<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 25, 1997
REGISTRATION NO. 333-30753
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------------------
WILLIAMS SCOTSMAN, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
MARYLAND 7389 52-0665775
(State or other jurisdiction of (Primary Standard Industrial (IRS Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
------------------------
8211 TOWN CENTER DRIVE
BALTIMORE, MARYLAND 21236
(410) 931-6000
(Address, including zip code, and telephone number, including area code, of
registrants' principal executive offices)
------------------------------
MOBILE FIELD OFFICE COMPANY
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
NEW JERSEY 7389 13-3933856
(State or other jurisdiction of (Primary Standard Industrial (IRS Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
------------------------
8211 TOWN CENTER DRIVE
BALTIMORE, MARYLAND 21236
(410) 931-6000
(Address, including zip code, and telephone number, including area code, of
registrants' principal executive offices)
WILLSCOT EQUIPMENT, LLC
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 7389 52-2037040
(State or other jurisdiction of (Primary Standard Industrial (IRS Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
------------------------
8211 TOWN CENTER DRIVE
BALTIMORE, MARYLAND 21236
(410) 931-6000
--------------------------
JOHN B. ROSS, ESQ.
VICE PRESIDENT - CORPORATE COUNSEL
8211 TOWN CENTER DRIVE
BALTIMORE, MARYLAND 21236
(410) 931-6000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------------
WITH A COPY TO:
MATTHEW NIMETZ, ESQ.
PAUL, WEISS, RIFKIND, WHARTON & GARRISON
1285 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10019-6064
(212) 373-3000
--------------------------
APPROXIMATE DATE OF COMMENCEMENT OF SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
------------------------
If the Securities 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. / /
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PROSPECTUS
WILLIAMS SCOTSMAN, INC.
[LOGO]
OFFER TO EXCHANGE ITS 9 7/8% SENIOR NOTES DUE 2007
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT
FOR ANY AND ALL OF ITS OUTSTANDING 9 7/8% SENIOR NOTES DUE 2007.
------------------
THIS EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M. NEW YORK CITY TIME
ON OCTOBER 27, 1997, UNLESS EXTENDED
Williams Scotsman, Inc., formerly known as The Scotsman Group, Inc.
("Scotsman" or the "Company"), hereby offers to exchange up to $400,000,000
aggregate principal amount of its 9 7/8% Senior Notes due 2007 (the "New
Notes"), which have been registered under the Securities Act of 1933, as amended
(the "Securities Act"), pursuant to a Registration Statement of which this
Prospectus is part, for a like principal amount of its 9 7/8% Senior Notes due
2007 outstanding on the date hereof (the "Existing Notes") upon the terms and
subject to the conditions set forth in this Prospectus and in the accompanying
Letter of Transmittal (which together constitute the "Exchange Offer"). The
terms of the New Notes are identical in all material respects to those of the
Existing Notes, except for certain transfer restrictions and registration rights
relating to the Existing Notes. The New Notes will be issued pursuant to, and
entitled to the benefits of, the indenture, dated as of May 15, 1997 (the
"Indenture"), among the Company, Mobile Field Office Company (the "Guarantor"),
Willscot Equipment, LLC (the "Subordinated Guarantor") and The Bank of New York,
as trustee, governing the Existing Notes. The Existing Notes and New Notes
outstanding under the Indenture at any time are referred to collectively as the
"Notes." The offering of the Existing Notes on May 22, 1997 (the "Offering") was
part of the financing that was used to consummate the Recapitalization (as
defined), which was undertaken to permit certain stockholders of Scotsman
Holdings, Inc. ("Holdings"), the holding company for Scotsman, to reduce their
equity interest in Holdings and to permit the Investor Group (which includes
affiliates of The Cypress Group L.L.C. ("Cypress"), Keystone, Inc. ("Keystone")
and FW Strategic Partners, L.P. ("Strategic Partners") and certain other
investors) and existing management to acquire control of Holdings.
Interest on the Notes will be payable semi-annually in arrears on June 1 and
December 1 of each year, commencing on December 1, 1997, at the rate of 9 7/8%
per annum. The Notes will be redeemable, in whole or in part, at the option of
the Company on or after June 1, 2002 at the redemption prices set forth herein
plus accrued interest to the date of redemption. In addition, at any time on or
prior to June 1, 2000, the Company may, at its option, redeem up to 40% of the
$400 million aggregate principal amount of the Notes originally issued with the
net cash proceeds of one or more Public Equity Offerings (as defined), at a
redemption price equal to 109.875% of the aggregate principal amount of the
Notes to be redeemed plus accrued interest to the date of redemption; PROVIDED,
HOWEVER, that after giving effect to any such redemption at least 60% of the
$400 million aggregate principal amount of the Notes originally issued remains
outstanding.
The Notes are general unsecured obligations of the Company and rank PARI
PASSU in right of payment with all existing and future unsubordinated
indebtedness of the Company, if any, and senior in right of payment with all
existing and future subordinated indebtedness. The Notes are effectively
subordinated in right of payment to all secured indebtedness of the Company
(including indebtedness incurred under the New Credit Facility (as defined)). As
of June 30, 1997, the Company had approximately $504.7 million of indebtedness
outstanding (including approximately $104.4 million of secured indebtedness
outstanding under the New Credit Facility). The Company and its subsidiaries are
permitted to incur additional secured and unsecured indebtedness under the
Indenture (including indebtedness under the New Credit Facility).
The Notes are unconditionally guaranteed (the "Guarantees") on a senior
basis by the Guarantor and are unconditionally guaranteed (the "Subordinated
Guarantee") on a subordinated basis by the Subordinated Guarantor, a
newly-created special purpose subsidiary of the Company formed to hold a
substantial amount of the Company's assets. The Guarantees are general unsecured
obligations of the Guarantor and rank PARI PASSU in right of payment with all
existing and future unsubordinated indebtedness of the Guarantor and senior in
right of payment to all existing and future subordinated indebtedness of the
Guarantor. The Guarantees are effectively subordinated in right of payment to
all secured indebtedness of the Guarantor (including the Guarantor's guarantee
of the New Credit Facility (as defined herein)) to the extent of the value of
the assets securing such indebtedness. The Subordinated Guarantee is a general
unsecured obligation of the Subordinated Guarantor and is subordinated in right
of payment to all existing and future Subordinated Guarantor Senior Indebtedness
(as defined) of the Subordinated Guarantor (including the Subordinated
Guarantor's guarantee on a senior secured basis of all obligations of the
Company under or in respect of the New Credit Facility (and refinancings
thereof)).
Upon a Change of Control (as defined), (i) the Company will have the option,
at any time on or prior to June 1, 2002, to redeem the Notes, in whole but not
in part, at a redemption price equal to 100% of the principal amount thereof
plus the Applicable Premium (as defined), together with accrued interest to the
date of redemption, and (ii) if the Company does not so redeem the Notes or if
such Change of Control occurs after June 1, 2002, the Company will be required
to make an offer to repurchase the Notes at a price equal to 101% of the
principal amount thereof plus accrued interest to the date of repurchase. In
addition under certain circumstances, the Company will be obligated to offer to
repurchase the Notes at 100% of the principal amount thereof plus accrued
interest, to the date of repurchase, with the proceeds of certain Asset Sales
(as defined). See "Description of the Notes."
(CONTINUED ON NEXT PAGE)
------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 15, FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED IN EVALUATING AN INVESTMENT IN 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 SEPTEMBER 25, 1997
<PAGE>
(CONTINUED FROM PREVIOUS PAGE)
The New Notes are being offered hereunder in order to satisfy certain
obligations of the Company, the Guarantor and the Subordinated Guarantor
contained in two separate Registration Rights Agreements, each dated as of May
22, 1997 (the "Registration Rights Agreements"), among (i) the Company, the
Guarantor and the Subordinated Guarantor and BT Securities Corporation,
Alex.Brown & Sons Incorporated and Donaldson, Lufkin & Jenrette Securities
Corporation, as the initial purchasers of the Existing Notes (the "Initial
Purchasers") and (ii) the Company, the Guarantor and the Subordinated Guarantor
and Oak Hill Securities Fund, L.P., as a direct purchaser of the Existing Notes
(the "Direct Purchaser").
The Company will not receive any proceeds from the Exchange Offer. The
Company will pay all of the expenses incident to the Exchange Offer. Tenders of
Existing Notes pursuant to the Exchange Offer may be withdrawn at any time prior
to the Expiration Date (as defined) of the Exchange Offer. The Company expressly
reserves the right to terminate or amend the Exchange Offer upon the occurrence
of any of the events specified under "The Exchange Offer--Conditions to the
Exchange Offer." If any such termination or amendment occurs, the Company will
notify the Exchange Agent and will either issue a press release or give oral or
written notice to the holders of the Existing Notes as promptly as practicable.
The Exchange Offer will expire at 5:00 P.M., New York City time, on October 27,
1997, unless the Company, in its sole discretion, has extended the period of
time for which the Exchange Offer is open. In the event the Company terminates
the Exchange Offer and does not accept for exchange any Existing Notes with
respect to the Exchange Offer, the Company will promptly return such Existing
Notes to the holders thereof. See "The Exchange Offer."
Each broker-dealer that receives New 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 New Notes. The Letter of Transmittal states
that by so acknowledging and by delivery of 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 New Notes
received in exchange for Existing Notes where such Existing Notes were acquired
by such broker-dealer as a result of market-making activities or other trading
activities. The Company has agreed that, for a period of 120 days after the
Expiration Date, it will make this Prospectus, as amended or supplemented,
available to any broker-dealer for use in connection with any such resale. See
"Plan of Distribution."
Prior to the Exchange Offer, there has been no public market for the
Existing Notes. Holders of the Existing Notes whose Existing Notes are not
tendered and accepted in the Exchange Offer will continue to hold the Existing
Notes. Following consummation of the Exchange Offer, the holders of the Existing
Notes will continue to be subject to the existing restrictions upon transfer
thereof and, except as provided herein, the Company will have no further
obligation to such holders to provide for registration under the Securities Act
of the Existing Notes held by them. To the extent Existing Notes are tendered
and accepted in the Exchange Offer, the trading market for untendered and
tendered but unaccepted Existing Notes could be adversely affected.
The Company currently does not intend to list the New Notes on any
securities exchange or to seek approval for quotation through any automated
quotation system. There can be no assurance that an active public market for the
New Notes will develop.
The Exchange Offer is not conditioned upon any minimum principal amount of
Existing Notes being tendered for exchange pursuant to the Exchange Offer.
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, ANY OF THE NEW NOTES OR EXISTING NOTES BY ANY
PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL FOR SUCH PERSON TO MAKE SUCH
AN OFFERING OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR THE
EXCHANGE PROPOSED TO BE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES IMPLY THAT
THE INFORMATION HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL THE COMPANY ACCEPT
SURRENDERS FOR EXCHANGE FROM, HOLDERS OF EXISTING NOTES IN ANY JURISDICTION IN
WHICH THE EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE
WITH THE SECURITIES OR BLUE SKY LAWS OF SUCH JURISDICTION.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith, files reports and other information with the Commission. Reports and
other information filed by the Company with the Commission pursuant to the
informational requirements of the Exchange Act may be inspected and copied at
the public reference facilities maintained by the Commission at Room 1024, 450
Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's regional
offices located at Seven World Trade Center, Suite 1300, New York, New York
10048; and Northwestern Atrium Center, 500 West Madison Street (Suite 1400),
Chicago, Illinois 60661 and copies of such material may be obtained from the
Public Reference Section of the Commission, at Room 1024, 450 Fifth Street,
N.W., Washington, D.C. 20549, at prescribed rates. The Commission also maintains
an Internet Web Site at http://www.sec.gov that contains reports and other
information.
This Prospectus constitutes a part of a registration statement (the
"Registration Statement") filed by the Company with the Commission under the
Securities Act. As permitted by the rules and regulations of the Commission,
this Prospectus does not contain all of the information contained in the
Registration Statement and the exhibits and schedules thereto and reference is
hereby made to the Registration Statement and the exhibits and schedules thereto
for further information with respect to the Company and the securities offered
hereby. Statements contained herein concerning the provisions of any documents
filed as an exhibit to the Registration Statement or otherwise filed with the
Commission are not necessarily complete.
