<PAGE> 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (Date of earliest event reported): OCTOBER 24, 1997
EVI, INC.
(Exact name of registrant as specified in charter)
DELAWARE 1-13086 04-2515019
(State of Incorporation) (Commission File No.) (I.R.S. Employer
Identification No.)
5 POST OAK PARK, SUITE 1760,
HOUSTON, TEXAS 77027-3415
(Address of Principal Executive Offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (713) 297-8400
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Page 1
Exhibit Index Appears on Page 4
<PAGE> 2
ITEM 5. OTHER EVENTS.
On May 1, 1997, EVI, Inc. (the "Company") acquired GulfMark
International, Inc. ("GulfMark"). The financial statements of the business and
assets of GulfMark acquired by the Company (the "GulfMark Retained Assets") for
the quarter ended March 31, 1997, are filed by the Company as Exhibit 99.1 and
are hereby incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
99.1 - Financial Statements of GulfMark Retained Assets for the
quarter ended March 31, 1997.
99.2 - Third Supplemental Indenture by and among EVI, Inc.,
Ercon, Inc. and The Chase Manhattan Bank, as trustee,
dated effective as of May 1, 1997.
99.3 - Fourth Supplemental Indenture by and among EVI, Inc., XLS
Holding, Inc., XL Systems, Inc. and The Chase Manhattan
Bank, as trustee, dated effective as of August 25, 1997.
Page 2
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
EVI, INC.
/s/ FRANCES R. POWELL
Dated: October 24, 1997 ----------------------------------------
Frances R. Powell
Vice President, Accounting
and Controller
Page 3
<PAGE> 4
INDEX TO EXHIBITS
Number Exhibit
------ -------
99.1 Financial Statements of GulfMark Retained Assets for the
quarter ended March 31, 1997.
99.2 Third Supplemental Indenture by and among EVI, Inc.,
Ercon, Inc. and The Chase Manhattan Bank, as trustee,
dated effective as of May 1, 1997.
99.3 Fourth Supplemental Indenture by and among EVI, Inc., XLS
Holding, Inc., XL Systems, Inc. and The Chase Manhattan
Bank, as trustee, dated effective as of August 25, 1997.
Page 4
<PAGE> 1
EXHIBIT 99.1
GULFMARK RETAINED ASSETS
BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
------------- -------------
(in thousands)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8 $ 356
Accounts receivable
Trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 421 802
Unbilled receivables on jobs in progress . . . . . . . . . . . . . 136 31
Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 24
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185 157
Prepaids . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 124
------------- -------------
750 1,494
Investment in EVI, Inc., including unrealized ------------- -------------
gain of $82,732,000 and $51,483,000, respectively . . . . . . . . . . 102,288 71,040
Property and equipment, at cost:
Transportation equipment . . . . . . . . . . . . . . . . . . . . . 279 279
Construction equipment . . . . . . . . . . . . . . . . . . . . . . 129 129
Office equipment . . . . . . . . . . . . . . . . . . . . . . . . . 71 71
Furniture, fixtures and other . . . . . . . . . . . . . . . . . . 68 68
------------- -------------
547 547
Less - accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . (318) (287)
------------- -------------
Net property and equipment . . . . . . . . . . . . . . . . . . . . 229 260
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109 422
------------- -------------
$ 103,376 $ 73,216
============= =============
LIABILITIES AND ADVANCES AND EQUITY
Trade accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . $ 152 $ 414
Accrued payroll and related expenses . . . . . . . . . . . . . . . . . . . 160 560
Accrued warranty expenses . . . . . . . . . . . . . . . . . . . . . . . . . - 354
Other accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 286 426
------------- -------------
598 1,754
------------- -------------
Deferred income taxes and other . . . . . . . . . . . . . . . . . . . . . 33,294 22,646
Commitments and contingencies
Advances and retained earnings . . . . . . . . . . . . . . . . . . . . . . 15,967 15,923
Cumulative translation adjustment related to EVI, Inc. investment . . . . . (1,086) (1,086)
Unrealized gain on EVI, Inc. investment . . . . . . . . . . . . . . . . . 54,603 33,979
------------- -------------
============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 2
GULFMARK RETAINED ASSETS
STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months
Ended March 31,
-----------------------
1997 1996
