. Shares represented by "broker non-votes" will not be treated as present for purposes of determining a quorum; however, shares voted by a broker on any issue other than a procedural motion will be considered present for all quorum purposes, even if the shares are not voted on every matter. A broker non-vote occurs on an item when a broker identified as the record holder of shares is not permitted to vote on that item without instruction from the beneficial owner of the shares and no instruction has been received.
A proxy in the enclosed form, if received in time for voting and not revoked, will be voted at the Annual Meeting in accordance with the instructions contained therein. Where a choice is not so specified, the shares represented by the proxy will be counted:
Abstentions or withheld votes and broker non-votes will not be counted as votes cast and, therefore, will not affect the election of the directors, the approval and adoption of the Charter AmendmentAgreement and Plan of Merger, the approval of the amendment to the 2003 Employee Stock Purchase Plan or the adoptionratification of the Plan Amendment.selection of the Company's independent public accountants.
Our website address is included several times in this proxy statement as a textual reference only and the information in the website is not incorporated by reference into this proxy statement.
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ELECTION OF DIRECTORS
The Board has unanimously adopted resolutions approving an amendment to Sections 3.1(c) and (d) of our Bylaws to declassify the Board. Section 3.1(c) of our Bylaws previously provided that the Board be divided into three classes, as nearly equal in number as reasonably possible, with members of each class serving three-year terms. The amendment provides for the annual election of all directors in the manner described below. The Board currently consists of nine directors. While the amendment does not change the present numbereight directors, each of directors, the Board has separately determined to reduce the number of directors to eight effective as of the 2004 Annual Meeting. The Board will retain the authority to change that number and to fill any vacancies or newly created directorships.
Classified or staggered boards have been widely adopted and have a long history in corporate law. Proponents of classified boards assert they promote the independence of directors because directors elected for multi-year terms are less subject to outside influence. Proponents of a staggered system for the election of directors also believe it provides continuity and stability in the management of the business and affairs of a company because a majority of directors always have prior experience as directors of the Company. Proponents further assert that classified boards may enhance shareholder value by forcing an entity seeking control of a target company to initiate arms-length discussions with the board of a target company because the entity is unable to replace the entire board in a single election.
On the other hand, some investors view classified boards as having the effect of reducing the accountability of directors to shareholders because classified boards limit the ability of shareholders to evaluate and elect all directors on an annual basis. The election of directors is a primary means for shareholders to influence corporate governance policies and to hold management accountable for implementing those policies. In addition, opponents of classified boards assert that a staggered structure for the election of directors may discourage proxy contests in which shareholders have an opportunity to votewhom serves for a competing slate of nominees and therefore may erode shareholder value.
Our Nominating and Governance Committee and Board have carefully considered the advantages and disadvantages of maintaining a classified board structure, and have concluded it is an appropriate time to declassify the Board. This determination by the Board furthers its goal of ensuring that the Company's corporate governance policies maximize management accountability to shareholders andone-year term which will allow shareholders the opportunity each year to register their views on the performance of the Board.
In connection with the amendment to our Bylaws to declassify our Board and in order to implement the provisions thereof, each of our directors whose terms would not have otherwise expiredexpire at the 2004 Annual Meeting has executed a resignation whereby he will resign at the 2004 Annual Meeting. As a result, the terms for all of our directors will end at the 2004 Annual Meeting. At the Annual Meeting, all directors are to be elected for one-year terms to serve until the Company's 20052006 Annual Meeting of Shareholders, or until their successors are elected and qualified. Eugene B. Doggett's term as a director will also terminate as of the 2004 Annual Meeting and he has elected not to seek re-nomination as a director. The Board has elected to reduce the size of the Board to eight directors, and therefore is only nominating eight directors for election. The Board has selected as nominees the following individuals who are the current directors of the Company: Clarke H. Bailey, Constantin R. Boden, Kent P. Dauten, B. Thomas Golisano, John F. Kenny, Jr., Arthur D. Little, C. Richard Reese and Vincent J. Ryan. Each has agreed to serve if elected, and management has no reason to believe that any of the nominees will be unavailable to serve.
The Company's executive officers were last elected as a group on May 22, 2003.27, 2004. At a meeting to be held immediately following the Annual Meeting, the Board currently intends to elect executive officers of the Company. All executive officers hold office at the discretion of the Board until the first meeting of
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the Board following the next annual meeting of shareholders or until they sooner die, resign or are removed. Except for T. Anthony Ryan, the Company's Senior Vice President, Real Estate, and Vincent J. Ryan, a director, who are brothers, there are no family relationships between or among any of the Company's officers or directors.
Required Vote
The affirmative vote of holders of a plurality of the votes properly cast at the Annual Meeting is required to elect each director. For purposes of determining which nominees receive a plurality, only those cast "For" are included, and any abstentionswithheld votes or broker non-votes will not count in making that determination.
The Board recommends that you vote FOR the election of each of the nominees listed below to serve as directors of Iron Mountain until the 20052006 Annual Meeting of Shareholders, or until their successors are elected and qualified.
Set forth below is the name and age of each director nominated to serve an additional term, his principal occupation and business experience during the past five years and the names of certain other companies of which he served as a director, as of April 1, 2004.2005.
Nominee | Principal Occupations and Business Experience During the Past Five Years | |
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Clarke H. Bailey Age | Mr. Bailey | |
Constantin R. Boden Age | Mr. Boden | |
Kent P. Dauten Age | Mr. Dauten | |
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B. Thomas Golisano Age | Mr. Golisano | |
John F. Kenny, Jr. Age | Mr. Kenny | |
Arthur D. Little Age | Arthur D. Little | |
C. Richard Reese Age | Mr. Reese | |
Vincent J. Ryan Age | Mr. Ryan |
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Set forth below is the name and age of each executive officer of the Company who is not a director of the Company, his principal occupation and business experience during the past five years and the names of certain other companies of which he served as a director, as of April 1, 2004.2005.
Name | Principal Occupations and Business Experience During the Past Five Years | |
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Age | ||
Jean A. Bua Age 46 | Ms. Bua joined Iron Mountain | |
John Connors Age 49 | Mr. Connors was appointed Executive Vice President, Sales and Marketing in February 2005. From 1999 to 2005, Mr. Connors served as Chief Executive Officer of Intrinsiq Research, a privately held company in the field of chemotherapy management software and information for the cancer care market. Prior to 1999, Mr. Connors served, at different times, as Chief Executive Officer of Molecular Insight Pharmaceuticals, Inc. and Kidsoft, LLC and as President of Merisel, Inc. | |
Harold E. Ebbighausen Age | Mr. Ebbighausen | |
Age | Mr. |
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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 receives an annual retainer fee of $20,000 as compensation for his services as a member of the Board and $1,000 for attendance at Board and committee meetings. In addition, committee chairmen of the Compensation and Nominating and Governance Committees receive an annual retainer of $5,000; the chairman of the Audit Committee receives an annual retainer of $20,000; and the "lead director" receives an annual retainer of $25,000. The Company also has a program by which it grants its nonemployee directors options to purchase shares of the Company's Common Stock every three years in an amount such that the product of the exercise price and the number of shares covered by the grant equals $200,000. Each such option has an exercise price equal to fair market value (as defined in the relevant plan)plan under which it is granted) on the date of grant, vests in equal amounts over a period of three years (subject to the optionee's continuing to be a director) and has a ten year term. Options have been and will continue to be granted under the Iron Mountain Incorporated 2002 Stock Incentive Plan (the "2002 Stock Incentive Plan"). All directors are reimbursed for out-of-pocket expenses incurred in attending meetings of the Board or committees thereof, and for other expenses incurred in their capacities as directors. The Company paid a total of $178,000$216,800 in cash for directors fees in respect of services for 2003.2004.
Board of Directors and Committees
Independence. TheOur Board is comprised of a majority of directors who qualify as independent directors pursuant to the corporate governance standards for companies listed on the New York Stock Exchange ("NYSE"). In determining independence pursuant to NYSE standards, each year the Board affirmatively determines whether directors have a direct or indirect material relationship with the Company, including its subsidiaries, that may interfere with their ability to exercise their independence from the Company. When assessing the materiality of a director's relationship with the Company, the Board considers all relevant facts and circumstances, not merely from the director's standpoint, but from that of the persons or organizations with which the director has an affiliation. Material relationships can include commercial, industrial, banking, consulting, legal, accounting, charitable and familial relationships.
The Board has determined that the following directors qualify as independent under NYSE rules: Messrs. Bailey, Boden, Dauten, Golisano and Little. The Board has also determined that Mr. Doggett, who is not seeking re-nomination, is an independent director under the NYSE rules. TheOur Board has concluded that none of these directors possessed the categorical relationships set forth in the NYSE listing standards that prevent independence. None of our independent directors has any relationship with the Company other than his service as a director and on committees of the Board.
Two of our directors, Messrs. Kenny and Reese, are management employees involved in our day to day activities and are not considered to be independent directors. Additionally, although none of the relationships Mr. Ryan has with the Company would be sufficient to classify him as not independent under NYSE rules, the Board has determined not to consider Mr. Ryan as an independent director due to his position with Schooner, the familial relationship between Mr. Ryan and T. Anthony Ryan, an officer of the Company, and Schooner's lease with the Company.
Attendance. During the fiscal year ended December 31, 2003,2004, the Board held four regular meetings and fourthree special meetings and took one actiontwo actions by written consent. EachExcept for Mr. Golisano, who attended five of the seven meetings held by the Board, each incumbent director who was then in office, attended at least 75% of the aggregate number of meetings of the Board and all committees thereof on which such director served. AllExcept for Mr. Golisano, all of our directors attended our 20032004 annual meeting of shareholders. All directors are expected to attend the annual meeting of shareholders.Annual Meeting. Our policy with respect to directorsdirectors' attendance at our annual meetings of shareholders can be found in our corporate governance guidelines, the full text of which appears in the "Investor Relations/Corporate Governance" section of our website at www.ironmountain.com. A printed copy of our corporate governance guidelines is also available free of charge to any shareholder who requests a copy.
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Committees. The Board of the Company has a standing Audit Committee, Executive Committee, Nominating and Governance Committee and Compensation Committee and Stock Incentive Plan Subcommittee of the Compensation Committee (the "Incentive Plan Subcommittee").Committee. The Board has adopted charters for the Audit Committee, Compensation Committee and Nominating and Governance Committee, each of which is available on our website at www.ironmountain.com under the heading "Investor Relations/Corporate Governance." A printed copy of these charters is also available free of charge to any shareholder who requests a copy. The Board and each of the Audit Committee, Compensation Committee and Nominating and Governance Committee have conducted and will continue to conduct annual self-evaluations. These self-evaluations are intended to facilitate an examination and discussion by the entire Board and each of these committees of their effectiveness as a group in fulfilling charter requirements and other responsibilities, as well as areas for improvement. During the fiscal year ended December 31, 2003,2004, the Audit Committee held eightnine meetings, the Executive Committee held fivethree meetings and took two actions by written consent, the Compensation Committee held five meetings and took three actions by written consent and the Nominating and Governance Committee held one meeting and the Incentive Plan Subcommittee held three meetings.meeting.
Audit Committee. The Audit Committee consists of three members, Messrs. Boden (Chairman), Little and Dauten, each of whom is independent as defined by the rules of the Securities and Exchange Commission ("SEC"), NYSE listing standards and the Audit Committee Charter. The Board has determined that Mr. Boden is an audit committee financial expert as defined by the rules of the SEC. Additionally, the Board has determined that each of the three members of the Audit Committee is financially literate as defined by the NYSE listing standards. The Audit Committee operates under a written charter adopted by the Board, which is attached to this proxy as Appendix A. The Audit Committee (1) assists the Board in oversight of the integrity of the Company's financial statements, (2) assists the Board in oversight of the Company's compliance with legal and regulatory requirements, (3) assists the Board in oversight of the independent auditor's qualifications and independence, (4) assists the Board in oversight of the performance of the Company's internal audit function and independent auditors, (5) prepares an Audit Committee report as required by the SEC to be included in the annual proxy statement, (6) performs such other duties as the Board may assign to the Committee from time to time and (7) takes other actions to meet its responsibilities as set forth in its written charter. The Audit Committee is also responsible for establishing procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls and auditing matters, including procedures for the confidential and anonymous submission by employees of the Company of any concerns regarding accounting or auditing matters they think may be questionable. Information about these procedures can be found in our Audit Committee Charter as well as on our website inunder the "Investor Relations/Corporate Governance"Governance section under the "E-Mail Alert" heading at www.ironmountain.com.
Executive Committee. The Executive Committee consists of Messrs. Ryan (Chairman), Reese and Bailey. Between meetings of the Board, the Executive Committee exercises all the powers of the Board in the management and direction of the business and affairs of the Company to the extent not otherwise prohibited by law, the Board, the Company's Amended and Restated Bylaws or Amended and Restated Articles of Incorporation.
Compensation Committee. For the year ended December 31, 2003, theThe Compensation Committee consistedconsists of Messrs. Bailey (Chairman), Boden Little and Ryan. Each of these directors is independent as defined by NYSE listing standards with the exception of Mr. Ryan, who, asLittle. As discussed above under "Independence," the Company has determined not to consider independent. Mr. Ryan hasindependent under NYSE listing standards; consequently, Mr. Ryan resigned from the Compensation Committee effective March 5, 2004. Upon Mr. Ryan's resignation, all of the members of the Compensation Committee qualify as independent under NYSE listing standards. The Compensation Committee (1) recommends to the Board the chief executive officer's and other executive officers' annual compensation, (2) creates shareholder value by ensuring market-driven, competitive and equitable compensation systemsystems for senior officers that create both short- and long-term incentives, (2)(3) takes actions to retain a skilled, creative and professional management team at the most economical cost, (3)(4) ensures that compensation policies and programs are compliant with applicable laws and are
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administered without bias or prejudice, (4)(5) takes actions to maintain a
compensation philosophy of "paying for performance" for senior management, (5)(6) develops and proposes for consideration by the Board compensation policies for the Company's non-employee directors that enable the Company to retain highly qualified individuals for such positions and (6)(7) takes other actions to meet its responsibilities as set forth in its written charter.
Nominating and Governance Committee. The Nominating and Governance Committee consists of Messrs. Little (Chairman), Boden and Golisano each of whom isqualify as independent as defined byunder NYSE listing standards. The Nominating and Governance Committee (1) recommends the composition and size of the Board, (2) identifies and recommends candidates for nomination to the Board, (3) recommends to the Board statements of the duties and responsibilities of each committee and subcommittee of the Board, (4) develops and recommends to the Board and implements corporate governance guidelines applicable to the Company, (5) assists the Board in reviewing management succession, (6) develops and monitors an annual process to assess the effectiveness of the Board and the Board's standing committees and (7) takes other actions to meet its responsibilities as set forth in its written charter.
Incentive Plan Subcommittee. The Incentive Plan Subcommittee consists of Messrs. Little (Chairman) and Boden, both of whom are "outside" and "non-employee" directors within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"), and the regulations thereunder, and Rule 16b-3 under Section 16 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), respectively. The Incentive Plan Subcommittee currently administers the 2002 Stock Incentive Plan, including the grant of stock options under the 2002 Stock Incentive Plan to all employees, including executive officers, and directors. The Incentive Plan Subcommittee also administers the 2003 Employee Stock Purchase Plan (the "ESPP"), the Iron Mountain Incorporated 1995 Stock Incentive Plan (the "1995 Plan"), the Iron Mountain Incorporated 1997 Stock Option Plan (the "1997 Plan"), the Iron Mountain/ATSI 1995 Stock Option Plan and the Nonqualified Stock Option Plan of Pierce Leahy Corp., and recommends the adoption of, and any amendments to, all stock incentive plans. There are no shares available for grant under the 1995 Plan and the 1997 Plan, other than shares that become available under such plans in the future as a result of the lapse or cancellation of outstanding stock options. There are no shares available for grant under the Iron Mountain/ATSI 1995 Stock Option Plan or the Nonqualified Stock Option Plan of Pierce Leahy Corp. The Incentive Plan Subcommittee also administers the Iron Mountain Incorporated Executive Deferred Compensation Plan, a nonqualified deferred compensation plan (the "Executive Deferred Compensation Plan").
Meetings of Independent/Non-Management Directors
In accordance with NYSE listing standards and pursuant to our Corporate Governance Guidelines, our non-management directors meet at regularly scheduled executive sessions and may hold such additional executive sessions as they determine necessary or appropriate. One of our non-management directors, Mr. Ryan, has been determined by the Board not to be considered independent as defined by the NYSE listing standards; the independent directors meet at least once each year without such non-independent director. The Board has named Mr. Boden as the lead director and he acts as the chair of the executive sessions.
Shareholder Communications to Board of Directors
The Board believes it is important for shareholders and others to have a process to send communications to the Board. Accordingly, any shareholder, security holder or other interested party who desires to communicate with the Board, any individual director, including the lead director, or the independent or non-management directors as a group, may do so by regular mail or e-mail directed to the Secretary of the Company. The Secretary's mailing address is c/o Iron Mountain, 745 Atlantic
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Avenue, Boston, Massachusetts 02111; the Secretary's e-mail address is corporatesecretary@ironmountain.com. Upon receiving mail addressed to the Board, the Secretary will assess the appropriate director or directors to receive the message, and will forward the mail to such director or directors without editing or altering it.
Selection of Candidates for Directors
The Board as a whole is responsible for nominating individuals for election to the Board by the shareholders and for filling vacancies on the Board that may occur between annual meetings of the shareholders. The Board is also responsible for developing and approving criteria, in addition to those set forth in our Corporate Governance Guidelines, for candidates for Board membership. The Nominating and Governance Committee is responsible for seeking candidates to become Board members, consistent with the criteria set forth in the Corporate Governance Guidelines and approved by the Board, and for recommending candidates to the entire Board for selection by the Board for nomination to fill vacancies on the Board or expiring terms of directors at each annual meeting of shareholders.
Nominees for director will be selected on the basis of their integrity, experience, achievements, judgment, intelligence, personal character, ability to make independent analytical inquiries, willingness to devote adequate time to Board duties, and likelihood that he or she will be able to serve on the
Board for a sustained period. The Nominating and Governance Committee will consider, as part of the process for identifying individuals who might be candidates, individuals who are properly recommended by shareholders for nomination by the Board at a meeting of shareholders at which directors are to be elected. To be proper, a recommendation for a nominee for director with respect to a meeting of shareholders must comply with applicable law, the Company's bylaws as described below in "NominationsBylaws, the Nominating and Proposals of Shareholders"Governance Committee Charter and the Company's Corporate Governance Guidelines. The Nominating and Governance Committee will consider any suggestions offered by other directors or shareholders with respect to potential directors and there will be no difference in the manner in which potential nominees are evaluated. However, the Nominating and Governance Committee, and the Board, will not be required to enlarge the size of the Board in order to nominate an otherwise fully qualified candidate proposed by a shareholder.
In 2003,2004, we did not pay a fee to any third party to identify or evaluate or assist in identifying or evaluating potential nominees for our Board. We did not, as of December 19, 2003,the February 21, 2005 deadline, receive any recommendations from shareholders for nominees for the Board.
Nominations and Proposals of Shareholders
The Company expects to hold the 20052006 Annual Meeting on May 26, 2005.25, 2006.
To be eligible for consideration at our 20052006 Annual Meeting, shareholder nominations of a person (or persons) to be elected as a director (or directors) must be received at our principal executive office no earlier than December 23, 2004,January 27, 2006, and no later than January 22, 2005.February 26, 2006. Shareholder nominations must also be made in compliance with the other requirements for shareholder nominations set forth in our Bylaws and Corporate Governance Guidelines.
A shareholder who intends to present a proposal at the 20052006 Annual Meeting of Shareholders and who wants the proposal included in the Company's 20052006 proxy statement and proxy card relating to that meeting must submit the proposal by December 23, 2004.28, 2005. In order for the proposal to be included in the proxy statement, the shareholder submitting the proposal must meet certain eligibility standards and comply with certain procedures established by the SEC, and the proposal must comply with the requirements as to form and substance established by our bylawsBylaws and applicable laws and regulations. The proposal must be mailed to the Company's principal executive office, at the address stated herein, and should be directed to the attention of the Chief Financial Officer.
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A shareholder who intends to present a proposal at the 20052006 Annual Meeting of Shareholders and who intends to conduct his, her or its own proxy solicitation must submit the proposal to the Company notno earlier than January 22, 200527, 2006 and not later than February 21, 2005.26, 2006.
Code of Ethics
We have adopted a Code of Ethics and Business Conduct that applies to each employee, including officers, of the Company and all directors. Our Code of Ethics and Business Conduct is posted on our website at www.ironmountain.com under the heading "Investor Relations/Corporate Governance." A printed copy of our Code of Ethics and Business Conduct is also available free of charge to any shareholder who requests a copy. We intend to satisfy our disclosure requirement regardingdisclose any amendment to, or waiver from, a provision of our Code of Ethics and Business Conduct applicable to the Company's chief executive officer, chief financial officer or principal accounting officer or controller by posting such information on our website or in a report on Form 8-K.website. Any waivers applicable to any other executive officers will also be promptly disclosed to shareholders on our website.
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AMENDMENT TOAPPROVAL OF THE COMPANY'S AMENDED AND RESTATEDARTICLESREINCORPORATION OF INCORPORATION TO INCREASE THE AUTHORIZED SHARESCOMPANY
INTO THE STATE OF COMMON STOCKDELAWARE
For the reasons set forth below, the Company's Board approved a proposal to change the Company's state of incorporation from Pennsylvania to Delaware (the "Reincorporation") and believes that the Reincorporation is in the best interests of the Company and its shareholders. Throughout this Item 2, the Company as currently incorporated in Pennsylvania will be referred to as "Iron Mountain PA" and the Company as reincorporated in Delaware will be referred to as "Iron Mountain DE".
Shareholders are urged to read carefully this section of this Proxy Statement, including the related appendices referenced below and attached to this Proxy Statement, before voting on the Reincorporation.
Proposed AmendmentMethod of Reincorporation
The Pennsylvania General Corporation Law provides thatReincorporation will be effected by merging Iron Mountain PA into its wholly owned Delaware subsidiary, Iron Mountain DE, pursuant to an Agreement and Plan of Merger (the "Merger Agreement"), in the totalform attached hereto as Appendix A. On the effective date of the merger, Iron Mountain DE will succeed to the assets and liabilities of, and possess all the rights and powers of, Iron Mountain PA and will continue to operate the business of the Company under its current name, Iron Mountain Incorporated. The Reincorporation will effect only a change in the legal domicile of the Company and other changes of a legal nature. The material changes are described in this Proxy Statement. The Reincorporation will NOT result in any change in the Company's business, management, capitalization, Board structure or membership, fiscal year, assets, liabilities or the location of the Company's principal facilities or headquarters. The Reincorporation is not expected to have a material effect on state or federal taxation of the Company. The directors elected at the Annual Meeting to serve as directors of Iron Mountain PA will become directors of Iron Mountain DE.
At the effective time of the merger, each issued and outstanding share of Common Stock will be automatically converted into one share of Iron Mountain DE common stock, $0.01 par value per share. Each stock certificate representing issued and outstanding shares of Common Stock will continue to represent the same number of shares of Iron Mountain DE common stock. Shareholders will not need to exchange their existing Common Stock certificates for Iron Mountain DE stock certificates but may do so if they would prefer. Any such request should be directed to the Company's transfer agent, The Bank of New York, Receive & Deliver Department, P.O. Box 11002, Church Street Station, New York, NY 10286, 800-524-4458. After the Reincorporation, certificates representing Common Stock will constitute "good delivery" in connection with sales through a broker, or otherwise, of shares of Iron Mountain DE common stock. Iron Mountain PA's transfer agent, The Bank of New York, will act as transfer agent for Iron Mountain DE after the Reincorporation. Shareholders may consult their stockbrokers or the Company with respect to any questions regarding the mechanics of these types of transactions.
All employee benefit, stock option and employee stock purchase plans of Iron Mountain PA will become Iron Mountain DE plans, and each option or right issued by such plans will automatically be converted into an option or right to purchase the same number of shares of Iron Mountain DE common stock, at the same price per share, upon the same terms and subject to the same conditions. Shareholders should note that approval of the Reincorporation will also constitute approval of these plans continuing as Iron Mountain DE plans. Other employee benefit arrangements of Iron Mountain PA will also be continued by Iron Mountain DE upon the terms and subject to the conditions currently in effect. The Company believes that the Reincorporation will not affect any of its material contracts with any third parties and that Iron Mountain PA's rights and obligations under such material contractual arrangements will continue as rights and obligations of Iron Mountain DE.
The Common Stock is listed for trading on the New York Stock Exchange and, after the merger, Iron Mountain DE common stock will be traded on the New York Stock Exchange under the same symbol, "IRM", as the shares of Common Stock are currently traded. The shares of Iron Mountain DE common stock will continue to be represented by the same CUSIP number that is currently used for the Common Stock. There will be no interruption in the trading of the Common Stock as a result of the merger.