Pursuant to the Indenture, the Company has agreed to provide the Trustee and
holders and prospective holders of the Notes with annual, quarterly and other
reports at the times and containing the information specified in Sections 13 and
15(d) of the Exchange Act and to file such reports with the Commission, whether
or not the Company is subject to such filing requirements.
The Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1996 and the Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1997, filed with the Commission, are attached hereto as Annex A and
Annex B, respectively.
2
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY, AND SHOULD BE READ IN
CONJUNCTION WITH, THE MORE DETAILED INFORMATION AND FINANCIAL STATEMENTS OF THE
COMPANY, INCLUDING THE NOTES THERETO (THE "FINANCIAL STATEMENTS"), INCLUDED
ELSEWHERE IN THIS PROSPECTUS. UNLESS OTHERWISE NOTED, THE "COMPANY" OR
"SCOTSMAN" REFERS TO WILLIAMS SCOTSMAN, INC. AND ITS CONSOLIDATED SUBSIDIARIES.
FOR PURPOSES OF THIS PROSPECTUS, THE PHRASE "ON A PRO FORMA BASIS AFTER GIVING
EFFECT TO THE RECAPITALIZATION" SHALL MEAN AFTER GIVING EFFECT TO THE
RECAPITALIZATION AS IF ALL TRANSACTIONS RELATED TO THE RECAPITALIZATION OCCURRED
ON THE APPLICABLE DATE. PROSPECTIVE INVESTORS ARE URGED TO READ THIS PROSPECTUS
IN ITS ENTIRETY. CERTAIN STATEMENTS IN THE PROSPECTUS (INCLUDING IN THIS
"PROSPECTUS SUMMARY") CONSTITUTE FORWARD-LOOKING STATEMENTS. SEE "SPECIAL NOTE
REGARDING FORWARD-LOOKING STATEMENTS."
THE COMPANY
Founded in 1946, Scotsman is the second largest lessor of mobile office
units in the United States with over 44,100 units leased through 65 branch
offices in 35 states. The Company's mobile office units provide high quality,
cost-effective relocatable space solutions to over 12,500 customers in 450
industries including construction, education, healthcare and retail. In recent
years, Scotsman's leasing operations have generated recurring revenues due to
high levels of repeat business and average lease periods of approximately 19
months. In addition to its core leasing operations, Scotsman sells new and
previously leased mobile office units and provides delivery, installation and
other ancillary products and services. For the twelve months ended June 30,
1997, Scotsman generated revenues and EBITDA of $216.3 million and $83.1
million, respectively.
The Company's fleet is generally comprised of standardized, versatile
products that can be configured to meet a wide variety of customer needs. The
units are fitted with axles and hitches and are towed to various locations. Most
units are wood frame construction, contain materials used in conventional
buildings, and are equipped with air conditioning and heating, electrical
outlets and, where necessary, plumbing facilities. Mobile office units are
durable and have an estimated useful life of 20 years. The average age of the
Company's fleet is approximately 8 years. From January 1, 1994 to December 31,
1996, the Company was able to sell used units in the ordinary course of its
business (excluding units sold pursuant to purchase options) at an average of
more than 95% of their total capitalized cost and a 20% premium to net book
value. Capitalized costs include the costs of the units as well as the costs of
significant improvements made to the units.
Based on its experience, management believes that the mobile office industry
(excluding manufacturing operations) exceeds $2.0 billion and has grown
significantly in recent years. This growth has been primarily driven by
population shifts, demographic trends, economic expansion, and the increased
demand for outsourcing space needs (for example, school expansion programs,
construction starts, recreation and entertainment activities.) By outsourcing
their space needs, the Company's customers are able to achieve flexibility,
preserve capital for core operations, and convert fixed costs into variable
costs.
From 1993 to 1996, the Company increased revenues at a compound annual
growth rate ("CAGR") of 17.9% to $195.1 million. Over the same period, EBITDA
grew at a CAGR of 28.2% to $75.4 million, lease fleet units grew by 59.0% to
40,662 units and the average annual utilization rate of its lease fleet
increased from 81.1% to 85.5%. The Company has achieved this growth by expanding
its lease fleet through factory purchases and acquisitions, expanding its branch
network, increasing ancillary high margin services and product lines and
improving fleet management.
3
<PAGE>
COMPETITIVE STRENGTHS
The Company attributes its success in the mobile office industry to the
following competitive strengths:
- MARKET LEADERSHIP. The Company is one of two national operators competing
in the highly fragmented mobile office industry and believes its lease
fleet is more than three times larger than that of its next largest
competitor. The Company is the first or second largest provider of leased
fleet units in most of its regional markets.
- NATIONAL PRESENCE AND CUSTOMER DIVERSITY. The Company's national presence
provides it with the benefits of (i) customer and geographic
diversification, (ii) less sensitivity to regional economic downturns,
(iii) the ability to redeploy units within its branch network to optimize
utilization levels, respond to regional economic downturns and reduce the
need for new unit purchases and (iv) economies of scale. The Company has
over 12,500 customers, the largest of which accounted for only 2.3% of
1996 revenues.
- EFFECTIVE FLEET MANAGEMENT. The Company's lease fleet is actively managed
to maximize customer satisfaction, optimize fleet utilization and improve
fleet quality and flexibility. Scotsman's proprietary management
information system provides comprehensive fleet statistics and lease
information that allows the Company to effectively monitor and allocate
its units throughout its branch network. Effective fleet management has
helped to improve the average annual utilization rate from 81.1% in 1993
to 85.5% in 1996.
- DEDICATED MARKETING AND CUSTOMER SERVICE. Through extensive marketing and
customer service programs, the Company focuses on maintaining and
expanding long-term customer relationships. Scotsman is the only industry
operator that maintains its own full-service national support staff to
prepare units for lease and maintain units while on lease. As a result of
this extensive customer service, Scotsman's leasing operations have
generated recurring revenues due to high levels of repeat business.
- PROVEN TRACK RECORD. Since 1993, the current management team has
substantially increased the Company's utilization rate of its fleet,
increased the size of its fleet by approximately 18,700 units or 73%,
doubled the size of its branch network and completed 16 strategic
acquisitions. As a result of these and other factors, since 1993, EBITDA
has increased at a CAGR of 28.2% to $75.4 million in 1996. Nearly all of
the top nine executive officers of the Company (including the President
and Chief Executive Officer, Chief Financial Officer and the Northern and
Southern Division Managers) retained all of their common stock and stock
options in Holdings (a total of $10.9 million at the Common Stock
Repurchase price) as part of the Recapitalization. This represents a
significant economic commitment to and confidence in the Company.
4
<PAGE>
BUSINESS AND GROWTH STRATEGY
Management's business and growth strategy includes the following:
- FLEET AND BRANCH EXPANSION. The Company plans to continue to capitalize on
the industry's favorable growth trends by increasing customer penetration
and fleet size in existing markets. In addition, the Company plans to open
branches in new markets where positive business fundamentals exist. From
January 1, 1994 to June 30, 1997, the Company increased its number of
branches from 30 to 65 and the number of units from approximately 25,500
to 44,100. The Company plans to continue expanding its network.
- SELECTIVE FLEET ACQUISITIONS. To complement its internal fleet and branch
expansion, the Company plans to capitalize on the industry's fragmentation
and expand its geographic coverage by making selective acquisitions of
mobile office and storage product lease fleets. Since January 1, 1994,
Scotsman made 16 acquisitions of approximately 10,800 units for a total
purchase price of $56.1 million. These units have accounted for
approximately 28% of the value of the Company's total fleet purchases
during that period.
The Company has generally been able to acquire units at less than the cost
of new factory purchased units. Typically, there is a low cost of
integrating acquired fleets and acquired units have existing leases that
generate immediate revenues and EBITDA. In addition, the Company has
historically been able to improve the financial operating performance,
utilization and growth rates of acquired fleets.
- ANCILLARY PRODUCTS AND SERVICES. The Company continues to identify new
applications for its existing products, diversify into new product
offerings and deliver ancillary products and services to leverage the
Company's existing branch network. For example, in 1996, the Company began
focusing on the market for storage product units, which are used for
secured storage space. Since January 1, 1996, the Company has completed
five acquisitions totaling approximately 2,400 storage units. Ancillary
products and services also include the rental of steps, ramps and
furniture.
- EDUCATION MARKET TRENDS. The Company believes that the education market
accounted for approximately 19% of 1996 revenues and offers growth
opportunities as a result of the following: (i) an increase in state and
local initiatives governing maximum class sizes, (ii) state and local
governmental pressures to decrease spending and find cost-effective ways
to expand classroom capacity, and (iii) increased interstate and
intrastate migrations necessitating rapid expansion of education space.
For example, California has mandated a statewide classroom size reduction
initiative to lower class sizes to 20 students from an average of
approximately 29 in kindergarten through third grade, which the Company
believes will increase demand for mobile office units for classrooms in
California.
5
<PAGE>
THE RECAPITALIZATION
On April 11, 1997, Holdings, Odyssey Partners, L.P. ("Odyssey") and certain
other stockholders of the Company (including members of senior management of the
Company) entered into a Recapitalization Agreement (the "Recapitalization
Agreement") with the Investor Group. Pursuant to the Recapitalization Agreement,
on May 22, 1997, Holdings repurchased 3,210,679 shares of its outstanding common
stock (the "Holdings Common Stock") for an aggregate of approximately $293.8
million in cash and approximately $21.8 million of Promissory Notes from Odyssey
and certain other existing stockholders (the "Common Stock Repurchase") and
issued 1,475,410 shares of Holdings Common Stock to the Investor Group for $135
million (the "Common Stock Issuance"). After giving effect to the
Recapitalization, on a primary basis, (i) the Investor Group and (ii) Odyssey
and certain other prior stockholders of Holdings (including members of senior
management) own approximately 90% and 10%, respectively, of the outstanding
Holdings Common Stock. The offering of the Existing Notes (the "Offering") was
part of an overall recapitalization of the Company and Holdings (the
"Recapitalization") which included the Common Stock Repurchase, the Common Stock
Issuance, tender offers and related consent solicitations for Scotsman's 9 1/2%
Senior Secured Notes due 2000 (the "Senior Secured Notes") and Holdings' Series
B 11% Senior Notes due 2004 (the "Holdings Notes") and the refinancing of all
outstanding indebtedness under the Company's prior credit facility (the "Prior
Credit Facility") with a new $300 million revolving bank credit facility (the
"New Credit Facility"). As part of the Recapitalization, a special purpose
subsidiary was created to acquire and hold certain Rental Equipment (as defined
in "Description of the Notes--Certain Definitions") primarily in cases where
such Rental Equipment is not evidenced by certificates of title. See "The
Recapitalization."
The following table sets forth the sources and uses of funds in the
Recapitalization:
<TABLE>
<CAPTION>
AMOUNT
SOURCES OF FUNDS (IN MILLIONS)
- ------------------------------------------------ -------------
<S> <C>
AMOUNT
USES OF FUNDS(3) (IN MILLIONS)
- ------------------------------------------------ -------------
</TABLE>
<TABLE>
<S> <C>
Borrowings under New Credit Facility
(1)..................................... $ 109.1
Proceeds from the Offering................ 400.0
Proceeds from Common Stock Issuance....... 135.0
Equity rollover (2)....................... 26.4
-----------
Repayment of Prior Credit Facility........ $ 119.0
Purchase of Senior Secured Notes (4)...... 179.8
Purchase of Holdings Notes (5)............ 32.2
Common Stock Repurchase (6)............... 271.9
Equity rollover (2)....................... 26.4
Payments to cancel options (7)............ 2.5
Deferred compensation plan payments....... 6.2
Transaction fees and expenses............. 32.5
-----------
</TABLE>
<TABLE>
<S> <C>
Total................................. $ 670.5
-----------
-----------
Total................................. $ 670.5
-----------
-----------
</TABLE>
- ------------------------
(1) Includes approximately $2.8 million the Company expects to borrow within the
next sixty days to fund expenses related to the Recapitalization.
(2) Represents shares of Holdings Common Stock held by Odyssey and shares and
stock options held by management which remained outstanding after the
Recapitalization. Options are valued based on the difference between the per
share repurchase price under the Recapitalization Agreement and the option
exercise price.