---------- ----------
(in thousands, except
per share amounts)
<S> <C> <C>
Contract revenues . . . . . . . . . . . . . . . . . . . . . . . $ 818 $ 538
---------- ---------
Contract costs . . . . . . . . . . . . . . . . . . . . . . . . 678 440
Selling, general and administrative . . . . . . . . . . . . . . 688 346
---------- ---------
Income before income taxes . . . . . . . . . . . . . . . . . . (548) (248)
Provision (benefit) for income taxes . . . . . . . . . . . . . 100 (84)
---------- ---------
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . $ (648) $ (164)
========== =========
Earnings per share . . . . . . . . . . . . . . . . . . . . . . $ (0.10) $ (0.02)
=========== =========
Weighted average shares outstanding . . . . . . . . . . . . . . 6,680 6,672
=========== =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 3
GULFMARK RETAINED ASSETS
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months
Ended March 31,
---------------------------------
1997 1996
----------- ----------
(in thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss .. . . . . . . . . . . . . . . . . . . . . . . . $ (648) $ (164)
Adjustments to reconcile net loss to net cash
used by operations:
Depreciation and amortization . . . . . . . . . . . . . 31 27
Deferred income tax provision . . . . . . . . . . . . . 29 (96)
Change in operating assets and liabilities:
Accounts receivable . . . . . . . . . . . . . . . . . 300 672
Inventory, prepaids and other . . . . . . . . . . . . 409 (28)
Accounts payable . . . . . . . . . . . . . . . . . . (262) (688)
Accrued payroll and related expenses . . . . . . . . (400) (375)
Other accrued liabilities . . . . . . . . . . . . . . . (140) -
Other, net . . . . . . . . . . . . . . . . . . . . . . (5) (58)
---------- ----------
Net cash used by continuing operations . . . . . . . (686) (710)
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment . . . . . . . . . . . - (14)
---------- ----------
Net cash used in investing activities . . . . . . . . - (14)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from debt, net of direct financing costs . . . . - 24
Net change in cash advances . . . . . . . . . . . . . . . 338 721
---------- ----------
Net cash provided by financing activities . . . . . 338 745
---------- ----------
NET INCREASE (DECREASE) IN CASH . . . . . . . . . . . . . . . . (348) 21
CASH AT BEGINNING OF PERIOD . . . . . . . . . . . . . . . . . . 356 27
---------- ----------
CASH AT END OF PERIOD . . . . . . . . . . . . . . . . . . . . . $ 8 $ 48
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 4
GULFMARK RETAINED ASSETS
CONDENSED NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. BACKGROUND AND ORGANIZATION:
On April 30, 1997, the stockholders of GulfMark International, Inc. (the
Predecessor), approved a transaction to transfer the assets, liabilities and
operations of its offshore marine services business (the Marine Business) to
GulfMark Offshore, Inc. (New GulfMark), a new wholly owned subsidiary of the
Predecessor. Immediately after the transfer of the Marine Business, the
Predecessor spun off New GulfMark by distributing all the common stock of New
GulfMark to the Predecessor's stockholders (the Distribution). Following the
Distribution, on May 1, 1997, a subsidiary of EVI, Inc. (formerly Energy
Ventures, Inc.) (EVI), was merged (the Merger) into the Predecessor, which then
consisted solely of the Predecessor's remaining active business, the erosion
control business (Ercon), as well as the Predecessor's investment in
approximately 4.4 million shares of EVI common stock. The Predecessor survived
the Merger as a subsidiary of EVI. The surviving entity is referred to herein
as GulfMark Retained Assets.
The accompanying financial statements include the accounts of GulfMark Retained
Assets, as described in the preceding paragraph.
EVI, Inc. effected a two-for-one stock split of EVI's common stock on May 12,
1997. As a result of the stock split, all EVI stock data contained herein has
been restated to reflect the effect of the two-for-one stock split.
Ercon offers a variety of turnkey erosion control products and services to
assist customers to control soil erosion and prevent damage or destruction, by
rivers, streams and bayous, of various types of assets, including highways,
bridges, pipelines, buildings and railroads. EVI is a publicly traded
international oil field equipment and service company which manufactures
artificial lift and completion systems, drill pipe and premium tubulars.
