
<PAGE>
 
                                                           Registration No. 333-
================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                ---------------
                                    FORM S-4
                             REGISTRATION STATEMENT
                                     Under
                           THE SECURITIES ACT OF 1933
                                ---------------
                               PIERCE LEAHY CORP.
             (exact name of registrant as specified in its charter)

<TABLE>
 <S>                                     <C>                                     <C>
                                                     4226                              23-2588479
            New York                       ------------------------               -------------------
 (State or other jurisdiction of         (Primary Standard Industrial              (I.R.S. Employer 
 incorporation or organization)          Classification Code Number)               Identification No.) 
</TABLE>

                                631 Park Avenue
                      King of Prussia, Pennsylvania 19406
                                 (610) 992-8200
    (Address, including zip code, and telephone number, including area code,
                of the registrant's principal executive offices)

                               Douglas B. Huntley
                            Chief Financial Officer
                                631 Park Avenue
                      King of Prussia, Pennsylvania 19406
                                 (610) 992-8200
 (Name, address, including zip code, and telephone number, including area code,
                             of agent for service)

                                    Copy to:
                           Richard J. Busis, Esquire
                               Cozen and O'Connor
                               1900 Market Street
                        Philadelphia, Pennsylvania 19103

  Approximate date of commencement of proposed sale to the public:  As soon as
practicable after this registration statement becomes effective.
  If the securities being registered on this Form are to be offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
  If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. [ ]
  If this form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act of 1933, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
  If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
<TABLE>
<CAPTION>
                                            CALCULATION OF REGISTRATION FEE
====================================================================================================================================

                                                                            Proposed               Proposed       
                                                                            Maximum                 Maximum       
    Title of Each Class of              Amount to be Registered             Offering               Aggregate           Amount of
Securities to be Registered/(1)/                                     Price Per Security(1)     Offering Price(1)    Registration Fee

- ------------------------------------------------------------------------------------------------------------------------------------

<S>                                     <C>                          <C>                       <C>                  <C>
11-1/8% Senior Subordinated
Notes due 2006....................           $200,000,000                    100%                $200,000,000            $68,966
====================================================================================================================================

</TABLE>
(1) Estimated pursuant to Rule 457 solely for the purposes of calculating the
    registration fee.

      The Registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
================================================================================
<PAGE>

Information contained herein is subject to completion or amendment.  A 
registration statement relating to these securities has been filed with the 
Securities and Exchange Commission.  These  securities may not be sold nor may 
offers to buy be accepted prior to the time the registration statement becomes 
effective.  This prospectus shall not constitute an offer to sell or the 
solicitation of an offer to buy nor shall there be any sale of these securities 
in any State in which such offer, solicitation or sale would be unlawful prior 
to registration or qualification under the securities laws of any such State.
 
                  Subject to Completion, dated August 12, 1996
PROSPECTUS

                               Pierce Leahy Corp.
       Offer to Exchange its 11 1/8% Senior Subordinated Notes due 2006,
              which have been registered under the Securities Act,
 for any and all of its outstanding 11 1/8% Senior Subordinated Notes due 2006

      The Exchange Offer will expire at 5:00 p.m., New York City time, on
                   __________________, 1996, unless extended
                             ---------------------
      Pierce Leahy Corp., a New York corporation ("Pierce Leahy" or the
"Company"), hereby offers to exchange (the "Exchange Offer"), upon the terms and
subject to the conditions set forth in this Prospectus and the accompanying
Letter of Transmittal (the "Letter of Transmittal"), up to $200,000,000 in
aggregate principal amount of the Company's new 11 1/8% Senior Subordinated
Notes due 2006 (the "Exchange Notes"), for $200,000,000 in aggregate principal
amount of the Company's outstanding 11 1/8% Senior Subordinated Notes due 2006
(the "Original Notes"). The Original Notes and the Exchange Notes are sometimes
referred to herein collectively as the "Notes."

     The terms of the Exchange Notes are substantially identical in all respects
(including principal amount, interest rate and maturity) to the terms of the
Original Notes for which they may be exchanged pursuant to this Exchange Offer,
except that (i) the Exchange Notes will be freely transferable by holders
thereof (other than as provided in the next paragraph) and issued free of any
covenant restricting transfer absent registration and (ii) holders of the
Exchange Notes will not be entitled to certain rights of holders of the Original
Notes under the Registration Rights Agreement (as defined herein), which rights
will terminate upon the consummation of the Exchange Offer. The Exchange Notes
will evidence the same debt as the Original Notes (which they replace) and will
be entitled to the benefits of an Indenture dated as of July 15, 1996 governing
the Original Notes and the Exchange Notes (the "Indenture"). For a complete
description of the terms of the Exchange Notes, see "Description of the Notes."
There will be no cash proceeds to the Company from the Exchange Offer.
   
     The Notes are redeemable at the option of the Company, in whole or in part,
at any time on or after July 15, 2001, at the redemption prices set forth
herein, plus accrued and unpaid interest to the date of redemption. In addition,
the Company, at its option, may redeem in the aggregate up to 35% of the
original principal amount of the Notes at any time and from time to time prior
to July 15, 1999 at 110% of the aggregate principal amount so redeemed, plus
accrued and unpaid interest thereon to the redemption date, with the Net
Proceeds (as defined herein) of one or more Public Equity Offerings (as defined
herein), provided that at least $130,000,000 of the principal amount of the
Notes originally issued remain outstanding immediately after the occurrence of
any such redemption and that any such redemption occurs within 90 days following
the closing of any such Public Equity Offering. See "Description of the Notes--
Optional Redemption."

     Upon a Change of Control (as defined herein), each holder of the Notes will
be entitled to require the Company to purchase such holder's Notes at 101% of
the principal amount thereof, plus accrued and unpaid interest to the purchase
date. See "Description of the Notes--Change of Control Offer." In addition, the
Company is obligated in certain instances to make an offer to repurchase the
Notes at a purchase price in cash equal to 100% of the principal amount thereof
plus accrued and unpaid interest, if any, to the date of repurchase with the net
cash proceeds of certain asset sales. See "Description of the Notes--Certain
Covenants--Limitation on Certain Asset Sales."

     The Exchange Notes will bear interest from the most recent date to which
interest has been paid on the Original Notes, or if no interest has been paid on
the Original Notes, from July 23, 1996. Holders whose Original Notes are
accepted for exchange will not receive any payment in respect of interest on
such Original Notes otherwise payable on any interest payment date the record
date for which occurs on or after consummation of the Exchange Offer. See "The
Exchange Offer -- Terms of the Exchange Offer."

     The Notes will be general unsecured obligations of the Company subordinate
in right of payment to all existing and future Senior Indebtedness (as defined
herein) of the Company and senior in right of payment to any subordinated
indebtedness of the Company. As of March 31, 1996, after giving effect to the
offering of the Original Notes and the application of the net proceeds therefrom
and the Transactions (as defined herein), the Company and its Canadian
subsidiary would have had no Senior Indebtedness outstanding.
 
     See "Risk Factors" commencing on page 18 for a discussion of certain
factors that should be considered by holders of the Notes.
                             ---------------------

    THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
    EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
    SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
    UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
    CONTRARY IS A CRIMINAL OFFENSE.
    
              The date of this Prospectus is                , 1996
                             ---------------------
<PAGE>
 
     The Original Notes were sold on July 23, 1996, in a transaction not
registered under the Securities Act of 1933, as amended (the "Securities Act"),
in reliance upon an exemption provided in the Securities Act. Accordingly, the
Original Notes may not be offered, resold or otherwise pledged, hypothecated or
transferred in the United States unless registered under the Securities Act or
unless an exemption from the registration requirements of the Securities Act is
available. The Exchange Notes are being offered to satisfy the obligations of
the Company under the Registration Rights Agreement relating to the Original
Notes. See "The Exchange Offer -- Purposes and Effects of the Exchange Offer."
Each holder receiving Exchange Notes, other than a broker-dealer, will represent
that the holder is not engaging in or intending to engage in a distribution of
such Exchange Notes. Exchange Notes issued pursuant to the Exchange Offer in
exchange for the Original Notes may be offered for resale, resold or otherwise
transferred by the holders thereof (other than any holder that is an affiliate
of the Company within the meaning of Rule 405 under the Securities Act), without
compliance with the registration and prospectus delivery requirements of the
Securities Act, provided that such Exchange Notes are acquired in the ordinary
course of such holders' business and such holders have no arrangement or
understanding with any person to participate in the distribution of such
Exchange Notes. Each broker-dealer that receives Exchange Notes for its own
account pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Notes. The Letter of
Transmittal states that by acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. See "The Exchange Offer -- Purposes and Effects
of the Exchange Offer" and "Plan of Distribution." Broker-dealers may use this
Prospectus, as amended or supplemented, in connection with resales of the
Exchange Notes received in exchange for the Original Notes where such Original
Notes were acquired by such broker-dealer as a result of market making
activities or other such trading.

     The Exchange Offer is not conditioned on any minimum aggregate principal
amount of Original Notes being tendered for exchange. The Company will accept
for exchange any and all validly tendered Notes not withdrawn prior to 5:00
p.m., New York City time, on _____________, 1996 unless extended by the Company,
in its sole discretion (the "Expiration Date"). Tenders of Notes may be
withdrawn at any time prior to the Expiration Date. The Exchange Offer is
subject to certain customary conditions. See "The Exchange Offer --Conditions."
Notes may be tendered only in integral multiples of $1,000. The Company will pay
all expenses incident to the Exchange Offer.

     The Notes constitute securities for which there is no established trading
market. Any Original Notes not tendered and accepted in the Exchange Offer will
remain outstanding. The Company does not currently intend to list the Exchange
Notes on any securities exchange. To the extent that any Original Notes are
tendered and accepted in the Exchange Offer, a holder's ability to sell
untendered Original Notes could be adversely affected. No assurances can be
given as to the liquidity of the trading market for either the Original Notes or
the Exchange Notes.
<PAGE>
 
                             AVAILABLE INFORMATION

     The Company has filed with the Commission a Registration Statement on Form
S-4 under the Securities Act with respect to the Exchange Notes offered hereby.
As permitted by the rules and regulations of the Commission, this Prospectus
omits certain information, exhibits and undertakings contained in the
Registration Statement. For further information with respect to the Company and
the Exchange Notes offered hereby, reference is made to the Registration
Statement, including the exhibits thereto and the financial statements, notes
and schedules filed as a part thereof. The Registration Statement (and the
exhibits and schedules thereto), as well as the periodic reports and other
information filed by the Company with the Commission, may be inspected and
copied at the Public Reference Section of the Commission at Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the regional
offices of the Commission located at Room 1400, 75 Park Place, New York, New
York 10007 and Suite 1400, Northwestern Atrium Center, 500 West Madison Street,
Chicago, Illinois 60661. Copies of such materials may be obtained from the
Public Reference Section of the Commission, Room 1024, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549, and its public reference facilities
in New York, New York and Chicago, Illinois at prescribed rates. Such 
information can also be reviewed through the Commission's Electronic Data
Gathering, Analysis, and Retrieval System which is publicly available through
the Commission's Web site (http://www.sec.gov). Statements contained in this
Prospectus as to the contents of any contract or other document are not
necessarily complete, and in each instance reference is made to the copy of such
contract or document filed as an exhibit to the Registration Statement, each
such statement being qualified in all respects by such reference.

     Pursuant to the Indenture, the Company has agreed to furnish to the Trustee
and to registered holders of the Notes, without cost to the Trustee or such
registered holders, copies of all reports and other information that would be
required to be filed by the Company with the Commission under the Exchange Act,
whether or not the Company is then required to file reports with the Commission.
As a result of the Exchange Offer, the Company will become subject to the
periodic reporting and other informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). The Company has agreed
that, whether or not the Company is subject to filing requirements under Section
13 or 15(d) of the Exchange Act, and so long as any Notes remain outstanding, it
will file with the Commission (but only if the Commission at such time is
accepting such voluntary filings) and will send the Trustee copies of the
financial information, documents and reports that would have been required to be
filed with the Commission pursuant to the Exchange Act.

     The principal address of the Company is 631 Park Avenue, King of Prussia,
Pennsylvania 19406, telephone number 610-992-8200.

                                       3
<PAGE>
 
                               PROSPECTUS SUMMARY

     The following summary is qualified in its entirety by reference to, and
should be read in conjunction with, the more detailed information and financial
statements contained elsewhere in this Prospectus. Except as otherwise indicated
by the context, references to "Pierce Leahy" and the "Company" include Pierce
Leahy Corp. and its consolidated subsidiary. Unless otherwise indicated, the
market information in this Prospectus includes the information with respect to
the pending acquisition described under "Business--Acquisition History and
Growth Strategy."


                                  The Company

     Pierce Leahy is the largest archive records management company in North
America, as measured by its 34 million cubic feet of records currently under
management. The Company operates a total of 105 records management facilities of
which 93 are in the United States, serving 44 local markets, including the 15
largest U.S. markets. In addition, the Company operates 12 records management
facilities in five of Canada's six largest markets. The Company provides records
management services to a diversified group of over 15,000 customer accounts in a
variety of industries including financial services, manufacturing,
transportation, healthcare and law. The Company believes it is the most
technologically advanced records management company in the industry by virtue of
its Pierce Leahy User Solution(R) (PLUS(R)) computer system. The PLUS(R) system
fully integrates the Company's records management, data retrieval and billing
functions on a centralized basis through the use of proprietary, real time
software. Management believes the PLUS(R) system allows the Company to
efficiently manage records in multiple markets for national customers, rapidly
integrate acquisitions of records management companies and maintain a low-cost
operating structure. The Company's pro forma revenues and EBITDA (as defined
herein) for the year ended December 31, 1995 were $121.6 million and $34.7
million, respectively.

     Pierce Leahy is a full-service provider of records management and related
services, enabling customers to outsource their data and records management
functions. The Company offers storage for all major media, including paper
(which has typically accounted for approximately 95% of the Company's storage
revenues), computer tapes, optical discs, microfilm, video tapes and X-rays. In
addition, the Company provides next day or same day records retrieval and
delivery, allowing customers prompt access to all stored material. The Company
also offers a wide range of other data management services, including customer
records management programs, imaging services and records management consulting
services. The Company's storage and related services are typically provided
pursuant to annual or multi-year contracts that include recurring monthly
storage fees, which continue until such records are permanently removed (for
which the Company charges a fee), and additional charges for services such as
retrieval on a per unit basis. In 1995, revenues from storage and from service
and storage material sales accounted for 58% and 42% of the Company's total
revenues, respectively.

     From 1991 to 1995, Pierce Leahy's revenues and EBITDA grew at compound
annual growth rates of 14.4% and 19.4%, respectively, as a result of internal
growth in cubic feet from new and existing customers (which averaged 13.9% per
annum, net of permanent removals of existing customer records) and acquisitions
of other records management companies. The Company's productivity has
concurrently improved as measured by (i) cubic footage under management per
employee increasing from 18,702 at the end of 1991 to 24,521 at the end of 1995
and (ii) EBITDA as a percentage of total revenues increasing from 21.2% in 1991
to 24.8% in 1995. The Company believes that growth through acquisitions results
in operating improvements as redundant operating expenses are eliminated. This
is evidenced by the Company's pro forma 1995 EBITDA as a percentage of total
revenues which equalled 28.5% as compared to 24.8% on an actual basis.

                                       4
<PAGE>
 
     The Company believes that it benefits from several positive industry
fundamentals, including (i) the diversified and recurring nature of storage and
service revenues, (ii) the ability of larger records management companies to
achieve economies of scale in both labor and real estate costs, (iii) the
continued trend toward corporate outsourcing of records management functions,
(iv) low maintenance capital expenditure requirements, (v) the historically non-
cyclical nature of the records management industry and (vi) the ongoing
consolidation of records management companies. The Company derives the majority
of its revenues from monthly fees charged for the storage of records. The
recurring nature of these revenues, which are derived from a diversified, stable
customer base (none of which accounted for more than 3% of total revenues during
1995) and require relatively little direct ongoing labor and marketing expenses,
contributes significantly to the Company's EBITDA. As the Company's volume of
records under management grows, the substantial investments made in its PLUS(R)
system and centralized support functions are amortized over a larger base of
business, creating economies of scale. These operating efficiencies, coupled
with the Company's entry into new markets, allow the Company to take advantage
of the trend by larger companies with multiple locations to outsource their
records management functions. The Company's capital expenditures are primarily
growth related and are comprised substantially of new shelving and other
expenditures related to storing and servicing new records. Pierce Leahy has not
experienced a reduction of its business as a result of economic downturns, in
fact, management believes that the outsourcing of records management may
accelerate during such times as a result of increased customer focus on noncore
operating costs. Finally, management believes the Company is well positioned to
continue to participate in the industry consolidation due to its ability to
rapidly and efficiently integrate in-market and new market acquisitions as a
result of its PLUS(R) system and centralized corporate administrative functions.

     The Records Management Industry

     According to a 1994 study by the Association of Commercial Record Centers
(the "ACRC"), an industry trade group with over 500 members, approximately 2,800
companies offer records storage and related services in North America. The
Company believes that only 25% of the potential market outsources its records
management functions and that approximately 75% is still "unvended," or
internally managed. The Company estimates that the North American vended records
management industry generates annual revenues in excess of $1.0 billion.
Management believes that only four companies offer records storage and services
on a national basis in the United States and only two companies do so in Canada.
Other industry participants operate regionally, or more typically, in single
markets.

     According to industry sources, an estimated four trillion documents are
created each year in the United States, many of which must be retained and
remain accessible for many years. Saved documents, or records, generally fall
into two categories: active and inactive. Active records refer to information
that is frequently referenced and usually stored on-site by the originator.
Inactive records are not needed for frequent access, but must be retained for
future reference, legal requirements or regulatory compliance. Inactive records,
which the Company estimates comprise approximately 80% of all records, are the
principal focus of the records management industry. Management is not aware of
any definitive information about the size or nature of the North American market
(vended and unvended, active and inactive). Estimates of such numbers and
percentages contained in this Prospectus have been developed by the Company from
internal sources and reflect the Company's current estimates; however, no
assurance can be given regarding the accuracy of such estimates.

                                       5
<PAGE>
 
     The Company believes that the records management industry is characterized
by the following trends:

     .  Increasing Production of Paper. Increasingly widespread technologies
        such as facsimiles, copiers, personal computers, laser printers and
        advanced software packages have enabled organizations to create, copy
        and distribute documents more easily and broadly. In spite of new
        "paperless" technologies (including the Internet and "e-mail"),
        information remains predominantly paper based, and such technologies
        have actually promoted the desire for hard copies of such electronic
        information.
     
     .  Expanded Record Keeping Needs. While technology has augmented the growth
        of paper generation, several external forces and concerns have played an
        important role in organizations' decisions to store and retain access to
        records. For example, the continued growth of regulatory requirements
        and the proliferation of litigation has resulted in increased volumes
        and lengthened holding periods of documents. Retained records are also
        remaining in storage for extended periods of time because the process of
        determining which records to destroy is time consuming and often more
        costly in the short-term than continued storage.
     
     .  Movement Towards Outsourcing. Outsourcing of internal records management
        functions represents the largest single source of new business for
        records management companies. The Company believes that as more
        organizations become aware of the advantages of professional records
        management, such as net cost reductions and enhanced levels of service,
        the records management industry will continue to gain a growing portion
        of the unvended segment.
     
     .  Industry Consolidation. The records management industry is undergoing a
        period of consolidation as larger, better capitalized industry
        participants acquire smaller regional or single-market participants.
        Management believes that this trend is driven by larger records
        management companies' desire to add to their revenue base quickly and
        cost effectively, achieve broader market presence and realize economies
        of scale, especially with respect to labor, real estate and management
        information expenses. Industry consolidation also provides private
        owners of smaller records management companies the ability to obtain
        liquidity.
     
     Business Strategy

        Pierce Leahy's business strategy is to become the preferred provider of
records management services in each of its markets by offering premium services
while maintaining a low-cost operating structure. The Company seeks to expand
its business in current and new markets through increased business from existing
customers, the addition of new customers and acquisitions of other records
management companies. The Company expects to continue its growth and enhance its
market position by implementing its strategy based on the following elements:

     .  Pursuing National and Unvended Customers. The Company focuses its sales
        and marketing efforts on pursuing large regional and national accounts,
        typically through multi-year contracts, where the Company believes its
        national presence and sophisticated systems provide it with a
        competitive advantage. The greatest source of potential business is from
        large organizations which are currently managing their records
        internally. These organizations are increasingly outsourcing such
        noncore activities, enabling their management to focus on their core
        business and to reduce capital requirements.
    
     .  Remaining a Low-Cost Operator. The Company strives to offer premium
        services to its customers while remaining a low-cost operator through
        achieving economies of scale in real estate, labor, transportation,
        management information and administrative expenses. The Company believes
        that it is one of the few records management companies with the size and
        resources to realize significant economies of scale in these areas.

                                       6
<PAGE>
 
     .  Using Sophisticated Centralized Systems. The Company believes that its
        proprietary PLUS(R) system is the most technologically advanced computer
        system in the industry. The PLUS(R) system coordinates the storage of
        records and related services in each of its facilities on a real time
        basis. PLUS(R), in tandem with a centralized customer service
        organization and local field support personnel, enables the Company to
        provide a high and consistent level of service (24 hours a day, seven
        days a week) to its customers in a cost-effective manner.

     .  Enhancing Facility Efficiency. The PLUS(R) system allows the Company to
        enhance the efficiency of its facilities while reducing fixed and
        operating costs and maintaining high customer service levels. PLUS(R)
        provides the Company with a real time inventory tracking system, using
        sophisticated bar-coding technology, designed to pinpoint the exact
        dlocation of any individual customer's records within any facility in
        North America. This system eliminates the need to designate permanent
        locations for an individual customer's records within a facility,
        enabling records to be stored wherever space is available and to be
        positioned within the Company's facilities based on retrieval frequency,
        thereby reducing labor costs.

     Acquisition and Growth Strategy

        Pierce Leahy believes that the consolidation trend occurring in the
North American records management industry will continue and that acquisitions
will remain an important part of the Company's growth strategy. Acquisitions
provide the Company with the ability to expand and achieve additional economies
of scale. Since 1991, the Company has successfully completed and integrated 18
acquisitions, totaling approximately 7.7 million cubic feet of records at the
time of acquisition. From July 1994 through December 31, 1995, approximately $45
million (including purchase price, capital expenditures and related integration
costs) was invested in eight acquisitions, which produced an incremental $10.6
million of EBITDA on a full-year or annualized basis during the first year
following acquisition. In each of these acquisitions, staffing levels were
immediately reduced with further reductions typically taking place in the
following months as general and administrative functions were integrated into
the Company's corporate organization.

     The Company's centralized organizational structure and management
information systems are essential elements for both the successful integration
of acquired records management operations and the ability of the Company to
achieve economies of scale. The rapid conversion of an acquired company's
records into the PLUS(R) system and the integration of all corporate functions
(order processing, accounting, payroll, etc.) into Pierce Leahy's corporate
organization in an efficient, standardized process allows the Company to realize
immediate cost savings as a result of reduced labor and overhead costs and
improved facility utilization.

     The Company targets potential acquisitions in both its existing markets 
(in-market) and in new markets which it is not yet servicing. In-market
acquisitions typically provide the highest degree of operating leverage since in
addition to eliminating redundant overhead, such as overlapping delivery runs,
an acquired company's storage facility can, when possible, be consolidated into
an existing Company facility within the same market area. New market
acquisitions allow the Company to both expand its business generally and enhance
its ability to serve national customer accounts.

     In order to accommodate its growth strategy, the Company has made
significant new facility investments during the last twelve months,
substantially increasing the Company's available storage capacity in its
Northeast region. During 1995, the Company purchased a storage facility in New
Jersey with 12 million cubic feet of storage capacity and leased (with an option
to purchase) a storage facility in Massachusetts with five million cubic feet of
storage capacity. The addition of these facilities provides the Company with
substantial excess storage capacity and is expected to satisfy the Company's
facility expansion requirements in its Northeast region for several years.

                                       7
<PAGE>
 
     Ownership and Management

        Pierce Leahy is the successor company to L. W. Pierce Co., Inc., which
was founded in 1957 by Leo W. Pierce, Sr. The Company is headquartered in King
of Prussia, Pennsylvania, and is a closely held corporation owned by members of
the Pierce family. Since 1984, the Company has been led by its President, 
J. Peter Pierce, the son of the Company's founder. The members of the Company's
management team who are not current shareholders participate in a stock option
plan.


                                The Transactions

     In connection with the offering of the Original Notes, the Company effected
a series of transactions (collectively referred to as the "Transactions") to 
(i) repay its existing credit facility and enter into the Credit Facility (as
defined herein), (ii) consummate the purchase of a pending acquisition, 
(iii) purchase certain real estate interests in properties currently leased or
subleased by the Company from entities affiliated with the Pierce family and
(iv) redeem 100 shares of Class A Common Stock (as defined herein) from Leo W.
Pierce, Sr. See "The Transactions."

     The principal purposes of the Transactions were to (i) provide the Company
with a capital structure that will facilitate the continued growth of the
Company's records management operations, (ii) enhance the Company's financial
flexibility and (iii) eliminate certain related party real estate transactions.

                                       8
<PAGE>
 
<TABLE>
<CAPTION>
                                                            The Exchange Offer
<S>                                                  <C>
Purpose of the Exchange Offer.....................   The Original Notes were sold in a transaction exempt from the registration
                                                     requirements of the Securities Act by the Company on July 23, 1996 to CIBC Wood
                                                     Gundy Securities Corp. (the "Initial Purchaser"). In connection therewith, the
                                                     Company executed and delivered, for the benefit of the holders of the Original
                                                     Notes, an Exchange Offer Registration Rights Agreement dated July 23, 1996 (the
                                                     "Registration Rights Agreement"), which is filed as an exhibit to the
                                                     Registration Statement of which this Prospectus is a part, providing for, among
                                                     other things, the Exchange Offer so that the Exchange Notes will be freely
                                                     transferable by the holders thereof without registration or any prospectus
                                                     delivery requirements under the Securities Act, except that a "dealer" or any
                                                     of its "affiliates" as such terms are defined under the Securities Act, who
                                                     exchanges Original Notes held for its own account will be required to deliver
                                                     copies of this Prospectus in connection with any resale of the Exchange Notes
                                                     issued in exchange for such Original Notes. See "The Exchange Offer--Purposes
                                                     and Effects of the Exchange Offer" and "Plan of Distribution."

The Exchange Offer................................   The Company is offering to exchange $1,000 principal amount of Exchange Notes
                                                     for each $1,000 principal amount of Original Notes that are properly tendered
                                                     and accepted. The Company will issue Exchange Notes on or promptly after the
                                                     Expiration Date. There is $200,000,000 aggregate principal amount of Original
                                                     Notes outstanding. The Original Notes and the Exchange Notes are collectively
                                                     referred to herein as the "Notes." The terms of the Exchange Notes are
                                                     substantially identical in all respects (including principal amount, interest
                                                     rate and maturity) to the terms of the Original Notes for which they may be
                                                     exchanged pursuant to the Exchange Offer, except that (i) the Exchange Notes
                                                     are freely transferable by holders thereof (other than as provided herein), and
                                                     are not subject to any covenant restricting transfer absent registration under
                                                     the Securities Act and (ii) holders of the Exchange Notes will not be entitled
                                                     to certain rights of holders of the Original Notes under the Registration
                                                     Rights Agreement, which rights will terminate upon the consummation of the
                                                     Exchange Offer. See "The Exchange Offer."

                                                     The Exchange Offer is not conditioned upon any minimum aggregate principal
                                                     amount of Original Notes being tendered for exchange.

                                                     Based on an interpretation by the staff of the Securities and Exchange
                                                     Commission (the "Commission") set forth in no-action letters issued to third
                                                     parties, the Company believes that the Exchange Notes issued pursuant to the
                                                     Exchange Offer in exchange for Original Notes may be offered for resale, resold
                                                     and otherwise transferred by a holder thereof (other than (i) a broker-dealer
                                                     who purchases such Exchange Notes directly from the Company to resell pursuant
                                                     to Rule 144A under the Securities Act or any other available exemption under
                                                     the Securities Act or (ii) a person that is an affiliate (as defined in Rule
</TABLE>

                                       9
<PAGE>
 
<TABLE>
<S>                                                  <C>
                                                     405 under the Securities Act) of the Company), without compliance with the
                                                     registration and prospectus delivery provisions of the Securities Act, provided
                                                     that the holder is acquiring the Exchange Notes in the ordinary course of its
                                                     business and is not participating, and had no arrangement or understanding with
                                                     any person to participate, in the distribution of the Exchange Notes. Each
                                                     broker-dealer that receives the Exchange Notes for its own account in exchange
                                                     for the Original Notes, where such Notes were acquired by such broker-dealer as
                                                     a result of market-making activities or other trading activities, must
                                                     acknowledge that it will deliver a prospectus in connection with any resale of
                                                     such Exchange Notes.

Registration Rights Agreement.....................   The Original Notes were sold by the Company on July 23, 1996 to the Initial
                                                     Purchaser pursuant to a Purchase Agreement dated as of July 17, 1996 by and
                                                     between the Company and the Initial Purchaser (the "Purchase Agreement").
                                                     Pursuant to the Purchase Agreement, the Company and the Initial Purchaser
                                                     entered into a Registration Rights Agreement dated as of July 23, 1996 (the
                                                     "Registration Rights Agreement") which grants the holders of the Original Notes
                                                     certain exchange and registration rights. See "The Exchange Offer --
                                                     Termination of Certain Rights." This Exchange Offer is intended to satisfy such
                                                     rights, which terminate upon the consummation of the Exchange Offer. The
                                                     holders of the Exchange Notes are not entitled to any exchange or registration
                                                     rights with respect to the Exchange Notes.

Expiration Date...................................   The Exchange Offer will expire at 5:00 p.m., New York City time, on
                                                     _____________, 1996, unless the Exchange Offer is extended by the Company in
                                                     its reasonable discretion, in which case the term "Expiration Date" shall mean
                                                     the latest date and time to which the Exchange Offer is extended.

Accrued Interest on the Exchange Notes
and Original Notes................................   Interest on the Exchange Notes will accrue from (A) the later of (i) the last
                                                     interest payment date on which interest was paid on the Notes surrendered in
                                                     exchange therefor or (ii) if the Notes are surrendered for exchange on a date
                                                     in a period which includes the record date for an interest payment date to
                                                     occur on or after the date of such exchange and as to which interest will be
                                                     paid, the date of such interest payment date, or (B) if no interest has been
                                                     paid on the Notes, from July 23, 1996. Holders whose Original Notes are
                                                     accepted for exchange will be deemed to have waived the right to receive any
                                                     interest accrued on the Original Notes.

Conditions to the
Exchange Offer....................................   The Exchange Offer is subject to certain customary conditions, which may be
                                                     waived by the Company. See "The Exchange Offer -- Conditions. The Exchange
                                                     Offer is not conditioned upon any minimum aggregate principal amount of
                                                     Original Notes being tendered for exchange. The Company reserves the right to
                                                     terminate
</TABLE>

                                       10
<PAGE>
 
<TABLE>
<S>                                                  <C>
                                                     or amend the Exchange Offer at any time prior to the Expiration Date upon the
                                                     occurrence of any such conditions.
                                                     
Procedures for Tendering                             
Original Notes....................................   Each holder of Original Notes wishing to accept the Exchange Offer must
                                                     complete, sign and date the Letter of Transmittal, or a facsimile thereof, in
                                                     accordance with the instructions contained herein and therein, and mail or
                                                     otherwise deliver such Letter of Transmittal, or such facsimile, together with
                                                     the Original Notes and any other required documentation to the exchange agent
                                                     (the "Exchange Agent") at the address set forth herein. Original Notes may be
                                                     physically delivered, but physical delivery is not required if a confirmation
                                                     of a book-entry of such Original Notes to the Exchange Agent's account at The
                                                     Depository Trust Company ("DTC" or the "Depository") is delivered in a timely
                                                     fashion. By executing the Letter of Transmittal, each holder will represent to
                                                     the Company that, among other things, the Exchange Notes acquired pursuant to
                                                     the Exchange Offer are being obtained in the ordinary course of business of
                                                     the person receiving such Exchange Notes, whether or not such person is the
                                                     holder, that neither the holder nor any such other person is engaged in, or
                                                     intends to engage in, or has an arrangement or understanding with any person
                                                     to participate in, the distribution of such Exchange Notes and that neither
                                                     the holder nor any such other person is an "affiliate," as defined under Rule
                                                     405 of the Securities Act, of the Company. Each broker or dealer that receives
                                                     Exchange Notes for its own account in exchange for Original Notes, where such
                                                     Original Notes were acquired by such broker or dealer as a result of market-
                                                     making activities or other trading activities, must acknowledge that it will
                                                     deliver a prospectus in connection with any resale of such Exchange Notes. See
                                                     "The Exchange Offer -- Procedures for Tendering" and "Plan of Distribution."
                                                     
Special Procedures for                               
Beneficial Owners.................................   Any beneficial owner whose Original Notes are registered in the name of a
                                                     broker, dealer, commercial bank, trust company or other nominee and who wishes
                                                     to tender should contact such registered holder promptly and instruct such
                                                     registered holder to tender on such beneficial owner's behalf. If such
                                                     beneficial owner wishes to tender on such owner's own behalf, such owner must,
                                                     prior to completing and executing the Letter of Transmittal and delivering his
                                                     Original Notes, either make appropriate arrangements to register ownership of
                                                     the Original Notes in such owner's name or obtain a properly completed bond
                                                     power from the registered holder. The transfer of registered ownership may
                                                     take considerable time. See "The Exchange Offer -- Procedures for Tendering."
                                                     
Guaranteed Delivery Procedures....................   Holders of Original Notes who wish to tender their Original Notes and whose
                                                     Original Notes are not immediately available or who cannot deliver their
                                                     Original Notes, the Letter of Transmittal or any other documents required by
                                                     the Letter of Transmittal to the Exchange
</TABLE>

                                       11
<PAGE>
 
<TABLE>
<S>                                                  <C>
                                                     Agent prior to the Expiration Date, must tender their Original Notes according
                                                     to the guaranteed delivery procedures set forth in the "Exchange Offer --
                                                     Guaranteed Delivery Procedures."

Acceptance of the Original Notes and
Delivery of the Exchange Notes....................   Subject to the satisfaction or waiver of the conditions to the Exchange Offer,
                                                     the Company will accept for exchange any and all Original Notes which are
                                                     properly tendered in the Exchange Offer prior to the Expiration Date. The
                                                     Exchange Notes issued pursuant to the Exchange Offer will be delivered on the
                                                     earliest practicable date following the Expiration Date. See "The Exchange
                                                     Offer --Terms of the Exchange Offer."

Withdrawal Rights.................................   Tenders of Original Notes may be withdrawn at any time prior to the Expiration
                                                     Date. See "The Exchange Offer -- Withdrawal of Tenders."

Certain Federal Income Tax
Considerations....................................   For a discussion of certain federal income tax considerations relating to the
                                                     exchange of the Exchange Notes for the Original Notes, see "Certain Federal
                                                     Income Tax Considerations."

Exchange Agent....................................   United States Trust Company of New York is serving as the Exchange Agent in
                                                     connection with the Exchange Offer. See "The Exchange Offer --Exchange Agent."

Effect on Holders of
the Original Notes................................   As a result of the making of, and upon acceptance for exchange of all validly
                                                     tendered Original Notes pursuant to the terms of this Exchange Offer, the
                                                     Company will have fulfilled one of the covenants contained in the Registration
                                                     Rights Agreement and, accordingly, there will be no increase in the interest
                                                     rate on the Original Notes pursuant to the applicable terms of the Registration
                                                     Rights Agreement due to the Exchange Offer. Holders of the Original Notes who
                                                     do not tender their Original Notes will be entitled to all the rights and
                                                     limitations applicable thereto under the Indenture dated as of July 15, 1996,
                                                     among the Company and United States Trust Company of New York, as trustee (the
                                                     "Trustee"), relating to the Original Notes and the Exchange Notes (the
                                                     "Indenture"), except for any rights under the Indenture or the Registration
                                                     Rights Agreement, which by their terms terminate or cease to have further
                                                     effectiveness as a result of the making of, and the acceptance for exchange of
                                                     all validly tendered Original Notes pursuant to, the Exchange Offer. All
                                                     untendered Original Notes will continue to be subject to the restrictions on
                                                     transfer provided for in the Original Notes and in the Indenture. To the extent
                                                     that Original Notes are tendered and accepted in the Exchange Offer, the
                                                     trading market for untendered Original Notes could be adversely affected.

</TABLE>

                                       12
<PAGE>
 
<TABLE>
<S>                                                  <C>
Use of Proceeds...................................   There will be no cash proceeds to the Company from the exchange pursuant to the
                                                     Exchange Offer.


                                                                 The Notes

The Exchange Notes................................   The Exchange Offer applies to $200,000,000 aggregate principal amount of the
                                                     Original Notes. The form and terms of the Exchange Notes are the same as the
                                                     form and terms of the Original Notes except that (i) the exchange will have
                                                     been registered under the Securities Act and, therefore, the Exchange Notes
                                                     will not bear legends restricting their transfer pursuant to the Securities
                                                     Act, and (ii) holders of the Exchange Notes will not be entitled to certain
                                                     rights of holders of the Original Notes under the Registration Rights
                                                     Agreement, which rights will terminate upon consummation of the Exchange Offer.
                                                     The Exchange Notes will evidence the same debt as the Notes (which they
                                                     replace) and will be issued under, and be entitled to the benefits of, the
                                                     Indenture. See "Description of the Notes" for further information and for
                                                     definitions of certain capitalized terms used below.

Issuer............................................   Pierce Leahy Corp.

Maturity Date.....................................   July 15, 2006.

Interest Rate.....................................   The Notes will bear interest at a rate of 11-1/8% per annum.

Interest Payment Dates............................   Interest will be payable semiannually on each January 15 and July 15,
                                                     commencing January 15, 1997 and will accrue from July 23, 1996, the issue date
                                                     of the Original Notes.

Ranking...........................................   The Notes will be general unsecured obligations of the Company subordinate in
                                                     right of payment to all existing and future Senior Indebtedness of the Company
                                                     and senior in right of payment to all subordinated indebtedness of the Company.
                                                     As of March 31, 1996, after giving effect to the offering of the Original Notes
                                                     and the Transactions, the Company and its Canadian subsidiary would have had no
                                                     Senior Indebtedness outstanding.

Guarantees by Future Subsidiaries.................   The Notes will be unconditionally guaranteed, on an unsecured senior
                                                     subordinated basis, as to the payment of principal, premium, if any, and
                                                     interest, jointly and severally (the "Guarantees"), by all future direct and
                                                     indirect domestic Restricted Subsidiaries of the Company having either assets
                                                     or shareholders' equity in excess of $5,000 (the "Guarantors"). Any such
                                                     Guarantees will be subordinated to all Senior Indebtedness of the respective
                                                     Guarantors. No Guarantees will be effective on the date of issuance of the
                                                     Notes. The Notes will be secured by a subordinated pledge of a portion of the
                                                     capital stock of the Company's Canadian subsidiary. See "Description of the

</TABLE>

                                       13
<PAGE>
 
<TABLE>
<S>                                                  <C>
                                                     Notes--Certain Covenants--Limitation on Creation of Subsidiaries."

Mandatory Redemption..............................   There will be no mandatory redemption requirements with respect to the Notes.

Optional Redemption...............................   The Notes will be redeemable at the option of the Company, in whole or in part,
                                                     at any time on or after July 15, 2001, at the redemption prices set forth
                                                     herein, plus accrued and unpaid interest to the date of redemption. In
                                                     addition, the Company, at its option, may redeem in the aggregate up to 35% of
                                                     the original principal amount of the Notes at any time and from time to time
                                                     prior to July 15, 1999 at a redemption price equal to 110% of the principal
                                                     amount thereof plus accrued interest to the redemption date with the Net
                                                     Proceeds of one or more Public Equity Offerings, provided that at least
                                                     $130,000,000 principal amount of Notes issued remain outstanding immediately
                                                     after the occurrence of any such redemption and that any such redemption occurs
                                                     within 90 days following the closing of any such Public Equity Offering.

Change of Control.................................   In the event of a Change of Control, the Company will be required to make an
                                                     offer to purchase all outstanding Notes at a price equal to 101% of the
                                                     principal amount thereof plus accrued and unpaid interest to the date of
                                                     repurchase. See "Description of the Notes--Change of Control Offer." There can
                                                     be no assurance that the Company will have sufficient funds or will be
                                                     contractually permitted by outstanding Senior Indebtedness to pay the required
                                                     purchase price for all Notes tendered by holders upon a Change of Control.

Asset Sale Proceeds...............................   The Company will be obligated in certain instances to make offers to repurchase
                                                     the Notes at a purchase price in cash equal to 100% of the principal amount
                                                     thereof plus accrued and unpaid interest, if any, to the date of repurchase
                                                     with the net cash proceeds of certain asset sales. See "Description of the
                                                     Notes--Certain Covenants--Limitation on Certain Asset Sales."

Certain Covenants.................................   The Indenture contains covenants for the benefit of the holders of the Notes
                                                     that, among other things, restrict the ability of the Company and any
                                                     Restricted Subsidiaries (as defined herein) to: (i) incur additional
                                                     Indebtedness; (ii) pay dividends and make distributions; (iii) issue stock of
                                                     subsidiaries; (iv) make certain investments; (v) repurchase stock; (vi) create
                                                     liens; (vii) enter into transactions with affiliates; (viii) enter into sale
                                                     and leaseback transactions; (ix) merge or consolidate the Company or any
                                                     Guarantors; and (x) transfer and sell assets. These covenants are subject to a
                                                     number of important exceptions, including the allowance of Permitted Tax
                                                     Distributions (as defined herein) as a result of the Company's status as a
                                                     Subchapter S corporation. See "Description of the Notes--Certain Covenants."

</TABLE>


                                  Risk Factors

     Prospective purchasers of the Notes should consider carefully the
information set forth under the caption "Risk Factors," and all other 
information set forth in this Prospectus, in evaluating the Notes and the
Company.

                                       14
<PAGE>
 
                Summary Historical and Pro Forma Financial Data

     The following summary historical and pro forma financial data, insofar as
it relates to each of the five years in the period ended December 31, 1995, has
been derived from the audited consolidated financial statements, including the
consolidated balance sheets at December 31, 1994 and 1995 and the related
consolidated statements of operations for each of the three years in the period
ended December 31, 1995 and the notes thereto appearing elsewhere in this
Prospectus. The summary historical and pro forma consolidated statement of
operations and balance sheet data as of and for the three months ended March 31,
1996 and summary historical statement of operations data for the three months
ended March 31, 1995 have been derived from unaudited consolidated financial
statements, which, in the opinion of management, include all adjustments,
consisting only of normal recurring adjustments, necessary for a fair
presentation of the results for the unaudited interim periods. Results for the
three months ended March 31, 1996 are not necessarily indicative of results that
may be expected for the entire year.

     The following summary pro forma statement of operations data and other data
give effect to, among other things, the Transactions, as if they had occurred on
January 1, 1995. The following unaudited pro forma condensed consolidated
balance sheet data give effect to, among other things, the Transactions, as if
they had occurred on March 31, 1996. The Transactions and certain management
assumptions and adjustments are described in the accompanying notes hereto. The
pro forma information should be read in conjunction with the Company's
consolidated financial statements and the notes thereto, as of December 31, 1995
and for the three years in the period ended December 31, 1995, appearing
elsewhere in this Prospectus. This pro forma information is not necessarily
indicative of the results that would have occurred had the Transactions been
completed on the dates indicated or the Company's actual or future results or
financial position. The summary historical and pro forma consolidated statement
of operations, balance sheet and other data should be read in conjunction with
the information contained in the Company's consolidated financial statements and
the notes thereto, "Management's Discussion and Analysis of Financial Condition
and Result of Operations," "Selected Historical and Pro Forma Consolidated
Statement of Operations, Balance Sheet and Other Data" and "Pro Forma Financial
Data" included elsewhere herein.

                                       15
<PAGE>
 
                Summary Historical and Pro Forma Financial Data

                             (dollars in thousands)
<TABLE>
<CAPTION>
 
                                                                                                        Three Months
                                                                                                            Ended
                                                      Year Ended December 31,                             March 31,
                             ----------------------------------------------------------------   ----------------------------------
                                                                                    Pro Forma                          Pro Forma
                              1991       1992       1993       1994       1995       1995(a)      1995       1996       1996(a)
                            --------   --------   --------   --------   --------   ---------    --------   --------   -----------
<S>                         <C>         <C>       <C>        <C>        <C>        <C>          <C>        <C>        <C>
Statement of Operations
 Data:
Revenues
  Storage  ................ $ 33,195   $ 37,633   $ 42,122   $ 47,123   $ 55,501   $ 75,143     $ 12,732   $ 16,969    $ 18,358
  Service and storage
   material sales..........   22,437     25,202     31,266     35,513     39,895     46,452        9,490     12,730      13,529
                            --------   --------   --------   --------   --------   --------     --------   --------    --------
Total revenues  ...........   55,632     62,835     73,388     82,636     95,396    121,595       22,222     29,699      31,887


Cost of sales, excluding
 depreciation and
   amortization  ..........   37,145     39,702     45,391     49,402     55,616     67,292       13,118     17,406      17,759
Selling, general and
 administrative  ..........    6,693      9,012     11,977     15,882     16,148     19,596        4,026      4,856       5,324
Depreciation and
 amortization  ............    5,783      5,734      6,888      8,436      8,163     10,959        1,990      2,572       2,939
Consulting payments to
 related parties (b)  .....      --        --         --          500        500        500          125        125         125
                            --------   --------   --------   --------   --------   --------     --------   --------     -------
   Operating income .......    6,011      8,387      9,132      8,416     14,969     23,248        2,963      4,740       5,740
Interest expense  .........    6,677      6,388      6,160      7,216      9,622     23,686        1,928      2,846       5,921
                            --------   --------   --------   --------   --------   --------     --------   --------    --------
Income (loss) before
extraordinary loss  .......     (666)     1,999      2,972      1,200      5,347       (438)       1,035      1,894        (181)
                            --------   --------   --------   --------   --------   --------     --------   --------    --------
Extraordinary loss(c)  ....      --        --        9,174      5,991      3,279      3,279          --         --          --
                            --------   --------   --------   --------   --------   --------     --------   --------    --------
Net income (loss).......... $   (666)  $  1,999   $ (6,202)  $ (4,791)  $  2,068   $ (3,717)    $  1,035   $  1,894    $   (181)
                            ========   ========   ========   ========   ========   ========     ========   ========    ========
Other Data:
EBITDA(d)  ................ $ 11,794   $ 14,121   $ 16,020   $ 17,352    $23,632   $ 34,707     $  5,078   $  7,437     $ 8,804
EBITDA margin  ............    21.2%      22.5%      21.8%      21.0%      24.8%      28.5%        22.9%      25.0%       27.6%

Capital expenditures(e)  .. $  3,521   $  5,565   $  5,827   $  6,352    $16,288        --      $  1,535   $  3,553         --
Cubic feet of storage
 under management   
 at end of period (000s)...   13,858     16,248     19,025     22,160     29,523     32,264       23,549     31,088      33,279

Ratio of EBITDA to            
 interest expense (f) .....      --         --         --         --         --       1.52x          --         --        1.54x
Ratio of total debt to   
 EBITDA  ..................      --         --         --         --         --       5.78x          --         --          --
Ratio of net debt to
 EBITDA  ..................      --         --         --         --         --       4.98x          --         --          --
Ratio of earnings to fixed   
 charges(g)  ..............      --      1.21x       1.30x      1.11x      1.37x        --         1.34x      1.45x         --

</TABLE> 
 
 
<TABLE>
<CAPTION> 
                                                 As of December 31,                          As of March 31, 1996
                               -------------------------------------------------------     --------------------------
                                                                                                         Pro Forma
                                  1991           1992       1993       1994      1995        Actual     As Adjusted(h)
                              --------       --------   --------   --------   --------      --------   ----------------
<S>                           <C>            <C>        <C>        <C>        <C>           <C>        <C> 
Balance Sheet Data:
Cash and cash equivalents..   $    332       $    461   $    528   $    358   $    722      $    474   $       27,949
Working capital (deficit)..    (10,402)       (11,656)    (9,143)    (5,202)    (8,139)       (6,595)          22,201 
Total assets ..............     59,726         65,869     74,621     79,746    131,328       138,628          201,973
Total debt (including                                                                                                 
 redeemable warrants)......     52,695         55,027     69,736     77,683    120,071       127,261          200,727 
Net debt (net of cash                                                                                                 
 balance)  ................     52,363         54,566     69,208     77,325    119,349       126,787          172,778 
Shareholders' deficit......    (11,006)        (9,028)   (14,508)   (19,341)   (18,201)      (17,867)         (29,237)
 
</TABLE>

                                           (see footnotes on the following page)

                                       16
<PAGE>
 
            Notes to Summary Historical and Pro Forma Financial Data

       (a) Gives effect to (i) acquisitions completed in 1995 and 1996 year to
           date, (ii) the redemption of certain warrants and (iii) the offering
           of the Original Notes, the Transactions and the application of the
           net proceeds from the sale of the Notes, as if each had occurred as
           of January 1, 1995. See "Use of Proceeds" and "Pro Forma Financial
           Data." In connection with the Transactions, the Company expects to
           incur non-recurring charges of approximately $5.3 million in the
           quarter in which the offering of the Original Notes is consummated.
           Such charges are not reflected in the Pro Forma Condensed
           Consolidated Statement of Operations. See "Risk Factors--Non-
           Recurring Charges; Expected Loss in Third Quarter of 1996."

       (b) Represents aggregate payments made to eight Pierce family members.

       (c) Represents loss on early extinguishment of debt due to refinancings
           in 1993, 1994 and 1995. Amounts include write-off of unamortized
           deferred financing costs and discount, along with prepayment
           penalties and other costs. A similar charge will occur in the quarter
           in which the debt is repaid ($2.0 million assuming the debt is repaid
           in the third quarter), which has not been reflected in the Pro Forma
           Condensed Consolidated Statement of Operations. See "Risk Factors--
           Non-Recurring Charges; Expected Loss in Third Quarter of 1996."

       (d) "EBITDA" is defined as net income (loss) before interest expense,
           taxes, depreciation and amortization, consulting payments to related
           parties and extraordinary items. EBITDA is not a measure of
           performance under generally accepted accounting principles ("GAAP").
           While EBITDA should not be considered in isolation or as a substitute
           for net income, cash flows from operating activities and other income
           or cash flow statement data prepared in accordance GAAP, or as a
           measure of profitability or liquidity, management understands that
           EBITDA is customarily used as a criteria in evaluating records
           management companies. Moreover, substantially all of the Company's
           financing agreements contain covenants in which EBITDA is used as a
           measure of financial performance. See "Management's Discussion and
           Analysis of Financial Condition and Results of Operations" for a
           discussion of other measures of performance determined in accordance
           with GAAP and the Company's sources and applications of cash flows.

       (e) Capital expenditures for 1995 are comprised of $7.2 million for new
           shelving, $5.1 million for new facility purchases and related
           improvements, $1.6 million for data processing, $1.5 million for
           leasehold and building improvements and $0.9 million for the purchase
           of transportation, warehouse and office equipment. Of the total 1995
           capital expenditures, approximately $2.5 million was for maintenance
           capital expenditures.

       (f) Excludes non-cash amortization of deferred financing fees of $0.9
           million and $0.2 million in pro forma 1995 and the three months ended
           March 31, 1996, respectively.

       (g) The earnings for the year ended December 31, 1991 and the pro forma
           year ended December 31, 1995 and the three months ended March 31,
           1996 were inadequate to cover fixed charges by $0.7 million, $0.4
           million and $0.2 million, respectively.

       (h) Gives effect to the following, as if they each had occurred as of
           March 31, 1996: (i) the acquisitions completed after March 31, 1996;
           (ii) the redemption of certain warrants; and (iii) the offering of
           the Original Notes, the Transactions and the application of the net
           proceeds from the sale of the Notes. See "Use of Proceeds" and "Pro
           Forma Financial Data."

                                       17
<PAGE>
 
                                  RISK FACTORS

          Prospective purchasers of the Notes should consider carefully the
       following risk factors, in addition to the other information set forth in
       this Prospectus, before making an investment in the Notes.