(3) As part of the Recapitalization, the Company transferred by dividend
approximately $177.4 million to Holdings, its parent corporation, to effect
the Common Stock Repurchase and the Holdings Tender Offer (as defined) and
to pay certain fees and expenses.
(4) Based upon a tender offer price of 104.83% plus accrued and unpaid interest
to May 22, 1997 and fees.
(5) Based upon a tender offer price of 107.36% plus accrued and unpaid interest
to May 22, 1997 and fees.
(6) Under the Recapitalization Agreement, the existing stockholders had the
option to receive either cash or promissory notes issued by Holdings (the
"Promissory Notes") in exchange for Holdings Common Stock. The Promissory
Notes mature on January 15, 1998 and bear interest at a fixed rate based on
forward LIBOR. To fund the Promissory Notes upon their maturity, the Company
will transfer sufficient funds to Holdings in the form of a dividend. The
Company currently expects to borrow such funds under the New Credit
Facility. Approximately $21.8 million aggregate principal amount of the
Promissory Notes were issued. The Promissory Notes are supported by a
stand-by letter of credit in the amount of $22.7 million issued on behalf of
the Company for the benefit of the holders of the Promissory Notes.
(7) Under the Recapitalization Agreement, the holders of the stock options to
acquire Holdings Common Stock had the option to receive either a cash
payment in exchange for the cancellation of their stock options or to
continue their investment in such options. Stock options to acquire 42,800
shares of Holdings Common Stock were cancelled in the Recapitalization.
6
<PAGE>
As a result of the Recapitalization, on June 30, 1997, the Company had
approximately $114.8 million of stockholder's deficit (before giving effect to
the dividend to Holdings to fund the repayment of the Promissory Notes upon
their maturity) and $504.7 million of outstanding indebtedness.
INVESTOR GROUP
As a result of the Recapitalization, Holdings is controlled by the Investor
Group. The Investor Group has extensive experience in investing in leveraged
companies. Generally, the members of the Investor Group seek to team with
manager/partners to invest in established operating businesses that have
historically demonstrated strong cash flow generating ability and that have a
favorable outlook for growth. Cypress manages a $1.05 billion private equity
fund which seeks to achieve long-term capital appreciation through investing in
a number of privately negotiated transactions. Since its founding, The Cypress
Group L.L.C. has made investments in Cinemark USA, Inc. and AMTROL Inc. Prior to
founding Cypress, the Cypress professionals managed the 1989 merchant banking
fund of Lehman Brothers Inc., which included investments in Infinity
Broadcasting Corporation, Lear Corporation, and together with Keystone, Wometco
Cable Corp. and Atlanta and Georgia Cable. Keystone, formerly Robert M. Bass
Group, Inc., is the principal investment entity of Robert M. Bass. Since 1987,
Keystone and associated entities have directly and indirectly sponsored over 25
leveraged acquisitions valued at more than $6.0 billion. These acquisitions have
included American Savings Bank, F.A., Bell & Howell Company, National
Reinsurance Corporation, Wometco Cable Corp. and Atlanta and Georgia Cable.
Strategic Partners is a Delaware limited partnership formed to invest primarily
in public and private equity securities. Mr. Bass is the lead investor in
Strategic Partners and the partners of its general partner are senior managers
of and other individuals associated with Keystone.
7
<PAGE>
THE EXCHANGE OFFER
<TABLE>
<S> <C>
Securities Offered........... Up to $400,000,000 aggregate principal amount of 9 7/8%
Senior Notes due 2007 (the "New Notes") which have been
registered under the Securities Act. The terms of the New
Notes and those of the Existing Notes are identical in all
material respects, except for certain transfer restrictions
relating to the Existing Notes.
The Exchange Offer........... The New Notes are being offered in exchange for a like
principal amount of Existing Notes. Existing Notes may be
exchanged only in integral multiples of $1,000. The issuance
of the New Notes is intended to satisfy obligations of the
Company under the Registration Rights Agreements.
Expiration Date;
Withdrawal of Tender........ The Exchange Offer will expire at 5:00 p.m., New York City
time, on October 27, 1997, or such later date and time to
which it is extended by the Company. The tender of Existing
Notes pursuant to the Exchange Offer may be withdrawn at any
time prior to the Expiration Date. Any Existing Notes not
accepted for exchange for any reason will be returned
without expense to the tendering holder thereof as promptly
as practicable after the expiration or termination of the
Exchange Offer.
Conditions to the Exchange
Offer....................... The Exchange Offer is subject to certain customary
conditions, which may be waived by the Company. The Company
currently expects that each of the conditions will be
satisfied and that no waivers will be necessary. See "The
Exchange Offer--Conditions to the Exchange Offer."
Procedures for Tendering
Existing Notes.............. Unless a tender of Existing Notes is effected pursuant to
the procedures for book-entry transfer as provided herein,
each holder of Existing Notes wishing to accept the Exchange
Offer must complete, sign and date a 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
such Existing Notes and any other required documentation, to
the Exchange Agent (as defined) at the address set forth
herein. See "The Exchange Offer--Procedures for Tendering
Existing Notes."
Use of Proceeds.............. There will be no proceeds to the Company from the exchange
of Notes pursuant to the Exchange Offer.
Certain Federal Income
Tax Considerations.......... The exchange pursuant to the Exchange Offer should not be a
taxable event for federal income tax purposes. See "Certain
Federal Income Tax Considerations."
Exchange Agent............... The Bank of New York is serving as the Exchange Agent in
connection with the Exchange Offer.
</TABLE>
8
<PAGE>
CONSEQUENCE OF EXCHANGING EXISTING NOTES
PURSUANT TO THE EXCHANGE OFFER
Based on certain no action letters issued by the staff of the Commission to
third parties in unrelated transactions, the Company believes that New Notes
issued pursuant to the Exchange Offer may be offered for resale, resold or
otherwise transferred by holders thereof (other than (i) any holder who is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act or (ii) any broker-dealer that purchases Notes from the Company to resell
pursuant to Rule 144A under the Securities Act ("Rule 144A") or any other
available exemption) without compliance with the registration and prospectus
delivery provisions of the Securities Act, provided that such New Notes are
acquired in the ordinary course of the holder's business and such holders have
no arrangement or understanding with any person to participate in a distribution
of such New Notes and are not participating in, and do not intend to participate
in, the distribution of such New Notes. By tendering, each holder will represent
to the Company in the Letter of Transmittal that, among other things, the New
Notes acquired pursuant to the Exchange Offer are being acquired in the ordinary
course of business of the person receiving such New Notes whether or not such
person is the holder, that neither the holder nor any such other person has an
arrangement or understanding with any person to participate in the distribution
of such New Notes, that neither the holder nor any such other person is
participating in or intends to participate in the distribution of such New 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-dealer
that receives New Notes for its own account in exchange for Existing Notes must
acknowledge that it will deliver a prospectus in connection with any resale of
such New Notes. See "Plan of Distribution." In addition, to comply with the
securities laws of certain jurisdictions, if applicable, the New Notes may not
be offered or sold unless they have been registered or qualified for sale in
such jurisdiction or an exemption from registration or qualification is
available and complied with. The Company has agreed, pursuant to the
Registration Rights Agreements and subject to certain specified limitations
therein, to register or qualify the New Notes for offer or sale under the
securities or blue sky laws of such jurisdictions as any holder of the Notes
reasonably requests in writing. If a holder of Existing Notes does not exchange
such Existing Notes for New Notes pursuant to the Exchange Offer, such Existing
Notes will continue to be subject to the restrictions on transfer contained in
the legend thereon. In general, the Existing Notes may not be offered or sold,
unless registered under the Securities Act, except pursuant to an exemption
from, or in a transaction not subject to, the Securities Act and applicable
state securities laws. See "The Exchange Offer--Consequences of Failure to
Exchange; Resales of New Notes."
The Existing Notes are currently eligible for trading in the Private
Offerings, Resales and Trading through Automated Linkages ("PORTAL") market.
Following commencement of the Exchange Offer but prior to its consummation, the
Existing Notes may continue to be traded in the PORTAL market. Following
consummation of the Exchange Offer, the New Notes will not be eligible for
PORTAL trading.
9
<PAGE>
THE NOTES
Except as otherwise indicated, the following description relates both to the
Existing Notes and to the New Notes to be issued in exchange for Existing Notes
in connection with the Exchange Offer. The New Notes will be obligations of the
Company evidencing the same indebtedness as the Existing Notes, and will be
entitled to the benefits of the same Indenture. The form and terms of the New
Notes are the same as the form and terms of the Existing Notes, except that the
New Notes have been registered under the Securities Act and therefore will not
bear legends restricting the transfer thereof. For a more complete description
of the Notes, see "Description of the Notes." Throughout this Prospectus,
references to the "Notes" refer to the New Notes and the Existing Notes
collectively.
<TABLE>
<S> <C>
ISSUER............................ Williams Scotsman, Inc. (the "Issuer")
MATURITY DATE..................... June 1, 2007.
INTEREST RATE..................... The Notes bear interest at the rate of 9 7/8% per annum.
INTEREST PAYMENT DATES............ Interest on the Notes will be payable semi-annually in
arrears on each June 1 and December 1, commencing
December 1, 1997.
RANKING........................... The Notes are general unsecured obligations of the
Issuer and rank PARI PASSU in right of payment with all
existing and future unsubordinated indebtedness of the
Issuer and senior in right of payment to all existing
and future subordinated indebtedness of the Issuer. The
Notes are effectively subordinated in right of payment
to all secured indebtedness of the Issuer (including
indebtedness incurred under the New Credit Facility and
any Senior Secured Notes to the extent not repurchased
in the Recapitalization) to the extent of the value of
the assets securing such indebtedness. As of June 30,
1997, the Issuer had approximately $504.7 million of
indebtedness outstanding (including approximately $104.4
million of secured indebtedness outstanding under the
New Credit Facility). The New Credit Facility provides
for a total line of revolving credit of up to $300
million subject to the satisfaction of certain
requirements (including a borrowing base test).
GUARANTEES........................ The Notes are unconditionally guaranteed on a senior
basis by the Guarantor and on a subordinated basis by
the Subordinated Guarantor. The Guarantees are general
unsecured obligations of the Guarantor and rank PARI
PASSU in right of payment with all existing and future
unsubordinated indebtedness of the Guarantor and senior
in right of payment to all existing and future
subordinated indebtedness of the Guarantor. The
Guarantees are effectively subordinated in right of
payment to all secured indebtedness of the Guarantor
(including the Guarantor's guarantee of the New Credit
Facility) to the extent of the value of the assets
securing such indebtedness. The Subordinated Guarantee
is a general unsecured obligation of the Subordinated
Guarantor and is subordinated in right of payment to all
existing and future Subordinated Guarantor Senior
Indebtedness (including the guarantee on a senior
secured basis by the Subordinated Guarantor of all
obligations of the Issuer under or in respect of the New
Credit Facility (and refinancings thereof)).
</TABLE>
10
<PAGE>
<TABLE>
<S> <C>
OPTIONAL REDEMPTION............... The Notes are redeemable in whole or in part, at the
option of the Issuer on or after June 1, 2002, at the
redemption prices set forth herein plus interest to the
date of redemption. In addition, at any time on or prior
to June 1, 2000, the Issuer may, at its option, redeem
up to 40% of the $400 million aggregate principal amount
of the Notes originally issued with the net cash
proceeds of one or more Public Equity Offerings, at a
redemption price equal to 109.875% of the aggregate
principal amount of the Notes to be redeemed plus
accrued interest to the date of redemption; PROVIDED,
HOWEVER, that after giving effect to any such redemption
at least 60% of the $400 million aggregate principal
amount of the Notes originally issued remains
outstanding.
CHANGE OF CONTROL................. Upon a Change of Control, (i) the Company will have the
option, at any time on or prior to June 1, 2002, to
redeem the Notes, in whole but not in part, at a
redemption price equal to 100% of the principal amount
thereof plus the Applicable Premium, together with
accrued interest, to the date of redemption, and (ii) if
the Company does not so redeem the Notes or if such
Change of Control occurs after June 1, 2002, the Company
will be required to make an offer to repurchase the
Notes at a price equal to 101% of the principal amount
thereof, plus accrued interest, to the date of
repurchase.