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, the disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results may differ from these estimates.
Construction Contracts
GulfMark Retained Assets reports income from construction contracts using the
percentage-of-completion method of accounting. The percentage of completion on
a given contract is determined considering the relationship of total cost
incurred to date to total estimated contract cost. Total revenues from claims
for additional compensation are recorded only if the scope and amount of the
claim have been agreed to by the customer (or the claim is specifically
provided for in the contract terms) and the amount of the claim can be reliably
estimated. On contracts where an ultimate loss is anticipated upon completion,
the full amount of the estimated loss is accrued when known.
Although the duration of construction contracts may exceed one year, GulfMark
Retained Assets generally invoices and collects for work performed on a monthly
basis. Accordingly, GulfMark Retained Assets' operating cycle has been defined
as one year for purposes of classifying amounts on its balance sheet as current
or noncurrent.
<PAGE> 5
Unbilled receivables on construction jobs in progress represent revenues
recognized in excess of amounts billed. Generally, unbilled work is billable
within 30 days.
Income Taxes
GulfMark Retained Assets accounts for income taxes in accordance with Statement
of Financial Accounting Standards (SFAS) No. 109, "Accounting for Income
Taxes," which requires recognition of deferred tax assets and liabilities for
the expected future tax consequences of events that have been recognized in the
financial statements or tax returns. Under this method, deferred tax assets
and liabilities are determined based on the difference between the financial
statement carrying amounts and tax bases of assets and liabilities using
enacted tax rates and laws in effect in the years in which the differences are
expected to reverse. SFAS No. 109 also requires that the likelihood and amount
of future taxable income be included in the criteria used to determine the
timing and amount of tax benefits recognized for net operating losses and tax
credit carryforwards in the financial statements.
GulfMark Retained Assets has been included in consolidated federal income tax
returns filed by the Predecessor. However, the tax expense reflected in the
Statements of Income and the tax liabilities reflected in the Balance Sheets
have been prepared on a separate return basis as though GulfMark Retained
Assets had filed stand-alone income tax returns, except for the utilization of
net operating loss (NOL) carryforward benefits, which have been allocated by
the Predecessor to GulfMark Retained Assets based on GulfMark Retained Assets'
pro-rata share of the Predecessor's actual pre-tax financial statement earnings
for each year.
Cumulative Translation Adjustment
GulfMark Retained Assets recorded its portion of EVI's cumulative translation
adjustment as a component of advances and equity during the periods which
GulfMark Retained Assets accounted for its investment in EVI on the equity
method.
Inventory
Inventory is stated at the lower of cost (moving-average) or market. Inventory
consists primarily of Palisade Erconet panels whose open weave of synthetics
controls water flow, Ercomat double-layered and cabled grout injectable fabric
for contoured bank armoring, and Ercorap bags of hydratable grout for more
vertical bank armoring.
Property and Equipment
Property and equipment is recorded at cost and depreciated over estimated
service lives. Depreciation is computed primarily using the straight-line
method. Estimated lives for major classes of property and equipment are as
follows:
Transportation equipment 3 to 4 years
Construction equipment 4 to 6 years
Office equipment, furniture, fixtures and other 4 to 7 years
Expenditures for maintenance and repairs are charged currently to expense;
renewals and betterments are capitalized. Asset costs and accumulated
depreciation for property retired or otherwise disposed of are removed from the
accounts, with any gain or loss included in the results of operations.
3. INVESTMENT IN EVI, INC:
At December 31, 1996, the Predecessor owned 4,471,144 shares of stock of EVI.
On July 26, 1996, the Predecessor sold 600,000 shares of its 5,071,144 shares
holding in EVI in conjunction with a public offering by EVI of 6,900,000 newly
issued shares. As a result, the Predecessor received net proceeds of
approximately $8.9 million, resulting in an after-tax gain of approximately
$4.1 million. As a result of this sale and offering, the Predecessor's
ownership interest in EVI decreased to approximately 9.7 percent.
<PAGE> 6
The shares of EVI owned by the Predecessor were held for investment purposes.