       High Level of Indebtedness and Leverage

          The Company is highly leveraged due to the substantial indebtedness it
       has incurred primarily to finance acquisitions and expand its operations.
       The Company and its Canadian subsidiary had approximately $200.7 million
       of pro forma debt as of March 31, 1996 after giving effect to the
       Transactions and the offering of the Original Notes. Moreover, as of
       March 31, 1996, the Company had pro forma shareholders' deficit of $29.2
       million after giving effect to the Transactions and the offering of the
       Original Notes. Subject to the restrictions in the Indenture and the
       Credit Facility and any other indebtedness that may be incurred in the
       future, the Company expects to incur additional indebtedness from time to
       time to finance acquisitions or capital expenditures or for other
       purposes.

          The Company experienced net losses in three of the last five fiscal
       years, although it has generated cash flow from operations in excess of
       debt service requirements in each of such years. Management believes,
       based upon current operations and internal growth at historical rates,
       that the Company's cash flow from operations and available borrowings
       under the Credit Facility will be sufficient to meet its anticipated
       requirements for capital expenditures, working capital and future debt
       service requirements during the term of the Notes. There can be no
       assurance, however, that the Company will continue to generate cash flows
       at levels sufficient to meet these requirements. The Company's ability to
       meet its debt service obligations will be dependent upon its future
       performance (including the performance of any acquired businesses) which,
       in turn, will be subject to general economic conditions and to financial,
       business and other factors affecting the operations of the Company, many
       of which are beyond its control. If the Company is unable to generate
       sufficient cash flows to service its indebtedness, it may be forced to
       adopt an alternative strategy that may include actions such as slowing or
       terminating the Company's acquisition program, reducing or delaying
       capital expenditures, selling assets, refinancing all or a portion of its
       existing indebtedness or obtaining additional financing. There can be no
       assurance that such actions would be possible or successful, particularly
       in view of the Company's high level of indebtedness.

          The level of the Company's indebtedness could have important
       consequences to holders of the Notes, including: (i) a substantial part
       of the Company's cash flow from operations must be dedicated to debt
       service and will not be available for other purposes; (ii) the Company's
       ability to obtain needed additional financing in the future may be
       limited; (iii) the Company's leveraged position and covenants contained
       in the Indenture and the Credit Facility (or any replacement thereof)
       could limit its ability to expand and make capital improvements and
       acquisitions; and (iv) the Company's level of indebtedness could make it
       more vulnerable to economic downturns, limit its ability to withstand
       competitive pressures, and limit its flexibility in reacting to changes
       in its industry and economic conditions generally. Certain of the
       Company's competitors currently operate on a less leveraged basis and
       have significantly greater operating and financing flexibility than the
       Company.

       Subordination of the Notes; No Guarantees

          The Notes will be subordinated in right of payment to all existing and
       future Senior Indebtedness of the Company. The Notes will also be
       structurally subordinated to all existing and future liabilities of the
       Company's subsidiaries, other than non-Senior Indebtedness of any
       subsidiaries of the Company that may in the future become Guarantors.
       Substantially all of the Company's assets (including the stock of the
       Company's subsidiary) are pledged to secure the Company's obligations
       under the Credit Facility. In addition, under the Indenture, provided
       certain incurrence tests are met, the Company will be able to borrow
       additional Senior Indebtedness. In the event of a bankruptcy, liquidation
       or reorganization of the Company or in the event that any default in
       payment of, or the acceleration of, any debt occurs, holders of Senior
       Indebtedness will be entitled to payment in full from the proceeds of all
       assets of the Company prior to any payment of such proceeds to the
       holders of the Notes. In addition, the Company may not make any principal
       or interest payments in respect of the Notes if any payment default
       exists with

                                       18
<PAGE>
 
       respect to Senior Indebtedness or any other default on Designated Senior
       Indebtedness (as defined in the Indenture) occurs and the maturity of
       such indebtedness is accelerated, or in certain circumstances prior to
       such acceleration for a specified period of time, unless, in any case,
       such default has been cured or waived, any such acceleration has been
       rescinded or such indebtedness has been repaid in full. Consequently,
       there can be no assurance that the Company will have sufficient funds
       remaining after such payments to make payments to the holders of the
       Notes. See "Description of the Notes--Subordination" and "Description of
       the Notes--Certain Covenants--Limitation on Additional Indebtedness."

          The Company's operations in Canada are conducted through a subsidiary
       in which the Company has a 99% equity interest. See "The Company." The
       Notes are obligations exclusively of the Company. The Canadian subsidiary
       is a separate and distinct legal entity which has not guaranteed the
       Notes. However, the Notes will be secured by a subordinated pledge of a
       portion of the capital stock of such subsidiary. The subsidiary has no
       obligation, contingent or otherwise, to pay amounts due pursuant to the
       Notes or to make any funds available therefor. Moreover, the payment of
       dividends and the making of loan advances to the Company by its Canadian
       subsidiary is contingent upon the earnings of such subsidiary.

       Non-Recurring Charges; Expected Loss in Third Quarter of 1996

          In connection with the Transactions, the Company will incur non-
       recurring charges of approximately $5.3 million in the third quarter of
       1996. These charges relate to the accounting for the Real Estate
       Transactions, as hereinafter defined (approximately $2.8 million), the
       acceleration of certain deferred financing charges currently being
       amortized in connection with the Company's previous credit facility which
       was refinanced (approximately $2.0 million) and the establishment of an
       annual pension for Leo W. Pierce, Sr. and his spouse (approximately $0.5
       million). As a result of these charges, the Company expects to incur a
       net loss for the third quarter of 1996.

       Risks Associated with Acquisitions

          The Company has pursued and intends to continue to pursue acquisitions
       of records management businesses as a key component of its growth
       strategy. Certain risks are inherent in an acquisition strategy, such as
       increasing leverage and debt service requirements, diversion of
       management time and attention and combining disparate company cultures
       and facilities, which could adversely affect the Company's operating
       results. The success of any acquisition will depend in part on the
       Company's ability to integrate effectively the acquired records
       management business into the Company. The process of integrating such
       acquired businesses may involve unforeseen difficulties and may utilize a
       substantial portion of the Company's financial and other resources. No
       assurance can be given that additional suitable acquisition candidates
       will be identified, financed and purchased on acceptable terms, or that
       the pending acquisition or other future acquisitions, if completed, will
       be successful. See "Business--Acquisition History and Growth Strategy."

          The size, timing and integration of possible future acquisitions may
       cause substantial fluctuations in operating results from quarter to
       quarter. As a result, operating results for any quarter may not be
       indicative of results that may be achieved for any subsequent quarter or
       for a full fiscal year.

       Restrictive Debt Covenants

          The Credit Facility contains a number of covenants that, among other
       things, limit the Company's ability to incur additional indebtedness, pay
       dividends, prepay subordinated indebtedness, dispose of certain assets,
       create liens, make capital expenditures, make certain investments or
       acquisitions and otherwise restrict corporate activities. The Credit
       Facility also requires the Company to comply with certain financial
       ratios and tests, under which the Company will be required to achieve
       certain financial and operating results. The ability of the Company to
       comply with such provisions may be affected by events beyond its control.
       A breach of any of these covenants would result in a default under the
       Credit Facility. In the event of any such default, depending on the
       actions taken by the lenders under the Credit Facility, the Company could
       be prohibited from making any payments on the Notes. In addition,

                                       19
<PAGE>
 
       such lenders could elect to declare all amounts borrowed under the Credit
       Facility, together with accrued interest, to be due and payable. As a
       result of the priority and security afforded the Credit Facility, there
       can be no assurance that the Company would have sufficient assets to pay
       indebtedness then outstanding under the Credit Facility and the Notes.
       Any refinancing of the Credit Facility is likely to contain similar
       restrictive covenants. See "Description of Credit Facility."

       Competition

          The Company faces competition from one or more competitors in all
       geographic areas where it operates. The Company believes that competition
       for customers is based on price, reputation for reliability and quality
       and scope of service. As a result of this competition and the decline in
       the commercial real estate market in the early 1990s, the records
       management industry has for the past several years experienced downward
       pricing pressures. Should a further downward trend in pricing occur or
       continue for an extended period of time, it could have a material adverse
       effect on the Company's results of operations. The Company also competes
       for acquisition candidates. Some of the Company's competitors possess
       greater financial and other resources than the Company. If any such
       competitor were to devote additional resources to the records storage
       business and/or such acquisition candidates or to focus its strategy on
       the Company's markets, the Company's results of operations could be
       adversely affected.

          The Company also faces competition from the internal document handling
       capability of its current and potential customers. There can be no
       assurance that these organizations will outsource more of their document
       management needs or that they will not bring in-house some or all of the
       functions they currently outsource. See "Business--The Records Management
       Industry" and "Business--Competition."

       Alternative Technologies

          The substantial majority of the Company's revenues have been derived
       from the storage of paper documents and from related services. Such
       storage requires significant physical space. Alternative technologies for
       generating, capturing, managing, transmitting and storing information
       have been developed, many of which require significantly less space than
       paper. Such technologies currently include computer media, imaging,
       microfilming, audio/video tape, film, CD-Rom and optical disc. None of
       these technologies has replaced paper as the principal means for storing
       information. However, there can be no assurance that one or more non-
       paper-based technologies (whether now existing or developed in the
       future) may not in the future reduce or supplant the use of paper as a
       preferred medium, which could in turn adversely affect the Company's
       business.

       Change of Control

          In the event of a Change of Control, the Company will be required to
       offer to repurchase all of the outstanding Notes at 101% of the principal
       amount thereof plus any accrued and unpaid interest thereon to the date
       of the purchase. A Change of Control under the Indenture will result in a
       default under the Credit Facility. The exercise by the holders of the
       Notes of their right to require the Company to repurchase the Notes upon
       a Change of Control could also cause a default under other indebtedness
       of the Company, even if the Change of Control itself does not, because of
       the financial effect of such repurchase on the Company. The Company's
       ability to pay cash to the holders of the Notes upon a repurchase may be
       limited by the Company's then existing financial resources. There can be
       no assurance that in the event of a Change of Control, the Company will
       have, or will have access to, sufficient funds or will be contractually
       permitted under the terms of outstanding indebtedness to pay the required
       purchase price for all Notes tendered by holders upon a Change of
       Control. See "Description of the Notes--Change of Control"; "Description
       of Credit Facility."

       Dependence on Key Personnel

          The Company's business depends upon the efforts, abilities and
       expertise of its executive officers and other key employees, including in
       particular, J. Peter Pierce, the Company's President and Chief Executive
       Officer. The

                                       20
<PAGE>
 
       Company has no employment contracts with any of its executive officers.
       There can be no assurance that the Company will be able to retain such
       officers, the loss of any of whom could have a material adverse effect
       upon the Company. See "Management."

       Fraudulent Conveyance Considerations

          The incurrence by the Company of the indebtedness evidenced by the
       Notes to finance the Real Estate Transactions and the Stock Redemption
       (as defined herein) is subject to review under relevant federal and state
       fraudulent conveyance statutes in a bankruptcy or reorganization case or
       a lawsuit by or on behalf of creditors of the Company. Under these
       statutes, if a court were to find that the payments were made with the
       intent of hindering, delaying or defrauding creditors or that the Company
       received less than a reasonably equivalent value or fair consideration
       for those payments and, at the time they were made, the Company either
       (i) was insolvent or rendered insolvent by reason thereof, (ii) was
       engaged in a business or transaction for which its remaining unencumbered
       assets constituted unreasonably small capital or (iii) intended to or
       believed that it would incur debts beyond its ability to pay them as they
       matured or became due, the court could void those payments or take other
       action detrimental to the holders of the Notes. If a court were to
       determine that the payments to be financed with the proceeds of the
       offering of the Original Notes were incurred in a fraudulent transfer
       under the foregoing standards, a fraudulent conveyance claim could also
       be asserted with respect to the Notes.

          The measure of insolvency for purposes of a fraudulent conveyance will
       vary depending upon the law of the jurisdiction being applied. Generally,
       however, a company will be considered insolvent at a particular time if
       the sum of its debts at that time is greater than the fair market value
       of its assets at such time or if the fair saleable value of its assets at
       that time is less than the amount that would be required to pay its
       probable liability on its existing debts as they become absolute and
       mature.

       Environmental Matters

          The Company owns or leases approximately 6.8 million square feet of
       facilities. Under various federal, state, local and foreign environmental
       laws, regulations and ordinances ("environmental laws"), the Company's
       properties and operations may subject it to liability for the costs of
       investigation, removal or remediation of soil and groundwater, on or off-
       site, contaminated by hazardous substances and other contaminants or
       hazardous materials such as petroleum products ("hazardous materials"),
       as well as damages to natural resources. Certain such laws impose cleanup
       responsibility and liability without regard to whether the owner or
       operator of the real estate or business thereon knew of or was
       responsible for the contamination, and whether or not operations at the
       property have been discontinued or title to the property has been
       transferred. In addition, the presence of such materials, or the failure
       to properly remediate such property, may adversely affect the current
       property owner's or operator's ability to sell, rent or use such property
       or to borrow using such property as collateral. The owner or operator of
       contaminated property also may be subject to statutory and common law
       claims by third parties based on any damages and costs resulting from
       off-site migration of the contamination.

          Certain environmental laws govern the removal, encapsulation or
       disturbance of asbestos-containing materials ("ACMs") in buildings. Such
       laws may impose liability for improper handling and release of ACMs and
       third parties may seek to recover from owners or operators of real estate
       for personal injury associated with exposure to such materials. Certain
       facilities operated by the Company contain ACMs.

                                      21
<PAGE>
 
          Certain of the properties formerly or currently owned or operated by
       the Company were previously used for industrial or other purposes that
       involved the use or storage of hazardous materials or the generation and
       disposal of hazardous wastes, and the use of underground storage tanks
       ("USTs") for hazardous materials. The Company has from time to time
       conducted certain environmental investigations, and remedial activities
       have been performed, at certain of its former and current properties, but
       an in-depth environmental review of each of the properties and related
       operations has not been conducted by or on behalf of the Company. In
       connection with its former and current ownership or operation of certain
       properties and businesses, the Company may be subject to environmental
       liability as discussed above and as more specifically described under
       "Business--Environmental Matters."

          The Company has not received any written notice from any governmental
       authority or third party asserting, and is not otherwise aware of, any
       material environmental non-compliance, liability or claim relating to
       hazardous materials or otherwise under any environmental laws applicable
       to the Company in connection with any of its present or former properties
       or operations other than as described under "Business--Environmental
       Matters." However, no assurance can be given that there are no
       environmental conditions for which the Company might be liable in the
       future or that future regulatory action, or compliance with future
       environmental laws, will not require the Company to incur costs with
       respect to its properties or operations that could have a material
       adverse effect on the Company's financial condition or results of
       operations.

       Casualty

          The Company currently maintains and intends to continue to maintain,
       to the extent such insurance is available on commercially reasonable
       terms, comprehensive liability, fire, flood and earthquake (where
       appropriate) and extended coverage insurance with respect to the
       properties that it now owns or leases or that it may in the future own or
       lease, with customary limits and deductibles. Certain types of loss,
       however, may not be fully insurable on a cost-effective basis. In the
       future, should uninsured losses or damages occur, the Company could lose
       both its investment in and anticipated profits from the affected property
       and may continue to be obligated on any leasehold obligations, mortgage
       indebtedness or other obligations related to such property. As a result,
       any such material loss could materially adversely affect the Company. See
       "Business--Insurance."

       Absence of Public Market

          There is no existing trading market for the Notes, and the Company
       does not intend to list any Notes on any securities exchange.  Although
       the Company has been advised that the Initial Purchaser currently intends
       to make a market in the Notes, the Initial Purchaser is not obligated to
       do so and may discontinue any such market making at any time without
       notice.  In addition, any market making activities in the Original Notes
       may be limited during the pendency of the Exchange Offer.  There can be
       no assurance that an active trading market for the Notes will develop,
       or, if it develops, that it will continue.  Future trading prices for the
       Notes will depend on many factors, including, among other things, the
       Company's operating results, the market for similar securities and
       changes in prevailing interest rates.  See "Description of the Notes --
       Registration Rights."

       Consequences of Failure to Exchange Original Notes

          The Exchange Notes will be issued in exchange for Original Notes only
       after timely receipt by the Exchange Agent of such Original Notes, a
       properly completed and duly executed Letter of Transmittal and all other
       required documents.  Therefore, holders of Original Notes desiring to
       tender such Original Notes in exchange for Exchange Notes should allow
       sufficient time to ensure timely delivery.  Neither the Exchange Agent
       nor the Company is under any duty to give notification of defects or
       irregularities with respect to tenders of Original Notes for exchange.
       Original Notes that are not tendered or are tendered but not accepted
       will, following consummation of the Exchange Offer, continue to be
       subject to the existing restrictions upon transfer thereof.  The Company
       does not currently anticipate that it will register the Original Notes
       under the Securities Act.  In addition, any holder of Original Notes who
       tenders in the Exchange Offer for the purpose of participating in a
       distribution of the Exchange Notes will be required to comply with the
       registration and prospectus delivery requirements of the Securities Act
       in connection
                                      22
<PAGE>
 
       with any resale transaction.  Each broker-dealer that receives Exchange
       Notes for its own account in exchange for Notes, where such Original
       Notes were acquired by such broker-dealer as a result of market-making
       activities or any other trading activities, must acknowledge that it will
       deliver a prospectus in connection with any resale of such Exchange
       Notes.  See "Plan of Distribution."  To the extent that Original Notes
       are tendered and accepted in the Exchange Offer, the trading market for
       untendered and tendered but unaccepted Original Notes could be adversely
       affected.  See "The Exchange Offer."

                                      23
<PAGE>
 
                               THE EXCHANGE OFFER

       Purposes and Effects of the Exchange Offer

          The Original Notes were sold by the Company on July 23, 1996 (the
       "Issue Date") to the Initial Purchaser pursuant to a Purchase Agreement
       dated as of July 17, 1996 (the "Purchase Agreement").  As a condition to
       the sale of the Original Notes, the Company and the Initial Purchaser
       entered into the Registration Rights Agreement on the Issue Date.
       Pursuant to the Registration Rights Agreement, the Company agreed that,
       unless the Exchange Offer is not permitted by applicable law or
       Commission policy, it would (i) file with the Commission a Registration
       Statement under the Securities Act with respect to the Exchange Notes
       within 45 days after the Issue Date, (ii) use its best efforts to cause
       such Registration Statement to become effective under the Securities Act
       within 135 days after the Issue Date and (iii) upon effectiveness of the
       Registration Statement, commence the Exchange Offer, keep the Exchange
       Offer open for at least 30 days (or a longer period if required by law)
       and deliver to the Exchange Agent Exchange Notes in the same aggregate
       principal amount at maturity as the Original Notes that were tendered by
       holders thereof pursuant to the Exchange Offer.  Under existing
       Commission interpretations, the Exchange Notes would in general be freely
       transferable after the Exchange Offer without further registration under
       the Securities Act; provided, that in the case of broker-dealers, a
       prospectus meeting the requirements of the Securities Act be delivered as
       required.  The Company has agreed to make available a prospectus meeting
       the requirements of the Securities Act to any broker-dealer for use in
       connection with any resale of any such Exchange Notes acquired as
       described below for such period of 180 days after the Expiration Date.  A
       broker-dealer that delivers such a prospectus to purchasers in connection
       with such resales will be subject to certain of the civil liability
       provisions under the Securities Act, and will be bound by the
       Registration Rights Agreement (including certain indemnification rights
       and obligations).  A copy of the Registration Rights Agreement has been
       filed as an exhibit to the Registration Statement of which this
       Prospectus is a part.  The Registration Statement of which this
       Prospectus is a part is intended to satisfy certain of the Company's
       obligations under the Registration Rights Agreement and the Purchase
       Agreement.

          The Company is generally not required to file any registration
       statement to register any outstanding Original Notes.  Holders of
       Original Notes who do not tender their Original Notes or whose Original
       Notes are tendered but not accepted will have to rely on exemptions to
       registration requirements under the securities laws, including the
       Securities Act, if they wish to sell their Original Notes.

          With respect to the Exchange Notes, based upon an interpretation by
       the staff of the Commission set forth in certain no-action letters issued
       to third parties, the Company believes that a holder (other than (i) a
       broker-dealer who purchases such Exchange Notes directly from the Company
       to resell pursuant to Rule 144A or any other available exemption under
       the Securities Act or (ii) any such holder which is an "affiliate" of the
       Company within the meaning of Rule 405 under the Securities Act) who
       exchanges Original Notes for Exchange Notes in the ordinary course of
       business and who is not participating, does not intend to participate,
       and has no arrangement with any person to participate, in the
       distribution of the Exchange Notes, will be allowed to resell the
       Exchange Notes to the public without further registration under the
       Securities Act and without delivering to the purchasers of the Exchange
       Notes a prospectus that satisfies the requirements of Section 10 of the
       Securities Act.  However, if any holder acquires the Exchange Notes in
       the Exchange Offer for the purpose of distributing or participating in
       the distribution of the Exchange Notes or is a broker-dealer, such holder
       cannot rely on the position of the staff of the Commission enumerated in
       certain no-action letters issued to third parties and must comply with
       the registration and prospectus delivery requirements of the Securities
       Act in connection with any resale transaction, unless an exemption from
       registration is otherwise available.  Each broker-dealer that receives
       Exchange Notes for its own account in exchange for Original Notes, where
       such Original Notes were acquired by such broker-dealer as a result of
       market-making activities or other trading activities, must acknowledge
       that it will deliver a prospectus in connection with any resale of such
       Exchange Notes.  The Letter of Transmittal states that by so
       acknowledging and by delivering a prospectus, a broker-dealer will not be
       deemed to admit that it is an "underwriter" within the meaning of the
       Securities Act.  This Prospectus, as it may be amended or supplemented
       from time to time, may be used by a broker-dealer in connection with
       resales of Exchange Notes received in exchange for Original Notes where
       such
                                      24
<PAGE>
 
       Original Notes were acquired by such broker-dealer as a result of market-
       making or other trading activities.  Pursuant to the Registration Rights
       Agreement, the Company has agreed to make this Prospectus, as it may be
       amended or supplemented from time to time, available to broker-dealers
       for use in connection with any resale for a period of 180 days after the
       Expiration Date.  See "Plan of Distribution."

       Terms of the Exchange Offer

          Upon the terms and subject to the conditions set forth in this
       Prospectus and in the accompanying Letter of Transmittal, the Company
       will accept any and all Original Notes validly tendered and not withdrawn
       prior to the Expiration Date.  The Company will issue $1,000 principal
       amount of Exchange Notes in exchange for each $1,000 principal amount of
       outstanding Original Notes surrendered pursuant to the Exchange Offer.
       Holders may tender some or all of their Original Notes pursuant to the
       Exchange Offer; provided, however, that Original Notes may be tendered
       only in integral multiples of $1,000.  The Exchange Offer is not
       conditioned upon any minimum aggregate principal amount of Original Notes
       being tendered for exchange.

          The form and terms of the Exchange Notes are the same as the form and
       terms of the Original Notes except that (i) the Exchange Notes will be
       registered under the Securities Act and, therefore, will not bear legends
       restricting their transfer and (ii) holders of the Exchange Notes will
       not be entitled to the certain rights of holders of Original Notes under
       the Registration Rights Agreement, which rights will terminate upon the
       consummation of the Exchange Offer.  The Exchange Notes will evidence the
       same debt as the Original Notes (which they replace) and will be issued
       under, and be entitled to the benefits of, the Indenture, which also
       authorized the issuance of the Original Notes, such that all outstanding
       Notes will be treated as a single class of debt securities under the
       Indenture.

          Interest on the Exchange Notes will accrue from the most recent date
       to which interest has been paid on the Original Notes or, if no interest
       has been paid, from July 23, 1996.  Accordingly, registered holders of
       Exchange Notes on the relevant record date for the first interest payment
       date following the consummation of the Exchange Offer will receive
       interest accruing from the most recent date to which interest has been
       paid or, if no interest has been paid, from July 23, 1996.  Original
       Notes accepted for exchange will cease to accrue interest from and after
       the date of the consummation of the Exchange Offer.  Holders whose
       Original Notes are accepted for exchange will not receive any payment in
       respect of interest on such Original Notes otherwise payable on any
       interest payment date, the record date for which occurs on or after
       consummation of the Exchange Offer.

          As of the date of this Prospectus, $200,000,000 aggregate principal
       amount of the Original Notes are outstanding and registered in the name
       of Cede & Co., as nominee for the Depository Trust Company (the
       "Depository" or "DTC").  Only a registered holder of the Original Notes
       (or such holder's legal representative or attorney-in-fact) as reflected
       on the records of the Trustee under the Indenture may participate in the
       Exchange Offer.  There will be no fixed record date for determining
       registered holders of the Original Notes entitled to participate in the
       Exchange Offer.

          Holders of the Original Notes do not have any appraisal or dissenters'
       rights under the Indenture in connection with the Exchange Offer.  The
       Company intends to conduct the Exchange Offer in accordance with the
       provisions of the Registration Rights Agreement and the applicable
       requirements of the Securities Act, the Exchange Act and the rules and
       regulations of the Commission thereunder.

          The Company shall be deemed to have accepted validly tendered Original
       Notes when, as and if the Company has given oral or written notice
       thereof to the Exchange Agent.  The Exchange Agent will act as agent for
       the tendering holders of Original Notes for the purposes of receiving the
       Exchange Notes from the Company.

          If any tendered Original Notes are not accepted for exchange because
       of an invalid tender, or due to the occurrence of certain other events
       set forth herein or otherwise, certificates for any such unaccepted
       Original Notes will be returned without expense to the tendering holders
       thereof (or in the case of Original Notes tendered by book-

                                      25
<PAGE>
 
       entry transfer, such Original Notes will be credited to the account of
       such holder maintained at the Depository), as promptly as practicable
       after the expiration or termination of the Exchange Offer.

          Holders who tender Original Notes in the Exchange Offer will not be
       required to pay brokerage commissions or fees or, subject to the
       instructions in the Letter of Transmittal, transfer taxes with respect to
       the exchange of Notes pursuant to the Exchange Offer.  The Company will
       pay all charges and expenses, other than certain applicable taxes
       described below, in connection with the Exchange Offer.  See "The
       Exchange Offer -- Fees and Expenses."

       Expiration Date; Extensions; Termination

          The term "Expiration Date" shall mean 5:00 p.m., New York City time on
       _______________, 1996 unless the Company, in its sole discretion, extends
       the Exchange Offer, in which case the term "Expiration Date" shall mean
       the latest date and time to which the Exchange Offer is extended.

          In order to extend the Exchange Offer the Company will notify the
       Exchange Agent of any extension by oral (promptly confirmed in writing)
       or written notice and will make a public announcement thereof, each prior
       to 9:00 a.m., New York City time, on the next business day after the
       previously scheduled expiration date of the Exchange Offer.  Without
       limiting the manner in which the Company may choose to make a public
       announcement of any delay, extension, amendment or termination of the
       Exchange Offer, the Company shall have no obligation to publish,
       advertise or otherwise communicate any such public announcement, other
       than by making a timely release to an appropriate news agency.

          The Company reserves the right, in its sole discretion, (i) to delay
       accepting any Original Notes, (ii) to extend the Exchange Offer, (iii) if
       any conditions set forth below under "-- Certain Conditions to the
       Exchange Offer" shall not have been satisfied, to terminate the Exchange
       Offer by giving oral or written notice of such delay, extension or
       termination to the Exchange Agent or (iv) to amend the terms of the
       Exchange Offer in any manner.  Any such delay in acceptance, extension,
       termination or amendment will be followed as promptly as practicable by
       oral or written notice thereof to the registered holders.  If the
       Exchange Offer is amended in a manner determined by the Company to
       constitute a material change, the Company will promptly disclose such
       amendment by means of a prospectus supplement that will be distributed to
       the registered holders of Original Notes, and the Company will extend the
       Exchange Offer for a period of five to ten business days, depending upon
       the significance of the amendment and the manner of disclosure to such
       registered holders, if the Exchange Offer would otherwise expire during
       such five to ten business day period.  The rights reserved by the Company
       in this paragraph are in addition to the Company's rights set forth below
       under the caption "-- Certain Conditions of the Exchange Offer."

          If the Company extends the period of time during which the Exchange
       Offer is open, or if it is delayed in accepting for exchange of, or in
       issuing and exchanging the Exchange Notes for, any Original Notes, or is
       unable to accept for exchange of, or issue Exchange Notes for, any
       Original Notes pursuant to the Exchange Offer for any reason, then,
       without prejudice to the Company's rights under the Exchange Offer, the
       Exchange Agent may, on behalf of the Company, retain all Original Notes
       tendered, and such Original Notes may not be withdrawn except as
       otherwise provided below in "-- Withdrawal of Tenders."  The adoption by
       the Company of the right to delay acceptance for exchange of, or the
       issuance and the exchange of the Exchange Notes, for any Original Notes
       is subject to applicable law, including Rule 14e-1(c) under the Exchange
       Act, which requires that the Company pay the consideration offered or
       return the Original Notes deposited by or on behalf of the holders
       thereof promptly after the termination or withdrawal of the Exchange
       Offer.

       Procedures for Tendering

          Only a registered holder of Original Notes may tender such Original
       Notes in the Exchange Offer.  To tender in the Exchange Offer, a holder
       must complete, sign and date the Letter of Transmittal, or facsimile
       thereof, have the signature thereon guaranteed if required by the Letter
       of Transmittal and mail or otherwise deliver such Letter

                                      26
<PAGE>
 
       of Transmittal or such facsimile to the Exchange Agent at the address set
       forth below under "The Exchange Offer -- Exchange Agent" for receipt
       prior to the Expiration Date.  In addition, either (i) certificates for
       such Notes must be received by the Exchange Agent along with the Letter
       of Transmittal, or (ii) a timely confirmation of a book-entry transfer of
       such Notes, if such procedure is available, into the Exchange Agent's
       account at DTC pursuant to the procedure for book-entry transfer
       described below, must be received by the Exchange Agent prior to the
       Expiration Date, or (iii) the holder must comply with the guaranteed
       delivery procedures described below.

          Any financial institution that is a participant in the Depository's
       Book-Entry Transfer Facility system may make book-entry delivery of the
       Original Notes by causing the Depository to transfer such Original Notes
       into the Exchange Agent's account in accordance with the Depository's
       procedure for such transfer.  Although delivery of Original Notes may be
       effected through book-entry transfer into the Exchange Agent's account at
       the Depository, the Letter of Transmittal (or facsimile thereof), with
       any required signature guarantees and any other required documents, must,
       in any case, be transmitted to and received or confirmed by the Exchange
       Agent at its addresses set forth under "-- Exchange Agent" below prior to
       5:00 p.m., New York City time, on the Expiration Date.  DELIVERY OF
       DOCUMENTS TO THE DEPOSITORY IN ACCORDANCE WITH ITS PROCEDURES DOES NOT
       CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.

          The tender by a holder which is not withdrawn prior to the Expiration
       Date will constitute a binding agreement between such holder and the
       Company in accordance with the terms and subject to the conditions set
       forth herein and in the Letter of Transmittal.

          THE METHOD OF DELIVERY OF NOTES AND THE LETTER OF TRANSMITTAL AND ALL
       OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND
       RISK OF THE HOLDER.  INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT
       HOLDERS USE AN OVERNIGHT OR HAND DELIVERY SERVICE, PROPERLY INSURED.  IF
       DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED,
       PROPERLY INSURED, IS RECOMMENDED.  IN ALL CASES, SUFFICIENT TIME SHOULD
       BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION
       DATE.  NO LETTER OF TRANSMITTAL OR NOTES SHOULD BE SENT TO THE COMPANY.
       HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS,
       TRUST COMPANIES OR NOMINEES TO EFFECT THE ABOVE TRANSACTIONS FOR SUCH
       HOLDERS.

          Any beneficial owner of the Original Notes whose Original Notes are
       registered in the name of a broker, dealer, commercial bank, trust
       company or other nominee and who wishes to tender should contact the
       registered holder promptly and instruct such registered holder to tender
       on such beneficial owner's behalf.  If such beneficial owner wishes to
       tender on such owner's own behalf, such owner must, prior to completing
       and executing the Letter of Transmittal and delivering such owner's
       Original Notes, either make appropriate arrangements to register
       ownership of the Notes in such owner's name (to the extent permitted by
       the Indenture) or obtain a properly completed assignment from the
       registered holder.  The transfer of registered ownership may take
       considerable time.

          If the Letter of Transmittal is signed by a person other than the
       registered holder of any Original Notes (which term includes any
       participants in DTC whose name appears on a security position listing as
       the owner of the Original Notes) or if delivery of the Exchange Notes is
       to be made to a person other than the registered holder, such Original
       Notes must be endorsed or accompanied by a properly completed bond power,
       in either case signed by such registered holder as such registered
       holder's name appears on such Original Notes with the signature on the
       Original Notes or the bond power guaranteed by an Eligible Institution
       (as defined below).

          Signatures on a Letter of Transmittal or a notice of withdrawal
       described below (see "-- Withdrawal of Tenders"), as the case may be,
       must be guaranteed by an Eligible Institution unless the Original Notes
       tendered pursuant thereto are tendered (i) by a registered holder who has
       not completed the box entitled "Special Delivery Instructions" on the
       Letter of Transmittal or (ii) for the account of an Eligible Institution.
       In the event that signatures on a Letter of Transmittal or a notice of
       withdrawal, as the case may be, are required to be guaranteed,

                                      27
<PAGE>
 
       such guarantee must be made by a member firm of a registered national
       securities exchange or of the National Association of Securities Dealers,
       Inc., a commercial bank or trust company having an office or
       correspondent in the United States, or another "Eligible Guarantor
       Institution" within the meaning of Rule 17Ad-15 under the Exchange Act
       (any of the foregoing, an "Eligible Institution").

          If the Letter of Transmittal or any Original Notes or assignments are
       signed by trustees, executors, administrators, guardians, attorneys-in-
       fact, officers of corporations or others acting in a fiduciary or
       representative capacity, such persons should so indicate when signing,
       and unless waived by the Company, evidence satisfactory to the Company of
       their authority to so act must be submitted with the Letter of
       Transmittal.

          The Exchange Agent and the Depository have confirmed that any
       financial institution that is a participant in the Depository's system
       may utilize the Depository's Automated Tender Offer Program to tender
       Original Notes.

          All questions as to the validity, form, eligibility (including time of
       receipt), acceptance and withdrawal of tendered Original Notes will be
       determined by the Company in its sole discretion, which determination
       will be final and binding.  The Company reserves the absolute right to
       reject any and all Original Notes not properly tendered or any Original
       Notes, the Company's acceptance of which would, in the opinion of counsel
       for the Company, be unlawful.  The Company also reserves the right to
       waive any defects, irregularities or conditions of tender as to
       particular Notes.  The Company's interpretation of the terms and
       conditions of the Exchange Offer (including the instructions in the
       Letter of Transmittal) will be final and binding on all parties.  Unless
       waived, any defects or irregularities in connection with tenders of
       Original Notes must be cured within such time as the Company shall
       determine.  Although the Company intends to request the Exchange Agent to
       notify holders of defects or irregularities with respect to tenders of
       Original Notes, neither the Company, the Exchange Agent nor any other
       person shall incur any liability for failure to give such notification.
       Tenders of Original Notes will not be deemed to have been made until such
       defects or irregularities have been cured or waived.

          While the Company has no present plan to acquire any Original Notes
       which are not tendered in the Exchange Offer or to file a registration
       statement to permit resales of any Original Notes which are not tendered
       pursuant to the Exchange Offer, the Company reserves the right in its
       sole discretion to purchase or make offers for any Original Notes that
       remain outstanding subsequent to the Expiration Date or, as set forth
       below under "-- Certain Conditions to the Exchange Offer," to terminate
       the Exchange Offer and, to the extent permitted by applicable law,
       purchase Original Notes in the open market, in privately negotiated
       transactions or otherwise.  The terms of any such purchases or offers
       could differ from the terms of the Exchange Offer.

          By tendering, each holder will represent to the Company that, among
       other things, (i) the Exchange Notes to be acquired by the holder of the
       Original Notes in connection with the Exchange Offer are being acquired
       by the holder in the ordinary course of business of the holder, (ii) the
       holder has no arrangement or understanding with any person to participate
       in the distribution of Exchange Notes, (iii) the holder acknowledges and
       agrees that any person who is a broker-dealer registered under the
       Exchange Act or is participating in the Exchange Offer for the purpose of
       distributing the Exchange Notes must comply with the registration and
       prospectus delivery requirements of the Securities Act in connection with
       a secondary resale transaction of the Exchange Notes acquired by such
       person and cannot rely on the position of the staff of the Commission set
       forth in certain no-action letters, (iv) the holder understands that a
       secondary resale transaction described in clause (iii) above and any
       resales of Exchange Notes obtained by such holder in exchange for
       Original Notes acquired by such holder directly from the Company should
       be covered by an effective registration statement containing the selling
       securityholder information required by Item 507 or Item 508, as
       applicable, of Regulation S-K of the Commission, and (v) the holder is
       not an "affiliate," as defined in Rule 405 of the Securities Act, of the
       Company.  If the holder is a broker-dealer that will receive Exchange
       Notes for its own account in exchange for Original Notes that were
       acquired as a result of market-making activities or other trading
       activities, the holder is required to acknowledge in the Letter of
       Transmittal that it will deliver a prospectus in connection with any
       resale of such Exchange Notes; however, by so acknowledging and by
       delivering a prospectus, the holder will not be deemed to admit that it
       is an "underwriter" within the meaning of the Securities Act.

                                      28
<PAGE>
 
       Return of Notes

          If any tendered Original Notes are not accepted for any reason set
       forth in the terms and conditions of the Exchange Offer or if Original
       Notes are withdrawn or are submitted for a greater principal amount than
       the holders desire to exchange, such unaccepted, withdrawn or non-
       exchanged Original Notes will be returned without expense to the
       tendering holder thereof (or, in the case of Original Notes tendered by
       book-entry transfer into the Exchange Agent's account at the Depository
       pursuant to the book-entry transfer procedures described below, such
       Original Notes will be credited to an account maintained with the
       Depository) as promptly as practicable.

       Book-Entry Transfer

          The Exchange Agent will make a request to establish an account with
       respect to the Original Notes at the Depository for purposes of the
       Exchange Offer within two business days after the date of this
       Prospectus, and any financial institution that is a participant in the
       Depository's system may make book-entry delivery of Original Notes by
       causing the Depository to transfer such Original Notes into the Exchange
       Agent's account at the Depository in accordance with the Depository's
       procedures for transfer.  However, although delivery of Original Notes
       may be effected through book-entry transfer at the Depository, the Letter
       of Transmittal or facsimile thereof, with any required signature
       guarantees and any other required documents, must, in any case, be
       transmitted to and received by the Exchange Agent at the address set
       forth below under "-- Exchange Agent" on or prior to the Expiration Date
       or pursuant to the guaranteed delivery procedures described below.

       Guaranteed Delivery Procedures

          Holders who wish to tender their Original Notes and (i) whose Original
       Notes are not immediately available or (ii) who cannot deliver their
       Original Notes (or complete the procedures for book-entry transfer), the
       Letter of Transmittal or any other required documents to the Exchange
       Agent prior to the Expiration Date, may effect a tender if:

          (a) the tender is made through an Eligible Institution;

          (b) prior to the Expiration Date, the Exchange Agent receives from
       such Eligible Institution a properly completed and duly executed Notice
       of Guaranteed Delivery substantially in the form provided by the Company
       (by facsimile transmission, mail or hand delivery) setting forth the name
       and address of the holder, the certificate number(s) of such Original
       Notes (if available) and the principal amount of Original Notes tendered,
       stating that the tender is being made thereby and guaranteeing that,
       within five New York Stock Exchange trading days after the Expiration
       Date, the Letter of Transmittal (or a facsimile thereof) together with
       the certificate(s) representing the Original Notes in proper form for
       transfer (or a confirmation of a book-entry transfer into the Exchange
       Agent's account at the Depository of Original Notes delivered
       electronically), and any other documents required by the Letter of
       Transmittal will be deposited by the Eligible Institution with the
       Exchange Agent; and

          (c) such properly executed Letter of Transmittal (or facsimile
       thereof), as well as the certificate(s) representing all tendered
       Original Notes in proper form for transfer (or a confirmation of a book-
       entry transfer into the Exchange Agent's account at the Depository of
       Original Notes delivered electronically), and all other documents
       required by the Letter of Transmittal are received by the Exchange Agent
       within five New York Stock Exchange trading days after the Expiration
       Date.

          Upon request to the Exchange Agent, a Notice of Guaranteed Delivery
       will be sent to holders who wish to tender their Original Notes according
       to the guaranteed delivery procedures set forth above.

                                      29
<PAGE>
 
       Withdrawal of Tenders

          Except as otherwise provided herein, tenders of Original Notes may be
       withdrawn at any time prior to the Expiration Date.

          To withdraw a tender of Original Notes in the Exchange Offer, a
       written or facsimile transmission notice of withdrawal must be received
       by the Exchange Agent at its address set forth herein prior to the
       Expiration Date.  Any such notice of withdrawal must (i) specify the name
       of the person having deposited the Original Notes to be withdrawn (the
       "Depositor"), (ii) identify the Original Notes to be withdrawn (including
       the certificate number or numbers (if applicable) and principal amount of
       such Original Notes), and (iii) be signed by the holder in the same
       manner as the original signature on the Letter of Transmittal by which
       such Original Notes were tendered (including any required signature
       guarantees).  All questions as to the validity, form and eligibility
       (including time of receipt) of such notices will be determined by the
       Company in its sole discretion, whose determination shall be final and
       binding on all parties.  Any Original Notes so withdrawn will be deemed
       not to have been validly tendered for purposes of the Exchange Offer and
       no Exchange Notes will be issued with respect thereto unless the Original
       Notes so withdrawn are validly retendered.  Properly withdrawn Notes may
       be retendered by following one of the procedures described above under 
       "-- Procedures for Tendering" at any time prior to the Expiration Date.

       Certain Conditions to the Exchange Offer

          Notwithstanding any other term of the Exchange Offer, the Company
       shall not be required to accept for exchange, or exchange the Exchange
       Notes for, any Original Notes not theretofore accepted for exchange, and
       may terminate or amend the Exchange Offer as provided herein before the
       acceptance of such Original Notes, if any of the following conditions
       exist:

          (a) any action or proceeding is instituted or threatened in any court
       or by or before any governmental agency with respect to the Exchange
       Offer which, in the reasonable judgment of the Company, might impair the
       ability of the Company to proceed with the Exchange Offer or have a
       material adverse effect on the contemplated benefits of the Exchange
       Offer to the Company or there shall have occurred any material adverse
       development in any existing action or proceeding with respect to the
       Company or any of its subsidiaries; or

          (b) there shall have been any material change, or development
       involving a prospective change, in the business or financial affairs of
       the Company or any of its subsidiaries which, in the reasonable judgment
       of the Company, could reasonably be expected to materially impair the
       ability of the Company to proceed with the Exchange Offer or materially
       impair the contemplated benefits of the Exchange Offer to the Company; or

          (c) there shall have been proposed, adopted or enacted any law,
       statute, rule or regulation which, in the judgment of the Company, could
       reasonably be expected to materially impair the ability of the Company to
       proceed with the Exchange Offer or materially impair the contemplated
       benefits of the Exchange Offer to the Company; or

          (d) any governmental approval which the Company shall, in its
       reasonable discretion, deem necessary for the consummation of the
       Exchange Offer as contemplated hereby shall have not been obtained.

          If the Company determines in its reasonable discretion that any of
       these conditions are not satisfied, the Company may (i) refuse to accept
       any Original Notes and return all tendered Original Notes to the
       tendering holders, (ii) extend the Exchange Offer and retain all Original
       Notes tendered prior to the expiration of the Exchange Offer, subject,
       however, to the rights of holders to withdraw such Original Notes (see
       "The Exchange Offer -- Withdrawal of Tenders") or (iii) waive such
       unsatisfied conditions with respect to the Exchange Offer and accept all
       properly tendered Original Notes which have not been withdrawn.  If such
       waiver constitutes a material change to the Exchange Offer, the Company
       will promptly disclose such waiver by means of a prospectus supplement
       that will be distributed to the registered holders of the Original Notes,
       and the Company will extend the Exchange Offer for a period of five to
       ten business days, depending upon the significance of the waiver and the

                                      30
<PAGE>
 
       manner of disclosure to the registered holders, if the Exchange Offer
       would otherwise expire during such five to ten business day period.

          Holders may have certain rights and remedies against the Company under
       the Registration Rights Agreement should the Company fail to consummate
       the Exchange Offer, notwithstanding a failure of the conditions stated
       above.  Such conditions are not intended to modify those rights or
       remedies in any respect.

          The foregoing conditions are for the sole benefit of the Company and
       may be asserted by the Company regardless of the circumstances giving
       rise to such condition or may be waived by the Company in whole or in
       part at any time and from time to time in the Company's reasonable
       discretion.  The failure by the Company at any time to exercise the
       foregoing rights shall not be deemed a waiver of any such right and each
       such right shall be deemed an ongoing right which may be asserted at any
       time and from time to time.

       Termination of Certain Rights

          All rights under Registration Rights Agreement (including registration
       rights) of holders of the Original Notes eligible to participate in this
       Exchange Offer will terminate upon consummation of the Exchange Offer
       except with respect to the Company's continuing obligations (i) to
       indemnify the holders (including any broker-dealers) and certain parties
       related to the holders against certain liabilities (including liabilities
       under the Securities Act), (ii) to provide, upon the request of any
       holder of a transfer-restricted Original Note, the information required
       by Rule 144A(d)(4) under the Securities Act in order to permit resales of
       such Original Notes pursuant to Rule 144A, (iii) to use its best efforts
       to keep the Registration Statement effective to the extent necessary to
       ensure that it is available for resales of transfer-restricted Notes by
       broker-dealers for a period of 180 days from the date on which the
       Registration Statement is declared effective and (iv) to provide copies
       of the latest version of the Prospectus to broker-dealers upon their
       request for a period of 180 days from the date on which the Registration
       Statement is declared effective.  Insofar as indemnification for
       liabilities arising under the Securities Act may be permitted pursuant to
       the foregoing provisions, the Company has been informed that in the
       opinion of the Securities and Exchange Commission such indemnification is
       against public policy as expressed in the Securities Act and is therefore
       unenforceable.

                                      31
<PAGE>
 
       Exchange Agent

          United States Trust Company of New York has been appointed as Exchange
       Agent for the Exchange Offer.  All questions and requests for assistance
       as well as all correspondence in connection with the Exchange Offer and
       the Letter of Transmittal should be addressed to the Exchange Agent, as
       follows:

<TABLE>
<S>                          <C>                         <C>
By Hand:                                                  By Overnight Courier:
United States Trust Company                                United States Trust
of New York                                                      Company
111 Broadway, Lower Level                                      of New York
New York, NY 10005                                         770 Broadway, 13th
Attention:  Corporate Trust                                       Floor
                                                           New York, NY 10003
By Mail:                                                  Attention:  Corporate
(insured or registered                                            Trust
recommended)                                                 Services Window
United States Trust Company
of New York
P.O. Box 843
Peter Cooper Station
New York, NY 10276
Attention:  Corporate Trust
 
 
                              Facsimile Transmission:
                                         (212) 420-6152
                                   (For Eligible
                                 Institutions Only)
 
                               Confirm by Telephone:
                                         (800) 548-6565
 
 
</TABLE>

          Requests for additional copies of this Prospectus, the Letter of
       Transmittal or the Notice of Guaranteed Delivery should be directed to
       the Exchange Agent.

       Fees and Expenses

          The expenses of soliciting tenders will be borne by the Company.  The
       principal solicitation is being made by mail; however, additional
       solicitation may be made by telegraph, telephone or in person by officers
       and regular employees of the Company and its affiliates.

          The Company has not retained any dealer-manager or other soliciting
       agent in connection with the Exchange Offer and will not make any
       payments to brokers, dealers or others soliciting acceptance of the
       Exchange Offer.  The Company, however, will pay the Exchange Agent
       reasonable and customary fees for its services and will reimburse it for
       its reasonable out-of-pocket expenses in connection therewith.
       
          The cash expenses to be incurred in connection with the Exchange Offer
       will be paid by the Company and are estimated in the aggregate to be
       approximately $250,000. Such expenses include fees and expenses of the
       Exchange Agent and Trustee, accounting and legal fees and printing costs,
       among others.

          The Company will pay all transfer taxes, if any, applicable to the
       exchange of Original Notes pursuant to the Exchange Offer.  If, however,
       certificates representing Exchange Notes, or Original Notes for principal
       amounts not tendered or acceptable for exchange, are to be delivered to,
       or are to be issued in the name of, any person other

                                      32
<PAGE>
 
       than the registered holders of the Original Notes tendered, or if
       tendered Original Notes are registered in the name of any person other
       than the person signing the Letter of Transmittal, or if a transfer tax
       is imposed for any reason other than the exchange of Original Notes
       pursuant to the Exchange Offer, then the amount of any such transfer
       taxes (whether imposed on the registered holder or any other persons)
       will be payable by the tendering holder.  If satisfactory evidence of
       payment of such taxes or exemption therefrom is not submitted with the
       Letter of Transmittal, the amount of such transfer taxes will be billed
       directly to such tendering holder of Original Notes.

       Accounting Treatment

          The Exchange Notes will be recorded at the same carrying value as the
       Original Notes as reflected in the Company's accounting records on the
       date of the exchange.  Accordingly, no gain or loss for accounting
       purposes will be recognized.  The expenses of the Exchange Offer will be
       amortized over the term of the Exchange Notes.

       Consequence of Failure to Exchange

          Participation in the Exchange Offer is voluntary.  Holders of the
       Original Notes are urged to consult their financial and tax advisors in
       making their own decisions on what action to take.

          The Original Notes which are not exchanged for the Exchange Notes
       pursuant to the Exchange Offer will remain restricted securities.
       Accordingly, such Original Notes may be resold only (i) to a person whom
       the seller reasonably believes is a qualified institutional buyer (as
       defined in Rule 144A under the Securities Act) in a transaction meeting
       the requirements of Rule 144A, (ii) in a transaction meeting the
       requirements of Rule 144 under the Securities Act, (iii) outside the
       United States to a foreign person in a transaction meeting the
       requirements of Rule 904 under the Securities Act, (iv) in accordance
       with another exemption from the registration requirements of the
       Securities Act (and based upon an opinion of counsel if the Company so
       requests), (v) to the Company or (vi) pursuant to an effective
       registration statement and, in each case, in accordance with any
       applicable securities laws of any state of the United States or any other
       applicable jurisdiction.
                               
                                      33
<PAGE>
 
                                  THE COMPANY

          Pierce Leahy is the largest archive records management company in
       North America, as measured by its 34 million cubic feet of records
       currently under management in 105 facilities throughout North America.
       The Company provides extensive records management services to a
       diversified group of over 15,000 customer accounts in a variety of
       industries including financial services, manufacturing, transportation,
       healthcare and law.

          Pierce Leahy's operations date to 1957 when its predecessor company,
       L.W. Pierce Co., Inc., was founded to provide filing systems and related
       equipment to companies in the Philadelphia area. L. W. Pierce Co., Inc.
       expanded primarily through internal growth until 1990 when it acquired
       Britannia Security Group, Inc. (doing business as Leahy Business
       Archives), which approximately doubled the size of the Company. The
       Company was formed at that time from the consolidation of the predecessor
       company with Leahy Business Archives.

          Since its incorporation in 1990, the Company has elected to be taxed
       as a corporation under Subchapter S (a "Subchapter S corporation") of the
       Internal Revenue Code of 1986, as amended (the "Code"). The Company has
       made, and intends to continue to make, distributions to its shareholders
       to pay their tax obligations as a result of the Company's status as a
       Subchapter S corporation. Such distributions will not be restricted by
       the terms of the Notes.

          The Company's Canadian business is operated by Pierce Leahy Command
       Company ("PLC Command"), a Nova Scotia unlimited liability company. As a
       result of the Company's status as a Subchapter S corporation, all of the
       capital stock of PLC Command is owned by two limited partnerships. Two
       separate corporations owned by J. Peter Pierce are the general partner of
       each partnership, respectively, and the Company has a 99% limited
       partnership interest in each partnership. Accordingly, the Company has an
       indirect 99% equity interest in PLC Command.

          The principal executive offices of the Company are located at 631 Park
       Avenue, King of Prussia, Pennsylvania 19406, and its telephone number is
       (610) 992-8200.