The Reincorporation includes the implementation of a new certificate of incorporation, in the form attached hereto as Appendix B (the "Delaware Charter") and bylaws, in the form attached hereto as Appendix C (the "Delaware Bylaws") for Iron Mountain DE to replace the current articles of incorporation and bylaws of Iron Mountain PA (the "Pennsylvania Charter" and "Pennsylvania Bylaws", respectively). As a Delaware corporation, Iron Mountain DE will be subject to the Delaware General Corporation Law (the "DGCL"). Iron Mountain PA is subject to the Business Corporation Law of Pennsylvania (the "PaBCL"). Differences between the Delaware Charter and Delaware Bylaws, on the one hand, and the Pennsylvania Charter and Pennsylvania Bylaws, on the other hand, must be viewed in the context of the differences between the DGCL and the PaBCL. Material differences are discussed below under "—Comparison of the Charters and Bylaws of Iron Mountain PA and Iron Mountain DE and Significant Differences Between the Corporation Laws of Delaware and Pennsylvania".
If approved by the shareholders, it is anticipated that the Reincorporation will be completed as soon thereafter as is practicable. As described in the Merger Agreement, however, the Board may abandon the Reincorporation or amend the Merger Agreement, subject to any restrictions imposed by the DGCL or the PaBCL, either before or after shareholder approval has been obtained if, in the opinion of the Board, circumstances arise that make such action advisable. Any amendment that would adversely affect Iron Mountain PA shareholders or effect a material change from the Delaware Charter in the form attached hereto and described herein, however, would require further approval by the holders of a majority of the outstanding shares of the Common Stock. The Board does not currently intend to make any material amendments to the Merger Agreement, nor does it intend to amend the Delaware Charter or Delaware Bylaws, in the forms attached hereto and described herein, should the Reincorporation be approved by the Company's shareholders.
As provided in the PaBCL, Iron Mountain PA shareholders will not be entitled to exercise dissenters' rights or to demand payment for their shares in connection with the merger or the Reincorporation. See "—Comparison of the Charters and the Bylaws of Iron Mountain PA and Iron Mountain DE and Significant Differences Between the Corporation Laws of Delaware and Pennsylvania—Dissenters' Rights of Appraisal" below.
The following discussion summarizes certain aspects of the Reincorporation. The summary is not intended to be complete and is qualified in its entirety by reference to the Merger Agreement, the Delaware Charter and the Delaware Bylaws, copies of which are attached to this Proxy Statement as Appendices A, B and C, respectively, the DGCL and the PaBCL.
Principal Reasons for the Reincorporation in Delaware
For many years, Delaware has followed a policy of encouraging incorporation in that state. In furtherance of that policy, Delaware has adopted comprehensive, modern and flexible corporate laws which are periodically updated and revised to meet changing business needs. Many corporations have initially chosen Delaware for their domicile, or have chosen to reincorporate in Delaware in a manner similar to that proposed by the Company. The Board believes the Reincorporation to be in the best interest of the Company and its shareholders for several reasons including, but not limited to:
Comparison of the Charters and the Bylaws of Iron Mountain PA and Iron Mountain DE and Significant Differences Between the Corporation Laws of Delaware and Pennsylvania
As a result of the Reincorporation, Iron Mountain PA shareholders will become stockholders of Iron Mountain DE and the rights of all such former Iron Mountain PA shareholders will thereafter be governed by the Delaware Charter, the Delaware Bylaws and the DGCL. The rights of the Iron Mountain PA shareholders are presently governed by the Pennsylvania Charter, the Pennsylvania Bylaws and the PaBCL.
The following summary, which does not purport to be a complete statement of the differences among the rights of the Iron Mountain DE stockholders and the Iron Mountain PA shareholders, sets forth certain differences between the DGCL and the PaBCL, between the Delaware Charter and the Pennsylvania Charter, and between the Delaware Bylaws and the Pennsylvania Bylaws. This summary is qualified in its entirety by reference to the full text of each of the documents, the DGCL and the PaBCL. The Delaware Charter and Delaware Bylaws are attached as Appendices B and C, respectively. Shareholders of the Company may obtain copies of the Pennsylvania Charter and Pennsylvania Bylaws at no cost by writing or telephoning us at: 745 Atlantic Avenue, Boston, Massachusetts 02111 Attention: Investor Relations, (617) 535-4799.
Limitations on Director Liability
The DGCL permits a corporation to include a provision in its certificate of incorporation eliminating or limiting the personal liability of a director or officer to a corporation or its stockholders for damages for certain breaches of the director's fiduciary duty. This provision may not eliminate or limit the liability of a director for:
Under the PaBCL and the Pennsylvania Bylaws, directors are liable for monetary damages only where the director has breached or failed to perform his or her duties under the PaBCL and that breach or failure to perform constitutes self-dealing, willful misconduct or recklessness. This limitation on liability does not extend to liability under a criminal statute or for the payment of taxes.
The Delaware Charter eliminates the liability of directors to the fullest extent permissible under Delaware law. The Reincorporation and associated measures result in a director being shielded from suits by Iron Mountain DE or its stockholders for monetary damages for negligence or gross negligence by the director in failing to satisfy the director's duty of care. Consequently, an action for monetary damages against a director predicated on a breach of the duty of care will be available only if Iron Mountain DE or its stockholders are able to establish that the director was disloyal in his conduct,
failed to act in good faith, engaged in intentional misconduct, knowingly violated the law, derived an improper personal benefit or approved an illegal dividend or stock repurchase. The effect of such measures may be to limit or eliminate a remedy which might otherwise be available to a stockholder of Iron Mountain DE who is dissatisfied with the Board's decisions. Although an aggrieved stockholder could sue to enjoin or rescind an action taken or proposed by the Board, such remedies may not be timely or adequate to prevent or redress injury in all cases. On the other hand, there may be circumstances in which the DGCL and the Delaware Charter permit the Company or the stockholders to act against a director where the director's conduct would not be actionable under the PaBCL, such as breaches of a director's duty of loyalty or failure to perform his or her duties, that does not constitute self-dealing, willful misconduct or recklessness.
Indemnification of Officers and Directors
The DGCL permits indemnification of officers and directors against liability incurred in third-party actions if the indemnitee acted in good faith and he or she reasonably believed the acts were in, or at least not opposed to, the best interests of the Company. Delaware law states that the indemnification provided by statute shall not be deemed exclusive of any other rights under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise. As a result, under Delaware law, a Delaware corporation is permitted to indemnify its directors and officers within the limits established by law and public policy pursuant to an express contract, bylaw provision, stockholder vote, vote of disinterested directors or otherwise, any or all of which provide broad indemnification rights.
The provisions of the PaBCL regarding indemnification are substantially similar to those of the DGCL. Under the PaBCL, Iron Mountain PA is permitted to indemnify its officers and directors so long as the indemnified person acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the Company's best interests and, with respect to any criminal proceeding, had no reasonable cause to believe his or her conduct was unlawful. Pennsylvania law states that the indemnification provided by statute shall not be deemed exclusive of any other rights under any bylaw, agreement, vote of shareholders or disinterested directors or otherwise. Under the Pennsylvania Bylaws no indemnification is provided in the case of willful misconduct or recklessness.
Statutory Anti-Takeover Measures
Delaware law permits a corporation to adopt a number of measures designed to reduce a corporation's vulnerability to hostile takeover attempts. Although the Board has not adopted or proposed any of these permitted anti-takeover measures at this time, there can be no assurance that the Board will not adopt anti-takeover measures available under Delaware law in the future. The availability of such measures under Delaware law, whether or not implemented, may have the effect of discouraging a future takeover attempt which a substantial number, or even a majority, of Iron Mountain DE's stockholders may deem to be in their best interests or in which stockholders may receive a premium for their shares over then current market prices. As a result, stockholders who might desire to participate in such transactions may not have the opportunity to do so.
In addition to permitted anti-takeover measures, for certain corporations, Section 203 of the DGCL ("Section 203") limits the ability of a potential acquirer to conduct a hostile takeover. Under Section 203, certain "business combinations" by Delaware corporations with "interested stockholders" are subject to a three-year moratorium unless (1) prior to the date the stockholder became an "interested stockholder", the board of directors approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder, (2) upon becoming an interested stockholder, the stockholder then owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced (excluding certain shares), or (3) at or subsequent to the date the stockholder became an "interested stockholder", the "business combination" is approved by the board of directors and authorized at an annual or special meeting by at least 662/3%
of the corporation's outstanding voting stock, excluding shares owned by the interested stockholder unless the corporation's board of directors or stockholders has given a level of approval, or unless the "interested stockholder" owns at least 5% of the stock of the corporation. For purposes of Section 203, the term "business combination" includes mergers, asset sales and other similar transactions, and an "interested stockholder" is a person who, together with affiliates and associates, owns (or within the prior three years, did own) 15% or more of the corporation's voting stock. In effect, Section 203 prohibits a Delaware corporation from engaging in a "business combination" with an "interested stockholder" for three years following the date that person becomes an interested stockholder. As with other anti-takeover provisions, it is anticipated that the provisions of Section 203 of the DGCL may encourage companies interested in acquiring Iron Mountain DE to negotiate in advance with the Board, since the stockholder approval requirement would be avoided if a majority of the directors then in office approve either the business combination or the transaction which results in the stockholder becoming an interested stockholder. Section 203 also has the effect of limiting the ability of a potential acquirer to make a two-tiered bid for Iron Mountain DE in which all stockholders would not be treated equally.
Section 203 only applies to Delaware corporations which have a class of voting stock that is (1) listed on a national securities exchange, (2) authorized for quotation on the Nasdaq Stock Market or (3) held of record by more than 2,000 stockholders. Because Iron Mountain DE common stock will be traded on the NYSE, Section 203 is applicable to Iron Mountain DE. A Delaware corporation may elect not to be governed by Section 203 by a provision in its original certificate of incorporation or an amendment thereto or to the bylaws, which amendment must be approved by a majority stockholder vote and may not be further amended by the board of directors. Section 203 will be applicable to Iron Mountain DE because the Delaware Charter does not contain an election to opt out of being governed by Section 203.
The Board recognizes that hostile takeover attempts do not always have unfavorable consequences or effects and may frequently be beneficial to the stockholders, providing all of the stockholders with considerable value for their shares. The Board believes, however, that the potential disadvantages of unapproved takeover attempts, such as disruption of the Company's business and the possibility of terms which may be less favorable to all of the stockholders than would be available in a board-approved transaction, are sufficiently great that prudent steps to reduce the likelihood of such takeover attempts and to enable the Board to fully consider a proposed takeover attempt and actively negotiate its terms are in the best interests of the Company and its stockholders.
The PaBCL contains provisions applicable to publicly held Pennsylvania corporations that may be deemed to have an anti-takeover effect. Subchapters 25 D, E, F, G, H, I and J of the PaBCL contain a variety of such measures, including restrictions on certain mergers and other business combinations and restrictions on the acquisition of shares which would entitle the acquiring person to cast a specified percentage of votes in an election of directors.
Subchapter 25D (relating to fundamental changes) provides generally that certain transactions involving "interested shareholders," including mergers, consolidations, share exchanges, asset sales, divisions, voluntary dissolutions and winding up and certain reclassifications affecting the voting or share interests, require an affirmative vote of the majority of the votes entitled to be cast, without counting the vote of the interested shareholder, unless the board of directors approves the transaction or another exception applies. An "interested shareholder" is defined to include any shareholder who is a party to the covered transaction or who is treated differently from other shareholders in connection with such a transaction and any person or group acting in concert with, or which controls, is controlled by, or under common control with, that shareholder.
Subchapter 25E (relating to control transactions) provides generally that if any person or group acquires 20% or more of the voting power of a publicly traded corporation, notice must be given to the
other shareholders, who then may demand from such person or group the fair value of their shares, including a proportionate amount of any control premium.
Subchapter 25F (relating to business combinations) restricts the ability of a person who becomes an "interested shareholder" to enter into certain "business combinations" with the corporation for a period of five years, unless one of certain exceptions apply. The term "business combination" is defined broadly to include various transactions including mergers, consolidations, asset sales and other similar transactions. An "interested shareholder" is defined generally as the beneficial owner of at least 20% of a corporation's voting stock.
Subchapter 25G (relating to control-share acquisitions) provides that a person who acquires for the first time 20% or more, 331/3% or more, or 50% or more of a company's voting shares shall not have any voting rights unless the disinterested shareholders approve such voting rights. If this approval is not obtained, the corporation may force the shareholder to sell his or her shares to the corporation.
Subchapter 25H (relating to disgorgement) applies in the event that (1) any person or group publicly discloses that such person or group may acquire control of the corporation through any means or (2) a person or group acquires, or publicly discloses an offer or intent to acquire, 20% or more of the voting power of the corporation. Any profits from sales of equity securities of the corporation by such person or group during a period of 18 months subsequent to obtaining the status of a controlling person revert to the corporation if the securities sold were acquired during such 18 month period or within 24 months prior thereto.
Subchapters 25D through 25J contain a wide variety of exemptions, exclusions and safe harbors. Subchapters I and J (relating to severance compensation for terminated employees and labor contracts) apply to certain acquisitions of shares and business combinations. In such cases, terminated employees may be entitled to severance payments and labor contracts may be given protection against termination. A Pennsylvania corporation may opt out of any of these provisions. Only subchapters 25D and 25F are applicable to Iron Mountain PA; the Pennsylvania Charter provides that subchapters 25E, 25G and 25H shall not be applicable to Iron Mountain PA and subchapters 25I and 25J are nullified by opting out of subchapter 25G.
Factors a Board May Consider in Exercising its Fiduciary Duties
Delaware law does not contain any statutory provision permitting the board of directors, committees of the board or individual directors, when discharging their duties, to consider, and it is therefore unclear under current Delaware law whether the board of directors, committees of the board or individual directors may consider, the interests of any constituencies other than the corporation or its stockholders.
The PaBCL, on the other hand, provides that in discharging their duties, the board of directors, committees of the board and individual directors may, in considering what is in the best interests of the corporation, consider, to the extent they deem appropriate, all pertinent factors, including the following:
Dividend Rights
Under the DGCL, directors may, subject to any restrictions in a corporation's certificate of incorporation, declare and pay dividends either (1) out of its surplus or (2) if no surplus exists, out of its net profits, for the current fiscal year and/or the preceding fiscal year. The directors of a Delaware corporation may not declare dividends out of net profits, however, if the capital of the corporation is less than the aggregate amount of capital represented by the issued and outstanding stock of all classes having a preference upon the distribution of assets. The rights of stockholders of a Delaware corporation to receive dividends are subject to the rights and preferences of holders of future series of preferred stock with preferential dividend rights, if any. Iron Mountain PA is authorized to issue shallup to 10 million shares of Preferred Stock, but no Preferred Stock is issued and outstanding. Iron Mountain DE will similarly be set forth in its Articles of Incorporation. The Company's Amended and Restated Articles of Incorporation (the "Restated Articles") presently authorize the Companyauthorized to issue 150,000,000 shares of Common Stock and 10,000,00010 million shares of Preferred Stock.
AsUnder the PaBCL, a corporation is prohibited from making a distribution to its shareholders if, after giving effect to the distribution (1) the corporation would be unable to pay its debts as they become due in the usual course of April 1, 2004, 85,841,854business, or (2) the corporation's total assets would be less than the sum of its total liabilities plus the amount that would be needed upon the dissolution of the authorizedcorporation to satisfy the rights, if any, of shareholders having superior preferential rights to the shareholders receiving the distribution.
Like the Pennsylvania Charter, the Delaware Charter contains no restrictions regarding dividends.
Stock Redemptions and Repurchases
Under the DGCL, a corporation may not purchase or redeem its own shares when the capital of the corporation is impaired or when such purchase or redemption would cause an impairment of the capital of the corporation. A Delaware corporation may, however, purchase or redeem any of its preferred shares if such shares will then be retired and the capital of the corporation is reduced in accordance with the DGCL. The PaBCL permits a corporation to redeem any and all classes of its shares and treats such redemption or repurchase like a dividend by the corporation to or for the benefit of its shareholders, subject to the same limitations described above under the caption "—Dividend Rights".
Voting Rights
Although the DGCL permits cumulative voting, the Delaware Charter does not provide for cumulative voting in the election of directors. Pursuant to the Delaware Charter and Delaware Bylaws, holders of Iron Mountain DE common stock are entitled to one vote per share on all matters voted on by stockholders.
The PaBCL grants cumulative voting rights to shareholders but allows an exception if the charter so provides. In the case of Iron Mountain PA, the Pennsylvania Charter prohibits cumulative voting in the election of directors. Pursuant to the PaBCL, holders of the Common Stock andare entitled to one vote per share on all matters voted on by shareholders.
Shareholder Meetings
Under the DGCL, if there is a failure to hold the annual meeting or to take action by written consent to elect directors in lieu of an annual meeting for a period of 30 days after the designated date for the annual meeting, or if no sharesdate has been designated for a period of Preferred Stock were issued and outstanding.13 months after the latest to occur of the organization of the corporation, its last annual meeting or the last action by written consent to elect directors in lieu of an annual meeting, the Court of Chancery may summarily order a meeting to be held upon the request of any stockholder or director. Under the DGCL, a special meeting of the stockholders may be called by a corporation's board of directors or any other person as
may be authorized by a corporation's certificate of incorporation or bylaws. Like the Pennsylvania Bylaws, the Delaware Bylaws provide that special meetings of the stockholders may be called only by the chairman of the board or by the board of directors of Iron Mountain DE.
Under the PaBCL, if the annual meeting for the election of directors is not held within six months after the date designated for the annual meeting pursuant to the bylaws, any shareholder may call the meeting at any time thereafter. Pursuant to the PaBCL, special meetings of shareholders may be called by the board of directors or by any officer or by any other persons as provided in the bylaws. The Board has unanimously approved, and unanimously recommendsPaBCL provides that the shareholders of a publicly traded corporation do not have a statutory right to call a special meeting. The Pennsylvania Bylaws do not provide an affirmative right to shareholders to call a special meeting.
Action by Shareholders Without a Meeting
Although Delaware law permits stockholder action to be taken by written consent, the Company approve,Delaware Charter specifically prohibits action by written consent of stockholders. Similarly, Pennsylvania law permits shareholder action by consent, but the Pennsylvania Bylaws prohibit action by either unanimous or partial consent of shareholders.
Shareholder Proposals, Nominations and Rights to Elect Directors
The DGCL and the PaBCL do not include provisions restricting the manner in which nominations for directors may be made by stockholders or the manner in which business may be brought before a proposalmeeting.
The Pennsylvania Bylaws provide that nominations of persons for election to the Board may be made only by the Board, a committee of the Board or by any shareholder who complies with the notice provisions in the Pennsylvania Bylaws. Notice must be given by a shareholder of a nomination, in writing:
The Pennsylvania Bylaws similarly restrict the right of shareholders to bring business before a meeting of shareholders by requiring advance notice to the corporation of the general nature of the business the shareholder seeks to bring before the meeting.
The Delaware Bylaws contains substantially similar provisions.
Charter Amendments
Under the DGCL, an amendment or change to the certificate of incorporation generally requires the approval of the board of directors, followed by the approval of the holders of a majority of the shares entitled to vote, unless the certificate of incorporation increases the required vote. The Delaware Charter does not require a greater percentage vote.
Under the PaBCL, an amendment to the articles of incorporation requires the approval of the board of directors followed by the affirmative vote of a majority of the votes actually cast by all shareholders entitled to vote thereon at a meeting at which a quorum is present and, if any class or
series of shares is entitled to vote thereon as a class, the affirmative vote of a majority of the votes cast in each such class vote. Under the PaBCL, the shareholders of a publicly traded corporation are not entitled by statute to propose an amendment to the articles of incorporation.
Amendments to Bylaws
Under the DGCL, bylaws may be adopted, amended or repealed by a vote of a majority of the stockholders entitled to vote thereon. Delaware law also allows for a majority of the board of directors to make changes to the corporation's bylaws if the certificate of incorporation confers this power upon the directors. The Delaware Charter will grant this power to directors. The power vested in the stockholders is not, however, divested or limited because the board of directors also has such power.
Under the PaBCL, bylaws may be adopted, amended and repealed by a vote of a majority of the votes actually cast by all shareholders entitled to vote thereon, and, if any shareholders are entitled to vote as a class, the affirmative vote of the majority of votes cast by such class. This authority may be expressly vested in the board of directors by the bylaws, subject to the power of the shareholders to change such action, unless the subject of the amendment is solely within the province of the shareholders. The Pennsylvania Bylaws provide that the Pennsylvania Bylaws may be amended or repealed by the vote of a majority of all directors, except for amendments that are solely within the province of the shareholders, in which case the affirmative vote of a majority of the votes cast by all shareholders entitled to vote is required to amend or repeal the first sentencebylaws.
Mergers and Fundamental Corporate Transactions
Under the DGCL, fundamental corporate transactions, such as mergers, consolidations, sales of Article FOURTHall or substantially all of a corporation's assets and dissolutions, require the approval of a majority of the Restated Articlesboard of directors and approval of the holders of a majority of the shares of a corporation's common stock. Although the DGCL permits a corporation to increase the numberminimum percentage vote required, the Delaware Charter and Delaware Bylaws do not require a greater vote.
Under the PaBCL, fundamental corporate transactions, such as mergers, consolidations, the sale, lease, exchange or other disposition of all, or substantially all, of the property and assets of a corporation and dissolutions, require board approval and approval by a majority of the votes actually cast by the shareholders entitled to vote thereon, and, if shareholders are entitled to vote as a class, the affirmative vote of the majority of votes cast by such class. Although the PaBCL permits a corporation to increase the minimum percentage vote required, the Pennsylvania Charter and Pennsylvania Bylaws do not increase the vote.
Dissenters' Rights of Appraisal
Under the DGCL, unless the certificate of incorporation of a corporation provides otherwise, there are no appraisal rights in connection with a merger or consolidation to holders of shares that are listed on a national securities exchange, quoted on a national market system or held of Common Stock thatrecord by more than 2,000 stockholders unless the Company is authorizedplan of merger or consolidation requires the stockholders to issue from 150,000,000 to 200,000,000 shares. The full textaccept anything other than stock of the first sentencesurviving corporation or stock of Article FOURTHanother corporation that is listed on a national securities exchange, quoted on a national market system or held of record by more than 2,000 stockholders, cash in lieu of fractional shares or any combination of the Articlesforegoing. In addition, the DGCL denies appraisal rights to the stockholders of Incorporation as proposedthe surviving corporation in a merger if that merger did not require for its approval the vote of the stockholders of the surviving corporation. The Delaware Charter does not provide for additional appraisal rights.
The PaBCL generally does not provide for dissenters' rights to be amended by this proposal is as follows: "FOURTH: The aggregate numberholders of shares which the corporation shall have authority to issue is Two Hundred Ten Million (210,000,000) shares, to be divided into Two Hundred Million (200,000,000) sharesthat are listed on a national securities exchange or held beneficially or of Common Stock, par value $0.01 per share and Ten Million (10,000,000) shares of Preferred Stock, par value $0.01 per share."record by more than 2,000 shareholders.
Reasons for and General Effect of the Proposed AmendmentFederal Income Tax Consequences
The BoardReincorporation will qualify for federal income tax purposes as a tax free reorganization under section 368(a) of Directors believesthe Code. As a condition to the closing of the Reincorporation, Iron Mountain DE will receive an opinion from Sullivan & Worcester LLP to the effect that, on the basis of the existing provisions of the Code, U.S. Treasury regulations issued thereunder, current administrative rules, pronouncements and court decisions, for federal income tax purposes upon completion of the Reincorporation:
(1) The Reincorporation will constitute a "reorganization" within the meaning of section 368(a)(1)(F) of the Code, and Iron Mountain PA and Iron Mountain DE will each be a "party to a reorganization" within the meaning of section 368(b) of the Code;
(2) No gain or loss will be recognized by Iron Mountain PA's shareholders upon the exchange (whether actual or constructive) of their shares of Iron Mountain PA for shares of Iron Mountain DE in the Reincorporation; and
(3) The aggregate tax basis of the shares of Iron Mountain DE received (whether actually or constructively) by each shareholder of Iron Mountain PA pursuant to the Reincorporation will be the same as the aggregate tax basis of the shares of Iron Mountain PA held by such shareholder immediately prior to the Reincorporation, and the holding period of the shares of Iron Mountain DE received (whether actively or constructively) by each shareholder of Iron Mountain PA will include the period during which the shares of Iron Mountain PA surrendered therefor were held by such shareholder (provided that the current level of authorized shares of Common Stock may restrictIron Mountain PA were held as a capital asset on the Company's abilitydate of the Reincorporation).