Because of, among other things, the Predecessor's ownership interest in EVI, as
well as the two common directors between the two companies, the Predecessor may
be considered an "affiliate" of EVI under federal securities rules and
regulations. As such, these EVI shares may not have been able to be sold by
the Predecessor absent registering such shares under the Securities Act of 1933
or an exemption therefrom.
Prior to June 30, 1995, the Predecessor accounted for EVI on the equity method;
however, the reduction in the Predecessor's ownership interest on June 30,
1995, required a change from the equity method to the cost method and the
application of certain requirements of SFAS No. 115, "Accounting for Certain
Investments in Debt and Equity Securities." Under the cost method, the
Predecessor no longer records its proportionate share of EVI's earnings as was
done prior to June 30, 1995, under the equity method.
In addition, under SFAS No. 115, "...the portion of the security that can
reasonably be expected to qualify for sale within one year..." must be reported
at its "fair value." If the Predecessor was considered an "affiliate" under
the federal securities rules and regulations, approximately 3,129,200 shares as
of March 31, 1997, represents the number of shares which could have been sold
by the Predecessor without registration pursuant to Rule 144 promulgated under
the Securities Act of 1933. Accordingly, GulfMark Retained Assets has
reflected in the accompanying balance sheet approximately 3,129,200 shares of
EVI holdings at the closing price quoted on the New York Stock Exchange as of
March 31, 1997. The related unrealized gain on those shares is reflected as a
separate component of advances and equity, net of the related deferred taxes.
The remaining 1,341,944 shares are carried at historical cost.
The following represents unaudited summarized income statements for EVI. For
more information regarding EVI's financial condition and operations, reference
is made to EVI's March 31, 1997, Form 10-Q filed with the Securities and
Exchange Commission.
Summarized Income Statements
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31
------------------------
1997 1996
----------- ----------
(In Thousands)
<S> <C> <C>
Revenues $ 164,640 $ 90,326
Expenses (142,045) (82,149)
Other expenses, net (355) (3,953)
---------- --------
Income before taxes 22,240 4,224
Tax provision 7,895 1,477
---------- --------
Income from continuing operations 14,345 2,747
Discontinued operations, net of taxes - 1,600
---------- --------
Net income $ 14,345 $ 4,347
========== ========
</TABLE>
<PAGE> 1
EXHIBIT 99.2
THIRD SUPPLEMENTAL INDENTURE
THIRD SUPPLEMENTAL INDENTURE (this "Supplement"), dated and effective
as of May 1, 1997, is entered into by and among Energy Ventures, Inc., a
Delaware corporation (the "Company"), Ercon, Inc., a Delaware corporation and
wholly owned subsidiary of the Company, (the "New Guarantor"), and The Chase
Manhattan Bank (formerly known as Chemical Bank), a New York corporation, as
Trustee (the "Trustee").
RECITALS OF THE COMPANY AND THE NEW GUARANTOR
WHEREAS, the Company, the Subsidiary Guarantors and the Trustee have
executed and delivered an Indenture dated as of March 15, 1994, among the
Company, the Subsidiary Guarantors and the Trustee (the "Original Indenture")
providing for the issuance by the Company of $120,000,000 aggregate principal
amount of the Company's 10 1/4% Senior Notes due 2004 (the "Securities") and
pursuant to which the Subsidiary Guarantors have agreed, jointly and severally,
to unconditionally guarantee the due and punctual payment of the principal of,
premium, if any, and interest on the Securities and all other amounts due and
payable under the Original Indenture and the Securities by the Company
("Indenture Obligations");
WHEREAS, the Company, Prideco, Inc., a Texas corporation and a wholly
owned subsidiary of the Company ("Prideco"), and the Trustee executed a First
Supplemental Indenture, dated as of June 30, 1995, pursuant to which Prideco
became a Subsidiary Guarantor and agreed to unconditionally guarantee the
Indenture Obligations;
WHEREAS, the Company, EVI Arrow, Inc., a Delaware corporation and a
wholly owned subsidiary of the Company ("EVI Arrow"), EVI Watson Packers, Inc.,
a Delaware corporation and a wholly owned subsidiary of the Company ("EVI
Watson"), and the Trustee executed a Second Supplemental Indenture, dated and
effective as of December 6, 1996, pursuant to which EVI Arrow and EVI Watson