                                THE TRANSACTIONS

          In connection with the offering of the Original Notes, the Company
       effected a series of transactions described below (collectively referred
       to as the "Transactions"):
       
          (i) the repayment of the amounts outstanding under the Company's
       previous credit facility ($146.1 million) and entering into the Credit
       Facility. See "Description of Credit Facility";

          (ii) the consummation of the purchase of a records management company
       in the San Diego market for $3.5 million;

          (iii) in order to eliminate or reduce certain related party rental
       expenses, the Company purchased from two partnerships owned by members of
       the Pierce family (the "Pierce Family Partnerships") six facilities
       located in the following locations which are currently leased by the
       Company from the Pierce Family Partnerships: Atlanta, Georgia; Chester,
       New York; Folcroft, Pennsylvania; Sharon Hill, Pennsylvania (two
       properties); and Midland, Texas. The purchase prices for five of these
       six properties were based on independent valuations prepared by various
       subsidiaries of Cushman & Wakefield, Inc. and the purchase price of the
       Midland, Texas property was based on the recent acquisition price for
       such property. In addition, the Company had been subleasing from one of
       the Pierce Family Partnerships 16 other facilities at a cost in excess of
       the amount being paid by such Pierce Family Partnership to the owner of
       the property. The Company purchased the leasehold interests from such
       Pierce Family Partnership, thereby reducing the Company's rental expense.
       In addition, one of the Pierce Family Partnerships had minority interests
       in five of the properties currently leased by the Company, which
       interests were purchased by the

                                      34
<PAGE>
 
       Company. The total purchase price for all of the above transactions (the
       "Real Estate Transactions") was $14.8 million, and the purchase of the
       real property and leasehold interests from the Pierce Family Partnerships
       will reduce the Company's annual rental expense by $2.0 million; and

          (iv) the redemption of 100 shares of Class A Common Stock from Leo W.
       Pierce, Sr. (representing 1% of the Company's Common Stock and
       approximately 19% of Mr. Pierce's beneficial holdings) for an aggregate
       price of $1.45 million (the "Stock Redemption").

                                      35
<PAGE>
 
                                USE OF PROCEEDS

          The Company will not receive any cash proceeds from the issuance of
       the Exchange Notes offered hereby.  In consideration for issuing the
       Exchange Notes as contemplated in this Prospectus, the Company will
       receive in exchange Original Notes in like principal amount, the terms of
       which are identical to the Exchange Notes.  The Original Notes
       surrendered in exchange for Exchange Notes will be retired and cancelled
       and cannot be reissued.  Accordingly, issuance of the Exchange Notes will
       not result in any increase in the indebtedness of the Company.

          The net proceeds to the Company from the sale of the Original Notes
       was or will be used to finance the Transactions and for general corporate
       purposes, including acquisitions. The anticipated sources and uses of
       funds from the sale of the Original Notes are set forth below (dollars in
       thousands).
<TABLE>
<CAPTION>
 
<S>                                                                   <C> 
Source of proceeds:
  Offering of Original Notes...................................     $200,000
                                                                    ========
Uses of proceeds:
  Retirement of existing Credit Facility -- U.S. ..............     $123,988 (a)
  Retirement of existing Credit Facility -- Canadian...........       22,128 (a)
  Real Estate Transactions.....................................       14,841
  Stock Redemption.............................................        1,450
  Pending acquisition..........................................        3,500
  General corporate purposes...................................       25,593
  Estimated fees and expenses..................................        8,500
                                                                    --------
       Total uses of proceeds..................................     $200,000
                                                                    ========
- --------------
</TABLE>
       (a) Based on actual outstanding indebtedness as of the closing of the
           sale of the Original Notes.

                                      36
<PAGE>
 
                                 CAPITALIZATION

          The following table sets forth the capitalization of the Company (i)
       as of March 31, 1996 and (ii) as adjusted to give effect to the sale of
       the Original Notes, the Transactions, the redemption of certain warrants
       and the accrual of a pension obligation for Leo W. Pierce, Sr. as if they
       had occurred as of March 31, 1996. This table should be read in
       conjunction with the information contained in "Use of Proceeds" as well
       as the Company's consolidated financial statements and notes thereto
       included elsewhere herein (U.S. dollars in thousands):
<TABLE>
<CAPTION>
 
 
                                                          As of March 31, 1996
                                                        ------------------------
                                                        Actual       As Adjusted
                                                        ------       -----------
<S>                          <C>        <C>        <C>          <C>      <C>
 
       Cash on hand................................     $    474        $ 27,949
                                                        ========        ========
 
       Existing Credit Facility -- U.S. (a)........     $102,575        $     --
       Existing Credit Facility -- Canadian(a).....       21,334              --
       Credit Facility -- U.S. ....................           --              --
       Credit Facility -- Canadian.................           --              --
       Original Notes .............................           --         200,000
       Redeemable warrants.........................        2,625              --
       Other indebtedness..........................          727             727
                                                        --------         -------
           Total debt..............................      127,261         200,727
 
       Shareholders' deficit.......................     (17,867)        (29,237)
                                                        --------        --------
            Total capitalization...................     $109,394        $171,490
                                                        ========        ========
- --------------
</TABLE>
       (a) Does not include approximately $21.4 million of additional U.S.
           borrowings and $0.8 million of additional Canadian borrowings since
           March 31, 1996.
                                      37
<PAGE>
 
         SELECTED HISTORICAL AND PRO FORMA CONSOLIDATED STATEMENT OF 
                   OPERATIONS, BALANCE SHEET AND OTHER DATA

          The following selected consolidated statement of operations, balance
       sheet and other data as of December 31, 1991, 1992, 1993, 1994 and 1995,
       and for the years then ended, have been derived from the Consolidated
       Financial Statements of the Company which have been audited by Arthur
       Andersen LLP, independent public accountants. The report of Arthur
       Andersen LLP with respect to the Company's Consolidated Financial
       Statements for the years ended December 31, 1993, 1994 and 1995 appears
       elsewhere in this Prospectus. The selected consolidated statement of
       operations, balance sheet and other data as of March 31, 1995 and 1996,
       and for the three months then ended, is derived from the unaudited
       Consolidated Financial Statements of the Company which, in management's
       opinion, includes all material adjustments (consisting only of normal
       recurring adjustments) necessary for the fair presentation of the
       information set forth therein. The results of operations for the three
       months ended March 31, 1996 are not necessarily indicative of the results
       that may be expected for a full year.

          The following selected pro forma statement of operations data and
       other data give effect to, among other things, the Transactions and the
       offering of the Original Notes, as if they had occurred on January 1,
       1995. The following unaudited pro forma condensed consolidated balance
       sheet data give effect to, among other things, the Transactions and the
       offering of the Original Notes, as if they had occurred on March 31,
       1996. The Transactions and certain management assumptions and adjustments
       are described in the accompanying notes hereto. The pro forma information
       should be read in conjunction with the Company's consolidated financial
       statements and the notes thereto, as of December 31, 1995 and for the
       three years in the period then ended, appearing elsewhere in this
       Prospectus. This pro forma information is not necessarily indicative of
       the results that would have occurred had the Transactions and the
       offering of the Original Notes been completed on the dates indicated or
       the Company's actual or future results or financial position.

          The information set forth below should be read in conjunction with the
       Pro Forma Condensed Consolidated Financial Statements, the Company's
       Consolidated Financial Statements and the related notes thereto, and
       "Management's Discussion and Analysis of Financial Condition and Results
       of Operations" appearing elsewhere in this Prospectus.

                                      38
<PAGE>
 
    SELECTED HISTORICAL AND PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS,
                          BALANCE SHEET AND OTHER DATA

                             (dollars in thousands)
<TABLE> 
<CAPTION>
 
                                                                                                                 
                                                                                                                 
                                                                               Year Ended December 31,                          
                                                      ----------------------------------------------------------------------------
                                                                                                                    Pro Forma   
                                                         1991         1992         1993       1994       1995        1995(a)    
                                                      ----------  -------------  ---------  ---------  ---------  ----------------
<S>                                                   <C>         <C>            <C>        <C>        <C>        <C>           
Statement of Operations Data:        
Revenues                                                                                                                        
        Storage..................................       $ 33,195       $ 37,633   $ 42,122   $ 47,123    $55,501      $ 75,143   
        Service and storage material sales.......         22,437         25,202     31,266     35,513     39,895        46,452   
                                                        --------       --------   --------   --------    -------      --------   
          Total revenues.........................         55,632         62,835     73,388     82,636     95,396       121,595   
                                                                                                                                 
Cost of sales, excluding depreciation and                 
        amortization............................          37,145         39,702     45,391     49,402     55,616        67,292 
Selling, general and administrative.............           6,693          9,012     11,977     15,882     16,148        19,596   
Depreciation and amortization...................           5,783          5,734      6,888      8,436      8,163        10,959   
Consulting payments to related parties (b).....               --             --         --        500        500           500   
                                                        --------       --------   --------   --------    -------      --------   
        Operating income........................           6,011          8,387      9,132      8,416     14,969        23,248   
                                                                                                                                
Interest expense................................           6,677          6,388      6,160      7,216      9,622        23,686   
                                                        --------       --------   --------   --------    -------      --------   
        Income (loss) before extraordinary loss.            (666)         1,999      2,972      1,200      5,347          (438)  
         
Extraordinary loss(c)...........................              --             --      9,174      5,991      3,279         3,279   
                                                        --------       --------   --------   --------    -------      --------   
        Net income (loss).......................        $   (666)      $  1,999   $ (6,202)  $ (4,791)   $ 2,068      $ (3,717)  
                                                        ========       ========   ========   ========    =======      ========   
                                                                                                                                
Other Data:                                                                                                                     
EBITDA(d).......................................        $ 11,794       $ 14,121   $ 16,020   $ 17,352    $23,632      $ 34,707   
EBITDA margin...................................           21.2%          22.5%      21.8%      21.0%      24.8%         28.5%  
                                                                                                                                
Capital expenditures(e).........................        $  3,521       $  5,565   $  5,827   $  6,352    $16,288            --   
Cubic feet of storage under management          
        at end of period (000s).................          13,858         16,248     19,025     22,160     29,523        32,264  
                                                                                                                                
Ratio of EBITDA to interest expense (f).........              --             --         --         --         --         1.52x   
Ratio of total debt to EBITDA...................              --             --         --         --         --         5.78x   
Ratio of net debt to EBITDA.....................              --             --         --         --         --         4.98x 
Ratio of earnings to fixed charges(g)...........              --          1.21x      1.30x      1.11x      1.37x            --   
        
</TABLE>                        
<TABLE> 
<CAPTION> 

                                                                                Three Months
                                                                                   Ended
                                                                                  March 31,
                                                                 ---------------------------------------------
                                                                                                   Pro Forma
                                                                 1995               1996              1996(a)
                                                               --------           --------         -----------
<S>                                                              <C>             <C>                 <C>
Statement of Operations Data:                                                                 
Revenues                                                                                      
   Storage......................................               $ 12,732           $ 16,969           $ 18,358
   Service and storage material sales...........                  9,490             12,730             13,529
                                                               --------           --------            -------
      Total revenues............................                 22,222             29,699             31,887
                                                                                              
Cost of sales, excluding depreciation and 
   amortization.................................                 13,118             17,406             17,759
Selling, general and administrative.............                  4,026              4,856              5,324
Depreciation and amortization...................                  1,990              2,572              2,939
Consulting payments to related parties (b)......                    125                125                125
                                                               --------           --------            -------
        Operating income........................                  2,963              4,740              5,740
                                                                                              
Interest expense................................                  1,928              2,846              5,921
                                                               --------           --------            -------
    Income (loss) before extraordinary loss.....                  1,035              1,894               (181)
Extraordinary loss(c)...........................                     --                 --                 --
                                                               --------           --------            -------
        Net income (loss).......................               $  1,035           $  1,894            $  (181)
                                                               ========           ========            =======
Other Data:                                                                                   
EBITDA(d).......................................               $  5,078           $  7,437            $ 8,804
EBITDA margin...................................                  22.9%              25.0%              27.6%
                                                                                              
Capital expenditures(e).........................               $  1,535           $  3,553                 --
Cubic feet of storage under management                         
   at end of period (000s)......................                 23,549             31,088             33,279 
                                                                                    
Ratio of EBITDA to interest expense (f).........                     --                 --              1.54x
Ratio of total debt to EBITDA...................                     --                 --                 --
Ratio of net debt to EBITDA.....................                     --                 --                 --
Ratio of earnings to fixed charges(g)...........                  1.34x              1.45x                 --
                                                 
</TABLE> 
<TABLE> 
<CAPTION> 

                                                                       As of December 31,                              
                                                        -----------------------------------------------------  
                                                         1991        1992        1993       1994        1995    
                                                        ------      ------      ------     ------      ------   
<S>                                                     <C>           <C>       <C>        <C>          <C>      
Balance Sheet Data:                                                                                          
Cash and cash equivalents.......................        $   332     $   461     $  528     $  358      $  722  
Working capital (deficit).......................        (10,402)    (11,656)    (9,143)    (5,202)     (8,139) 
Total assets....................................         59,726      65,869     74,621     79,746     131,328  
Total debt (including redeemable warrants)......         52,695      55,027     69,736     77,683     120,071                       

Net debt (net of cash balance)..................         52,363      54,566     69,208     77,325     119,349  
                                                                                                 
Shareholders' deficit...........................        (11,006)     (9,028)   (14,508)   (19,341)    (18,201) 
 
</TABLE>

<TABLE>
<CAPTION> 

                                                           As of March 31, 1996
                                                        ----------------------------
                                                                       Pro Forma
                                                         Actual      As Adjusted(h)
                                                        --------    ----------------
<S>                                                    <C>               <C>                                                  
Balance Sheet Data:                                 
Cash and cash equivalents.......................         $  474           $ 27,949
Working capital (deficit).......................         (6,595)            22,201 
Total assets....................................        138,628            201,973
Total debt (including redeemable warrants)......        127,261            200,727
Net debt (net of cash balance)..................        126,787            172,778
Shareholders' deficit...........................        (17,867)           (29,237)
                                  
</TABLE>
                                           (see footnotes on the following page)

                                      39
<PAGE>
 
      Notes to Selected Historical and Pro Forma Consolidated Statement 
                  of Operations, Balance Sheet and Other Data

       (a) Gives effect to (i) acquisitions completed in 1995 and 1996 year to
           date, (ii) the redemption of certain warrants and (iii) the offering
           of the Original Notes, the Transactions, and the application of the
           net proceeds from the sale of the Notes, as if each had occurred as
           of January 1, 1995. See "Use of Proceeds" and "Pro Forma Financial
           Data." In connection with the Transactions, the Company expects to
           incur non-recurring charges of approximately $5.3 million in the
           quarter in which the offering of the Original Notes is consummated.
           Such charges are not reflected in the Pro Forma Condensed
           Consolidated Statement of Operations. See "Risk Factors--Non-
           Recurring Charges; Expected Loss in Third Quarter of 1996."

       (b) Represents aggregate payments made to eight Pierce family members.

       (c) Represents loss on early extinguishment of debt due to refinancings
           in 1993, 1994 and 1995. Amounts include write-off of unamortized
           deferred financing costs and discount, along with prepayment
           penalties and other costs. A similar charge will occur in the quarter
           in which the debt is repaid ($2.0 million assuming the debt is repaid
           in the third quarter), which has not been reflected in the Pro Forma
           Condensed Consolidated Statement of Operations. See "Risk Factors--
           Non-Recurring Charges; Expected Loss in Third Quarter of 1996."

       (d) "EBITDA" is defined as net income (loss) before interest expense,
           taxes, depreciation and amortization, consulting payments to related
           parties and extraordinary items. EBITDA is not a measure of
           performance under GAAP. While EBITDA should not be considered in
           isolation or as a substitute for net income, cash flows from
           operating activities and other income or cash flow statement data
           prepared in accordance GAAP, or as a measure of profitability or
           liquidity, management understands that EBITDA is customarily used as
           a criteria in evaluating records management companies. Moreover,
           substantially all of the Company's financing agreements contain
           covenants in which EBITDA is used as a measure of financial
           performance. See "Management's Discussion and Analysis of Financial
           Condition and Results of Operations" for a discussion of other
           measures of performance determined in accordance with GAAP and the
           Company's sources and applications of cash flows.

       (e) Capital expenditures for 1995 are comprised of $7.2 million for new
           shelving, $5.1 million for facility purchases and related
           improvements, $1.6 million for data processing, $1.5 million for
           leasehold and building improvements and $0.9 million for the purchase
           of transportation, warehouse and office equipment. Of the total 1995
           capital expenditures, approximately $2.5 million was for maintenance
           capital expenditures.

       (f) Excludes non-cash amortization of deferred financing fees of $0.9
           million and $0.2 million in pro forma 1995 and the three months ended
           March 31, 1996, respectively.

       (g) The earnings for the year ended December 31, 1991 and the pro forma
           year ended December 31, 1995 and the three months ended March 31,
           1996 were inadequate to cover fixed charges by $0.7 million, $0.4
           million and $0.2 million, respectively.

       (h) Gives effect to the following, as if they each had occurred as of
           March 31, 1996: (i) the acquisitions completed after March 31, 1996;
           (ii) the redemption of certain warrants; and (iii) the offering of
           the Original Notes, the Transactions and the application of the net
           proceeds from the sale of the Notes. See "Use of Proceeds" and "Pro
           Forma Financial Data."


                                      40
<PAGE>
 
                            PRO FORMA FINANCIAL DATA

          The pro forma condensed consolidated balance sheet as of March 31,
       1996 gives effect to, among other things, the Transactions, as if they
       occurred on March 31, 1996. The unaudited pro forma condensed
       consolidated statement of operations and other data for the year ended
       December 31, 1995 and the three months ended March 31, 1996 give effect
       to, among other things, the Transactions, as if they occurred on January
       1, 1995. The Transactions and certain management assumptions and
       adjustments are described in the accompanying notes hereto. The pro forma
       condensed consolidated balance sheet and statements of operations should
       be read in conjunction with the Company's consolidated financial
       statements and notes thereto, as of December 31, 1995 and for each of the
       three years in the period ended December 31, 1995, appearing elsewhere in
       this Prospectus.

                                       41
<PAGE>
 
                               PIERCE LEAHY CORP.

                 PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

                                 MARCH 31, 1996
                             (dollars in thousands)
<TABLE>
<CAPTION>
 
                                                         Completed      Redemption                Offering and    Pro Forma
                                                        and Pending         of           Pro          Other           As
                                             Actual    Acquisition(a)   Warrants(b)     Forma    Transactions(c)   Adjusted
                                            ---------  --------------  -------------  ---------  ---------------  ----------
<S>                                         <C>        <C>             <C>            <C>        <C>              <C>
ASSETS
CURRENT ASSETS:
   Cash...................................  $    474      $    850       $     --     $  1,324       $ 26,625      $ 27,949
   Accounts receivable....................    15,724           500             --       16,224             --        16,224
   Inventories............................       654            50             --          704             --           704
   Prepaid expenses and other.............     1,612           150             --        1,762             --         1,762
                                            --------      --------       --------     --------       --------      --------
      Total current assets................    18,464         1,550             --       20,014         26,625        46,639
PROPERTY AND EQUIPMENT, net...............    77,110         9,225             --       86,335          7,008        93,343
OTHER ASSETS, primarily intangibles.......    43,054        12,025             --       55,079          6,912        61,991
                                            --------      --------       --------     --------       --------      --------
                                            $138,628      $ 22,800       $     --     $161,428       $ 40,545      $201,973
                                            ========      ========       ========     ========       ========      ========
 
LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES:
   Current portion of long-term debt and
    noncompete obligations................  $  2,175      $     --       $     --     $  2,175       $ (1,870)     $    305
     Accounts payable.....................     4,682           100             --        4,782             --         4,782
     Accrued expenses.....................     8,980           650             --        9,630            499        10,129
     Deferred revenues....................     9,222            --             --        9,222             --         9,222
                                            --------      --------       --------     --------       --------      -------- 
        Total current liabilities.........    25,059           750             --       25,809         (1,371)       24,438
LONG-TERM DEBT AND
 NONCOMPETE OBLIGATIONS...................   122,461        22,050          2,625      147,136         53,286       200,422
DEFERRED RENT.............................     2,856            --             --        2,856             --         2,856
DEFERRED INCOME TAXES.....................     3,494            --             --        3,494             --         3,494
REDEEMABLE WARRANTS.......................     2,625            --         (2,625)          --             --            --
SHAREHOLDERS' DEFICIT.....................   (17,867)           --             --      (17,867)       (11,370)      (29,237)
                                            --------      --------       --------     --------       --------      --------
                                            $138,628      $ 22,800       $     --     $161,428       $ 40,545      $201,973
                                            ========      ========       ========     ========       ========      ========
</TABLE>
         The accompanying notes are an integral part of this statement.

                                       42
<PAGE>
 
                               PIERCE LEAHY CORP.

            NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

                                 MARCH 31, 1996
                             (dollars in thousands)

       (a) Represents the balance sheets for the businesses acquired by the
           Company after March 31, 1996 (File Box, Inc. and Security Archives,
           Inc.) and the pending acquisition (see "Business--Acquisition History
           and Growth Strategy"), after application of the purchase method of
           accounting. Expected total purchase price is $22,050, including
           transaction costs.

       (b) Represents the redemption of warrants issued in connection with a
           prior financing.

       (c) Reflects the sale of $200,000 of Original Notes and the use of the
           proceeds to repay existing indebtedness of $123,909, the acquisitions
           closed after March 31, 1996 for $18,550, the pending acquisition for
           $3,500, the redemption of warrants for $2,625, estimated transaction
           costs and expenses of $8,500, the Stock Redemption for $1,450, and
           the Real Estate Transactions for $14,841, resulting in net cash
           available for operations of $26,625. Since the Real Estate
           Transactions involve land, buildings and joint venture interests
           purchased from the Pierce Family Partnerships, for financial
           reporting purposes, the assets will be recorded at their depreciated
           cost of $7,008 and the $5,069 excess of the purchase price over the
           depreciated basis will be charged to shareholders' deficit. The debt
           refinancing will result in the write-off of unamortized deferred
           financing costs in the period in which the repayment occurs ($2,107
           as of March 31, 1996, estimated to be $1,986 if the repayment occurs
           in the third quarter). In addition, payments to the Pierce Family
           Partnerships of $2,764 for certain leases and $499 for an accrual of
           a pension obligation due to Leo W. Pierce, Sr. will be charged to
           expense.

                                       43
<PAGE>
 
                               PIERCE LEAHY CORP.

            PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

                      FOR THE YEAR ENDED DECEMBER 31, 1995
                             (dollars in thousands)
<TABLE>
<CAPTION>
 
                                                                                             Adjustments      
                                                                                                from          
                                                Completed       Adjustments                   Offering         Pro Forma
                                               and Pending         from           Pro         and Other            As
                                    Actual    Acquisition(a)   Acquisitions      Forma      Transactions        Adjusted
                                    -------   --------------   -------------    --------    -------------      ----------
<S>                                 <C>       <C>              <C>              <C>         <C>                <C>
REVENUES.......................... $ 95,396      $ 26,199          $     --     $121,595        $     --        $121,595
                                   --------      --------          --------     --------        --------        --------
OPERATING EXPENSES:                                                                                         
 Cost of sales, excluding                                                                                   
   depreciation and amortization..   55,616        15,248            (1,556) (b)  69,308          (2,016) (f)     67,292
  Selling, general and                                                                                      
   administrative.................   16,148         6,848            (3,400) (c)  19,596              --          19,596
  Depreciation and amortization...    8,163         1,906               634  (d)  10,703             256  (f)     10,959
  Consulting payments to related                                                                            
   parties........................      500            --                --          500              --             500
                                   --------      --------          --------     --------        --------        --------

     Total operating expenses.....   80,427        24,002            (4,322)     100,107          (1,760)         98,347
                                   --------      --------          --------     --------        --------        --------
     Operating income.............   14,969         2,197             4,322       21,488           1,760          23,248
INTEREST EXPENSE..................    9,622           454             3,681  (e)  13,757           9,929  (g)     23,686
                                   --------      --------          --------     --------        --------        --------
    Income (loss) before                                                                                        
      extraordinary loss..........    5,347         1,743               641        7,731          (8,169)           (438)
EXTRAORDINARY LOSS................    3,279            --                --        3,279              --           3,279
                                   --------      --------          --------     --------        --------        --------
NET INCOME (LOSS)................. $  2,068      $  1,743          $    641     $  4,452         $(8,169)       $ (3,717)
                                   ========      ========          ========     ========        ========        ========
</TABLE>
         The accompanying notes are an integral part of this statement.

                                       44
<PAGE>
 
                               PIERCE LEAHY CORP.

            PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

                   FOR THE THREE MONTHS ENDED MARCH 31, 1996
                             (dollars in thousands)
<TABLE>
<CAPTION>
 
                                                                                                       Adjustments
                                                     Completed         Adjustments                    from Offering      Pro Forma
                                                    and Pending            from            Pro          and Other            As
                                          Actual   Acquisition(a)      Acquisitions       Forma       Transactions        Adjusted
                                          -------  --------------    ----------------    -------    -----------------    ----------
<S>                                       <C>      <C>               <C>                 <C>        <C>                  <C>
REVENUES................................  $29,699      $ 2,188           $     --        $31,887          $    --         $31,887
                                          -------      -------           --------        -------          -------          -------
OPERATING EXPENSES:                                                                                                     
 Cost of sales, excluding depreciation                                                                                  
   and amortization......................   17,406         991               (133) (b)    18,264             (505)(f)      17,759
 Selling, general and administrative....    4,856          683               (215) (c)     5,324               --           5,324
 Depreciation and amortization..........    2,572          197                106  (d)     2,875               64  (f)      2,939
 Consulting payments to related                                                                                      
  parties...............................      125           --                 --            125               --             125
                                          -------      -------            -------        -------          -------         -------
    Total operating expenses............   24,959        1,871               (242)        26,588             (441)         26,147
                                          -------      -------            -------        -------          -------         -------
    Operating income....................    4,740          317                242          5,299              441           5,740
INTEREST EXPENSE........................    2,846            6                582  (e)     3,434            2,487 (g)       5,921
                                          -------      -------            -------        -------          -------         -------
    Income (loss) before                                                                                                
     extraordinary loss.................    1,894          311               (340)         1,865           (2,046)           (181)
EXTRAORDINARY LOSS......................       --           --                 --             --               --              --
                                          -------      -------            -------        -------          -------         -------
NET INCOME (LOSS).......................  $ 1,894      $   311              $(340)       $ 1,865          $(2,046)        $  (181)
                                          =======      =======            =======        =======          =======         =======
</TABLE>                                                                  
         The accompanying notes are an integral part of this statement.   

                                       45
<PAGE>
 
                               PIERCE LEAHY CORP.

                   NOTES TO PRO FORMA CONDENSED CONSOLIDATED
                            STATEMENT OF OPERATIONS

                             (dollars in thousands)

       (a) Represents the historical results of operations of acquisitions
           completed in 1995 and 1996 for periods prior to their acquisition by
           the Company and the results of operations of the pending acquisition.
           See "Business--Acquisition and Growth Strategy."
       (b) Pro forma adjustments have been made to reduce cost of sales by
           $1,556 in 1995 and $133 for the three months ended March 31, 1996, to
           eliminate specific expenses that would not have been incurred had the
           completed and pending acquisitions occurred as of January 1, 1995.
           Such cost savings relate to (i) the termination of certain employees
           due to the integration and consolidation of the operations and (ii) a
           reduction in warehouse rent expense related to facilities the Company
           has or will vacate or negotiated changes in lease terms.
       (c) Pro forma adjustments for the year ended December 31, 1995 and for
           the three months ended March 31, 1996 have been made to reduce
           selling, general and administrative expenses by $3,400 and $215,
           respectively, to eliminate specific expenses that would not have been
           incurred had the completed and pending acquisitions occurred as of
           January 1, 1995. Such cost savings relate to the termination of
           certain employees and a reduction in computer and certain other
           operating costs. Additional cost savings that the Company expects to
           realize through the integration of the acquisitions into the
           Company's operations have not been reflected.
       (d) A pro forma adjustment has been made to reflect additional
           depreciation and amortization expense based on the fair market value
           of the assets acquired, as if the completed and pending acquisitions
           had occurred as of January 1, 1995. Property and equipment are
           depreciated over five to 40 years, goodwill is amortized over 30
           years and covenants not to compete are amortized over four to five
           years on a straight-line basis. Such depreciation and amortization
           may change upon the final appraisal of the fair market value of the
           net assets acquired.
       (e) Represents interest expense on debt incurred to finance the completed
           and pending acquisitions of $3,681 in 1995, using an effective annual
           interest rate of 9.33%, and $582 for the three months ended March 31,
           1996, using an effective annual interest rate of 9.58%.
       (f) Reflects the purchase of land and buildings as part of the Real
           Estate Transactions from the Pierce Family Partnerships that
           previously leased such facilities to the Company. In addition, the
           Company will pay $2,764 to one of the Pierce Family Partnerships to
           assume such Partnership's position in certain leases with third-
           parties. These operating leases with third-parties were "passed
           through" to the Company with a mark-up. Rent expense of $2,016 in
           1995 and $505 for the three months ended March 31, 1996 has been
           eliminated based on these proposed transactions. Depreciation expense
           of $256 in 1995 and $64 for the three months ended March 31, 1996 has
           been recorded based on the depreciated cost of the buildings and
           improvements to be acquired ($6,382 at the assumed purchase date),
           using an estimated remaining useful life of 25 years. The $2,764
           payment to assume leases will result in a one-time charge in the
           statement of operations in the quarter in which the Real Estate
           Transactions are consummated, and has not been reflected in the Pro
           Forma Condensed Consolidated Statement of Operations. These pro forma
           statements also do not include the accrual for a pension obligation
           due Leo W. Pierce, Sr. See "Risk Factors--Non-Recurring Charges;
           Expected Loss in Third Quarter of 1996."
       (g) Reflects interest expense on the $200,000 proceeds from the sale of
           the Original Notes, at 11/1//8%, and amortization of deferred debt
           issuance costs, which costs are expected to be approximately $8,500,
           offset by the elimination of interest expense on the indebtedness
           that will be repaid with a portion of the proceeds of the offering of
           the Original Notes. The repayment of such indebtedness will result in
           the write-off of deferred financing costs of approximately $1,986 in
           the statements of operations in the quarter in which the repayment
           occurs and has not been reflected in the Pro Forma Condensed
           Consolidated Statement of Operations. See "Risk Factors--Non-
           Recurring Charges; Expected Loss in Third Quarter of 1996." Pro forma
           adjusted interest expense represents the interest on the $200,000 of
           Original Notes (including the amortization of deferred financing
           costs) and the unpaid existing indebtedness which will not be repaid,
           along with certain costs under the Credit Facility.

                                       46
<PAGE>
 
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

          The following discussion should be read in conjunction with the
       Selected Historical and Pro Forma Consolidated Statement of Operations,
       Balance Sheet and Other Data and the Consolidated Financial Statements
       and the Notes thereto and the other financial and operating information
       included elsewhere in this Prospectus.

       General

          The Company is the largest archive records management company in North
       America, as measured by its 34 million cubic feet of records currently
       under management. The Company's operations date to 1957 when its
       predecessor company, L.W. Pierce Co., Inc., was founded to provide filing
       systems and related equipment to companies in the Philadelphia area. The
       Company expanded primarily through internal growth until 1990, when it
       acquired Leahy Business Archives which effectively doubled its size.
       Since 1991, the Company has pursued an expansion strategy combining
       growth from new and existing customers with the completion and successful
       integration of 18 acquisitions.

          The Company has experienced significant growth in its revenues and
       EBITDA as a result of its successful expansion and acquisition strategy,
       which has been facilitated by the implementation of the PLUS(R) system.
       During the four-year period ended December 31, 1995, revenues increased
       from $55.6 million to $95.4 million, representing a compound annual
       growth rate of 14.4%. The Company has also made substantial investments
       in its facilities and management information systems, the benefits of
       which are now being realized through economies of scale and increased
       operating efficiencies. The Company's EBITDA as a percentage of total
       revenues improved from 21.2% in 1991 to 24.8% in 1995, while EBITDA
       increased from $11.8 million to $23.6 million, over the same period,
       representing a compound annual growth rate of 19.4%. As the Company's
       volume of business grows, the Company believes its substantial investment
       in infrastructure will be amortized over a larger base of business,
       creating further economies of scale.

          The following table illustrates the growth in stored cubic feet from
       existing customers, new customers and acquisitions from 1991 through 1995
       and for the three-month period ended March 31, 1996:


                                      47

<PAGE>
 
              Net Additions of Cubic Feet of Storage by Category
                           (cubic feet in thousands)

                            Year Ended December 31,
                            -----------------------
<TABLE>
<CAPTION>
                                                                                  Three Months
                                                                                      Ended
                                                                                    March 31,
                                     1991     1992     1993     1994      1995        1996
                                    -------  -------  -------  -------  ---------   ---------
<S>                                 <C>      <C>      <C>      <C>      <C>        <C>
Additions of Cubic Feet:
   Existing Customer Accounts(a)..     950    1,101    1,166    1,657     722(b)      371(b)
   New Customer Accounts(c).......     376      995    1,494    1,038     2,018       644
   Acquisitions...................      __      294      117      440     4,623       550
                                    ------   ------   ------   ------    ------    ------
  Total...........................   1,326    2,390    2,777    3,135     7,363     1,565
   % Increase.....................      11%      17%      17%      16%       33%      *
Breakdown of % Increase:
   Existing Customer Accounts(a)..       8%       8%       7%       9%        3%      *
   New Customer Accounts(c).......       3%       7%       9%       5%        9%
   Acquisition....................       0%       2%       1%       2%       21%      *
                                    ------   ------   ------   ------    ------    ------
   Total..........................      11%      17%      17%      16%       33%      *
Cubic Feet Under Management:
   Beginning of Period............  12,532   13,858   16,248   19,025    22,160    29,523
   End of Period..................  13,858   16,248   19,025   22,160    29,523    31,088

</TABLE>
- --------------
*   Not applicable
(a) Net of permanent removals.
(b) Includes effects of a records destruction program for a major customer
    recommended by the Company pursuant to a consulting agreement.
(c) For the first twelve months after the establishment of an account, records
    added to such account are classified as additions to new customer accounts
    in the period in which they are received.


        Revenues

    The Company's revenues consist of storage revenues (58.2% of total revenues
in 1995), and related service and storage material sales revenues (41.8% of
total revenues in 1995). The Company provides records storage and related
services under annual or multi-year contracts that typically provide for
recurring monthly storage fees which continue until such records are permanently
removed (for which the Company charges a service fee) and service charges based
on activity with respect to such records. The Company's current average monthly
storage rate is approximately $0.175 per cubic foot (or $2.10 per year).
Permanent removal fees range from $2.00 to $5.75 per cubic foot. Since there are
relatively little direct on-going marketing, labor or capital expenditures
associated with storing a box of records, recurring storage fees contribute
significantly to EBITDA.

    While the Company's total revenues have increased at a compound annual
growth rate of 14.4% from 1991 to 1995, total revenue per annual average cubic
foot during such period has declined 10.0% from $4.22 to $3.80.* The decline is
attributable to (i) increases in sales to large volume accounts under long-term
contracts with discounted rates, which generate lower revenue per cubic foot,
but typically generate increased operating income, (ii) renegotiation of
contracts with existing customers to provide for longer term contracts at lower
rates, and (iii) industry-wide pricing pressures (based in large part on
reductions related to the cost of commercial real estate since the late 1980s).
Declines in revenues per cubic foot have been more than offset by improvements
in operating efficiencies and greater productivity as demonstrated by the
increase in EBITDA and EBITDA as a percentage of total revenues over the same
period.

                                       48
<PAGE>
 
        Operating Expenses and Productivity

          Operating expenses consist primarily of cost of sales, selling,
       general and administrative expenses, and depreciation and amortization.
       Cost of sales are comprised mainly of wages and benefits, facility
       occupancy costs, equipment costs and supplies. The major components of
       selling, general and administrative expenses are management,
       administrative, marketing and data processing wages and benefits and also
       include travel, communication and data processing expenses, professional
       fees and office expenses.

          In recent years, the Company has undertaken several steps to reduce
       operating expenses, particularly labor and facility occupancy costs,
       which are its two highest cost components. From 1991 to 1995, annual
       operating expenses (before depreciation, amortization and consulting
       payments) per average annual cubic foot declined 13.9% from $3.32 to
       $2.86. *

          The installation of the PLUS(R) system (which took approximately five
       years and over $8 million to develop and implement) has significantly
       reduced the Company's labor requirements by streamlining administrative
       and warehouse work processes, thereby reducing the labor required to
       process customer orders. The PLUS(R) system also has increased the speed
       at which the Company can obtain labor efficiencies when acquiring new
       records management companies, which in conjunction with the Company's
       centralized corporate administrative functions, has generally enabled the
       Company to integrate several acquisitions sites concurrently and to
       reduce the workforce of acquired businesses by at least 20%.


          The following table illustrates the Company's improvement in labor
       productivity from 1991 to 1995:


                         Analysis of Labor Productivity
<TABLE>
<CAPTION>
 
 
                                                                               December 31
                                                        ------------------------------------------------------
                                                                                                     Pro Forma
                                                           1991     1992     1993     1994     1995   1995(a)
                                                        -------  -------  -------  -------  -------  ---------
         <S>                                            <C>      <C>      <C>      <C>      <C>      <C>
         Cubic Feed Under Management Per Employee(b)..   18,702   19,961   23,033   24,405   24,521     25,525
         EBITDA Per Employee(c).......................  $15,916  $18,174  $19,537  $20,014  $22,379    $27,458
         Number of Employees at End of Period.........      741      814      826      908    1,204      1,264
</TABLE> 
       --------------
       (a) Pro forma cubic feet under management is equal to (i) cubic feet of
           records under management as of December 31, 1995, plus (ii) cubic
           feet of records under management on the closing of each acquisition
           consummated during 1996, plus (iii) the number of cubic feet of
           records expected to be added upon the closing of the pending
           acquisition. Pro forma number of employees equals (a) the actual
           number of employees as of the end of 1995, plus (b) the number of
           employees added as a result of the 1996 acquisitions, plus (c) the
           number of employees expected to be added upon the closing of the
           pending acquisition, less (d) the number of employees from (b) and
           (c) that were eliminated in the Company's pro forma calculations. See
           Note (2) to Notes to Pro Forma Condensed Consolidated Statement of
           Operations. Pro forma EBITDA gives effect to the 1996 acquisitions,
           the pending acquisition, the offering of the Original Notes, the
           Transactions and the application of the net proceeds from the sale of
           the Notes, as if each had occurred as of January 1, 1995. See "Use of
           Proceeds" and "Pro Forma Financial Data."
       (b) Based on end of period cubic footage under management and end of
           period number of employees.
       (c) Based on the average of the number of employees at the beginning and
           end of period.
      ------------------------
           *For periods through 1994, average cubic feet is the average of cubic
       feet at the beginning and the end of the period; for periods beginning on
       or after January 1, 1995, average cubic feet is the average of the cubic
       feet at the end of each month in such period.

                                       49
<PAGE>
 
          The Company is consolidating certain individual warehouses into
       larger, more efficient regional facilities, which generate economies of
       scale in both labor and occupancy costs. The majority of the Company's
       available storage capacity is in two new facilities located in
       Massachusetts and New Jersey. These facilities have high storage
       densities (cubic feet of storage capacity divided by square footage)
       which allow the Company to allocate its fixed real estate costs over a
       larger revenue base and increase its storage capacity per employee. The
       Massachusetts and New Jersey facilities, when fully occupied, will have
       over 17 million cubic feet of combined storage capacity, and as a result,
       warehouse utilization has declined to approximately 59% from historical
       levels of between 70% and 80%. The added capacity is expected to satisfy
       the Company's growth requirements in its Northeast region for several
       years.

          In addition to the reduction in rental expense expected to result from
       the Real Estate Transactions, the Company has attempted to reduce
       administrative expenses as it grows. During 1995, the Company implemented
       a new medical plan which reduced its health care expenditures per
       employee by over 30% annually while maintaining comparable coverage
       levels. The Company also reduced its telephone rates through a
       competitive bid process and is reviewing other areas for cost savings.

          The Company's depreciation and amortization charges result primarily
       from the capital-intensive nature of its business and the acquisitions
       the Company has completed. The principal components of depreciation
       relate to shelving, facilities and leasehold improvements, equipment for
       new facilities and computer systems. Amortization primarily relates to
       goodwill, deferred financing costs and noncompetition agreements arising
       from acquisitions and client acquisition costs. The Company has accounted
       for all of its acquisitions under the purchase method. Since the purchase
       price for records management companies is usually substantially in excess
       of the fair market value of their assets, these purchases have given rise
       to significant goodwill and, accordingly, significant levels of
       amortization. Although amortization is a non-cash charge, it does
       decrease reported net income. Accordingly, as the Company expands by
       making such acquisitions, amortization charges will increase, thereby
       continuing to affect net income negatively.

        Capital Expenditure Requirements

          The majority of the Company's capital expenditures are related to
       expansion. The largest single component is the purchase of shelving which
       is directly related to the addition of new records. Shelving costs total
       approximately $2.00 per cubic foot on a fully installed basis. Shelving
       has a relatively long life and rarely needs to be replaced. Most of the
       Company's storage facilities (both in number and square feet) are leased,
       but the Company will purchase facilities on an opportunistic basis. New
       facilities (leased or purchased) require certain improvements such as
       installation of lighting and security systems and other storage related
       modifications. The Company's data processing capital expenditures are
       also largely related to growth. As new facilities are added, on-site
       computer enhancements are needed.

          In 1995, over 80% of total capital expenditures of $16.3 million was
       related to expansion items. Capital expenditures consisted of $7.2
       million for new shelving, $5.1 million for new facility purchases and
       related improvements, $1.6 million for data processing, $1.5 million for
       leasehold and building improvements, and $0.9 million for the purchase of
       transportation, warehouse and office equipment. Of the total 1995 capital
       expenditures, approximately $2.5 million was for maintenance capital
       expenditures.

          Since the majority of the Company's capital expenditures are growth
       related, the Company has the ability to adjust a major component of its
       use of funds by slowing its rate of growth. Under a slow growth strategy,
       the Company's capital expenditures would be significantly reduced, as
       minimal additional shelving and other expansionary capital expenditures
       would be required. The Company capitalizes, as client acquisition costs,
       certain costs related to new, large multi-year storage contracts. Client
       acquisition costs totaled $2.9 million during 1995 and included sales
       commissions and certain client move-in costs. Client acquisition costs
       are amortized over six years, the average initial contract term.

                                       50
<PAGE>
 
        Extraordinary Losses

          To provide capital to fund its growth oriented business strategy, the
       Company has incurred substantial indebtedness. The Company has completed
       several expansions of its credit facilities, primarily utilizing bank and
       insurance company debt, which have resulted in one-time charges including
       the repurchase of warrants, prepayment penalties and the write-off of
       deferred financing costs aggregating $18.4 million from 1993 to 1995.
       Similarly, the Company will recognize one-time charges in 1996 from the
       write-off of deferred financing costs in connection with the repayment of
       the existing indebtedness in the quarter in which such indebtedness is
       repaid ($2.0 million assuming the indebtedness is repaid in the third
       quarter). See "Risk Factors--Non-Recurring Charges; Expected Loss in
       Third Quarter of 1996."

       Results of Operations

          The following table sets forth, for the periods indicated, information
       derived from the Company's consolidated statements of operations,
       expressed as a percentage of revenue. There can be no assurance that the
       trends in revenue growth or operating results shown below will continue
       in the future.
<TABLE> 
<CAPTION>                 
                                                                                  Three Months
                                             Years Ended December 31,            Ended March 31,
                                             ------------------------            ---------------
                                               1993     1994      1995            1995    1996
                                             -------   -------   ------          ------   ------
<S>                                         <C>       <C>       <C>            <C>      <C>
Revenues:                                                                        
   Storage..............................       57.4%     57.0%     58.2%          57.3%    57.1%
   Service and storage material sales...       42.6%     43.0%     41.8%          42.7%    42.9%
                                             ------    ------    ------          -----    ----- 

      Total revenues....................      100.0%    100.0%    100.0%         100.0%   100.0%
                                                                                 
Cost of sales, excluding depreciation   
 and amortization.......................       61.9%     59.8%     58.3%          59.0%    58.6%
Selling, general and administrative.....       16.3%     19.2%     16.9%          18.1%    16.4%
Depreciation and amortization...........        9.4%     10.2%      8.6%           9.0%     8.7%
Consulting payments to related          
 parties................................          0%      0.6%      0.5%           0.6%     0.4%
                                             ------    ------    ------          -----    ----- 
   Operating income.....................       12.4%     10.2%     15.7%          13.3%    15.9%

                                                                                 
Interest expense........................        8.4%      8.7%     10.1%           8.7%     9.6%
                                             ------    ------    ------          -----    ----- 
   Income (loss) before extraordinary   
    loss................................        4.0%      1.5%      5.6%           4.6%     6.3%
Extraordinary loss......................       12.5%      7.2%      3.4%             0%       0%
                                             ------    ------    ------          -----    ----- 
   Net income (loss)....................       (8.5%)    (5.7%)     2.2%           4.6%     6.3%
                                             ======    ======    ======          =====    ===== 
   EBITDA...............................       21.8%     21.0%     24.8%          22.9%    25.0%
                                             ======    ======    ======          =====    ===== 
</TABLE>

                                       51
<PAGE>
 
        Three Months Ended March 31, 1996 Compared to Three Months Ended March
       31, 1995

          Storage revenues increased from $12.7 million in the three months
       ended March 31, 1995 to $17.0 million in the three months ended March 31,
       1996, an increase of $4.3 million or 33.9%. Service and storage material
       sales revenues increased from $9.5 million in the three months ended
       March 31, 1995 to $12.7 million in the three months ended March 31, 1996,
       an increase of $3.2 million or 33.7%.

          Total revenues increased from $22.2 million in the three months ended
       March 31, 1995 to $29.7 million in the three months ended March 31, 1996,
       an increase of $7.5 million or 33.8%. Six acquisitions completed from
       February 1995 to March 1996 accounted for $5.4 million or 72.0% of such
       increase in total revenues. The balance of the revenue growth resulted
       from net increases in cubic feet stored from existing customers and from
       sales to new customers, partially offset by the reduction of records of a
       major customer pursuant to a records destruction program recommended by
       the Company pursuant to a consulting agreement.

          The monthly average cubic feet of storage increased approximately
       32.9% for the first three months of 1996 as compared to the first three
       months of 1995, from approximately 22.8 million cubic feet to
       approximately 30.3 million cubic feet.

          Cost of sales (excluding depreciation and amortization) increased from
       $13.1 million in the three months ended March 31, 1995 to $17.4 million
       in the three months ended March 31, 1996, an increase of $4.3 million or
       32.8%, but decreased slightly as a percentage of total revenues from
       59.0% in 1995 to 58.6% in 1996. The $4.3 million increase resulted
       primarily from an increase in cubic feet stored from internal growth and
       acquisitions. The decrease as a percentage of total revenues was due
       primarily to operating efficiencies partially offset by the effect of the
       severe winter weather in 1996 as compared to 1995.

          Selling, general and administrative expenses increased from $4.0
       million in the three months ended March 31, 1995 to $4.9 million in the
       three months ended March 31, 1996, an increase of $0.9 million or 22.5%,
       but decreased as a percentage of total revenues from 18.1% in 1995 to
       16.4% in 1996. The $0.9 million increase was due primarily to increases
       in administrative staffing, including increases due to acquisitions.

          As a result of the foregoing factors, EBITDA increased from $5.1
       million in the three months ended March 31, 1995 to $7.4 million in the
       three months ended March 31, 1996, an increase of $2.3 million or 45.1%,
       and increased as a percentage of total revenues from 22.9% in 1995 to
       25.0% in 1996.

          Depreciation and amortization expenses increased from $2.0 million in
       the three months ended March 31, 1995 to $2.6 million in the three months
       ended March 31, 1996, an increase of $0.6 million or 30.0%, but decreased
       as a percentage of total revenues from 9.0% in 1995 to 8.6% in 1996.
       Depreciation and amortization expenses continued to increase primarily as
       a result of the Company's acquisitions and capital investments for
       shelving, improvements to records management facilities, information
       systems and client acquisition costs.

          Interest expense increased from $1.9 million in the three months ended
       March 31, 1995 to $2.8 million in the three months ended March 31, 1996.
       This increase was due primarily to increased levels of indebtedness,
       primarily to finance acquisitions, as well as higher interest rates. The
       Company's future interest expense may increase significantly as a result
       of the higher interest rate on the Notes offered hereby and additional
       indebtedness the Company may incur to finance possible future growth.

          As a result of the foregoing factors, net income increased from $1.0
       million in the three months ended March 31, 1995 to $1.9 million in the
       three months ended March 31, 1996, an increase of $0.9 million or 90%,
       and increased as a percentage of total revenues from 4.6% in 1995 to 6.3%
       in 1996.

                                       52
<PAGE>
 
        Year Ended December 31, 1995 Compared to Year Ended December 31, 1994

          Storage revenues increased from $47.1 million in 1994 to $55.5 million
       in 1995, an increase of $8.4 million or 17.8%. Service and storage
       material sales revenues increased from $35.5 million in 1994 to $39.9
       million in 1995, an increase of $4.4 million or 12.4%.

          Total revenues increased from $82.6 million in 1994 to $95.4 million
       in 1995, an increase of $12.8 million or 15.5%. Almost one-half of the
       total revenue growth resulted from sales to new customers and increases
       in cubic feet stored from existing customers, partially offset by the
       reduction of records of a major customer pursuant to a records
       destruction program recommended by the Company pursuant to a consulting
       agreement. Five acquisitions completed from February 1995 to October 1995
       accounted for $6.6 million (or 51.6%) of the increase.

          The annual average cubic feet stored increased from approximately 20.6
       million in 1994 to approximately 25.1 million in 1995, an increase of
       21.8%. The percentage increase in average cubic feet stored was greater
       than that of total revenues for the reasons discussed in the second
       paragraph under "--General--Revenues" above.

          Cost of sales (excluding depreciation and amortization) increased from
       $49.4 million in 1994 to $55.6 million in 1995, an increase of $6.2
       million or 12.6%, but decreased as a percentage of total revenues from
       59.8% in 1994 to 58.3% in 1995. The $6.2 million increase was due
       primarily to increases in storage volume and the associated cost of
       additional storage capacity. The decrease as a percentage of total
       revenues was due primarily to increased operating and storage
       efficiencies, in part reflecting the full implementation of the PLUS(R)
       system during the first quarter of 1995.

          Selling, general and administrative expenses increased from $15.9
       million in 1994 to $16.1 million in 1995, an increase of $0.2 million or
       1.3%, and decreased as a percentage of total revenues from 19.2% in 1994
       to 16.9% in 1995. The decrease as a percentage of total revenues was due
       to operating efficiencies and the implementation of programs to control
       and reduce certain administrative expenses.

          As a result of the foregoing factors, EBITDA increased from $17.4
       million in 1994 to $23.6 million in 1995, an increase of $6.2 million or
       35.6%, and increased as a percentage of total revenues from 21.0% in 1994
       to 24.8% in 1995. The increase as a percentage of total revenues
       reflected growth in the Company's business, economies of scale and
       increased operating efficiencies.

          Depreciation and amortization expenses decreased from $8.4 million in
       1994 to $8.2 million in 1995, a decrease of $0.2 million or 2.4%, and
       decreased as a percentage of total revenues from 10.2% in 1994 to 8.6% in
       1995. This decrease, both in dollars and as a percentage of total
       revenues, was due primarily to the Company's revision of the estimated
       useful lives of certain long-term assets, effective January 1, 1995, to
       more accurately reflect the estimated economic lives of the related
       assets and to be more in conformity with industry practices. The
       aggregate effect of adopting these revised lives was to decrease
       amortization and depreciation expense by approximately $4.9 million. This
       change more than offset what would have been an increase in depreciation
       charges resulting from capital expenditures for shelving and improvements
       to records management facilities and information systems and the
       amortization of goodwill from the Company's acquisitions.

          Interest expense increased from $7.2 million in 1994 to $9.6 million
       in 1995, an increase of $2.4 million or 33.3%, due primarily to higher
       levels of indebtedness. The Company recorded extraordinary losses of $6.0
       million in 1994 and $3.3 million in 1995 related to the early
       extinguishment of debt as a result of refinancing and expanding its
       existing credit agreement in 1994 and again in 1995.

          As a result of the foregoing factors, net income was $2.1 million in
       1995 compared to a net loss of $4.8 million in 1994.

                                       53
<PAGE>
 
        Year Ended December 31, 1994 Compared to Year Ended December 31, 1993

          Storage revenues increased from $42.1 million in 1993 to $47.1 million
       in 1994, an increase of $5.0 million or 11.9%. Service and storage
       material sales revenues increased from $31.3 million in 1993 to $35.5
       million in 1994, an increase of $4.2 million or 13.4%.