Opinions of counsel are not binding upon the Internal Revenue Service (the "IRS") or the courts. The Company has not requested a ruling from the IRS with respect to issue or reserve Common Stock for general corporate purposes. The purposethe federal income tax consequences of the Reincorporation under the Code. Shareholders of Iron Mountain PA should consult their tax advisors regarding the effect, if any, of the proposed amendment is to provide sufficient authorized sharesReincorporation in light of Common Stock to givetheir individual circumstances. In particular, because the Board the flexibility to issue Common Stock in the future in connection with stock dividends, acquisitions and other transactions that management believes would provide the potential for growth and for other general corporate purposes. If the proposed amendment is adopted, there will be 114,158,146 shares of Common Stock authorized and unissued, based on the number of shares outstanding and reserved as of April 1, 2004.
No further action or authorization by the Company's shareholders would be necessary priorabove discussion relates only to the issuance of additional shares of Common Stock, except as may be required for a particular transaction by applicable law or regulatory agencies or by the rulesU.S. federal income tax consequences of the NYSE orReincorporation, shareholders of Iron Mountain PA should also consult their tax advisors as to the foreign, state and local tax consequences, if any, other stock exchange on which the Company's securities may then be listed. If additional shares are available, transactions dependent upon the issuance of additional shares would be less likely to be impeded or undermined by delays and uncertainties occasioned by the need to obtain prior shareholder authorization. The ability to issue shares, as deemed in the Company's best interests by the Board, may also permit the Company to avoid expenses incurred in holding special shareholders' meetings in the future.
At the present time, the Board has no specific plans to issue or reserve additional shares of Common Stock other than in connection with routine grants under the 2002 Stock Incentive Plan or any similar replacement plan and issuances of shares under the ESPP. Shareholders of the Company have no preemptive rights with respect to any shares of the Company's Common Stock.Reincorporation.
Required Vote
The affirmative vote of the holders of a majority of the votes properly cast at the Annual Meeting on the proposal is required to approve the amendment toMerger Agreement and the Company's Restated Articles.Reincorporation, which will also constitute approval of the Delaware Charter and the Delaware Bylaws. For purposes of determining whether a majority of the votes have been cast in favor of the approval of the amendment toMerger Agreement and the Company's Restated Articles,Reincorporation, only those cast "For" or "Against" are included, and any abstentions orand broker non-votes will not count in making that determination.
The Board recommends that you vote FOR the proposal to amendapproval of the Company's Restated Articles to increaseMerger Agreement and the number of authorized shares of Common Stock from 150,000,000 to 200,000,000.Reincorporation.
12
APPROVAL OF AMENDMENT TO THE IRON MOUNTAIN INCORPORATEDCOMPANY'S20022003 EMPLOYEE STOCK INCENTIVEPURCHASE PLAN
The Company's Board has unanimously approved, and unanimously recommends that the shareholders of the Company approve, an amendment to the 20022003 Employee Stock IncentivePurchase Plan (the "ESPP"), attached hereto as Appendix B,D, to increase the number of shares of Common Stock authorized for issuance under the 2002 Stock Incentive PlanESPP from 1,352,5431,125,000 to 3,352,543.2,325,000.
The Board believes that equity interests areequity-based compensation is a significant factor in the Company's ability to attract, retain and motivate keyits employees, directors and other service providers thatwho are critical to the Company's long-term success and that an increase in the number of shares available for issuance under the 2002 Stock Incentive PlanESPP is necessary in order to provide those persons with incentives to serve the Company. In approving the increase in the number of shares reserved for issuance under the 2002 Stock Incentive Plan,ESPP, the Board consideredtook into consideration the shares projected to be available under the ESPP as of the close of the current offering on May 31, 2005. As of that date, it is projected that no more than 445,586 shares will be available. Since at present no more than 195,000 shares are available in any six-month offering period, sufficient shares remain to complete only approximately 550,000two additional offerings (ending November 30, 2005 and May 31, 2006 respectively). Under current offering period limitations, the increase in shares wereavailable by 1,200,000 is designed to ensure that a sufficient number of shares are available for grant under the 2002 Stock Incentive Plan as of April 1, 2004, the average annual rate of grants during 2001 through 2003, and the portion of the Company's outstanding shares represented by shares subject to options, relative to other publicly held companies in related businesses.an additional three years.
Summary of the 2002 Stock Incentive PlanESPP
The following summary of the material features of the 2002 Stock Incentive PlanESPP is qualified in its entirety by reference to the complete text of the 2002 Stock Incentive Plan, which is filedESPP, attached hereto as an appendix to the Company's Proxy Statement on Schedule 14A filed in April 2002.Appendix E.
Overview. The 2002 Stock Incentive Plan permits the issuanceESPP operates by granting, in a series of equity-based awards, including incentive stockofferings, options nonqualified stock options, grants of Common Stock, whether or not subject to restrictions, and stock appreciation rights. The 2002 Stock Incentive Plan initially reserved 1,352,543 shares ofacquire Common Stock. If shareholders approveThe Compensation Committee determines the amendment tocommencement date and duration of offerings. The Compensation Committee may also, and currently does, limit the 2002 Stock Incentive Plan, the totalmaximum amount of Common Stock reservedavailable with respect to an offering.
In general, offerings last for six months and begin each June 1 and December 1. During an offering, payroll deductions are accumulated on behalf of each participant. At the end of the offering, the options are exercised and the accumulated payroll deductions are retained by the Company as full payment of the option price. Each participant receives a number of shares of Common Stock equal to the accumulated payroll deductions credited to the participant's account as of the exercise date divided by the option price. The "option price" of shares of Common Stock will be 3,352,543.85% of the lower of the fair market value of Common Stock at the start of the offering or on the exercise date. Fair market value under the ESPP generally means the average of the highest and lowest sale price of Common Stock on the date in question. The Compensation Committee may, with respect to a future offering, reduce (or eliminate) the option price discount or apply any discount only to the fair market value of the shares on the exercise date.
Purpose, Eligible Individuals, Effective Date and Duration.Shares Available under the ESPP. The 2002 Stock Incentive Plan was effectiveAs of April 1, 2002.2005, there were approximately 445,586 shares available for future sale under the ESPP. The purposeproposed amendment to the ESPP will increase the total number of shares that may be subject to options under the ESPP by 1,200,000.
If an option expires or is terminated or surrendered, the shares allocable to the option may again be available under the ESPP. If at the end of an offering there are not enough shares available to satisfy all desired purchases, a pro rata allocation of the 2002 Stock Incentive Plan isavailable shares will be made among all participants, and any excess payroll deductions will be returned to encourage employees, officers, directorsparticipants.
Eligibility and consultantsParticipation. In general, any employee of the Company and our subsidiariesor a subsidiary that is (or is treated for federal income tax purposes as) a corporation who render servicesis customarily employed for more than
five months in a calendar year may become a participant in any future offering under the ESPP by electing to our management, development or operationparticipate prior to continue their association with us by providing favorable opportunities for themthe commencement of the offering. However, the following persons are ineligible to participate in the ownership of our Common Stock and in our future growth through grants of our Common Stock, with or without restrictions, options to acquire our Common Stock and other rights to compensation in amounts determined by the value of our Common Stock (collectively, "Awards"). For this purpose, subsidiaries include corporations, companies, partnerships and other forms of business organizations in which we ownESPP: (1) any employee who owns, directly or indirectly, 50%as of the start of an offering, 5% or more of the Company's stock or the stock of one of the Company's corporate subsidiaries; (2) any employee of a subsidiary that does not elect to participate in the ESPP; (3) any union employee, if the union elects not to participate in the ESPP; (4) any individual who is not an employee, including outside directors, consultants and independent contractors; and (5) any employee hired fewer than six months prior to the commencement of an offering. In addition, an employee will not be granted an option that would permit him or her to own (or be considered to own) or hold outstanding options to purchase 5% or more of the total combined voting power or value of all classes ofthe Company's stock or other formthe stock of equity ownershipone of the Company's corporate subsidiaries, and a participant cannot acquire in any year more than $25,000 worth of the Company's stock under the ESPP (based on the value of the Company's stock at the start of the offering).
A participant may authorize payroll deductions of from 1% to 15% of the participant's cash compensation on each pay date. A participant can decrease his or in which we have a significant financial interest. The recipienther rate of payroll deductions, but the participant can never increase the rate of payroll deductions once an offering begins.
A participant may, prior to the end of an Award is referred tooffering period, and at such time and in such manner as the Compensation Committee may prescribe, withdraw from an "Optionee." At this time, approximately 13,000 persons are eligible to receive options pursuantoffering and request payment of an amount in cash equal to the 2002 Stock Incentive Plan.
The 2002 Stock Incentive Planaccumulated payroll deductions credited to the participant's account under the ESPP. In no event will terminate on March 31, 2012, unless earlier terminated by the Board. Termination of the 2002 Stock Incentive Plan will not affect Awards made priora participant receive interest with respect to termination, but no Awards will be made after termination.his or her payroll deductions, whether used to exercise options or returned in cash.
Shares SubjectTermination of Employment. Upon termination of employment for any reason other than death, the participant will receive a payment in cash of the amount credited to the 2002 Stock Incentive Plan. The total number of shares of our Common Stock that may be subject to Awardsparticipant's account under the 2002 Stock Incentive Plan may not exceed 1,352,543 shares, or 3,352,543 shares if the amendment is approved. The shares may be authorized but unissued shares or treasury shares. The total amount of Common Stock that may be granted under the Plan to any single person in any calendar year may not exceed in the aggregate 500,000 shares. To the extent that
13
an option or other form of Award lapses or is forfeited, the shares subject to the Award will again become available for grant under the terms of the 2002 Stock Incentive Plan.
ESPP. In the event that a participant dies prior to the end of any change inan offering period, the number of shares or kind of Common Stock outstanding pursuant to a reorganization, recapitalization, exchange of shares, stock dividend or split or combination of shares, appropriate adjustmentsparticipant's account will be madepaid in cash to the numberhis or her estate.
Restrictions on Transfer. A participant may not transfer, assign, pledge or otherwise dispose of shares of authorized Common Stock, to the number of shares of Common Stock subject to outstanding Awards, to the exercise price per share of options and other forms of Awards and to the kind of shares that may bean option issued under the 2002 Stock Incentive Plan.
As of April 1, 2004, 785,064 options to purchase shares of Common Stock were outstandingESPP. Shares acquired under the 2002 Stock Incentive Plan.ESPP at the end of an offering period will be freely tradable, subject in all cases to the participant's compliance with applicable laws and the Company's Statement of Insider Trading Policy.
Administration. AlthoughThe ESPP became effective April 7, 2003 and is administered by the BoardCompensation Committee. The Compensation Committee has the authority to administer the Plan, it has generally delegated this authority to the Incentive Plan Subcommittee, which administers all of our equity-based compensation plans. Each member of the Incentive Plan Subcommittee is a "non-employee director" within the meaning of Rule 16b-3 promulgated under the Exchange Actadopt, amend and an "outside director" within the meaning of Section 162(m) of the Code.
Subject to the terms of the 2002 Stock Incentive Plan, the Incentive Plan Subcommittee has the authority to: (1) select Optionees; (2) determine the terms and conditions of Awards, including the price to be paid by an Optionee for any Common Stock; and (3) interpret the 2002 Stock Incentive Plan and prescriberescind such rules and regulations foras, in its administration.opinion, may be advisable in the administration of the ESPP and to decide all questions of interpretation and application of such rules and regulations, which decision will be final and binding.
Stock Options.Forfeiture for Dishonesty. The Incentive Plan Subcommittee may grant incentive stock optionsIf the Board determines that a participant has engaged in fraud, embezzlement, theft, commission of a felony or proven dishonesty in the course of his or her employment that has damaged the Company or a subsidiary or has disclosed trade secrets or other proprietary information of the Company or a subsidiary, (1) the individual's participation in the ESPP will terminate and nonqualified stock options under the 2002participant will forfeit his or her right to receive any Common Stock Incentive Plan. The Incentive Plan Subcommittee determinesthat has not been delivered pursuant to an offering and (2) the numberCompany will have the right to repurchase all or any part of the shares of Common Stock subject to each option, its exercise price, its duration and the manner and time of exercise. Incentive stock options may be issued only to employees of the Company or of a corporate subsidiary of ours, and the exercise price must be at least equal to the fair market value of the Common Stock as of the date the option is granted. Further, an incentive stock option generally must be exercised within ten years of grant. The Incentive Plan Subcommittee, in its discretion, may provide that any option is subject to vesting limitations that make it exercisable during its entire duration or during any lesser period of time.
The exercise price of an option may be paid in cash, in shares of Common Stock ownedacquired by the Optionee, by delivery of a recourse promissory note secured byparticipant upon the Common Stock acquired upon exercise of the option (provided that such a loan would not be available to any executive officer or director of the Company) or by means of a "cashless exercise" procedure in which a broker transmits to us the exercise price in cash, either as a margin loan or against the Optionee's notice of exercise and confirmation by us that we will issue and deliver to the broker stock certificates for that number of shares of Common Stock having an aggregate fair market value equal to the exercise price, or agrees to pay the exercise price to us in cash upon its receipt of stock certificates.
In its discretion, and subject to the terms of the 2002 Stock Incentive Plan, the Incentive Plan Subcommittee may grant a reload option to purchase the number of shares of Common Stock delivered to us in full or partial payment of the exercise price on theearlier exercise of any option or in full or partial payment ofpursuant to the tax withholding obligations resulting from the exercise of any option.
Options are,ESPP, at the discretion of the Incentive Plan Subcommittee, transferable to members of the Optionee's immediate family or to a family partnership or trust for the benefit of the Optionee's immediate family.
Stock Appreciation Rights. The Incentive Plan Subcommittee may also grant stock appreciation rights to Optionees on such terms and conditions as it may determine. Stock appreciation rights may be granted separately or in connection with an option. Upon the exercise of a stock appreciation right, the
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Optionee is entitled to receive paymentprice equal to the excess of the fair market value, on the date of exercise, of the number of shares of Common Stock for which the stock appreciation right is exercised, over the exercise price for the Common Stock under a related option, or if there is not a related option, over an amount per share stated in the agreement setting forth the terms and conditions of the stock appreciation right. Payment may be made in cash or other property, including Common Stock, in accordance with the provisions of the applicable agreement. Upon the exercise of a stock appreciation right related to an option, the option will terminate aspaid to the number of shares of Common Stock for which the stock appreciation right is exercised.
Stock Grants. The Incentive Plan Subcommittee may issue shares of Common Stock to Optionees, eitherCompany upon exercise, together with or without restrictions, as determined by it in its discretion. Restrictions may include conditions that require the Optionee to forfeit the shares in the event that the holder ceases to provide services to us or one of our subsidiaries before a stated time. Unlike holders of options and stock appreciation rights, the recipient of a stock grant, including a stock grant subject to restrictions, unless otherwise provided for in a restricted stock agreement, has the rights of a shareholder of ours to vote and to receive payment of dividends on the Common Stock.
Special Bonus Award. The Incentive Plan Subcommittee may grant in connection with any nonqualified stock option or stock grant a special cash bonus in an amount not to exceed the lesser of (1) the combined federal, state and local income and employment tax liability incurred by the Optionee as a consequence of acquiring Common Stock on the exercise of the option or the grant or vesting of Common Stock, and the related special bonus, or (2) 30% of the imputed income realized by the Optionee on account of the exercise or vesting, and the related special bonus. A grant may also provide that the Company will lend an Optionee an amount not more than the amount described in the preceding sentence, less the amount of any special cash bonus.interest.
Effect of Certain Corporate Transactions.Changes. If, while unexercised Awards remain outstanding underbefore an offering closes, the 2002 Stock Incentive Plan we mergeCompany merges or consolidateconsolidates with one or more corporations (whether or not we arethe Company is the surviving corporation), if we areor the Company is liquidated, or sellsells or otherwise disposedisposes of substantially all of ourits assets to another entity, or if there is a "change in control"of control," then except as otherwise specifically provided to the contrary in any applicable agreement, the Incentive Plan Subcommittee mayCompensation Committee, in its discretion, amend the terms of all unexercised Awards so that may
either: (1) convert outstanding options such that after the effective date of the event, each Optioneeparticipant is entitled upon exercise of an Award, to receive, in lieu of Common Stock, the number and class of shares of suchthe stock or other securities to which he or shethe participant would have been entitled had he or shethe participant been a shareholder at the time of the event,event; or is entitled to receive from(2) end the successor entity a new Awardoffering and exercise the options as of comparable value; (2) each Optionee is given an opportunity to exercise all or some of his or her unexercised Awards during a twentythe day period ending with the event, at which time the unexercised Awards will be cancelled; or (3) all unexercised Awards are cancelled as ofbefore the effective date of the event in consideration for cash or other consideration with a value equal to the valueevent.
A "change of the shares the Optionee would have received had the Award been exercised (to the extent exercisable). In addition to the foregoing, the Incentive Plan Subcommittee may in its discretion also amend the terms of an Award by cancelling some or all of the restrictions on its exercise to permit its exercise to a greater extent than that permitted under its existing terms.
For these purposes, a change of control willcontrol" shall be deemed to have occurred if any person (as thatsuch term is used in Section 13(d) and 14(d)(2) of the Exchange Act) other than a trust related to anyan employee benefit plan maintained by the Company becomes the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of 50% or more of our outstanding Common Stock, and within the period of 24 consecutive months immediately thereafter, individuals other than (1) individuals who at the beginning of such period constitute the entire Board or (2) individuals whose election, or nomination for election by the Company's shareholders, was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of the period, become a majority of the Board.
15 If the Reincorporation described in Item 2 takes place, all employee benefit, stock option and employee stock purchase plans of Iron Mountain PA will become Iron Mountain DE plans, and each option or right issued by such plans will automatically be converted into an option or right to purchase the same number of shares of Iron Mountain DE common stock, at the same price per share, upon the same terms and subject to the same conditions, as set forth in Item 2 above.
Amendments toAmendment or Termination of the 2002 Stock Incentive Plan.ESPP. The Board may modify, revise or terminate the 2002 Stock Incentive Plan at any time, andwithout a vote by shareholders, terminate or, from time to time, exceptamend, modify or suspend the ESPP; provided, however, that without shareholder approval of our shareholders is required with respect to any amendment tothere will be no: (1) change in the aggregate number of shares of Common Stock that may be issued under the 2002 Stock Incentive Plan or to any personESPP; (2) change in a year, change the class of persons eligible to receive Awardsparticipate in the ESPP; or make any(3) other changeschange to the ESPP that requirerequires shareholder approval under applicable law. Amendments adversely affecting outstanding Awards may notUnless terminated earlier, the ESPP will terminate on the date on which there are no longer any shares of Common Stock available to be made without the consent of the holder of the Award.offered.
The Board may also amend the 2002 Stock Incentive Plan as necessary to enable awards to qualify for favorable foreign tax treatment in the case of an Optionee who is subject to a tax regime outside the United States.
Tax Treatment.The following description of the federal income tax consequences of Awardsthe ESPP is general and does not purport to be complete. In addition, the description does not discuss the tax consequences arising as a result of the participant's death or of the tax consequences of the ESPP under the laws of any state or foreign country in which the participant may reside.
Federal Income Tax TreatmentConsequences of Options.the ESPP. An Optionee realizes no taxable income when a nonqualifiedThe ESPP is intended to constitute an "employee stock option is granted. Instead, the difference between the fair market valuepurchase plan" under Section 423 of the Common Stock acquired pursuant toCode. As presently in effect, under Section 423 of the Code, a participant will not realize income as a result of either the grant of an option at the start of an offering period or the exercise of an option at the end of an offering period and the Company will not be entitled to an income tax deduction at such grant date or exercise price paid is taxed as ordinary compensation income whendate. If the option is exercised. The difference is measured and taxed asparticipant does not dispose of the datestock acquired under the ESPP before the earlier of exercise, iftwo years after the Common Stock is not subject to a "substantial riskstart of an offering or forfeiture," or asone year after the end of the date or dates on which the risk terminates in other cases. An Optionee may elect to be taxed on the difference between the exercise price and the fair market value of the Common Stock on the date of exercise, even though some or all of the Common Stock acquired is subject to a substantial risk of forfeiture. Gain onan offering, then upon the subsequent sale of the Common Stock acquired by exercise ofstock, the option is taxed as capital gain. We receive no tax deduction on the grant of a nonqualified stock option, but we are entitled to a tax deduction when the Optionee recognizesparticipant will have ordinary compensation income on or after exercise of the option, in the same amount as the income recognized by the Optionee.
Generally, an Optionee incurs no federal income tax liability on either the grant or the exerciselesser of an incentive stock option, although an Optionee will generally have taxable income for alternative minimum tax purposes at the time of exercise equal to the excess15% of the fair market value of the Common Stock subjectstock as of the start of the offering or the excess, if any, of the selling price of the stock over the option price. Any additional gain or loss will be treated as long-term capital gain or loss. The Company is not entitled to an income tax deduction with respect to the option overordinary compensation income described above.
If the exercise price. Provided thatparticipant disposes of the Common Stock is held for at leaststock acquired under the ESPP before the earlier of two years after the start of the offering or one year after the date of exerciseend of the option and at least two years after its date of grant, any gain realized on a subsequent sale of the Common Stock will be taxed as long-term capital gain. If the Common Stock is disposed of within a shorter period of time, the Optionee will recognize ordinary compensation income in an amount equal to the difference between the sales price and the exercise price or (if less) the difference between the fair market value at the time of exercise and the exercise price. We receive no tax deduction on the grant or exercise of an incentive stock option, but we are entitled to a tax deduction if the Optionee recognizes ordinary compensation income on account of a premature disposition of shares acquired on exercise of an incentive stock option, in the same amount and at the same time as the Optionee recognizes income.
Tax Treatment of Stock Appreciation Rights. An Optionee recognizes no income upon the grant of a stock appreciation right, but upon its exercise realizes ordinary compensation income in an amount equal to the cash or cash equivalent that he receives at that time. If the Optionee receives Common Stock upon exercise of the stock appreciation right, he recognizes ordinary compensation income measured by the fair market value of the Common Stock so received (or, if the Common Stock is subject to a substantial risk of forfeiture, at the date or dates on which the risk expires, unless he or she elects to be taxed currently). We are entitled to a tax deduction in the amount of ordinary compensation income recognized.
Tax Treatment of Stock Grants. A person who receives a stock grant without any restrictions will recognize ordinary compensation income on the fair market value of the Common Stock over the
16
amount (if any) paid for the Common Stock. If the Common Stock is subject to restrictions, the recipient generally will not recognize ordinary compensation income at the time the award is received, but will recognize ordinary compensation income when restrictions constituting a substantial risk of forfeiture lapse. The amount of such income will be equal tooffering, then the excess, of the aggregate fair market value, as of the date the restrictions lapse, over the amount (if any) paid for the Common Stock. Alternatively, the Optionee may elect to be taxed, pursuant to Section 83(b) of the Code, on the excessif any, of the fair market value of the Common Stockstock at the timeend of grantthe offering over the amount (if any) paid for the Common Stock, notwithstanding any restrictions. All such taxable amounts are deductible by us at the time and in the amount of theoption price will be ordinary compensation income recognized by the Optionee.
Section 162(m) of the Code. Section 162(m) of the Code generally disallows an income tax deduction to public companies for compensation in excess of $1,000,000 paid in any year to the chief executive officer and any of the four most highly compensated other executive officers, to the extent that this compensation is not "performance based" within the meaning of Section 162(m) of the Code. In the case of a stock plan, the performance-based exception is satisfied if, in addition to other requirements, the plan, including the amount of stock available for grant under the plan, is approved by shareholders, the grants are made by a committee of outside directors,participant, and the amount of compensation a person can receive is based solely on an increase in the value of the Common Stock after grant. If the amendment to increase the number of shares available for grant under the 2002 Stock Incentive Plan is approved by shareholders, one of the requirements for the performance-based exceptionCompany will be satisfiedentitled to a deduction with respect to shares awarded underthat income. Any additional gain or loss will be treated as short-term or long-term capital gain or loss, depending on the Plan.holding period.
Required Vote
The affirmative vote of holders of a majority of the votes properly cast at the Annual Meeting is required to approve the amendment to the 2002 Stock Incentive PlanESPP to increase the number of shares of Common Stock issuable thereunder from 1,352,5431,125,000 to 3,352,543.2,325,000. For purposes of determining whether a majority of the votes have been cast in favor of the approval of the amendment to the 2002 Stock Incentive Plan,ESPP, only those cast "For" or "Against" are included, and any abstentions or broker non-votes will not count in making that determination. Additionally, NYSE rules require that at least a majority of the votes that all shareholders are entitled to cast at the Annual Meeting must vote on the Plan Amendment, whether for or against.
The Board recommends that you vote FOR the approval of the amendment to the 20022003 Employee Stock IncentivePurchase Plan.
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
Subject to ratification by the shareholders, the Audit Committee has selected the firm of Deloitte & Touche LLP as the Company's independent public accountants for the current year.
Representatives of Deloitte & Touche LLP are expected to be present at the Annual Meeting. They will have the opportunity to make a statement if they desire to do so and will be available to respond to appropriate questions from shareholders who are present at the Annual Meeting.
The fees we paid to Deloitte & Touche in 2004 are shown in the table appearing in this proxy statement under the heading "Additional Information—Auditors."
If the shareholders do not ratify the selection of Deloitte & Touche LLP as the Company's independent public accountants, the selection of accountants will be reconsidered by the Audit Committee.