CERTAIN COVENANTS................. The Indenture governing the Notes (the "Indenture")
contains certain covenants that limit the ability of the
Issuer and its restricted subsidiaries to, among other
things, incur additional indebtedness, pay dividends or
make certain other restricted payments, consummate
certain asset sales, enter into certain transactions
with affiliates, incur liens, impose restrictions on the
ability of a restricted subsidiary to pay dividends or
make certain payments to the Issuer and its restricted
subsidiaries, merge or consolidate with any other person
or sell, assign, transfer, lease, convey or otherwise
dispose of all or substantially all of the assets of the
Issuer. In addition, under certain circumstances, the
Issuer will be required to offer to purchase the Notes,
in whole or in part, at a purchase price equal to 100%
of the principal amount thereof plus accrued interest to
the date of repurchase, with the proceeds of certain
Asset Sales (as defined).
</TABLE>
For additional information regarding the Notes, see "Description of the
Notes."
11
<PAGE>
COMPARISON OF NEW NOTES WITH EXISTING NOTES
<TABLE>
<S> <C>
Freely Transferable............... Generally, the New Notes will be freely transferable
under the Securities Act by holders thereof other than
any holder that is either an affiliate of the Company or
a broker-dealer that purchased the Notes from the
Company to resell pursuant to Rule 144A or any other
available exemption. The New Notes otherwise will be
substantially identical in all material respects
(including interest rate and maturity) to the Existing
Notes. See "The Exchange Offer."
Registration Rights............... The holders of Existing Notes currently are entitled to
certain registration rights pursuant to two separate
Registration Rights Agreements (the "Registration Rights
Agreements"), each dated as of May 22, 1997, among (i)
the Company, the Guarantor, the Subordinated Guarantor
and the Initial Purchasers and (ii) the Company, the
Guarantor, the Subordinated Guarantor and the Direct
Purchaser. However, upon consummation of the Exchange
Offer, subject to certain exceptions, holders of
Existing Notes who do not exchange their Existing Notes
for New Notes in the Exchange Offer will no longer be
entitled to registration rights and will not be able to
offer or sell their Existing Notes, unless such Existing
Notes are subsequently registered under the Securities
Act (which, subject to certain limited exceptions, the
Company will have no obligation to do), except pursuant
to an exemption from, or in a transaction not subject
to, the Securities Act and applicable state securities
laws. See "Risk Factors -- Adverse Consequences of
Failure to Adhere to Exchange Offer Procedures."
Absence of a Public Market for the
New Notes....................... The New Notes are new securities and there is currently
no established market for the New Notes. Accordingly,
there can be no assurances as to the development or
liquidity of any market for the New Notes. The Company
does not intend to apply for listing on a securities
exchange of the New Notes.
</TABLE>
RISK FACTORS
Holders of Existing Notes and prospective purchasers of New Notes should
carefully consider all of the information set forth in this Prospectus and, in
particular, should evaluate the specific factors set forth under "Risk Factors"
in connection with the Exchange Offer.
12
<PAGE>
SUMMARY HISTORICAL AND UNAUDITED PRO FORMA FINANCIAL DATA
The summary historical and unaudited pro forma financial data presented
below are derived from the Financial Statements, which are presented elsewhere
herein. The financial data for the six months ended June 30, 1996 and 1997 are
derived from the unaudited interim financial statements of the Company, which in
the opinion of management of the Company, have been prepared on the same basis
as Financial Statements included elsewhere in this Prospectus. Results of
operations for the six months ended June 30, 1997 are not necessarily indicative
of the results that may be expected for the full year ending December 31, 1997.
For additional information, see "Capitalization," "Selected Historical Financial
Data," "Management's Discussion and Analysis of Financial Condition and Results
of Operations" and the Financial Statements included elsewhere in this
Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
-------------------------------- ---------------------
1994 1995 1996 1996 1997
--------- --------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
STATEMENT OF OPERATIONS DATA:
Revenues............................................................... $133,975 $158,520 $195,142 $87,520 $108,707
Cost of sales and services............................................. 81,934 90,467 109,499 48,383 60,319
--------- --------- ---------- --------- ----------
Gross profit....................................................... 52,041 68,053 85,643 39,137 48,388
--------- --------- ---------- --------- ----------
Selling, general and administrative expenses........................... 29,303 36,295 42,260 21,359 23,752
Recapitalization expenses.............................................. -- -- -- -- 5,105
Other depreciation and amortization.................................... 1,349 1,851 2,411 1,093 1,253
Interest expense....................................................... 18,705 22,485 25,797 12,498 16,360
Restructuring costs.................................................... 912 -- -- -- --
Income taxes........................................................... 700 2,863 5,980 1,615 740
--------- --------- ---------- --------- ----------
Earnings before extraordinary item..................................... $1,072 $4,559 $9,195 $2,572 $1,178
--------- --------- ---------- --------- ----------
--------- --------- ---------- --------- ----------
Net earnings (loss)................................................ $1,072 $4,559 $9,195 $2,572 $(7,067)
--------- --------- ---------- --------- ----------
--------- --------- ---------- --------- ----------
OTHER DATA:
EBITDA (1)............................................................. $42,067 $56,550 $75,371 $33,328 $41,065
EBITDA margin (1)...................................................... 31.4% 35.7% 38.6% 38.1% 37.8%
Pro forma cash interest expense (2)(3)................................. -- -- $50,295 -- $25,463
Utilization rate (4)................................................... 82.9% 81.1% 85.5% 83.1% 85.6%
Lease fleet units (end of period)...................................... 33,017 37,386 40,662 38,343 44,158
Net capital expenditures for lease fleet (5)........................... $55,397 $64,443 $62,564 $26,147 $36,550
Non-lease fleet capital expenditures................................... 3,341 6,871 10,284 2,972 6,023
Number of branches..................................................... 36 49 55 54 65
</TABLE>
<TABLE>
<CAPTION>
AS OF JUNE
AS OF DECEMBER 31, 30,
1996 1997
------------------ -------------
<S> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
BALANCE SHEET DATA:
Lease equipment, gross.................................. $423,703 $459,286
Lease equipment, net.................................... 356,183 376,671
Total assets............................................ 428,697 481,767
Total debt (6).......................................... 268,753 504,699
Stockholder's equity (deficit).......................... 69,633 (114,811 )
</TABLE>
- ------------------------------
(1) EBITDA represents net earnings before deducting income taxes, interest,
restructuring costs, the non-cash portion of deferred compensation, and
depreciation and amortization. EBITDA and EBITDA margin data, which are not
measures of financial performance under generally accepted accounting
principles, are presented because such data are used by certain investors to
determine the Company's ability to meet historical debt service
requirements. Such data should not be considered as an alternative to net
earnings as an indicator of the Company's operating performance or as an
alternative to cash flows as measures of liquidity.
(2) Pro forma to give effect to the transactions contemplated by the
Recapitalization as if such transactions had occurred at the beginning of
the applicable period (and in the case of balance sheet data at the end of
such period). For the period from January
(FOOTNOTES CONTINUED ON FOLLOWING PAGE)
13
<PAGE>
(FOOTNOTES CONTINUED FROM PRECEDING PAGE)
1, 1997 through May 21, 1997, the calculation assumes that the interest rate
for borrowing under the New Credit Facility is 8.25% and the commitment fee
charged on the unused commitment thereunder is 0.50%. Thereafter, actual
rates charged were used.
(3) Cash interest expense represents interest expense less amortization of
deferred financing costs.
(4) Utilization rate is defined as units on rent divided by the total units in
the Company's lease fleet. Units on rent and total units are calculated
based on the average of the number of such units at the end of each month
during the applicable period.
(5) Net capital expenditures for lease fleet represents purchases, asset
acquisitions, and other capitalized costs of units, reduced by the book
values of sold, previously leased units which were $6,425, $7,653 and $9,713
in 1994, 1995, and 1996 respectively, and were $4,230 and $4,761 in the six
months ended June 30, 1996 and 1997, respectively. In 1994, net capital
expenditures includes $16,648 of lease fleet additions related to the
acquisition of Mobile Field Office Company.
(6) Does not include $3,500 aggregate principal amount of long-term debt related
to discontinued manufacturing operations.
14
<PAGE>
RISK FACTORS
Set forth below are the principal risk factors involved in an exchange of or
investment in the Notes. Holders of Existing Notes and prospective purchasers of
the New Notes should carefully consider these risk factors as well as the other
information set forth elsewhere in this Prospectus, which may affect a decision
to acquire the New Notes. For a discussion of certain potential tax consequences
of such investment, see "Certain Federal Income Tax Considerations."
SUBSTANTIAL LEVERAGE AND ABILITY TO SERVICE DEBT
The Company incurred substantial indebtedness in connection with the
Recapitalization. As of June 30, 1997, the Company had total indebtedness of
$504.7 million and common stockholder's deficit of $114.8 million (before giving
effect to the dividend to Holdings to fund the repayment of the Promissory Notes
upon their maturity). Although the Indenture contains limitations on the amount
of additional Indebtedness (as defined herein) that the Company may incur, under
certain circumstances the amount of such Indebtedness could be substantial and,
in any case, such Indebtedness may be secured. Although the Indenture limits the
incurrence of Indebtedness and the issuance of preferred stock of certain of the
Company's subsidiaries, such limitation is subject to a number of significant
qualifications. Moreover, the Indenture does not impose any limitation on the
incurrence by such subsidiaries of liabilities that are not considered
Indebtedness under the Indenture. Finally, Unrestricted Subsidiaries (as defined
herein) are generally permitted to incur Indebtedness without restriction under
the Indenture. See "Description of the Notes--Certain Covenants--Limitation on
Indebtedness."
The degree to which the Company is leveraged could have significant
consequences to holders of the Notes, including the following: (i) the Company's
ability to obtain additional financing for working capital, capital
expenditures, acquisitions or general corporate purposes may be impaired; (ii) a
substantial portion of the Company's cash flow from operations must be dedicated
to the payment of interest on the Notes and its other existing indebtedness,
thereby reducing the funds available to the Company for other purposes; (iii)
the agreements governing the Company's long-term indebtedness contain certain
restrictive financial and operating covenants; (iv) the indebtedness under the
New Credit Facility will be at variable rates of interest, which would cause the
Company to be vulnerable to increases in interest rates; (v) all of the
indebtedness outstanding under the New Credit Facility and the guarantees
thereof will be secured by substantially all the assets of the Company, the
Guarantors and the Subordinated Guarantor; (vi) the New Credit Facility has an
expiration date prior to the stated maturity of the Notes; (vii) the Company is
substantially more leveraged than certain of its competitors, which might place
the Company at a competitive disadvantage; (viii) the Company may be hindered in
its ability to pursue business opportunities; and (ix) the Company's substantial
degree of leverage could make it more vulnerable in the event of a downturn in
general economic conditions or in its business.
The Company may be required to refinance all or a portion of the New Credit
Facility at or prior to its maturity, which is prior to the maturity of the
Notes. Potential measures to raise cash may include the sale of assets or
equity, or by obtaining additional debt financing. However, the Company's
ability to raise funds by selling assets is restricted by the New Credit
Facility, and its ability to effect equity financings is dependent on results of
operations and market conditions. In the event that the Company is unable to
refinance the New Credit Facility or raise funds through asset sales, sales of
equity or otherwise, its ability to pay principal of and interest on the Notes
would be adversely affected.
EFFECT OF SUBORDINATION TO SECURED INDEBTEDNESS; ASSET ENCUMBRANCE
The Notes are unsecured and thus, will be effectively subordinated in right
of payment to any secured indebtedness of the Company, to the extent of the
value of any assets securing such indebtedness. The indebtedness outstanding
under the New Credit Facility will be secured by liens on substantially all of
the property of the Company, the Guarantors and the Subordinated Guarantor. The
New Credit Facility provides for a total line of revolving credit of up to $300
million subject to the satisfaction of certain
15
<PAGE>
requirements (including a borrowing base test). The Company had total secured
indebtedness of $104.4 million at June 30, 1997. In addition to indebtedness
under the New Credit Facility and the Senior Secured Notes, the Indenture also
permits the Company and its Restricted Subsidiaries (as defined herein) to incur
additional secured indebtedness under certain circumstances. See "Description of
the Notes--Certain Covenants--Limitation on Indebtedness."