became Subsidiary Guarantors and agreed to unconditionally guarantee the
Indenture Obligations (the Indenture, as supplemented by the First Supplemental
Indenture and the Second Supplemental Indenture, is hereinafter referred to as
the "Indenture");
WHEREAS, the New Guarantor has become a Material Restricted Subsidiary
and pursuant to Sections 12.3(b) and (d) of the Indenture is obligated to enter
into the Supplement thereby guaranteeing the punctual payment of all Indenture
Obligations as provided in Article XII of the Indenture;
WHEREAS, pursuant to Section 8.1(f) of the Indenture, the Company, the
New Guarantor and the Trustee may enter into this Supplement without the
consent of any Holder;
WHEREAS, the execution and delivery of this Supplement have been duly
authorized by a Board Resolution of the respective Board of Directors of the
Company and the New Guarantor; and
WHEREAS, all conditions and requirements necessary to make the
Supplement valid and binding upon the Company and the New Guarantor, and
enforceable against the Company and the New Guarantor in accordance with its
terms, have been performed and fulfilled;
NOW, THEREFORE, in consideration of the above premises, each of the
parties hereto agrees, for the benefit of the others and for the equal and
proportionate benefit of the Holders of the Securities, as follows:
<PAGE> 2
ARTICLE ONE
THE NEW GUARANTEE
Section 101. For value received, the New Guarantor, in accordance
with Article Twelve of the Indenture, hereby unconditionally guarantees (the
"New Guarantee"), jointly and severally among itself and the Subsidiary
Guarantors, to the Trustee and the Holders, the due and punctual payment of the
principal of, premium, if any, and interest on the Securities and all other
amounts due and payable under the Indenture and the Securities by the Company,
whether at maturity, by acceleration, redemption, repurchase or otherwise as
more specifically set forth in Section 12.1 of the Indenture, including,
without limitation, interest on the overdue principal of, premium, if any, and
interest on the Securities, to the extent lawful, all in accordance with the
terms of Article XII of the Indenture and subject to the limitations set forth
in Section 12.5 of the Indenture. Each of the agreements made and obligations
assumed hereunder by the New Guarantor shall constitute, and shall be deemed to
constitute, a Guarantee under the Indenture and for all purposes of the
Indenture, and the New Guarantor shall be considered a Subsidiary Guarantor for
all purposes of the Indenture as if it was originally named therein as a
Subsidiary Guarantor.
Section 102. The New Guarantee shall be automatically and
unconditionally released and discharged upon the occurrence of the events set
forth in Sections 3.1 and 12.4 of the Indenture.
ARTICLE TWO
MISCELLANEOUS
Section 201. Except as otherwise expressly provided or unless the
context otherwise requires, all terms used herein which are defined in the
Indenture shall have the meanings assigned to them in the Indenture. Except as
supplemented hereby, the Indenture (including the Guarantees incorporated
therein) and the Securities are in all respects ratified and confirmed and all
the terms and provisions thereof shall remain in full force and effect.
Section 202. This Supplement shall be effective as of the date above
written.
Section 203. The recitals contained herein shall be taken as the
statements of the Company and the New Guarantor, and the Trustee assumes no
responsibility for the correctness. The Trustee makes no representations as to
the validity or sufficiency of this Supplement.
Section 204. This Supplement shall be governed by and construed in
accordance with the laws of the jurisdiction which govern the Indenture and its
construction.
Section 205. This Supplement may be executed in any number of
counterparts each of which shall be an original, but such counterparts shall
together constitute but one and the same instrument.
<PAGE> 3
IN WITNESS WHEREOF, the parties hereto have caused this Supplement to
be duly executed and their respective seals to be affixed hereunto and duly
attested all as of the day and year first above written.
ENERGY VENTURES, INC.
[Corporate Seal]
By: /s/ JAMES G. KILEY
--------------------------------
James G. Kiley
Vice President and
Chief Financial Officer
Attest:
/s/ FRANCES R. POWELL
- - - - - - - - - - - - - - - ------------------------------
Frances R. Powell
Assistant Secretary
ERCON, INC.