Required Vote
The affirmative vote of holders of a majority of the votes properly cast at the Annual Meeting is required to ratify the selection of Deloitte & Touche LLP to serve as the Company's independent public accountants for the current fiscal year. For purposes of determining the number of votes cast, only those cast "For" or "Against" are included, and any abstentions or broker non-votes will not count in making that determination.
The Board recommends that you vote FOR the ratification of the selection of Deloitte & Touche LLP.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information known to the Company with respect to beneficial ownership of Common Stock by (1) each director, (2) the Chief Executive Officer, and the other fourthree most highly compensated executive officers of the Company (theand Robert G. Miller and Peter Delle Donne, each of whom would have been one of the most highly compensated executive officers of the Company for 2004 but for the fact that he was no longer an executive officer of the Company as of the end of 2004 (collectively, the "Named Executive Officers"), (3)(4) all directors, the Chief Executive Officer and Named Executive Officersthe other three most highly compensated executive officers of the Company as a group and (4)(5) each shareholder known by us to be the beneficial owner of more than five percent of the Common Stock. Such information is presented as of March 1, 2004,2005, except as otherwise noted.
| Amount of Beneficial Ownership(1) | ||||
---|---|---|---|---|---|
Name | Shares | Percent Owned | |||
Directors and Executive Officers | |||||
C. Richard Reese(2) | 2,340,071 | 2.7 | % | ||
John F. Kenny, Jr.(3) | 436,702 | * | % | ||
Harold E. Ebbighausen(4) | 45,255 | * | % | ||
Robert G. Miller(5) | 112,495 | * | % | ||
Peter E. Delle Donne(6) | 55,227 | * | % | ||
Clarke H. Bailey(7) | 98,049 | * | % | ||
Constantin R. Boden(8) | 60,448 | * | % | ||
Kent P. Dauten(9) | 1,530,183 | 1.8 | % | ||
Eugene B. Doggett(10) | 35,093 | * | % | ||
B. Thomas Golisano(11) | 1,872,654 | 2.2 | % | ||
Arthur D. Little(12) | 55,818 | * | % | ||
Vincent J. Ryan (13) | 7,660,530 | 8.9 | % | ||
All directors and executive officers as a group (12 persons)(14) | 12,991,152 | 15.0 | % | ||
Five Percent Shareholders | |||||
Warren E. Buffett(15) | 5,018,500 | 5.9 | % | ||
Chieftain Capital Management, Inc.(16) | 11,228,800 | 13.1 | % | ||
T. Rowe Price Associates, Inc.(17) | 5,840,078 | 6.8 | % | ||
Thomas W. Smith(18) | 5,334,259 | 6.2 | % | ||
Thomas N. Tryforos(19) | 4,599,586 | 5.4 | % | ||
Scott J. Vassalluzo(20) | 4,611,770 | 5.4 | % |
| Amount of Beneficial Ownership(1) | ||||
---|---|---|---|---|---|
Name | Shares | Percent Owned | |||
Directors and Executive Officers | |||||
C. Richard Reese(2) | 3,507,671 | 2.7 | % | ||
John F. Kenny, Jr.(3) | 579,527 | * | % | ||
Robert T. Brennan(4) | — | — | |||
Harold E. Ebbighausen(5) | 83,013 | * | % | ||
Robert G. Miller(6) | 184,038 | * | % | ||
Jean A. Bua(7) | 63,374 | * | % | ||
Peter E. Delle Donne(8) | 103,852 | * | % | ||
Clarke H. Bailey(9) | 149,687 | * | % | ||
Constantin R. Boden(10) | 93,285 | * | % | ||
Kent P. Dauten(11) | 2,027,128 | 1.6 | % | ||
B. Thomas Golisano(12) | 2,636,594 | 2.0 | % | ||
Arthur D. Little(13) | 39,199 | * | % | ||
Vincent J. Ryan (14) | 11,476,302 | 8.8 | % | ||
All directors and executive officers as a group (11 persons)(15) | 20,839,818 | 16.0 | % | ||
Five Percent Shareholders | |||||
Davis Selected Advisers, L.P.(16) | 15,952,422 | 12.3 | % | ||
T. Rowe Price Associates, Inc. (17) | 8,308,066 | 6.4 | % | ||
Thomas W. Smith (18) | 7,534,243 | 5.8 | % | ||
Scott J. Vassalluzo(19) | 6,637,082 | 5.1 | % | ||
Daniel J. Englander (20) | 42,975 | * | % |
Schooner Trust 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
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Common Stock. Schooner Trust has agreed to vote the shares of Common Stock subject to such arrangement at the direction of Mr. Reese.
Meyer 2003 Trust. The Trustees of the Meyer Trust have joint voting and dispositive power over such shares.
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resultTrust. Mr. Ryan is Chairman and the beneficial owner of such deferred compensation arrangement described above in note (2).Schooner. Pursuant to such deferred compensation arrangement, upon the earlier to occur of (i) Schooner Trust's sale or exchange of all or a portion of those 1,311,3731,967,059 shares, after all other shares of Iron Mountain Common Stock held by Schooner Trust have been sold, or (ii) the cessation of Mr. Reese's employment with Iron Mountain, Schooner Trust is required to transfer such shares (or portion thereof) to Mr. Reese, or remit to Mr. Reese cash in an amount equal to the then current fair market value of such shares. Schooner Trust has agreed to vote the shares subject to such deferred compensation arrangement at the direction of Mr. Reese. Thus Mr. Ryan has sole voting power with respect to 2,792,7414,189,112 shares held by Schooner Trust, and has sole dispositive power with respect to the entire 4,104,1146,156,171 shares held by Schooner Trust. Mr. Ryan is President of Schooner Trust and he, and members of his family, are the sole shareholders of Schooner Trust.
Mr. Ryan's address is c/o Schooner Capital LLC, 745 Atlantic Avenue, Boston, Massachusetts 02111.
6,637,082 shares with Mr. TryforosEnglander and Mr. Vassalluzo. The address of Mr. Smith is 323 Railroad Avenue, Greenwich, Connecticut 06830.
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Executive CompensationEXECUTIVE COMPENSATION
The following table provides certain information concerning compensation earned by the Chief Executive Officer and the Named Executive Officers measured as of December 31, 2003.2004, 2003 and 2002.
Summary Compensation Table
| Annual Compensation | Long-Term Compensation | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name and Principal Position | Year | Salary | Bonus | Other Annual Compensation | Number of Shares Underlying Options | All Other Compensation(1) | ||||||||||
C. Richard Reese Chairman of the Board and Chief Executive Officer | 2004 2003 2002 | $ | 849,526 770,769 685,577 | $ | 1,375,000 1,168,197 1,300,000 | $ | 0 0 0 | 0 0 0 | $ | |||||||
John F. Kenny, Jr. Executive Vice President and Chief Financial Officer | 2004 2003 2002 | $ | 364,006 332,692 310,673 | $ | 250,000 201,695 341,740 | |||||||||||
$ | 0 0 0 | 0 0 | $ | |||||||||||||
Harold E. Ebbighausen President of IMOSDP, a division of IMIM from 2002 until December 2004; currently Group President, North American Service Delivery | 2004 2003 2002 | $ | 275,648 258,000 254,250 | $ | 264,622 258,000 254,250 | $ | 0 0 0 | 0 0 24,155 | $ | 4,206 3,653 2,401 | ||||||
Jean A. Bua Senior Vice President and Corporate Controller | 2004 2003 2002 | $ | 213,577 189,446 174,269 | $ | 44,036 34,455 52,281 | $ | 0 0 0 | 0 11,720 0 | $ | 2,237 3,619 2,635 | ||||||
Robert G. President and Chief Operating Officer of IMRM, a division of IMIM | 2004 2003 2002 | $ | 280,831 274,250 | $ | 0 117,949 246,825 | $ | 0 0 0 | 0 | $ | |||||||
Peter E. Delle President of Iron Mountain Enterprise Solutions and Services, a division of IMIM | 2004 2003 2002 | $ | 316,369 295,192 | $ | 203,724 94,911 214,980 | $ | 0 0 0 | 10,470 0 0 | $ |
following: (i) the Company's matching contribution to The Iron Mountain Companies 401(k) Plan in the amount of $3,819 for Messers. Reese, Kenny, Ebbighausen, Miller and Delle Donne and $1,935 for Ms. Bua and (ii) group term life insurance premiums paid by the Company in the amounts of $720 for Mr. Reese, $511 for Mr. Kenny, $387 for Mr. Ebbighausen, $302 for Ms. Bua, $421 for Mr. Miller and $72 for Mr. Delle Donne.
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The following table sets forth certain information concerning the grant of options to purchase the Company's Common Stock to thosethe Named Executive Officers who were granted options during the year ended December 31, 2003.2004.
Option Grants In 20032004
| | | | | Potential Realizable Value at Assumed Annual Rates of Stock Price Appreciation for Option Term(1) | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Number of Securities Underlying Options Granted | Percent of Total Options Granted to Employees in Fiscal Year 2003 | | | |||||||||||
Name | Exercise Price ($/Sh) | Expiration Date | |||||||||||||
5% | 10% | ||||||||||||||
John F. Kenny, Jr. | 6,510 | 1.42 | % | $ | 38.40 | 3/26/2013 | $ | 407,198 | $ | 648,394 | |||||
Robert G. Miller | 13,021 | 2.84 | % | $ | 38.40 | 3/26/2013 | $ | 814,458 | $ | 1,296,888 |
| | | | | Potential Realizable Value at Assumed Annual Rates of Stock Price Appreciation for Option Term(1) | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Number of Securities Underlying Options Granted | Percent of Total Options Granted to Employees in Fiscal Year 2004 | | | |||||||||||
Name | Exercise Price ($/Sh) | Expiration Date | |||||||||||||
5% | 10% | ||||||||||||||
Peter E. Delle Donne | 10,470 | 1.29 | % | $ | 28.650 | 2/19/2014 | $ | 488,612 | $ | 778,033 |
The following table sets forth certain information with respect to stock options during the year ended December 31, 20032004 exercised by, and the unexercised options to purchase Common Stock held by, the Named Executive Officers. Mr. Reese does not have any options.
Aggregated Option Exercises In Last Fiscal Year And Fiscal Year End Option Values
| | | Number of Securities Underlying Unexercised Options at December 31, 2003 | Value of Unexercised In-the-Money-Options at December 31, 2003(1) | | | Number of Securities Underlying Unexercised Options at December 31, 2004 | Value of Unexercised In-the-Money-Options at December 31, 2004(1) | ||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name | Shares Acquired On Exercise | Value Realized | Shares Acquired On Exercise | Value Realized | ||||||||||||||||||||||||||
Exercisable | Unexercisable | Exercisable | Unexercisable | Exercisable | Unexercisable | Exercisable | Unexercisable | |||||||||||||||||||||||
John F. Kenny, Jr. | 0 | $ | 0 | 380,166 | 59,540 | $ | 9,639,534 | $ | 639,844 | 127,841 | $ | 2,895,686 | 478,907 | 52,813 | $ | 9,491,763 | $ | 550,958 | ||||||||||||
Harold E. Ebbighausen | 0 | $ | 0 | 29,594 | 23,593 | $ | 525,103 | $ | 296,456 | 13,379 | $ | 208,422 | 51,910 | 14,494 | $ | 796,046 | $ | 142,664 | ||||||||||||
Jean A. Bua | 31,610 | $ | 693,934 | 39,146 | 12,077 | $ | 679,291 | $ | 88,964 | |||||||||||||||||||||
Robert G. Miller | 7,806 | $ | 187,097 | 94,585 | 39,565 | $ | 2,400,073 | $ | 476,110 | 54,000 | $ | 1,347,360 | 114,199 | 33,027 | $ | 1,945,043 | $ | 349,245 | ||||||||||||
Peter E. Delle Donne | 0 | $ | 0 | 40,512 | 40,516 | $ | 608,760 | $ | 608,821 | 0 | $ | 0 | 81,064 | 50,947 | $ | 1,143,359 | $ | 590,899 |
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Equity Compensation Plan Information
The following provides certain equity compensation plan information with respect to all of our equity compensation plans in effect as of December 31, 2003:2004:
Plan Category | Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in first column) | Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in first column) | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Equity compensation plans approved by security holders | Equity compensation plans approved by security holders | 3,950,884 | $ | 20.59 | 1,630,616 | Equity compensation plans approved by security holders | 5,272,046 | $ | 16.55 | 4,498,639 | ||||||||
Equity compensation plans not approved by security holders | Equity compensation plans not approved by security holders | 0 | 0 | 0 | Equity compensation plans not approved by security holders | 0 | 0 | 0 | ||||||||||
Total | 5,272,046 | (1) | $ | 16.55 | 4,498,639 | (2) | ||||||||||||
Total | 3,950,884 | (1) | $ | 20.59 | 1,630,616 | (2) |
Compensation Committee Report on Executive Compensation
The Compensation Committee consists entirely of directors who are not employees of the Company. It is the Compensation Committee's responsibility to review, recommend and approve the Company's compensation policies and programs, including all compensation for the Chief Executive Officer and the other executive officers of the Company for the fiscal year ended December 31, 2003.2004.
The Incentive Plan SubcommitteeCompensation Committee consists entirely of directors who are both "non-employee" directors within the meaning of Rule 16b-3 under Section 16 of the Exchange Act and "outside" directors within the meaning of Section 162(m) of the Code and the regulations thereunder, so that grants of options under the 1995 Plan, the 1997 Plan and the 2002 Stock Incentive Plan to executive officers wereare (or were) exempt under Rule 16b-3 and generally eligible for the "performance-based" exception of Section 162(m) of the Code. The Incentive Plan SubcommitteeCompensation Committee administered the 1995 Plan, the 1997 Plan and the 2002 Stock Incentive Plan and in exercise of that function determined what grants of stock options, restricted stock appreciation rights and stock appreciation rightsgrants (whether or not restricted) thereunder were to be made to the Chief Executive Officer and the other executive officers of the Company. The Incentive Plan SubcommitteeCompensation Committee also administered the Iron Mountain/ATSI 1995 Stock Option Plan, the Nonqualified Stock Option Plan of Pierce Leahy Corp., the 1995 Plan, the 1997 Plan (although no additional grants were made under any of those plans)plans in 2004), the Executive Deferred Compensation Plan and the ESPP. (Prior to March 2004, a subcommittee of the Compensation Committee administered each of the aforementioned plans.)
The purpose of the 1995 Plan, the 1997 Plan, the 2002 Stock Incentive Plan and the other stock incentive plans administered by the Incentive Plan SubcommitteeCompensation Committee is to encourage key employees, directors and consultants of the Company who render services of special importance to, and who contribute materially to the success of, the Company to continue their association with the Company by providing favorable opportunities for them to participate in the ownership of the Company and in its future growth.
The purpose of the ESPP is to provide employees of the Company with the opportunity to acquire an equity interest in the Company by providing favorable terms for them to purchase the Company's Common Stock.
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The Executive Deferred Compensation Plan is maintained for the purpose of providing deferred compensation to a select group of management and highly compensated employees of the Company. This plan is expected to encourage the continued employment of the participating employees, whose management and individual performance are largely responsible for the success of the Company, and to facilitate the recruiting of key management and highly compensated employees required for the continued growth and profitability of the Company.
The Compensation Committee determined the salary levels of the Company's executive officers, including the Chief Executive Officer, and other officers for fiscal year 2003,2004, and the amounts of bonuses paid in 20042005 for performance in fiscal year 2003.2004. The compensation policies implemented by the Compensation Committee, which combine base salary and incentive compensation in the form of cash bonuses and long-term stock options, are designed to achieve the operating and acquisition strategies and goals of the Company. The Compensation Committee establishes base compensation for executive officers, including the Chief Executive Officer, based upon third-party compensation surveys, taking into account the other compensation components offered by the Company, the size and complexity of the Company, the experience and expected future contributions of each executive officer and other factors. Cash bonuses for executive officers are determined after the completion of each fiscal year, based upon an evaluation of the Company's performance during the year as compared with certain fiscal goals of the Company for the year, together with each executive officer's performance during such year and, in the case of the Chief Executive Officer, pursuant to the 2003 Senior Executive Incentive Program (the "SEIP").
Section 162(m) of the Code generally disallows an income tax deduction to public companies for compensation in excess of $1,000,000 paid in any year to the Chief Executive Officer or any of the four other most highly compensated executive officers, to the extent that this compensation is not "performance-based" within the meaning of Section 162(m). The Compensation Committee's general policy, subject to all then prevailing relevant circumstances, is to attempt to structure the compensation arrangements of the Company to maximize deductions for federal income tax purposes. In connection with a review of Mr. Reese's compensation package, the Board adopted and the shareholders approved the SEIP in 2003 in part to maximize the deduction for compensation paid to Mr. Reese. With respect to Mr. Reese's bonus paid in 20042005 for performance in fiscal year 2003,2004, the Compensation Committee timely certified in writing that the performance goals and other material terms of the SEIP were satisfied. The Compensation Committee also timely established, pursuant to the SEIP, the criteria for any bonus for which Mr. Reese may be eligible in 20052006 for performance in fiscal year 2004.2005.
COMPENSATION COMMITTEE CLARKE H. BAILEY,Chairman CONSTANTIN R. BODEN ARTHUR D. LITTLE |
Change of Control Arrangement
The 1995 Plan provides for acceleration of the vesting of options and stock appreciation rights if the Company or any wholly owned subsidiary of the Company is a party to a merger or consolidation (whether or not the Company is the surviving corporation) in any transaction or series of related transactions and there is a "Limited Change of Control" of the Company. As of December 31, 2003,2004, there were 309,337175,471 unvested options under the 1995 Plan. The 1997 Plan and the 2002 Stock Incentive Plan do not contain this provision. A Limited Change of Control occurs if after the merger or consolidation (1) individuals who immediately prior to the merger or consolidation served as members of the Board no longer constitute a majority of the Board or the board of directors of the surviving
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corporation and (2) the voting securities of the Company outstanding immediately prior to the merger or consolidation do not represent (either by remaining outstanding or upon conversion into securities of the surviving corporation) more than 50% of the voting power of the securities of the Company or the surviving corporation immediately after the merger or consolidation.
Compensation Committee Interlocks and Insider Participation
For the year ended December 31, 2003, the Compensation Committee of the Board consisted of Mr. Bailey, who is the Chairman, and Messrs. Boden, Little and Ryan. Mr. Ryan is the Chairman of the Board and Chief Executive Officer of Schooner and principal shareholder of Schooner Trust. Schooner is a party to a lease as described in "Certain Relationships and Related Transactions." Mr. Ryan resigned from the Compensation Committee effective March 5, 2004 so that the Compensation Committee would consist entirely of independent directors as required by NYSE listing standards.
Certain Relationships and Related Transactions
We lease space to an affiliated company, Schooner, leases space fromfor its corporate headquarters located in Boston, Massachusetts. For the Company at the Company's corporate headquarters. Vincent J. Ryan, a director of the Company, is the Chairman of the Board and Chief Executive Officer of Schooner. The lease is a tenancy-at-will and may be terminated by either the Company or by Schooner at any time. As consideration for the lease, Schooner pays rent to the Company based on its pro rata share of all expenses related to the use and occupancy of the premises. The rent paid by Schooner to the Company under such lease was $143,569.73 in the yearyears ended December 31, 2002, 2003 and 2004, Schooner currently pays annualpaid rent to us totaling $128,000, $144,000 and $153,000, respectively. We lease facilities from a trust of approximately $169,450. The Company believes thatwhich Neal Goldman, Vice President, Business Development for Iron Mountain Information Management, Inc. is the terms of this lease are no less favorable to it than would have been negotiated with an unrelated thirdbeneficiary and three separate limited partnerships, whose general partner was a related party. Our aggregate rental payment for such facilities during 2002, 2003 and 2004 was $1,372,000, $1,309,000 and $1,345,000, respectively.
The Company paid compensation of approximately $265,000$285,000 for the year ended December 31, 20032004 to Mr. T. Anthony Ryan. Mr. Ryan is Senior Vice President, Real Estate, of the Company and is the brother of Vincent J. Ryan, a director 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.
Audit Committee Report
Management is responsible for the Company's financial reporting process including its system of internal controls, and for the preparation of consolidated financial statements in accordance with generally accepted accounting principles. The Company's independent auditorpublic accountant is responsible for auditing those financial statements. The Audit Committee's responsibility is to monitor and review these processes.
The Audit Committee has reviewed and discussed with the independent auditorpublic accountant and management the plan and results of the auditing engagement and the audited financial statements for the fiscal year ended December 31, 2003.2004. The Audit Committee has reviewed with management the scope and nature of the Company's internal auditing controls and has discussed with the independent auditorpublic accountant the matters required to be discussed by Statement on Auditing Standards No. 61, Communications with Audit Committee. In addition, the Audit Committee has received the written disclosures and the letter from the independent auditorpublic accountant required by Independence Standards Board No. 1, Independence Discussions With Audit Committees and discussed with the independent auditorpublic accountant its independence from the Company and its management. The Audit Committee considered whether the provision of nonaudit services by the independent auditorpublic accountant is compatible with maintaining the independent auditor'spublic accountant's independence and concluded that it was acceptable at this time.
The Audit Committee has reported to the Board its activities, conclusions and recommendations. Specifically, in reliance on the reviews and discussions referred to above, the Audit Committee
25
recommended to the Board, and the Board has approved, that the audited financial statements be included in the Company's Annual Report on Form 10-K for the year ended December 31, 2003,2004, as filed with the Commission on March 11,16, 2004. The Audit Committee has approved the reappointment of Deloitte & Touche LLP as the Company's independent auditorpublic accountant for the fiscal year ending December 31, 2004.2005.
AUDIT COMMITTEE CONSTANTIN R. BODEN,Chairman ARTHUR D. LITTLE KENT P. DAUTEN |
AuditorsIndependent Public Accountant
The Company is not required to submithas submitted the selection of the Company's auditorsindependent public accountant to a shareholder vote. On May 21, 2003, our Audit Committee engaged Deloitte & Touche LLPvote, as the Company's independent public accountants for the fiscal year ending December 31, 2003.
For a portion of fiscal year 2002, Arthur Andersen LLP acted as the Company's independent public accountants. On June 19, 2002, the Board, upon the recommendation of the Audit Committee and approval of the Executive Committee, dismissed Arthur Andersen as the Company's independent public accountants. The audit reports of Arthur Andersen on the Company's consolidated financial statements for the fiscal year ended December 31, 2001 did not contain any adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope or accounting principles. During the fiscal year ended December 31, 2001 and the subsequent interim period through June 19, 2002, there were no disagreements with Arthur Andersen on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to Arthur Andersen's satisfaction, would have caused Arthur Andersen to make reference to the subject matter of the disagreement in connection with its reports. None of the reportable events described under Item 304(a)(1)(v) of Regulation S-K occurred within the fiscal year ended December 31, 2001 or within the interim period through June 19, 2002.
The Company provided Arthur Andersen with a copy of the above disclosures. A letter dated June 19, 2002 from Arthur Andersen stating its agreement with the Company's statements is listed under Item 7 and filed as Exhibit 16.1 and incorporated by reference into the Company's report on Form 8-K filed June 19, 2002.
During the fiscal year ended December 31, 2001 and the subsequent interim period through June 19, 2002, the Company did not consult with Deloitte & Touche with respect to the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company's consolidated financial statements or regarding any other matters or events set forth in Item 304(a)(2)(i) and (ii) of Regulation S-K.4 above.
A representative of Deloitte & Touche is expected to be present at the Annual Meeting. They will have the opportunity to make a statement if they desire to do so and will be available to respond to appropriate questions from shareholders who are present at the Annual Meeting.
The fees for services provided by Deloitte & Touche LLP to us for the fiscal year ended December 31, 2003 and fees for services provided by Deloitte & Touche for the audit of the 2002
26
financial statements and services provided by Deloitte & Touche and Arthur Andersen for reviews of the financial statements included in the Company's 2002 quarterly reports were as follows:
| FY 2002 | FY 2003 | |||||
---|---|---|---|---|---|---|---|
Audit Fees(1) | $ | 693,000 | $ | 847,000 | |||
Audit-Related Fees(2) | $ | 178,000 | $ | 101,000 | |||
Tax Fees(3) | $ | 166,000 | $ | 640,000 | |||
Subtotal | $ | 1,037,000 | $ | 1,588,000 | |||
All Other Fees(4) | $ | 44,000 | $ | 73,000 | |||
Total Fees | $ | 1,081,000 | $ | 1,661,000 |
The Audit Committee has established policies and procedures which are intended to control the services provided by our auditorsindependent public accountant and to monitor their continuing independence. Under these policies, no audit or non-audit services may be undertaken by our auditorsindependent public accountant unless the engagement is specifically pre-approved by the Audit Committee. The Audit Committee may delegate to one or more members the authority to grant the pre-approvals required by this paragraph. The decisions of any member to whom authority is delegated to pre-approve an activity under this paragraph shallmust be presented to the full Audit Committee at each of its scheduled meetings.