The Subordinated Guarantee is a general unsecured obligation of the
Subordinated Guarantor and is subordinated in right of payment to all existing
and future Subordinated Guarantor Senior Indebtedness, including the guarantee
on a senior secured basis by the Subordinated Guarantor of all obligations of
the Issuer under or in respect of the New Credit Facility (and refinancings
thereof). Under certain circumstances, the Subordinated Guarantor may not make
payments in respect of the Subordinated Guarantee if a payment default or
non-payment default exists with respect to Subordinated Guarantor Senior
Indebtedness. In the event that holders of the Notes are required to turn over
amounts received by them to the holders of the Subordinated Guarantor Senior
Indebtedness, the holders of the Notes will be subrogated to the rights of the
holders of the Subordinated Guarantor Senior Indebtedness (upon the full payment
of all Subordinated Guarantor Senior Indebtedness in cash or cash equivalents)
and therefore subject to any available defenses or avoidance powers with respect
to such indebtedness. Under such circumstances, if the liens of the holders of
the Subordinated Guarantor Senior Indebtedness were released or failed to
constitute perfected liens, the holders of the Notes could lose the benefits of
such security interests and be adversely affected. See "Description of the
Notes--Ranking" and "--Subordinated Guarantee of the Notes."
The New Credit Facility includes certain covenants that, among other things,
restrict: (i) the making of investments, loans and advances and the paying of
dividends and other restricted payments; (ii) the incurrence of additional
indebtedness; (iii) the granting of liens, other than liens created pursuant to
the New Credit Facility and certain permitted liens; (iv) mergers,
consolidations, and sales of all or a substantial part of the Company's business
or property; (v) the sale of assets; and (vi) the making of capital
expenditures. The ability of the Company to comply with these and other
provisions of the New Credit Facility may be affected by events beyond the
Company's control. The breach of any of these covenants could result in a
default under the New Credit Facility, in which case, depending on the actions
taken by the lenders thereunder or their successors or assignees, such lenders
could elect to declare all amounts borrowed under the New Credit Facility,
together with accrued interest, to be due and payable, and the Company could be
unable to make payments of interest and principal on the Notes until the default
is cured or all amounts borrowed under the New Credit Facility are paid or
satisfied in full. If the Company were unable to repay such borrowings, such
lenders could proceed against their collateral. If the indebtedness under the
New Credit Facility were to be accelerated, there can be no assurance that the
assets of the Company would be sufficient to repay in full such indebtedness and
the other indebtedness of the Company, including the Notes. See "Description of
The New Credit Facility" and "Description of the Notes--Ranking."
RESTRICTIVE DEBT COVENANTS
The Indenture imposes significant operating and financial restrictions on
the Company. Such restrictions significantly limit or prohibit, among other
things, the ability of the Company and its restricted subsidiaries to incur
additional indebtedness, incur liens, pay dividends or make certain other
restricted payments or investments, consummate certain asset sales, enter into
certain transactions with affiliates, impose restrictions on the ability of a
restricted subsidiary to pay dividends or make certain payments to the Company,
merge or consolidate with any other person or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of the assets of the
Company. These restrictions, in combination with restrictions imposed by the New
Credit Facility, could limit the ability of the Company to respond to market
conditions or meet extraordinary capital needs or otherwise restrict corporate
activities. There can be no assurances that such restrictions will not adversely
affect the ability of the Company to finance its
16
<PAGE>
future operations or capital needs. See "Description of The New Credit Facility"
and "Description of the Notes--Certain Covenants."
POSSIBLE INABILITY TO REPURCHASE NOTES UPON A CHANGE OF CONTROL
The Indenture provides that, upon the occurrence of any Change of Control,
under certain circumstances, the Company will be required to make an offer (a
"Change of Control Offer") to repurchase the Notes at a price equal to 101% of
the principal amount thereof, together with accrued interest, to the date of
repurchase. Any Change of Control under the Indenture would constitute a default
under the New Credit Facility. Therefore, upon the occurrence of a Change of
Control, the lenders under the New Credit Facility would have the right to
accelerate the Company's obligations under the New Credit Facility. Upon such
event, such lenders would be entitled to receive payment of all outstanding
obligations under the New Credit Facility. See "Description of the New Credit
Facility." If a Change of Control were to occur and waivers under the New Credit
Facility were not obtained (or such indebtedness was not refinanced), it is
unlikely that the Company would be able to repay all of its obligations under
the New Credit Facility and the Notes. Consequently, it is unlikely that the
Company would have sufficient funds available to repurchase the Notes pursuant
to the Change of Control Offer in the absence of a waiver under the New Credit
Facility or alternative financing.
RISK OF FRAUDULENT TRANSFER LIABILITY
The Company believes that the indebtedness represented by the Notes was
incurred for proper purposes and in good faith, and that, based on asset
valuations and other financial information, the Company is solvent, will have
sufficient capital for carrying on its businesses and will be able to pay its
debts as they mature. Notwithstanding the Company's belief, if a court of
competent jurisdiction in a suit by an unpaid creditor or a representative of
creditors (such as a trustee in bankruptcy or a debtor-in-possession) were to
find that either the Company did not receive fair consideration or reasonably
equivalent value for issuing the Notes and, at the time of the incurrence of
indebtedness represented by the Notes, the Company was insolvent, was rendered
insolvent by reason of such incurrence, was engaged in a business or transaction
for which its remaining assets constituted unreasonably small capital, intended
to incur, or believed that it would incur, debts beyond its ability to pay as
such debts matured, or intended to hinder, delay or defraud its creditors, such
court could avoid such indebtedness, subordinate such indebtedness to other
existing and future indebtedness of the Company or take other action detrimental
to the holders of the Notes. The measure of insolvency for purposes of the
foregoing will vary depending upon the law of the relevant jurisdiction.
Generally, however, a company would be considered insolvent for purposes of the
foregoing if the sum of the Company's debts is greater than all the Company's
property at a fair valuation, or if the present fair saleable value of the
Company's assets is less than the amount that will be required to pay its
probable liability on its existing debts as they become absolute and matured.
In addition, the Guarantees and the Subordinated Guarantee may be subject to
review under relevant federal and state fraudulent conveyance and similar
statutes in a bankruptcy or reorganization case or a lawsuit by or on behalf of
creditors of any of the Guarantors or the Subordinated Guarantor, as the case
may be. In such a case, the analysis set forth above would generally apply,
except that the Guarantees could also be subject to the claim that, since
Guarantees and the Subordinated Guarantee were incurred for the benefit of the
Company (and only indirectly for the benefit of the Guarantors or the
Subordinated Guarantor, as the case may be), the obligations of the Guarantors
or the Subordinated Guarantor, as the case may be, thereunder were incurred for
less than reasonably equivalent value or fair consideration. A court could avoid
a Guarantor's or Subordinated Guarantor's obligation under its Guarantee or
Subordinated Guarantee, subordinate the Guarantee or Subordinated Guarantee to
other indebtedness of a Guarantor or Subordinated Guarantor or take other action
detrimental to the holders of the Notes. In addition, the Subordinated Guarantee
provides that if in a bankruptcy or reorganization of the Subsidiary Guarantor
it is substantively consolidated with the Company, the terms of such
Subordinated Guarantee shall nevertheless be effective vis-a-vis the assets of
the Subordinated Guarantor thereby subordinating the
17
<PAGE>
claims of the holders of the Notes in respect of such assets to the claims of
creditors of the Company under the New Credit Facility (and refinancing
thereof). See "Description of the Notes--Guarantees of the Notes". On June 30,
1997, the assets of the Subordinated Guarantor included approximately 33,600 of
the Company's units and represented approximately 56% of the total consolidated
assets of the Company.
SENSITIVITY TO ECONOMIC ENVIRONMENT
A portion of the Company's revenues are derived from customers who are in
industries and businesses that are cyclical in nature and subject to changes in
general economic conditions, such as the construction industry. In addition,
because the Company conducts its operations in a variety of markets, it is
subject to economic conditions in each such market. Although the Company
believes that certain of its operating strategies and industry characteristics
may help to mitigate the effects of economic downturns, general economic
downturns or localized downturns in markets where the Company has operations,
including any downturns in the construction industry, could have a material
adverse effect on the Company and its business, results of operations and
financial condition.
COMPETITION
Although the Company's competition varies significantly by market, the
mobile office industry, in general, is highly competitive. The Company competes
primarily in terms of product availability, customer service and price. The
Company believes that its reputation for customer service and its ability to
offer a wide selection of units suitable for many varied uses at competitive
prices allows it to compete effectively. However, certain of the Company's
competitors, such as GE Capital Modular Space, are less leveraged, have greater
market share or product availability in a given market, and have greater
financial resources and pricing flexibility than the Company.
CONCENTRATION OF OWNERSHIP
The Investor Group beneficially owns in the aggregate approximately 90% of
the outstanding Holdings Common Stock. Holdings in turn owns 100% of the
outstanding voting securities of the Company. As a result, the Investor Group
has the ability to control the Company's management, policies and financing
decisions, to elect a majority of the members of the Company's Board of
Directors and to control the vote on all matters coming before the stockholders
of the Company. See "Security Ownership of Certain Beneficial Owners and
Management" and "Certain Transactions--Investor Stockholders Agreement."
LACK OF PUBLIC MARKET FOR THE NOTES
Prior to the Exchange Offer, there has been no public market for the
Existing Notes. The Company currently does not intend to list the New Notes on
any securities exchange or to seek approval for quotation through any automated
quotation system and no active public market for the New Notes is currently
anticipated. There can be no assurance that an active public market for the New
Notes will develop, or if developed, will continue.
Although the Initial Purchasers have acted as market makers with respect to
the Existing Notes and have informed the Company that they currently intend to
make a market in the New Notes, they are not obligated to do so and any such
market making may be discontinued at any time without notice. Accordingly, there
can be no assurance as to the development or liquidity of any market for the New
Notes.
ADVERSE CONSEQUENCES OF FAILURE TO ADHERE TO EXCHANGE OFFER PROCEDURES
Issuance of the New Notes in exchange for Existing Notes pursuant to the
Exchange Offer will be made only after a timely receipt by the Exchange Agent of
such Existing Notes, a properly completed and duly executed Letter of
Transmittal and all other required documents. Therefore, holders of Existing
Notes
18
<PAGE>
desiring to tender such Existing Notes in exchange for New Notes should allow
sufficient time to ensure timely delivery. Neither the Company nor the Exchange
Agent is under any duty to give notification of defects or irregularities with
respect to the tenders of Existing Notes for exchange. Existing Notes that are
not tendered or are tendered but not accepted will, following the consummation
of the Exchange Offer, continue to be subject to the existing restrictions upon
transfer thereof and, upon consummation of the Exchange Offer certain
registration rights under the Registration Rights Agreements will terminate.
RECEIPT OF RESTRICTED SECURITIES UNDER CERTAIN CIRCUMSTANCES
Any holder of Existing Notes who tenders in the Exchange Offer for the
purpose of participating in a distribution of the New Notes may be deemed to
have received restricted securities and, if so, will be required to comply with
the registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction. See "The Exchange Offer--Consequences of
Failure to Exchange; Resales of New Notes."
ADVERSE EFFECT ON MARKET FOR EXISTING NOTES
To the extent that Existing Notes are tendered and accepted in the Exchange
Offer, the trading market for the untendered and tendered but unaccepted
Existing Notes could be adversely affected. See "The Exchange Offer."
19
<PAGE>
USE OF PROCEEDS
No proceeds will be received by the Company from the Exchange Offer. The net
proceeds of the offering of the Existing Notes ($387.8 million), together with
borrowings under the New Credit Facility and the net proceeds from the Common
Stock Issuance, were used to fund the Recapitalization. As part of the
Recapitalization, the Company transferred $177.4 million to Holdings to effect
the Common Stock Repurchase and Holdings Tender Offer and to pay certain fees
and expenses. See "The Recapitalization."
CAPITALIZATION
The following sets forth the capitalization of the Company as of June 30,
1997. This table should be read in conjunction with "Use of Proceeds," "Selected
Historical Financial Data," "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the Financial Statements appearing
elsewhere in this Prospectus.