          Total revenues increased from $73.4 million in 1993 to $82.6 million
       in 1994, an increase of $9.2 million or 12.5%. The substantial majority
       of the revenue growth resulted from sales to new customers and increases
       in cubic feet stored from existing customers. Four acquisitions completed
       from April to October 1994 accounted for $1.0 million (or 10.9%) of the
       increase.

          The annual average cubic feet stored increased from approximately 17.6
       million in 1993 to approximately 20.6 million in 1994, an increase of
       17.1%. The percentage increase in cubic feet stored was greater than that
       of total revenues for the reasons discussed in the second paragraph under
       "--General--Revenues" above.

          Cost of sales (excluding depreciation and amortization) increased from
       $45.4 million in 1993 to $49.4 million in 1994, an increase of $4.0
       million or 8.8%, but decreased as a percentage of total revenues from
       61.9% in 1993 to 59.8% in 1994. The $4.0 million increase was due
       primarily to increases in storage volume and the cost of additional
       storage capacity. The decrease as a percentage of total revenues was due
       primarily to increased storage efficiencies.

          Selling, general and administrative expenses increased from $12.0
       million in 1993 to $15.9 million in 1994, an increase of $3.9 million or
       32.5%, and increased as a percentage of total revenues from 16.3% in 1993
       to 19.2% in 1994. The increase in such expenses was due primarily to
       increased staffing principally related to the Company's investment in its
       corporate and sales infrastructure, the cost of converting its facilities
       to the PLUS(R) system, and the need to operate duplicate information
       systems in this period.

          As a result of the foregoing factors, EBITDA increased from $16.0
       million in 1993 to $17.4 million in 1994, an increase of $1.4 million or
       8.8%, but decreased as a percentage of total revenues from 21.8% in 1993
       to 21.0% in 1994.

          Depreciation and amortization expenses increased from $6.9 million in
       1993 to $8.4 million in 1994, an increase of $1.5 million or 21.7%, and
       increased as a percentage of total revenues from 9.4% in 1993 to 10.2% in
       1994. This increase, both in dollars and as a percentage of total
       revenues, was due primarily to an increase in depreciation charges
       resulting from capital expenditures for shelving and improvements to
       records management facilities and information systems and amortization of
       goodwill resulting from acquisitions.

          Interest expense increased from $6.2 million in 1993 to $7.2 million
       in 1994, an increase of $1.0 million or 16.1%, due primarily to increased
       levels of indebtedness. The Company incurred an extraordinary loss in
       1994 of $6.0 million related to the early extinguishment of debt and
       cancellation of warrants when it refinanced and expanded its existing
       credit facility in 1994 as compared to a $9.2 million extraordinary loss
       in 1993 for the same reasons.

          As a result of the foregoing factors, the net loss decreased from $6.2
       million in 1993 to $4.8 million in 1994, a decrease of $1.4 million and
       decreased from 8.5% of total revenues to 5.7% of total revenues.

       Liquidity and Capital Resources

          The Company's primary sources of capital have been cash flows from
       operations and borrowings under various revolving credit facilities and
       other senior indebtedness. Historically, the Company's primary uses of
       capital have been acquisitions, capital expenditures and client
       acquisition costs.

                                       54
<PAGE>
 
        Capital Investments

          For 1993, 1994 and 1995 and the three months ended March 31, 1996,
       capital expenditures were $5.8 million, $6.4 million, $16.3 million and
       $3.6 million, respectively, and client acquisition costs were $2.8
       million, $1.9 million, $2.9 million and $1.1 million, respectively.
       Capital expenditures for 1995 were comprised of $7.2 million for new
       shelving, $5.1 million for new facility purchases and related
       improvements, $1.6 million for data processing, $1.5 million for
       leasehold and building improvements and $0.9 million for the purchase of
       transportation, warehouse and office equipment. In each period, the
       largest component of capital expenditures was for the purchase and
       installation of shelving to store additional records. The Company's
       Canadian subsidiary has entered into an agreement to purchase a facility
       in Montreal for approximately Cdn $5.15 million (approximately U.S. $3.8
       million). The Canadian subsidiary is expected to finance the purchase
       through a combination of mortgage financing and borrowings under the
       Canadian portion of the Credit Facility.

          Excluding the Transactions, the Company expects capital expenditures
       for 1996 will approximate $25.0 million, including $3.8 million for the
       purchase of the Montreal facility and $6.0 million to exercise an option
       to purchase a storage facility currently being leased by the Company. The
       Company expects client acquisition costs for 1996 will approximate $4.0
       million. The non-real estate 1996 estimated capital expenditures are
       primarily growth related and, like estimated client acquisition costs,
       are based on assumed continued growth of the Company's business
       consistent with levels for the first quarter of 1996. There can be no
       assurance that the Company's business will continue to grow at such rate,
       and for any variance there will be a corresponding change in growth-
       related capital expenditures. The Company expects to fund such
       expenditures with cash flows from existing operating activities and by
       borrowings under the Credit Facility.

        Recent and Pending Acquisitions

          In order to capitalize on industry consolidation opportunities, the
       Company has actively pursued acquisitions since the beginning of 1993,
       which has significantly impacted liquidity and capital resources through
       the investment of approximately $68.4 million in acquisitions. The
       Company has historically financed its acquisitions with borrowings under
       its credit agreements and with cash flows from existing operating
       activities.

        Sources of Funds

          Net cash provided by operating activities totaled $8.0 million, $11.0
       million, $17.5 million and $2.5 million for 1993, 1994 and 1995 and the
       three months ended March 31, 1996, respectively. The $3.0 million
       increase from 1993 to 1994 is primarily accounted for by a $1.4 million
       increase in EBITDA, which was partially offset by a $1.0 million increase
       in interest expense and no increase in working capital in 1994 as
       compared to an increase in working capital of $3.2 million in 1993. The
       $6.5 million increase from 1994 to 1995 is primarily comprised of a $6.2
       million increase in EBITDA and a $3.4 million decrease in working
       capital, partially offset by a $2.4 million increase in interest expense.

          Net cash flows provided by financing activities were $5.8 million,
       $2.8 million, $34.2 million and $5.6 million for 1993, 1994 and 1995 and
       the three months ended March 31, 1996, respectively. In 1993, the Company
       entered into a $75.0 million credit agreement which allowed it to
       refinance its existing indebtedness, cancel the warrants issued in
       connection with the acquisition of Leahy Business Archives in 1990 and
       provided for working capital. In 1994, the credit agreement was expanded
       to $120.0 million and included a substantial acquisition facility. In
       1995, the credit agreement was expanded to $170.0 million, including a
       substantial acquisition facility, and provided funds for the acquisition
       of PLC Command in Canada.

          The Company entered into the Credit Facility on August __, 1996 which
       provides $100.0 million in U.S. dollar borrowings and Cdn $35.0 million
       in Canadian dollar borrowings. The Credit Facility contains a number of
       financial and other covenants restricting the Company's ability to incur
       additional indebtedness and make certain types of expenditures. Covenants
       in the Indenture governing the Notes will restrict borrowings under the
       Credit Facility. See

                                       55
<PAGE>
 
       "Description of Credit Facility" and "Description of the Notes--Certain
       Covenants--Limitation on Additional Indebtedness."

          As a Subchapter S corporation, the Company does not pay federal income
       taxes. However, the Company does make distributions to its shareholders
       to allow them to pay federal and state taxes related to the Company's
       taxable income. As of December 31, 1995, the shareholders for federal tax
       purposes had net operating loss carryforwards of approximately $18.5
       million. Consequently, there have been minimal distributions to
       shareholders for tax payments in recent years.

        Future Capital Needs

            The Company's ability to generate cash adequate to fund its needs
       depends primarily on the results of its operations and the availability
       of financing. Management believes that cash flow from operations in
       conjunction with borrowings under the Credit Facility and the net
       proceeds from the sale of the Original Notes will be adequate for its
       operations and the execution of its near-term acquisition strategy.
       However, there can be no assurance that the Company will not require
       additional sources of financing or that the terms acceptable for any
       future financing, if required, would be favorable to the Company.

                                       56
<PAGE>
 
                                    BUSINESS

       General

          Pierce Leahy is the largest archive records management company in
       North America, as measured by its 34 million cubic feet of records
       currently under management. The Company operates a total of 105 records
       management facilities of which 93 are in the United States, serving 44
       local markets, including the 15 largest U.S. markets. In addition, the
       Company operates 12 records management facilities in five of Canada's six
       largest markets. The Company provides records management services to a
       diversified group of over 15,000 customer accounts in a variety of
       industries including financial services, manufacturing, transportation,
       healthcare and law. The Company believes it is the most technologically
       advanced records management company in the industry by virtue of its
       Pierce Leahy User Solution (PLUS(R)) computer system. The PLUS(R) system
       fully integrates the Company's records management, data retrieval and
       billing functions on a centralized basis through the use of proprietary,
       real time software. Management believes the PLUS(R) system allows the
       Company to efficiently manage records in multiple markets for national
       customers, rapidly integrate acquisitions of records management companies
       and maintain a low-cost operating structure.

          Pierce Leahy is a full-service provider of records management and
       related services, enabling customers with the ability to outsource their
       data and records management functions. The Company offers storage for all
       major media, including paper (which has typically accounted for
       approximately 95% of the Company's storage revenues), computer tapes,
       optical discs, microfilm, video tapes and X-rays. In addition, the
       Company provides next day or same day records retrieval and delivery,
       allowing customers prompt access to all stored material. The Company also
       offers a wide range of other data management services, including customer
       records management programs, imaging services and records management
       consulting services. The Company's storage and related services are
       typically provided pursuant to annual or multi-year contracts that
       include recurring monthly storage fees, which continue until such records
       are permanently removed (for which the Company charges a fee), and
       additional charges for services such as retrieval on a per unit basis. In
       1995, revenues from storage and from service and storage material sales
       accounted for 58% and 42% of the Company's total revenues, respectively.

          The Company believes that it benefits from several positive industry
       fundamentals, including (i) the diversified and recurring nature of
       storage and service revenues, (ii) the ability of larger records
       management companies to achieve economies of scale in both labor and real
       estate costs, (iii) the continued trend toward corporate outsourcing of
       records management functions, (iv) low maintenance capital expenditure
       requirements, (v) the historically non-cyclical nature of the records
       management industry and (vi) the ongoing consolidation of records
       management companies. The Company derives the majority of its revenues
       from monthly fees charged for the storage of records. The recurring
       nature of these revenues, which are derived from a diversified, stable
       customer base (none of which accounted for more than 3% of total revenues
       during 1995) and require relatively little direct ongoing labor and
       marketing expenses, contributes significantly to the Company's EBITDA. As
       the Company's volume of records under management grows, the substantial
       investments made in its PLUS(R) system and centralized support functions
       are amortized over a larger base of business, creating economies of
       scale. These operating efficiencies, coupled with the Company's entry
       into new markets, allow the Company to take advantage of the trend by
       larger companies with multiple locations to outsource their records
       management functions. The Company's capital expenditures are primarily
       growth related and are comprised substantially of new shelving and other
       expenditures related to storing and servicing new records. Pierce Leahy
       has not experienced a reduction of its business as a result of economic
       downturns, in fact, management believes that the outsourcing of records
       management may accelerate during such times as a result of increased
       customer focus on noncore operating costs. Finally, management believes
       the Company is well positioned to continue to participate in the industry
       consolidation due to its ability to rapidly and efficiently integrate in-
       market and new market acquisitions as a result of its PLUS(R) system and
       centralized corporate administrative functions.

                                       57
<PAGE>
 
       The Records Management Industry

          According to a 1994 study by the ACRC, an industry trade group with
       over 500 members, approximately 2,800 companies offer records storage and
       related services in North America. The Company believes that only 25% of
       the potential market outsources its records management functions and that
       approximately 75% is still "unvended," or internally managed. The Company
       estimates that the North American vended records management industry
       generates annual revenues in excess of $1.0 billion. Management believes
       that only four companies offer records storage and services on a national
       basis in the United States and only two companies do so in Canada. Other
       industry participants operate regionally, or more typically, in single
       markets.

          According to industry sources, an estimated four trillion documents
       are created each year in the United States, many of which must be
       retained and remain accessible for many years. Saved documents, or
       records, generally fall into two categories: active and inactive. Active
       records refer to information that is frequently referenced and usually
       stored on-site by the originator. Inactive records are not needed for
       frequent access, but must be retained for future reference, legal
       requirements or regulatory compliance. Inactive records, which the
       Company estimates comprise approximately 80% of all records, are the
       principal focus of the records management industry. Management is not
       aware of any definitive information about the size or nature of the North
       American market (vended and unvended, active and inactive). Estimates of
       such numbers and percentages contained in this Prospectus have been
       developed by the Company from internal sources and reflect the Company's
       current estimates; however, no assurance can be given regarding the
       accuracy of such estimates.

          The Company believes that the records management industry is
       characterized by the following trends:

          Increasing Production of Paper.   Increasingly widespread technologies
       such as facsimiles, copiers, personal computers, laser printers and
       advanced software packages have enabled organizations to create, copy and
       distribute documents more easily and broadly. In spite of new "paperless"
       technologies (including the Internet and "e-mail"), information remains
       predominantly paper based, and such technologies have actually promoted
       the desire for hard copies of such electronic information.

          Expanded Record Keeping Needs.   While technology has augmented the
       growth of paper generation, several external forces and concerns have
       played an important role in organizations' decisions to store and retain
       access to records. For example, the continued growth of regulatory
       requirements and the proliferation of litigation has resulted in
       increased volumes and lengthened holding periods of documents. Retained
       records are also remaining in storage for extended periods of time
       because the process of determining which records to destroy is time
       consuming and often more costly in the short-term than continued storage.

          Movement Towards Outsourcing.   Outsourcing of internal records
       management functions represents the largest single source of new business
       for records management companies. The Company believes that as more
       organizations become aware of the advantages of professional records
       management, such as net cost reductions and enhanced levels of service,
       the records management industry will continue to gain a growing portion
       of the unvended segment. For example, it may be more cost effective for a
       company to store inactive records at an off-site facility rather than at
       a corporate headquarters where real estate costs can be substantially
       greater. Moreover, third party records management companies are able to
       create real estate and labor efficiencies relative to a single customer
       by spreading multiple customers' records storage needs over a single
       fixed cost base.

          Industry Consolidation.   The records management industry is
       undergoing a period of consolidation as larger, better capitalized
       industry participants acquire smaller regional or single-market
       participants. Management believes that this trend is driven by larger
       records management companies' desire to add to their revenue base quickly
       and cost effectively, achieve broader market presence and realize
       economies of scale, especially with respect to labor, real estate and
       management information expenses. Industry consolidation also provides
       private owners of smaller records management companies the ability to
       obtain liquidity.

                                       58
<PAGE>
 
       Business Strategy

          Pierce Leahy's business strategy is to become the preferred provider
       of records management services in each of its markets by offering premium
       services while maintaining a low-cost operating structure. The Company
       seeks to expand its business in current and new markets through increased
       business from existing customers, the addition of new customers and
       acquisitions of other records management companies. The Company expects
       to continue its growth and enhance its market position by implementing
       its strategy based on the following elements:

          Pursuing National and Unvended Customers.   The Company focuses its
       sales and marketing efforts on pursuing large regional and national
       accounts, typically through multi-year contracts, where the Company
       believes its national presence and sophisticated systems provide it with
       a competitive advantage. The greatest source of potential business is
       from large organizations which are currently managing their records
       internally. These organizations are increasingly outsourcing such noncore
       activities, enabling their management to focus on their core business and
       to reduce capital requirements. For example, during the first four months
       of 1996, the Company entered into 14 contracts, each to manage initially
       at least 10,000 cubic feet of records, including four contracts for at
       least 100,000 cubic feet of records.

          Remaining a Low-Cost Operator.   The Company strives to offer premium
       services to its customers while remaining a low-cost operator through
       achieving economies of scale in real estate, labor, transportation,
       management information and administrative expenses. The Company believes
       that it is one of the few records management companies with the size and
       resources to realize significant economies of scale in these areas.

          Using Sophisticated Centralized Systems.   The Company believes that
       its proprietary PLUS(R) system is the most technologically advanced
       computer system in the industry, and allows the Company to maintain a
       centralized management approach to its business. All customer calls are
       fielded by one of the Company's two centralized customer service
       departments located at the Company's U.S. and Canadian corporate
       headquarters which can take customer calls 24 hours a day, seven days a
       week. Routine pick-up and delivery requests are dispatched directly by
       customer service representatives to local facilities as directed by
       PLUS(R). All billing functions are also handled centrally by PLUS(R)
       system software. The Company's centralized customer service and billing
       functions eliminate the need for redundant functions at individual
       facilities. PLUS(R), in tandem with a centralized order processing
       organization and local field support personnel, enables the Company to
       provide a high and consistent level of service (24 hours a day, seven
       days a week) to its customers in a cost-effective manner.

          Although PLUS(R) is centralized so that the customer has real-time
       access to the database, the system offers local management flexibility in
       meeting a customer's needs. Through a variety of pre-programmed options,
       local management can customize the system to enhance its utility to
       different types of customers. For example, PLUS(R) offers (i) specialized
       inventory reporting formats (e.g., by insurance policy, law case file
       number or mortgage file), (ii) specialized invoicing (e.g., to local
       division with information reporting to the customer's corporate office,
       and vice versa, and departmental invoicing), (iii) pre-set inventory
       review dates based on the assigned retention period for a particular
       class of document and (iv) authorized users with security passwords.

          Enhancing Facility Efficiency. The PLUS(R) system allows the Company
       to enhance the efficiency of its facilities while reducing fixed and
       operating costs and maintaining high customer service levels. PLUS(R)
       provides the Company with a real time inventory tracking system, using
       sophisticated bar-coding technology, designed to pinpoint the exact
       location of any individual customer's records within any facility in
       North America. This system eliminates the need to designate permanent
       locations for an individual customer's records within a facility,
       enabling records to be stored wherever space is available and to be
       positioned within the Company's facilities based on retrieval frequency,
       thereby reducing labor costs.

                                       59
<PAGE>
 
   The system also provides the local archive manager a number of pre-programmed
options for managing the archive workforce (e.g., where to shelve new boxes in a
labor efficient manner, the sequence in which to perform non-rush deliveries),
as well as providing management comprehensive labor productivity and warehouse
utilization data to monitor archive efficiency.

Acquisition History and Growth Strategy

   Pierce Leahy believes that the consolidation trend occurring in the North
American records management industry will continue and that acquisitions will
remain an important part of the Company's growth strategy. Acquisitions provide
the Company with the ability to expand and achieve additional economies of
scale. Since 1991, the Company has successfully completed and integrated 18
acquisitions, totaling approximately 7.7 million cubic feet of records at the
time of acquisition. From July 1994 through December 31, 1995, approximately $45
million (including purchase price, capital expenditures and related integration
costs) was invested in eight acquisitions, which produced an incremental $10.6
million of EBITDA on a full-year or annualized basis during the first year
following acquisition. In each of these acquisitions, staffing levels were
immediately reduced with further reductions typically taking place in the
following months as general and administrative functions were integrated into
the Company's corporate organization.

   The following table summarizes the market or markets for each acquisition
since 1990 and its date of acquisition:

<TABLE>
<CAPTION>
                                                                                              Date of
             Acquisition                           Market                                     Acquisition
             -----------                           ------                                     -----------  
<S>                                                <C>                                        <C>
             Leahy Business Archives               Multiple*                                  February 1990
             Muhlenhaupt Records                   Long Island                                April 1992
              Management                                                      
             Arcus Data                            New York                                   July 1992
             File Away                             Baltimore/Washington, D.C.                 July 1992
             Taylor Document                       Richmond                                   August 1992
             Data Management of                    Nashville                                  April 1993
              Tennessee                                                       
             Command Records                       Chicago                                    June 1994
             Fidelity Archives                     Philadelphia                               July 1994
             ProFilers                             Jacksonville                               October 1994
             Fileminders                           Jacksonville                               October 1994
             Vital Archives                        New York                                   February 1995
             Bestway Archival                      Miami                                      May 1995
              Services                                                        
             Curtis Archives                       Seattle                                    August 1995
             Command Records Service               Canada**                                   October 1995
             AMK Documents                         Phoenix                                    October 1995
             Brambles (Ottawa                      Ottawa                                     March 1996
              Division)                                                       
             The File Cabinet                      Atlanta                                    March 1996
             File Box                              Austin                                     April 1996
             Security Archives                     Dallas                                     May 1996
</TABLE>

- --------------
 *  Los Angeles, Houston, New York, New Jersey, Boston, Connecticut, Chicago,
    Dallas and Miami/Ft. Lauderdale.
**  Toronto, Montreal, Vancouver, Ottawa and Calgary.

   The Company has signed an agreement to purchase a records management company
in the San Diego area for approximately $3.5 million. 

   The Company's centralized organizational structure and management information
systems are essential elements for both the successful integration of acquired
records management operations and the ability of the Company to achieve
economies of scale. The rapid conversion of an acquired company's records into
the PLUS(R) system and the integration of all corporate functions (order
processing, accounting, payroll, etc.) into Pierce Leahy's corporate
organization in an efficient, standardized process allows the Company to realize
immediate cost savings as a result of reduced labor and overhead costs and
improved facility utilization.

                                       60
<PAGE>
 
   The Company targets potential acquisitions in both its existing markets (in-
market) and in new markets which it is not yet servicing. In-market acquisitions
typically provide the highest degree of operating leverage since in addition to
eliminating redundant overhead, such as overlapping delivery runs, an acquired
company's storage facility can, when possible, be consolidated into an existing
Company facility within the same market area. New market acquisitions allow the
Company to both expand its business generally and enhance its ability to serve
national customer accounts.

Description of Services

   Pierce Leahy's records management services are focused on storage, retrieval
and data management of hard copy documents.

 Storage

   Storage revenues have averaged 58% of total revenues during the Company's
last five fiscal years. Nearly all of the Company's storage fees are derived
from hard copy storage. During 1995, Pierce Leahy generated 93% of its storage
revenues from hard copy storage and 7% from vault storage for special items such
as computer tapes, X-rays, films or other valuable items. Storage charges
typically are billed monthly on a per cubic foot basis.

   The Company tracks all of its records stored in cartons, from initial pick-up
through permanent removal, with the use of the PLUS(R) system. Bar-coded boxes
are packed by the customer and transported by the Company's transportation
department to the appropriate facility where they are scanned and placed into
storage at the locations designated by PLUS(R). At such time, the Company's data
input personnel enter the data twice (i.e., double key verifying) to enhance the
integrity of the information entered into the system.

   The Company offers secure, climate-controlled facilities for the storage of
non-paper forms of media such as computer tapes, optical discs, microfilm, video
tapes and X-rays. These types of media often require special facilities due to
the nature of the records. The Company's storage fees for non-paper media are
higher than for typical paper storage. The Company also provides ancillary
services for non-paper records in the same manner as it provides for its hard
copy storage operations.

 Service and Product Sales

   The Company's principal services include adding records to storage, temporary
removal of records from storage, replacing temporarily removed records and
permanent withdrawals from storage or destruction of records. Pick-up and
delivery of customer records can be tailored to a customer's specific needs and
range from standard next-day service (requests received by 3:30 p.m. are
delivered or picked up the next day) to emergency service (typically within
three hours or less). Pick-up and delivery operations are supported by the
Company's fleet of over 300 owned or leased vehicles. The Company charges for
pick-up and delivery services on a per-unit basis depending on the immediacy of
delivery requested.

   A small percentage of the Company's customers manage their records on a file
by file basis, allowing the customer direct access and traceability of a
specific file (rather than on a box by box basis). The Company provides data
entry services to such customers to input the file by file listings into the
PLUS(R) system.

   All of the Company's services are centrally coordinated by the PLUS(R)
system, permitting the Company to cost-effectively provide its customers with a
high level of service. The centralized order entry system allows (i) efficient
workload balancing as the daily "peak" call-in periods can be spread over three
time zones, (ii) centralized quality control monitoring to increase delivery of
consistent and high-quality service, and (iii) the employment of Spanish-
speaking customer service representatives whose language skills can serve any of
the Company's U.S. customers, primarily for its markets in Florida, Texas and
California, and French-speaking representatives serving Canada.

   The Company also offers a records destruction service, which provides
customers with a secure, controlled

                                       61
<PAGE>
 
program to periodically review and remove records which no longer need to be
retained. Although boxes destroyed no longer generate monthly storage fees, the
Company charges for the destruction of records and increases its available
shelving space as a result. The Company believes its ability to manage
destruction programs for customers efficiently also enhances its ability to
attract large accounts.

   In addition to providing traditional storage, customers may contract with
Pierce Leahy to manage their on-site records or file services center. Such
management services generally include providing Company personnel and/or the
Company's Recordminder(R) PC-based file management software program to manage
the customer's active files (including records storage and tracking) at the
customer's facilities, supplemented by off-site storage at the Company's
facilities. Pierce Leahy also provides consulting and other services on an
individualized basis, including advisory work for customers setting up in-house
records management systems. In addition, the Company sells cardboard boxes and
other storage containers to its customers.

Management Information Systems

   The Company believes that PLUS(R), its core management information system, is
the most sophisticated records management system in the industry, and provides
the Company with a significant customer service and cost advantage in attracting
and retaining major national accounts in multiple cities and acquiring other
records management companies. The PLUS(R) system, together with the Company's
Recordminder(R) program (a PC-based file management program which a customer can
pay to utilize on-site at its own facilities), enables the Company to offer its
customers full life cycle records management, from file creation to destruction,
and coordinates inventory control, order entry, billing, material sales, service
activity, accounts receivable and management reporting on a centralized basis.
PLUS(R) utilizes database technology, proprietary software and extensive bar
coding in a flexible, enterprise-wide, client/server environment.

   During 1993, the Company completed an extensive two and one-half year
development program and began to install the PLUS(R) system in each of its
facilities. The Company invested approximately $8 million in developing PLUS(R),
primarily in conjunction with Andersen Consulting, together with input from
Hewlett Packard, Racal, Progress and Symbol Technologies. Company-wide
installation of PLUS(R) was completed during the first quarter of 1995.

   Implementation of the PLUS(R) system has improved the Company's operating
efficiency by streamlining a number of its daily work processes:

 .  PLUS(R) allows the Company to locate each unit of a customer's records,
    regardless of location, through an enterprise-wide, shared database and to
    centrally receive and dispatch pick-up and delivery orders to the
    appropriate location for processing. Management believes that no other
    records management system in the industry offers such real time access for
    multi-market locations.

 .  The PLUS(R) system reduces the number of employees required to handle the
    inbound/outbound movement of boxes through the use of sophisticated
    algorithms which allow archive employees to process multiple customer
    requests in an efficient manner.

 .  PLUS(R) facilitates the integration of acquired records management companies
    in an efficient, standardized process. By converting the acquired company's
    records into the PLUS(R) system, Pierce Leahy is able to reduce the labor
    and overhead costs associated with the acquisition, resulting in immediate
    cost savings.

 .  The PLUS(R) system assists the Company in efficiently utilizing its storage
    space by eliminating the need for permanent locations for individual
    records. At any one time, approximately 2% of total cubic feet of records
    managed by Pierce Leahy are temporarily returned to customers, freeing up
    storage space which PLUS(R) enables the Company to use productively. When a
    box is temporarily returned to a customer, a new box may be placed in the
    original box's location. Upon return of the original box to the facility,
    PLUS(R) automatically assigns the box a new location.

                                       62
<PAGE>
 
   PLUS(R) offers several additional features which enhance the Company's
customer support functions. The system is continuously updated when any account
activity is undertaken, providing customers with real time access to information
regarding box location and retrievals. The PLUS(R) system is flexible and allows
Pierce Leahy to design and implement customized records management solutions for
various industries utilizing a set of standardized options. The PLUS(R) system's
on-line customer support network allows certain customers to place orders for
both records storage and retrieval directly from their own in-house terminals
resulting in a more efficient system of records management. PLUS(R) can also
perform sophisticated searches to locate inventory items even when the customer
does not have the specific number of the box it is seeking.

Sales and Marketing

   During the past four years, the Company has invested significant effort in
developing its sales and marketing department, which is comprised of 50
employees in the United States and Canada. Sales representatives are trained to
sell a "total systems approach," in which a customer's records management
requirements are surveyed and evaluated in order to determine the file
management system which best meets the customer's needs. Sales representatives
are instructed to offer recommendations on how to implement a system responsive
to a particular customer's needs. Since the beginning of 1992, the Company's
sales representatives secured over 2,400 new customer accounts comprising over
six million cubic feet of new records.

   The Company's sales and marketing department is divided into four regions:
Northeast; South; West; and Canada. The Company's Vice President, Sales and
Marketing directs four regional sales managers who are each responsible for one
of the regions. Each regional sales manager has at least four years experience
with the Company. The sales force is primarily compensated on a commission basis
with incentives tied to the Company's sales goals. The Company also uses
telemarketing, direct response and print advertising to assist in its marketing
programs.

Customers

   The Company serves a diversified group of over 15,000 customers accounts in a
variety of industries, including financial services, manufacturing,
transportation, healthcare and law. The Company tracks customer accounts, which
are based on billing invoices. Accordingly, depending on how billings have been
arranged at the request of a customer, one customer may have multiple customer
accounts. None of the Company's customers accounted for more than 4% of the
Company's total revenues during any of the last three years. The Company
services all types of customers from small to medium size companies (such as
professional groups and law firms that often are located in one market) to large
Fortune 500-type companies that have operations in multiple locations. Larger
companies with multiple locations that have performed their own records
management services to date are a principal focus for new customers by the
Company. The Company believes that its presence in multiple markets in
conjunction with the PLUS(R) system enable it to provide the sophisticated file
management services frequently required by such customers on a regional or
national basis.

   The Company typically enters into contracts with customers which provide for
an initial term of one or more years and provide for annual renewals thereafter
(with either party having the right to terminate the contract). Customers are
generally charged monthly storage fees until their records are destroyed or
permanently removed, for which fees are charged. In addition, services such as
file retrieval are separately charged. During 1995, less than 2% of cubic feet
of records under management by the Company were permanently removed (other than
as part of an organized records destruction program). The Company believes this
relatively low attrition rate is due to a number of factors, including
satisfaction with the Company's services as well as the effort and expense of
transferring records to another service provider or back in-house.

                                       63
<PAGE>
 
Facilities

   The Company operates a total of 105 records management facilities of which 93
are in the United States, serving 44 local markets, including the 15 largest
U.S. markets, and 12 facilities in Canada serving five major markets. Of the 6.8
million square feet of floor space in the Company's records storage facilities,
approximately 40% and 60% are in owned and leased facilities, respectively. The
Company's facilities are located as follows:

<TABLE>
<CAPTION>
                                                           Records Management


                     Location                                  Facilities
        <S>                                                    <C>
        United States

              Arizona.......................................       3
              California....................................       7
              Connecticut...................................       7
              Florida.......................................       7
              Georgia.......................................       4
              Illinois......................................       3
              Maryland......................................       2
              Massachusetts.................................       7
              Michigan......................................       1
              New Jersey....................................      11
              New York......................................       4
              North Carolina................................       4
              Pennsylvania..................................       8
              Tennessee.....................................       2
              Texas.........................................      15
              Virginia......................................       3
              Washington....................................       5
                                                                 ---
                  Total U.S.................................      93
                                                                 ---
        Canada
              Calgary.......................................       2
              Montreal......................................       3
              Ottawa........................................       2
              Toronto.......................................       4
              Vancouver.....................................       1
                                                                 ---
                  Total Canada..............................      12
                                                                 ---

                  Total.....................................     105
                                                                 ===
</TABLE>

   In order to accommodate its growth strategy, the Company has made significant
new facility investments during the last twelve months, substantially increasing
the Company's available storage capacity in its Northeast region. During 1995,
the Company purchased a storage facility in New Jersey with 12 million cubic
feet of storage capacity and leased (with an option to purchase) a storage
facility in Massachusetts with five million cubic feet of storage capacity. The
addition of these facilities provides the Company with substantial excess
storage capacity and is expected to satisfy the Company's facility expansion
requirements in its Northeast region for several years.

                                       64
<PAGE>
 
Competition

   The Company believes it competes with three other large multi-market
companies in the U.S. and one in Canada, as well as a large number of local and
regional concerns. The Company believes that competition for customers is based
on price, reputation for reliability, quality of service and scope and scale of
technology, and believes that it generally competes effectively based on these
factors. Management believes that, except for Iron Mountain Incorporated, all of
these competitors have records management revenues significantly lower than
those of the Company. The Company believes that the trend towards consolidation
in the industry will continue and the Company also faces competition in
identifying attractive acquisition candidates. In addition, the Company faces
competition from the internal document handling capability of its current and
potential customers.

   The substantial majority of the Company's revenues are derived from the
storage of paper records and from related services. Alternative technologies for
generating, capturing, managing, transmitting and storing information has been
developed, many of which require significantly less space than paper. Such
technologies include computer media, microforms, audio/video tape, film, CD-Rom
and optical disc. Management believes that conversion of paper documents into
these smaller storage media is currently not cost-effective for inactive
records.

Employees

   As of March 31, 1996, the Company had 1,204 employees, including 166
employees in Canada. None of the Company's employees is covered by a collective
bargaining agreement. Management considers its employee relations to be good.

Insurance

   The Company carries comprehensive property insurance with insurers which it
believes to be reputable and in amounts which it believes to be appropriate,
covering replacement costs of real and personal property. Subject to certain
limitations and deductibles, such policies also cover extraordinary expenses
associated with business interruption and damage or loss from flood or
earthquakes (in certain geographic areas), and losses at the Company's
facilities up to $20.5 million.

Environmental Matters

   The Company's properties and operations may be subject to liability under
various environmental laws, regardless of fault, for the investigation, removal
or remediation of soil or groundwater, on or off-site, resulting from the
release or threatened release of hazardous materials, as well as damages to
natural resources. The owner or operator of contaminated property may also be
subject to claims for damages and remediation costs from third parties based
upon the migration of any hazardous materials to other properties.

   At certain of the properties owned or operated by the Company, petroleum
products or other hazardous materials, are or were stored in USTs. Some formerly
used USTs have been removed; others were abandoned in place. All of the USTs are
registered, as required, under applicable law. The Company also is aware of the
presence in some of its facilities of ACMs, but believes that no action is
presently required to be taken as a result of such material.

   At the Company's recently acquired New Jersey facility, certain contamination
has been discovered resulting from operations of the prior owner thereof. The
prior owner, which has agreed to be responsible for the cost of such
remediation, is completing remediation of the property under a consent order
with the New Jersey Department of Environmental Protection ("NJDEP"). The prior
owner has posted a $1.1 million letter of credit with the NJDEP which expires in
1997. The Company has purchased an environmental liability insurance policy
covering the cleanup costs to the Company, if any, resulting from any on- or 
off-site environmental condition existing at the time of the Company's
acquisition of this property, with a $250,000 deductible and policy limits of $4
million per occurrence/$8 million in the aggregate, provided the claim first
arises during the term of the policy, which is August

                                       65
<PAGE>
 
10, 1995 through August 11, 1998.

   The Company has not received any written notice from any governmental
authority or third party asserting, and is not otherwise aware of, any
material noncompliance, liability or claim under environmental laws
applicable to the Company other than as described above. No assurance can
be given that there are no environmental conditions for which the Company
may be liable in the future or that future regulatory action, or
compliance with future environmental laws, will not require the Company
to incur costs that could have a material adverse effect on the Company's
financial condition or results of operations.

Legal Proceedings

   The Company is involved in litigation from time to time in the ordinary
course of its business. In the opinion of Management, no material legal
proceedings are pending to which the Company, or any of its property, is
subject.

                                       66
<PAGE>
 
                                   MANAGEMENT

Executive Officers and Directors

   Set forth below is certain information regarding the Company's directors,
executive officers and other significant management personnel:

<TABLE>
<CAPTION>

                        Name                            Age                                        Position
                        ----                            ---                                        --------
                  <S>                                   <C>                 <C>
                  Leo W. Pierce, Sr..................... 77                 Chairman of the Board
                  J. Peter Pierce....................... 50                 President, Chief Executive Officer and Director
                  Douglas B. Huntley.................... 36                 Vice President, Chief Financial Officer and Director
                  Joseph A. Nezi........................ 49                 Vice President, Sales and Marketing
                  David Marsh........................... 48                 Vice President, Chief Information Officer
                  Ross M. Engelman...................... 32                 Vice President, Operations--South
                  J. Michael Gold....................... 37                 Vice President, Operations--Northeast
                  Christopher J. Williams............... 37                 Vice President, Operations--West
                  Leo W. Pierce, Jr..................... 51                 Vice President, Contracts Administration and
                                                                            Director
                  Michael J. Pierce..................... 46                 Vice President, Equipment Sales and Distribution
                                                                            Group and Director
                  Raul A. Fernandez..................... 46                 Vice President, Information Services
                  Joseph P. Linaugh..................... 46                 Vice President, Treasurer
                  Lisa G. Goldschmidt................... 28                 General Counsel
                  Alan B. Campell....................... 45                 Director
                  Delbert S. Conner..................... 66                 Director
</TABLE>

   Leo W. Pierce, Sr. has served as Chairman of the Board of the Company since
its formation in 1957. Mr. Pierce served as the Chief Executive Officer of the
Company from formation to January 1995 and as its President from formation to
January 1984. Prior to forming the Company, Mr. Pierce was a sales
representative for Lefebure Corporation and an accountant for Price Waterhouse.
Mr. Pierce holds a B.A. degree from St. John's University.

   J. Peter Pierce has served as President and Chief Executive Officer of the
Company since January 1995 and has been a director since the early 1970s. Mr.
Pierce served as President and Chief Operating Officer of the Company from
January 1984 to January 1995, prior to which time he served in various other
capacities with the Company, including as Vice President of Operations, General
Manager of Connecticut, New York and New Jersey and Sales Executive. Mr. Pierce
attended the University of Pennsylvania and served in the United States Marine
Corps.

   Douglas B. Huntley has served as Chief Financial Officer since January 1994
and a director of the Company since September 1994. From May 1993 until December
1993, Mr. Huntley served as Assistant to the President of the Company. From
August 1989 to March 1993, he was an Executive Advisor and a Project Manager of
Rockwell International in connection with a multi-billion dollar NASA contract.
Prior thereto, Mr. Huntley was an accountant for Deloitte Haskin & Sells. Mr.
Huntley holds a B.S. degree from Bucknell University and an M.B.A. from the
University of Pennsylvania, Wharton School of Business and is a Certified Public
Accountant.

   Joseph A. Nezi has served as Vice President, Sales and Marketing of the
Company since September 1991. From July 1990 to September 1991, Mr. Nezi was the
Vice President, Sales and Marketing of Delaware Valley Wholesale Florist where
he was responsible for the sales and marketing of a firm with $30 million of
sales. Prior thereto, Mr. Nezi was the President and General Manager of
Pomerantz and Company following 17 years in various sales positions of
increasing responsibility with Xerox. Mr. Nezi holds a B.A. degree from
Villanova University.

                                       67
<PAGE>
 
   David Marsh has served as Vice President and Chief Information Officer of the
Company since January 1995 and was Assistant to the President of the Company
from November 1994 to December 1994. From August 1986 to May 1994, Mr. Marsh was
Manager--Corporate Relations for the Massachusetts Institute of Technology where
he was responsible for the management and development of MIT's relationships
with U. S. and European information technology, communications and service
companies. Mr. Marsh holds a B.S. degree from University of Salford, U.K. and
S.M. degrees in Management and Nuclear Engineering from MIT.

   Ross M. Engelman has served as Vice President, Operations--South since
October 1994. From June 1993 to October 1994, Mr. Engelman was Vice President,
Information Systems and from September 1991 to June 1993, he was Assistant to
the President of the Company. From August 1985 to September 1991, Mr. Engelman
was a management consultant with Andersen Consulting. Mr. Engelman holds a
B.S.E. degree from the University of Pennsylvania, Wharton School of Business.

   J. Michael Gold has served as Vice President, Operations--Northeast of the
Company since June 1993. Prior thereto, Mr. Gold was Vice President, Operations
from February 1992 to June 1993, Vice President, New York Metropolitan Region
from January 1990 to February 1992 and General Manager of the New Jersey Archive
from April 1985 to February 1989. Prior to joining the Company, Mr. Gold was the
Budget Administration Manager for SmithKline Beecham. Mr. Gold holds a B.A.
degree from Villanova University.

   Christopher J. Williams has served as Vice President, Operations--West since
June 1993. From February 1992 to June 1993, Mr. Williams was the Company's Vice
President, Information Services. Prior thereto, Mr. Williams held a number of
additional positions with the Company since he joined it in 1980, including most
recently as General Manager of the New York Archive and Regional Vice President
- --New England. Mr. Williams holds a B.S. degree from Western New England
College.

   Leo W. Pierce, Jr. has served as Vice President, Contract Administration of
the Company since January 1990 and as a director since the early 1970s. Mr.
Pierce has been affiliated with the Company since its inception in various
capacities, including as manager of the Philadelphia Archive and Vice President,
Facilities Management. Mr. Pierce holds a B.A. degree from LaSalle University.

   Michael J. Pierce has served as Vice President, Equipment Sales and
Distribution Group of the Company since February 1990 and as a director since
the early 1970s. Mr. Pierce has been affiliated with the Company since its
inception in various sales capacities. Mr. Pierce attended Temple University and
served in the United States Army.

   Raul A. Fernandez has served as Vice President, Information Systems of the
Company since February 1990. From March 1988 to February 1990, Mr. Fernandez was
Director of Information Systems. Prior to joining the Company, Mr. Fernandez was
employed by RCA Pictures Division and Sperry-Unisys as District Manager. Mr.
Fernandez holds a B.A. degree from Kings College.

   Joseph P. Linaugh has served as Vice President and Treasurer of the Company
since January 1994. From January 1990 to December 1993, Mr. Linaugh served as
Vice President, Chief Financial Officer and a director of the Company. Prior to
joining the Company, Mr. Linaugh worked in various financial positions with
private and publicly held companies and for Laventhol & Horwath in public
accounting. Mr. Linaugh holds a B.S. degree from LaSalle University and is a
Certified Public Accountant.

   Lisa G. Goldschmidt has served as General Counsel of the Company since
October 1995. From September 1992 to October 1995, Ms. Goldschmidt was an
attorney at Reed Smith Shaw & McClay. Ms. Goldschmidt holds a B.A. and a J.D.
degree from the University of Pennsylvania.

   Alan B. Campell has served as a director of the Company since September 1994.
Mr. Campell is one of the founders of Campell Vanderslice Furman, an investment
banking firm, and has been a Managing Director of the firm since its formation
in 1986. Prior thereto, Mr. Campell was a Vice President at Chase Manhattan
Bank, N.A. Mr. Campell holds a B.A. degree from Brown University and an M.A.
from the University of Southern California.

                                       68
<PAGE>
 
   Delbert S. Conner has served as a director of the Company since September
1990. Since May 1995, Mr. Conner has served as the Vice Chairman of USCO
Distribution Services, Inc. on a semi-retired basis. From January 1994 through
April 1995, he was the Vice Chairman of USCO on a full-time basis and its
President and Chief Executive Officer from February 1983 to December 1993. Mr.
Conner holds a B.S. degree from Bryant College.

   Messrs. J. Peter Pierce, Leo W. Pierce, Jr. and Michael J. Pierce are
brothers. Leo W. Pierce, Sr. is their father. For purposes of the above
biographical information, the Company includes L. W. Pierce Company, Inc., the
predecessor to Pierce Leahy. See "The Company."

Board Committees

   The Company's Board of Directors appointed a Compensation Committee in
September 1994. The Compensation Committee is comprised of Leo W. Pierce, Sr.,
J. Peter Pierce and Alan B. Campell. The Compensation Committee recommends to
the Board both salary levels and bonuses for the officers of the Company. The
Compensation Committee also reviews and makes recommendations with respect to
the Company's existing and proposed compensation plans, and serves as the
committee responsible for administrating the Company's non-qualified stock
option plan. Until September 1994, the Compensation Committee's functions were
exercised by the Board of Directors.

   All directors receive reimbursement of reasonable out-of-pocket expenses
incurred in connection with meetings of the Board of Directors. Mr. Conner also
receives $3,500 for each meeting of the Board of Directors which he attends. No
other director receives separate compensation for services rendered as a
director.

                                       69
<PAGE>
 
Executive Compensation

   The following table sets forth the compensation received by the Company's
Chief Executive Officer and the five other highest paid executive officers
(together with the Chief Executive Officer, the "Named Executive Officers") for
services to the Company in 1995.

                           Summary Compensation Table
<TABLE>
<CAPTION>
                                                                                               Long-Term   
                                                                                              Compensation 
                                                  Annual Compensation                            Awards    
                                         ------------------------------------------------     ------------ 
                                                                                 Other          Securities               
               Name and                                                          Annual         Underlying       All Other
          Principal Position                     Salary         Bonus         Compensation       Options       Compensation
       ------------------------                 --------      ----------      ------------      ----------    ---------------
                                                                                                 
<S>                                             <C>           <C>             <C>               <C>           <C>
J. Peter Pierce........................         $186,800      $93,400              --              --          $6,680(a)
        President and Chief Executive                                                                         
        Officer                                                                                               
Ross M. Engelman.......................          130,422       65,000              --              85           4,938(b)
        Vice President,                                                                                       
        Operations--South                                                                                     
J. Michael Gold........................          129,905       65,000              --              85           3,416(c)
        Vice President,                                                                                       
        Operations--Northeast                                                                                 
Douglas B. Huntley.....................          129,520       65,000              --              85           4,802(d)
        Vice President and                                                                                    
        Chief Financial Officer                                                                               
Joseph A. Nezi.........................          133,020       97,841(e)           --              85           5,739(f)
        Vice President,                                                                                       
        Sales and Marketing                                                                                   
Christopher J. Williams................          129,905       65,000              --              85           4,810(g)
        Vice President,
        Operations--West
 
</TABLE>
(a) Included in such amount is $2,310 representing an employer match under the
    401(k) Plan (as defined herein), $1,371 in net premiums for a guaranteed
    term life insurance policy on behalf of Mr. Pierce and $3,000 representing
    contributions made by the Company under the Profit Sharing Plan (as defined
    herein).
(b) Included in such amount is $2,107 representing an employer match under the
    401(k) Plan, $98 in net premiums for a guaranteed term life insurance policy
    on behalf of Mr. Engelman and $2,608 representing contributions made by the
    Company under the Profit Sharing Plan.
(c) Included in such amount is $700 representing an employer match under the
    401(k) Plan, $119 in net premiums for a guaranteed term life insurance
    policy on behalf of Mr. Gold and $2,598 representing contributions made by
    the Company under the Profit Sharing Plan.
(d) Included in such amount is $2,093 representing an employer match under the
    401(k) Plan, $119 in net premiums for a guaranteed term life insurance
    policy on behalf of Mr. Huntley and $2,590 representing contributions made
    by the Company under the Profit Sharing Plan.
(e) Includes $32,842 paid as commissions.
(f) Included in such amount is $2,310 representing an employer match under the
    401(k) Plan, $438 in net premiums for a guaranteed term life insurance
    policy on behalf of Mr. Nezi and $3,000 representing contributions made by
    the Company under the Profit Sharing Plan.
(g) Included in such amount is $2,066 representing an employer match under the
    401(k) Plan, $125 in net premiums for a guaranteed term life insurance
    policy on behalf of Mr. Williams and $2,598 representing contributions made
    by the Company under the Profit Sharing Plan.

                                       70
<PAGE>
 
Option Grants in 1995

   The following table sets forth certain information concerning stock options
granted to the Named Executive Officers during 1995.

                             Option Grants in 1995
<TABLE>
<CAPTION>

                                                  Individual Grants
                                ----------------------------------------------------
                                                                                                      Potential
                                                                                                      Realizable
                                Number of        % of Total                                            Value at
                               Securities         Options                                           Assumed Annual
                               Underlying        Granted to       Exercise                          Rates of Stock
                                Options         Employees in        Price        Expiration       Price Appreciation
          Name                 Granted (a)          1995           (Share)          Date          For Option Term(b)
          ----                 -----------      ------------      ---------      ----------      ---------------------
<S>                            <C>              <C>               <C>            <C>             <C>          <C>
                                                                                                    5%          10%
                                                                                                 --------     --------
J. Peter Pierce................     --                --              --             --             --           --
Ross M. Engelman...............     85                15           $5,406             *          $288,983     $732,341
J. Michael Gold................     85                15            5,406             *           288,983      732,341
Douglas B. Huntley.............     85                15            5,406             *           288,983      732,341
Joseph A. Nezi.................     85                15            5,406             *           288,983      732,341
Christopher J. Williams........     85                15            5,406             *           288,983      732,341
</TABLE>
- --------------
*   The options have no specified expiration date.
(a) All options were granted under the Plan (as defined herein) and are for the
    purchase of shares of Class B Common Stock of the Company. The options vest
    in five equal annual installments commencing on the first anniversary of the
    date of grant, and vested options become exercisable on the earlier of ten
    years from the date of grant or the date the Company is no longer a
    Subchapter S corporation. The Company may make loans with respect to vested
    options. See "--Stock Incentive Plan."
(b) Illustrates the value that might be received upon exercise of options
    immediately prior to the assumed expiration of their term at the specified
    compounded rates of appreciation based on the market price for the Class B
    Common Stock when the options were granted. There is no established trading
    market for the Class B Common Stock and, accordingly, the market price is
    based upon the formula set forth in the Plan. Since the options granted to
    the Named Executive Officers do not have a specified expiration date, for
    purposes of calculating the assumed appreciation, the options have been
    deemed to expire ten years from the date of grant.

Stock Option Exercises and Holdings

    The following table sets forth the value of options held by each of the
Named Executives at December 31, 1995. None of the Named Executives exercised
any options during 1995.

<TABLE>
<CAPTION>

                                          Aggregated Option Exercises in 1995 and
                                             Option Values at December 31, 1995
          
                                                                      Number of Unexercised                  Value of Unexercised
                                                                            Options at                     In-the-Money Options at
                                                                       December 31, 1995(a)                  December 31, 1995(b)
                                                                    --------------------------            --------------------------
                                        Shares
             Name                     Acquired on       Value
             ----                      Exercise        Realized     Exercisable     Unexercisable     Exercisable     Unexercisable
                                       --------        --------     -----------     -------------     -----------     -------------
<S>                                   <C>              <C>          <C>             <C>               <C>             <C>
J. Peter Pierce.......................     --             --             --                --               --                 --
Ross M. Engelman......................     --             --             --                85               --             $68,255
J. Michael Gold.......................     --             --             --                85               --              68,255
Douglas B. Huntley....................     --             --             --                85               --              68,255
Joseph A. Nezi........................     --             --             --                85               --              68,255
Christopher J. Williams...............     --             --             --                85               --              68,255
</TABLE>

(a) All options are for the purchase of shares of Class B Common Stock.
(b) There is no established market for the Class B Common Stock and,
    accordingly, the values are based on the exercise price of options granted
    on January 1, 1996 in accordance with the formula set forth in the Plan.

                                       71
<PAGE>
 
Compensation Committee Interlocks and Insider Participation

   Alan B. Campell, a member of the Compensation Committee of the Board of
Directors, is a managing director of Campell Vanderslice Furman ("CVF"), an
investment banking firm that has provided investment banking services to the
Company since 1992. Mr. Campell became a director of the Company in 1994. During
1993, 1994 and 1995, the Company paid CVF $1.5 million, $0.8 million and $0.7
million, respectively, with respect to investment banking services. In addition,
CVF earned investment banking fees $0.7 million for advisory services in
connection with the Transactions and the offering of the Original Notes.

Stock Incentive Plan

   The Company established a Nonqualified Stock Option Plan (the "Plan") in
September 1994 to provide incentives to Key Employees (defined below) who
contribute significantly to the strategic and long-term performance objectives
and growth of the Company. The Plan is administered by the Compensation
Committee of the Board of Directors.

   The Plan provides for the issuance of non-qualified stock options to "Key
Employees," defined as employees of the Company who are members of a select
group of management or highly compensated employees. As of May 31, 1996, there
were 13 Key Employees. Under the Plan, options exercisable for an aggregate of
1,141 shares of Class B Common Stock are available for grant. The exercise price
per share of Class B Common Stock of options granted under the Plan shall be
equal to or greater than the fair market value of the Class B Common Stock as of
the last day of the calendar quarter coinciding with or immediately preceding
the date of the grant. Options granted under the Plan become exercisable, to the
extent they are vested, at the earlier of the tenth anniversary of the date of
grant or the date the Company is no longer a Subchapter S Corporation.