[Corporate Seal]
By: /s/ JAMES G. KILEY
--------------------------------
James G. Kiley
Vice President
Attest:
/s/ FRANCES R. POWELL
- - - - - - - - - - - - - - - ------------------------------
Frances R. Powell
Assistant Secretary
THE CHASE MANHATTAN BANK
[Corporate Seal]
By: /s/ W.B. DODGE
--------------------------------
Name: W. B. Dodge
------------------------------
Title: Vice President
-----------------------------
Attest:
/s/ WANDA EILAND
- - - - - - - - - - - - - - - ------------------------------
Trust Officer
<PAGE> 1
EXHIBIT 99.3
FOURTH SUPPLEMENTAL INDENTURE
FOURTH SUPPLEMENTAL INDENTURE (this "Supplement"), dated and effective
as of August 25, 1997, is entered into by and among EVI, Inc. (formerly known
as Energy Ventures, Inc.), a Delaware corporation (the "Company"), XLS Holding,
Inc., a Texas corporation and wholly owned subsidiary of the Company ("XLS"),
XL Systems, Inc., a Texas corporation and wholly owned subsidiary of XLS ("XL
Systems", together with XLS, the "New Guarantors"), and The Chase Manhattan
Bank (formerly known as Chemical Bank), a New York corporation, as Trustee (the
"Trustee").
RECITALS OF THE COMPANY AND THE NEW GUARANTORS
WHEREAS, the Company, the Subsidiary Guarantors and the Trustee have
executed and delivered an Indenture dated as of March 15, 1994, among the
Company, the Subsidiary Guarantors and the Trustee (the "Original Indenture")
providing for the issuance by the Company of $120,000,000 aggregate principal
amount of the Company's 10 1/4% Senior Notes due 2004 (the "Securities") and
pursuant to which the Subsidiary Guarantors have agreed, jointly and severally,
to unconditionally guarantee the due and punctual payment of the principal of,
premium, if any, and interest on the Securities and all other amounts due and
payable under the Original Indenture and the Securities by the Company
("Indenture Obligations");
WHEREAS, the Company, Prideco, Inc., a Texas corporation and a wholly
owned subsidiary of the Company ("Prideco"), and the Trustee executed a First
Supplemental Indenture, dated as of June 30, 1995, pursuant to which Prideco
became a Subsidiary Guarantor and agreed to unconditionally guarantee the
Indenture Obligations;
WHEREAS, the Company, EVI Arrow, Inc., a Delaware corporation and a
wholly owned subsidiary of the Company ("EVI Arrow"), EVI Watson Packers, Inc.,
a Delaware corporation and a wholly owned subsidiary of the Company ("EVI
Watson"), and the Trustee executed a Second Supplemental Indenture, dated and
effective as of December 6, 1996, pursuant to which EVI Arrow and EVI Watson
became Subsidiary Guarantors and agreed to unconditionally guarantee the
Indenture Obligations;
WHEREAS, the Company, Ercon, Inc., a Delaware corporation and a wholly
owned subsidiary of the Company ("Ercon"), and the Trustee executed a Third
Supplemental Indenture, dated and effective as of May 1, 1997, pursuant to
which Ercon became a Subsidiary Guarantor and agreed to unconditionally
guarantee the Indenture Obligations (the Original Indenture, as supplemented by
the First Supplemental Indenture, the Second Supplemental Indenture and the
Third Supplemental Indenture, is hereinafter referred to as the "Indenture");
WHEREAS, each of the New Guarantors has become a Material Restricted
Subsidiary and pursuant to Sections 12.3(b) and (d) of the Indenture is
obligated to enter into the Supplement thereby guaranteeing the punctual
payment of all Indenture Obligations as provided in Article XII of the
Indenture;
WHEREAS, pursuant to Section 8.1(f) of the Indenture, the Company, the
New Guarantors and the Trustee may enter into this Supplement without the
consent of any Holder;
WHEREAS, the execution and delivery of this Supplement have been duly
authorized by a Board Resolution of the respective Board of Directors of the
Company and each of the New Guarantors; and
WHEREAS, all conditions and requirements necessary to make the
Supplement valid and binding upon the Company and the New Guarantors, and
enforceable against the Company and the New Guarantors in accordance with its
terms, have been performed and fulfilled;
<PAGE> 2