<TABLE>
<CAPTION>
AS OF JUNE 30, 1997
--------------------
<S> <C>
(DOLLARS IN
THOUSANDS)
LONG-TERM DEBT
New Credit Facility (1)................................................. $ 104,359
Notes................................................................... 400,000
Senior Secured Notes.................................................... 340
----------
Total long-term debt (3).............................................. 504,699
STOCKHOLDER'S EQUITY (DEFICIT)
Common stock and additional paid-in capital............................. 56,877
Retained earnings (deficit)............................................. (171,688)
----------
Total stockholder's equity (deficit).................................. (114,811)
----------
Total capitalization................................................ $ 389,888
----------
----------
</TABLE>
- ------------------------
(1) As part of the Recapitalization, the Company entered into the New Credit
Facility which will enable it to obtain revolving credit loans and the
issuance of letters of credit. The New Credit Facility provides for a total
line of revolving credit of up to $300,000 subject to the satisfaction of
certain requirements (including a borrowing base test). Promissory Notes
issued in connection with the Recapitalization are supported by a stand-by
letter of credit in the amount of $22,700 issued on behalf of the Company
for the benefit of the holders of the Promissory Notes. See "Description of
the New Credit Facility."
(2) The Company expects to borrow $2,800 within the next sixty days to fund
expenses related to the Recapitalization.
(3) Does not include $3,500 aggregate principal amount of long-term debt related
to discontinued manufacturing operations.
20
<PAGE>
SELECTED HISTORICAL FINANCIAL DATA
The following tables summarize certain selected historical financial data
which should be read in conjunction with "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and the Financial Statements
appearing elsewhere in this Prospectus. The selected historical financial data
set forth below for the fiscal years ended December 31, 1992, 1993, 1994, 1995
and 1996 and as of the end of each of such periods have been derived from the
audited financial statements of the Company. The selected historical financial
data presented below for the six month periods ended June 30, 1996 and 1997 have
been prepared on the same basis as the audited Financial Statements included
elsewhere herein and, in the opinion of the Company, include all adjustments
(consisting only of normal recurring adjustments) necessary to present fairly
the information set forth therein. Operating results for the six months ended
June 30, 1997 are not necessarily indicative of the results that may be expected
for the year ending December 31, 1997.
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
----------------------------------------------------- --------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1992 1993(1) 1994 1995 1996 1996 1997
--------- --------- --------- --------- --------- --------- ---------
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Leasing........................................ $72,744 $73,384 $79,342 $96,498 $116,769 $54,540 $63,306
Sales of new units............................. 27,709 18,501 22,290 23,126 28,042 10,943 17,837
Delivery and installation...................... 28,369 24,237 26,511 28,162 32,767 13,953 17,552
Other.......................................... 3,712 3,011 5,832 10,734 17,564 8,084 10,012
--------- --------- --------- --------- --------- --------- ---------
Total revenues............................. 132,534 119,133 133,975 158,520 195,142 87,520 108,707
--------- --------- --------- --------- --------- --------- ---------
Cost of sales and services:
Leasing:
Depreciation and amortization.............. 12,516 13,131 18,804 23,417 30,588 15,000 16,062
Other direct leasing costs................. 19,082 20,913 20,578 23,103 26,647 12,315 13,626
Sales of new units............................. 24,355 15,967 19,436 19,273 23,043 9,056 15,055
Delivery and installation...................... 23,495 20,874 21,569 22,048 25,247 10,441 12,861
Other.......................................... 1,197 1,372 1,547 2,626 3,974 1,571 2,715
--------- --------- --------- --------- --------- --------- ---------
Total cost of sales and services........... 80,645 72,257 81,934 90,467 109,499 48,383 60,319
--------- --------- --------- --------- --------- --------- ---------
Gross profit:
Leasing........................................ 41,146 39,340 39,960 49,978 59,534 27,225 33,618
Sales of new units............................. 3,354 2,534 2,854 3,853 4,999 1,887 2,782
Delivery and installation...................... 4,874 3,363 4,942 6,114 7,520 3,512 4,691
Other.......................................... 2,515 1,639 4,285 8,108 13,590 6,513 7,297
--------- --------- --------- --------- --------- --------- ---------
Total gross profit......................... 51,889 46,876 52,041 68,053 85,643 39,137 48,388
--------- --------- --------- --------- --------- --------- ---------
Selling, general and administrative expenses....... 28,237 24,264 29,303 36,295 42,260 21,359 23,752
Recapitalization expenses (2)...................... -- -- -- -- -- -- 5,105
Other depreciation and amortization................ 1,319 1,377 1,349 1,851 2,411 1,093 1,253
Interest........................................... 21,330 21,530 18,705 22,485 25,797 12,498 16,360
Restructuring costs (3)............................ 1,921 6,082 912 -- -- -- --
Income tax expense (benefit)....................... (336) (2,536) 700 2,863 5,980 1,615 740
--------- --------- --------- --------- --------- --------- ---------
Earnings (loss) from continuing operations before
extraordinary item (4)........................... (582) (3,841) 1,072 4,559 9,195 2,572 1,178
--------- --------- --------- --------- --------- --------- ---------
Net earnings (loss)................................ ($4,825) ($7,307) $1,072 $4,559 $9,195 $2,572 ($7,067)
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Ratio of earnings to fixed charges (5)............. N/A N/A 1.1x 1.3x 1.6x 1.3x 1.1x
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
----------------------------------------------------- --------------------
1992 1993(1) 1994 1995 1996 1996 1997
--------- --------- --------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
OTHER DATA:
EBITDA (6)......................................... $35,226 $35,743 $42,067 $56,550 $75,371 $33,328 $41,065
EBITDA margin (6).................................. 26.6% 30.0% 31.4% 35.7% 38.6% 38.1% 37.8%
Utilization rate (7)............................... 80.0 81.1 82.9 81.1 85.5 83.1 85.6
Lease fleet units (end of period).................. 24,960 25,499 33,017 37,386 40,662 38,343 44,158
Net capital expenditures for lease fleet (8)....... $8,826 $12,497 $55,397 $64,443 $62,564 $26,147 $36,550
Non-lease fleet capital expenditures............... 898 727 3,341 6,871 10,284 2,972 6,023
Number of branches................................. 29 30 36 49 55 54 65
BALANCE SHEET DATA (at period end):
Lease equipment, net............................... $209,388 $246,550 $283,181 $324,207 $356,183 $335,354 $376,671
Total assets....................................... 263,287 295,882 335,633 383,679 428,697 399,852 481,767
Total debt (9)..................................... 191,019 176,408 206,346 242,695 268,753 251,197 504,699
Stockholder's equity (deficit)..................... 17,585 56,877 57,949 62,508 69,633 63,010 (114,811)
</TABLE>
- ------------------------
(1) On December 16, 1993, Holdings purchased all of the issued and outstanding
stock of Scotsman. The acquisition was accounted for under the purchase
method of accounting by Holdings, and the Company restated its balance sheet
to "push down" the effects of the purchase accounting adjustments.
(2) In the second quarter of 1997, the Company recognized $5,105 of expenses
related to the Recapitalization including $2.5 million in connection with
acceleration of deferred compensation and $2.6 million in connection with
the cancellation of stock options.
(3) Restructuring costs for 1992 consist primarily of costs relating to the
disposal of its manufacturing operations. Restructuring costs for 1993
consist primarily of costs incurred in connection with the acquisition of
Scotsman by Holdings in December 1993 and costs relating to the
discontinuation of its modular structures business. Restructuring costs in
1994 consist primarily of costs related to the discontinuation of its
modular structures business.
(4) Effective December 31, 1992, the Company adopted a plan of disposition of
its manufacturing operation. The results of operations for the Company's
manufacturing activities are presented as a discontinued operation.
(5) The ratio of earnings to fixed charges is computed by dividing fixed charges
into earnings from continuing operations before income taxes and
extraordinary items plus fixed charges. Fixed charges include interest,
expensed or capitalized, including amortization of deferred financing costs
and debt discount and the estimated interest component of rent expense.
Earnings were not sufficient to cover fixed charges by $918 in 1992 and
$6,377 in 1993. However, the Company's earnings for the purposes of
calculating this ratio included non-cash charges for depreciation and
amortization of $13,835 in 1992 and $14,508 in 1993.
(6) EBITDA represents net earnings from continuing operations before
extraordinary items and before deducting income taxes, interest,
restructuring costs, the non-cash portion of deferred compensation, and
depreciation and amortization and, in 1992, before including the benefit
from the non-recurring settlement of a sales tax assessment of $942. EBITDA
and EBITDA margin data, which are not measures of financial performance
under generally accepted accounting principles, are presented because such
data are used by certain investors to determine the Company's ability to
meet historical debt service requirements. Such data should not be
considered as an alternative to net earnings as an indicator of the
Company's operating performance or as an alternative to cash flows as
measures of liquidity.
(7) Utilization rate is defined as units on rent divided by the total units in
the Company's rental equipment fleet. Units on rent and total units are
calculated based on the average of the number of such units at the end of
each month during the applicable period.
(8) Net capital expenditures for lease fleet represents purchases, asset
acquisitions and other capitalized costs of units, reduced by the book
values of sold, previously leased units which were $7,810, $8,381, $6,425,
$7,653 and $9,713 in 1992, 1993, 1994, 1995, and 1996, respectively, and
were $4,230 and $4,761 in the six months ended June 30, 1996 and 1997,
respectively. In 1994, net capital expenditures includes $16,648 of lease
fleet additions related to the acquisition of Mobile Field Office Company.
(9) Does not include aggregate principal amount of long-term debt related to
discontinued manufacturing operations of $4,526, $4,471, $4,405, $4,331,
$3,500 in 1992, 1993, 1994, 1995 and 1996, respectively, and $3,700 and
$3,500 in the six months ended June 30, 1996 and 1997, respectively.
22
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THE FOLLOWING DISCUSSION REGARDING THE FINANCIAL CONDITION AND RESULTS OF
OPERATIONS OF THE COMPANY FOR THE THREE FISCAL YEARS ENDED DECEMBER 31, 1996 AND
THE SIX MONTHS ENDED JUNE 30, 1996 AND 1997 SHOULD BE READ IN CONJUNCTION WITH
THE MORE DETAILED INFORMATION AND FINANCIAL STATEMENTS INCLUDED ELSEWHERE IN
THIS PROSPECTUS. CERTAIN STATEMENTS IN "MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS" ARE FORWARD-LOOKING STATEMENTS.
SEE "SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS."
GENERAL
The Company derives its revenues and earnings from the leasing and sale of
mobile office and storage units, delivery and installation of those units and
the provision of other ancillary products and services. Leasing operations,
which primarily comprise the leasing of mobile office units and the sale of
units from the Company's lease fleet, account for a majority of the Company's
revenues and gross profits. Used mobile office units are sold by the Company in
the ordinary course of its business at either fair market value or, to a lesser
extent pursuant to pre-established lease purchase options. The Company's cash
flow from leasing operations is favorably affected by the sale of used units
from the Company's lease fleet as the costs of such units generally have been
incurred in previous fiscal periods. Accordingly, the sale of used units results
in the availability of the total cash proceeds and the reporting of gross profit
on such sales.
New unit sales revenues are derived from the sale of new mobile offices,
similar to those units leased by the Company. Revenues from delivery and
installation result from activities related to the transportation and
installation of and site preparation for both leased and sold products. Other
revenues are derived from the sale of other products and services including:
rental of steps, furniture and ramps; sales of parts, supplies and security
systems; and charges for granting insurance waivers and for damage billings.
Although a portion of the Company's business is with customers in industries
that are cyclical in nature and subject to changes in general economic
conditions, management believes that certain characteristics of the mobile
office leasing industry and Scotsman's operating strategies should help to
mitigate the effects of economic downturns. These characteristics include (i)
the Company's typical lease terms which include contractual provisions requiring
customers to retain units on lease for, on average, 12 months, (ii) the
flexibility and low cost offered to Scotsman's customers by leasing which may be
an attractive alternative to capital purchases, (iii) the Company's ability to
redeploy units during regional recessions (for example, during 1995, in response
to an economic slowdown the Company moved over 300 units from its Northeast
region to the Midwest and Southeast regions) and (iv) the diversity of the
Company's industry segments and the geographic balance of the Company's
operations (historically during economic slowdowns, the construction industry,
which the Company believes represented 26% of its 1996 revenues, experiences
declines in utilization rates, while the other customer segments including
education are more stable).