   The Board, in its sole discretion, may direct the Company to make a loan to a
Key Employee whose Vested Percentage (defined below) with respect to one or more
stock options is at least 60%. The maximum amount of any such loan shall be 25%
of the amount which would be payable to the Key Employee had he terminated
employment other than on account of death or total and permanent disability as
of the date of the loan as set forth in the following paragraph. Vested
Percentage is based upon the options vesting in five equal annual installments
commencing on the first anniversary of the date of grant; provided, however,
that 100% shall be deemed to be vested in the case of a Key Employee who
terminates employment on account of death or total and permanent disability.

   If a Key Employee's employment is terminated for any reason, each stock
option which has not been exercised shall terminate; provided, however, that if
a Key Employee terminates employment after the Class B Common Stock has become
readily tradeable in an established securities market, other than pursuant to a
termination for cause, his option shall not expire until the end of the 90-day
period following the date of termination. Upon termination of employment (other
than for cause or when the Class B Common Stock is tradeable in an established
securities market), the Company is required to pay the Key Employee the Vested
Percentage of the value of any options held by the Key Employee. The value of
the options for this purpose is equal to the aggregate fair market value of the
underlying shares (determined by a formula set forth in the Plan), less (i) the
principal amount of any outstanding loans pursuant to the Plan and (ii) the
aggregate exercise price of the underlying shares.

401(k) Plan; Profit Sharing Plan

   The Company has a savings and investment plan under Section 401(k) of the
Code (the "401(k) Plan") and a profit sharing plan also under Section 401(k)
(the "Profit Sharing Plan"). The 401(k) Plan covers substantially all full-time
employees over the age of 20 1/2 and with more than 1,000 hours of service.
Participants in the 401(k) Plan may elect to defer a specified percentage of
their compensation into the 401(k) Plan on a pre-tax basis. The Company is
required to make matching contributions under the 401(k) Plan equal to 25% of
the employee's contributions up to a maximum of 2% of the employee's annual
compensation. The contributions to the 401(k) Plan

                                       72
<PAGE>
 
by a participant vest immediately. Participants earn a vested right to their
matching contributions in increasing amounts over a period of five years,
commencing after three full years of employment. After seven years of service,
the participant's right to his or her matching contribution is fully vested.
Thereafter, the participant may receive a distribution of the entire value of
his or her account upon termination of employment or upon retirement, disability
or death.

   The Profit Sharing Plan covers substantially all full-time employees over the
age of 21 with more than 1,000 hours of service. The Company may make
discretionary profit sharing contributions in amounts as the Board of Directors
of the Company may determine. The Company's contributions under the Profit
Sharing Plan have historically ranged from 2-3% of a participant's annual
eligible income. Participants are not permitted to contribute to the Profit
Sharing Plan directly. Participants earn a vested right to their profit sharing
contribution in increasing amounts over a period of five years, commencing after
three full years of employment. After seven years of service, the participant's
right to his or her profit sharing contribution is fully vested. Thereafter, the
participant may receive a distribution of the entire value of his or her account
upon termination of employment or upon retirement, disability or death.


                             CERTAIN TRANSACTIONS

   The Company leases six facilities from the Pierce Family Partnerships and
subleases 16 properties from one of the Pierce Family Partnerships. The leases
and subleases were entered into during the period from March 1980 to April 1995.
The aggregate rental payments for the leases and subleases were $7,036,000,
$7,658,000 and $8,201,000 in 1993, 1994 and 1995, respectively. Pursuant to the
Real Estate Transactions, the Company purchased for $14.8 million all of the
interests of the Pierce Family Partnerships in such properties as well as
minority interests in five other properties currently leased by the Company.

   The Company also leases from four separate limited partnerships its corporate
headquarters in King of Prussia, Pennsylvania and its facilities in Suffield,
Connecticut, Orlando, Florida and Charlotte, North Carolina. J. Peter Pierce,
the Company's President and Chief Executive Officer, is the general partner of
three of the limited partnerships and members of the Pierce family and certain
other officers of the Company and their affiliates own substantial limited
partnership interests in each of the four limited partnerships. The lease on the
Company's corporate headquarters expires on April 30, 2003, without any renewal
options. The leases for the Suffield, Orlando and Charlotte facilities terminate
on December 31, 1996, October 31, 2004 and August 31, 2001, respectively. Each
of such leases contains two five-year renewal options. The aggregate rental
payments by the Company for such properties during 1993, 1994 and 1995 were
$327,000, $531,000 and $773,000, respectively.

   The Company believes that the terms of its leases with the related parties
are as favorable to the Company as those generally available from unaffiliated
third parties. There are no plans by the Company to lease additional facilities
from officers, directors or other affiliated parties.

   In May 1996, the Company repaid a note in the amount of $80,000 to the
Company's Chairman, Leo W. Pierce, Sr., which was entered into in December 1993.
As part of the Transactions, the Company intends to redeem 100 shares of Class A
Common Stock from Mr. Pierce for an aggregate price of $1.45 million. The
Company previously undertook to pay $60,000 per year for a five-year period to
Mr. Pierce's spouse upon his death. The Company intends to replace this
arrangement by providing an annual pension in the amount of $96,000 to Mr.
Pierce and then to his spouse, if she survives him.

   The Company has entered into a consulting agreement with Maurice Cox, Jr., a
shareholder of the Company, to provide consulting services to the Company
through 2004 for an annual payment of $40,000.

   In December 1994, the Company loaned $60,000 to J. Michael Gold, its Vice
President, Operations--Northeast, of which the entire principal amount, together
with interest accruing at a rate of 8.875%, was outstanding as of June 30, 1996.

                                       73
<PAGE>
 
                            PRINCIPAL SHAREHOLDERS

   The following table sets forth, as of August 1, 1996, information as to the
Company's stock beneficially owned by (i) each director of the Company, (ii)
each Named Executive Officer, (iii) all directors and executive officers of the
Company as a group, and (iv) each person who is known by the Company to be the
beneficial owner of more than 5% of the Company's Class A Common Stock, the only
class of voting stock outstanding.

<TABLE>
<CAPTION>
                                                        Class A                  Class B
                                                    Common Stock             Common Stock
                                            ------------------------   ------------------------
                                                                                                  Percentage of      Percentage
                                                                                                   Beneficial        of Voting
                                                         Percent of                 Percent of    Ownership of     Power of all
                                              No. of      Class A        No. of      Class B       all Common         Common
                 Name(a)                    Shares(b)      Shares      Shares(b)      Shares          Stock            Stock
                 -------                    ---------      ------      ---------      ------          -----            -----
<S>                                         <C>          <C>           <C>          <C>           <C>              <C>
Leo W. Pierce, Sr. (c)...................      410          45.6%            20          *             4.2%             45.6%
J. Peter Pierce (d)......................       90          10.0          1,480        16.4%          15.9              10.0
Leo W. Pierce, Jr. (e)...................       90          10.0          1,300        14.4           14.0              10.0
Michael J. Pierce (f)....................       70           7.8          1,265        14.1           13.5               7.8
Mary E. Pierce...........................       50           5.6          1,265        14.1           13.3               5.6
Barbara P. Quinn (g).....................       50           5.6          1,255        13.9           13.2               5.6
Constance P. Buckley (h).................       50           5.6          1,255        13.9           13.2               5.6
Maurice Cox, Jr. (i).....................       90          10.0          1,160        12.9           12.6              10.0
Alan B. Campell..........................       --            --             --          --             --                --
Delbert S. Conner........................       --            --             --          --             --                --
Ross M. Engelman.........................       --            --             --          --             --                --
J. Michael Gold..........................       --            --             --          --             --                --
Douglas B. Huntley.......................       --            --             --          --             --                --
Joseph A. Nezi...........................       --            --             --          --             --                --
Christopher J. Williams..................       --            --             --          --             --                --
All Directors and Executive Officers as                                                                                
   a Group (12 persons)..................      660          73.3%         4,065        45.2%          47.7%             73.3%
</TABLE>
- --------------
*   Less than one percent.
(a) The address of all persons in this table who are shown to beneficially own
    5% or more of the Class A Common Stock, unless otherwise specified, is c/o
    Pierce Leahy Corp., 631 Park Avenue, King of Prussia, Pennsylvania 19406.
(b) As used in this table, "beneficial ownership" means sole or shared power to
    vote or direct the voting of a security, or the sole or shared investment
    power with respect to a security (i.e., the power to dispose, or direct the
    disposition, of a security). A person is deemed for any date to have
    "beneficial ownership" of any security that such person has a right to
    acquire within 60 days after such date. For purposes of computing the
    percentage of outstanding shares held by each person named above, any
    security that such person has the right to acquire within 60 days of the
    date of calculation is deemed to be outstanding, but is not deemed to be
    outstanding for purposes of computing the percentage ownership of any other
    person.
(c) Includes 10 shares of Class B Common Stock held by Mr. Pierce's wife.
(d) Includes 340 shares of Class B Common Stock held for the benefit of Mr.
    Pierce's children.
(e) Includes 213 shares of Class B Common Stock held for the benefit of Mr.
    Pierce's children.
(f) Includes 100 shares of Class B Common Stock held for the benefit of Mr.
    Pierce's child.
(g) Includes 523 shares of Class B Common Stock held for the benefit of Ms.
    Quinn's children.
(h) Includes 144 shares of Class B Common Stock held for the benefit of Ms.
    Buckley's children.
(i) The address of Mr. Cox is 731 E. Manoa Road, Havertown, Pennsylvania 19083.
    Includes 10 shares of Class A Common Stock and 320 shares of Class B Common
    Stock held by Mr. Cox's wife and 120 shares held by or for the benefit of
    Mr. Cox's children.

                                       74
<PAGE>
 
Shareholders Agreement

   The Company and its shareholders, with the exception of Leo W. Pierce, Sr.
(collectively, with the exclusion of Mr. Pierce, the "Shareholders"), are
parties to a buy/sell agreement which imposes certain restrictions on the
issuance and transfer of the Company's stock. Transfers of the Company's stock
during a Shareholder's lifetime may only be made to (i) lineal descendants of
Mr. Pierce and his wife, (ii) any trust for the benefit of any such lineal
descendant, provided that at least one trustee of such trust at all times is a
lineal descendant of Mr Pierce and his wife or (iii) to the spouse of a lineal
descendant of Mr. Pierce and his wife as custodian under a Uniform Transfers to
Minors Act for a lineal descendant of Mr. Pierce and his wife who has not
attained age 21 (collectively, "Permitted Transferees"). Shareholders are
permitted to make testamentary transfers to Permitted Transferees or to any
trust for the benefit of a lineal descendant of Mr. Pierce and his wife,
provided that at least one trustee of such trust at all times is a lineal
descendant of Mr. Pierce and his wife.

   Within 270 days after a permitted testamentary transfer, the transferee may
elect to require the Company to purchase all or any part of the stock that was
acquired in such testamentary transfer. Upon the death of a Shareholder (other
than in the event of a permitted testamentary transfer), commencement of
bankruptcy or similar proceeding by or against a Shareholder, receipt by a
Shareholder of a bona fide written offer from a person other than a Permitted
Transferee to acquire all of the Shareholder's stock or a transfer or attempted
transfer by a Shareholder of any of his stock in violation of the buy/sell
agreement, the Company and the remaining Shareholders have the option to
purchase all or any of the stock owned by the affected Shareholder; provided,
however, that the Company is required to purchase any such stock not purchased
under such options, to the extent not prohibited by law or agreement. The
purchase price for such purchases is the agreed value, to be determined at least
annually by a qualified third party appraiser selected by the Company, except
that with respect to bona fide offers from third parties, the purchaser may
elect either the offer price or the agreed value. The purchase of stock by the
Company and/or remaining Shareholders following the death of a Shareholder or a
permitted testamentary transfer shall be funded, to the extent available, with
the proceeds of any life insurance policies received by the Company and/or
remaining Shareholders on the deceased Shareholder or transferor, respectively.
The Company currently maintains life insurance policies on the lives of various
of the Shareholders with an aggregate death benefit of $3.75 million.

                                       75
<PAGE>
 
                         DESCRIPTION OF CREDIT FACILITY

   As of August , 1996, the Company entered into a new credit facility with
Canadian Imperial Bank of Commerce ("CIBC" or "Agent") as the Agent. The credit
facility (the "Credit Facility") is a senior secured revolving line of credit in
an aggregate principal amount of $100 million in U.S. dollar borrowings and $35
million in Canadian dollar borrowings by the Company's Canadian subsidiary. The
following summary does not purport to be complete and is subject to and
qualified in its entirety by reference to the Credit Facility which is filed as
an exhibit to the Registration Statement of which this Prospectus forms a part.

   The aggregate available commitment under the Credit Facility will be reduced
incrementally on a quarterly basis, beginning September 30, 1999. The Credit
Facility matures on June 30, 2002, unless previously terminated. Prior to any
advance being made under the Credit Facility, the Company will be required to be
in compliance with all financial and operating covenants. The lenders under the
Credit Facility will be paid a commitment fee at a rate of 0.375% per annum on
unused commitments, payable quarterly. In addition, the Agent will receive other
customary fees.

   Borrowings under the U.S. Dollar portion of the Credit Facility will bear
interest at a rate equal to, at the option of the Company, either (i) the base
rate (which is based on as the Federal Funds rate or the prime rate most
recently announced by the Agent) or (ii) LIBOR, in each case plus an applicable
margin determined by reference to the ratio of Total Net Debt to EBITDA of the
Company (as defined in the Credit Facility). Borrowings under the Canadian
Dollar portion of the Credit Facility will also bear interest based on various
methods plus an applicable margin.

   The obligations of the Company under the Credit Facility will be
unconditionally guaranteed, jointly and severally, by all subsidiaries of the
Company. The obligations of the Company and such guarantors under the Credit
Facility will be secured primarily by a first priority pledge of the stock of
all material subsidiaries of the Company and a first priority lien on all of the
assets of the Company and such guarantors. In addition, the shareholders of the
Company have pledged their stock as additional security for payment of all
obligations under the Credit Facility. Recourse to the Company's shareholders
will be limited to their stock. Obligations under the Canadian facility will be
guaranteed by the Company.

   The Credit Facility contains, among other things, covenants restricting the
ability of the Company and its subsidiaries to dispose of assets, pay dividends,
repurchase or redeem capital stock and indebtedness, create liens, make capital
expenditures, make certain investments or acquisitions, enter into transactions
with affiliates and otherwise restrict corporate activities. The Credit Facility
also contains the following financial covenants: minimum permitted fixed charge
coverage ratio; maximum ratio of Total Net Debt to EBITDA; maximum ratio of Net
Senior Debt to EBITDA; minimum ratio of EBITDA to Total Cash Interest Expense;
and limitations on aggregate capital expenditures and acquisitions (as defined
in the Credit Facility).

   Events of default under the Credit Facility include those usual and customary
for facilities of this type, including among other things, default in the
payment of principal and interest in respect of material amounts of indebtedness
of the Company or its subsidiaries, any non-payment on indebtedness under the
Credit Facility, a Change of Control (as defined in the Credit Facility), any
material breach of the covenants, representations and warranties included in the
Credit Facility and related documents, the institution of any bankruptcy
proceedings and the failure of any security agreement related to the Credit
Facility or lien granted thereunder to be valid and enforceable. Upon the
occurrence and continuance of an event of default under the Credit Facility, the
lenders may terminate their commitments to lend and declare the outstanding
advances due and payable.

                                       76
<PAGE>
 
                            DESCRIPTION OF THE NOTES

   The Original Notes were, and the Exchange Notes will be, issued under an
Indenture, dated as of July 15, 1996 (the "Indenture") between the Company and
the United States Trust Company of New York, as trustee (the "Trustee"). The
terms of the Notes include those stated in the Indenture and those made part of
the Indenture by reference to the Trust Indenture Act of 1939, as amended (the
"Trust Indenture Act"). The Notes are subject to all such terms, and holders of
the Notes are referred to the Indenture and the Trust Indenture Act for a
statement of such terms.

   The following is a summary of the material terms and provisions of the Notes.
This summary does not purport to be a complete description of the Notes and is
subject to the detailed provisions of, and qualified in its entirety by
reference to, the Notes and the Indenture (including the definitions contained
therein). Definitions relating to certain capitalized terms are set forth under
"-- Certain Definitions" and throughout this description. Capitalized terms that
are used but not otherwise defined herein have the meanings assigned to them in
the Indenture, and such definitions are incorporated herein by reference. The
Indenture has been filed as an exhibit to the Registration Statement of which
this Prospectus is a part. The form of the Exchange Notes and the Original Notes
are identical in all material respects except that the Exchange Notes will have
been registered under the Securities Act and, therefore, will not bear legends
restricting their transfer. The Exchange Notes will not represent new
indebtedness of the Company, will be entitled to the benefits of the same
Indenture which governs the Original Notes and will rank pari passu with the
Original Notes. Any provisions of the Indenture which require actions by or
approval of a specified percentage of Original Notes shall require the approval
of the holders of such percentage of principal amount of Original Notes and
Exchange Notes, in the aggregate.

General

   The Notes are limited in aggregate principal amount to $200,000,000. The
Notes are general unsecured obligations of the Company, subordinated in right of
payment to Senior Indebtedness of the Company and senior in right of payment to
any current or future subordinated indebtedness of the Company, except as
otherwise provided herein.

   The Notes will be unconditionally guaranteed, on a senior subordinated basis,
as to payment of principal, premium, if any, and interest, jointly and
severally, by each Restricted Subsidiary which guarantees payment of the Notes
pursuant to the covenant described under "Limitation on Creation of
Subsidiaries" (the "Guarantors").

   The Notes will not be guaranteed by the Company's Canadian subsidiary.
However, the Notes are secured by a subordinated pledge of a portion of the
capital stock of such Subsidiary.

Maturity, Interest and Principal

   The Notes will mature on July 15, 2006. The Notes will bear interest at a
rate of 11 1/8% per annum from the date of original issuance until maturity.
Interest is payable semi-annually in arrears on January 15 and July 15,
commencing January 15, 1997, to holders of record of the Notes at the close of
business on the immediately preceding January 1, and July 1, respectively.
Interest on the Exchange Notes will accrue from (A) the later of (i) the last
interest payment date on which interest was paid on the Notes surrendered in
exchange therefor or (ii) if the Notes are surrendered for exchange on a date in
a period which includes the record date for an interest payment date to occur on
or after the date of such exchange and as to which interest will be paid, the
date of such interest payment date, or (B) if no interest has been paid on the
Notes, from the Issue Date.

   The interest rate on the Notes is subject to increase, and such Additional
Interest will be payable on the payment dates set forth above, in certain
circumstances, if the Notes (or other securities substantially similar to the
Notes) are not registered with the Commission within the prescribed time
periods. Upon consummation of the Exchange Offer, such registration requirements
will have been met and no Additional Interest will be payable with

                                       77
<PAGE>
 
respect the Notes, except as set forth below. In the event that the Company does
not exchange Exchange Notes for all Original Notes validly tendered in
accordance with the terms of the Exchange Offer on or prior to 60 days after the
date of this Prospectus or the Registration Statement of which this Prospectus
forms a part ceases to be effective at any time prior to the consummation of the
Exchange Offer (either such event, a "Registration Default"), the sole remedy
available to holders of the Notes will be the immediate assessment of additional
interest ("Additional Interest") as follows: the per annum interest rate on the
Notes will increase by 50 basis points; and the per annum interest rate will
increase by an additional 25 basis points for each subsequent 90-day period
during which the Registration Default remains uncured, up to a maximum
additional interest rate of 200 basis points per annum in excess of the interest
rate on the cover of this Prospectus. All Additional Interest will be payable to
holders of the Notes in cash on the same original issue payment dates as the
Notes, commencing with the first such date occurring after any such Additional
Interest commences to accrue, until such Registration Default is cured. After
the date on which such Registration Default is cured, the interest rate on the
Notes will revert to the interest rate originally borne by the Notes (as shown
on the cover of this Prospectus).

   The summary herein of certain provisions of the Registration Rights Agreement
does not purport to be complete and is subject to, and is qualified in its
entirety by reference to, all the provisions of the Registration Rights
Agreement, which has been filed as an exhibit to the Registration Statement of
which this Prospectus forms a part, a copy of which will be available upon
request to the Company.

Optional Redemption

   The Notes are redeemable at the option of the Company, in whole or in part,
at any time on or after July 15, 2001 at the following redemption prices
(expressed as a percentage of principal amount), together, in each case, with
accrued and unpaid interest to the redemption date, if redeemed during the
twelve-month period beginning on July 15, of each year listed below:

<TABLE>
<CAPTION>

         Year                                                   Percentage
         ----                                                   ----------
         <S>                                                    <C>
         2001...............................................      105.563%
         2002...............................................      103.708%
         2003...............................................      101.854%
         2004 and thereafter................................      100.000%
</TABLE>

   Notwithstanding the foregoing, the Company may redeem in the aggregate up to
35% of the original principal amount of Notes at any time and from time to time
prior to July 15, 1999 at a redemption price equal to 110% of the aggregate
principal amount so redeemed, plus accrued interest to the redemption date out
of the Net Proceeds of one or more Public Equity Offerings; provided, that at
least $130,000,000 of the principal amount of Notes originally issued remains
outstanding immediately after the occurrence of any such redemption and that any
such redemption occurs within 90 days following the closing of any such Public
Equity Offering.

   In the event of redemption of fewer than all of the Notes, the Trustee shall
select either on a pro rata basis or by lot or in such other manner as it shall
deem fair and appropriate the Notes to be redeemed. The Notes will be redeemable
in whole or in part upon not less than 30 nor more than 60 days' prior written
notice, mailed by first class mail to a holder's last address as it shall appear
on the register maintained by the Registrar of the Notes. If any Note is to be
redeemed in part only, the notice of redemption that relates to such Note shall
state the portion of the principal amount thereof to be redeemed. A new Note, in
a principal amount equal to the unredeemed portion thereof, will be issued in
the name of the holder thereof upon cancellation of the original Note. On and
after any redemption date, interest will cease to accrue on the Notes or
portions thereof called for redemption unless the Company shall fail to redeem
any such Note.

                                       78
<PAGE>
 
Subordination

   The indebtedness represented by the Notes is, to the extent and in the manner
provided in the Indenture, subordinated in right of payment to the prior
indefeasible payment and satisfaction in full in cash of all existing and future
Senior Indebtedness of the Company. As of March 31, 1996, after giving pro forma
effect to the application of the net proceeds of the offering of the Original
Notes, no Senior Indebtedness would have been outstanding.

   In the event of any insolvency or bankruptcy case or proceeding, or any
receivership, liquidation, arrangement, reorganization or other similar case or
proceeding in connection therewith, relative to the Company or to its creditors,
as such, or to its assets, whether voluntary or involuntary, or any liquidation,
dissolution or other winding-up of the Company, whether voluntary or involuntary
and whether or not involving insolvency or bankruptcy, or any general assignment
for the benefit of creditors or other marshalling of assets or liabilities of
the Company (except in connection with the merger or consolidation of the
Company or its liquidation or dissolution following the transfer of
substantially all of its assets, upon the terms and conditions permitted under
the circumstances described under "Mergers and Consolidations") (all of the
foregoing referred to herein individually as a "Bankruptcy Proceeding" and
collectively as "Bankruptcy Proceedings"), the holders of Senior Indebtedness of
the Company will be entitled to receive payment and satisfaction in full in cash
of all amounts due on or in respect of all Senior Indebtedness of the Company
before the holders of the Notes are entitled to receive or retain any payment or
distribution of any kind on account of the Notes. In the event that,
notwithstanding the foregoing, the Trustee or any holder of Notes receives any
payment or distribution of assets of the Company of any kind, whether in cash,
property or securities, including, without limitation, by way of set-off or
otherwise, in respect of the Notes before all Senior Indebtedness of the Company
is paid and satisfied in full in cash, then such payment or distribution will be
held by the recipient in trust for the benefit of holders of Senior Indebtedness
and will be immediately paid over or delivered to the holders of Senior
Indebtedness or their representative or representatives to the extent necessary
to make payment in full in cash of all Senior Indebtedness remaining unpaid,
after giving effect to any concurrent payment or distribution, or provision
therefor, to or for the holders of Senior Indebtedness. By reason of such
subordination, in the event of liquidation or insolvency, creditors of the
Company who are holders of Senior Indebtedness may recover more, ratably, than
other creditors of the Company, and creditors of the Company who are not holders
of Senior Indebtedness or of the Notes may recover more, ratably, than the
holders of the Notes.

   No payment or distribution of any assets or securities of the Company or any
Restricted Subsidiary of any kind or character (including, without limitation,
cash, property and any payment or distribution which may be payable or
deliverable by reason of the payment of any other Indebtedness of the Company
being subordinated to the payment of the Notes by the Company) may be made by or
on behalf of the Company or any Restricted Subsidiary, including, without
limitation, by way of set-off or otherwise, for or on account of the Notes, or
for or on account of the purchase, redemption or other acquisition of the Notes,
and neither the Trustee nor any holder or owner of any Notes shall take or
receive from the Company or any Restricted Subsidiary, directly or indirectly in
any manner, payment in respect of all or any portion of Notes following the
delivery by the representative of the holders of Designated Senior Indebtedness
("Representative") to the Trustee of written notice of (i) the occurrence of a
Payment Default or (ii) the occurrence of a Non-Payment Event of Default on
Designated Senior Indebtedness and the acceleration of the maturity of such
Designated Senior Indebtedness in accordance with its terms, and, in any such
event, such prohibition shall continue until such Payment Default is cured,
waived in writing or ceases to exist or such acceleration has been rescinded or
otherwise cured. At such time as the prohibition set forth in the preceding
sentence shall no longer be in effect, subject to the provisions of the
following paragraph, the Company shall resume making any and all required
payments in respect of the Notes, including any missed payments.

   Upon the occurrence of a Non-Payment Event of Default on Designated Senior
Indebtedness, no payment or distribution of any assets or securities of the
Company of any kind or character (including, without limitation, cash, property
and any payment or distribution which may be payable or deliverable by reason of
the payment of any other Indebtedness of the Company being subordinated to the
payment of the Notes by the Company) may be made by or on behalf of the Company,
including, without limitation, by way of set-off or otherwise, on account of the
Notes, or for or on account of the purchase, redemption, defeasance or other
acquisition of Notes, and neither the

                                       79
<PAGE>
 
Trustee nor any holder or owner of any Notes shall take or receive from the
Company or any Restricted Subsidiary, directly or indirectly in any manner,
payment in respect of all or any portion of the Notes, for a period (a "Payment
Blockage Period") commencing on the date of receipt by the Trustee of written
notice from the Representative of such Non-Payment Event of Default unless and
until (subject to any blockage of payments that may then be in effect under the
preceding paragraph) the earliest of (x) more than 179 days shall have elapsed
since receipt of such written notice by the Trustee, (y) such Non-Payment Event
of Default shall have been cured or waived in writing or shall have ceased to
exist or such Designated Senior Indebtedness shall have been paid in full or (z)
such Payment Blockage Period shall have been terminated by written notice to the
Company or the Trustee from such Representative, after which, in the case of
clause (x), (y) or (z), the Company shall resume making any and all required
payments in respect of the Notes, including any missed payments. Notwithstanding
any other provision of the Indenture, in no event shall a Payment Blockage
Period commenced in accordance with the provisions of the Indenture described in
this paragraph extend beyond 179 days from the date of the receipt by the
Trustee of the notice referred to above (the "Initial Blockage Period"). Any
number of additional Payment Blockage Periods may be commenced during the
Initial Blockage Period; provided, however, that no such additional Payment
Blockage Period shall extend beyond the Initial Blockage Period. After the
expiration of the Initial Blockage Period, no Payment Blockage Period may be
commenced until at least 180 consecutive days have elapsed from the last day of
the Initial Blockage Period. Notwithstanding any other provision of the
Indenture, no event of default with respect to Designated Senior Indebtedness
(other than a Payment Default) which existed or was continuing on the date of
the commencement of any Payment Blockage Period initiated by the Representative
shall be, or be made, the basis for the commencement of a second Payment
Blockage Period initiated by the Representative, whether or not within the
Initial Blockage Period, unless such event of default shall have been cured or
waived for a period of not less than 90 consecutive days.

   Each Guarantee will, to the extent set forth in the Indenture, be
subordinated in right of payment to the prior payment in full of all Senior
Indebtedness of the respective Guarantor, including obligations of such
Guarantor with respect to the Credit Facility (including any guarantee thereof),
and will be subject to the rights of holders of Designated Senior Indebtedness
of such Guarantor to initiate blockage periods, upon terms substantially
comparable to the subordination of the Notes to all Senior Indebtedness of the
Company.

   If the Company or any Guarantor fails to make any payment on the Notes or any
Guarantee, as the case may be, when due or within any applicable grace period,
whether or not on account of payment blockage provisions, such failure would
constitute an Event of Default under the Indenture and would enable the holders
of the Notes to accelerate the maturity thereof. See "--Events of Default."

   A holder of Notes by his acceptance of Notes agrees to be bound by such
provisions and authorizes and expressly directs the Trustee, on his behalf, to
take such action as may be necessary or appropriate to effectuate the
subordination provided for in the Indenture and appoints the Trustee his
attorney-in-fact for such purpose.

Certain Covenants

   The Indenture contains, among others, the following covenants. Except as
otherwise specified, all of the covenants described below will appear in the
Indenture.

 Limitation on Additional Indebtedness

   The Company will not, and will not permit any Restricted Subsidiary of the
Company to, directly or indirectly, incur (as defined) any Indebtedness
(including Acquired Indebtedness) unless (a) after giving effect to the
incurrence of such Indebtedness and the receipt and application of the proceeds
thereof, the ratio of the Company's total Indebtedness to the Company's Adjusted
EBITDA is less than 6.0 to 1 if the Indebtedness is incurred prior to July 15,
2001 and 5.5 to 1 if the Indebtedness is incurred thereafter; provided, however,
that if the Indebtedness which is the subject of a determination under this
provision is Acquired Indebtedness, or Indebtedness incurred in connection with
the simultaneous acquisition of any Person, business, property or assets, then
such ratio shall be determined by giving effect (on a pro forma basis, as if the
transaction had occurred at the beginning of the four

                                       80
<PAGE>
 
       quarter period ending at the end of the last fiscal quarter of such
       Person or business for which financial statements are available) to the
       incurrence or assumption of such Acquired Indebtedness or such other
       Indebtedness by the Company; and (b) no Default or Event of Default shall
       have occurred and be continuing at the time or as a consequence of the
       incurrence of such Indebtedness.

          Notwithstanding the foregoing, the Company and its Restricted
       Subsidiaries may incur Permitted Indebtedness; provided, that the Company
       will not incur any Permitted Indebtedness, without meeting the
       Indebtedness incurrence provisions of the preceding paragraph, that ranks
       pari passu or junior in right of payment to the Notes and that has a
       maturity or mandatory sinking fund payment prior to the maturity of the
       Notes.

          Notwithstanding the two preceding paragraphs, the Company will not
       permit any of its foreign Subsidiaries to incur any subordinated
       Indebtedness.

        Limitation on Restricted Payments

          The Company will not make, and will not permit any of its Restricted
       Subsidiaries to, directly or indirectly, make, any Restricted Payment,
       unless:

          (a) no Default or Event of Default shall have occurred and be
       continuing at the time of or immediately after giving effect to such
       Restricted Payment;

          (b) immediately after giving pro forma effect to such Restricted
       Payment, the Company could incur $1.00 of additional Indebtedness (other
       than Permitted Indebtedness) under the covenant set forth under
       "Limitation on Additional Indebtedness"; and

          (c) immediately after giving effect to such Restricted Payment, the
       aggregate of all Restricted Payments declared (except to the extent not
       made on the payment date) or made after the Issue Date does not exceed
       the sum of (1) 50% of the cumulative Consolidated Net Income of the
       Company subsequent to the Issue Date (or minus 100% of any cumulative
       deficit in Consolidated Net Income during such period) and (2) 100% of
       the aggregate Net Proceeds and the fair market value of securities or
       other property received by the Company from the issue or sale, after the
       Issue Date, of Capital Stock (other than Disqualified Capital Stock or
       Capital Stock of the Company issued to any Subsidiary of the Company) of
       the Company or any Indebtedness or other securities of the Company
       convertible into or exercisable or exchangeable for Capital Stock (other
       than Disqualified Capital Stock) of the Company which has been so
       converted or exercised or exchanged, as the case may be, and (3)
       $1,000,000. For purposes of determining under this clause (c) the amount
       expended for Restricted Payments, cash distributed shall be valued at the
       face amount thereof and property other than cash shall be valued at its
       fair market value.

          Notwithstanding the foregoing, the provisions of this covenant shall
       not prohibit (i) the payment of any distribution within 60 days after the
       date of declaration thereof, if at such date of declaration such payment
       would comply with the provisions of the Indenture, (ii) the retirement of
       any shares of Capital Stock of the Company or subordinated Indebtedness
       by conversion into, or by or in exchange for, shares of Capital Stock
       (other than Disqualified Capital Stock), or out of, the Net Proceeds of
       the substantially concurrent sale (other than to a Subsidiary of the
       Company) of other shares of Capital Stock of the Company (other than
       Disqualified Capital Stock), (iii) the redemption or retirement of
       Indebtedness of the Company subordinated to the Notes in exchange for, by
       conversion into, or out of the Net Proceeds of, a substantially
       concurrent sale or incurrence of Indebtedness (other than any
       Indebtedness owed to a Subsidiary) of the Company that is contractually
       subordinated in right of payment to the Notes to at least the same extent
       as the subordinated Indebtedness being redeemed or retired, (iv) the
       retirement of any shares of Disqualified Capital Stock by conversion
       into, or by exchange for, shares of Disqualified Capital Stock, or out of
       the Net Proceeds of the substantially concurrent sale (other than to a
       Subsidiary of the Company) of other shares of Disqualified Capital Stock,
       (v) Permitted Tax Distributions, (vi) the Real Estate Transactions, (vii)
       the Stock Redemption, (viii) distributions or other payments to the
       Permitted Holders, whether or not pro rata, provided, however, that the
       aggregate amount of all such distributions or payments under this clause
       (viii) made in any one year does not exceed $700,000 or (ix) additional
       payments to the Permitted Holders or

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       employees of the Company for repurchases of stock or repurchases pursuant
       to the Nonqualified Stock Option Plan; provided, however, that the
       aggregate amount of all such payments under this clause (ix) does not
       exceed $2,000,000 in the aggregate, exclusive of amounts funded by
       insurance proceeds and, provided, further, that with respect to clauses
       (viii) and (ix) (other than with respect to payments funded by insurance
       proceeds) no Default or Event of Default shall have occurred and be
       continuing at the time of any such distribution or payment or will occur
       immediately after giving effect to any such distribution or payment; and,
       provided, further, that, in determining the aggregate amount of all
       Restricted Payments made subsequent to the Issue Date, all distributions
       or payments made pursuant to clauses (viii) and (ix) (exclusive of
       insurance proceeds) shall be included.

          Not later than the date of making any Restricted Payment, the Company
       shall deliver to the Trustee an Officers' Certificate stating that such
       Restricted Payment is permitted and setting forth the basis upon which
       the calculations required by the covenant "Limitation on Restricted
       Payments" were computed, which calculations may be based upon the
       Company's latest available financial statements, and that no Default or
       Event of Default exists and is continuing and no Default or Event of
       Default will occur immediately after giving effect to any Restricted
       Payments.

        Limitation on Other Senior Subordinated Debt

          The Company will not, and will not permit any of its Restricted
       Subsidiaries to, directly or indirectly, incur, contingently or
       otherwise, any Indebtedness (other than the Notes and the Guarantees, as
       the case may be) that is both (i) subordinate in right of payment to any
       Senior Indebtedness of the Company or its Restricted Subsidiaries, as the
       case may be, and (ii) senior in right of payment to the Notes and the
       Guarantees, as the case may be. For purposes of this covenant,
       Indebtedness is deemed to be senior in right of payment to the Notes and
       the Guarantees, as the case may be, if it is not explicitly subordinate
       in right of payment to Senior Indebtedness at least to the same extent as
       the Notes and the Guarantees, as the case may be, are subordinate to
       Senior Indebtedness.

        Limitations on Investments

          The Company will not, and will not permit any of its Restricted
       Subsidiaries to, make any Investment other than (i) a Permitted
       Investment or (ii) an Investment that is made as a Restricted Payment in
       compliance with the "--Limitation on Restricted Payments" covenant, after
       the Issue Date.

        Limitations on Liens

          The Company will not, and will not permit any of its Restricted
       Subsidiaries to, create, incur or otherwise cause or suffer to exist or
       become effective any Liens of any kind (other than Permitted Liens) upon
       any property or asset of the Company or any Restricted Subsidiary or any
       shares of stock or debt of any Restricted Subsidiary which owns property
       or assets, now owned or hereafter acquired, in any case which secures
       Indebtedness pari passu with or subordinated to the Notes unless (i) if
       such Lien secures Indebtedness which is pari passu with the Notes, then
       the Notes are secured on an equal and ratable basis with the obligations
       so secured until such time as such obligation is no longer secured by a
       Lien or (ii) if such Lien secures Indebtedness which is subordinated to
       the Notes, any such Lien shall be subordinated to the Lien granted to the
       holders of the Notes in the same collateral to the same extent as such
       subordinated Indebtedness is subordinated to the Notes.

        Limitation on Transactions with Affiliates

          The Company will not, and will not permit any of its Restricted
       Subsidiaries to, directly or indirectly, enter into any transaction or
       series of related transactions (including, without limitation, the sale,
       purchase, exchange or lease of assets, property or services) with any
       Affiliate (including entities in which the Company or any of its
       Restricted Subsidiaries own a minority interest) or holder of 10% or more
       of the Company's Common Stock (an "Affiliate Transaction") or extend,
       renew, waive or otherwise modify the terms of any Affiliate Transaction
       entered into prior to the Issue Date unless (i) such Affiliate
       Transaction is between or among the Company and its Wholly-Owned
       Subsidiaries; (ii) such Affiliate Transaction is solely between or among
       Wholly-Owned Subsidiaries of the Company; or (iii) the terms of such
       Affiliate Transaction are fair and reasonable to the Company or such
       Restricted

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       Subsidiary, as the case may be, and the terms of such Affiliate
       Transaction are at least as favorable as the terms which could be
       obtained by the Company or such Restricted Subsidiary, as the case may
       be, in a comparable transaction made on an arm's-length basis between
       unaffiliated parties; provided, however,  that the Company and its
       Restricted Subsidiaries may renew any then existing Affiliate Transaction
       through either a renewal option or upon expiration of an arrangement on
       substantially similar terms to those in effect immediately preceding such
       expiration. In any Affiliate Transaction involving an amount or having a
       value in excess of $1 million which is not permitted under clause (i) or
       (ii) above, the Company must obtain a resolution of the Board of
       Directors certifying that such Affiliate Transaction complies with clause
       (iii) above. In transactions with a value in excess of $3 million which
       are not permitted under clause (i) or (ii) above, the Company must obtain
       a written opinion as to the fairness from a financial point of view of
       such a transaction from an independent investment banking firm or
       recognized real estate firm (as the case may be).

          The foregoing provisions will not apply to (i) any Restricted Payment
       that is not prohibited by the provisions described under "Limitations on
       Restricted Payments" contained herein, (ii) any transaction, approved by
       the Board of Directors of the Company in good faith, with an officer,
       director, employee or consultant of the Company or of any Subsidiary in
       his or her capacity as an officer, director, employee or consultant
       entered into in the ordinary course of business, including compensation,
       indemnity and employee benefit arrangements with any officer, director,
       employee or consultant of the Company or of any Subsidiary, or (iii)
       customary investment banking, underwriting, placement agent or financial
       advisor fees paid in connection with services rendered to the Company or
       any Subsidiary.

        Limitation on Creation of Subsidiaries

          The Company shall not create or acquire, nor permit any of its
       Restricted Subsidiaries to create or acquire, any Subsidiary other than
       (i) a Restricted Subsidiary existing as of the date of the Indenture,
       (ii) a Restricted Subsidiary that is acquired or created after the date
       of the Indenture, or (iii) an Unrestricted Subsidiary; provided, however,
       that each Restricted Subsidiary organized under the laws of the United
       States or any State thereof or the District of Columbia acquired or
       created pursuant to clause (ii) shall, at the time it has either assets
       or shareholder's equity in excess of $5,000, execute a guarantee, in the
       form attached to the Indenture and reasonably satisfactory in form and
       substance to the Trustee (and with such documentation relating thereto as
       the Trustee shall require, including, without limitation a supplement or
       amendment to the Indenture and opinions of counsel as to the
       enforceability of such guarantee). See "Future Guarantees."

        Limitation on Certain Asset Sales

          The Company will not, and will not permit any of its Restricted
       Subsidiaries to, consummate an Asset Sale unless (i) the Company or its
       Restricted Subsidiaries, as the case may be, receives consideration at
       the time of such sale or other disposition at least equal to the fair
       market value thereof (as determined for Asset Sales other than eminent
       domain, condemnation or similar government proceedings in good faith by
       the Company's board of directors, and evidenced by a board resolution);
       (ii) not less than 85% of the consideration received by the Company or
       its Subsidiaries, as the case may be, is in the form of cash or Temporary
       Cash Investments; and (iii) the Asset Sale Proceeds received by the
       Company or such Restricted Subsidiary are applied (a) first, to the
       extent the Company elects, or is required, to prepay, repay or purchase
       debt under any then existing Senior Indebtedness of the Company or any
       Restricted Subsidiary within 180 days following the receipt of the Asset
       Sale Proceeds from any Asset Sale; (b) second, to the extent of the
       balance of Asset Sale Proceeds after application as described above, to
       the extent the Company elects, to an investment in assets (including
       Capital Stock or other securities purchased in connection with the
       acquisition of Capital Stock or property of another Person) used or
       useful in businesses similar or ancillary to the business of the Company
       or Restricted Subsidiary as conducted at the time of such Asset Sale,
       provided that such investment occurs or the Company or a Restricted
       Subsidiary enters into contractual commitments to make such investment,
       subject only to customary conditions (other than the obtaining of
       financing), on or prior to the 181st day following receipt of such Asset
       Sale Proceeds (the "Reinvestment Date") and Asset Sale Proceeds
       contractually committed are so applied within 270 days following the
       receipt of such Asset Sale Proceeds; and (c) third, if on the
       Reinvestment Date with respect to any Asset Sale, the Available Asset
       Sale Proceeds exceed

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<PAGE>
 
       $10 million, the Company shall apply an amount equal to such Available
       Asset Sale Proceeds to an offer to repurchase the Notes, at a purchase
       price in cash equal to 100% of the principal amount thereof plus accrued
       and unpaid interest, if any, to the date of repurchase (an "Excess
       Proceeds Offer"). If an Excess Proceeds Offer is not fully subscribed,
       the Company may retain the portion of the Available Asset Sale Proceeds
       not required to repurchase Notes for general corporate purposes. If the
       aggregate principal amount of Notes tendered pursuant to such Excess
       Proceeds Offer is more than the amount of the Available Asset Sale
       Proceeds, the Notes tendered will be repurchased on a pro rata basis or
       by such other method as the Trustee shall deem fair and appropriate.

          If the Company is required to make an Excess Proceeds Offer, the
       Company shall mail, within 30 days following the Reinvestment Date, a
       notice to the holders stating, among other things: (1) that such holders
       have the right to require the Company to apply the Available Asset Sale
       Proceeds to repurchase such Notes at a purchase price in cash equal to
       100% of the principal amount thereof plus accrued and unpaid interest, if
       any, to the date of purchase; (2) the purchase date, which shall be no
       earlier than 30 days and not later than 60 days from the date such notice
       is mailed; (3) the instructions, determined by the Company, that each
       holder must follow in order to have such Notes repurchased; and (4) the
       calculations used in determining the amount of Available Asset Sale
       Proceeds to be applied to the repurchase of such Notes.

        Limitation on Preferred Stock of Restricted Subsidiaries

          The Company will not permit any Restricted Subsidiary to issue any
       Preferred Stock (except Preferred Stock to the Company or a Restricted
       Subsidiary) or permit any Person (other than the Company or a Subsidiary)
       to hold any such Preferred Stock unless the Company or such Restricted
       Subsidiary would be entitled to incur or assume Indebtedness under the
       covenant described under "--Limitation on Additional Indebtedness" in the
       aggregate principal amount equal to the aggregate liquidation value of
       the Preferred Stock to be issued; provided, however, that any Restricted
       Subsidiary that guarantees the Notes pursuant to the covenant described
       under "Limitation on Creation of Subsidiaries" shall be permitted to
       issue Preferred Stock that is not Disqualified Capital Stock.

        Limitation on Capital Stock of Restricted Subsidiaries

          The Company will not (i) sell, pledge, hypothecate or otherwise convey
       or dispose of any Capital Stock of a Restricted Subsidiary (other than
       under the terms of the Credit Facility or under the terms of any
       Designated Senior Indebtedness) or (ii) permit any of its Restricted
       Subsidiaries to issue any Capital Stock, other than to the Company or a
       Wholly-Owned Subsidiary of the Company. The foregoing restrictions shall
       not apply to an Asset Sale made in compliance with "Limitation on Certain
       Asset Sales" or the issuance of Preferred Stock in compliance with the
       covenants described under "--Limitation on Additional Indebtedness" or
       "--Limitation on Preferred Stock of Restricted Subsidiaries."

        Limitation on Sale and Lease-Back Transactions

          The Company will not, and will not permit any Restricted Subsidiary
       to, enter into any Sale and Lease-Back Transaction unless (i) the
       consideration received in such Sale and Lease-Back Transaction is at
       least equal to the fair market value of the property sold, as determined
       by a board resolution of the Company, and (ii) the Company could incur
       the Attributable Indebtedness in respect of such Sale and Lease-Back
       Transaction in compliance with the covenant described under "Limitation
       on Additional Indebtedness."

        Payments for Consent

          Neither the Company nor any of its Subsidiaries shall, directly or
       indirectly, pay or cause to be paid any consideration, whether by way of
       interest, fee or otherwise, to any holder of any Notes for or as an
       inducement to any consent, waiver or amendment of any of the terms or
       provisions of the Indenture or the Notes unless such consideration is
       offered to be paid or agreed to be paid to all holders of the Notes which
       so consent, waive or agree to amend in the time frame set forth in
       solicitation documents relating to such consent, waiver or agreement.

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<PAGE>
 
       Change of Control Offer

          Within 30 days of the occurrence of a Change of Control, the Company
       shall notify the Trustee in writing of such occurrence and shall make an
       offer to purchase (the "Change of Control Offer") the outstanding Notes
       at a purchase price equal to 101% of the principal amount thereof plus
       any accrued and unpaid interest thereon to the Change of Control Payment
       Date (as hereinafter defined) (such applicable purchase price being
       hereinafter referred to as the "Change of Control Purchase Price") in
       accordance with the procedures set forth in this covenant.

          Within 30 days of the occurrence of a Change of Control, the Company
       also shall (i) cause a notice of the Change of Control Offer to be sent
       at least once to the Dow Jones News Service or similar business news
       service in the United States and (ii) send by first-class mail, postage
       prepaid, to the Trustee and to each holder of the Notes, at the address
       appearing in the register maintained by the Registrar of the Notes, a
       notice stating:

          (1) that the Change of Control Offer is being made pursuant to this
       covenant and that all Notes tendered will be accepted for payment, and
       otherwise subject to the terms and conditions set forth herein;

          (2) the Change of Control Purchase Price and the purchase date (which
       shall be a Business Day no earlier than 20 business days from the date
       such notice is mailed (the "Change of Control Payment Date"));

          (3) that any Note not tendered will continue to accrue interest;

          (4) that, unless the Company defaults in the payment of the Change of
       Control Purchase Price, any Notes accepted for payment pursuant to the
       Change of Control Offer shall cease to accrue interest after the Change
       of Control Payment Date;

          (5) that holders accepting the offer to have their Notes purchased
       pursuant to a Change of Control Offer will be required to surrender the
       Notes to the Paying Agent at the address specified in the notice prior to
       the close of business on the Business Day preceding the Change of Control
       Payment Date;

          (6) that holders will be entitled to withdraw their acceptance if the
       Paying Agent receives, not later than the close of business on the third
       Business Day preceding the Change of Control Payment Date, a telegram,
       telex, facsimile transmission or letter setting forth the name of the
       holder, the principal amount of the Notes delivered for purchase, and a
       statement that such holder is withdrawing his election to have such Notes
       purchased;

          (7) that holders whose Notes are being purchased only in part will be
       issued new Notes equal in principal amount to the unpurchased portion of
       the Notes surrendered, provided  that each Note purchased and each such
       new Note issued shall be in an original principal amount in denominations
       of $1,000 and integral multiples thereof;

          (8) any other procedures that a holder must follow to accept a Change
       of Control Offer or effect withdrawal of such acceptance; and

          (9) the name and address of the Paying Agent.

          On the Change of Control Payment Date, the Company shall, to the
       extent lawful, (i) accept for payment Notes or portions thereof or
       beneficial interests under a Global Note properly tendered pursuant to
       the Change of Control Offer, (ii) deposit with the Paying Agent money
       sufficient to pay the purchase price of all Notes or portions thereof or
       beneficial interests so tendered and (iii) deliver or cause to be
       delivered to the Trustee Notes so accepted together with an Officers'
       Certificate stating the Notes or portions thereof tendered to the
       Company. The Paying Agent shall promptly (1) mail to each holder of Notes
       so accepted and (2) cause to be credited to the respective accounts of
       the holders under a Global Note of beneficial interest so accepted
       payment in an amount equal to the purchase price for such Notes, and the
       Company shall execute and issue, and the Trustee shall promptly
       authenticate and mail to such holder, a new Note equal in principal
       amount to any unpurchased portion of the Notes surrendered and shall
       issue a Global Note equal in principal amount to any unpurchased portion
       of beneficial interest so surrendered;

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<PAGE>
 
       provided that each such new Note shall be issued in an original principal
       amount in denominations of $1,000 and integral multiples thereof.

          The Indenture requires that if the Credit Facility is in effect, or
       any amounts are owing thereunder or in respect thereof, at the time of
       the occurrence of a Change of Control, prior to the mailing of the notice
       to holders described in the preceding paragraph, but in any event within
       30 days following any Change of Control, the Company covenants to (i)
       repay in full all obligations under or in respect of the Credit Facility
       or offer to repay in full all obligations under or in respect of the
       Credit Facility and repay the obligations under or in respect of the
       Credit Facility of each lender who has accepted such offer or (ii) obtain
       the requisite consent under the Credit Facility to permit the repurchase
       of the Notes as described above. The Company must first comply with the
       covenant described in the preceding sentence before it shall be required
       to purchase Notes in the event of a Change of Control; provided that the
       Company's failure to comply with the covenant described in the preceding
       sentence constitutes an Event of Default described in clause (iii) under
       "Events of Default" below if not cured within 60 days after the notice
       required by such clause. As a result of the foregoing, a holder of the
       Notes may not be able to compel the Company to purchase the Notes unless
       the Company is able at the time to refinance all of the obligations under
       or in respect of the Credit Facility or obtain requisite consents under
       the Credit Facility. Failure by the Company to make a Change of Control
       Offer when required by the Indenture constitutes a default under the
       Indenture and, if not cured within 60 days after notice, constitutes an
       Event of Default.

          The Indenture provides that, (A) if the Company or any Subsidiary
       thereof has issued any outstanding (i) Indebtedness that is subordinated
       in right of payment to the Notes or (ii) Preferred Stock, and the Company
       or such Subsidiary is required to make a Change of Control Offer or to
       make a distribution with respect to such subordinated Indebtedness or
       Preferred Stock in the event of a change of control, the Company shall
       not consummate any such offer or distribution with respect to such
       subordinated Indebtedness or Preferred Stock until such time as the
       Company shall have paid the Change of Control Purchase Price in full to
       the holders of Notes that have accepted the Company's Change of Control
       Offer and shall otherwise have consummated the Change of Control Offer
       made to holders of the Notes and (B) the Company will not issue
       Indebtedness that is subordinated in right of payment to the Notes or
       Preferred Stock with change of control provisions requiring the payment
       of such Indebtedness or Preferred Stock prior to the payment of the Notes
       in the event of a Change of Control under the Indenture.

          In the event that a Change of Control occurs and the holders of Notes
       exercise their right to require the Company to purchase Notes, if such
       purchase constitutes a "tender offer" for purposes of Rule 14e-1 under
       the Exchange Act at that time, the Company will comply with the
       requirements of Rule 14e-1 as then in effect with respect to such
       repurchase.