The Audit Committee may not approve performancefees for services provided by the independent auditor or its personnel of the following non-audit servicesDeloitte & Touche LLP to us for the Company (unless permitted by SEC rulesfiscal year ended December 31, 2003 and applicableDecember 31, 2004 were as follows:
| FY 2003 | FY 2004 | |||||
---|---|---|---|---|---|---|---|
Audit Fees | $ | 847,000 | $ | 2,665,000 | |||
Audit-Related Fees(1) | $ | 101,000 | $ | 128,000 | |||
Tax Fees (2) | $ | 640,000 | $ | 437,000 | |||
Subtotal | $ | 1,588,000 | $ | 3,230,000 | |||
All Other Fees(3) | $ | 73,000 | $ | 3,000 | |||
Deloitte & Touche LLP Total Fees | $ | 1,661,000 | $ | 3,233,000 |
The Audit Committee will not approve engagements of our auditorsindependent public accountant to perform non-audit services for us if doing so will cause our auditorsindependent public accountant to cease to be independent within the meaning of applicable SEC or NYSE rules. In other circumstances, the Audit Committee considers among other things, whether our auditors areindependent public accountant is able to provide the required services in a more or less effective and efficient manner than other available service providers.
Since May 6, 2003, the date when SEC rules relating to approval of services byof auditors became effective, all services for which we engaged our auditors werehave been pre-approved by the Audit Committee. The total fees we paid to Deloitte & Touche and Arthur Andersen for services in 20022003 and 20032004 are set forth
above. The Audit Committee approved the engagement of Deloitte & Touche to provide these non-audit services because they determined that Deloitte & Touche's providing these services would not compromise its independence and that its familiarity with our record keeping and accounting systems would permit it to provide these services with equal or higher quality, quicker and at a lower cost than we could obtain these services from other providers.
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Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires that the Company's executive officers, directors, and persons who own more than ten percent of a registered class of the Company's equity securities file reports of ownership on Form 3 and changes in ownership on Form 4 or 5 with the Commission.SEC Such executive officers, directors and ten percent shareholders are also required by CommissionSEC rules to furnish to the Company copies of all Section 16(a) reports that they file. Based solely on its review of the copies of such forms received by it, or written representations from certain reporting persons that they were not required to file a Form 5, the Company believes that, during the fiscal year ended December 31, 2003,2004, the Company's executive officers, directors and ten percent shareholders complied with all Section 16(a) filing requirements applicable to such persons, except that eachRobert T. Brennan, our President of Jean A. Bua, our Chief Accounting Officer, John F. Kenny,North American Operations, was late in filing a director and our Chief Financial Officerreport on Form 3 relating to his status as a reporting person and Robert G. Miller, former President and Chief Operating Officer of IMRM wereand our current Executive Vice President, Asia/Pacific Business Development, was late in filing a report on Form 4 relating to options granted to eacha sale of them of which they were not notified in time to meet accelerated filing requirements.Company shares.
28
In February 2000, Iron Mountain merged with Pierce Leahy Corp. in a stock-for-stock merger. In order to provide comprehensive disclosure, the performance graphs for both Iron Mountain and Pierce Leahy prior to the merger are shown below, in addition to a performance graph for the combined company after the merger.
Iron Mountain—Pre-Merger
The following graph compares the percentage change in the cumulative total return on the common stock of Iron Mountain prior to the merger to the cumulative total returns of the S&P 500 Index and the S&P Small Cap 600 Index for fiscal years 1999, 1998, 1997 and 1996. This comparison assumes an investment of $100 on February 1, 1996 and the reinvestment of any dividends.
29
Pierce Leahy
The following graph compares the percentage change in the cumulative total return on Pierce Leahy's common stock to the cumulative total returns of the S&P 500 Index and the Russell 2000 Index for fiscal years 1999 and 1998 and for the portion of 1997 that Pierce Leahy's common stock was registered under Section 12 of the Exchange Act. This comparison assumes an investment of $100 on July 2, 1997 and the reinvestment of any dividends.
30
Iron Mountain—Post-Merger
The following graph compares the percentage change in the cumulative total return on the Common Stock of the combined Company after the merger of Iron Mountain and Pierce Leahy on February 1, 2000 to the cumulative total returns of the S&P 500 Index and the Russell 1000 Index for the period from February 1, 2000 through December 31, 2003.2004. This comparison assumes an investment of $100 on February 1, 2000 and the reinvestment of any dividends.
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The Board does not know of any other matters that may come before the Annual Meeting. However, if any other matters are properly presented to the meeting, it is the intention of the persons named in the accompanying proxy to vote, or otherwise act, in accordance with their best judgment on such matters.
Additional Documentation
The Company will furnish without charge to any shareholder, upon written or oral request, a copy of the Company's Annual Report on Form 10-K, including the financial statements and the financial statement schedules and other documents filed pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act. Requests for such documents should be addressed to the Secretary of Iron Mountain Incorporated, 745 Atlantic Avenue, Boston, Massachusetts 02111, telephone number (617) 535-4766.
By Order of the Board of Directors, | |
GARRY B. WATZKE,Secretary |
April 22, 200427, 2005
AUDIT COMMITTEEAGREEMENT AND PLAN OF MERGER
OF
IRON MOUNTAIN INCORPORATED
(A Delaware Corporation)
AND
IRON MOUNTAIN INCORPORATED
(A Pennsylvania Corporation)
THIS AGREEMENT AND PLAN OF MERGER, dated this day of May, 2005, is made by and between Iron Mountain Incorporated, a Pennsylvania corporation (the "Corporation"), and Iron Mountain Incorporated, a Delaware corporation (the "Surviving Corporation").
CHARTERWITNESSETH:
WHEREAS, the Corporation is a corporation duly organized and existing under the laws of the Commonwealth of Pennsylvania and is authorized to issue Two Hundred Million (200,000,000) shares of common stock, $0.01 par value per share (the "Common Stock"), and Ten Million (10,000,000) shares of Preferred Stock, $0.01 par value per share (the "Preferred Stock"), of which Preferred Stock there are no shares issued and outstanding as of the date hereof;
WHEREAS, the Surviving Corporation is a corporation duly organized and existing under the laws of the State of Delaware and is authorized to issue Two Hundred Million (200,000,000) shares of common stock, $0.01 par value per share (the "Surviving Common Stock"), one (1) of which is issued and outstanding as of the date hereof and owned by the Corporation, and Ten Million (10,000,000) shares of Preferred Stock, $0.01 par value per share (the "Surviving Preferred Stock"), of which Preferred Stock there are no shares issued and outstanding as of the date hereof;
WHEREAS, the Corporation desires to merge itself into the Surviving Corporation in a transaction intended to qualify as a reorganization within the meaning of Section 368(a)(1)(F) of the Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS, the Surviving Corporation is a wholly owned subsidiary of the Corporation;
WHEREAS, the Surviving Corporation desires that the Corporation be merged with and into itself;
WHEREAS, the Board of Directors of the Corporation has determined that, for the purpose of effecting the reincorporation of the Corporation in the State of Delaware, it is advisable and in the best interests of the Corporation and its stockholders that the Corporation merge with and into the Surviving Corporation upon the terms and conditions provided herein; and
WHEREAS, the respective Boards of Directors of the Corporation and the Surviving Corporation and the shareholders of the Corporation have approved this Agreement and Plan of Merger.
NOW THEREFORE, in consideration of the foregoing premises and the undertakings herein contained and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:
1. Merger.The Audit Committee (the "Committee"Corporation shall be merged with and into the Surviving Corporation pursuant to Section 252 of the Delaware General Corporation Law ("DGCL") and Section 1921 of the Pennsylvania Business Corporation Law ("PBCL"). The Surviving Corporation shall survive the merger herein contemplated and shall continue to be governed by the laws of the State of Delaware. The separate corporate existence of the Corporation shall cease forthwith upon the Effective Time (as defined below). The merger of the Corporation into the Surviving Corporation shall herein be referred to as the "Merger."
2. Stockholder Approval. The Corporation has submitted this Agreement and Plan of Merger for, and received from its shareholders, approval of the transactions contemplated herein, and the merger of the Corporation with and into the Surviving Corporation has been authorized in the manner prescribed by the DGCL and the PBCL.
3. Effective Time. The Merger shall be effective upon the later to occur of either (a) filing of a Certificate of Merger with the Secretary of State of the State of Delaware or (b) the filing of this Agreement and Plan of Merger or the Articles of Merger with the Department of State of the Commonwealth of Pennsylvania, which filings shall be made as soon as practicable after the date hereof. The time of such effectiveness shall herein be referred to as the "Effective Time."
4. Termination. At any time prior to the Effective Time, this Agreement may be terminated and the Merger abandoned by agreement of the Board of Directors of the Corporation. The filing of a Certificate of Merger with the Secretary of State of the State of Delaware and Articles of Merger with the Department of State of the Commonwealth of Pennsylvania pursuant to Section 3 hereof shall constitute certification that this Agreement of Merger has not theretofore been terminated. If terminated as provided in this Section 4, this Agreement shall forthwith become wholly void and of no further force or effect.
5. Common Stock of the Corporation. As of the Effective Time, by virtue of the Merger and without any action on the part of the holders thereof, each share of Common Stock of the Corporation issued and outstanding immediately prior thereto shall cease to exist and shall be changed and converted into one (1) fully paid and non-assessable share of the Surviving Common Stock.
6. Common Stock of the Surviving Corporation. As of the Effective Time, by virtue of the Merger and without any action on the part of the holders thereof, each share of Common Stock of the Surviving Corporation issued and outstanding immediately prior thereto shall cease to exist and shall be cancelled.
7. Stock Certificates. On and after the Effective Time, all of the outstanding certificates which prior to that time represented shares of the Common Stock of the Corporation shall be deemed for all purposes to evidence ownership of and to represent the shares of the Surviving Common Stock into which the shares of the Common Stock represented by such certificates have been converted as herein provided. The registered owner on the books and records of the Surviving Corporation or its transfer agent of any such outstanding stock certificate shall, until such certificate shall have been surrendered for transfer or conversion or otherwise accounted for to the Surviving Corporation or its transfer agent, have and be entitled to exercise any voting and other rights with respect to and to receive any dividend and other distributions upon the shares of the Surviving Common Stock evidenced by such outstanding certificate as above provided.
8. Option Securities. Effective as of the Effective Time, each then outstanding option to purchase Common Stock (the "Board""Options") granted pursuant to any option plan of Iron Mountain Incorporatedthe Corporation (the "Company""Option Plans") shall consistbe converted automatically into an option to purchase such number of a minimumshares of three (3) directors, one of whom will act as Chair. The Committee will act by a majority of the members present at a meeting. Meetings may be held in person or by telecommunications pursuantSurviving Common Stock equal to which all members attending can communicate with each other. In lieu of a meeting, the Committee may act by unanimous written consent. In the event one or more vacancies on the Committee temporarily reduce the number of membersshares of Common Stock subject to two (2), action takensuch Option immediately prior to the Effective Time and on other terms and conditions (including, without limitation, exercise price) as were applicable under the applicable Option Plan and the underlying stock option agreement. At the Effective Time, the Surviving Corporation shall assume each Option Plan and each underlying stock option agreement that relates to outstanding Options. The Surviving Corporation shall (i) reserve for issuance the number of additional shares of Surviving Common Stock that will become issuable upon the exercise of the Options, as so converted, and (ii) as soon as practicable after the Effective Time, make such amendments to existing Registration Statements on Form S-8, or file a new Registration Statement, as shall be necessary to register the shares of Surviving Common Stock subject to such Options, as so converted.
9. Succession. As of the Effective Time, the Surviving Corporation shall succeed to all of the rights, privileges, debts, liabilities, powers and property of the Corporation in the manner of and as
more fully set forth in Section 259 of the DGCL and Section 1929 of the PBCL. Without limiting the foregoing, upon the Effective Time, all property, rights, privileges, franchises, patents, trademarks, licenses, registrations, and other assets of every kind and description of the Corporation shall be transferred to, vested in and devolved upon the Surviving Corporation without further act or deed and all property, rights, and every other interest of the Corporation and the Surviving Corporation shall be as effectively the property of the Surviving Corporation as they were of the Corporation and the Surviving Corporation, respectively. All rights of creditors of the Corporation and all liens upon any property of the Corporation shall be preserved unimpaired, and all debts, liabilities and duties of the Corporation shall attach to the Surviving Corporation and may be enforced against it to the same extent as if said debts, liabilities and duties had been incurred or contracted by it.
10. Governing Documents. The Certificate of Incorporation of the twoSurviving Corporation in effect as of the Effective Time shall continue to be the Certificate of Incorporation of the Surviving Corporation until further amended in accordance with the provisions thereof and applicable law. The Bylaws of the Surviving Corporation in effect as of the Effective Time shall continue to be the Bylaws of the Surviving Corporation until amended in accordance with the provisions thereof and applicable law. The charters of the committees of the Board of Directors, the Code of Ethics and Business Conduct and the Corporate Governance Guidelines of the Corporation in effect as of the Effective Time shall be the charters of the committees of the Board of Directors, the Code of Ethics and Business Conduct and the Corporate Governance Guidelines of the Surviving Corporation until amended in accordance with the provisions thereof and applicable law.
11. Directors and Officers. The directors and officers in office of the Corporation at the Effective Time shall be the members of the Committee shall be deemed authorized actions of the Committee. Members of the Committee shall be appointed by the Board of Directors and the officers of the Surviving Corporation, all of whom shall servehold their directorships and offices until the meetingelection and qualification of their respective successors or until their tenure is otherwise terminated in accordance with the Certificate of Incorporation and Bylaws of the Board occurring immediately afterSurviving Corporation.
12. Legal Opinion. As a condition to the next following annual meeting of shareholders unless they earlier resign or are removed by the Board acting in its discretion. Unless a Chair is elected by the Board, the membersconsummation of the Committee may designateMerger, the Corporation shall have received a chair by majority vote.
I. Purpose
The primary purposefavorable opinion, dated the date of the Committee is to assist the Board in fulfilling its responsibility to oversee the quality and integrityMerger, of and management's conduct with respectSullivan & Worcester LLP, counsel to the Company's financial reporting process, including oversightCorporation and the Surviving Corporation, to the effect that the Merger constitutes a tax-free reorganization in accordance with the provisions of Section 368(a) of the Company's compliance with legalCode and regulatory requirements. This role involves:as to the consequences thereof to the Corporation's shareholders.
(a) assisting the Board in oversight of the integrity of the Company's financial statements;
�� (b) assisting the Board in oversight of the Company's compliance with legal 13. Further Assurances. From time to time, as and regulatory requirements;
(c) assisting the Board in oversight of the independent auditor's qualifications and independence;
(d) assisting the Board in the performance of the Company's internal audit function and independent auditors;
(e) preparing an Audit Committee report aswhen required by the SecuritiesSurviving Corporation or by its successors and Exchange Commission ("SEC")assigns, there shall be executed and delivered on behalf of the Corporation such deeds and other instruments, and there shall be taken or caused to be includedtaken by it such further and other action, as shall be appropriate or necessary in order to vest or perfect in or to confirm of record or otherwise in the annual proxy statement;Surviving Corporation the title to and
(f) performing such other duties as possession of all the Board may assign to the Committee from time to time.
While the Committee has theproperty, interests, assets, rights, privileges, immunities, powers, franchises and responsibilities set forth in this Charter, it is not the dutyauthority of the CommitteeCorporation, and otherwise to preparecarry out the Company's financial statements,purposes of this Agreement and Plan of Merger, and the officers and directors of the Corporation are fully authorized in the name and on behalf of the Corporation or otherwise to plan or conduct auditstake any and all such action and to execute and deliver any and all such deeds and other instruments.
14. Governing Law. This Agreement and Plan of those financial statements, to determine that those financial statements are completeMerger and accuratethe legal relations between the parties shall be governed by and construed in accordance with generally accepted accounting principles, or to determine that disclosures have been properly made. This is the responsibilitylaws of the Company's managementState of Delaware, and, so far as applicable, the merger provisions of the laws of the Commonwealth of Pennsylvania.
15. Registered Office. The registered office of the Surviving Corporation shall be located in the City of Wilmington, County of New Castle, State of Delaware and the independent auditor.
II. Duties and Responsibilities
The Committee shall havename of the following duties and responsibilities:
(a) The Committeeregistered agent in charge thereof shall be directly responsible for the appointment, compensation, retentionCorporation Service Company.
[Remainder of this Page Intentionally Left Blank]
IN WITNESS WHEREOF, this Agreement and oversightPlan of Merger is executed as of the work of the independent auditor (including resolution of any disagreements overdate first above written.
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IRON MOUNTAIN INCORPORATED, a Pennsylvania corporation | |||
By: | Name: Title: | ||
IRON MOUNTAIN INCORPORATED, a Delaware corporation | |||
By: | Name: Title: |
financial reporting) for the purpose of preparing or issuing an audit report or performing other audit review or test services, and the independent auditor must report to the Committee.
(b) The Committee shall establish procedures for:
(i) the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls, or auditing matters; and
(ii) the confidential, anonymous submission by Company employees of concerns regarding questionable accounting or auditing matters.
(c) The Committee shall at least annually review a report by the Company's independent auditor describing the auditor's internal control procedures, any material issues raised by the auditor's most recent quality control review, and assessment of all material relationships between the independent auditor and the Company;
(d) The Committee shall discuss the Company's annual and quarterly financial statements with management and the independent auditor (including disclosures under management's discussion and analysis of financial condition and results of operations ("MD&A"));
(e) The Committee shall discuss earnings press releases (either individually or generally) with management, as well as financial information and earnings guidance provided to analysts and ratings agencies;
(f) The Committee shall periodically discuss with management policies with respect to risk assessment and risk management;
(g) The Committee shall periodically hold separate meetings with management, internal auditors and the independent auditor;
(h) The Committee shall review with the independent auditor any audit problems or difficulties and management's responses;
(i) The Committee shall set policies regarding the hiring of employees or former employees of the independent auditor; and
(j) The Committee shall furnish regular reports to the Board concerning the Committee's work.
III. Membership Qualifications
All of the members of the Committee shall meet the independence requirements of the SEC, the Corporate Governance Rules of the New York Stock Exchange ("NYSE") listing standards and any other applicable laws and regulations. At least one member of the Committee shall be an audit committee financial expert, as such term is defined by the SEC; all members of the Committee shall be "financially literate," as defined by the NYSE, or shall become financially literate within a reasonable period of time after their appointment; and at least one member of the Committee shall have accounting or related financial management expertise within the meaning of the Corporate Governance Rules of the NYSE listing standards. No member of the Committee shall be a member of the audit committee of more than three publicly held companies unless the Board shall have determined that such simultaneous service does not impair the ability of such member to serve on the Committee.
No member of the Committee shall (a) directly or indirectly receive from the Company consulting, advisory or other compensatory fees other than Board or Committee fees or similar compensation for serving on the Board or a committee of the Board; or (b) be an "affiliated person" (as defined by SEC rules and regulations) of the Company or any subsidiary thereof, unless permitted by an exemption provided by such rules and regulations. The Company shall make required disclosure of any exception in its annual proxy statement.
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IV. Periodic Reviews and Other Activities
The following functions shall be the regular recurring activities of the Committee in carrying out its oversight function and its responsibilities. These functions are set forth as a guide with the understanding that the Committee may diverge from this guide as appropriate given the circumstances.
(a) Quarterly, in connection with the preparation of each periodic report of the Company, the Committee shall review with management and the independent auditor:
(i) The Company's financial statements, including the Company's disclosures under MD&A, to be included in the Company's periodic reports, prior to the filing of such reports with the SEC. Such review shall specifically include a discussion with management regarding:
(A) Critical accounting estimates and judgments including how policies were chosen among alternatives, the methodology of applying those estimates and policies, and the assumptions made, and the impact of changes in, those policies, both qualitatively and quantitatively;
(B) Material off-balance sheet transactions, arrangements, obligations (including contingent obligations) and other relationships of the Company with unconsolidated entities or other persons, that may have a material current or future effect on financial condition, changes in financial condition, results of operations, liquidity, capital resources, capital reserves or significant components of revenues or expenses; and
(C) Related-party transactions.
(ii) Any analysis prepared by management and/or the independent auditor of significant financial reporting issues and judgments made in connection with the preparation of such financial statements, including analyses of the effects of the application of alternative generally accepted accounting principles ("GAAP") on the financial statements.
(b) Quarterly, in connection with the preparation of each periodic report of the Company, the Committee shall review: (i) management's disclosures to the Committee under Section 302 of the Sarbanes-Oxley Act and (ii) the CEO and CFO certifications to be filed pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act, and the bases therefor.
(c) At least quarterly, the Committee shall meet, separately, with management, the internal auditing staff, and the independent auditor to review and discuss the Company's auditing and accounting principles and practices and financial statement presentations that could significantly affect the Company's financial statements, any changes in the Company's selection or application of accounting principles suggested by the independent auditor, internal auditing staff or management and any major issues as to the quality and adequacy of the Company's internal controls.
(d) At least annually, the Committee shall obtain and review a report by the independent auditor describing: (i) the firm's internal quality-control procedures; and (ii) any material issues raised by (a) the most recent internal quality-control review, or peer review, of the firm, or (b) any inquiry or investigation by governmental or professional authorities, within the preceding five (5) years, respecting one (1) or more independent audits carried out by the firm, and any steps taken to deal with any such issues. In addition, the Committee shall verify that the independent auditor is registered with the Public Company Accounting Oversight Board ("PCAOB"), review any public reports of the PCAOB disciplining the independent auditor and review any recent inspection reports of the independent auditor.
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(e) In connection with any audit, the independent auditor shall inform the Committee about:
(i) All critical accounting policies, alternative GAAP methods or departures from GAAP discussed with management and their ramifications, and the independent auditor's preferred alternative; and
(ii) Other material written communications between the independent auditor or its firm and management, such as any management letter or schedule of unadjusted differences.
(f) At least annually, the Committee shall evaluate the independence of the independent auditor by:
(i) Discussing with the independent auditor any relationships between the independent auditor and the Company (consistent with Independence Standards Board Standard No. 1) and their impact on the independent auditor's independence;
(ii) Considering whether there should he a rotation of the audit firm in order to ensure auditor independence; and
(iii) Confirming that the lead (or coordinating) audit partner (the audit partner having primary responsibility for the audit) has not performed audit services for the Company for each of the past five (5) fiscal years, and that other audit partners have not performed services for the Company for such periods of time as would be prohibited by SEC rules or applicable accounting standards. The Committee shall also review and evaluate the lead audit partner.
(g) The Committee shall prepare the report required by the SEC to be included in the Company's annual proxy statement and review and approve all other disclosures regarding the Committee and the performance of its duties to be included in such proxy statement or in any other document required by applicable securities laws or stock exchange listing requirements or rules;
(h) The Committee shall regularly review with the independent auditor:
(i) Any problems or difficulties encountered in the course of the audit work, including any restrictions on the scope of the activities or access to requested information, and the Company's response;
(ii) Any disagreements with management;
(iii) Any changes required in the planned scope of the internal audit; and
(iv) The internal audit department responsibilities, budget and staffing.
(i) Periodically, the Committee shall meet with management to review the Company's major financial risk exposures and the steps management has taken to monitor and control such exposures, and to discuss guidelines and policies to govern the process by which risk assessment and management is undertaken. This review must include a discussion of any significant deficiencies and material weaknesses or other major adequacy issues in the design or operation of internal control over financial reporting and any fraud (without regard to materiality) involving management or employees with a significant role in the Company's internal control over financial reporting. The Committee shall discuss any special steps adopted in light of material control deficiencies.
(j) Periodically, the Committee shall review with management, the independent auditor, the internal auditing staff and the Company's counsel, as appropriate, any legal, regulatory or compliance matters (including any material reports or inquiries received from regulators or governmental agencies) that could have a significant impact on the Company's financial statements, including significant changes in accounting standards or rules as promulgated by the PCAOB, the Financial Accounting Standards Board, the SEC or other regulatory authorities with relevant jurisdiction.
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(k) The Committee shall discuss the general contents of earnings press releases (including the use of "pro forma" or "adjusted" or other non-GAAP information), as well as financial information and earnings guidance provided to analysts and rating agencies.
(l) The Committee shall preapprove all audit (including comfort letters and statutory audits) and non-audit services, other than as provided in the following sentence. The preapproval requirement is waived with respect to the provision of non-audit services for the Company, if:
(i) The aggregate amount of all such non-audit services provided to the Company constitutes no more than five percent (5%) of the total amount of revenues paid by the Company to the independent auditor during the fiscal year in which the non-audit services are provided;
(ii) Such services were not recognized by the Company at the time of the engagement to be non-audit services; and
(iii) Such services are promptly brought to the attention of the Committee and approved prior to the completion of the audit by the Committee or by one or more members of the Committee to whom authority to grant such approvals has been delegated by the Committee.
The Committee may delegate to one or more members the authority to grant the preapprovals required by this paragraph. The decisions of any member to whom authority is delegated to preapprove an activity under this paragraph shall be presented to the full Committee at each of its scheduled meetings.