23
<PAGE>
RESULTS OF OPERATIONS
See the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996 and Quarterly Report on Form 10-Q for the quarter ended June
30, 1997 attached hereto as Annex A and Annex B, respectively.
LIQUIDITY AND CAPITAL RESOURCES
See the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997 and Quarterly Report on Form 10-Q for the quarter ended June
30, 1997, attached hereto as Annex A and Annex B, respectively.
SEASONALITY
See the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997 and Quarterly Report on Form 10-Q for the quarter ended June
30, 1997, attached hereto as Annex A and Annex B, respectively.
INFLATION
See the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997 and Quarterly Report on Form 10-Q for the quarter ended June
30, 1997, attached hereto as Annex A and Annex B, respectively.
24
<PAGE>
THE EXCHANGE OFFER
GENERAL
The Company hereby offers, upon the terms and subject to the conditions set
forth in this Prospectus and in the accompanying Letter of Transmittal (which
together constitute the Exchange Offer), to exchange up to $400.0 million
aggregate principal amount of New Notes for a like aggregate principal amount of
Existing Notes properly tendered on or prior to the Expiration Date and not
withdrawn as permitted pursuant to the procedures described below. The Exchange
Offer is being made with respect to all of the Existing Notes: the total
aggregate principal amount of Existing Notes and New Notes will in no event
exceed $400.0 million.
The Existing Notes were issued on May 22, 1997. An aggregate of $300 million
aggregate principal amount of the Existing Notes were sold to the Initial
Purchasers and then re-offered at a price of 100%. The remaining $100.0 million
aggregate principal amount of Existing Notes were sold directly to the Direct
Purchaser at a price of 97.75%. The Direct Purchaser agreed with the Initial
Purchasers that it will not sell, transfer or otherwise dispose of or transfer
any of the Existing Notes (except for the Exchange Offer) purchased by it for a
period of 90 days from the offering of the Existing Notes without the consent of
BT Securities Corporation. The Direct Purchaser, Oak Hill Securities Fund, L.P.,
is a Delaware limited partnership that acquires and actively manages a diverse
portfolio of investments principally in leveraged companies. Certain principals
of the general partner of the Direct Purchaser and Oak Hill Advisors, Inc., the
adviser of the Direct Purchaser, have business relationships with Keystone and
Keystone has an equity investment in the Direct Purchaser. The Company paid a
$750,000 fee to Oak Hill Advisors, Inc. for financial advisory services rendered
in connection with the transaction.
This Prospectus, together with the Letter of Transmittal, is first being
sent on or about September 25, 1997 to all holders of Existing Notes known to
the Company. The Company's obligation to accept Existing Notes for exchange
pursuant to the Exchange Offer is subject to certain conditions as set forth
under "-- Conditions to the Exchange Offer" below.
PURPOSE OF THE EXCHANGE OFFER
The Existing Notes were issued by the Company on May 22, 1997 in
transactions exempt from the registration requirements of the Securities Act.
Accordingly, the Existing Notes may not be reoffered, resold, or otherwise
transferred in the United States unless so registered or unless an applicable
exemption from the registration and prospectus delivery requirements of the
Securities Act is available.
In connection with the issuance and sale of the Existing Notes, the Company,
the Guarantor and the Subordinated Guarantor entered into two separate
Registration Rights Agreements, each dated as of May 22, 1997 (the "Registration
Rights Agreements"), which require the Company, the Guarantor and the
Subordinated Guarantor to (x) file on or before July 6, 1997 (45 days after the
date of issuance of the Existing Notes) a registration statement relating to the
Exchange Offer (the "Exchange Offer Registration Statement") and (y) use their
respective best efforts to cause the Exchange Offer Registration Statement to
become effective on or before October 19, 1997 (150 days after the date of
issuance of the Existing Notes). The Company, the Guarantor and the Subordinated
Guarantor will keep the Exchange Offer open for not less than 30 days (or
longer, if required by applicable law) after the date notice of the Exchange
Offer is mailed to the holders of the Existing Notes. In the event that (i) the
Exchange Offer Registration Statement or a shelf registration statement relating
to resales of the Existing Notes (the "Shelf Registration Statement") is not
filed by July 6, 1997, (ii) the Exchange Offer is not consummated nor the Shelf
Registration Statement is declared effective by October 19, 1997, or (iii) after
November 18, 1997, and after either the Exchange Offer Registration Statement or
the Shelf Registration Statement is declared effective, such Registration
Statement thereafter ceases to be effective or usable (subject to certain
exceptions) in connection with resales of Notes or in accordance with and during
the periods specified in the Registration Statement (each, a "Failure to
Register"), additional interest will accrue on the Notes at
25
<PAGE>
the rate of 0.5% per annum from and including the date on which any Failure to
Register shall occur but excluding the date on which all Failures to Register
have been cured. The Exchange Offer is being made by the Company, the Guarantor
and the Subordinated Guarantor to satisfy their obligations with respect to the
Registration Rights Agreements.
Based on no-action letters issued by the staff of the Commission to third
parties in unrelated transactions, the Company believes that the New Notes
issued pursuant to the Exchange Offer may be offered for resale, resold or
otherwise transferred by holders thereof (other than (i) any such holder that is
an "affiliate" of the Company within the meaning of Rule 405 under the
Securities Act or (ii) any broker-dealer that purchases Notes from the Company
to resell pursuant to Rule 144A or any other available exemption) without
compliance with the registration and prospectus delivery requirements of the
Securities Act, provided that such New 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 New Notes and are not
participating in, and do not intend to participate in, the distribution of such
New Notes. Any holder of Existing Notes who tenders in the Exchange Offer for
the purpose of participating in a distribution of the New Notes may be deemed to
have received restricted securities and, if so, will be required to comply with
the registration and prospectus delivery requirements of the Securities Act in
connection with a secondary resale transaction. Thus, any New Notes acquired by
such holders will not be freely transferable except in compliance with the
Securities Act. See "--Consequences of Failure to Exchange; Resale of New
Notes."
EXPIRATION DATE; EXTENSION; TERMINATION; AMENDMENT
The Exchange Offer will expire at 5:00 P.M., New York City time, on October
27, 1997 unless the Company, in its sole discretion, has extended the period of
time for which the Exchange Offer is open (such date, as it may be extended, is
referred to herein as the "Expiration Date"). The Expiration Date will be at
least 20 business days after the commencement of the Exchange Offer in
accordance with Rule 14e-1(a) under the Exchange Act. The Company expressly
reserves the right, at any time or from time to time, to extend the period of
time during which the Exchange Offer is open and thereby delay acceptance for
exchange of any Existing Notes, by giving oral notice (promptly confirmed in
writing) or written notice to The Bank of New York (the "Exchange Agent") and by
giving written notice of such extension to the holders thereof no later than
9:00 A.M. New York City time, on the next business day after the previously
scheduled Expiration Date. During any such extension, all Existing Notes
previously tendered will remain subject to the Exchange Offer unless properly
withdrawn.
In addition, the Company expressly reserves the right to terminate or amend
the Exchange Offer and not to accept for exchange any Existing Notes not
theretofore accepted for exchange upon the occurrence of any of the events
specified below under "--Conditions to the Exchange Offer." If any such
termination or amendment occurs, the Company will notify the Exchange Agent and
will either issue a press release or give oral or written notice to the holders
of the Existing Notes as promptly as practicable.
For purposes of the Exchange Offer, a "business day" means any day other
than Saturday, Sunday or a date on which banking institutions are required or
authorized by New York State law to be closed, and consists of the time period
from 12:01 A.M. through 12:00 midnight, New York City time.
PROCEDURES FOR TENDERING EXISTING NOTES
The tender to the Company of Existing Notes by a holder thereof as set forth
below and the acceptance thereof by the Company will constitute a binding
agreement between the tendering holder and the Company upon the terms and
subject to the conditions set forth in this Prospectus and in the accompanying
Letter of Transmittal.
A holder of Existing Notes may tender the same by (i) properly completing
and signing the Letter of Transmittal or a facsimile thereof (all references in
this Prospectus to the Letter of Transmittal shall be
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<PAGE>
deemed to include a facsimile thereof) and delivering the same, together with
the certificate or certificates representing the Existing Notes being tendered
and any required signature guarantees, to the Exchange Agent at its address set
forth below on or prior to the Expiration Date (or complying with the procedure
for book-entry transfer described below) or (ii) complying with the guaranteed
delivery procedures described below.
THE METHOD OF DELIVERY OF EXISTING NOTES, LETTERS OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDERS. IF SUCH
DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL PROPERLY INSURED,
WITH RETURN RECEIPT REQUESTED, BE USED. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO INSURE TIMELY DELIVERY. NO EXISTING NOTES OR LETTERS OF TRANSMITTAL
SHOULD BE SENT TO THE COMPANY.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the case
may be, must be guaranteed unless the Existing Notes surrendered for exchange
pursuant thereto are tendered (i) by a registered holder of the Existing Notes
who has not completed the box entitled "Special Issuance Instructions" or
"Special Delivery Instructions" on the Letter of Transmittal or (ii) for the
account of an Eligible Institution (as defined below). 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, such guarantees must be by a firm which is a
member of a registered national securities exchange or a member of the National
Association of Securities Dealers, Inc. or by a clearing agency, an insured
credit union, a savings association or a commercial bank or trust company having
an office or correspondent in the United States (collectively, "Eligible
Institutions"). If Existing Notes are registered in the name of a person other
than a signer of the Letter of Transmittal, the Existing Notes surrendered for
exchange must be endorsed by, or be accompanied by a written instrument or
instruments of transfer or exchange, in satisfactory form as determined by the
Company in its sole discretion, duly executed by the registered holder with the
signature thereon guaranteed by an Eligible Institution.
Any financial institution that is a participant in DTC's Book-Entry Transfer
Facility system may make book-entry delivery of the Existing Notes by causing
DTC to transfer such Existing Notes into the Exchange Agent's account in
accordance with DTC's procedures for such transfer. In connection with a
book-entry transfer, a Letter of Transmittal need not be transmitted to the
Exchange Agent, provided that the book-entry transfer procedure must be complied
with prior to 5:00 p.m., New York City time, on the Expiration Date.
If a holder desires to accept the Exchange Offer and time will not permit a
Letter of Transmittal or Existing Note to reach the Exchange Agent before the
Expiration Date or the procedure for book-entry transfer cannot be completed on
a timely basis, a tender may be effected if the Exchange Agent has received at
its address set forth below on or prior to the Expiration Date a letter,
telegram or facsimile transmission from an Eligible Institution setting forth
the name and address of the tendering holder, the names in which the Existing
Notes are registered and, if possible, the certificate numbers of the Existing
Notes to be tendered, and stating that the tender is being made thereby and
guaranteeing that within three business days after the Expiration Date the
Existing Notes in proper form for transfer (or a confirmation of book-entry
transfer of such Existing Notes into the Exchange Agent's account at the
book-entry transfer facility), will be delivered by such Eligible Institution
together with a properly completed and duly executed Letter of Transmittal (and
any other required documents). Unless Existing Notes being tendered by the
above-described method are deposited with the Exchange Agent within the time
period set forth above (accompanied or preceded by a properly completed Letter
of Transmittal and any other required documents), the Company may, at its
option, reject the tender. Copies of a Notice of Guaranteed Delivery which may
be used by Eligible Institutions for the purposes described in this paragraph
are available from the Exchange Agent.
A tender will be deemed to have been received as of the date when (i) the
tendering holder's properly completed and duly signed Letter of Transmittal
accompanied by the Existing Notes (or a confirmation of book-entry transfer of
such Existing Notes into the Exchange Agent's account at the book-entry transfer
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<PAGE>
facility) is received by the Exchange Agent, or (ii) a Notice of Guaranteed
Delivery or letter, telegram or facsimile transmission to similar effect (as
provided above) from an Eligible Institution is received by the Exchange Agent.