          The Company's ability to purchase the Notes will be limited by the
       Company's then available financial resources and, if such financial
       resources are insufficient, its ability to arrange financing to effect
       such purchases. There can be no assurance that the Company will have
       sufficient funds to repurchase the Notes upon a Change of Control or that
       the Company will be able to arrange financing for such purpose.

       Merger, Consolidation or Sale of Assets

          The Company will not and will not permit any Guarantor to consolidate
       with, merge with or into, or transfer all or substantially all of its
       assets (as an entirety or substantially as an entirety in one transaction
       or a series of related transactions), to any Person unless: (i) the
       Company or the Guarantor, as the case may be, shall be the continuing
       Person, or the Person (if other than the Company or the Guarantor) formed
       by such consolidation or into which the Company or the Guarantor, as the
       case may be, is merged or to which the properties and assets of the
       Company or the Guarantor, as the case may be, are transferred shall be a
       corporation organized and existing under the laws of the United States or
       any State thereof or the District of Columbia and shall expressly assume,
       by a supplemental indenture, executed and delivered to the Trustee, in
       form satisfactory to the Trustee, all of the obligations of the Company
       or the Guarantor, as the case may be, under the Notes and the Indenture,
       and the obligations under the Indenture shall remain in full force and
       effect; (ii) immediately before and immediately after

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<PAGE>
 
       giving effect to such transaction, no Default or Event of Default shall
       have occurred and be continuing; and (iii) immediately after giving
       effect to such transaction on a pro forma basis the Company or such
       Person could incur at least $1.00 of additional Indebtedness (other than
       Permitted Indebtedness) under the covenant set forth under "Limitation on
       Additional Indebtedness"; provided, however, that a Guarantor may merge
       into the Company or another Guarantor without complying with this clause
       (iii).

          In connection with any consolidation, merger or transfer of assets
       contemplated by this provision, the Company shall deliver, or cause to be
       delivered, to the Trustee, in form and substance reasonably satisfactory
       to the Trustee, an Officers' Certificate and an opinion of counsel, each
       stating that such consolidation, merger or transfer and the supplemental
       indenture in respect thereto comply with this provision and that all
       conditions precedent herein provided for relating to such transaction or
       transactions have been complied with.

       Future Guarantees

          The Notes will be guaranteed on a senior subordinated basis by the
       Guarantors. All payments pursuant to the Guarantees by the Guarantors
       will be subordinated in right of payment to the prior payment in full of
       all Senior Indebtedness of the Guarantor, to the same extent and in the
       same manner that all payments pursuant to the Notes are subordinated in
       right of payment to the prior payment in full of all Senior Indebtedness
       of the Company.

          The obligations of each Guarantor will be limited to the maximum
       amount as will, after giving effect to all other contingent and fixed
       liabilities of such Guarantor (including, without limitation, any
       guarantees of Senior Indebtedness) and after giving effect to any
       collections from or payments made by or on behalf of any other Guarantor
       in respect of the obligations of such other Guarantor under its Guarantee
       or pursuant to its contribution obligations under the Indenture, result
       in the obligations of such Guarantor under the Guarantee not constituting
       a fraudulent conveyance or fraudulent transfer under federal or state
       law. Each Guarantor that makes a payment or distribution under a
       Guarantee will be entitled to a contribution from each other Guarantor in
       a pro rata amount based on the Adjusted Net Assets of each Subsidiary
       Guarantor.

          A Guarantor will be released from all of its obligations under its
       Guarantee if all or substantially all of its assets are sold or all of
       its Capital Stock is sold, in each case in a transaction in compliance
       with the covenant described under "Limitation on Certain Asset Sales," or
       the Guarantor merges with or into or consolidates with, or transfers all
       or substantially all of its assets to, the Company or another Guarantor
       in a transaction in compliance with "Merger, Consolidation or Sale of
       Assets," and such Guarantor has delivered to the Trustee an Officers'
       Certificate and an opinion of counsel, each stating that all conditions
       precedent herein provided for relating to such transaction have been
       complied with.

       Events of Default

          The following events are defined in the Indenture as "Events of
       Default":

          (i) default in payment of any principal of, or premium, if any, on the
       Notes;

          (ii) default for 30 days in payment of any interest on the Notes after
       such interest becomes due and payable;

          (iii) default by the Company or any Guarantor in the observance or
       performance of any other covenant in the Notes or the Indenture for 60
       days after written notice from the Trustee or the holders of not less
       than 25% in aggregate principal amount of the Notes then outstanding;

          (iv) default in the payment at final maturity of principal in an
       aggregate amount of $3,000,000 or more with respect to any Indebtedness
       of the Company or any Restricted Subsidiary thereof which default shall
       not be cured, waived or postponed pursuant to an agreement with the
       holders of such Indebtedness within 60 days after written notice as
       provided in the Indenture, or the acceleration of any such Indebtedness
       aggregating $3,000,000 or more which acceleration shall not be rescinded
       or annulled within 20 days after written notice as provided in the

                                       87
<PAGE>
 
       Indenture;

          (v) any final judgment or judgments which can no longer be appealed
       for the payment of money in excess of $3,000,000 (which are not paid or
       covered by third party insurance by financially sound insurers that have
       not disclaimed coverage) shall be rendered against the Company or any
       Restricted Subsidiary thereof, and shall not be discharged for any period
       of 60 consecutive days during which a stay of enforcement shall not be in
       effect; and

          (vi) certain events involving bankruptcy, insolvency or reorganization
       of the Company or any Restricted Subsidiary thereof.

          The Indenture provides that the Trustee may withhold notice to the
       holders of the Notes of any default (except in payment of principal or
       premium, if any, or interest on the Notes) if the Trustee considers it to
       be in the best interest of the holders of the Notes to do so.

          The Indenture provides that if an Event of Default (other than an
       Event of Default resulting from certain events of bankruptcy, insolvency
       or reorganization) shall have occurred and be continuing, then the
       Trustee or the holders of not less than 25% in aggregate principal amount
       of the Notes then outstanding may declare to be immediately due and
       payable the entire principal amount of all the Notes then outstanding
       plus accrued interest to the date of acceleration and (i) such amounts
       shall become immediately due and payable or (ii) if there are any amounts
       outstanding under or in respect of the Credit Facility such amounts shall
       become due and payable upon the first to occur of an acceleration of
       amounts outstanding under or in respect of the Credit Facility or five
       business days after receipt by the Company and the representative of the
       holders of Senior Indebtedness under or in respect of the Credit
       Facility, of notice of the acceleration of the Notes; provided, however,
       that after such acceleration but before a judgment or decree based on
       acceleration is obtained by the Trustee, the holders of a majority in
       aggregate principal amount of outstanding Notes may, under certain
       circumstances, rescind and annul such acceleration if all Events of
       Default, other than nonpayment of accelerated principal, premium or
       interest, have been cured or waived as provided in the Indenture. In case
       an Event of Default resulting from certain events of bankruptcy,
       insolvency or reorganization shall occur, the principal, premium and
       interest amount with respect to all of the Notes shall be due and payable
       immediately without any declaration or other act on the part of the
       Trustee or the holders of the Notes.

          The holders of a majority in principal amount of the Notes then
       outstanding shall have the right to waive any existing default or
       compliance with any provision of the Indenture or the Notes and to direct
       the time, method and place of conducting any proceeding for any remedy
       available to the Trustee, subject to certain limitations specified in the
       Indenture.

          No holder of any Note will have any right to institute any proceeding
       with respect to the Indenture or for any remedy thereunder, unless such
       holder shall have previously given to the Trustee written notice of a
       continuing Event of Default and unless also the holders of at least 25%
       in aggregate principal amount of the outstanding Notes shall have made
       written request and offered reasonable indemnity to the Trustee to
       institute such proceeding as a trustee, and unless the Trustee shall not
       have received from the holders of a majority in aggregate principal
       amount of the outstanding Notes a direction inconsistent with such
       request and shall have failed to institute such proceeding within 60
       days. However, such limitations do not apply to a suit instituted on such
       Note on or after the respective due dates expressed in such Note.

       Defeasance and Covenant Defeasance

          The Indenture provides the Company may elect either (a) to defease and
       be discharged from any and all obligations with respect to the Notes
       (except for the obligations to register the transfer or exchange of such
       Notes, to replace temporary or mutilated, destroyed, lost or stolen
       Notes, to maintain an office or agency in respect of the Notes and to
       hold monies for payment in trust) ("defeasance") or (b) to be released
       from its obligations with respect to the Notes under certain covenants
       contained in the Indenture and described above under "Certain Covenants"
       ("covenant defeasance"), upon the deposit with the Trustee (or other
       qualifying trustee), in trust for such purpose,

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       of money and/or U.S. Government Obligations which through the payment of
       principal and interest in accordance with their terms will provide money,
       in an amount sufficient to pay the principal of, premium, if any, and
       interest on the Notes, on the scheduled due dates therefor or on a
       selected date of redemption in accordance with the terms of the
       Indenture. Such a trust may only be established if, among other things,
       the Company has delivered to the Trustee an opinion of counsel (as
       specified in the Indenture) (i) to the effect that neither the trust nor
       the Trustee will be required to register as an investment company under
       the Investment Company Act of 1940, as amended, and (ii) to the effect
       that holders of the Notes or persons in their positions will not
       recognize income, gain or loss for federal income tax purposes as a
       result of such deposit, defeasance and discharge and will be subject to
       federal income tax on the same amount and in the same manner and at the
       same times, as would have been the case if such deposit, defeasance and
       discharge had not occurred, which, in the case of defeasance only, must
       be based upon a private letter ruling concerning the Notes, a published
       ruling of the Internal Revenue Service or a change in applicable federal
       income tax law.

       Modification of Indenture

          From time to time, the Company, the Guarantors, if applicable, and the
       Trustee may, without the consent of holders of the Notes, modify, amend,
       waive or supplement the provisions of the Indenture or the Notes for
       certain specified purposes, including providing for uncertificated Notes
       in addition to certificated Notes, and curing any ambiguity, defect or
       inconsistency, or making any other change that does not materially and
       adversely affect the rights of any holder. The Indenture contains
       provisions permitting the Company, the Guarantors, if applicable, and the
       Trustee, with the consent of holders of at least a majority in principal
       amount of the outstanding Notes, to modify, amend, waive or supplement
       the Indenture or the Notes, except that no such modification shall,
       without the consent of each holder affected thereby, (i) reduce the
       amount of Notes whose holders must consent to an amendment, supplement,
       or waiver to the Indenture or the Notes, (ii) reduce the rate of or
       change the time for payment of interest on any Note, (iii) reduce the
       principal of or premium on or change the stated maturity of any Note,
       (iv) make any Note payable in money other than that stated in the Note or
       change the place of payment from New York, New York, (v) change the
       amount or time of any payment required by the Notes or reduce the premium
       payable upon any redemption of Notes, or change the time before which no
       such redemption may be made, (vi) waive a default on the payment of the
       principal of, interest on, or redemption payment with respect to any
       Note, or (vii) take any other action otherwise prohibited by the
       Indenture to be taken without the consent of each holder affected
       thereby.

          The consent of the holders is not necessary to approve the particular
       form of a proposed amendment. It is sufficient if such consent approves
       the substance of the proposed amendment.

       Reports to Holders

          So long as the Company is subject to the periodic reporting
       requirements of the Exchange Act, it will continue to furnish the
       information required thereby to the Commission and to the holders of the
       Notes. The Indenture provides that even if the Company is entitled under
       the Exchange Act not to furnish such information to the Commission or to
       the holders of the Notes, it will nonetheless continue to furnish such
       information to the Commission and holders of the Notes.

       Compliance Certificate

          The Company will deliver to the Trustee on or before 100 days after
       the end of the Company's fiscal year and on or before 50 days after the
       end of each the first, second and third fiscal quarters in each year an
       Officers' Certificate stating whether or not the signers know of any
       Default or Event of Default that has occurred. If they do, the
       certificate will describe the Default or Event of Default and its status.

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       The Trustee

          The Trustee under the Indenture is the Registrar and Paying Agent with
       regard to the Notes. The Indenture provides that, except during the
       continuance of an Event of Default which is continuing, the Trustee will
       perform only such duties as are specifically set forth in the Indenture.
       During the existence of an Event of Default which is continuing, the
       Trustee will exercise such rights and powers vested in it under the
       Indenture and use the same degree of care and skill in its exercise as a
       prudent person would exercise under the circumstances in the conduct of
       such person's own affairs.

       Transfer and Exchange

          Holders of the Notes may transfer or exchange Notes in accordance with
       the Indenture. The Registrar under such Indenture may require a holder,
       among other things, to furnish appropriate endorsements and transfer
       documents, and to pay any taxes and fees required by law or permitted by
       the Indenture. The Registrar is not required to transfer or exchange any
       Note selected for redemption. Also, the Registrar is not required to
       transfer or exchange any Note for a period of 15 days before selection of
       the Notes to be redeemed.

          The Original Notes were issued in a transaction exempt from
       registration under the Securities Act and are subject to restrictions on
       transfer.

          The registered holder of a Note may be treated as the owner of it for
       all purposes.

       Certain Definitions

          Set forth below is a summary of certain of the defined terms used in
       the covenants contained in the Indenture. Reference is made to the
       Indenture for the full definition of all such terms as well as any other
       capitalized terms used herein for which no definition is provided.

          "Acquired Indebtedness" means Indebtedness of a Person (including an
       Unrestricted Subsidiary) existing at the time such Person becomes a
       Restricted Subsidiary or assumed in connection with the acquisition of
       assets from a Person.

          "Acquisition EBITDA" means, without duplication, (i) EBITDA for the
       last four fiscal quarters for which financial statements are available at
       the date of determination (the "Acquisition EBITDA Period") with respect
       to a business or Person which has been acquired by the Company or one of
       its Restricted Subsidiaries or which is the subject of a binding
       acquisition agreement requiring the calculation of EBITDA for purposes of
       the covenant restricting the incurrence of Indebtedness and, in each
       case, with respect to which financial results on a consolidated basis
       with the Company have not been made available for an entire fiscal
       quarter; plus (ii) in connection with any such acquisition, projected
       quantifiable improvements in operating results due to an established
       program of cost reductions (consistent with the cost reductions actually
       achieved by the Company in connection with prior acquisitions) adopted,
       in good faith, by the Company or one of its Restricted Subsidiaries
       through a Board Resolution certified by an Officers' Certificate filed
       with the Trustee (calculated on a pro forma basis for the Acquisition
       EBITDA Period as if the program had been implemented at the beginning of
       the Acquisition EBITDA Period), without giving effect to any operating
       losses of the acquired Person. Such Officers' Certificate shall confirm
       that any such anticipated cost reductions made in connection with an
       acquisition with a purchase price in excess of $25 million have been
       reviewed for reasonableness and consistency with past practice by an
       independent nationally recognized investment banking firm and such firm
       shall not have raised any material objections thereto. Each such
       Officers' Certificate shall be signed by the Chief Financial Officer and
       another officer of the Company. Acquisition EBITDA of a business shall be
       a fixed number determined as of the date the calculation of EBITDA for
       purposes of the covenant restricting the incurrence of Indebtedness is
       first required with respect to the acquisition of such business (the
       "Determination Date") and shall be utilized from the Determination Date
       through the date financial results are available for the first full
       fiscal quarter following the acquisition (following which the actual
       EBITDA of such business or Person shall be included in the EBITDA of the
       Company). For purposes of determining

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<PAGE>
 
       Acquisition EBITDA with respect to the acquisition of a particular
       business or Person, Acquisition EBITDA shall include not only the
       Acquisition EBITDA of such business or Person, but also the Acquisition
       EBITDA of any business previously acquired by the Company or the subject
       of a pending acquisition agreement to the extent that, as of the
       Determination Date, the financial results for such business or Person on
       a consolidated basis with the Company for a full fiscal quarter
       subsequent to its acquisition by the Company are not yet available.

          "Adjusted EBITDA" means for any Person, without duplication, the sum
       of (a) EBITDA of such Person and its Restricted Subsidiaries for the most
       recent fiscal quarter for which internal financial statements are
       available, multiplied by four and (b) Acquisition EBITDA.

          "Adjusted Net Assets" of a Guarantor at any date shall mean the lesser
       of the amount by which (x) the fair value of the property of such
       Guarantor exceeds the total amount of liabilities, including, without
       limitation, contingent liabilities (after giving effect to all other
       fixed and contingent liabilities (including, without limitation, any
       guarantees of Senior Indebtedness)), but excluding liabilities under the
       Guarantee, of such Guarantor at such date and (y) the present fair
       salable value of the assets of such Guarantor at such date exceeds the
       amount that will be required to pay the probable liability of such
       Guarantor on its debts (after giving effect to all other fixed and
       contingent liabilities (including, without limitation, any guarantees of
       Senior Indebtedness) and after giving effect to any collection from any
       Subsidiary of such Guarantor in respect of the obligations of such
       Subsidiary under the Guarantee), excluding Indebtedness in respect of the
       Guarantee, as they become absolute and matured.

          "Affiliate" of any specified Person means any other Person which
       directly or indirectly through one or more intermediaries controls, or is
       controlled by, or is under common control with, such specified Person.
       For the purposes of this definition, "control" (including, with
       correlative meanings, the terms "controlling," "controlled by," and
       "under common control with"), as used with respect to any Person, means
       the possession, directly or indirectly, of the power to direct or cause
       the direction of the management or policies of such Person, whether
       through the ownership of voting securities, by agreement or otherwise.

          "Asset Sale" means the sale, transfer or other disposition (other than
       to the Company or any of its Restricted Subsidiaries) in any single
       transaction or series of related transactions involving assets with a
       fair market value in excess of $500,000 of (a) any Capital Stock of or
       other equity interest in any Restricted Subsidiary of the Company, (b)
       all or substantially all of the assets of the Company or of any
       Restricted Subsidiary thereof, (c) real property of the Company or a
       Restricted Subsidiary or (d) all or substantially all of the assets of
       any business property, or part thereof, owned by the Company or any
       Restricted Subsidiary thereof, or a division, line of business or
       comparable business segment of the Company or any Restricted Subsidiary
       thereof; provided that Asset Sales shall not include (i) sales, leases,
       conveyances, transfers or other dispositions to the Company or to a
       Restricted Subsidiary or to any other Person if after giving effect to
       such sale, lease, conveyance, transfer or other disposition such other
       Person becomes a Restricted Subsidiary, (ii) transactions complying with
       "Merger, Consolidation or Sale of Assets" above and (iii) transfers or
       other distributions of assets which constitute (1) Permitted Investments
       or (2) Restricted Payments made in compliance with the covenant described
       under "Certain Covenants--Limitation on Restricted Payments."

          "Asset Sale Proceeds" means, with respect to any Asset Sale, (i) cash
       received by the Company or any Restricted Subsidiary from such Asset Sale
       (including cash received as consideration for the assumption of
       liabilities incurred in connection with or in anticipation of such Asset
       Sale), after (a) provision for all income or other taxes measured by or
       resulting from such Asset Sale; provided, however, that so long as the
       Company is taxed as an S corporation or other pass-through entity for
       federal income tax purposes, taxes shall be determined on a pro forma
       basis as if the Company was a C corporation, (b) payment of all brokerage
       commissions, underwriting and other fees and expenses related to such
       Asset Sale, (c) provision for minority interest holders in any Restricted
       Subsidiary as a result of such Asset Sale, (d) payments made to retire
       Indebtedness secured by the assets subject to such Asset Sale and (e)
       deduction of appropriate amounts to be provided by the Company or a
       Restricted Subsidiary as a reserve, in accordance with GAAP, against any
       liabilities associated with the assets sold or disposed of in such Asset
       Sale and retained by the Company or a Restricted Subsidiary after such
       Asset Sale, including, without limitation, pension and other post
       employment benefit liabilities and liabilities related to environmental
       matters or against any indemnification obligations associated with the
       assets sold or disposed of

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<PAGE>
 
       in such Asset Sale, and (ii) promissory notes and other non-cash
       consideration received by the Company or any Restricted Subsidiary from
       such Asset Sale or other disposition upon the liquidation or conversion
       of such notes or non-cash consideration into cash.

          "Attributable Indebtedness" under the Indenture in respect of a Sale
       and Lease-Back Transaction means, as of the time of determination, the
       greater of (i) the fair value of the property subject to such arrangement
       (as determined by the Board of Directors) and (ii) the present value
       (discounted at the rate of interest implicit in such transaction) of the
       total obligations of the lessee for rental payments during the remaining
       term of the lease included in such Sale and Lease-Back Transaction
       (including any period for which such lease has been extended).

          "Available Asset Sale Proceeds" means, with respect to any Asset Sale,
       the aggregate Asset Sale Proceeds from such Asset Sales that have not
       been applied in accordance with clauses (iii)(a) or (iii)(b), and which
       has not yet been the basis for an Excess Proceeds Offer in accordance
       with clause (iii)(c), of the first paragraph of "Certain Covenants--
       Limitation on Certain Asset Sales".

          "Capital Stock" means, with respect to any Person, any and all shares
       or other equivalents (however designated) of capital stock, partnership
       interests or any other participation, right or other interest in the
       nature of an equity interest in such Person or any option, warrant or
       other security convertible into any of the foregoing.

          "Capitalized Lease Obligations" means Indebtedness represented by
       obligations under a lease that is required to be capitalized for
       financial reporting purposes in accordance with GAAP, and the amount of
       such Indebtedness shall be the capitalized amount of such obligations
       determined in accordance with GAAP.

          A "Change of Control" of the Company will be deemed to have occurred
       at such time as (i) any Person (including a Person's Affiliates and
       associates), other than a Permitted Holder, becomes the beneficial owner
       (as defined under Rule 13d-3 or any successor rule or regulation
       promulgated under the Exchange Act) of more than 50% of the total voting
       power of the Company's Common Stock, (ii) any Person (including a
       Person's Affiliates and associates), other than a Permitted Holder,
       becomes the beneficial owner of more than 33/1//3% of the total voting
       power of the Company's Common Stock, and the Permitted Holders
       beneficially own, in the aggregate, a lesser percentage of the total
       voting power of the Common Stock of the Company than such other Person
       and do not have the right or ability by voting power, contract or
       otherwise to elect or designate for election a majority of the Board of
       Directors of the Company, (iii) there shall be consummated any
       consolidation or merger of the Company in which the Company is not the
       continuing or surviving corporation or pursuant to which the Common Stock
       of the Company would be converted into cash, securities or other
       property, other than a merger or consolidation of the Company in which
       the holders of the Common Stock of the Company outstanding immediately
       prior to the consolidation or merger hold, directly or indirectly, at
       least a majority of the Common Stock of the surviving corporation
       immediately after such consolidation or merger, (iv) during any period of
       two consecutive years, individuals who at the beginning of such period
       constituted the Board of Directors of the Company (together with any new
       directors whose election by such Board of Directors or whose nomination
       for election by the shareholders of the Company has been approved by a
       majority of the directors then still in office who either were directors
       at the beginning of such period or whose election or recommendation for
       election was previously so approved) cease to constitute a majority of
       the Board of Directors of the Company or (v) J. Peter Pierce shall no
       longer be involved in the strategic planning of the Company (as
       President, Chairman of the Board or otherwise), other than by reason of
       his death or disability; provided, however, that upon the consummation of
       an initial public offering of common equity securities of the Company
       yielding gross proceeds to the Company of at least $20,000,000 this
       clause (v) shall cease to constitute a "Change of Control" under the
       Indenture.

          "Common Stock" of any Person means all Capital Stock of such Person
       that is generally entitled to (i) vote in the election of directors of
       such Person or (ii) if such Person is not a corporation, vote or
       otherwise participate in the selection of the governing body, partners,
       managers or others that will control the management and policies of such
       Person.

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          "Consolidated Interest Expense" means, with respect to any Person, for
       any period, the aggregate amount of interest which, in conformity with
       GAAP, would be set forth opposite the caption "interest expense" or any
       like caption on an income statement for such Person and its Subsidiaries
       on a consolidated basis for such period (including, but not limited to,
       Redeemable Dividends, whether paid or accrued, on Preferred Stock of a
       Subsidiary, imputed interest included in Capitalized Lease Obligations,
       all commissions, discounts and other fees and charges owed with respect
       to letters of credit and bankers' acceptance financing, the net costs
       associated with hedging obligations, the interest portion of any deferred
       payment obligation, amortization of discount or premium, if any, and all
       other non-cash interest expense (other than interest amortized to cost of
       sales)) plus, without duplication, all net capitalized interest for such
       period and all interest paid under any guarantee of Indebtedness
       (including a guarantee of principal, interest or any combination thereof)
       of any Person, plus the amount of all dividends or distributions paid on
       Disqualified Capital Stock (other than dividends paid or payable in
       shares of Capital Stock of the Company).

          "Consolidated Net Income" means, with respect to any Person, for any
       period, the aggregate of the Net Income of such Person and its
       Subsidiaries for such period, on a consolidated basis, determined in
       accordance with GAAP provided, however, that (a) the Net Income of any
       Person (the "other Person") in which the Person in question or any of its
       Subsidiaries has less than a 99% interest (which interest does not cause
       the net income of such other Person to be consolidated into the net
       income of the Person in question in accordance with GAAP) shall be
       included only to the extent of the amount of dividends or distributions
       paid to the Person in question or the Subsidiary, (b) the Net Income of
       any Subsidiary of the Person in question, which Subsidiary is subject to
       any restriction or limitation on the payment of dividends or the making
       of other distributions (other than pursuant to the Notes or the
       Indenture), shall be excluded to the extent of such restriction or
       limitation (provided that if any such restriction or limitation by its
       terms takes effect upon the occurrence of a default or event of default,
       such exclusion shall become effective only upon the occurrence of such
       default or event of default which is continuing), (c)(i) the Net Income
       of any Person acquired in a pooling of interests transaction for any
       period prior to the date of such acquisition and (ii) any net gain (but
       not loss) resulting from an Asset Sale by the Person in question or any
       of its Subsidiaries other than in the ordinary course of business shall
       be excluded, and (d) extraordinary, unusual and nonrecurring gains and
       losses shall be excluded.

          "Credit Facility" means the credit agreement or credit agreements to
       be entered into by and among the Company, the Restricted Subsidiaries and
       any one or more lenders from time to time parties thereto, as the same
       may be amended, extended, increased, renewed, restated, supplemented or
       otherwise modified (in whole or in part, and without limitation as to
       amount, terms, conditions, covenants and other provisions) from time to
       time, and any agreement or agreements governing Indebtedness incurred to
       refinance, replace, restructure or refund in whole or in part the
       borrowings and then maximum commitments under the Credit Facility or such
       agreement (whether with the original administrative agent and lenders or
       other agents and lenders or otherwise, and whether provided under the
       original Credit Facility or other credit agreements or otherwise). The
       Company shall promptly notify the Trustee of any such refunding,
       replacement, restructuring or refinancing of the Credit Facility.

          "Designated Senior Indebtedness," as to the Company or any Guarantor,
       as the case may be, means any Senior Indebtedness (a) under the Credit
       Facility, or (b) which at the time of determination exceeds $15 million
       in aggregate principal amount (or accredit value in the case of
       Indebtedness issued at a discount) outstanding or available under a
       committed facility, and (i), unless such designation is prohibited by the
       Credit Facility, which is specifically designated in the instrument
       evidencing such Senior Indebtedness as "Designated Senior Indebtedness"
       by such Person and (ii) as to which the Trustee has been given written
       notice of such designation.

          "Disqualified Capital Stock" means any Capital Stock of the Company or
       a Restricted Subsidiary thereof which, by its terms (or by the terms of
       any security into which it is convertible or for which it is exchangeable
       at the option of the holder), or upon the happening of any event, matures
       or is mandatorily redeemable, pursuant to a sinking fund obligation or
       otherwise, or is redeemable at the option of the holder thereof, in whole
       or in part, on or prior to the maturity date of the Notes, for cash or
       securities constituting Indebtedness. Without limitation of the
       foregoing, Disqualified Capital Stock shall be deemed to include (i) any
       Preferred Stock of a Restricted Subsidiary of the Company and (ii) any
       Preferred Stock of the Company, with respect to either of which, under
       the terms of

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<PAGE>
 
       such Preferred Stock, by agreement or otherwise, such Restricted
       Subsidiary or the Company is obligated to pay current dividends or
       distributions in cash during the period prior to the maturity date of the
       Notes; provided, however, that Preferred Stock of the Company or any
       Restricted Subsidiary thereof that is issued with the benefit of
       provisions requiring a change of control offer to be made for such
       Preferred Stock in the event of a change of control of the Company or
       Restricted Subsidiary, which provisions have substantially the same
       effect as the provisions of the Indenture described under "Change of
       Control," shall not be deemed to be Disqualified Capital Stock solely by
       virtue of such provisions, and provided, further, that Capital Stock
       owned by the Company or a wholly-owned Restricted Subsidiary shall not
       constitute Disqualified Capital Stock.

          "EBITDA" means, for any Person, for any period, an amount equal to (a)
       the sum of (i) Consolidated Net Income for such period, plus (ii) the
       provision for taxes for such period based on income or profits to the
       extent such income or profits were included in computing Consolidated Net
       Income and any provision for taxes utilized in computing net loss under
       clause (i) hereof, plus (iii) Consolidated Interest Expense for such
       period (but only including Redeemable Dividends in the calculation of
       such Consolidated Interest Expense to the extent that such Redeemable
       Dividends have not been excluded in the calculation of Consolidated Net
       Income), plus (iv) depreciation for such period on a consolidated basis,
       plus (v) amortization of intangibles and other deferred financing fees
       for such period on a consolidated basis, plus (vi) any other non-cash
       items reducing Consolidated Net Income for such period, plus (vii) any
       payments to Permitted Holders not exceeding $700,000 per year permitted
       under clause (vi) of "Certain Covenants--Limitations on Restricted
       Payments," plus (viii) Permitted Tax Distributions, except that with
       respect to the Company each of the foregoing items shall be determined on
       a consolidated basis with respect to the Company and its Restricted
       Subsidiaries only, plus (ix) for any calculation of EBITDA utilizing the
       three month period ending June 30, 1996 or September 30, 1996, the amount
       of pro forma savings with respect to the Real Estate Transactions set
       forth in the Prospectus (without duplication for amounts actually
       realized and included in EBITDA).

          "Exchange Act" means the Securities Exchange Act of 1934, as amended.

          "GAAP" means generally accepted accounting principles consistently
       applied as in effect in the United States from time to time.

          "incur" means, with respect to any Indebtedness or other obligation of
       any Person, to create, issue, incur (by conversion, exchange or
       otherwise), assume, guarantee or otherwise become liable in respect of
       such Indebtedness or other obligation or the recording (other than
       previously recorded), as required pursuant to GAAP or otherwise, of any
       such Indebtedness or other obligation on the balance sheet of such person
       (and "incurrence," "incurred," "incurable," and "incurring" shall have
       meanings correlative to the foregoing); provided that a change in GAAP
       that results in an obligation of such Person that exists at such time
       becoming Indebtedness shall not be deemed an incurrence of such
       Indebtedness.

          "Indebtedness" means (without duplication), with respect to any
       Person, any indebtedness at any time outstanding, secured or unsecured,
       contingent or otherwise, which is for borrowed money (whether or not the
       recourse of the lender is to the whole of the assets of such Person or
       only to a portion thereof), or evidenced by bonds, notes, debentures or
       similar instruments or representing the balance deferred and unpaid of
       the purchase price of any property (excluding, without limitation, any
       balances that constitute accounts payable or trade payables, and other
       accrued liabilities arising in the ordinary course of business) if and to
       the extent any of the foregoing indebtedness would appear as a liability
       upon a balance sheet of such Person prepared in accordance with GAAP, and
       shall also include, to the extent not otherwise included (i) any
       Capitalized Lease Obligations, (ii) obligations secured by a Lien to
       which the property or assets owned or held by such Person is subject,
       whether or not the obligation or obligations secured thereby shall have
       been assumed (provided, however, that if such obligation or obligations
       shall not have been assumed, the amount of such Indebtedness shall be
       deemed to be the lesser of the principal amount of the obligation or the
       fair market value of the pledged property or assets), (iii) guarantees of
       items of other Persons which would be included within this definition for
       such other Persons (whether or not such items would appear upon the
       balance sheet of the guarantor), (iv) all obligations for the
       reimbursement of any obligor on any letter of credit, banker's acceptance
       or similar credit transaction (provided that, in the case of any

                                       94
<PAGE>
 
       such letters of credit, the items for which such letters of credit
       provide credit support are those of other Persons which would be included
       within this definition for such other Persons), (v) in the case of the
       Company, Disqualified Capital Stock of the Company or any Restricted
       Subsidiary thereof, and (vi) obligations of any such Person under any
       Interest Rate Agreement applicable to any of the foregoing (if and to the
       extent such Interest Rate Agreement obligations would appear as a
       liability upon a balance sheet of such Person prepared in accordance with
       GAAP). The amount of Indebtedness of any Person at any date shall be the
       outstanding balance at such date of all unconditional obligations as
       described above and, with respect to contingent obligations, the maximum
       liability upon the occurrence of the contingency giving rise to the
       obligation, provided (i) that the amount outstanding at any time of any
       Indebtedness issued with original issue discount is the principal amount
       of such Indebtedness less the remaining unamortized portion of the
       original issue discount of such Indebtedness at such time as determined
       in conformity with GAAP and (ii) that Indebtedness shall not include any
       liability for federal, state, local or other taxes. Notwithstanding any
       other provision of the foregoing definition, any trade payable arising
       from the purchase of goods or materials or for services obtained in the
       ordinary course of business or contingent obligations arising out of
       customary indemnification agreements with respect to the sale of assets
       or securities shall not be deemed to be "Indebtedness" of the Company or
       any Restricted Subsidiaries for purposes of this definition. Furthermore,
       guarantees of (or obligations with respect to letters of credit
       supporting) Indebtedness and Liens securing Indebtedness otherwise
       included in the determination of such amount shall not also be included.

          "Interest Rate Agreement" means, for any Person, any interest rate
       swap agreement, interest rate cap agreement, interest rate collar
       agreement or other similar agreement designed to protect the party
       indicated therein against fluctuations in interest rates.

          "Investments" means, directly or indirectly, any advance, account
       receivable (other than an account receivable arising in the ordinary
       course of business or acquired as a part of the assets acquired by the
       Company in connection with an acquisition of assets which is otherwise
       permitted by the terms of the Indenture), loan or capital contribution to
       (by means of transfers of property to others, payments for property or
       services for the account or use of others or otherwise), the purchase of
       any stock, bonds, notes, debentures, partnership or joint venture
       interests or other securities of, the acquisition, by purchase or
       otherwise, of all or substantially all of the business or assets or stock
       or other evidence of beneficial ownership of, any Person or the making of
       any investment in any Person. Investments shall exclude (i) extensions of
       trade credit on commercially reasonable terms in accordance with normal
       trade practices and (ii) the repurchase or redemption of securities of
       any Person by such Person.

          "Issue Date" means the date the Notes are first issued by the Company
       and authenticated by the Trustee under the Indenture.

          "Lien" means with respect to any property or assets of any Person, any
       mortgage or deed of trust, pledge, hypothecation, assignment, deposit
       arrangement, security interest, lien, charge, easement, encumbrance,
       preference, priority, or other security agreement or preferential
       arrangement of any kind or nature whatsoever on or with respect to such
       property or assets (including without limitation, any Capitalized Lease
       Obligation, conditional sales, or other title retention agreement having
       substantially the same economic effect as any of the foregoing).

          "Net Income" means, with respect to any Person for any period, the net
       income (loss) of such Person determined in accordance with GAAP minus
       Permitted Tax Distributions with respect to such period, and excluding
       any foreign currency translation gains or losses added or deducted, as
       applicable, in the computation of Net Income.

          "Net Proceeds" means (a) in the case of any sale of Capital Stock by
       the Company, the aggregate net proceeds received by the Company, after
       payment of expenses, commissions and the like incurred in connection
       therewith, whether such proceeds are in cash or in property (valued at
       the fair market value thereof, as determined in good faith by the board
       of directors, at the time of receipt), (b) in the case of any exchange,
       exercise, conversion or surrender of outstanding securities of any kind
       for or into shares of Capital Stock of the Company which is not
       Disqualified Stock, the net book value of such outstanding securities on
       the date of such exchange, exercise, conversion or surrender (plus any
       additional amount required to be paid by the holder to the Company upon
       such

                                       95
<PAGE>
 
       exchange, exercise, conversion or surrender, less any and all payments
       made to the holders, e.g., on account of fractional shares and less all
       expenses incurred by the Company in connection therewith) and (c) in the
       case of any issuance of any Indebtedness by the Company or any Restricted
       Subsidiary, the aggregate net cash proceeds received by such Person after
       payment of expenses, commissions, underwriting discounts and the like
       incurred in connection therewith.

          "Non-Payment Event of Default" means any event (other than a Payment
       Default) the occurrence of which entitles one or more Persons to
       accelerate the maturity of any Designated Senior Indebtedness.

          "Notes" means the securities that are issued under the Indenture, as
       amended or supplemented from time to time pursuant to the Indenture.

          "Officers' Certificate" means, with respect to any Person, a
       certificate signed by the Chief Executive Officer, the President or any
       Vice President and the Chief Financial Officer or any Treasurer of such
       Person that shall comply with applicable provisions of the Indenture.

          "Payment Default" means any default, whether or not any requirement
       for the giving of notice, the lapse of time or both, or any other
       condition to such default becoming an event of default has occurred, in
       the payment of principal of (or premium, if any) or interest on or any
       other amount payable in connection with Designated Senior Indebtedness.

          "Permitted Holders" means, collectively, Leo W. Pierce, Sr., his
       children or other lineal descendants (whether adoptive or biological),
       the spouses of any of the foregoing and any probate estate of any such
       individual and any trust, so long as one or more of the foregoing
       individuals is the principal beneficiary of such trust, and any other
       partnership, corporation or other entity all of the partners,
       shareholders, members or owners of which are any one of the foregoing.

          "Permitted Indebtedness" means:

          (i)    Indebtedness of the Company or any Restricted Subsidiary
       arising under or in connection with the Credit Facility in an amount not
       to exceed $10 million above the amount that could be borrowed at the time
       of determination under the first paragraph under "Certain Covenants--
       Limitation on Additional Indebtedness";

          (ii)   Indebtedness of the Company's Canadian subsidiary (and related
       guarantees) under the Credit Facility in an amount not to exceed Cdn
       $30.3 million;

          (iii)  Indebtedness under the Notes and the Guarantees;

          (iv)   Indebtedness not covered by any other clause of this definition
       which is outstanding on the date of the Indenture;

          (v)    Indebtedness of the Company to any Restricted Subsidiary and
       Indebtedness of any Restricted Subsidiary to the Company or another
       Restricted Subsidiary;

          (vi)   Purchase Money Indebtedness and Capitalized Lease Obligations
       incurred to acquire property in the ordinary course of business which
       Indebtedness and Capitalized Lease Obligations do not in the aggregate
       exceed 5% of the Company's consolidated total assets;

          (vii)  Interest Rate Agreements;

          (viii) additional Indebtedness of the Company not to exceed $3 million
       in principal amount outstanding at any time; and

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<PAGE>
 
          (ix)  Refinancing Indebtedness.

          "Permitted Investments" means, for any Person, Investments made on or
       after the date of the Indenture consisting of

          (i)   Investments by the Company, or by a Restricted Subsidiary
       thereof, in the Company or a Restricted Subsidiary; and

          (ii)  Temporary Cash Investments; and

          (iii) Investments by the Company, or by a Restricted Subsidiary
       thereof, in a Person (or in all or substantially all of the business or
       assets of a business or a Person), if as a result of such Investment (a)
       such Person becomes a Restricted Subsidiary of the Company, (b) such
       Person is merged, consolidated or amalgamated with or into, or transfers
       or conveys substantially all of its assets to, or is liquidated into, the
       Company or a Restricted Subsidiary thereof or (c) such business or assets
       are owned by the Company or a Restricted Subsidiary; and

          (iv)  reasonable and customary loans made to employees not to exceed
       $500,000 in the aggregate at any one time outstanding, plus any loans
       which may be required to be made under the Nonqualified Stock Option Plan
       in an amount not to exceed $2,000,000; and

          (v)   an Investment that is made by the Company or a Restricted
       Subsidiary thereof in the form of any stock, bonds, notes, debentures,
       partnership or joint venture interests or other securities that are
       issued by a third party to the Company or Restricted Subsidiary solely as
       partial consideration for the consummation of an Asset Sale that is
       otherwise permitted under the covenant described under "Certain
       Covenants--Limitation on Certain Asset Sales"; and

          (vi)  accounts receivable of the Company and its Restricted
       Subsidiaries generated in the ordinary course of business; and

          (vii) Investments existing on the Issue Date; and

          (viii) the Real Estate Transactions and the Stock Redemption; and

          (ix)  Investments for any purpose not to exceed $2,000,000.

          "Permitted Liens" means (i) Liens on property or assets of, or any
       shares of stock of or secured debt of, any Person or business existing at
       the time such Person becomes a Restricted Subsidiary of the Company or at
       the time such Person is merged into or consolidated with the Company or
       any of its Restricted Subsidiaries or at the time such business is
       acquired by the Company or a Restricted Subsidiary, provided that such
       Liens are not incurred in anticipation of such Person becoming a
       Restricted Subsidiary of the Company or merging into or consolidating
       with the Company or any of its Restricted Subsidiaries or such business
       being acquired by the Company or a Restricted Subsidiary, (ii) Liens
       securing Refinancing Indebtedness, provided that any such Lien does not
       extend to or cover any Property, shares or debt other than the Property,
       shares or debt securing the Indebtedness so refunded, refinanced or
       extended, (iii) Liens in favor of the Company or any of its Restricted
       Subsidiaries, (iv) Liens securing industrial revenue bonds, (v) Liens to
       secure Purchase Money Indebtedness that is otherwise permitted under the
       Indenture, provided that (a) any such Lien is created solely for the
       purpose of securing Indebtedness representing, or incurred to finance,
       refinance or refund, the cost (including sales and excise taxes,
       installation and delivery charges and other direct costs of, and other
       direct expenses paid or charged in connection with, such purchase or
       construction) of such Property, (b) the principal amount of the
       Indebtedness secured by such Lien does not exceed 100% of such costs, and
       (c) such Lien does not extend to or cover any Property other than such
       item of Property and any improvements on such item, (vi) statutory liens
       or landlords', carriers', warehouseman's, mechanics', suppliers',
       materialmen's, repairmen's or other like Liens arising in the ordinary
       course of business and with respect to amounts not yet delinquent or
       being contested in good faith by appropriate proceedings, (vii) other
       Liens securing

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<PAGE>
 
       obligations incurred in the ordinary course of business which obligations
       do not exceed $1,000,000 in the aggregate at any one time outstanding,
       (viii) any extensions, substitutions, replacements or renewals of any of
       the foregoing, (ix) Liens for taxes, assessments or governmental charges
       that are being contested in good faith by appropriate proceedings, (x)
       Liens securing Capital Lease Obligations permitted to be incurred under
       clause (v) of the definition of "Permitted Indebtedness,"n provided that
       such Lien does not extend to any property other than that subject to the
       underlying lease, (xi) Liens securing Designated Senior Indebtedness,
       (xii) easements or minor defects or irregularities in title and other
       similar charges or encumbrances on property not interfering in any
       material respect with the Company's or any Restricted Subsidiaries' use
       of such property, (xiii) Liens existing on the date of the Indenture and
       (xiv) pledges or deposits made in the ordinary course of business in
       connection with (a) leases, performance bonds and similar bonds, (b)
       workers' compensation, unemployment insurance and other social security
       legislation or (c) securing the performance of surety bonds and appeal
       bonds required (1) in the ordinary course of business or in connection
       with the enforcement of rights or claims of the Company or a Subsidiary
       thereof or (2) in connection with judgments that do not give rise to an
       Event of Default and which do not exceed $3 million in the aggregate.

          "Permitted Tax Distributions" means, for so long as the Company is
       taxed as an S corporation or other pass-through entity for federal income
       tax purposes, distributions to the holders of Capital Stock of the
       Company based on estimates of the highest amount of federal, state and
       local income tax per share of Capital Stock that any holder of Capital
       Stock of the Company would be required to pay as a result of the
       Company's being treated as a pass-through entity for income tax purposes.

          "Person" means any individual, corporation, partnership, joint
       venture, association, joint-stock company, trust, unincorporated
       organization or government (including any agency or political subdivision
       thereof).

          "Preferred Stock" means any Capital Stock of a Person, however
       designated, which entitles the holder thereof to a preference with
       respect to dividends, distributions or liquidation proceeds of such
       Person over the holders of other Capital Stock issued by such Person.

          "Property" of any Person means all types of real, personal, tangible,
       intangible or mixed property owned by such Person whether or not included
       in the most recent consolidated balance sheet of such Person and its
       Subsidiaries under GAAP.

          "Public Equity Offering" means a public offering by the Company of
       shares of its Capital Stock and any and all rights, warrants or options
       to acquire such Capital Stock.

          "Purchase Money Indebtedness" means any Indebtedness incurred in the
       ordinary course of business by a Person to finance the cost (including
       the cost of construction) of an item of Property, the principal amount of
       which Indebtedness does not exceed the sum of (i) 100% of such cost and
       (ii) reasonable fees and expenses of such Person incurred in connection
       therewith.

          "Redeemable Dividend" means, for any dividend or distribution with
       regard to Disqualified Capital Stock, the quotient of the dividend or
       distribution divided by the difference between one and the maximum
       statutory federal income tax rate (expressed as a decimal number between
       1 and 0) then applicable to the issuer of such Disqualified Capital
       Stock.

          "Refinancing Indebtedness" means Indebtedness that refunds,
       refinances, renews, replaces or extends any Indebtedness of the Company
       outstanding on the Issue Date or other Indebtedness permitted to be
       incurred by the Company or its Restricted Subsidiaries pursuant to the
       terms of the Indenture, whether involving the same or any other lender or
       creditor or group of lenders or creditors, but only to the extent that
       (i) the Refinancing Indebtedness is subordinated to the Notes to at least
       the same extent as the Indebtedness being refunded, refinanced or
       extended, if at all, (ii) the Refinancing Indebtedness is scheduled to
       mature either (a) no earlier than the Indebtedness being refunded,
       refinanced or extended, or (b) after the maturity date of the Notes,
       (iii) the portion, if any, of the Refinancing Indebtedness that is
       scheduled to mature on or prior to the maturity date of the Notes has a
       weighted

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<PAGE>
 
       average life to maturity at the time such Refinancing Indebtedness is
       incurred that is equal to or greater than the weighted average life to
       maturity of the portion of the Indebtedness being refunded, refinanced or
       extended that is scheduled to mature on or prior to the maturity date of
       the Notes, (iv) such Refinancing Indebtedness is in an aggregate
       principal amount that is equal to or less than the sum of (a) the
       aggregate principal amount then outstanding under the Indebtedness being
       refunded, refinanced or extended, (b) the amount of accrued and unpaid
       interest, if any, and premiums owed, if any, not in excess of preexisting
       prepayment provisions on such Indebtedness being refunded, refinanced or
       extended and (c) the amount of customary fees, expenses and costs related
       to the incurrence of such Refinancing Indebtedness, and (v) such
       Refinancing Indebtedness is incurred by the same Person that initially
       incurred the Indebtedness being refunded, refinanced or extended, except
       that the Company may incur Refinancing Indebtedness to refund, refinance
       or extend Indebtedness of any Wholly-Owned Subsidiary of the Company.

          "Restricted Payment" means any of the following: (i) the declaration
       or payment of any dividend or any other distribution or payment on
       Capital Stock of the Company or any Restricted Subsidiary of the Company
       or any payment made to the direct or indirect holders (in their
       capacities as such) of Capital Stock of the Company or any Restricted
       Subsidiary of the Company (other than (x) dividends or distributions
       payable solely in Capital Stock (other than Disqualified Stock) or in
       options, warrants or other rights to purchase Capital Stock (other than
       Disqualified Stock), and (y) in the case of Restricted Subsidiaries of
       the Company, dividends or distributions payable to the Company or to a
       Wholly-Owned Subsidiary of the Company); (ii) the purchase, redemption or
       other acquisition or retirement for value of any Capital Stock of the
       Company or any of its Restricted Subsidiaries (other than Capital Stock
       owned by the Company or a Wholly-Owned Subsidiary of the Company,
       excluding Disqualified Capital Stock); (iii) the purchase, defeasance,
       repurchase, redemption or other acquisition or retirement for value,
       prior to any scheduled maturity, scheduled repayment or scheduled sinking
       fund payment of, or the making of any principal payment on, any
       Indebtedness which is subordinated in right of payment to the Notes other
       than subordinated Indebtedness acquired in anticipation of satisfying a
       scheduled sinking fund obligation, principal installment or final
       maturity, in each case due within one year of the date of acquisition);
       (iv) the making of any Investment or guarantee of any Investment in any
       Person other than a Permitted Investment; (v) any designation of a
       Restricted Subsidiary as an Unrestricted Subsidiary on the basis of the
       Investment by the Company therein; and (vi) forgiveness of any
       Indebtedness of an Affiliate of the Company (other than a Restricted
       Subsidiary) to the Company or a Restricted Subsidiary. For purposes of
       determining the amount expended for Restricted Payments, cash distributed
       or invested shall be valued at the face amount thereof and property other
       than cash shall be valued at its fair market value in the good faith
       determination of the Board of Directors. It is agreed that any payments
       made to L.W. Pierce, Sr. or his spouse pursuant to a pension obligation
       of the Company in the annual amount of $96,000 shall not constitute a
       Restricted Payment.

          "Restricted Subsidiary" means a Subsidiary of the Company other than
       an Unrestricted Subsidiary and includes all of the Subsidiaries of the
       Company existing as of the Issue Date. The Board of Directors of the
       Company may designate any Unrestricted Subsidiary or any Person that is
       to become a Subsidiary as a Restricted Subsidiary if immediately after
       giving effect to such action (and treating any Acquired Indebtedness as
       having been incurred at the time of such action), the Company could have
       incurred at least $1.00 of additional Indebtedness (other than Permitted
       Indebtedness) pursuant to the "Limitation on Additional Indebtedness"
       covenant.

          "Sale and Lease-Back Transaction" means any arrangement with any
       Person providing for the leasing by the Company or any Restricted
       Subsidiary of the Company of any real or tangible personal property,
       which property (i) has been or is to be sold or transferred by the
       Company or such Restricted Subsidiary to such Person in contemplation of
       such leasing and (ii) would constitute an Asset Sale if such property had
       been sold in an outright sale thereof.

          "Senior Indebtedness" means the principal of and premium, if any, and
       interest (including, without limitation, interest accruing or that would
       have accrued but for the filing of a bankruptcy, reorganization or other
       insolvency proceeding whether or not such interest constitutes an
       allowable claim in such proceeding) on, and any and all other fees,
       expense reimbursement obligations and other amounts due pursuant to the
       terms of all agreements, documents and instruments providing for,
       creating, securing or evidencing or otherwise entered into in connection
       with (a) all

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<PAGE>
 
       Indebtedness of the Company owed to lenders under or in respect of the
       Credit Facility, (b) all obligations of the Company with respect to any
       Interest Rate Agreement, (c) all obligations of the Company to reimburse
       any bank or other person in respect of amounts paid under letters of
       credit, acceptances or other similar instruments, (d) all other
       Indebtedness of the Company which does not provide that it is to rank
       pari passu with or subordinate to the Notes and (e) all deferrals,
       renewals, extensions, replacements, refundings, refinancings and
       restructurings of, and amendments, modifications and supplements to, any
       of the Senior Indebtedness described above. Notwithstanding anything to
       the contrary in the foregoing, Senior Indebtedness will not include (i)
       Indebtedness of the Company to any of its Subsidiaries, (ii) Indebtedness
       represented by the Notes, (iii) any Indebtedness which by the express
       terms of the agreement or instrument creating, evidencing or governing
       the same is junior or subordinate in right of payment to any item of
       Senior Indebtedness, (iv) any trade payable arising from the purchase of
       goods or materials or for services obtained in the ordinary course of
       business, or (v) Indebtedness (other than that described in clause (a)
       above) incurred in violation of the Indenture.

          "Subsidiary" of any specified Person means any corporation,
       partnership, joint venture, association or other business entity, whether
       now existing or hereafter organized or acquired, (i) in the case of a
       corporation, of which more than 50% of the total voting power of the
       Capital Stock entitled (without regard to the occurrence of any
       contingency) to vote in the election of directors, officers or trustees
       thereof is held by such first-named Person or any of its Subsidiaries; or
       (ii) in the case of a partnership, joint venture, association or other
       business entity, with respect to which such first-named Person or any of
       its Subsidiaries has the power to direct or cause the direction of the
       management and policies of such entity by contract or otherwise or if in
       accordance with GAAP such entity is consolidated with the first-named
       Person for financial statement purposes.