The Committee's policies and procedures for such approvals of audit and non-audit services, and any waivers of approvals pursuant to the foregoing prohibitions, shall be disclosed in, or included with, the Company's annual proxy statement and annual report filed with the SEC.
The Committee may not approve performance by the independent auditor or its personnel of the following non-audit services for the Company (unless permitted by SEC rules and applicable accounting standards): (1) bookkeeping or other services related to the accounting records or financial statements of the Company; (2) financial information systems design and implementation; (3) appraisal or valuation services, fairness opinions, or contribution in kind reports; (4) actuarial services; (5) internal audit outsourcing services; (6) management functions or human resources; (7) broker or dealer, investment advisor, or investment banking services; and (8) legal services and expert services unrelated to the audit.
(m) The (i) Committee shall determine the appropriate funding for payment of compensation (1) to the independent auditor for the purpose of rendering or issuing an audit report or any other services provided by the independent auditor; and (ii) to any advisors retained by the Committee to assist in carrying out its duties.
(n) The Committee shall review and consider with the independent auditor the matters required to be discussed by Statement of Auditing Standards No. 61.
(o) The Committee hereby establishes a policy that the Company may not hire employees or former employees of the independent auditor if their status as employees would cause an independent director to cease being an independent director under NYSE listing standards or SEC rules and regulations or would cause the independent auditor to cease being independent under applicable SEC rules and regulations or the standards of the PCAOB.
(p) The Committee shall review and consent to the appointment and replacement of the Company's senior internal audit director, approve the annual internal audit plan, and annually review the performance of the internal auditing staff.
(q) The Committee shall review the significant reports to management prepared by the internal auditing staff or the independent auditor, respectively, and management's responses.
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(r) The Committee shall at least annually review this Charter and propose to the Board any amendments it deems appropriate.
V. Meetings
The Committee shall meet four (4) times per year on a quarterly basis, or more frequently as circumstances require. The Committee may ask members of management, the internal auditing staff, the independent auditor and others to attend Committee meetings and to provide pertinent information, as necessary. The Committee shall meet in separate executive sessions with management, the internal auditing staff and the independent auditor to discuss any matters that the Committee (or any of these groups) believes should be discussed privately.
VI. Subcommittees
The Committee shall have the authority to delegate any of its responsibilities to subcommittees as the Committee may deem appropriate in its sole discretion.
VII. Miscellaneous
The Committee shall have authority to retain independent legal, accounting or other consultants to assist and advise the Committee in the performance of its purposes, duties and responsibilities. The Committee shall have sole authority to approve related fees and retention terms.
The Committee shall report its actions and recommendations to the Board after each Committee meeting and shall conduct and present to the Board an annual performance evaluation of the Committee.
Adopted: June 1, 2000
Amended and Restated: March 4, 2004
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CERTIFICATE OF INCORPORATION
OF
IRON MOUNTAIN INCORPORATED
FIRST. The name of the Corporation is Iron Mountain Incorporated.
SECOND. The address of the Corporation's registered office in the State of Delaware and New Castle County is Corporation Service Company, Suite 400, 2711 Centerville Road, City of Wilmington, County of New Castle. The name of the Corporation's registered agent at such address is Corporation Service Company.
THIRD. The nature of the business and purposes to be conducted or promoted by the Corporation are to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware.
FOURTH. The total number of shares of all classes of capital stock that the Corporation shall have authority to issue is Two Hundred Ten Million (210,000,000) shares, of which Two Hundred Million (200,000,000) shall be Common Stock, par value $0.01 per share (the "Common Stock"), and (ii) Ten Million (10,000,000) shall be Preferred Stock, par value $0.01 per share (the "Preferred Stock").
A description of the respective classes of stock and a statement of the designations, powers, preferences and rights, and the qualifications, limitations and restrictions of the Preferred Stock and Common Stock are as follows:
A. COMMON STOCK.
4.1. General. All shares of Common Stock will be identical and will entitle the holders thereof to the same rights, powers and privileges. The rights, powers and privileges of the holders of the Common Stock are subject to and qualified by the rights of holders of the Preferred Stock.
4.2. Dividends. Dividends may be declared and paid on the Common Stock from funds lawfully available therefor as and when determined by the Board of Directors and subject to any preferential dividend rights of any then outstanding Preferred Stock.
4.3. Dissolution, Liquidation or Winding Up. In the event of any dissolution, liquidation or winding up of the affairs of the Corporation, whether voluntary or involuntary, each issued and outstanding share of Common Stock shall entitle the holder thereof to receive an equal portion of the net assets of the Corporation available for distribution to the holders of Common Stock, subject to any preferential rights of any then outstanding Preferred Stock.
4.4. Voting Rights. Except as otherwise required by law or this Certificate of Incorporation, each holder of Common Stock shall have one vote in respect of each share of stock held of record by such holder on the books of the Corporation for the election of directors and on all matters submitted to a vote of stockholders of the Corporation; provided, however, that, except as otherwise required by law, holders of Common Stock, as such, shall not be entitled to vote on any amendment to this Certificate of Incorporation (including any Certificate of Designations relating to any series of Preferred Stock) that relates solely to the terms of one or more outstanding series of Preferred Stock if the holders of such affected series are entitled, either separately or together with the holders of one or more other such series, to vote thereon pursuant to this Certificate of Incorporation (including any Certificate of Designations relating to any series of Preferred Stock). Except as otherwise required by law or provided herein, holders of Common Stock shall vote together with holders of the Preferred Stock as a single class, subject to any special or preferential voting rights of any then outstanding Preferred Stock. There
shall be no cumulative voting. Subject to the rights of the holders of any series of Preferred Stock pursuant to the terms of this Certificate of Incorporation or any resolution or resolutions providing for the issuance of such series of stock adopted by the Board of Directors, the number of authorized shares of Preferred Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the Common Stock irrespective of the provisions of Section 242(b)(2) of the General Corporation Law of the State of Delaware.
B. PREFERRED STOCK.
Preferred Stock may be issued in one or more series at such time or times and for such consideration or considerations as the Board of Directors of the Corporation may determine. Each series shall be so designated as to distinguish the shares thereof from the shares of all other series and classes. Except as otherwise provided in this Certificate of Incorporation (including any Certificate of Designations relating to any series of Preferred Stock), different series of Preferred Stock shall not be construed to constitute different classes of shares for the purpose of voting by classes.
The Board of Directors is expressly authorized to provide for the issuance of all or any shares of the undesignated Preferred Stock in one or more series, each with such designations, preferences, voting powers (or special, preferential or no voting powers), relative, participating, optional or other special rights and privileges and such qualifications, limitations or restrictions thereof as shall be stated in the resolution or resolutions adopted by the Board of Directors to create such series, and a certificate of said resolution or resolutions (a "Certificate of Designation") shall be filed in accordance with the General Corporation Law of the State of Delaware. The authority of the Board of Directors with respect to each such series shall include, without limitation of the foregoing, the right to provide that the shares of each such series may be: (i) subject to redemption at such time or times and at such price or prices; (ii) entitled to receive dividends (which may be cumulative or non-cumulative) at such rates, on such conditions, and at such times, and payable in preference to, or in such relation to, the dividends payable on any other class or classes or any other series; (iii) entitled to such rights upon the dissolution of, or upon any distribution of the assets of, the Corporation; (iv) convertible into, or exchangeable for, shares of any other class or classes of stock, or of any other series of the same or any other class or classes of stock of the Corporation at such price or prices or at such rates of exchange and with such adjustments, if any; (v) entitled to the benefit of such limitations, if any, on the issuance of additional shares of such series or shares of any other series of Preferred Stock; or (vi) entitled to such other preferences, powers, qualifications, rights and privileges, all as the Board of Directors may deem advisable and as are not inconsistent with law and the provisions of this Certificate of Incorporation.
FIFTH. �� The name and address of the incorporator is as follows:
Name | Mailing Address | |
---|---|---|
Garry B. Watzke | 745 Atlantic Avenue, 10th Floor, Boston, MA 02111 |
SIXTH. The following provisions are included for the management of the business and the conduct of the affairs of the Corporation, and for further definition, limitation and regulation of the powers of the Corporation and of its Board of Directors and stockholders:
6.1. Management Under Direction of Board. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors of the Corporation.
6.2. Amendment of Bylaws. The Board of Directors of the Corporation is expressly authorized to adopt, amend or repeal the Bylaws of the Corporation. The stockholders shall also have the power to adopt, amend or repeal the Bylaws of the Corporation.
6.3. No Stockholder Action By Written Consent. Subject to the rights of holders of shares of any class or series of Preferred Stock in respect of actions to be taken by such shares, stockholders of the Corporation may not take any action by written consent in lieu of a meeting.
6.4. Place for Keeping Books. The books of the Corporation may be kept at such place within or without the State of Delaware as the Bylaws of the Corporation may provide or as may be designated from time to time by the Board of Directors of the Corporation.
6.5. Calling of Stockholder Meetings; Business Transacted. Subject to the rights of holders of shares of any class or series of Preferred Stock in respect of meetings of the holders of such shares, meetings of stockholders may be called at any time only by the Chairman of the Board of Directors (if any), the President, or a majority of the Board of Directors. Business transacted at any special meeting of stockholders shall be limited to matters relating to the purpose or purposes stated in the notice of meeting.
SEVENTH. The Corporation is to have perpetual existence.
EIGHTH.
8.1. Number of Directors. The number of directors of the Corporation initially shall be eight (8) which number may thereafter be increased or decreased solely by resolution of the Board of Directors; provided, however, that no such increase or decrease shall result in the Corporation having fewer than three (3) directors.
8.2. Election of Directors. Elections of directors need not be by written ballot except as and to the extent provided in the Bylaws of the Corporation.
8.3. Term; Vacancies. Each director shall hold office until the expiration of the term for which he or she was elected and until his or her successor has been elected and qualified or until his or her earlier death, resignation or removal. Any vacancies on the Board of Directors, including vacancies resulting from an increase in the number of directors, may be filled by a majority vote of the remaining members of the Board (though less than a quorum) or by a sole remaining director or, only if no directors remain, by the stockholders and each person so elected shall be a director to serve for the balance of the unexpired term. A director elected to fill a vacancy on the Board shall be elected for a term expiring at the next annual meeting. No decrease in the authorized number of directors shall shorten the term of any incumbent director.
8.4. Stockholder Nominations and Introduction of Business, Etc. Advance notice of stockholder nominations for election of directors and other business to be brought by stockholders before a meeting of stockholders shall be given in the manner provided in the Bylaws of the Corporation.
8.5. Rights of Preferred Stock. The provisions of this Article are subject to the rights of the holders of any series of Preferred Stock from time to time outstanding.
NINTH. No director of the Corporation shall be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director notwithstanding any provision of law imposing such liability; provided, however, that, to the extent provided by applicable law, this provision shall not eliminate 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 174 of the General Corporation Law of the State of Delaware, or (iv) for any transaction from which the director derived
an improper personal benefit. No amendment to or repeal of this provision shall apply to or have any effect on the liability or alleged liability of any director for or with respect to any acts or omissions of such director occurring prior to such amendment or repeal. If the Delaware General Corporation Law is amended after the filing of this Certificate of Incorporation to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the Delaware General Corporation Law, as so amended.
IN WITNESS WHEREOF, the undersigned has hereunto signed his name and affirms that the statements made in this Certificate of Incorporation are true this day of May, 2005.
Garry B. Watzke Sole Incorporator |
BYLAWS
OF
IRON MOUNTAIN INCORPORATED
ARTICLE I—OFFICE
Section 1.1. Registered Office. The registered office of the Corporation shall be located in the City of Wilmington, County of New Castle, State of Delaware and the name of the resident agent in charge thereof shall be Corporation Service Company.
Section 1.2. Other Offices. The Corporation may also have offices at such other places both within and without the State of Delaware as the Board of Directors (hereinafter referred to as the "Board of Directors" or the "Board") may from time to time appoint or the business of the Corporation may require.
Section 1.3. Books. The books of the Corporation may be kept within or without the State of Delaware as the Board of Directors may from time to time determine or the business of the Corporation may require.
ARTICLE II—MEETINGS OF STOCKHOLDERS
Section 2.1. Time and Place of Meetings. All meetings of stockholders shall be held at such place, either within or without the State of Delaware, on such date and at such time as the Board of Directors (or the Chairman in the absence of a designation by the Board of Directors) may designate from time to time.
Section 2.2. Annual Meeting. The annual meeting of stockholders shall be held for the election of directors on such date and at such time as the Board of Directors may designate from time to time. Any other proper business may be transacted at the annual meeting.
Section 2.3. Special Meetings. Special meetings of the stockholders for any purpose or purposes may be called only by the Chairman of the Board, if any, the President or by the Board of Directors pursuant to a resolution adopted by a majority vote of the Board of Directors.
Section 2.4. Introduction of Business At a Meeting of Stockholders. At an annual or special meeting of stockholders, only such business shall be conducted, and only such proposals shall be acted upon, as shall have been properly brought before such annual or special meeting of stockholders. To be properly brought before an annual or special meeting of stockholders, business must be (i) in the case of a special meeting, specified in the notice of the special meeting (or any supplement thereto) given by or at the direction of the Board of Directors or otherwise properly brought before the meeting by the Board of Directors, or (ii) in the case of an annual meeting, properly brought before the meeting by or at the direction of the Board of Directors, or otherwise properly brought before the annual meeting by a stockholder who shall have been a stockholder of record on the record date for such meeting and shall continue to be entitled to vote thereat. For business to be properly brought before an annual meeting of stockholders by a stockholder, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation. To be timely, a stockholder notice must be delivered to, or mailed and received at, the principal executive offices of the Corporation (A) in the case of an annual meeting that is called for a date that is within 30 days before or after the anniversary date of the immediately preceding annual meeting of stockholders, not less than 60 nor more than 90 days prior to the first anniversary (the "Anniversary") of the date the Corporation's proxy statement was mailed to stockholders in connection with the previous year's annual meeting of stockholders, and
(B) in the case of an annual meeting that is called for a date that is not within 30 days before or after the anniversary date of the immediately preceding annual meeting, not later than the later of (x) the 90th day prior to such annual meeting or (y) the close of business on the tenth day following the day on which public disclosure of the date of the meeting was made.
In order to be effective, a stockholder's notice to the Secretary shall set forth as to each matter the stockholder proposes to bring before an annual meeting of stockholders (i) a brief description of the business desired to be brought before the annual meeting, the reasons for conducting such business at the annual meeting and, if a specific action is to be proposed, the text of the resolution(s) which the proposing stockholder proposes that the stockholders adopt, (ii) a representation that the stockholder is a holder of record of the stock of the Corporation entitled to vote at such meeting, including the class and number of shares of such stock that are owned beneficially and of record by such stockholder, and intends to appear in person or by proxy at the meeting to bring the business specified in the notice before the meeting, (iii) the name and address, as they appear on the Corporation's books, of the stockholder proposing such business and any other stockholders known by such stockholder to be supporting such proposal, (iv) the class and number of shares of the Corporation which are beneficially owned by any stockholders known by the proposing stockholder to be supporting such proposal on the date of such stockholder's notice, (v) whether such stockholder intends to deliver a proxy statement and form of proxy to holders of, in the case of a proposal, at least the percentage of the Corporation's voting shares required under these Bylaws and applicable law to carry the proposal (an affirmative statement of such intent, a "Solicitation Notice"), and (vi) any material interest of the stockholder in such proposal.
If the stockholder has provided the Corporation with a Solicitation Notice, such stockholder must have delivered a proxy statement and form of proxy to holders of at least the percentage of the Corporation's voting shares required under applicable law to carry such proposal. If no Solicitation Notice relating thereto has been timely provided pursuant to this Section, the stockholder proposing such business must not have solicited a number of proxies sufficient to have required the delivery of such a Solicitation Notice under this Section.
Notwithstanding anything in these Bylaws to the contrary, no business shall be conducted at a meeting of stockholders except in accordance with the procedures set forth in this Section 2.4. The Chairman of the meeting shall, if the facts warrant, determine and declare to the meeting that any item of proposed business was not properly brought before the meeting in accordance with the procedures prescribed by these Bylaws, and if he should so determine, he shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted.
The foregoing requirements shall be in addition to any other requirements imposed by applicable law or regulation.
Section 2.5. Notice of Meetings; Waiver of Notice. (a) Written or printed notice of every meeting of stockholders, annual or special, stating the hour, date and place thereof, and the purpose or purposes in general terms for which the meeting is called shall, not less than ten (10) days, or such longer period as shall be provided by law, the Certificate of Incorporation, these Bylaws, or otherwise, and not more than sixty (60) days before such meeting, be served upon or mailed to each stockholder entitled to vote thereat, at the address of such stockholder as it appears upon the stock records of the Corporation or, if such stockholder shall have filed with the Secretary of the Corporation a written request that notices be mailed to some other address, then to the address designated in such request.
(b) A written waiver of any such notice signed by the person entitled thereto, or a waiver by electronic transmission by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends the meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not
validly called or convened. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice.
Section 2.6. Notice by Electronic Transmission. Without limiting the manner by which notice otherwise may be given effectively to stockholders pursuant to the General Corporation Law of the State of Delaware (the "Delaware Law"), the Certificate of Incorporation or these Bylaws, any notice to stockholders given by the Corporation under any provision of the Delaware Law, the Certificate of Incorporation or these Bylaws shall be effective if given by a form of electronic transmission consented to by the stockholder to whom the notice is given. Any such consent shall be revocable by the stockholder by written notice to the Corporation. Any such consent shall be deemed revoked if: (i) the Corporation is unable to deliver by electronic transmission two consecutive notices given by the Corporation in accordance with such consent; and (ii) such inability becomes known to the Secretary or an Assistant Secretary of the Corporation or to the transfer agent, or other person responsible for the giving of notice. However, the inadvertent failure to treat such inability as a revocation shall not invalidate any meeting or other action. Any notice given pursuant to the preceding paragraph shall be deemed given: (i) if by facsimile telecommunication, when directed to a number at which the stockholder has consented to receive notice; (ii) if by electronic mail, when directed to an electronic mail address at which the stockholder has consented to receive notice; (iii) if by a posting on an electronic network together with separate notice to the stockholder of such specific posting, upon the later of (A) such posting and (B) the giving of such separate notice; and (iv) if by any other form of electronic transmission, when directed to the stockholder. An affidavit of the Secretary or an Assistant Secretary or of the transfer agent or other agent of the Corporation that the notice has been given by a form of electronic transmission shall, in the absence of fraud, be prima facie evidence of the facts stated therein.
Section 2.7. Definition of Electronic Transmission. An "electronic transmission" means any form of communication, not directly involving the physical transmission of paper, that creates a record that may be retained, retrieved, and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process.
Section 2.8. Quorum and Adjournments. Except as otherwise provided by law or by the Certificate of Incorporation, or these bylaws and subject to the Delaware Law, the presence, in person or by proxy, at any meeting of stockholders of the holders of a majority of the voting power of the shares of the capital stock of the Corporation issued, outstanding and entitled to vote thereat shall be requisite and shall constitute a quorum. If one or more classes of stock are entitled to vote as separate classes upon any question, then, in the case of 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 of the voting power of all stock of that class issued, outstanding and entitled to vote. If a majority of the voting power of shares of capital stock of the Corporation issued and outstanding and entitled to vote thereat or, where a larger quorum is required, such quorum, shall not be represented at any meeting of the stockholders regularly called, the holders of a majority of the voting power of the shares present or represented by proxy and entitled to vote thereat shall have power to adjourn the meeting to another time, or to another time and place, without notice other than announcement of adjournment at the meeting, and there may be successive adjournments for like cause and in like manner until the requisite amount of shares entitled to vote at such meeting shall be represented; provided, however, that if the adjournment is for more than thirty (30) days, notice of the hour, date and place of the adjourned meeting shall be given to each stockholder entitled to vote thereat. Subject to the requirements of the Delaware Law and the Certificate of Incorporation, on any issue on which one 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 shall be represented, any business may be transacted which might have been transacted at the meeting as originally noticed.
Section 2.9. Votes; Proxies. Except as otherwise provided in the Certificate of Incorporation, and subject to the Delaware Law, at each meeting of stockholders, every stockholder of record at the closing of the transfer books, if closed, or on the date set by the Board of Directors for the determination of stockholders entitled to vote at such meeting, shall have one vote for each share of stock entitled to vote which is registered in such stockholder's name on the books of the Corporation on such date.
At each such meeting every stockholder entitled to vote shall be entitled to do so in person, or by proxy appointed by an instrument in writing or as otherwise permitted by law subscribed by such stockholder and bearing a date not more than three (3) years prior to the meeting in question, unless said instrument provides for a longer period during which it is to remain in force. A duly executed proxy shall be irrevocable if it states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power. A proxy may be made irrevocable regardless of whether the interest with which it is coupled is an interest in the stock itself or any interest in the Corporation generally. A stockholder may revoke any proxy which is not irrevocable by attending the meeting and voting in person or by filing with the Secretary of the Corporation an instrument in writing or as otherwise permitted by law revoking the proxy or another duly executed proxy bearing a later date.
Voting at meetings of stockholders need not be by written ballot and, except as otherwise provided by law, need not be conducted by inspectors of election unless so determined by the Chairman of the meeting or by the holders of shares of stock having a majority of the votes which could be cast by the holders of all outstanding shares of stock entitled to vote thereon which are present in person or represented by proxy at such meeting. If it is required or determined that inspectors of election be appointed, the Chairman shall appoint one or more inspectors of election, who shall first take and subscribe an oath or affirmation faithfully to execute the duties of inspectors at such meeting with strict impartiality and according to the best of their ability. The inspector(s) 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 inspector.
At any meeting at which a quorum is present, a plurality of the votes properly cast for election to the Board of Directors shall be sufficient to elect a candidate to the Board of Directors, 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 the Delaware Law, the Certificate of Incorporation, these Bylaws, or otherwise.
Section 2.10. Organization. The Chairman of the Board, if there be one, or in his or her absence the Vice Chairman, or in the absence of a Vice Chairman, the President, or in the absence of the President, a Vice President, shall call meetings of the stockholders to order and shall act as chairman thereof. The Secretary of the Corporation, if present, shall act as secretary of all meetings of stockholders, and, in his or her absence, the presiding officer may appoint a secretary.
ARTICLE III—DIRECTORS
Section 3.1. General Powers; Number and Term of Office. The business and affairs of the Corporation shall be conducted and managed by a Board of Directors, none of whom needs to be a stockholder. Except as otherwise provided by the Delaware Law, the Certificate of Incorporation or these Bylaws, the number of directors shall be fixed by the Board of Directors (and not by the stockholders) from time to time, in each case by a vote of a majority of the directors in office at the time, regardless of whether such majority constitutes a quorum, provided that no decrease shall affect
the term of any director then in office. If the number is not so fixed at any meeting or after an event giving rise to a vacancy, the number shall remain as it stood immediately prior to such meeting or event. The number of directors shall not be less than three.
Section 3.2. Nomination of Directors. Only persons nominated in accordance with the procedures set forth in this Section 3.2 shall be eligible for election as directors. Nominations of persons for election to the Board of Directors may be made at a meeting of stockholders (i) by or at the direction of the Board of Directors or a committee of Directors appointed by the Board, or (ii) by any stockholder of the Corporation who shall have been a stockholder of record on the record date for such meeting and shall continue to be entitled to vote thereat who complies with the notice procedures set forth in this Section 3.2. Such nominations, other than those made by or at the direction of the Board, shall be made pursuant to timely notice in writing to the Secretary of the Corporation. To be timely, a stockholder's notice must be delivered to, or mailed and received at, the principal executive offices of the Corporation (i) in the case of an annual meeting that is called for a date that is within 30 days before or after the anniversary date of the immediately preceding annual meeting of stockholders, not less than 60 days nor more than 90 days prior to the Anniversary, and (ii) in the case of an annual meeting that is called for a date that is not within 30 days before or after the anniversary date of the immediately preceding annual meeting, or in the case of a special meeting of stockholders called for the purpose of electing Directors, not later than the later of (x) the 90th day prior to such annual meeting or (y) the close of business on the tenth day following the day on which public disclosure of the date of the meeting was made;provided, however, such time periods shall be subject to Rule 14a-8 of the Securities Exchange Act of 1934, as amended, or any successor provision thereto, to the extent applicable. Notwithstanding anything in these Bylaws to the contrary, in the event that the number of directors to be elected to the Board of Directors at an annual meeting of the stockholders is increased and there is no public announcement by the Corporation naming all of the nominees for director or specifying the size of the increased Board of Directors at least one hundred (100) days prior to the first anniversary of the date of mailing of notice for the preceding year's annual meeting (or, if the annual meeting is held more than thirty (30) days before or after such anniversary date, at least one hundred (100) days prior to such annual meeting), a stockholder's notice required by this Section 3.2 shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary at the principal executive office of the Corporation not later than the close of business on the tenth (10th) day following the day on which such public announcement is first made by the Corporation.