NOW, THEREFORE, in consideration of the above premises, each of the
parties hereto agrees, for the benefit of the others and for the equal and
proportionate benefit of the Holders of the Securities, as follows:
ARTICLE ONE
THE NEW GUARANTEES
Section 101. For value received, each of the New Guarantors, in
accordance with Article Twelve of the Indenture, hereby unconditionally
guarantees (the "New Guarantee"), jointly and severally among themselves and
the Subsidiary Guarantors, to the Trustee and the Holders, the due and punctual
payment of the principal of, premium, if any, and interest on the Securities
and all other amounts due and payable under the Indenture and the Securities by
the Company, whether at maturity, by acceleration, redemption, repurchase or
otherwise as more specifically set forth in Section 12.1 of the Indenture,
including, without limitation, interest on the overdue principal of, premium,
if any, and interest on the Securities, to the extent lawful, all in accordance
with the terms of Article XII of the Indenture and subject to the limitations
set forth in Section 12.5 of the Indenture. Each of the agreements made and
obligations assumed hereunder by the New Guarantors shall constitute, and shall
be deemed to constitute, a Guarantee under the Indenture and for all purposes
of the Indenture, and each of the New Guarantors shall be considered a
Subsidiary Guarantor for all purposes of the Indenture as if it was originally
named therein as a Subsidiary Guarantor.
Section 102. The New Guarantees shall be automatically and
unconditionally released and discharged upon the occurrence of the events set
forth in Sections 3.1 and 12.4 of the Indenture.
ARTICLE TWO
MISCELLANEOUS
Section 201. Except as otherwise expressly provided or unless the
context otherwise requires, all terms used herein which are defined in the
Indenture shall have the meanings assigned to them in the Indenture. Except as
supplemented hereby, the Indenture (including the Guarantees incorporated
therein) and the Securities are in all respects ratified and confirmed and all
the terms and provisions thereof shall remain in full force and effect.
Section 202. This Supplement shall be effective as of the date above
written.
Section 203. The recitals contained herein shall be taken as the
statements of the Company and the New Guarantors, and the Trustee assumes no
responsibility for their correctness. The Trustee makes no representations as
to the validity or sufficiency of this Supplement.
Section 204. This Supplement shall be governed by and construed in
accordance with the laws of the jurisdiction which govern the Indenture and its
construction.
Section 205. This Supplement may be executed in any number of
counterparts each of which shall be an original, but such counterparts shall
together constitute but one and the same instrument.
<PAGE> 3
IN WITNESS WHEREOF, the parties hereto have caused this Supplement to
be duly executed and their respective seals to be affixed hereunto and duly
attested all as of the day and year first above written.
EVI, INC.
[Corporate Seal]
By: /s/ JAMES G. KILEY
--------------------------------
James G. Kiley
Vice President and
Chief Financial Officer
Attest:
/s/ FRANCES R. POWELL
- - - - - - - - - - - - - - - ------------------------------
Frances R. Powell
Assistant Secretary
XLS HOLDING, INC.
[Corporate Seal]
By: /s/ JAMES G. KILEY
--------------------------------
James G. Kiley
Vice President
Attest:
/s/ FRANCES R. POWELL
- - - - - - - - - - - - - - - ------------------------------
Frances R. Powell
Assistant Secretary
XL SYSTEMS, INC.
[Corporate Seal]
By: /s/ JAMES G. KILEY
--------------------------------
James G. Kiley
Vice President
Attest:
/s/ FRANCES R. POWELL
- - - - - - - - - - - - - - - ------------------------------
Frances R. Powell
Assistant Secretary
THE CHASE MANHATTAN BANK
[Corporate Seal]
By: /s/ W.B. DODGE
--------------------------------
Name: W.B. Dodge
-------------------------------
Title: Vice President
-----------------------------
Attest:
/s/ WANDA EILAND
- - - - - - - - - - - - - - - ------------------------------
Trust Officer