          "Temporary Cash Investments" means (i) Investments in marketable,
       direct obligations issued or guaranteed by the United States of America,
       or of any governmental agency or political subdivision thereof, maturing
       within 365 days of the date of purchase; (ii) Investments in demand
       deposits or certificates of deposit issued by a bank organized under the
       laws of the United States of America or any state thereof or the District
       of Columbia, in each case having capital, surplus and undivided profits
       totaling more than $500,000,000 and rated at least A by Standard & Poor's
       Corporation and A-2 by Moody's Investors Service, Inc., maturing within
       365 days of purchase; (iii) Investments not exceeding 365 days in
       duration in money market funds that invest substantially all of such
       funds' assets in the Investments described in the preceding clauses (i)
       and (ii); (iv) any security maturing not more than 180 days after the
       date of acquisition, backed by a stand-by or direct pay letter of credit
       issued by a bank meeting the qualifications described in clause (ii)
       above; or (v) commercial paper, maturing not more than one year after the
       date of acquisition, issued by a corporation (other than an Affiliate or
       Subsidiary of the Company) organized and existing under the laws of the
       United States of America or any state thereof or the District of Columbia
       with a rating, at the time as of which any investment therein is made, of
       "P-1" by Moody's Investors Service, Inc. or "A-1" by Standard & Poor's
       Corporation.

          "Unrestricted Subsidiary" means (a) any Subsidiary of an Unrestricted
       Subsidiary and (b) any Subsidiary of the Company which is classified
       after the Issue Date as an Unrestricted Subsidiary by a resolution
       adopted by the Board of Directors of the Company; provided that a
       Subsidiary organized or acquired after the Issue Date may be so
       classified as an Unrestricted Subsidiary only if such classification is
       in compliance with the covenant set forth under "Limitation on Restricted
       Payments." The Trustee shall be given prompt notice by the Company of
       each resolution adopted by the Board of Directors of the Company under
       this provision, together with a copy of each such resolution adopted.

          "Wholly-Owned Subsidiary" means any Restricted Subsidiary, 99% or more
       of the outstanding Capital Stock (other than directors' qualifying
       shares) of which are owned, directly or indirectly, by the Company.

       Book-Entry; Delivery and Form

          The Original Notes were issued in the form of one Note certificate
       (the "Original Global Note").  Except for Exchange Notes issued to Non-
       Global Purchasers (as defined below), the Exchange Notes will initially
       be issued in the form of one or more Global Notes (collectively, the
       "Exchange Global Notes").  The Original Global Note

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<PAGE>
 
       was deposited on the date of the closing of the sale of the Original
       Notes, and the Exchange Global Notes will be deposited on the date of
       closing of the Exchange Offer, with, or on behalf of, The Depository
       Trust Company ("DTC" or the "Depository") and registered in the name of a
       nominee of the DTC.

          Notes that are (i) originally issued or transferred to institutional
       "accredited investors" (as defined in Rule 501(a)(1), (2), (3) or (7)
       under the Securities Act) that are not "qualified institutional buyers"
       (as defined in Rule 144A under the Securities Act) (the "Non-Global
       Purchasers") or (ii) issued as described below under "-- Certificated
       Securities" will be issued, in registered form, without interest coupons
       ("Certificated Securities"). Upon the transfer to a qualified
       institutional buyer of such Certificated Securities initially issued to a
       Non-Global Purchaser, such Certificated Securities will, unless the
       Global Note has previously been exchanged in whole for such Certificated
       Securities, be exchanged for an interest in the Global Note. "Global
       Notes" means the Original Global Notes or the Exchange Global Notes, as
       the case may be.

          The Global Note.   The Company expects that pursuant to procedures
       established by the DTC (i) upon deposit of the Global Note, the DTC will
       credit the accounts of persons who have accounts with DTC
       ("participants") or persons who hold interests through participants
       designated by such person with portions of the Global Note and (ii)
       ownership of the Notes will be shown on, and the transfer of ownership
       thereof will be effected only through, records maintained by DTC or its
       nominee (with respect to interests of participants) and the records of
       participants (with respect to interests of persons other than
       participants). Qualified institutional buyers may hold their interests in
       the Global Note directly through DTC if they are participants in such
       system, or indirectly through organizations which are participants in
       such system.

          So long as DTC, or its nominee, is the registered owner or holder of
       the Notes, DTC or such nominee will be considered the sole owner or
       holder of the Notes represented by the Global Note for all purposes under
       the Indenture. No beneficial owner of an interest in the Global Note will
       be able to transfer such interest except in accordance with DTC's
       applicable procedures, in addition to those provided for under the
       Indenture.

          Payments of the principal of, premium (if any) and interest on the
       Global Note will be made to DTC or its nominee, as the case may be, as
       the registered owner thereof. None of the Company, the Trustee or any
       Paying Agent will have any responsibility or liability for any aspect of
       the records relating to or payments made on account of beneficial
       ownership interests in the Global Note or for maintaining, supervising or
       reviewing any records relating to such beneficial ownership interests.

          The Company expects that DTC or its nominee, upon receipt of any
       payment of the principal of, premium (if any) and interest on the Global
       Note, will credit participants' accounts with payments in amounts
       proportionate to their respective beneficial interests in the principal
       amount of such Global Note, as shown on the records of DTC or its
       nominee. The Company also expects that payments by participants to owners
       of beneficial interests in such Global Note held through such
       participants will be governed by standing instructions and customary
       practice, as is now the case with securities held for the accounts of
       customers registered in the names of nominees for such customers. Such
       payments will be the responsibility of such participants.

          Transfers between participants in DTC will be effected in accordance
       with DTC rules and will be settled in clearinghouse funds. If a holder
       requires physical delivery of a Certificated Security for any reason,
       including to sell Notes to persons in states which require physical
       delivery of such securities or to pledge such securities, such holder
       must transfer its interest in the Global Note in accordance with the
       normal procedures of DTC and the procedures set forth in the Indenture.

          DTC has advised the Company that it will take any action permitted to
       be taken by a holder of Notes (including the presentation of Notes for
       exchange as described below) only at the direction of one or more
       participants to whose account the DTC interest in the Global Note is
       credited and only in respect of such portion of the aggregate principal
       amount of Notes as to which such participant or participants have given
       such direction. However, if there is an Event of Default under the
       Indenture, DTC will exchange the Global Note for Certificated Securities,
       which it will distribute to its participants.

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          DTC has advised the Company as follows: DTC is a limited purpose trust
       company organized under the laws of the State of New York, a member of
       the Federal Reserve System, a "clearing corporation" within the meaning
       of the Uniform Commercial Code and a "Clearing Agency" registered
       pursuant to the provisions of Section 17A of the Exchange Act. DTC was
       created to hold securities for its participants and facilitate the
       clearance and settlement of securities transactions between participants
       through electronic book-entry changes in accounts of its participants,
       thereby eliminating the need for physical movement of certificates.
       Participants include securities brokers and dealers, banks, trust
       companies and clearing corporations and certain other organizations.
       Indirect access to the DTC system is available to others such as banks,
       brokers, dealers and trust companies that clear through or maintain a
       custodial relationship with a participant, either directly or indirectly
       ("indirect participants").

          Although DTC has agreed to the foregoing procedures in order to
       facilitate transfers of interests in the Global Note among participants
       of DTC, it is under no obligation to perform such procedures, and such
       procedures may be discontinued at any time. Neither the Company nor the
       Trustee will have any responsibility for the performance by DTC or its
       participants or indirect participants of their respective obligations
       under the rules and procedures governing their operations.

          Certificated Securities.   If DTC is at any time unwilling or unable
       to continue as a depositary for the Global Note and a successor
       depositary is not appointed by the Company within 90 days, the Company
       will issue Certificated Securities in exchange for the Global Note.  In
       addition, subject to certain conditions, any person having a beneficial
       interest in the Global Notes may, upon request to the Trustee, exchange
       such beneficial interest for Notes in the form of Certificated
       Securities.  Upon any such issuance, the Trustee is required to register
       such Certificated Securities in the name of, and cause the same to be
       delivered to, such person or persons (or the nominee thereof).


                          DESCRIPTION OF CAPITAL STOCK

          The Company's authorized capital stock consists of 2,000,000 shares of
       Common Stock with a par value of $.01 per share. Of the 2,000,000 shares
       of Common Stock that the Company is authorized to issue, 1,000,000 shares
       are designated as Class A Common Stock (the "Class A Common Stock") and
       1,000,000 shares are designated as Class B Common Stock (the "Class B
       Common Stock"). Currently, 900 shares of Class A Common Stock and 9,000
       shares of Class B Common Stock are outstanding. In addition, 1,141 shares
       of Class B Common Stock are reserved for issuance with respect to the
       exercise of certain rights under the Company's Non-Qualified Stock Option
       Plan.

          Holders of shares of Class A Common Stock are entitled to one vote per
       share for each matter submitted to the shareholders of the Company
       without cumulative voting rights in the election of directors. Holders of
       Class B Common Stock have no right to vote on any matter voted on by the
       shareholders of the Company, except as may be provided by law. In all
       other respects, all shares of Common Stock shall have identical rights,
       preferences and privileges. The shares of Common Stock have no pre-
       emptive rights. In the event of a liquidation, dissolution or winding up
       of the Company, the holders of the Common Stock are entitled to share
       ratably in all assets remaining after payment of liabilities. The holders
       of Common Stock are entitled to receive ratably such dividends, if any,
       as may be declared from time to time by the Board of Directors out of
       funds legally available therefor. Except for distributions to the
       shareholders to pay their tax obligations resulting from the Company's
       Subchapter S status, the Company has not declared any dividends on the
       Common Stock and, except with respect to Permitted Tax Distributions and
       possible distributions to shareholders aggregating less than $700,000
       annually, does not expect to declare dividends in the foreseeable future.
       See "The Company." Payment of future dividends rests with the discretion
       of the Board of Directors and will depend on, among other things, the
       earnings, capital requirements and financial condition of the Company and
       shall be subject to limitations set forth in the Notes and other
       Indebtedness, including Senior Indebtedness, of the Company.

                                      102
<PAGE>
 
                   CERTAIN FEDERAL INCOME TAX CONSIDERATIONS

          The following discussion summarizes certain federal income tax
       considerations for holders who elect to exchange their Original Notes for
       Exchange Notes in the Exchange Offer.  This summary is for general
       information purposes only and does not address specific tax aspects of
       the Exchange Offer which may be relevant to certain holders such as
       foreign persons, financial institutions, broker-dealers, tax-exempt
       organizations or insurance companies.  THEREFORE, EACH HOLDER OF A NOTE
       SHOULD CONSULT HIS OR HER OWN TAX ADVISOR CONCERNING THE PARTICULAR
       FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF EXCHANGING HIS OR
       HER ORIGINAL NOTES FOR EXCHANGE NOTES IN THE EXCHANGE OFFER.

          Under current provisions of the Internal Revenue Code of 1986, as
       amended, the Treasury Regulations promulgated thereunder and current
       judicial authority and administrative rulings and practice, an exchange
       of the debt instrument of an issuer for a new debt instrument of the
       issuer will be treated as an "exchange" for federal income tax purposes
       if the new debt instrument differs materially either in kind or in extent
       from the old debt instrument.  Because the Exchange Notes are
       substantially identical to the Original Notes and because the Exchange
       was contemplated by the Indenture pursuant to which the Original Notes
       were sold, the Exchange Notes and Original Notes should not be considered
       to differ materially either in kind or in extent and, accordingly, the
       Exchange should not constitute an "exchange" for federal income tax
       purposes.  Therefore, for federal income tax purposes, no gain or loss
       should be recognized by the holder on the exchange of an Original Note
       for an Exchange Note, the holder's adjusted tax basis in the Exchange
       Note should be the same as his or her basis in the Original Note and the
       holding period for the Exchange Note should be the same as the holding
       period for the Original Note.


                              PLAN OF DISTRIBUTION

          Each broker-dealer that receives Exchange Notes for its own account
       pursuant to the Exchange Offer must acknowledge that it will deliver a
       prospectus in connection with any resale of such Exchange Notes. This
       Prospectus, as it may be amended or supplemented from time to time, may
       be used by a broker-dealer in connection with the resale of Exchange
       Notes received in exchange for Original Notes where such Original Notes
       were acquired as a result of market-making activities or other trading
       activities.  The Company has agreed that for a period of 180 days after
       the Expiration Date, it will use reasonable efforts to make this
       Prospectus, as amended or supplemented, available to any broker-dealer
       for use in connection with any such resale; provided that such broker-
       dealer indicates in the Letter of Transmittal that it is a broker-dealer.
       In addition, until ___________, 1996, all broker-dealers effecting
       transactions in the Exchange Notes may be required to deliver a
       Prospectus.

          The Company will not receive any proceeds from any sale of Exchange
       Notes by broker-dealers or any other persons.  Exchange Notes received by
       broker-dealers for their own account pursuant to the Exchange Offer may
       be sold from time to time in one or more transactions in the over-the-
       counter market, in negotiated transactions, through the writing of
       options on the Exchange Notes or a combination of such methods of resale,
       at market prices prevailing at the time of resale, at prices related to
       such prevailing market prices or at negotiated prices.  Any such resale
       may be made directly to purchasers or to or through brokers or dealers
       who may receive compensation in the form of commissions or concessions
       from any such broker-dealer and/or the purchasers of any such Exchange
       Notes.  Any broker-dealer that resells Exchange Notes that were received
       by it for its own account pursuant to the Exchange Offer and any broker
       or dealer that participates in a distribution of such Exchange Notes may
       be deemed to be an "underwriter" within the meaning of the Securities
       Act, and any profit on any such resale of Exchange Notes and any
       commissions or concessions received by any such persons may be deemed to
       be underwriting compensation under the Securities Act.  The Letter of
       Transmittal states that by acknowledging that it will deliver and by
       delivering a prospectus, a broker-dealer will not be deemed to admit that
       it is an "underwriter" within the meaning of the Securities Act.

                                      103
<PAGE>
 
          For a period of 180 days after the Expiration Date, the Company will
       promptly send additional copies of this Prospectus and any amendment or
       supplement to this Prospectus to any broker-dealer that requests such
       documents in the Letter of Transmittal.

          By acceptance of this Exchange Offer, each broker-dealer that receives
       Exchange Notes pursuant to the Exchange Offer agrees that, upon receipt
       of notice from the Company of the happening of any event which makes any
       statement in the Prospectus untrue in any material respect or which
       requires the making of any changes in the Prospectus in order to make the
       statements therein not misleading (which notice the Company agrees to
       deliver promptly to such broker-dealer), such broker-dealer will suspend
       use of the Prospectus until the Company has amended or supplemented the
       Prospectus to correct such misstatement or omission and has furnished
       copies of the amended or supplemented Prospectus to such broker-dealer.
       If the Company gives any such notice to suspend the use of the
       Prospectus, it shall extend the 180-day period referred to above by the
       number of days during the period from and including the date of the
       giving of such notice up to and including when broker-dealers have
       received copies of the supplement or amended Prospectus necessary to
       permit resales of Exchange Notes.

          The Company has agreed to pay all expenses incident to the Company's
       performance of, or compliance with, the Registration Rights Agreement and
       will indemnify the holders (including any broker-dealers) and certain
       parties related to the holders against certain liabilities, including
       liabilities under the Securities Act.


                                 LEGAL MATTERS

          Certain legal matters with respect to the Notes offered hereby will be
       passed upon for the Company by Cozen and O'Connor, Philadelphia,
       Pennsylvania.


                                    EXPERTS

          The financial statements and schedules of Pierce Leahy Corp. as of
       December 31, 1994 and 1995, and for each of the three years in the period
       ended December 31, 1995, included in this Prospectus and elsewhere in the
       Registration Statement have been audited by Arthur Andersen LLP,
       independent public accountants, as indicated in their reports with
       respect thereto, and are included herein in reliance upon the authority
       of said firm as experts in giving said reports.

          The financial statements of Security Archives, Inc. as of June 30,
       1994 and 1995, and for the years then ended included in this Prospectus
       have been audited by Deloitte & Touche LLP, independent auditors, as
       stated in their report appearing herein and are included in reliance upon
       the report of such firm given upon their authority as experts in
       accounting and auditing.

                                      104
<PAGE>
 
                         INDEX TO FINANCIAL STATEMENTS
 
<TABLE>
<CAPTION>
                                                                            PAGE
                                                                            ----
<S>                                                                         <C>
CONSOLIDATED FINANCIAL STATEMENTS OF PIERCE LEAHY CORP.:
  Report of Independent Public Accountants.................................  F-2
  Consolidated Balance Sheets..............................................  F-3
  Consolidated Statements of Operations....................................  F-4
  Consolidated Statements of Shareholders' Deficit.........................  F-5
  Consolidated Statements of Cash Flows....................................  F-6
  Notes to Consolidated Financial Statements...............................  F-7
FINANCIAL STATEMENTS OF COMMAND RECORDS SERVICES LIMITED................... F-17
FINANCIAL STATEMENTS OF SECURITY ARCHIVES, INC. ........................... F-23
FINANCIAL STATEMENTS OF AMK DOCUMENT SERVICES, INC. ....................... F-29
</TABLE>
 
                                      F-1
<PAGE>
 
                   REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
 
To Pierce Leahy Corp.:
 
  We have audited the accompanying consolidated balance sheets of Pierce Leahy
Corp. (a New York corporation) and Subsidiary as of December 31, 1994 and
1995, and the related consolidated statements of operations, shareholders'
deficit and cash flows for each of the three years in the period ended
December 31, 1995. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
 
  We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
 
  In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Pierce Leahy Corp. and
Subsidiary as of December 31, 1994 and 1995, and the results of their
operations and their cash flows for each of the three years in the period
ended December 31, 1995, in conformity with generally accepted accounting
principles.
 
                                          Arthur Andersen LLP
 
Philadelphia, Pa.,
March 4, 1996
 
 
                                      F-2
<PAGE>
 
                               PIERCE LEAHY CORP.
 
                          CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                   DECEMBER 31
                                                ------------------   MARCH 31,
                                                  1994      1995       1996
                                                --------  --------  -----------
                                                                    (UNAUDITED)
                                     ASSETS
<S>                                             <C>       <C>       <C>
CURRENT ASSETS:
  Cash......................................... $    358  $    722   $    474
  Accounts receivable, net of allowance for
   doubtful accounts of $554, $487, and $592...   11,513    14,182     15,724
  Inventories..................................      333       762        654
  Prepaid expenses and other...................      554     1,025      1,612
                                                --------  --------   --------
    Total current assets.......................   12,758    16,691     18,464
                                                --------  --------   --------
PROPERTY AND EQUIPMENT.........................   79,129   109,755    113,743
  Less--Accumulated depreciation and
   amortization................................  (31,003)  (35,328)   (36,633)
                                                --------  --------   --------
    Net property and equipment.................   48,126    74,427     77,110
                                                --------  --------   --------
OTHER ASSETS:
  Intangible assets, net.......................   17,834    38,621     41,615
  Other........................................    1,028     1,589      1,439
                                                --------  --------   --------
    Total other assets.........................   18,862    40,210     43,054
                                                --------  --------   --------
                                                $ 79,746  $131,328   $138,628
                                                ========  ========   ========

<CAPTION> 

                     LIABILITIES AND SHAREHOLDERS' DEFICIT
<S>                                             <C>       <C>        <C> 
CURRENT LIABILITIES:
  Current portion of long-term debt............ $  2,144  $  1,478   $  1,975
  Current portion of noncompete obligations....       70       200        200
  Accounts payable.............................    4,848     4,641      4,682
  Accrued expenses.............................    3,871     9,533      8,980
  Deferred revenues............................    7,027     8,978      9,222
                                                --------  --------   --------
    Total current liabilities..................   17,960    24,830     25,059
LONG-TERM DEBT.................................   75,294   116,812    121,994
NONCOMPETE OBLIGATIONS.........................      --        517        467
DEFERRED RENT..................................    2,558     2,814      2,856
DEFERRED INCOME TAXES..........................    3,100     3,492      3,494
COMMITMENTS AND CONTINGENCIES (Note 9)
REDEEMABLE WARRANTS............................      175     1,064      2,625
SHAREHOLDERS' DEFICIT..........................  (19,341)  (18,201)   (17,867)
                                                --------  --------   --------
                                                $ 79,746  $131,328   $138,628
                                                ========  ========   ========
</TABLE>
 
        The accompanying notes are an integral part of these statements.
 
                                      F-3
<PAGE>
 
                               PIERCE LEAHY CORP.
 
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                FOR THE YEAR ENDED       FOR THE THREE MONTHS
                                    DECEMBER 31             ENDED MARCH 31
                             --------------------------- ---------------------
                               1993      1994     1995      1995       1996
                             --------  --------  ------- ---------- ----------
                                                              (UNAUDITED)
<S>                          <C>       <C>       <C>     <C>        <C>
REVENUES:
  Storage................... $ 42,122  $ 47,123  $55,501 $   12,732 $   16,969
  Service and storage
   material sales...........   31,266    35,513   39,895      9,490     12,730
                             --------  --------  ------- ---------- ----------
    Total revenues..........   73,388    82,636   95,396     22,222     29,699
                             --------  --------  ------- ---------- ----------
OPERATING EXPENSES:
  Cost of sales, excluding
   depreciation and
   amortization.............   45,391    49,402   55,616     13,118     17,406
  Selling, general and
   administrative...........   11,977    15,882   16,148      4,026      4,856
  Depreciation and
   amortization.............    6,888     8,436    8,163      1,990      2,572
  Consulting payments to
   related parties..........      --        500      500        125        125
                             --------  --------  ------- ---------- ----------
    Total operating
     expenses...............   64,256    74,220   80,427     19,259     24,959
                             --------  --------  ------- ---------- ----------
    Operating income........    9,132     8,416   14,969      2,963      4,740
                             --------  --------  ------- ---------- ----------
INTEREST EXPENSE............    6,160     7,216    9,622      1,928      2,846
                             --------  --------  ------- ---------- ----------
    Income before
     extraordinary item.....    2,972     1,200    5,347      1,035      1,894
EXTRAORDINARY ITEM--Loss on
 early extinguishment of
 debt.......................    9,174     5,991    3,279        --         --
                             --------  --------  ------- ---------- ----------
NET INCOME (LOSS)........... $ (6,202) $ (4,791) $ 2,068 $    1,035 $    1,894
                             ========  ========  ======= ========== ==========
</TABLE>
 
        The accompanying notes are an integral part of these statements.
 
                                      F-4
<PAGE>
 
                               PIERCE LEAHY CORP.
 
                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                COMMON STOCK
                                --------------
                                                ADDITIONAL
                                CLASS   CLASS    PAID-IN   ACCUMULATED
                                  A       B      CAPITAL     DEFICIT     TOTAL
                                ------  ------  ---------- ----------- ---------
<S>                             <C>     <C>     <C>        <C>         <C>
BALANCE, JANUARY 1, 1993....... $  --   $  --      $ 24     $  (9,052) $  (9,028)
  Cancellation of common stock
   warrants....................    --      --       --            746        746
  Net loss.....................    --      --       --         (6,202)    (6,202)
  Distributions to
   shareholders................    --      --       --            (24)       (24)
                                ------  ------     ----     ---------  ---------
BALANCE, DECEMBER 31, 1993.....    --      --        24       (14,532)   (14,508)
  Accretion of redeemable
   warrants....................    --      --       --            (16)       (16)
  Net loss.....................    --      --       --         (4,791)    (4,791)
  Distributions to
   shareholders................    --      --       --            (26)       (26)
                                ------  ------     ----     ---------  ---------
BALANCE, DECEMBER 31, 1994.....    --      --        24       (19,365)   (19,341)
  Accretion of redeemable
   warrants....................    --      --       --           (889)      (889)
  Net income...................    --      --       --          2,068      2,068
  Distributions to
   shareholders................    --      --       --            (39)       (39)
                                ------  ------     ----     ---------  ---------
BALANCE, DECEMBER 31, 1995.....    --      --        24       (18,225)   (18,201)
  Accretion of redeemable
   warrants (unaudited)........    --      --       --         (1,560)    (1,560)
  Net income (unaudited).......    --      --       --          1,894      1,894
                                ------  ------     ----     ---------  ---------
BALANCE, MARCH 31, 1996
 (unaudited)................... $  --   $  --      $ 24     $ (17,891) $ (17,867)
                                ======  ======     ====     =========  =========
</TABLE>
 
        The accompanying notes are an integral part of these statements.
 
                                      F-5
<PAGE>
 
                               PIERCE LEAHY CORP.
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                                FOR THE THREE
                                                                MONTHS ENDED
                            FOR THE YEAR ENDED DECEMBER 31        MARCH 31
                           ----------------------------------  ----------------
                              1993        1994        1995      1995     1996
                           ----------  ----------  ----------  -------  -------
                                                                 (UNAUDITED)
<S>                        <C>         <C>         <C>         <C>      <C>
CASH FLOWS FROM OPERATING
 ACTIVITIES:
 Net income (loss).......  $   (6,202) $   (4,791) $    2,068  $ 1,035  $ 1,894
 Adjustments to reconcile
  net income (loss) to
  net cash provided by
  operating activities--
 Extraordinary item......       9,174       5,991       3,279      --       --
 Depreciation and
  amortization...........       6,888       8,434       8,163    1,990    2,421
 Amortization of
  deferred financing
  costs..................         836       1,068         533      142      111
 Imputed interest on
  long-term debt and
  noncompete
  obligation.............         647         231         --       --       --
 Change in deferred
  rent...................        (104)         50          29      (16)      43
 Foreign currency
  adjustment of long-
  term debt..............         --          --          --       --        79
 Change in assets and
  liabilities, net of
  the effects from
  the purchase of
  businesses--
  (Increase) decrease
   in--
   Accounts receivable,
    net..................      (2,671)     (2,061)       (360)     104   (1,402)
   Inventories...........          (5)        (46)       (347)    (178)     107
   Prepaid expenses......         173         (91)         57     (212)    (580)
   Other assets..........        (504)        255        (536)    (190)     162
  Increase (decrease)
   in--
   Accounts payable......          96       1,763        (978)  (1,690)      39
   Accrued expenses......        (702)       (170)      4,693    1,950     (628)
   Deferred revenues.....         393         367         921      744      244
                           ----------  ----------  ----------  -------  -------
  Net cash provided by
   operating
   activities............       8,019      11,000      17,522    3,679    2,490
                           ----------  ----------  ----------  -------  -------
CASH FLOWS FROM INVESTING
 ACTIVITIES:
 Capital expenditures....      (5,827)     (6,352)    (16,288)  (1,535)  (3,553)
 Client acquisition
  expenditures...........      (2,840)     (1,905)     (2,934)    (348)  (1,108)
 Payments for businesses
  acquired, net of cash
  acquired...............      (1,500)     (4,663)    (29,456)  (4,000)  (2,865)
 Increase in intangible
  assets.................         (47)       (943)     (2,484)    (752)    (763)
 Payments on noncompete
  agreements.............      (3,570)        (70)       (153)     --       (50)
                           ----------  ----------  ----------  -------  -------
  Net cash used in
   investing
   activities............     (13,784)    (13,933)    (51,315)  (6,635)  (8,339)
                           ----------  ----------  ----------  -------  -------
CASH FLOWS FROM FINANCING
 ACTIVITIES:
 Net borrowings
  (payments) on revolving
  line of credit.........       5,200      (7,700)       (900)    (400)   4,236
 Proceeds from issuance
  of long-term debt......      60,084      76,850     128,420    4,100    1,700
 Payments on long-term
  debt...................     (41,257)    (61,121)    (90,937)    (537)    (335)
 Payments on capital
  lease obligations......      (2,113)        (74)        (21)     --       --
 Prepayment penalties and
  cancellation of
  warrants...............     (10,715)     (1,781)        --       --       --
 Payment of debt
  financing costs........      (5,343)     (3,385)     (2,366)     --       --
 Distributions to
  shareholders...........         (24)        (26)        (39)     --       --
                           ----------  ----------  ----------  -------  -------
  Net cash provided by
   financing
   activities............       5,832       2,763      34,157    3,163    5,601
                           ----------  ----------  ----------  -------  -------
NET INCREASE (DECREASE)
 IN CASH.................          67        (170)        364      207     (248)
CASH, BEGINNING OF
 PERIOD..................         461         528         358      358      722
                           ----------  ----------  ----------  -------  -------
CASH, END OF PERIOD......  $      528  $      358  $      722  $   565  $   474
                           ==========  ==========  ==========  =======  =======
SUPPLEMENTAL DISCLOSURE
 OF CASH FLOW
 INFORMATION:
 Cash paid for interest..  $    5,610  $    6,738  $    8,356  $ 1,018  $ 3,594
                           ==========  ==========  ==========  =======  =======
</TABLE>
 
        The accompanying notes are an integral part of these statements.
 
                                      F-6
<PAGE>
 
                              PIERCE LEAHY CORP.
 
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
                               DECEMBER 31, 1995
                       (IN THOUSANDS EXCEPT SHARE DATA)
 
(INFORMATION AS OF MARCH 31, 1996 AND FOR THE THREE MONTHS ENDED MARCH 31,
1995 AND 1996 IS UNAUDITED)
 
1. BACKGROUND:
 
  Pierce Leahy Corp. and its majority-owned subsidiary, Pierce Leahy Command
Company (together, the "Company"), stores and services business records for
clients throughout the United States and Canada. The Company also sells
storage containers and provides records management consulting services and
imaging services.
 
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
 
 Interim Consolidated Financial Statements
 
  The consolidated balance sheets as of March 31, 1996 and the consolidated
statements of operations for the three months ended March 31, 1995 and 1996
are unaudited and, in the opinion of management of the Company, include all
adjustments (consisting only of normal recurring adjustments) necessary for a
fair presentation of the results for those interim periods. The results of
operations for the three months ended March 31, 1995 and 1996 are not
necessarily indicative of the results to be expected for the full year.
 
 Principles of Consolidation
 
  The consolidated financial statements include the accounts of Pierce Leahy
Corp. and its 99%-owned subsidiary, Pierce Leahy Command Company. All
intercompany accounts and transactions have been eliminated in consolidation.
The minority interest in Pierce Leahy Command Company is not material to the
consolidated financial statements.
 
 Use of Estimates
 
  The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
 
 Inventories
 
  Inventories, which consist of storage containers, are stated at the lower of
cost (first-in, first-out) or market.
 
 Property and Equipment
 
  Property and equipment are stated at cost. Depreciation is provided using
straight-line and accelerated methods over the estimated useful lives of the
assets.
 
 Goodwill
 
  Goodwill reflects the cost in excess of fair value of the net assets of
companies acquired in purchase transactions. Goodwill is amortized using the
straight-line method from the date of acquisition over the expected period to
be benefited, currently estimated at 30 years. The Company assesses the
recoverability of goodwill, as well as other long lived assets, based upon
expectations of future undiscounted cash flows in accordance with Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of Long
Lived Assets and for Long Lived Assets to be Disposed of."
 
                                      F-7
<PAGE>
 
                              PIERCE LEAHY CORP.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
 
 Client Acquisition Costs
 
  The unreimbursed costs of moving the records of new clients into the
Company's facilities and sales commissions related to new client contracts
have been capitalized and are included in intangible assets in the
accompanying balance sheets (see Note 4). All such costs are being amortized
on a straight-line basis over six years, which represents the average initial
contract term.
 
 Deferred Rent
 
  Certain of the Company's leases for warehouse space, including the related
party leases discussed in Note 9, provide for scheduled rent increases over
the lease terms. The Company recognizes rent expense on a straight-line basis
over the lease terms, with the excess of the rent charged to expense over the
amount paid recorded as deferred rent in the accompanying balance sheets.
 
 Health Insurance Reserve
 
  The Company self-insures for benefit claims under a health insurance plan
provided to employees. The self-insurance is limited to $75 in claims per
insured individual per year, and a liability for claims incurred but not
reported is reflected in the accompanying balance sheets. Specific stop loss
insurance coverage is maintained to cover claims in excess of $75 per insured
individual per year.
 
 Income Taxes
 
  The Company is a Subchapter S corporation and, therefore, any taxable income
or loss for federal income tax purposes is passed through to the shareholders.
While not subject to federal income taxes, the Company is subject to income
taxes in certain states. The Company reports certain expenses in different
periods for financial reporting and income tax purposes. In addition, the
carrying value of certain assets acquired exceeded their tax bases. If the
Subchapter S corporation status was terminated, a deferred income tax
liability would need to be recorded.
 
  The Tax Reform Act of 1986 provides for a tax at the corporate level on
gains realized on asset sales for a specified period following the election of
Subchapter S status. Deferred taxes have been provided for taxes which may be
triggered if the Company disposes of certain assets acquired in connection
with an acquisition.
 
 Revenue Recognition
 
  Storage and service revenues are recognized in the month the respective
service is provided. Storage material sales are recognized when shipped to the
customer. Deferred revenues represent amounts invoiced for storage services in
advance of the rendering of the services.
 
 Change in Accounting Estimates
 
  Effective January 1, 1995, the Company revised its estimates of the useful
lives of certain long-term assets as follows:
 
<TABLE>
<CAPTION>
                                                            USEFUL LIFE (YEARS)
                                                            --------------------
     LONG-TERM ASSET                                           OLD       NEW
     ---------------                                        --------- ----------
     <S>                                                    <C>       <C>
     Buildings.............................................        25         40
     Warehouse equipment...................................        12      12-20
     Client acquisition costs..............................         3          6
     Other intangibles.....................................         3         10
     Goodwill..............................................      5-20         30
</TABLE>
 
 
                                      F-8
<PAGE>
 
                              PIERCE LEAHY CORP.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
  The aggregate effect of adopting these revised lives was to decrease
amortization and depreciation expense and increase net income for the year
ended December 31, 1995, by approximately $4,868. Management believes that the
new lives more accurately reflect the estimated economic lives of the related
assets and that such lives are more in conformity with industry practices.
 
 Foreign Currency Translation
 
  The balance sheets and statements of operations of the Canadian operations
are translated into U.S. dollars using the rates of exchange at period end.
All foreign currency transaction gains and losses are included in operations
in the period in which they occur. The cumulative translation adjustment at
December 31, 1995 and March 31, 1996 is not material to the consolidated
financial statements.
 
 New Accounting Pronouncements
 
  The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation." The
Company is required to adopt this standard for the year ending December 31,
1996. The Company has elected to adopt the disclosure requirement of this
pronouncement. The adoption of this pronouncement will have no impact on the
Company's consolidated statement of operations.
 
3. PROPERTY AND EQUIPMENT:
 
<TABLE>
<CAPTION>
                                                    DECEMBER 31
                                                 ------------------  MARCH 31,
                                        LIFE       1994      1995      1996
                                     ----------- --------  --------  ---------
   <S>                               <C>         <C>       <C>       <C>
   Land.............................         --  $  3,594  $  4,780  $  4,753
   Buildings and improvements....... 10-40 years   23,397    35,758    35,686
   Warehouse equipment (primarily
    shelving)....................... 12-20 years   39,485    53,943    56,347
   Data processing equipment and
    software........................     7 years    9,051    10,684    11,698
   Furniture and fixtures...........     7 years    2,515     2,970     3,221
   Transportation equipment.........     5 years    1,087     1,620     2,038
                                                 --------  --------  --------
                                                   79,129   109,755   113,743
   Less--Accumulated depreciation
    and amortization................              (31,003)  (35,328)  (36,633)
                                                 --------  --------  --------
     Net property and equipment.....             $ 48,126  $ 74,427  $ 77,110
                                                 ========  ========  ========
</TABLE>
 
  Depreciation expense was $4,036, $5,066, $4,325, $1,004, and $1,305 for the
years ended December 31, 1993, 1994, and 1995 and for the three months ended
March 31, 1995 and 1996, respectively.
 
4. INTANGIBLE ASSETS:
 
<TABLE>
<CAPTION>
                                                     DECEMBER 31
                                                  ------------------  MARCH 31,
                                                    1994      1995      1996
                                                  --------  --------  ---------
   <S>                                            <C>       <C>       <C>
   Goodwill..................................     $  9,194  $ 25,857  $ 27,255
   Client acquisition costs..................        5,549     8,680     9,788
   Noncompete agreements.....................        6,180     6,980     7,420
   Customer lists............................        4,220     4,720     4,720
   Deferred financing costs..................        3,409     2,248     2,245
   Other intangible assets...................          224     4,679     5,957
                                                  --------  --------  --------
                                                    28,776    53,164    57,385
   Less--Accumulated amortization............      (10,942)  (14,543)  (15,770)
                                                  --------  --------  --------
   Net intangible assets.....................     $ 17,834  $ 38,621  $ 41,615
                                                  ========  ========  ========
</TABLE>
 
                                      F-9
<PAGE>
 
                              PIERCE LEAHY CORP.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
 
<TABLE>
<CAPTION>
                                                          MARCH 31, 1996
                                                   -----------------------------
                                                           ACCUMULATED  NET BOOK
                                           LIFE     COST   AMORTIZATION  VALUE
                                        ---------- ------- ------------ --------
   <S>                                  <C>        <C>     <C>          <C>
   Goodwill............................   30 years $27,255   $ 2,775    $24,480
   Client acquisition costs............    6 years   9,788     3,687      6,101
   Noncompete agreements...............  3-7 years   7,420     6,279      1,141
   Customer lists......................    5 years   4,720     2,167      2,553
   Deferred financing costs............  5-8 years   2,245       138      2,107
   Other intangible assets............. 3-15 years   5,957       724      5,233
                                                   -------   -------    -------
                                                   $57,385   $15,770    $41,615
                                                   =======   =======    =======
</TABLE>
 
  Amortization of all intangible assets, other than deferred financing costs
which are charged to interest expense, was $2,852, $3,370, $3,838, $986, and
$1,116, for the years ended December 31, 1993, 1994, and 1995 and the three
months ended March 31, 1995 and 1996, respectively. Amortization of deferred
financing costs was $836, $1,068, $533, $142 and $111 for the years ended
December 31, 1993, 1994, and 1995 and the three months ended March 31, 1995
and 1996, respectively. Capitalized client acquisition costs were $2,840,
$1,905, $2,934, $348, and $1,108, and related amortization expense was $727,
$1,536, $909, $227, and $297 for the years ended December 31, 1993, 1994, and
1995 and for the three months ended March 31, 1995 and 1996, respectively.
 
  The Company continually evaluates whether events or circumstances have
occurred that indicate that the remaining useful lives of the intangible
assets should be revised or that the remaining balance of such assets may not
be recoverable. As of March 31, 1996, the Company believes that no revisions
to the remaining useful lives or write-downs of intangible assets are
required.
 
5. ACCRUED EXPENSES:
 
<TABLE>
<CAPTION>
                                                          DECEMBER 31
                                                         ------------- MARCH 31,
                                                          1994   1995    1996
                                                         ------ ------ ---------
   <S>                                                   <C>    <C>    <C>
   Accrued salaries and commissions..................... $  603 $2,190  $2,266
   Accrued vacation.....................................  1,723  2,140   2,417
   Other................................................  1,545  5,203   4,297
                                                         ------ ------  ------
                                                         $3,871 $9,533  $8,980
                                                         ====== ======  ======
</TABLE>
 
                                     F-10
<PAGE>
 
                              PIERCE LEAHY CORP.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
 
6. LONG-TERM DEBT:
 
<TABLE>
<CAPTION>
                                                      DECEMBER 31
                                                    -----------------
                                                                       MARCH 31,
                                                     1994      1995      1996
                                                    -------  --------  ---------
   <S>                                              <C>      <C>       <C>
   U.S. Revolver, variable interest rate (10.125%
    at March 31, 1996)............................  $   --   $    --   $  3,500
   Canadian Revolver, variable interest rate
    (9.375% at March 31, 1996)....................      --        --        735
   Standby Acquisition Note, variable interest
    rate (10.125% at March 31, 1996), payable in
    quarterly installments ranging from 4.17% to
    11.67% of the outstanding balance beginning
    December 1997 through November 2000...........      --        --      1,700
   Tranche A term loan, variable interest rate
    (8.5% at March 31, 1996), payable in quarterly
    installments ranging from $313 to $938
    beginning December 1995 through September
    2000..........................................      --     12,188    11,875
   Tranche B term loan, variable interest rate
    (8.75% at March 31, 1996), payable in
    quarterly installments ranging from $425 to
    $6,500 beginning March 1998 through September
    2002..........................................      --     47,500    47,500
   Tranche C term loan, variable interest rate (9%
    at March 31, 1996), payable in quarterly
    installments of $9,500 beginning December 2002
    through September 2003........................      --     38,000    38,000
   Canadian term loan, variable interest rate
    (8.29% at March 31, 1996), payable in
    quarterly installments ranging from $138 to
    $276 beginning March 1997 through June 2002,
    with final payment of $15,624 in September
    2002..........................................      --     20,520    20,599
   Borrowings under previous credit agreement
    (repaid in October 1995)......................   76,750       --        --
   Other..........................................      688        82        60
                                                    -------  --------  --------
                                                     77,438   118,290   123,969
   Less--Current portion..........................   (2,144)   (1,478)   (1,975)
                                                    -------  --------  --------
                                                    $75,294  $116,812  $121,994
                                                    =======  ========  ========
</TABLE>
 
  In October 1995, the Company entered into a credit facility (the "Credit
Facility"), which provides for borrowings of up to $143 million (U.S. dollars)
and $36 million (Canadian dollars). In addition to refinancing the borrowings
under the former credit facility and paying the related accrued interest, the
Company used the proceeds of the Credit Facility to acquire Command Record
Services, Inc., increase its available borrowing capacity for acquisitions,
and pay financing costs of $2,245.
 
                                     F-11
<PAGE>
 
                              PIERCE LEAHY CORP.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
 
  A summary of the aggregate commitment under the Credit Facility is as
follows:
 
<TABLE>
<CAPTION>
                                                                        CANADIAN
                                                           U.S. DOLLARS DOLLARS
                                                           ------------ --------
   <S>                                                     <C>          <C>
   A Term Note............................................   $ 12,500   $   --
   B Term Note............................................     47,500       --
   C Term Note............................................     38,000       --
   Standby Acquisition Note...............................     30,000       --
   U.S. Revolver..........................................     15,000       --
   Canadian Term Loan.....................................        --     28,000
   Canadian Revolver......................................        --      8,000
                                                             --------   -------
                                                             $143,000   $36,000
                                                             ========   =======
</TABLE>
 
  At the closing of the Credit Facility, the A, B and C Term Notes and the
Canadian term loan were drawn in full and $2.3 million was drawn under the
Canadian Revolver. No proceeds were drawn under the Standby Acquisition Note
or the U.S. Revolver at that time.
 
  Borrowing capacity under the U.S. Revolver and the Canadian Revolver has
scheduled reductions beginning in March 1997 and December 1997, respectively,
and expires in September 2000. Borrowing capacity under the Standby
Acquisition Note is reduced quarterly by amounts ranging from 4.167% to
11.666% of the outstanding borrowings under the Standby Acquisition Note
beginning on December 31, 1997. In addition to the scheduled principal
payments under the term loans and reductions in the borrowing capacity under
the U.S. Revolver, Canadian Revolver and Standby Acquisition Note, the Company
is subject to mandatory prepayments equal to 50% of excess cash flow, as
defined, and upon certain other events including sale of assets, stock or
incurrence of any other indebtedness, among others.
 
  The highest amounts outstanding under the U.S. and Canadian revolvers during
the year ended December 31, 1995 and the three month period ended March 31,
1996 was $3,200 and $4,235, respectively. The average amount outstanding on
the revolvers during such periods was $888 and $1,605, respectively, while the
weighted average interest rate was 10.43% and 9.76%, respectively.
 
  The Credit Facility specifies certain minimum or maximum relationships
between operating cash flows (earnings before interest, taxes, depreciation
and amortization) and interest, total debt and fixed charges, along with
minimum levels of operating cash flows and defined current ratio and operating
cash flows to debt service targets. There are restrictions on dividends,
capital expenditures, incurrence of indebtedness and lease obligations, among
other items. The Company was in compliance with the applicable provisions of
the Credit Facility at March 31, 1996. The Credit Facility is secured by
substantially all of the assets and outstanding common stock of the Company.
 
  Future scheduled principal payments on the Company's long-term debt at March
31, 1996 are as follows:
 
<TABLE>
     <S>                                                                <C>
     1996.............................................................. $  1,975
     1997..............................................................    4,899
     1998..............................................................    9,926
     1999..............................................................   11,374
     2000..............................................................   12,875
     2001 and thereafter...............................................   82,920
                                                                        --------
                                                                        $123,969
                                                                        ========
</TABLE>
 
                                     F-12
<PAGE>
 
                              PIERCE LEAHY CORP.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
 
  Based on the borrowing rates currently available to the Company for loans
with similar terms and average maturities, the Company believes that the
carrying amount of debt at March 31, 1996 approximates fair value.
 
  In connection with entering into credit facilities in 1993 and 1994, the
Company issued warrants to certain the lenders to purchase common stock.
Warrants to purchase 217 shares at $.01 per share were issued in 1993 and 52
shares at $2,839.72 per share were issued in 1994. Management assigned an
initial value of $338 to the 1993 warrants and $87 to the 1994 warrants for
financial reporting purposes. The outstanding warrants at December 31, 1994
and 1995 represent the right to purchase 2.63% of the Company's fully diluted
common stock. The warrant holders may put the warrants to the Company, and the
Company may call the warrants beginning in February 1996 and June 1997,
respectively, at amounts which are determined by a formula, as defined in the
Credit Facility. The change in value of the redeemable warrants from the
initial value has been accreted through a charge to shareholders' deficit in
the accompanying financial statements.
 
  Debt refinancings occurred in 1993, 1994 and 1995 resulting in the write-off
of previously deferred financing costs of $1,043, $3,981 and $2,779,
respectively, and prepayment and other charges (including the write-off of
unamortized debt discount) of $8,131 in 1993, $2,011 in 1994 and $500 in 1995.
Such write-offs and charges have been recorded as extraordinary items in the
accompanying consolidated statements of operations.
 
7. COMMON STOCK:
 
  At December 31, 1994 and 1995 and March 31, 1996, the Company's common stock
was comprised of the following:
 
<TABLE>
<CAPTION>
                                                           CLASS A    CLASS B
                                                          ---------- ----------
     <S>                                                  <C>        <C>
     Par value........................................... $      .01 $      .01
     Shares authorized...................................  1,000,000  1,000,000
     Shares issued and outstanding.......................      1,000      9,000
</TABLE>
 
8. STOCK OPTIONS:
 
  In September 1994, the Company established a nonqualified stock option plan
which provides for the granting to key employees of options to purchase an
aggregate of 1,141 shares of common stock. Options to purchase 567 shares at
$5 per share were granted in 1995 and options to purchase 340 shares at $6 per
share were granted in 1996. Option grants are exercisable at the earlier of
the tenth anniversary of the date of grant or the first date on which the
Company ceases to be an S Corporation, and have an exercise price equal to or
greater than the fair market value of the common stock on the date of grant.
Fair market value is determined based on a formula, as defined in the option
plan. The options vest in five equal annual installments beginning on the
first anniversary of the date of grant. At March 31, 1996, options for 113
shares were vested. The exercise of the options is subject to certain
restrictions.
 
9. COMMITMENTS AND CONTINGENCIES:
 
 Operating Leases
 
  At March 31, 1996, the Company was obligated under noncancelable operating
leases, including the related-party leases discussed below, for warehouse
space, office equipment and transportation equipment. These leases expire at
various times through 2007 and require minimum rentals, subject to escalation,
as follows:
 
                                     F-13
<PAGE>
 
                              PIERCE LEAHY CORP.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
 
<TABLE>
     <S>                                                                <C>
     1996.............................................................. $ 20,317
     1997..............................................................   18,379
     1998..............................................................   16,345
     1999..............................................................   14,121
     2000..............................................................   13,009
     2001 and thereafter...............................................   34,933
                                                                        --------
                                                                        $117,104
                                                                        ========
</TABLE>
 
  Rent expense was approximately $11,052, $12,262, $14,098, $3,277, and $5,919
for the years ended December 31, 1993, 1994, and 1995 and for the three months
ended March 31, 1995 and 1996, respectively.
 
  The Company leases office and warehouse space at prices which, in the
opinion of management, approximate market rates from entities which are owned
by various shareholders of the Company. Rent expense on these leases was
approximately $7,036, $7,658, $8,201, $2,050, and $2,210 for the years ended
December 31, 1993, 1994, and 1995 and for the three months ended March 31,
1995 and 1996, respectively. These related party leases require minimum
rentals, subject to escalation, as follows:
 
<TABLE>
     <S>                                                                 <C>
     1996............................................................... $ 8,881
     1997...............................................................   8,232
     1998...............................................................   7,394
     1999...............................................................   6,606
     2000...............................................................   6,385
     2001 and thereafter................................................  14,259
                                                                         -------
                                                                         $51,757
                                                                         =======
</TABLE>
 
 Other Matters
 
  The Company has entered into a consulting agreement with a shareholder of
the Company and a consulting/non-compete agreement with the former owner of an
acquired business. These agreements require the following minimum payments:
 
<TABLE>
     <S>                                                                  <C>
     1996................................................................ $  584
     1997................................................................    280
     1998................................................................     73
     1999................................................................     40
     2000................................................................     40
     2001 and thereafter.................................................    150
                                                                          ------
                                                                          $1,167
                                                                          ======
</TABLE>
 
  The Company has an agreement with a shareholder of the Company that requires
payments of $60 per year for five years upon the death of the shareholder. The
present value of this benefit has been recorded as a liability in the
accompanying balance sheets.
 
  In December 1993, the Company borrowed $80 from a shareholder which bears
interest at 7%. The note was repaid during 1996.
 
                                     F-14
<PAGE>
 
                              PIERCE LEAHY CORP.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
 
  The Company is party to various claims arising in the ordinary course of
business. Although the ultimate outcome of these matters is presently not
determinable, management, after consultation with legal counsel, does not
believe that the resolution of these matters will have a material adverse
effect on the Company's financial position or results of operations.
 
10. EMPLOYEE BENEFIT PLANS:
 
  The Company maintains a discretionary profit sharing and a 401(k) plan for
substantially all full-time employees over the age of 20 1/2 and with more
than 1,000 hours of service. Participants in the 401(k) plan may elect to
defer a specified percentage of their compensation on a pre tax basis. The
Company is required to make matching contributions equal to 25% of the
employee's contribution up to a maximum of 2% of the employee's annual
compensation. Participants become vested on the Company's matching
contribution over three to seven years. The expense relating to these plans
was $262, $506, $591, $148, and $167 for the years ended December 31, 1993,
1994 and 1995 and the three months ended March 31, 1995 and 1996,
respectively.
 
11. STOCK PURCHASE AGREEMENTS:
 
  The Company and its shareholders are parties to an agreement which provides
that, in the event of a shareholder's desire to transfer his ownership
interest, the other shareholders and/or the Company have the right of first
refusal to purchase the stock under the terms specified in the agreement. The
agreement also provides that, in the event of a shareholder's death, the
Company will purchase the stock from the estate of the deceased under the
terms and at the amount per share, subject to periodic adjustment, specified
in the agreement. The purchase would be funded, in part, from the proceeds of
insurance policies currently in place ($37,700 face value).
 
12. ACQUISITIONS:
 
  In 1995, the Company completed five acquisitions of records management
businesses for an aggregate purchase price of $30,094, including assumption of
debt. During the three months ended March 31, 1996, the Company completed two
acquisitions for an aggregate purchase price of $2,929 and subsequent to that
date, completed two additional acquisitions with an aggregate purchase price
of $18,550. Each of these acquisitions was accounted for using the purchase
method of accounting and, accordingly, the results of operations for each
acquisition have been included in the consolidated results of the Company from
the respective acquisition dates. The excess of the purchase price over the
underlying fair value of the assets and liabilities acquired has been
allocated to goodwill ($17,751 and $988 in 1995 and the three months ended
March 31, 1996, respectively) and is being amortized over the estimated
benefit period of 30 years. In addition, the Company entered into a noncompete
and consulting agreement (see Note 9).
 