In order to be effective, a stockholder's notice to the Secretary shall set forth (i) as to each person whom the stockholder proposes to nominate for election or reelection as a director (a) the name, age, business address and residence address of such person, (b) the principal occupation or employment of such person, (c) the class and number of shares of the Corporation which are beneficially owned by such person on the date of such stockholder's notice and (d) any other information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (including without limitation such person's written consent to being named in the proxy statement as a nominee and to serving as a director if elected), and (ii) as to the stockholder giving the notice, (a) a representation that the stockholder is a holder of record of shares of the Corporation entitled to vote at such meeting, including the class and number of shares of such stock that are owned beneficially and of record by such stockholder, and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice, (b) the name and address, as they appear on the Corporation's books, of such stockholder and any other stockholders known by such stockholder to be supporting such nominee(s), (c) the class and number of shares of the Corporation which are beneficially owned by any other stockholders known by such stockholder to be supporting such nominee(s) on the date of such stockholder's notice, (d) a Solicitation Notice or a statement that the stockholder does not intend to deliver a proxy statement and form of proxy to
holders of a sufficient number of holders of the Corporation's voting shares to elect such nominee or nominees, and (d) a description of all arrangements or understandings between the stockholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the stockholder.
If the stockholder has provided the Corporation with a Solicitation Notice, such stockholder must, at least fifteen days prior to the date of such meeting, have delivered a proxy statement and form of proxy to holders of a percentage of the Corporation's voting shares reasonably believed by such stockholder to be sufficient to elect the nominee or nominees proposed to be nominated by such stockholder. If no Solicitation Notice relating thereto has been timely provided pursuant to this Section 3.2, the stockholder proposing such nomination must not have solicited a number of proxies sufficient to have required the delivery of such a Solicitation Notice under this Section 3.2.
The Chairman of the meeting shall, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the procedures prescribed by the Bylaws, and if he should so determine, he shall so declare to the meeting and the defective nomination shall be disregarded.
The foregoing requirements shall be in addition to any other requirements imposed by applicable law or regulation.
Section 3.3. Removal. Subject to the rights of the holders of any class or series of stock having a preference over the Common Stock as to dividends or upon liquidation to elect additional directors under specified circumstances, any director may be removed from office by the stockholders in the manner provided in this Section 3.3. At any special meeting of the stockholders of the Corporation, the notice of which shall state that the removal of a director or directors is among the purposes of the meeting, the affirmative vote of the holders of a majority of the combined voting power of the outstanding shares of capital stock of the Corporation entitled to vote in the election of directors generally, voting together as a single class, may remove such director or directors with or without cause.
Section 3.4. Vacancies. If any vacancy shall occur among the directors, or if the number of directors shall at any time be increased, such vacancy shall be filled only by the directors then in office, although less than a quorum, by a majority vote of the directors then in office or by the sole remaining director, or, only if no directors then remain, by the stockholders of the Corporation.
Section 3.5. Meetings. Meetings of the Board of Directors shall be held at such place, within or without the State of Delaware, as may from time to time be fixed by resolution of the Board of Directors or by the Chairman of the Board, if there be one, or by the President, and as may be specified in the notice or waiver of notice of any meeting. Meetings may be held at any time upon the call of the Chairman of the Board, if there be one, or the President or a majority of the directors in office by personal oral communication, telephonic oral communication, telecopy or electronic transmission, or written notice, duly served or sent or mailed to each director not less than twenty-four (24) hours before such meeting, except that, if mailed, not less than 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 telecopy or electronic transmission, waive notice thereof before or after the meeting. A regular meeting of the Board may be held without notice immediately following the annual meeting of stockholders at the place where such meeting is held. Regular meetings of the Board may also be held without notice at such time and place as shall from time to time be determined by resolution of the Board. Except as otherwise provided by the Delaware Law, the Certificate of Incorporation or otherwise, neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors or any committee thereof need be specified in any written waiver of notice.
Section 3.6. Telephone Meetings. Members of the Board of Directors, or any committee thereof, may participate in a meeting of such Board of Directors, or any committee, by means of video conference, telephone conference or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting pursuant to the foregoing provisions shall constitute presence in person at the meeting.
Section 3.7. Votes. Except as otherwise provided by law, the Certificate of Incorporation or these Bylaws, the vote of the majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors.
Section 3.8. Quorum and Adjournment. Except as otherwise provided by the Delaware Law, the Certificate of Incorporation or these Bylaws, 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 3.9. Compensation. Directors may receive compensation for their services, as such, and for service on any committee of the Board of Directors, as fixed by resolution of the Board of Directors and for expenses of attendance at each regular or special meeting of the Board or any committee thereof. Nothing in this Section shall be construed to preclude a director from serving the Corporation in any other capacity and receiving compensation therefor.
Section 3.10. Action by Consent of Directors. Any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if all members of the Board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board or committee. Such consent shall be treated as a vote adopted at a meeting for all purposes. Such consents may be executed in one or more counterparts and not every Director or committee member need sign the same counterpart.
Section 3.11. Resignation. Any director may resign at any time by giving notice in writing or by electronic transmission to the Board of Directors or to the Secretary. The resignation of any director shall take effect upon receipt of notice thereof or at such later time as shall be specified in such notice; and unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.
ARTICLE IV—COMMITTEES OF DIRECTORS
Section 4.1. Establishment and Powers. The Board of Directors of the Corporation may, by resolution adopted by a majority of the Directors in office, establish one or more committees to consist of one or more Directors of the Corporation. Any committee, to the extent provided in the resolution of the Board of Directors or in the Bylaws, shall have and may exercise all of the powers and authority of the Board of Directors, except that a committee shall not have any power or authority as to the following:
Section 4.2. Alternate Members. The Board of Directors may designate one or more Directors as alternate members of any committee who may replace any absent or disqualified member at any meeting of the committee or for the purpose of any written action by the committee. In the absence or disqualification of a member and alternate member or members of a committee, the member or
members thereof present at a meeting and not disqualified from voting, whether or not he, she or they constitute a quorum, may unanimously appoint another Director to act at the meeting in the place of the absent or disqualified member.
Section 4.3. Term. Each committee of the Board of Directors shall serve at the pleasure of the Board of Directors.
Section 4.4. Status of Committee Action. The term "Board of Directors" or "Board," when used in any provision of these Bylaws relating to the organization or procedures of or the manner of taking action by the Board of Directors, shall be construed to include and refer to any executive or other committee of the Board of Directors. Any provision of these Bylaws relating or referring to action to be taken by the Board of Directors or the procedure required therefor shall be satisfied by the taking of corresponding action by a committee of the Board of Directors to the extent authority to take the action has been delegated to the committee pursuant to this Section, except that the executive committee, if any, shall have authority to act in all matters in which the Board of Directors is empowered to act between regular meetings of the Board of Directors, except to the extent provided in Section 4.1 of these Bylaws.
ARTICLE V—OFFICERS
Section 5.1. Office. The Board of Directors shall elect a President, a Secretary and a Treasurer, and, in their discretion, may elect a Chairman of the Board, a Vice Chairman of the Board, a Controller, and one or more Executive Vice Presidents, Senior Vice Presidents, Vice Presidents, Assistant Secretaries, Assistant Treasurers and Assistant Controllers and such other officers 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 (or at such other meeting as the Board of Directors determines), and each shall hold office for the term provided by the vote of the Board, except that each will be subject to removal from office in the discretion of the Board as provided herein. The powers and duties of more than one office may be exercised and performed by the same person.
Section 5.2. 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 5.3. Chairman of the Board. The Chairman of the Board of Directors, if any, shall be the chief executive officer of the Corporation, and, subject to the direction of the Board of Directors, shall have general charge of the management and direction of the business, affairs and property of the Corporation, and general supervision over its other officers and agents, and, when present, shall preside at all meetings of the stockholders and the Board of Directors. The Chairman of the Board of Directors shall perform such other duties and have such other powers as the Board of Directors shall designate from time to time.
Section 5.4. President. The President shall be the chief operating officer of the Corporation. In general, he shall perform all duties incident to the office of President and chief operating officer and shall see that all orders and resolutions of the Board of Directors are carried into effect and shall perform such other executive, supervisory and management functions and duties as may be assigned to him from time to time by the Board of Directors or the Chairman of the Board.
Section 5.5. Vice Presidents. Each Executive Vice President, Senior Vice President and Vice President shall have and exercise such powers and shall perform such duties as from time to time may be assigned to him or to her by the Board of Directors, the Chairman or the President.
Section 5.6. Secretary. The Secretary shall keep the minutes of all meetings of the stockholders and of the Board of Directors and committees of the Board in books provided for the purpose and
shall see that all notices are duly given in accordance with the provisions of law and these Bylaws. The Secretary shall be custodian of the records and of the corporate seal or seals of the Corporation and shall see that the corporate seal is affixed to all documents the execution of which, on behalf of the Corporation under its seal, is duly authorized, and, when the seal is so affixed, he or she may attest the same. Without limiting the generality of the foregoing, in general, the Secretary shall perform all duties incident to the office of secretary of a corporation, and such other duties as from time to time may be assigned to him or her by the Board of Directors.
Section 5.7. 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 5.8. 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. The Treasurer may endorse for collection on behalf of the Corporation checks, notes and other obligations; may sign receipts and vouchers for payments made to the Corporation and may sign checks of the Corporation, singly or jointly with another person as the Board of Directors may authorize, and pay out and dispose of the proceeds under the direction of the Board. The Treasurer shall render to the President and to the Board of Directors, whenever requested, an account of the financial condition of the Corporation; and in general, shall perform all the duties incident to the office of treasurer of a corporation, and such other duties as from time to time may be assigned by the Board of Directors.
Section 5.9. 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 5.10. Controller. The Controller, if elected, shall be the chief accounting officer of the Corporation and shall perform all duties incident to the office of a controller of a corporation, and, in the absence of or disability of the Treasurer or any Assistant Treasurer, perform the duties and exercise the powers of the Treasurer and shall perform such other duties as the Board of Directors shall prescribe or as from time to time may be assigned by the Chairman of the Board, if any, the President or the Treasurer.
Section 5.11. Assistant Controllers. The Assistant Controllers in order of their seniority shall, in the absence or disability of the Controller, perform the duties and exercise the powers of the Controller and shall perform such other duties as the Board of Directors shall prescribe or as from time to time may be assigned by the Controller.
Section 5.12. Subordinate Officers. The Board of Directors may appoint such subordinate officers as it may deem desirable. Each such officer shall hold office for such period, have such authority and perform such duties as the Board of Directors may prescribe. The Board of Directors may, from time to time, authorize any officer to appoint and remove subordinate officers and to prescribe the powers and duties thereof.
Section 5.13. Compensation. The Board of Directors shall fix the compensation of all officers of the Corporation. It may authorize any officer, upon whom the power of appointing subordinate officers may have been conferred, to fix the compensation of such subordinate officers.
Section 5.14. Removal. Any officer of the Corporation may be removed, with or without cause, by action of the Board of Directors.
Section 5.15. Bonds. The Board of Directors may require any officer of the Corporation to give a bond to the Corporation, conditional upon the faithful performance of his or her duties, with one or more sureties and in such amount as may be satisfactory to the Board of Directors.
Section 5.16. Resignation. Any officer may resign at any time by giving notice in writing or by electronic transmission to the Board of Directors (or to a principal officer to whom such officer reports). The resignation of any officer shall take effect upon receipt of notice thereof or at such later time as shall be specified in such notice; and unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.
ARTICLE VI—CERTIFICATES OF STOCK
Section 6.1. Form and Execution of Certificates. The interest of each stockholder of the Corporation shall be evidenced by a certificate or certificates for shares of stock in such form as the Board of Directors may from time to time prescribe. The certificates of stock of each class shall be consecutively numbered and signed by the Chairman or Vice Chairman of the Board, if any, the President, an Executive Vice President, Senior Vice President or a Vice President and by the Secretary, an Assistant Secretary, the Treasurer or an Assistant Treasurer of the Corporation, and may be countersigned and registered in such manner as the Board of Directors may by resolution prescribe, and shall bear the corporate seal or a printed or engraved facsimile thereof. Where any such certificate is signed by a transfer agent or transfer clerk acting on behalf of the Corporation, the signatures of any such Chairman, Vice Chairman, President, Executive Vice President, Senior 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 Bylaws, or any agreement to which the Corporation is a party, shall have the restriction noted conspicuously on the certificate, and shall also set forth, on the face or back, either the full text of the restriction or a statement of the existence of such restriction and (except if such restriction is imposed by law) a statement that the Corporation will furnish a copy thereof to the holder of such certificate upon written request and without charge.
Every certificate issued when the Corporation is authorized to issue more than one class or series of stock shall set forth on its face or back either the full text of the preferences, voting powers, qualifications, and special and relative rights of the shares of each class and series authorized to be issued, or a statement of the existence of such preferences, powers, qualifications and rights, and a statement that the Corporation will furnish a copy thereof to the holder of such certificate upon written request and without charge.
Section 6.2. Transfer of Shares. The shares of the stock of the Corporation shall be transferred on the books of the Corporation by the holder thereof in person or by his or her attorney lawfully
constituted, upon surrender for cancellation of certificates for the same number of shares, with an assignment and power of transfer endorsed thereon or attached thereto, duly executed, with such proof or guaranty of the authenticity of the signature as the Corporation or its agents may reasonably require. The Corporation shall be entitled to treat the holder of record of any share or shares of stock as the holder in fact thereof and accordingly shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person whether or not it shall have express or other notice thereof, save as expressly provided by law, by the Certificate of Incorporation or these Bylaws. It shall be the duty of each stockholder to notify the Corporation of his or her post office address.
Section 6.3. Fixing Date for Determination of Stockholders of Record. In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors (but not the stockholders) may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors and which record date: (a) in the case of determination of stockholders entitled to vote at any meeting of stockholders or adjournment thereof, shall, unless otherwise required by law, the Certificate of Incorporation or these Bylaws, not be more than sixty (60) nor less than ten (10) days before the date of such meeting; and (b) in the case of any other action, shall not be more than sixty (60) days prior to such other action. If no record date is fixed: (a) the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held; and (b) the record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors (but not the stockholders) may fix a new record date for the adjourned meeting.
Section 6.4. 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 of Directors (but not the stockholders) 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 6.5. Lost or Destroyed Certificates. Unless waived in whole or in part by the Board of Directors or any officer acting pursuant to the direction of the Board of Directors, any person requesting the issuance of a new certificate in lieu of an alleged lost, destroyed, mislaid or wrongfully taken certificate shall (a) give to the Corporation his or her bond of indemnity with an acceptable surety, and (b) satisfy such other requirements as may be imposed by the Corporation. Thereupon, a new share certificate shall be issued to the registered owner or his or her assigns in lieu of the alleged lost, destroyed, mislaid or wrongfully taken certificate, provided that the request therefor and issuance thereof have been made before the Corporation has notice that such shares have been acquired by a bona fide purchaser.
Section 6.6. Uncertificated Shares. The Board of Directors of the Corporation may by resolution provide that one or more of any or all classes or series of the stock of the Corporation shall be uncertificated shares, subject to the provisions of Section 158 of the Delaware Law.
Section 6.7. 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 one or more classes or series of its 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 the Corporation's stock and stock certificates.
ARTICLE VII—EXECUTION OF DOCUMENTS
Section 7.1. 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 7.2. 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 Chairman or Vice Chairman of the Board, if any, the President, any Executive Vice President, any Senior 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 7.3. Execution of Proxies. The Chairman or Vice Chairman of the Board, if any, the President, any Executive Vice President, any Senior Vice President or any Vice President, and the Secretary, the Treasurer, any Assistant Secretary or any Assistant Treasurer, or any other officer designated by the Board of Directors, may sign on behalf of the Corporation proxies to vote upon shares of stock of other companies standing in the name of the Corporation.
ARTICLE VIII—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 IX—FISCAL YEAR
The fiscal year of the Corporation shall be determined from time to time by vote of the Board of Directors.
ARTICLE X—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.
These Bylaws may be altered, amended, changed or repealed and new Bylaws 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 Bylaw, 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 above provided.
ARTICLE XII—LIMITATION OF DIRECTORS' LIABILITY AND INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHER PERSONS
Section 12.1. Actions, Suits and Proceedings Other than by or in the Right of the Corporation. The Corporation shall indemnify and hold harmless, to the fullest extent permitted by applicable law as it presently exists or may hereafter be amended, any person who was or is a party or threatened to be made a party to or is otherwise involved in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that he or she is or was, or has agreed to become, a director or officer of the Corporation, or is or was serving, or has agreed to serve, at the request of the Corporation, as a director, officer, partner, employee or trustee of, or in a similar capacity with, another corporation, partnership, joint venture, trust or other enterprise or nonprofit entity (including any employee benefit plan) (all such persons being referred to hereafter as an "Indemnitee"), or by reason of any action alleged to have been taken or omitted in such capacity, against all expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by or on behalf of the Indemnitee in connection with such action, suit or proceeding and any appeal therefrom, if the Indemnitee acted in good faith and in a manner which the Indemnitee 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 reasonable cause to believe the Indemnitee's 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 Indemnitee did not act in good faith and in a manner which the Indemnitee reasonably believed to be in, or not opposed to, the best interests of the Corporation, and, with respect to any criminal action or proceeding, shall not create a presumption that the Indemnitee did not have reasonable cause to believe that his or her conduct was unlawful.
Section 12.2. Actions or Suits by or in the Right of the Corporation. The Corporation shall indemnify any Indemnitee who was or is a party to or 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 the Indemnitee is or was, or has agreed to become, a director or officer of the Corporation, or is or was serving, or has agreed to serve, at the request of the Corporation, as a director, officer, partner, employee or trustee of, or in a similar capacity with, another corporation, partnership, joint venture, trust or other enterprise (including any employee benefit plan), or by reason of any action alleged to have been taken or omitted in such capacity, against all expenses (including attorneys' fees) and, to the extent permitted by law, amounts paid in settlement actually and reasonably incurred by or on behalf of the Indemnitee in connection with such action, suit or proceeding and any appeal therefrom, if the Indemnitee acted in good faith and in a manner which the Indemnitee reasonably believed to be in, or not opposed to, the best interests of the Corporation, except that no indemnification shall be made under this Section 12.2 in respect of any claim, issue or matter as to which the Indemnitee shall have been adjudged to be liable to the Corporation, unless, and only to the extent, that the Court of Chancery of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of such liability but in view of all the circumstances of the case, the Indemnitee is fairly and reasonably entitled to indemnity for such
expenses (including attorneys' fees) which the Court of Chancery of Delaware or such other court shall deem proper.
Section 12.3. Definition of Entitlement; Success on the Merits. Any indemnification under Section 12.1 or 12.2 (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 person requesting such is proper in the circumstances because he or she has met the applicable standard of conduct set forth in Section 12.1 or 12.2, as the case may be. Such determination shall be made (a) by the Board of Directors, by a majority vote of directors who are not parties to such action, suit or proceeding (whether or not a quorum), (b) by a committee of such directors designated by majority vote of such directors (whether or not a quorum), (c) if there are no disinterested directors or if a majority of disinterested directors so directs, by independent legal counsel (who may be regular legal counsel to the corporation) in a written opinion, or (d) by the stockholders. To the extent, however, that any person referred to in Section 12.1 or 12.2 has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to therein or in defense of any claim, issue or matter therein, he or she shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him or her in connection therewith.
Section 12.4. Expense Advance. Expenses (including attorneys' fees) incurred by an officer or director of the Corporation in defending any pending or threatened civil, criminal, administrative or investigative action, suit or proceeding may be paid by the Corporation in advance of the final disposition of such action, suit or proceeding as authorized by the Board of Directors in the manner provided in Section 12.3 of this Article upon receipt of an undertaking by or on behalf of such officer or director to repay such amount, if it shall ultimately be determined that he or she is not entitled to be indemnified by the Corporation as authorized in this Article.
Section 12.5. Nonexclusively. The indemnification and advancement of expenses provided by, or granted pursuant to, the other Sections of this Article shall not be deemed exclusive of any other rights to which any person seeking indemnification or advancement of expenses may be entitled under the Certificate of Incorporation or any statute, bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his or her official capacity and as to action in another capacity while holding such office. The provisions of this Article XII shall not be deemed to preclude the indemnification of any person who is not specified in Section 12.1 or 12.2 but whom the Corporation has the power to indemnify under applicable law or otherwise.
Section 12.6. Insurance. The Corporation shall have the 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, trustee, partner, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise or nonprofit entity, against any liability asserted against and incurred by such person in any such capacity, or arising out of his or her status as such, whether or not the Corporation would have the obligation to indemnify such person against liability under this Article or the power to indemnify such person against such liability under the provisions of Section 145 of the Delaware Law.
Section 12.7. Other Indemnification. The Corporation's obligation, if any, to indemnify any person who was or is serving at its request as a director, trustee, partner, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise or nonprofit entity shall be reduced by any amount such person may collect as indemnification from such other corporation, partnership, joint venture, trust or other enterprise or nonprofit entity or from insurance.
Section 12.8. Continuation of Indemnification. The indemnification and advancement of expenses provided by, or granted pursuant to, this Article shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director, trustee, partner, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person.
Section 12.9. Limitation on Indemnification. Notwithstanding anything contained in this Article XII to the contrary, except for proceedings to enforce rights to indemnification, the Corporation shall not be obligated to indemnify any director or officer (or his or her heirs, executors or personal or legal representative) or advance expenses in connection with a proceeding (or part thereof) initiated by such person unless such proceeding (or part thereof) was authorized or consented to by the Board of Directors.
Section 12.10. Indemnification of Employees and Agents. The Corporation may, to the extent authorized from time to time by the Board of Directors, provide rights to indemnification and to the advancement of expenses to employees and agents of the Corporation similar to those conferred in this Article XII to Directors and officers of the Corporation.
Section 12.11. Other Rights. The indemnification and advancement of expenses provided by this Article shall not be deemed exclusive of any other rights to which an Indemnitee seeking indemnification or advancement of expenses may be entitled under any law (common or statutory), agreement or vote of stockholders or disinterested directors or otherwise, both as to action in the Indemnitee's official capacity and as to action in any other capacity while holding office for the Corporation, and shall continue as to an Indemnitee who has ceased to be a director or officer, and shall inure to the benefit of the estate, heirs, executors and administrators of the Indemnitee. Nothing contained in this Article shall be deemed to prohibit, and the Corporation is specifically authorized to enter into, agreements with officers and directors providing indemnification rights and procedures different from those set forth in this Article. In addition, the Corporation may, to the extent authorized from time to time by its Board of Directors, grant indemnification rights to other employees or agents of the Corporation or other persons serving the Corporation and such rights may be equivalent to, or greater or less than, those set forth in this Article.
Section 12.13. Amendment. The provisions of this Article XII relating to the limitation of Directors' liability, to indemnification and to the advancement of expenses shall constitute a contract between the Corporation and each of its Directors and officers which may be modified as to any Director or officer in respect of any act or omission occurring prior to the date of any such modification only with that person's consent or as specifically provided in this Section. Notwithstanding any other provision of these Bylaws relating to their amendment generally, any repeal or amendment of this Article XII which is adverse to any Director or officer shall apply to such Director or officer only on a prospective basis, and shall not reduce any limitation on the personal liability of a director of the Corporation, or limit the rights of an Indemnitee to indemnification or to the advancement of expenses with respect to any action or failure to act occurring prior to the time of such repeal or amendment. Notwithstanding any other provision of these Bylaws, no repeal or amendment of these Bylaws shall affect any or all of this Article so as either to reduce the limitation of directors' liability or limit indemnification or the advancement of expenses in any manner unless adopted by (a) the unanimous vote of the Directors of the Corporation then serving, or (b) the affirmative vote of stockholders entitled to cast not less than a majority of the votes that all stockholders are entitled to cast in the election of Directors; provided that no such amendment shall have retroactive effect inconsistent with the preceding sentence.
Section 12.14. Savings Clause. If this Article or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Corporation shall nevertheless indemnify each Indemnitee as to any expenses (including attorneys' fees), judgments, fines and amounts paid in settlement in connection with any action, suit, proceeding or investigation, whether civil, criminal or administrative, including an action by or in the right of the Corporation, to the fullest extent permitted by any applicable portion of this Article that shall not have been invalidated and to the fullest extent permitted by applicable law.
Section 12.15. Definitions. Terms used herein and defined in Section 145(h) and Section 145(i) of the Delaware Law shall have the respective meanings assigned to such terms in such Section 145(h) and Section 145(i).
ARTICLE XIII INTERPRETATION OF BYLAWS—SEPARABILITY
Section 13.1. Interpretation. All words, terms and provisions of these Bylaws shall be interpreted and defined by and in accordance with the Delaware Law. If any provision of these Bylaws shall be inconsistent with any provision of the Certificate of Incorporation, the provision of the Certificate of Incorporation shall prevail. Where any provision of these Bylaws refers to a rule or process as set forth in these Bylaws, the reference shall be construed to include and be satisfied by any rule or process on the same subject set forth in the Certificate of Incorporation.
Section 13.2. Separability. The provisions of these Bylaws are independent of and separable from each other, and no provision shall be affected or rendered invalid or unenforceable by virtue of the fact that for any reason any other or others of them may be invalid or unenforceable in whole or in part.
ARTICLE XIV—DETERMINATIONS BY THE BOARD
Section 14.1. Effect of Board Determinations. Any determination involving interpretation or application of these Bylaws made in good faith by the Board of Directors shall be final, binding and conclusive on all parties in interest.
FIRST AMENDMENT TO THE IRON MOUNTAIN INCORPORATED20022003 EMPLOYEE STOCK INCENTIVEPURCHASE PLAN
As adopted by resolution of the
Board of Directors on March 4, 2004and submitted for approval by the Shareholders on May 27, 2004April [ ], 2005
IRON MOUNTAIN INCORPORATED
2003 EMPLOYEE STOCK PURCHASE PLAN
The purpose of the Iron Mountain Incorporated 2003 Employee Stock Purchase Plan is to provide employees of Iron Mountain Incorporated (the "Company") and its Subsidiaries the opportunity to acquire an equity interest in the Company by providing favorable terms for them to purchase its stock. This Plan is intended to qualify as an employee stock purchase plan within the meaning of Section 423 of the Code.
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Change of Control" of the Company shall be deemed to have occurred if any person (as such term is used in Section 13(d) and 14(d)(2) of the Exchange Act) other than a trust related to an employee benefit plan maintained by the Company becomes the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of 50 percent or more of the Company's outstanding Common Stock, and within the period of 24 consecutive months immediately thereafter, individuals other than (i) individuals who at the beginning of such period constitute the entire Board or (ii) individuals whose election, or nomination for election by the Company's shareholders, was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of the period, become a majority of the Board.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended. Any reference to a particular Section shall include any successor and regulation thereto.
(d) "Committee" shall have the meaning set forth in Section 3.
(e) "Common Stock" shall mean the shares of the Company's common stock, $0.01 par value per share.
(f) "Company" shall have the meaning set forth in Section 1.
(g) "Compensation" shall mean cash remuneration reported (or to be reported) in Box 1 of Form W-2, or its equivalent, increased by any salary reduction elected pursuant to Sections 402(g), 132(f) or 125 of the Code.
(h) "Employee" shall mean any individual who is customarily employed for more than five months in a calendar year by the Company or any Subsidiary. The term Employee shall not include: (i) any individual who is not a common law employee of the Company or a Subsidiary; (ii) any Employee who owns, directly or indirectly, as of the Offering Date five percent or more of the total combined voting power or value of all classes of stock of the Company or a Subsidiary; (iii) any individual who is a common law employee of a Subsidiary, none of the employees of which participate in the Plan, as determined by the Committee; (iv) any Employee who is a member of a collective bargaining unit with which the Company or a Subsidiary has bargained in good faith with respect to participation in the Plan and as a result of such bargaining the labor organization made an affirmative decision not to participate in the Plan; and (v) any Employee whose employment commencement date is fewer than six months prior to the commencement of an Offering.
(i) "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
(j) "Exercise Date" shall mean the date(s) designated by the Committee from time to time on which an Optionee may exercise an Option; provided, however, that no Exercise Date shall be more than 12 months after the applicable Offering Date; and provided, further, that if such prior date is not a business day, the Exercise Date shall be the business day immediately preceding the applicable date.
(k) "Fair Market Value" shall be determined according to the following rules: (i) if the Common Stock is not at the time listed or admitted to trading on a stock exchange or the Nasdaq National Market, Fair Market Value shall be the closing price of the Common Stock on the date in question in the over-the-counter market, as such price is reported in a publication of general circulation selected by the Board and regularly reporting the price of the Common Stock in such market; provided, however, that if the price of the Common Stock is not so reported, Fair Market Value shall be determined in good faith by the Board, which may take into consideration (1) the price paid for the Common Stock in the most recent trade of a substantial number of shares known to the Board to have occurred at arm's length between willing and knowledgeable investors, (2) an appraisal by an independent party or (3) any other method of valuation undertaken in good faith by the Board, or some or all of the above as the Board shall in its discretion elect; or (ii) if the Common Stock is at the time listed or admitted to trading on any stock exchange or the Nasdaq National Market, then Fair Market Value shall be the mean between the lowest and highest reported sale prices (or the lowest reported bid price and the highest reported asked price) of the Common Stock on the date in question on the principal exchange on which the Common Stock is then listed or admitted to trading. If no reported sale of Common Stock takes place on the date in question on the principal exchange or the Nasdaq National Market, as the case may be, then the reported closing sale price (or the reported closing asked price) of the Common Stock on such date on the principal exchange or the Nasdaq National Market, as the case may be, shall be determinative of Fair Market Value.
(l) "Insider" shall mean a person subject to Section 16 of the Exchange Act.
(m) "Offering" shall mean any offering of Common Stock in accordance with Section 7.
(n) "Offering Date" shall mean the date(s) designated by the Committee from time to time on which an Option is granted; provided, however, that there shall be at least one Offering Date in any consecutive 12-month period while the Plan remains in effect; and provided, further, that if such date is not a business day, the Offering Date shall be the business day immediately preceding the applicable date.
(o) "Option" shall mean the right of a Participant to purchase Common Stock pursuant to an Offering.
(p) "Option Price" shall have the meaning set forth in Section 8.
(q) "Optionee" shall mean any individual who has been granted an Option that remains outstanding under the terms of any Offering or who owns Common Stock as a result of an Offering.
(r) "Participant" shall mean an Employee who has in effect a payroll deduction authorization in accordance with Section 6.
(s) "Plan" shall mean the Iron Mountain Incorporated 2003 Employee Stock Purchase Plan as set forth herein, with any and all amendments hereto that may be in effect.
(t) "Securities Act" shall mean the Securities Act of 1933, as amended.
(u) "Subsidiary" shall mean a corporation of which the Company owns, directly or indirectly through an unbroken chain of ownership, fifty percent or more of the total combined voting power of all classes of stock, whether or not such corporation now exists or is hereafter organized or acquired by the Company or a Subsidiary. An entity may be treated as a Subsidiary for purposes of this Plan if, consistent with Sections 423 and 424 of the Code, such entity is owned by a corporation and is
disregarded for federal income tax purposes, or such entity is treated as a corporation for federal income tax purposes.
Unless the Board shall designate another person or persons, the Plan shall be administered by the Stock Incentive Plan Subcommittee (the "Committee") of the Compensation Committee of the Board. No member of the Committee shall be liable for any action or determination made in good faith with respect to the Plan.
The Committee shall have the authority to adopt, amend and rescind such rules and regulations as, in its opinion, may be advisable in the administration of the Plan. All questions of interpretation and application of such rules and regulations, of the Plan and of Options granted thereunder shall be subject to the determination of the Committee, which shall be final and binding.
The Committee shall have the authority, without the need for further approval, to establish a different Offering Date and/or Exercise Date, to modify the amount of time between an Offering Date and an Exercise Date, to increase or decrease the number of Offerings in a year and to limit the number of shares that may be available in an Offering.
With respect to Insiders, transactions under the Plan are intended to comply with all applicable conditions of Rule 16b-3 or its successor under the Exchange Act. To the extent any provision of the Plan or action by the Committee fails to so comply, it shall be deemed to be modified so as to be in compliance with such Rule or, if such modification is not possible, it shall be deemed to be null and void, to the extent permitted by law and deemed advisable by the Committee.
The total amount of Common Stock with respect to which Options may be granted under the Plan shall not exceed in the aggregate 750,000 shares from either authorized but unissued shares or treasury shares; provided, however, that such aggregate number of shares shall be subject to adjustment in accordance with Section 15. If any outstanding Option expires for any reason, including a withdrawal pursuant to Section 10, or terminates by reason of the severance of employment of the Participant or any other cause, or is surrendered, the shares of Common Stock allocable to the unexercised portion of the Option may again be made subject to an Option under the Plan.
An Employee shall be eligible to become a Participant in the Plan on any Offering Date on which the Employee is employed by the Company or a Subsidiary; provided, however, that no Employee shall be granted an Option:
(a) An Employee may become a Participant in any Offering by completing an authorization for payroll deductions in connection with the Offering at such time (prior to the Offering Date) and in such manner as the Committee may prescribe. Payroll deductions pursuant to an authorization shall
commence with the payroll period in which the Offering Date occurs and shall end with the last payroll completed prior to the Exercise Date for the Offering to which the authorization applies, unless the authorization is sooner terminated by the Participant as provided in Section 10. The Committee may provide that in the case of the first Offering, payroll deductions shall commence with the first payroll period ending after the initial Offering Date. All payroll deductions shall be made on an after-tax basis.
(b) A Participant shall elect in the authorization for payroll deduction to have deductions made from his or her Compensation on each payday in an amount equal to a whole percentage of from one to 15 percent of his Compensation. All payroll deductions made for a Participant shall be credited to a bookkeeping account maintained for such Participant under the Plan. In no event shall interest be paid to a Participant with respect to payroll deductions credited to the Participant's account, whether such deductions are used in connection with the exercise of an Option or are returned to the Participant or the Participant's estate in cash.
(c) Except as may be required by law, a Participant may not make any payments to the Participant's account other than by authorization for payroll deduction. A Participant may elect to decrease the payroll deduction rate at such time and in such manner as the Committee may prescribe. In no event shall a Participant increase the amount of payroll deductions during an Offering. A Participant may discontinue participation in the Offering as provided in Section 10.
(a) Options under the Plan shall be granted in a series of Offerings, the first of which shall begin on the first Offering Date designated by the Committee. Successive Offerings shall begin on each Offering Date thereafter until all of the shares of Common Stock available under the Plan are exhausted or until the Plan is terminated pursuant to Section 18 or Section 19. Participation by an Employee in any Offering shall neither limit nor require his participation in any other Offering.
(b) Each Participant in an Offering shall be granted, as of the applicable Offering Date, an Option to purchase that number of shares of Common Stock that the accumulated payroll deductions credited to his account during the Offering are able to purchase at the Option Price.
(c) If the total number of shares for which Options are to be granted as of any Offering Date exceeds the number of shares available for the Offering, the Committee shall make a pro rata allocation of the available shares in a manner as nearly uniform as practicable, and as it shall determine to be equitable. Further, any accumulated payroll deductions remaining in a Participant's account after the close of such Offering shall be paid in cash to the Participant and shall not be applied to a subsequent offering. In the event a shortfall in shares appears likely, the Committee may, but shall not be required to, reduce remaining payroll deductions to be made pursuant to authorizations for that Offering.
(d) In no event shall a Participant be granted an Option in any Offering to acquire more than that number of shares of Common Stock equal to $25,000 divided by the Fair Market Value of the shares as of the Offering Date; provided, however, that such limit shall be subject to Section 5(ii) and to the adjustment in accordance with Section 15.
The Option Price of shares of Common Stock for any Offering shall be the lesser of: (a) 85 percent of the Fair Market Value of the shares on the Offering Date; or (b) 85 percent of the Fair Market Value of the shares on the Exercise Date. The Committee shall have the authority, without the need for further approval and solely with respect to an Offering not yet commenced, to reduce (or eliminate entirely) the amount of the 15 percent discount or may require that any discount be applied only to the Fair Market Value of the shares on the Exercise Date.
(a) A Participant's Option for an Offering will be exercised automatically as of the Exercise Date for the Offering to purchase that number of shares of Common Stock equal to the accumulated payroll deductions credited to the Participant's account as of the Exercise Date divided by the Option Price.
(b) A Participant may elect prior to the Exercise Date at such time and in such manner as the Committee may prescribe to receive in cash an amount equal to the accumulated payroll deductions in his account on the Exercise Date, rather than exercising his Option.
(c) As promptly as practicable after each Exercise Date the Company shall deliver to each Participant in the Offering, in accordance with the Participant's election, either (a) the shares purchased upon the exercise of the Participant's Option, together with a cash payment equal to the balance of any payroll deductions credited to the Participant's account during the Offering that were not used for the purchase of shares, or (b) a cash payment equal to the total of the payroll deductions credited to the Participant's account during the Offering.
(d) The shares purchased upon exercise of an Option shall be deemed to be transferred to the Participant on the Exercise Date.
(e) The Committee may, in its discretion, limit the shares purchased in an Offering to whole shares, in which event amounts representing fractional shares may, at the discretion of the Committee, either be carried forward for use in the next Offering if the Participant will participate in that Offering or paid to the Participant in cash.
A Participant may at any time prior to the Exercise Date at such time and in such manner as the Committee may prescribe withdraw from an Offering and request payment of an amount in cash equal to the accumulated payroll deductions credited to the Participant's account under the Plan. Such amount will be paid to the Participant as promptly as practicable after receipt of the Participant's request to withdraw, and no further payroll deductions will be made from the Participant's Compensation with respect to the Offering then in progress and any outstanding Option shall be cancelled. A Participant's withdrawal from an Offering will have no effect upon his or her eligibility to participate in any subsequent Offering or in any employee stock purchase plan (within the meaning of Section 423 of the Code) that may hereafter be adopted by the Company or a Subsidiary.
(a) Options shall not be transferable by a Participant and no amount credited to a Participant's account may be assigned, transferred, pledged or otherwise disposed of in any way by a Participant. An Option shall expire unexercised immediately if a Participant ceases to satisfy the definition of the term Employee for any reason other than death and the amount of the accumulated payroll deductions then credited to the Participant's account under the Plan will be paid in cash. Upon termination of the Participant's employment with the Company or a Subsidiary for any reason other than death, an amount in cash equal to the accumulated payroll deductions then credited to the Participant's account under the Plan will be paid to the Participant. In the case of a Participant's death, the provisions of Section 16 shall control.
(b) An authorized leave of absence or absence on military or government service shall not constitute severance of the employment relationship between the Company or Subsidiary and the Participant for purposes of this Section 11, provided that either (a) the absence is for a period of no more than 90 days or (b) the Employee's right to be re-employed after the absence is guaranteed either by statute or by contract.
The Company shall not be required to sell or issue any shares of Common Stock under the Plan if the issuance of such shares would constitute or result in a violation by the Optionee or the Company of any provision of any law, statute or regulation of any governmental authority. Specifically, in connection with the Securities Act, upon the exercise of any Option the Company shall not be required to issue shares unless the Board has received evidence satisfactory to it to the effect that the Optionee will not transfer such shares except pursuant to a registration statement in effect under the Securities Act or unless an opinion of counsel satisfactory to the Company has been received by the Company to the effect that such registration is not required. Any determination in this connection by the Board shall be final, binding and conclusive. The Company shall not be obligated to take any affirmative action to cause the exercise of an Option or the issuance of shares pursuant to an Option to comply with any laws or regulations of any governmental authority including, without limitation, the Securities Act or applicable state securities laws.
No Participant shall have rights as a shareholder with respect to shares covered by his Option until the applicable Exercise Date and, except as otherwise provided in Section 15, no adjustment shall be made for dividends of which the record date precedes the applicable Exercise Date.
Notwithstanding anything to the contrary in the Plan, if the Board determines, after full consideration of the facts presented on behalf of both the Company and the individual, that a Participant or an Optionee has been engaged in fraud, embezzlement, theft, commission of a felony or proven dishonesty in the course of his employment by the Company or a Subsidiary, which damaged the Company or Subsidiary, or has disclosed trade secrets or other proprietary information of the Company or a Subsidiary, (a) such individual's participation in an Offering shall terminate and he shall forfeit his right to receive any Common Stock pursuant to an Offering that has not yet been delivered and (b) the Company shall have the right to repurchase all or any part of the shares of Common Stock acquired by an Optionee upon the earlier exercise of any Option, at a price equal to the amount paid to the Company upon such exercise, increased by an amount equal to the interest that would have accrued in the period between the date of exercise of the Option and the date of such repurchase upon a debt in the amount of the exercise price, at the prime rate(s) announced from time to time during such period in the Federal Reserve Statistical Release Selected Interest Rates. The decision of the Board as to the cause of a Participant's or Optionee's discharge and the damage done to the Company or a Subsidiary shall be final, binding and conclusive. No decision of the Board, however, shall affect in any manner the finality of the discharge of a Participant or Optionee by the Company or a Subsidiary.
(a) If the outstanding shares of Common Stock are hereafter changed for a different number or kind of shares or other securities of the Company, by reason of a reorganization, recapitalization, exchange of shares, stock split, combination of shares or dividend payable in shares or other securities, a corresponding adjustment shall be made by the Committee in the number and kind of shares or other securities, and in the Option Price, covered by outstanding Options, and for which Options may be granted under the Plan; provided, however, that no adjustment shall be made that would constitute a modification as defined in Section 424 of the Code. Any such adjustment made by the Committee shall be conclusive and binding upon all affected persons, including the Company and all Participants and Optionees.
(b) If while unexercised Options remain outstanding under the Plan the Company merges or consolidates with a wholly-owned subsidiary for the purpose of reincorporating itself under the laws of another jurisdiction, the Optionees will be entitled to acquire shares of Common Stock of the
reincorporated company upon the same terms and conditions as were in effect immediately prior to such reincorporation (unless such reincorporation involves a change in the number of shares or the capitalization of the Company, in which case proportional adjustments shall be made as provided above), and the Plan, unless otherwise rescinded by the Board, will remain the Plan of the reincorporated company.
(c) Except as otherwise provided in (a) or (b) above, if while unexercised Options remain outstanding under the Plan the Company merges or consolidates with one or more corporations (whether or not the Company is the surviving corporation), or is liquidated or sells or otherwise disposes of substantially all of its assets to another entity, or upon a Change of Control, then the Committee, in its discretion, shall provide that either:
(d) Except as expressly provided to the contrary in this Section 15, the issuance by the Company of shares of stock of any class for cash or property or for services, either upon direct sale or upon the exercise of rights or warrants, or upon conversion of shares or obligations of the Company convertible into such shares or other securities, shall not affect the number, class or price of shares of Common Stock then subject to outstanding Options.
16. DISPOSITION OF ACCOUNT AT DEATH
In the event that a Participant dies after the Exercise Date but before the delivery of the stock certificates, such certificates when issued together with any cash remaining in the Participant's account shall be transferred to the Participant's estate. In the event that a Participant dies prior to the Exercise Date, a payment shall be made to the Participant's estate of an amount in cash equal to the accumulated payroll deductions credited to the Participant's account under the Plan.
(a) Accumulated payroll deductions and the proceeds from the sale of shares pursuant to the exercise of Options shall constitute general funds of the Company.
(b) To the extent required by law, the Company or a Subsidiary shall withhold or cause to be withheld income and other taxes with respect to any income recognized by an Optionee by reason of the exercise of an Option. An Optionee shall agree that if the amount payable to him by the Company and any Subsidiary in the ordinary course is insufficient to pay such taxes, then he shall upon request of the Company pay to the Company an amount sufficient to satisfy its tax withholding obligations.
(c) All notices or other communications by a Participant or Optionee to the Company pursuant to the Plan shall be deemed to have been given when received in the form specified by the Company at the location or by the person designated by the Company for the receipt thereof.
(d) Neither the Plan nor the grant of an Option pursuant to the Plan shall impose upon the Company or a Subsidiary any obligation to employ or continue to employ any Participant, and the right of the Company or a Subsidiary to terminate the employment of any person shall not be diminished or affected by reason of the fact that an Option has been granted to him.
(e) The title of the sections of the Plan are included for convenience only and shall not be construed as modifying or affecting their provisions. The masculine gender shall include both sexes; the singular shall include the plural and the plural the singular unless the context otherwise requires.
(f) The Plan shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts, without regard to the principles of conflicts of law.
The Board may at any time terminate or from time to time amend, modify or suspend this Plan (or any part thereof); provided, however, that without approval by an affirmative vote of a majority of the votes properly cast at a duly held meeting of the shareholders of the Corporation at which a quorum representing a majority of all outstanding Common Stock is present, in person or by proxy there shall be no: (a) change in the number of shares of Common Stock that may be issued under the Plan, except by operation of the provisions of Section 15; (b) change in the class of persons eligible to participate in the Plan; or (c) other change in the Plan that requires shareholder approval under applicable law. Notwithstanding the preceding sentence, the Board shall in all events have the power to make such changes in the Plan and the Committee shall in all events have the power to make such changes in the regulations and administrative provisions under the Plan or in any outstanding Option as, in the opinion of counsel for the Company, may be necessary or appropriate from time to time to enable the Plan to qualify as an employee stock purchase plan as defined in Section 423 of the Code, so as to enable any Option to receive preferential federal income tax treatment. No amendment shall materially affect outstanding Options without the consent of the Optionee and the termination of the Plan will not terminate Options then outstanding, without the consent of the Optionee.
Notwithstanding the foregoing, at such time after the Company is not required to file periodic reports under the Exchange Act, at its option, the Company may terminate the Plan and, upon the termination, outstanding Options shall be cancelled and each Participant shall receive in cash an amount equal to the accumulated payroll deductions without interest credited to the Participant's account under the Plan immediately prior to termination.
The Plan shall be effective as of April 7, 2003, subject only to ratification by the holders of a majority of the outstanding shares of common stock present, or represented, and entitled to vote thereon (voting as a single class) at a duly held meeting (or written consents in lieu thereof) of the shareholders of the Company within 12 months before or after such date. Unless the Plan shall have terminated earlier, the Plan shall terminate on the date as of which there are no longer any shares available pursuant to Section 4 to be offered and no Option shall be granted pursuant to the Plan after that date.
IRON MOUNTAIN INCORPORATED
745 ATLANTIC AVENUE
BOSTON, MASSACHUSETTS 02111
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints C. RICHARD REESE and JOHN F. KENNY, JR., and each of them, as proxies of the undersigned, each with the power to appoint his substitute, and hereby authorizes both of them, or either one if only one be present, to represent and to vote, as designated on the reverse hereof, all the common stock, $.01 par value per share, of Iron Mountain Incorporated held of record by the undersigned or with respect to which the undersigned is entitled to vote or act at the Annual Meeting of Shareholders to be held on May 27, 200426, 2005 at 10:00 a.m., local time, or any adjournment or postponement thereof.
This proxy when properly executed will be voted in the manner directed herein by the undersigned shareholder. If no direction is made, this proxy will be voted FOR all of the Directors listed in Proposal 1, FOR the approvaladoption of the amendment to the Company's AmendedAgreement and Restated ArticlesPlan of IncorporationMerger described in Proposal 2, and FOR the approval of the amendment to the Iron Mountain Incorporated 20022003 Employee Stock IncentivePurchase Plan described in Proposal 3.3 and FOR the ratification of the selection of Deloitte & Touche LLP as the Company's independent public accountants described in Proposal 4.
SEE REVERSE SIDE | CONTINUED AND TO BE SIGNED ON REVERSE SIDE | SEE REVERSE SIDE |
PROXY
[LOGO OF IRON MOUNTAIN INCORPORATED]
April , 200427, 2005
Dear Shareholder:
It is amy pleasure to invite you to the Company's 20042005 Annual Meeting in Boston, Massachusetts on Thursday, May 27, 2004,26, 2005, at 10:00 a.m., local time, at the offices of Sullivan & Worcester LLP, One Post Office Square, 21st Floor, Boston, Massachusetts.
The Annual Report to Shareholders, Notice of Meeting, proxy statement and form of proxy are included herein. The matters listed in the Notice of Meeting are described in detail in the proxy statement.
The vote of every shareholder is important. Mailing your completed proxy will not prevent you from voting in person at the meeting if you wish to do so.
Please sign, date and promptly mail your proxy. Your cooperation will be greatly appreciated.
Your Board of Directors and management look forward to greeting those shareholders who are able to attend.
Sincerely, C. RICHARD REESE Chairman of the Board and Chief Executive Officer |
[PROXY]
DETACH HERE | ||||||
ý | Please mark votes as in this example. | |||||
1. | Election of the following directors | |||||
Nominees: | (01) | Clarke H. Bailey | ||||
(02) | Constantin R. Boden | |||||
(03) | Kent P. Dauten | |||||
(04) | B. Thomas Golisano | |||||
(05) | John F. Kenny, Jr. | |||||
(06) | Arthur D. Little | |||||
(07) | C. Richard Reese | |||||
(08) | Vincent J. Ryan | |||||
FOR o | WITHHOLD o | |||||
o For all nominees except as noted above |
2. Approve the adoption of the | ||||||||
FOR o | AGAINST o | ABSTAIN o | ||||||
3. Approve | ||||||||
FOR o | AGAINST o | ABSTAIN o | ||||||
4. Ratify the selection by the Audit Committee of Deloitte & Touche LLP as the Company's independent public accountants for the year ending December 31, 2005. | ||||||||
FOR o | AGAINST o | ABSTAIN o | ||||||
5. In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting. | ||||||||
MARK HERE IF YOU PLAN TO ATTEND THE MEETING o | ||||||||
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT o | ||||||||
Note: Please sign exactly as your name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate name by an authorized officer or if a partnership, please sign in full partnership name by an authorized person. |
Signature: | Date: | Signature: | Date: |