  A summary of the cash consideration and allocation of the purchase price as
of the acquisition dates are as follows:
 
<TABLE>
<CAPTION>
                                                                1995     1996
                                                               -------  -------
     <S>                                                       <C>      <C>
     Fair value of assets acquired............................ $37,271  $22,005
     Liabilities assumed......................................  (7,177)    (526)
     Cash acquired............................................    (638)    (764)
                                                               -------  -------
       Net cash paid.......................................... $29,456  $20,715
                                                               =======  =======
</TABLE>
 
  Included in the 1996 amounts are $19,000 of fair value of assets acquired,
$450 of liabilities assumed, $700 of cash acquired and $17,850 of net cash
paid on acquisitions that were completed subsequent to March 31, 1996.
 
                                     F-15
<PAGE>
 
                              PIERCE LEAHY CORP.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
 
  The following unaudited pro forma information shows the results of the
Company's operations for the year ended December 31, 1995 and three months
ended March 31, 1996, as though each of the completed acquisitions had
occurred as of January 1, 1995:
 
<TABLE>
<CAPTION>
                                                                         THREE
                                                              YEAR      MONTHS
                                                             ENDED       ENDED
                                                          DECEMBER 31, MARCH 31,
                                                              1995       1996
                                                          ------------ ---------
     <S>                                                  <C>          <C>
     Total revenues......................................   $120,257    $31,582
     Net income (loss)...................................       (414)       646
</TABLE>
 
  The pro forma results have been prepared for comparative purposes only and
are not necessarily indicative of the actual results of operations had the
acquisitions taken place as of January 1, 1995 or the results that may occur
in the future. Furthermore, the pro forma results do not give effect to all
cost savings or incremental costs which may occur as a result of the
integration and consolidation of the acquired companies.
 
                                     F-16
<PAGE>
 
                   REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
 
To Pierce Leahy Corp.:
 
  We have audited the accompanying statements of operations and cash flows of
Command Records Services Limited for each of the periods ended December 31,
1993, December 31, 1994 and October 26, 1995. These financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
 
  We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
 
  In our opinion, the financial statements referred to above present fairly,
in all material respects, the results of operations and cash flows of Command
Records Services Limited for each of the periods ended December 31, 1993,
December 31, 1994 and October 26, 1995 in conformity with generally accepted
accounting principles.
 
                                          Arthur Andersen LLP
 
Philadelphia, Pa.,
June 21, 1996
 
                                     F-17
<PAGE>
 
                        COMMAND RECORDS SERVICES LIMITED
 
                            STATEMENTS OF OPERATIONS
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                        FOR THE YEARS ENDED  FOR THE TEN MONTHS
                                            DECEMBER 31       ENDED OCTOBER 26
                                        -------------------- ------------------
                                          1993       1994           1995
                                        ---------  --------- ------------------
<S>                                     <C>        <C>       <C>
REVENUES:
  Storage.............................. $   5,290  $   6,299      $ 5,525
  Service..............................     4,618      6,453        5,447
  Product..............................       368        596          453
                                        ---------  ---------      -------
                                           10,276     13,348       11,425
                                        ---------  ---------      -------
OPERATING EXPENSES:
  Salaries.............................     4,277      5,472        4,020
  Occupancy............................     1,568      2,214        1,806
  Archive operating....................     1,129      1,474        1,498
  Selling, general and administrative..     1,578      1,781        2,243
  Depreciation and amortization........       848      1,012          926
  Cost of product......................       153        225          220
  Restructuring expenses (Note 6)......       --         --           670
  Loss on write down and disposal of
   property and equipment (Note 5).....       526         25          105
                                        ---------  ---------      -------
                                           10,079     12,203       11,488
                                        ---------  ---------      -------
    Operating income (loss)............       197      1,145          (63)
INTEREST EXPENSE.......................       198        249          300
                                        ---------  ---------      -------
    Income (loss) before provision for
     income taxes......................        (1)       896         (363)
PROVISION FOR INCOME TAXES.............       184        531           22
                                        ---------  ---------      -------
NET INCOME (LOSS)...................... $    (185) $     365      $  (385)
                                        =========  =========      =======
</TABLE>
 
        The accompanying notes are an integral part of these statements.
 
                                      F-18
<PAGE>
 
                        COMMAND RECORDS SERVICES LIMITED
 
                            STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                       FOR THE YEARS ENDED   FOR THE TEN MONTHS
                                           DECEMBER 31        ENDED OCTOBER 26
                                       --------------------  ------------------
                                         1993       1994            1995
                                       ---------  ---------  ------------------
<S>                                    <C>        <C>        <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss)................... $    (185) $     365        $ (385)
  Adjustments to reconcile net income
   (loss) to net cash provided by
   operating activities--
    Loss on write down and disposal of
     property and equipment...........       526         25           105
    Depreciation and amortization.....       848      1,012           926
    Deferred income taxes.............       (10)        10            63
    Increase in deferred rent.........       123         25           (33)
    Change in assets and liabilities
     excluding effects from the
     purchase of businesses--
      (Increase) decrease in--
        Accounts receivable, net......       (36)      (229)          (35)
        Inventories...................       114        (56)           21
        Prepaid expenses..............       (41)       (43)          112
        Income taxes receivable.......       --         --           (406)
        Other assets..................         7        (37)            7
      Increase (decrease) in--
        Accounts payable..............       126         26          (439)
        Accrued expenses..............       173        (89)          453
        Accrued income taxes..........       195        (58)         (173)
        Deferred revenues.............       167         96           112
        Other deferred liabilities....        98       (157)           33
                                       ---------  ---------        ------
      Net cash provided by operating
       activities.....................     2,105        890           361
                                       ---------  ---------        ------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Proceeds on sale of property and
   equipment..........................       288        456           187
  Capital expenditures................      (454)      (983)         (275)
  Increase in intangible assets.......       (95)      (376)            1
  Payments for businesses acquired,
   net of cash acquired...............    (1,986)       --            --
                                       ---------  ---------        ------
      Net cash used in investing
       activities.....................    (2,247)      (903)          (87)
                                       ---------  ---------        ------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Net borrowings on line of credit....       --         140           614
  Due to associated companies.........      (133)      (524)           12
  Deferred payments for businesses
   acquired...........................     1,004       (676)         (270)
                                       ---------  ---------        ------
      Net cash provided by (used in)
       financing activities...........       871     (1,060)          356
                                       ---------  ---------        ------
NET INCREASE (DECREASE) IN CASH.......       729     (1,073)          630
CASH, BEGINNING OF YEAR...............       353      1,082             9
                                       ---------  ---------        ------
CASH, END OF YEAR..................... $   1,082  $       9        $  639
                                       =========  =========        ======
</TABLE>
 
        The accompanying notes are an integral part of these statements.
 
                                      F-19
<PAGE>
 
                       COMMAND RECORDS SERVICES LIMITED
 
                         NOTES TO FINANCIAL STATEMENTS
                                (IN THOUSANDS)
 
1. FINANCIAL STATEMENTS
 
  On January 1, 1995, Command Records Services Limited ("CRSL"), Arcodex
Records Manager Ltd. ("ARML") and Data Repro Com Enterprises Ltd. ("DRCEL"),
amalgamated to form Command Records Services Limited (the "Company").
 
  The financial statements include the accounts of CRSL, ARML and DRCEL. All
significant intercompany transactions and balances have been eliminated.
 
  The Company stores and services business records for a nationwide customer
base located throughout Canada. The Company also sells storage containers and
provides records management consulting services, software products for
managing customer records and microfilming services.
 
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
 Use of Estimates
 
  The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Ultimate settlement of these amounts could differ from those
estimates.
 
 Revenue Recognition
 
  Storage revenue is recognized as storage services are provided. Deferred
revenues represent amounts invoiced for storage services in advance of the
rendering of the services. Service revenue is recognized as the services are
provided.
 
 Property and Equipment
 
  Property and equipment are stated at cost. Depreciation is provided using
the straight-line method over the estimated useful lives of the assets.
 
 Goodwill
 
  Goodwill is being amortized over 10 years using the straight-line method.
The Company continually evaluates whether events or circumstances have
occurred that indicate that the remaining useful lives of the intangible
assets should be revised or that the remaining balance of such assets may not
be recoverable. As of October 26, 1995, the Company believes that no revisions
to the remaining useful lives or write downs of intangible assets are
required.
 
 Deferred Rent
 
  Certain of the Company's leases for warehouse space provide for scheduled
rent increases over the lease terms. The Company recognizes rent expense on a
straight-line basis over the lease terms, with the excess of the rent charged
to expense over the amount paid recorded as deferred rent in the balance
sheets.
 
 Client Acquisition Costs
 
  The unreimbursed costs of moving the records of new clients into the
Company's facilities have been capitalized. All such costs are being amortized
on a straight-line basis over the contract term.
 
                                     F-20
<PAGE>
 
                       COMMAND RECORDS SERVICES LIMITED
 
                  NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
 
 
 Income Taxes
 
  Income taxes are recorded using the liability method. Under this method
deferred tax assets and liabilities are recognized based on differences
between the financial statement and tax basis of assets and liabilities using
presently enacted tax rates.
 
 Foreign Currency Translation
 
  The statements have been translated from the functional currency of Canadian
dollars to U.S. dollars using the average exchange rate for the results of
operations.
 
3. ACQUISITIONS
 
  On December 6, 1993, CRSL purchased 100% of the shares of ARML and DRCEL.
The acquisition has been accounted for using the purchase method. The net
assets acquired were as follows:
 
<TABLE>
   <S>                                                                   <C>
   Assets............................................................... $1,692
   Liabilities..........................................................  1,237
                                                                         ------
                                                                            455
   Integration and Acquisition Costs....................................   (181)
   Goodwill.............................................................  1,718
                                                                         ------
   Purchase Price....................................................... $1,992
                                                                         ======
</TABLE>
 
  ARML and DRCEL results of operations have been consolidated with Command
Records Services Limited as of December 6, 1993, the date of acquisition.
 
4. INCOME TAXES
 
  The Company's provision for income taxes is made up as follows:
 
<TABLE>
<CAPTION>
                                                                1993 1994 1995
                                                                ---- ---- -----
   <S>                                                          <C>  <C>  <C>
   Provision for income taxes based on combined basic Canadian
    federal and provincial income tax rate of 44%.............  $--  $394 $(159)
   Impact of permanent differences
   Capital loss on disposal of property with no future tax
    benefit...................................................   169  --    --
   Non-deductible meals and entertainment.....................    12   27    25
   Non-deductible goodwill amortization.......................   --    70    58
   Non-deductible awards to employees.........................     3   10     3
   Increase in valuation allowance............................   --    30    95
                                                                ---- ---- -----
   Actual provision for income taxes..........................  $184 $531 $  22
                                                                ==== ==== =====
</TABLE>
 
5. DISPOSAL OF PROPERTY
 
  In 1994, the Company sold its Agincourt property. The Company recorded a
write down of $509 in 1993 which is included in the loss on write down and
disposal of property and equipment. The write down was recorded when the
decision to sell the property was made by management.
 
                                     F-21
<PAGE>
 
                       COMMAND RECORDS SERVICES LIMITED
 
                  NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
 
 
6. RESTRUCTURING EXPENSES
 
  During 1995, the Company recorded a restructuring charge of $775 comprising
termination and other costs.
 
7. RELATED PARTY TRANSACTIONS
 
  The accompanying consolidated statements of operations include the following
related party transactions:
 
<TABLE>
<CAPTION>
                                                                  1993 1994 1995
                                                                  ---- ---- ----
   <S>                                                            <C>  <C>  <C>
   Sales......................................................... $246 $198 $175
   Interest expense.............................................. $198 $184 $177
   Corporate charges............................................. $ 78 $ 82 $128
</TABLE>
 
  In 1991, the Company purchased its Brampton property from its parent. The
property was transferred at the carrying value of $3,844 in consideration for
17,260 common shares of the Company.
 
8. COMMITMENTS AND CONTINGENCIES
 
 Operating Leases
 
  At October 26, 1995, the Company was obligated under non-cancelable
operating leases for warehouse space, office equipment and transportation
equipment requiring minimum rentals as follows:
 
<TABLE>
   <S>                                                                    <C>
   1996.................................................................. $1,149
   1997..................................................................    913
   1998..................................................................    659
   1999..................................................................    604
   2000..................................................................    501
   2001 and thereafter...................................................    958
                                                                          ------
                                                                          $4,784
                                                                          ======
</TABLE>
 
 Other Matters
 
  The Company is party to various claims arising in the ordinary course of
business. Although the ultimate outcome of these matters is presently not
determinable, management, after consultation with legal counsel, does not
believe that the resolution of these matters will have a material adverse
effect on the Company's financial position or results of operations.
 
9. SUBSEQUENT EVENT
 
  On October 27, 1995 the Company was acquired by Pierce Leahy Command Company
("PLCC"). PLCC was incorporated by Pierce Leahy Corp. for the purpose of the
acquisition. On November 6, 1995, PLCC and CRSL were amalgamated.
 
                                     F-22
<PAGE>
 
 
 
 
                         INDEPENDENT AUDITORS' REPORT
 
To the Board of Directors and Stockholders of  Security Archives, Inc.:
 
  We have audited the accompanying balance sheets of Security Archives, Inc.
as of June 30, 1995 and 1994, and the related statements of income and
retained earnings and of cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
 
  We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe our audits provide a reasonable basis for
our opinion.
 
  In our opinion, such financial statements present fairly, in all material
respects, the financial position of Security Archives, Inc. as of June 30,
1995 and 1994, and the results of its operations and its cash flows for the
years then ended in conformity with generally accepted accounting principles.
 
  As discussed in Notes 1, 2 and 4 to the financial statements, during 1994,
the Company changed its methods of accounting for investments in equity
securities and income taxes to conform with Statements of Financial Accounting
Standards No. 115 and No. 109, respectively.
 
DELOITTE & TOUCHE LLP
 
Dallas, Texas
August 14, 1995
 
 
 
                                     F-23
<PAGE>
 
                            SECURITY ARCHIVES, INC.
 
                                 BALANCE SHEETS
 
<TABLE>
<CAPTION>
                                                JUNE 30,
                                         ------------------------   MARCH 31,
                                            1994         1995         1996
                                                                   (UNAUDITED)
<S>                                      <C>          <C>          <C>
ASSETS
CURRENT ASSETS:
  Cash and cash equivalents............. $   465,058  $   387,354  $   703,129
  Accounts receivable...................     205,599      245,839      253,966
  Prepaid expenses......................     169,191      243,886      325,272
                                         -----------  -----------  -----------
    Total current assets................     839,848      877,079    1,282,367
PROPERTY, PLANT AND EQUIPMENT:
  Land..................................   1,128,822    1,128,822    1,128,822
  Buildings and improvements............   2,533,200    2,646,548    3,260,627
  Equipment.............................   4,106,862    4,430,263    4,449,706
                                         -----------  -----------  -----------
                                           7,768,884    8,205,633    8,839,155
  Less accumulated depreciation.........  (3,892,935)  (3,849,502)  (3,845,308)
                                         -----------  -----------  -----------
                                           3,875,949    4,356,131    4,993,847
INVESTMENTS--Available for sale (Note
 2).....................................     989,795      341,264          --
DEFERRED INCOME TAXES (Note 4)..........      13,495          --           --
OTHER ASSETS............................     112,835      136,447      123,191
                                         -----------  -----------  -----------
    TOTAL ASSETS........................ $ 5,831,922  $ 5,710,921  $ 6,399,405
                                         ===========  ===========  ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
  Current maturities of long-term debt
   (Note 3)............................. $   157,564  $       --   $       --
  Accounts payable......................      76,239      243,682       92,917
  Accrued expenses......................     123,201      153,768      107,788
  Deferred income taxes (Note 4)........      51,877       52,659       55,234
  Other.................................      23,000       23,000       23,000
                                         -----------  -----------  -----------
    Total current liabilities...........     431,881      473,109      278,939
LONG-TERM DEBT, NET OF CURRENT MATURI-
 TIES (Note 3)..........................   1,477,994          --           --
DEFERRED INCOME TAXES (Note 4)..........         --         3,485        6,699
COMMITMENTS (Note 5)....................
STOCKHOLDERS' EQUITY (Notes 3 and 5):
  Common stock--par value $50 per share;
   100 shares authorized
   and issued...........................       5,000        5,000        5,000
  Treasury stock--56 shares, at cost....  (2,475,958)  (2,475,958)  (2,475,958)
  Unrealized leases on investments (Note
   2)...................................     (46,877)     (10,384)         --
  Retained earnings.....................   6,439,882    7,715,669    8,584,725
                                         -----------  -----------  -----------
    Total stockholders' equity..........   3,922,047    5,234,327    6,113,767
                                         -----------  -----------  -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQ-
 UITY................................... $ 5,831,922  $ 5,710,921  $ 6,399,405
                                         ===========  ===========  ===========
</TABLE>
 
                       See notes to financial statements.
 
                                      F-24
<PAGE>
 
                            SECURITY ARCHIVES, INC.
 
                   STATEMENTS OF INCOME AND RETAINED EARNINGS
 
<TABLE>
<CAPTION>
                                                         FOR THE NINE  MONTHS
                                  FOR THE YEAR ENDED             ENDED
                                       JUNE 30,                MARCH 31,
                                 ----------------------  ----------------------
                                    1994        1995        1995        1996
                                 ----------  ----------  ----------  ----------
                                                              (UNAUDITED)
<S>                              <C>         <C>         <C>         <C>
REVENUE:
  Storage charges..............  $2,470,703  $2,812,673  $2,095,542  $2,295,615
  Pickup and delivery..........     840,040     857,638     652,376     593,938
  Retrieval, refile and cata-
   log.........................     497,428     510,573     377,658     385,756
  Document disintegration......     293,869     363,311     272,621     225,732
  Cart service.................      78,630      81,397      62,640      58,010
  Deposit on boxes.............      71,326      70,151      55,112      59,601
  Miscellaneous................     105,141     287,997     162,965     322,105
                                 ----------  ----------  ----------  ----------
                                  4,357,137   4,983,740   3,678,914   3,940,757
EXPENSES:
  Storage......................     553,977     651,482     483,724     393,011
  Handling.....................   1,115,739   1,082,665     712,810     793,837
  General and administrative...   1,085,490   1,192,996   1,000,197   1,462,215
                                 ----------  ----------  ----------  ----------
                                  2,755,206   2,927,143   2,196,731   2,649,063
                                 ----------  ----------  ----------  ----------
OPERATING PROFIT...............   1,601,931   2,056,597   1,482,183   1,291,694
OTHER INCOME (EXPENSE):
  Interest income..............      69,285      87,400      20,458       9,172
  Interest expense.............    (154,326)   (112,938)   (106,068)        --
  Other........................      60,684     (52,624)    (16,082)      8,190
                                 ----------  ----------  ----------  ----------
INCOME BEFORE INCOME TAXES AND
 CUMULATIVE EFFECT OF CHANGE IN
 ACCOUNTING PRINCIPLE..........   1,577,574   1,978,435   1,380,491   1,309,056
PROVISION FOR INCOME TAXES
 (Note 4)......................    (616,491)   (702,648)   (485,000)   (440,000)
                                 ----------  ----------  ----------  ----------
INCOME BEFORE CUMULATIVE EFFECT
 OF CHANGE IN ACCOUNTING
 PRINCIPLE.....................     961,083   1,275,787     895,491     869,056
CUMULATIVE EFFECT OF CHANGE IN
 ACCOUNTING PRINCIPLE (Note
 4)............................      53,283         --          --          --
                                 ----------  ----------  ----------  ----------
NET INCOME.....................   1,014,366   1,275,787     895,491     869,056
RETAINED EARNINGS, BEGINNING OF
 YEAR..........................   5,425,516   6,439,882   6,439,882   7,715,669
                                 ----------  ----------  ----------  ----------
RETAINED EARNINGS, END OF
 YEAR..........................  $6,439,882  $7,715,669  $7,335,373  $8,584,725
                                 ==========  ==========  ==========  ==========
</TABLE>
 
                       See notes to financial statements.
 
                                      F-25
<PAGE>
 
                            SECURITY ARCHIVES, INC.
 
                            STATEMENTS OF CASH FLOWS
 
<TABLE>
<CAPTION>
                                                             FOR THE NINE
                                 FOR THE YEARS ENDED         MONTHS ENDED
                                      JUNE 30,                 MARCH 31,
                               ------------------------  ----------------------
                                  1994         1995        1995        1996
                               -----------  -----------  ---------  -----------
                                                              (UNAUDITED)
<S>                            <C>          <C>          <C>        <C>
CASH FLOWS FROM OPERATING AC-
 TIVITIES:
  Net Income.................  $ 1,014,366  $ 1,275,787  $ 895,491  $   869,056
  Adjustments to reconcile
   net income to net cash
   provided by operating
   activities................
  Depreciation...............      463,797      509,516    371,980      437,161
  Loss (gain) on disposal of
   assets....................      (44,441)      28,454        --        61,556
  Loss on sale of
   investments...............       19,435       24,813     20,615       10,384
  Deferred income tax ex-
   pense.....................       26,400       (3,747)    17,763        5,789
  Changes in operating assets
   and liabilities:
    (Increase) decrease in
     accounts receivable.....        9,563      (40,240)   (96,301)      (8,127)
    Decrease in income taxes
     receivable..............       31,066          --         --           --
    (Increase) decrease in
     prepaid expenses........     (140,247)     (74,695)     1,380      (81,386)
    (Increase) decrease in
     other assets............     (100,758)     (23,612)    19,171       13,256
    Increase (decrease) in
     accounts payable........       17,107      167,443    (33,472)    (150,765)
    Increase (decrease) in
     accrued expenses........      (73,916)      30,567    108,681      (45,980)
    Increase in other liabil-
     ities...................       23,000          --         --           --
                               -----------  -----------  ---------  -----------
      Net cash provided by
       operating activities..    1,245,372    1,894,286  1,305,308    1,110,944
                               -----------  -----------  ---------  -----------
CASH FLOWS FROM INVESTING AC-
 TIVITIES:
  Purchase of property, plant
   and equipment.............   (1,193,989)  (1,018,150)  (660,593)  (1,136,433)
  Proceeds from sale of prop-
   erty......................       79,771          --         --           --
  Purchases of investments...   (1,070,373)     (58,250)   (52,145)         --
  Proceeds from sale of in-
   vestments.................    1,012,178      739,968     20,316      341,264
                               -----------  -----------  ---------  -----------
      Net cash used in in-
       vesting activities....   (1,172,413)    (336,432)  (692,422)    (795,169)
                               -----------  -----------  ---------  -----------
CASH FLOWS FROM FINANCING AC-
 TIVITIES--Principal payments
 of long-term debt...........     (144,051)  (1,635,558)  (116,844)         --
                               -----------  -----------  ---------  -----------
NET INCREASE (DECREASE) IN
 CASH AND CASH EQUIVALENTS...      (71,092)     (77,704)   496,042      315,775
CASH AND CASH EQUIVALENTS,
 BEGINNING OF PERIOD.........      536,150      465,058    465,058      387,354
                               -----------  -----------  ---------  -----------
CASH AND CASH EQUIVALENTS,
 END OF PERIOD...............  $   465,058  $   387,354  $ 961,100  $   703,129
                               -----------  -----------  ---------  -----------
SUPPLEMENTAL DISCLOSURE:
  Cash payments for:
    Interest.................  $   154,326  $   112,938  $ 106,068  $       --
                               -----------  -----------  ---------  -----------
    Income taxes.............  $   413,255  $   485,000  $ 400,000  $   400,000
                               -----------  -----------  ---------  -----------
  Noncash Investing activi-
   ties:
    Unrealized loss on in-
     vestments...............  $    46,877  $    10,384  $  12,576  $       --
                               -----------  -----------  ---------  -----------
</TABLE>
 
                       See notes to financial statements.
 
                                      F-26
<PAGE>
 
                            SECURITY ARCHIVES, INC.
 
       NOTES TO FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 1995 AND 1994
 
(INFORMATION AS OF MARCH 31, 1996 AND FOR THE NINE MONTHS ENDED MARCH 31, 1995
                            AND 1996 IS UNAUDITED)
 
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
  General--Security Archives, Inc. (the "Company"), a Texas corporation, is
engaged in the storage, delivery, retrieval and destruction of documents for
companies in the north Texas area.
 
  Interim Consolidated Financial Statements--The consolidated balance sheets
as of March 31, 1996 and the consolidated statements of operations for the
three months ended March 31, 1995 and 1996 are unaudited and, in the opinion
of management of the Company, include all adjustments (consisting only of
normal recurring adjustments) necessary for a fair presentation of the results
for those interim periods. The results of operations for the three months
ended March 31, 1995 and 1996 are not necessarily indicative of the results to
be expected for the full year.
 
  Investments--The Company adopted Statement of Financial Accounting Standards
No. 115, "Accounting for Certain Investments in Debt and Equity Securities"
("SFAS 115"), effective June 30, 1994. Under SFAS 115, investments are
classified as held-to-maturity, available-for-sale, or trading, depending on
the Company's ability and intent with respect to the use of individual
securities. The Company's investments at June 30, 1995 and 1994, are
classified as available-for-sale and are carried at fair value.
 
  Property, Plant and Equipment--Property, plant and equipment are carried at
cost. Depreciation is computed using the straight-line method over the
estimated useful lives of the related assets, ranging from 3 to 18 years. When
assets are retired or otherwise disposed of, the cost and related accumulated
depreciation are removed from the accounts, and any resulting gain or loss is
reflected in income for the period. The cost of maintenance and repairs is
charged to expense as incurred; significant renewals and betterments are
capitalized. Deductions are made for retirements resulting from the renewals
or betterments.
 
  Income Taxes--Effective July 1, 1993, the Company adopted Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS
109"), which changed the method of accounting for income taxes from the
deferred method to the liability method. Under the liability method, deferred
income taxes are recognized for the tax consequences of temporary differences
by applying enacted statutory tax rates applicable to future years to
differences between the financial statement carrying amounts and the tax bases
of existing assets and liabilities.
 
  Cash Equivalents--The Company considers all highly liquid investments with
an original maturity of three months or less to be cash equivalents.
 
2. INVESTMENTS
 
  The Company adopted SFAS 115 effective June 30, 1994. Investments at June
30, 1995 and 1994, consisting of shares of the Phoenix Tax-Exempt Bond
Portfolio, are classified as available-for-sale and have a cost of $357,438
and $1,063,968 and a fair value, as determined by quoted market prices, of
$341,264 and $989,795, at June 30, 1995 and 1994, respectively. The net
unrealized losses included in stockholders' equity at June 30, 1995 and 1994,
was $10,384 and $46,877, net of income taxes of $5,790 and $27,296,
respectively.
 
  In fiscal year 1995, the Company sold shares with a cost of $764,781 for
$739,968, resulting in a realized loss of $24,813. The loss was calculated
using the average cost method.
 
                                     F-27
<PAGE>
 
3. LONG-TERM DEBT
 
  Long-term debt at June 30, 1994, consisted of a 9% note payable to the
former majority stockholder for the purchase of 56 shares of common stock in
the amount of $1,635,558, of which $157,564 represented amounts due in 1995.
During June 1995, the Company paid off the note in full.
 
4. INCOME TAXES
 
  Effective July 1, 1993, the Company adopted SFAS 109. The cumulative effect
of this accounting change has been credited to 1994 income as a separate item.
 
  The provision for income taxes consists of the following:
 
<TABLE>
<CAPTION>
                                                                1995      1994
                                                              --------  --------
   <S>                                                        <C>       <C>
   Current federal........................................... $641,704  $471,383
   Current state.............................................   78,706    58,260
   Deferred..................................................  (17,762)   86,848
                                                              --------  --------
   Total..................................................... $702,648  $616,491
                                                              ========  ========
</TABLE>
 
  Deferred income taxes at June 30, 1995 and 1994, principally related to the
use of accelerated depreciation methods for tax purposes on property, plant
and equipment and prepaid insurance.
 
  The Company's effective income tax rate differs from the federal statutory
rate primarily from state income taxes (net of federal tax benefit).
 
5. COMMITMENTS
 
  During 1989, the Company entered into a stock repurchase agreement with a
stockholder. Under the terms of the agreement, the Company will purchase the
stockholder's shares upon the stockholder's death at the greater of the book
value of the shares or the amount of the life insurance proceeds received by
the Company from a policy on the stockholder's life. Payment of the purchase
price would be made in quarterly payments over four years, bearing interest at
8% per annum. At June 30, 1995, the stockholder held 12 shares of stock at a
book value of $118,962 per share. The Company owns a $500,000 face value life
insurance policy on the stockholder.
 
                                     F-28
<PAGE>
 
                   REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
 
To AMK Document Services, Inc.:
 
  We have audited the accompanying statements of operations and cash flows of
AMK Document Services, Inc. (an Arizona corporation) for the ten-month period
ended October 31, 1995. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
 
  We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the statements of operations and
cash flows are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the
statements of operations and cash flows. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audit provides a reasonable basis for our opinion.
 
  In our opinion, the statements of operations and cash flows referred to
above presents fairly, in all material respects, the results of operations and
cash flows of AMK Document Services, Inc. for the ten-month period ended
October 31, 1995, in conformity with generally accepted accounting principles.
 
                                          Arthur Andersen LLP
 
Philadelphia, Pa.,
June 5, 1996
 
                                     F-29
<PAGE>
 
                          AMK DOCUMENT SERVICES, INC.
 
                            STATEMENT OF OPERATIONS
                   FOR THE TEN MONTHS ENDED OCTOBER 31, 1995
 
<TABLE>
<S>                                                                  <C>
REVENUES:
  Storage........................................................... $  706,434
  Service and storage materials and sales...........................  1,550,762
                                                                     ----------
    Total revenues..................................................  2,257,196
                                                                     ----------
OPERATING EXPENSES:
  Cost of sales, excluding depreciation.............................  1,613,409
  Selling, general and administrative...............................    348,247
  Depreciation......................................................     58,262
                                                                     ----------
    Total operating expenses........................................  2,019,918
                                                                     ----------
    Operating income................................................    237,278
INTEREST INCOME.....................................................      4,740
                                                                     ----------
NET INCOME.......................................................... $  242,018
                                                                     ==========
</TABLE>
 
         The accompanying notes are an integral part of this statement.
 
                                      F-30
<PAGE>
 
                          AMK DOCUMENT SERVICES, INC.
 
                            STATEMENT OF CASH FLOWS
                   FOR THE TEN MONTHS ENDED OCTOBER 31, 1995
 
<TABLE>
<S>                                                                  <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income........................................................ $ 242,018
  Adjustments to reconcile net income to net cash provided by
   operating activities--
    Depreciation....................................................    58,262
    Increase in deferred rent.......................................    16,544
    Decrease in assets--
      Accounts receivable...........................................    78,948
      Inventories...................................................    12,242
      Prepaid expenses and other assets.............................     7,829
    Increase in liabilities--
      Accounts payable and accrued expenses.........................    10,548
      Deferred revenues.............................................    22,194
                                                                     ---------
      Net cash provided by operating activities.....................   448,585
                                                                     ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures..............................................   (68,629)
                                                                     ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Distributions to shareholder......................................  (482,040)
                                                                     ---------
NET DECREASE IN CASH................................................  (102,084)
CASH, BEGINNING OF PERIOD...........................................   324,889
                                                                     ---------
CASH, END OF PERIOD................................................. $ 222,805
                                                                     =========
</TABLE>
 
         The accompanying notes are an integral part of this statement.
 
                                      F-31
<PAGE>
 
                          AMK DOCUMENT SERVICES, INC.
 
                         NOTES TO FINANCIAL STATEMENTS
 
                               OCTOBER 31, 1995
 
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
 
 Business
 
  AMK Document Services, Inc. (the "Company"), stores, services business
records and provides microfilming services for a customer base primarily
located in Phoenix, Arizona.
 
 Use of Estimates
 
  The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
 
 Property and Equipment
 
  Property and equipment are stated at cost. Depreciation is provided using
straight-line and accelerated methods over the estimated useful lives of the
assets. Property and equipment consist of the following:
 
<TABLE>
<CAPTION>
                                                                   OCTOBER 31,
                                                          LIFE        1995
                                                       ----------- -----------
   <S>                                                 <C>         <C>
   Leasehold improvements............................. 15-39 years $  317,372
   Warehouse equipment (primarily shelving)...........   3-7 years    329,562
   Microfilming equipment.............................   5-7 years    210,422
   Furniture, fixtures and office equipment...........   3-7 years    113,981
   Transportation equipment...........................   3-5 years     46,841
                                                                   ----------
                                                                    1,018,178
   Less--Accumulated depreciation and amortization....               (594,642)
                                                                   ----------
     Net property and equipment.......................             $  423,536
                                                                   ==========
</TABLE>
 
  Depreciation expense was $58,262 for the ten-month period ended October 31,
1995.
 
 Revenue Recognition
 
  Storage and service revenues are recognized in the month the respective
service is provided. Storage material sales are recognized when shipped to the
customer. Deferred revenues represent amounts invoiced for storage services in
advance of the rendering of the services.
 
 Deferred Rent
 
  One of the Company's leases for warehouse space provides for scheduled rent
increases over the lease terms. The Company recognizes rent expense on a
straight-line basis over the lease terms, with the excess of the rent charged
to expense over the amount paid recorded as deferred rent.
 
 Income Taxes
 
  The Company is a Subchapter S corporation and, therefore, any taxable income
or loss is passed through to the shareholder. The Company reports certain
expenses in different periods for financial reporting and income tax purposes.
If the Subchapter S corporation status was terminated, deferred income taxes
would need to be recorded in the financial statements.
 
                                     F-32
<PAGE>
 
                          AMK DOCUMENT SERVICES, INC.
 
                  NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
 
 
2. COMMITMENTS AND CONTINGENCIES
 
 Operating Leases
 
  At October 31, 1995, the Company was obligated under a noncancelable
operating lease for warehouse space. The lease expires in 1997 and requires
minimum rentals, subject to escalation of $51,072 in 1996 and $53,760 in 1997.
 
  The Company also leases office and warehouse space at prices which, in the
opinion of management, approximate market rates from entities which are owned
by the shareholder of the Company. These related party leases are month-to-
month leases.
 
  Rent expense on the above leases was $352,953 for the ten-month period ended
October 31, 1995, including $287,985 paid to the related party.
 
3. EMPLOYEE BENEFIT PLANS:
 
  The Company maintains a discretionary profit sharing and a 401(k) plan for
substantially all full-time employees over the age of 21 and with more than
1,000 hours of service. There was no Company contribution to these plans in
the ten-month period ended October 31, 1995.
 
4. SUBSEQUENT EVENT
 
  Effective November 1, 1995, the Company, sold its assets and business to
Pierce Leahy Corp. and ceased active operations. Certain assets and
liabilities not essential to the ongoing business were retained by the
Company.
 
                                     F-33
<PAGE>
 
================================================================================

          No dealer, salesperson or other person has been authorized to give any
information or to make any representations in connection with the offer
contained herein other than those contained in this Prospectus and, if given or
made, such information or representations must not be relied upon as having been
authorized by the Company or any other person. This Prospectus does not
constitute an offer to sell or the solicitation of an offer to buy to any person
in any jurisdiction in which such offer or solicitation is not authorized or in
which the person making such offer or solicitation is not qualified to do so or
to any person to whom it is unlawful to make such offer or solicitation. Neither
the delivery of this Prospectus nor any sale made hereunder shall under any
circumstances create an implication that there has been no change in the affairs
of the Company since the date hereof or that the information contained herein is
correct as of any time subsequent to the date hereof.

                             ---------------------

                               TABLE OF CONTENTS
<TABLE>
<CAPTION>
 
                                            Page
                                            ----
<S>                                         <C>
Available Information......................    3
Prospectus Summary.........................    4
Risk Factors...............................   18
The Exchange Offer.........................   24
The Company................................   34
The Transactions...........................   34
Use of Proceeds............................   36
Capitalization.............................   37
Selected Historical and Pro Forma
 Consolidated Statement of Operations,
 Balance Sheet and Other Data..............   38
Pro Forma Financial Data...................   41
Management's Discussion and Analysis of
 Financial Condition and Results of
 Operations................................   47
Business...................................   57
Management.................................   67
Certain Transactions.......................   73
Principal Shareholders.....................   74
Description of Credit Facility.............   76
Description of the Notes...................   77
Description of Capital Stock...............  102
Certain Federal Income Tax Considerations..  103
Plan of Distribution.......................  103
Legal Matters..............................  104
Experts....................................  104
Index to Financial Statements..............  F-1
 
             --------
</TABLE>

   Until                , 1996, (90 days after the date of this Prospectus), all
dealers effecting transactions in the Exchange Notes, whether or not
participating in this distribution, may be required to deliver a Prospectus.
This is in addition to the obligation of dealers to deliver a Prospectus when
selling Exchange Notes received in exchange for Original Notes held for their
own account.  See "Plan of Distribution."

================================================================================



================================================================================

[LOGO]

Pierce Leahy Corp.


 Offer to Exchange its 11 1/8% Senior 
Subordinated Notes due 2006 which have
 been registered under the Securities 
Act for any and all outstanding 11 1/8%
  Senior Subordinated Notes due 2006



- -----------------------------------------

             Prospectus

- -----------------------------------------




                         , 1996



================================================================================
<PAGE>
 
                                    PART II

                  INFORMATION NOT REQUIRED IN THE PROSPECTUS


       Item 20.  Indemnification of Directors and Officers.

            Section 721 of the New York Business Corporation Law provides that
       the indemnification and advancement of expenses of directors and officers
       may be provided by the certificate of incorporation or by-laws of a
       corporation, or when authorized by the certificate of incorporation or
       by-laws, a resolution of shareholders, a resolution of directors or an
       agreement providing for indemnification (except in cases where a judgment
       or other final adjudication establishes that such acts were committed in
       bad faith or were the result of active or deliberate dishonesty and were
       material to the cause of action so adjudicated or that he personally
       gained in fact a financial profit or other advantage to which he was not
       legally entitled).

            Section 722 of the New York Business Corporation Law provides that a
       corporation may indemnify any person, made, or threatened to be made, a
       party to an action or proceeding other than one by or in the right of the
       corporation to procure a judgment in its favor, whether civil or
       criminal, including an action by or in the right of any other
       corporation, partnership, joint venture, trust, employee benefit plan or
       other entity which any director or officer of the corporation served in
       any capacity at the request of the corporation, by reason of the fact
       that he was a director or officer of the corporation, or served such
       other corporation, partnership, joint venture, trust, employee benefit
       plan or other entity in any capacity, against judgments, fines, amounts
       paid in settlement and reasonable expenses if such director or officer
       acted, in good faith, for a purpose which he reasonably believed to be
       in, or in the case of service for any other corporation, partnership,
       joint venture, trust, employee benefit plan or other enterprise, not
       opposed to, the best interests of the corporation and, in criminal acts
       or proceedings, in addition, had no reasonable cause to believe that his
       conduct was unlawful.

            Section 722 of the New York Business Corporation Law also states
       that a corporation may indemnify any person made, or threatened to be
       made, a party to an action by or in the right of the corporation to
       procure a judgment in its favor by reason of the fact that he is or was a
       director or officer of the corporation or any other corporation,
       partnership, joint venture, trust, employee benefit plan or other entity
       at the request of the corporation, against amounts paid in settlement and
       reasonable expenses actually and necessarily incurred by him in
       connection with the defense or settlement of such action, or in
       connection with an appeal therein if such director or officer acted, in
       good faith, for a purpose which he reasonably believed to be in, or in
       the case of service for any other corporation, partnership, joint
       venture, employee benefit plan or other entity, not opposed to, the best
       interests of the corporation, except that no indemnification shall be
       made in respect of a threatened or pending action which is settled or
       otherwise disposed of, or any claim, issue or matter as to which such
       person shall have been adjudged to be liable to the corporation, unless
       the court determines the person is fairly and reasonably entitled to
       indemnity for such portion of the settlement amount and expenses as the
       court deems proper.

            Section 726 of the New York Business Corporation Law provides that a
       corporation shall have the power to purchase and maintain insurance for
       indemnification of directors and officers.  However, no insurance may
       provide for any payment, other than cost of defense, to or on behalf of
       any director or officer for a judgment or a final adjudication adverse to
       the insured director or officer if (i) a judgment or other final
       adjudication establishes that his acts of active and deliberate
       dishonesty were material to the cause of action adjudicated or that he
       personally gained a financial profit or other advantage to which he was
       not legally entitled or (ii) if prohibited under the insurance law of New
       York.

            Section 724 of the New York Business Corporation Law provides that
       indemnification shall be awarded by a court to the extent authorized
       under Sections 722 or 723(a) of the New York Business Corporation Law
       notwithstanding the failure of a corporation to provide indemnification,
       and despite any contrary resolution of the board or of the shareholders.

            For information regarding provisions under which a director or
       officer of the Company may be insured or indemnified in any manner
       against any liability which he may incur in his capacity as such, or such
       liability for monetary damages may be limited, reference is made to
       Article Seventh of the Company's Certificate of Incorporation (included
       as Exhibit 3.1 to this Registration Statement and incorporated by
       reference herein) and to Section 6.7 of the Company's By-laws (included
       as Exhibit 3.2 to this Registration Statement and incorporated by

                                     II-1
<PAGE>
 
       reference herein), which provides for indemnification to the maximum
       extent authorized by law.


       Item 21.  Exhibits and Financial Statement Schedules.

            (a)  Exhibits

       Exhibit
           No.        Exhibit
       -------        -------

     * 3.1       Certificate of Incorporation of the Company

     * 3.2       Amended and Restated By-laws of the Company

       4.1       Indenture dated as of July 15, 1996 between the Company and
                 United States Trust Company of New York, as Trustee (the
                 "Indenture")

       4.2       Form of Original Note No. R-1 for $200,000,000

     * 4.3       Form of Exchange Note

       4.4       Registration Rights Agreement dated as of July 23, 1996 by and
                 between the Company and CIBC Wood Gundy Securities Corp. (the
                 "Initial Purchaser")

     * 5         Opinion of Cozen and O'Connor

       10.1      Securities Purchase Agreement dated as of July 17, 1996 by and
                 between the Company and the Initial Purchaser

     * 10.2      Amended and Restated Buy/Sell Agreement dated as of July 19,
                 1996 by and among the Company and certain of its shareholders

     * 10.3      Pierce Leahy Corp. Non-Qualified Stock Option Plan

     * 10.4      Credit Agreement, dated as of August __, 1996, among the
                 Company, Pierce Leahy Command Company, the several lenders from
                 time to time parties thereto, Canadian Imperial Bank of
                 Commerce, as Canadian Administrative Agent, and Canadian
                 Imperial Bank of Commerce, New York Agency, as U.S.
                 administrative agent, together with certain collateral
                 documents attached thereto, including the U.S. Global Guarantee
                 and Security Agreement made by the Company, certain of its
                 affiliates and subsidiaries and its shareholders in favor of
                 the U.S. Administrative Agent and the Canadian Security
                 Agreement between Pierce Leahy Command Company and the Canadian
                 Administrative Agent

       12        Statement re: Computation of Ratios

     * 21        Subsidiaries of the Registrant

     * 23.1      Consent of Cozen and O'Connor (included in Exhibit 5)

       23.2      Consent of Arthur Andersen LLP

       23.3      Consent of Deloitte & Touche LLP

       24        Power of Attorney (included on signature page)

       25        Statement of eligibility of Trustee, United States Trust
                 Company of New York, on Form T-1

                                     II-2
<PAGE>
 
       Exhibit
           No.              Exhibit
       -------              -------

       27           Financial Data Schedule

     * 99.1         Form of Letter of Transmittal

     * 99.2         Form of Notice of Guaranteed Delivery
     ---------
     * To be filed by amendment.

            (b)     Financial Statement Schedules

                    Schedule of Valuation and Qualifying Accounts

                    All other financial statement schedules are omitted because
       they either are not applicable or the required information is included in
       the financial statements or notes thereto appearing elsewhere in this
       Registration Statement.

            (c)     Not applicable.


       Item 22.     Undertakings.

            (a)     Insofar as indemnification for liabilities arising under the
       Securities Act of 1933 may be permitted to directors, officers and
       controlling persons of the Registrant pursuant to the foregoing
       provisions, or otherwise, the Registrant has been advised that in the
       opinion of the Securities and Exchange Commission such indemnification is
       against public policy as expressed in the Act and is, therefore,
       unenforceable.  In the event that a claim for indemnification against
       such liabilities (other than the payment by the Registrant of expenses
       incurred or paid by a director, officer or controlling person of the
       Registrant in the successful defense of any action, suit or proceeding)
       is asserted by such director, officer or controlling person in connection
       with the securities being registered, the Registrant will, unless in the
       opinion of its counsel the matter has been settled by controlling
       precedent, submit to a court of appropriate jurisdiction the question
       whether such indemnification by it is against public policy as expressed
       in the Act and will be governed by the final adjudication of such issue.

            (b)(1)  The undersigned Registrant hereby undertakes as follows:
       that prior to any public reoffering of the securities registered
       hereunder through use of a prospectus which is a part of this
       registration statement, by any person or party who is deemed to be an
       underwriter within the meaning of Rule 145(c), the issuer undertakes that
       such reoffering prospectus will contain the information called for by the
       applicable registration form with respect to reofferings by persons who
       may be deemed underwriters, in addition to the information called for by
       the other items of the applicable form.

               (2)  The Registrant undertakes that every prospectus: (i) that is
       filed pursuant to paragraph (1) immediately preceding, or (ii) that
       purports to meet the requirements of Section 10(a)(3) of the Act and is
       used in connection with an offering of securities subject to Rule 415,
       will be filed as a part of an amendment to the registration statement and
       will not be used until such amendment is effective, and that, for
       purposes of determining any liability under the Securities Act of 1933,
       each such post-effective amendment shall be deemed to be a new
       registration statement relating to the securities offered therein, and
       the offering of such securities at that time shall be deemed to be the
       initial bona fide offering thereof.

            (c)     The undersigned Registrant hereby undertakes to respond to
       requests for information that is incorporated by reference into the
       prospectus pursuant to Item 4, 10(b), 11 or 13 of this form, within one
       business day of receipt of such request, and to send the incorporated
       documents by first class mail or other equally prompt means.  This
       includes information contained in documents filed subsequent to the
       effective date of the registration statement through the date of
       responding to the request.

            (d)     The undersigned Registrant hereby undertakes to supply by
       means of a post-effective amendment all information concerning a
       transaction, and the company being acquired involved therein, that was
       not the subject of and included in the registration statement when it
       became effective.


                                     II-3
<PAGE>
 
                                  SIGNATURES


            Pursuant to the requirements of the Securities Act of 1933, the
       Registrant has duly caused this Registration Statement to be signed on
       its behalf by the undersigned, thereunto duly authorized, in King of
       Prussia, Pennsylvania, on August 9, 1996.


                                           PIERCE LEAHY CORP.


                                           By:/s/J. Peter Pierce
                                              ----------------------------------
                                              J. Peter Pierce, President and
                                              Chief Executive Officer


                               POWER OF ATTORNEY


            KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
       appears below constitutes and appoints J. Peter Pierce and Douglas B.
       Huntley, and each of them, his true and lawful attorneys-in-fact and
       agents, with full power of substitution and resubstitution, for him and
       in his name, place and stead, in any and all capacities, to sign any and
       all amendments to this Registration Statement, and to file the same, with
       all exhibits thereto, and other documentation in connection therewith,
       with the Securities and Exchange Commission, granting unto said
       attorneys-in-fact and agents full power and authority to do and perform
       each and every act and thing requisite and necessary to be done in and
       about the premises, as fully to all intents and purposes as he might or
       could do in person, hereby ratifying and confirming all that said
       attorneys-in-fact and agents, or their substitute or substitutes, may
       lawfully do or cause to be done by virtue hereof.

            Pursuant to the requirements of the Securities Act of 1933, this
       Registration Statement has been signed by the following persons in the
       capacities and on the dates indicated.
<TABLE> 
<CAPTION> 

       Signature                             Title                                     Date
       ---------                             -----                                     ----
       <S>                                   <C>                                       <C> 

       /s/Leo W. Pierce, Sr.
       ----------------------------------    Chairman of the Board of Directors        August 9, 1996
       Leo W. Pierce, Sr.

       /s/J. Peter Pierce
       ----------------------------------    President, Chief Executive Officer        August 9, 1996
       J. Peter Pierce                       and Director
                                             (Principal Executive Officer)

       /s/Douglas B. Huntley                                            
       ----------------------------------    Vice President, Chief Financial           August 9, 1996
       Douglas B. Huntley                    Officer and Director
                                             (Principal Financial and
                                             Accounting Officer)


       ----------------------------------    Director                                  August      , 1996
       Leo W. Pierce, Jr.
</TABLE> 

                             [Signatures Continue]

                                     II-4
<PAGE>
 
                            [Signatures Continued]
<TABLE> 
<CAPTION> 
       Signature                             Title                                     Date
       ---------                             -----                                     ----
       <S>                                   <C>                                       <C> 

       /s/Michael J. Pierce
       ----------------------------------    Director                                  August 9, 1996
       Michael J. Pierce

       /s/Alan B. Campbell
       ----------------------------------    Director                                  August 9, 1996
       Alan B. Campell

       /s/Delbert S. Conner
       ----------------------------------    Director                                  August 9, 1996
       Delbert S. Conner
</TABLE> 

                                     II-5
<PAGE>
 
                   REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To Pierce Leahy Corp.:

We have audited in accordance with generally accepted auditing standards, the
financial statements for Pierce Leahy Corp. and have issued our report thereon
dated March 4, 1996, which is included in this registration statement.  Our
audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole.  The schedule of valuation and qualifying accounts
is presented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic financial statements.  This
schedule has been subjected to the auditing procedures applied in the audit of
the basic financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.


                                                   ARTHUR ANDERSEN LLP



Philadelphia, Pa.,
   March 4, 1996






                                      S-1
<PAGE>
 
                              PIERCE LEAHY CORP.
                       VALUATION AND QUALIFYING ACCOUNTS


                                 (In thousands)

                                   Balance,    Charges    Deductions    Balance,
                                  Beginning      to          from        End of
                                  of Period    Expense     Reserve       Period
                                  ---------    -------    ----------    -------
                                                         
December 31, 1995:                                       
  Reserve for doubtful accounts     $554         $418        $485         $487
                                  ---------    -------    ----------    -------
December 31, 1994:                                       
  Reserve for doubtful accounts     $513         $180        $139         $554
                                  ---------    -------    ----------    -------
December 31, 1993:                                       
  Reserve for doubtful accounts     $583          $89        $159         $513
                                  ---------    -------    ----------    -------
<PAGE>
 
                                 Exhibit Index


  Exhibit  
    No.            Exhibit
  -------          -------
        
* 3.1       Certificate of Incorporation of the Company
        
* 3.2       Amended and Restated By-laws of the Company
        
  4.1       Indenture dated as of July 15, 1996 between the Company and United 
            States Trust Company of New York, as Trustee (the "Indenture")
        
  4.2       Form of Original Note No. R-1 for $200,000,000
        
* 4.3       Form of Exchange Note
        
  4.4       Registration Rights Agreement dated as of July 23, 1996 by and
            between the Company and CIBC Wood Gundy Securities Corp. (the
            "Initial Purchaser")
        
* 5         Opinion of Cozen and O'Connor
        
  10.1      Securities Purchase Agreement dated as of July 17, 1996 by and
            between the Company and the Initial Purchaser
        
* 10.2      Amended and Restated Buy/Sell Agreement dated as of July 19, 1996 by
            and among the Company and certain of its shareholders
        
* 10.3      Pierce Leahy Corp. Non-Qualified Stock Option Plan
        
* 10.4      Credit Agreement, dated as of August __, 1996, among the Company,
            Pierce Leahy Command Company, the several lenders from time to time
            parties thereto, Canadian Imperial Bank of Commerce, as Canadian
            Administrative Agent, and Canadian Imperial Bank of Commerce, New
            York Agency, as U.S. administrative agent, together with certain
            collateral documents attached thereto, including the U.S. Global
            Guarantee and Security Agreement made by the Company, certain of its
            affiliates and subsidiaries and its shareholders in favor of the
            U.S. Administrative Agent and the Canadian Security Agreement
            between Pierce Leahy Command Company and the Canadian Administrative
            Agent.
        
  12        Statement re: Computation of Ratios
        
* 21        Subsidiaries of the Registrant
        
* 23.1      Consent of Cozen and O'Connor (including in Exhibit 5)
        
  23.2      Consent of Arthur Anderson LLP
        
  23.3      Consent of Deloitte & Touche
        
  24        Power of Attorney (included on signature page)
        
  25        Statement of eligibility of Trustee, United States Trust Company of 
            New York, on Form T-1
        
  27        Financial Data Schedule
        
* 99.1      Form of Letter of Transmittal
        
* 99.2      Form of Notice of Guaranteed Delivery
- ---------
* To be filed by amendment.