Issuances of New Notes in exchange for Existing Notes tendered pursuant to a
Notice of Guaranteed Delivery or letter, telegram or facsimile transmission to
similar effect (as provided above) by an Eligible Institution will be made only
against deposit of the Letter of Transmittal (and any other required documents)
and the tendered Existing Notes.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of Existing Notes tendered for exchange will be
determined by the Company in its sole discretion, which determination shall be
final and binding. The Company reserves the absolute right to reject any and all
tenders of any particular Existing Notes not properly tendered or to not accept
any particular Existing Notes which acceptance might, in the judgment of the
company or its counsel, be unlawful. The Company also reserves the absolute
right to waive any defects or irregularities or conditions of the Exchange Offer
as to any particular Existing Notes either before or after the Expiration Date
(including the right to waive the ineligibility of any holder who seeks to
tender Existing Notes in the Exchange Offer). The interpretation of the terms
and conditions of the Exchange Offer as to any particular Existing Notes either
before or after the Expiration Date (including the Letter of Transmittal and the
instructions thereto) by the Company shall be final and binding on all parties.
Unless waived, any defects or irregularities in connection with tenders of
Existing Notes for exchange must be cured within such reasonable period of time
as the Company shall determine. Neither the Company, the Exchange Agent nor any
other person shall be under any duty to give notification of any defect or
irregularity with respect to any tender of Existing Notes for exchange, nor
shall any of them incur any liability for failure to give such notification.
If the Letter of Transmittal is signed by a person or persons other than the
registered holder or holders of Existing Notes, such Existing Notes must be
endorsed or accompanied by appropriate powers of attorney, in either case signed
exactly as the name or names of the registered holder or holders appear on the
Existing Notes.
If the Letter of Transmittal or any Existing Notes or powers of attorney 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, proper evidence satisfactory to the Company of their authority to so
act must be submitted.
By tendering, each holder will represent to the Company, the Guarantor and
the Subordinated Guarantor in the Letter of Transmittal that, among other
things, the New Notes acquired pursuant to the Exchange Offer are being acquired
in the ordinary course of business of the person receiving such New Notes,
whether or not such person is the holder, that neither the holder nor any such
other person has an arrangement or understanding with any person to participate
in the distribution of such New Notes, that neither the holder nor any such
other person is participating in or intends to participate in the distribution
of such New 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,
the Guarantor and the Subordinated Guarantor.
Each broker-dealer that receives new Notes for its own account in exchange
for Existing Notes, where such Existing 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 New Notes. See "Plan of Distribution."
WITHDRAWAL RIGHTS
Tenders of Existing Notes may be withdrawn at any time prior to the
Expiration Date.
For a withdrawal to be effective, a written notice of withdrawal sent by
telegram, facsimile transmission (receipt confirmed by telephone) or letter must
be received by the Exchange Agent prior to the Expiration Date at its address
set forth below. Any such notice of withdrawal must (i) specify the name of
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<PAGE>
the person having tendered the Existing Notes to be withdrawn (the "Depositor"),
(ii) identify the Existing Notes to be withdrawn (including the certificate
number or numbers and principal amount of such Existing Notes), (iii) be signed
by the holder in the same manner as the original signature on the Letter of
Transmittal by which such Existing Notes were tendered or as otherwise described
above (including any required signature guarantees) or be accompanied by
documents of transfer sufficient to have the Trustee under the Indenture
register the transfer such Existing Notes into the name of the person
withdrawing the tender and (iv) specify the name in which any such Existing
Notes are to be registered, if different from that of the depositor. 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, which
determination will be final and binding on all parties. Any Existing Notes so
withdrawn will be deemed not to have been validly tendered for exchange for
purposes of the Exchange Offer. Any Existing Notes which have been tendered for
exchange and which are properly withdrawn will be returned to the holder thereof
without cost to such holder as soon as practicable after such withdrawal.
Properly withdrawn Existing Notes may be retendered by following one of the
procedures described under "--Procedures for Tendering Existing Notes" above at
any time on or prior to the Expiration Date.
ACCEPTANCE OF EXISTING NOTES FOR EXCHANGE; DELIVERY OF NEW NOTES
Upon satisfaction or waiver of all of the conditions to the Exchange Offer,
the Company will accept, promptly after the Expiration Date, all Existing Notes
properly tendered and will issue the New Notes promptly after acceptance of the
Existing Notes. See "--Conditions to the Exchange Offer" below. For the purposes
of the Exchange Offer, the Company shall be deemed to have accepted properly
tendered Existing Notes for exchange when, as and if the Company has given oral
and written notice thereof to the Exchange Agent.
For each Existing Note accepted for exchange, the holder of such Existing
Note will receive a New Note having a principal amount equal to that of the
surrendered Existing Note.
In all cases, issuance of New Notes for Existing Notes that are accepted for
exchange pursuant to the Exchange Offer will be made only after timely receipt
by the Exchange Agent of certificates for such Existing Notes or a timely
Book-Entry Confirmation of such Existing Notes into the Exchange Agent's account
at the Book-Entry Transfer Facility, a properly completed and duly executed
Letter of Transmittal and all other required documents. If any tendered Existing
Notes are not accepted for any reason set forth in the terms and conditions of
the Exchange Offer or if Existing Notes are submitted for a greater principal
amount than the holder desires to exchange, such unaccepted or non-exchanged
Existing Notes will be returned without expense to the tendering holder thereof
(or, in case of Existing Notes tendered by book-entry transfer into the Exchange
Agent's account at the Book-Entry Transfer Facility pursuant to the book-entry
transfer procedures described below, such non-exchanged Existing Notes will be
credited to an account maintained with such Book-Entry Transfer Facility) as
promptly as practicable after the expiration of the Exchange Offer.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provision of the Exchange Offer, the Company shall
not be required to accept for exchange, or to issue New Notes in exchange for,
any Existing Notes and may terminate or amend the Exchange Offer if at any time
before the acceptance of such Existing Notes for exchange or the exchange of the
New Notes for such Existing Notes any of the following events shall occur:
(i) any injunction, order or decree shall have been issued by any court
or any governmental agency that would prohibit, prevent or otherwise
materially impair the ability of the Company to proceed with the Exchange
Offer, or
(ii) the Exchange Offer shall violate any applicable law or any
applicable interpretation of the staff of the Commission.
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<PAGE>
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 any such
condition or may be waived by the Company in whole or in part at any time from
time to time in its reasonable judgment. The failure by the Company at any time
to exercise any of 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.
In addition, neither the Company will accept for exchange any Existing Notes
tendered, and no New Notes will be issued in exchange for any such Existing
Notes, if at such time any stop order shall be threatened or in effect with
respect to the Registration Statement of which this Prospectus constitutes a
part or the qualification of the indenture under the Trust Indenture Act of 1939
(the "Trust Indenture Act"). In any such event the Company, the Guarantor and
the Subordinated Guarantor are required to use every reasonable effort to obtain
the withdrawal of any stop order at the earliest possible time.
The Exchange Offer is not conditioned upon any minimum principal amount of
Existing Notes being tendered for exchange.
EXCHANGE AGENT
The Bank of New York has been appointed as the Exchange Agent for the
Exchange Offer. All executed Letters of Transmittal should be directed to the
Exchange Agent at one of the addresses set forth below. Requests for additional
copies of this Prospectus or of the Letter of Transmittal and requests for
Notices of Guaranteed Delivery should be directed to the Exchange Agent
addressed as follows:
<TABLE>
<S> <C> <C>
BY MAIL: BY HAND DELIVERY: BY OVERNIGHT MAIL OR COURIER:
The Bank of New York The Bank of New York The Bank of New York
101 Barclay Street-7E 101 Barclay Street 101 Barclay Street-7E
New York, NY 10286 Corporate Trust and New York, NY 10286
Attn:Reorganization Department Agency Services Window Attn:Reorganization Department
Shilpa Privedi Ground Level Shilpa Privedi
New York, NY 10286
Attn: Shilpa Privedi
For information, call
Ph: (212) 815-5789
Fax: (212) 815-6339
</TABLE>
DELIVERY OF THE EXISTING NOTES, LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED
DOCUMENTS TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF
INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A
VALID DELIVERY.
SOLICITATION OF TENDERS; FEES AND EXPENSES
The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payment to brokers, dealers or other
persons soliciting acceptances 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 by the Company in connection with the Exchange
Offer will be paid by the Company.
No person has been authorized to give any information or to make any
representations in connection with the Exchange Offer other than those contained
in this Prospectus. If given or made, such information or representations should
not be relied upon as having been authorized by the Company. Neither the
delivery of this Prospectus nor any exchange made hereunder shall, under any
circumstances, create any implication that there has been no change in the
affairs of the Company since the respective dates as of
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<PAGE>
which information is given herein. The Exchange Offer is not being made to (nor
will tenders be accepted from or on behalf of) holders of Existing Notes in any
jurisdiction in which the making of the Exchange Offer or the acceptance thereof
would not be in compliance with the laws of such jurisdiction.
TRANSFER TAXES
Holders who tender their Existing Notes for exchange will not be obligated
to pay any transfer taxes in connection therewith except that holders who
instruct the Company to register New Notes in the name of, or request that
Existing Notes not tendered or not accepted in the Exchange Offer be returned
to, a person other than the registered tendering holder will be responsible for
the payment of any applicable transfer tax thereon.
ACCOUNTING TREATMENT
The New Notes will be recorded at the carrying value of the Existing 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 by the
Company upon the exchange of New Notes for Existing Notes. Expenses incurred in
connection with the issuance of the New Notes will be amortized over the term of
the New Notes.
CONSEQUENCES OF FAILURE TO EXCHANGE; RESALES OF NEW NOTES
Holders of Existing Notes who do not exchange their Existing Notes for New
Notes pursuant to the Exchange Offer will continue to be subject to the
restrictions on transfer of such Existing Notes as set forth in the legend
thereon as a consequence of the issuance of the Existing Notes pursuant to the
exemptions from, or in transactions not subject to, the registration
requirements of the Securities Act and applicable state securities laws.
Existing Notes not exchanged pursuant to the Exchange Offer will continue to
remain outstanding in accordance with their terms. In general, the Existing
Notes may not be altered or sold unless registered under the Securities Act,
except pursuant to an exemption from, or in a transaction not subject to, the
Securities Act and applicable state securities laws. The Company, the Guarantor
and the Subordinated Guarantor do not currently anticipate that they will
register the Existing Notes under the Securities Act. However, in the event that
the Company, the Guarantor and the Subordinated Guarantor determine that the
Exchange Offer is not available or may not be consummated as soon as practicable
after the last date the Exchange Offer is open because it would violate
applicable law or the applicable interpretations of the staff of the Commission,
or if for any other reason the Exchange Offer is not consummated by November 18,
1997, or if the Initial Purchasers so request with respect to the Existing Notes
not eligible to be exchanged for New Notes in the Exchange Offer and held by
them following consummation of the Exchange Offer, or if any holder of Notes is
not eligible to participate in the Exchange Offer or does not receive freely
tradeable New Notes in exchange for Existing Notes in the Exchange Offer, then,
in each case, the Company, the Guarantor and the Subordinated Guarantor will at
their sole expense, (a) as promptly as practicable, use all reasonable efforts
to prepare and file the Shelf Registration Statement, (b) use all reasonable
efforts to cause the Shelf Registration Statement to be declared effective under
the Securities Act and (c) use all reasonable efforts to keep effective the
Shelf Registration Statement until the earlier of two years after the Issue Date
or such time as all of the applicable Notes have been sold thereunder. The
Company will, in the event that a Shelf Registration Statement is filed, provide
to each Holder copies of the prospectus that is a part of the Shelf Registration
Statement, notify each such Holder when the Shelf Registration for the Notes has
become effective and take certain other actions as are required to permit
unrestricted resales of the Notes. A Holder that sells such Notes pursuant to
the Shelf Registration Statement will be required to be named as a selling
security holder in the related prospectus and to deliver a prospectus to
purchasers, will be subject to certain of the civil liability provisions under
the Securities Act in connection with such sales and will be bound by the
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provisions of the Registration Rights Agreements that are applicable to such a
Holder (including certain indemnification rights and obligations).
Based on certain no-action letters issued by the staff of the Commission to
third parties in unrelated transactions, the Company believes that New Notes
issued pursuant to the Exchange Offer may be offered for resale, resold or
otherwise transferred by holders thereof (other than (i) any such holder which
is an "affiliate" of the Company within the meaning of Rule 405 under the
Securities Act or (ii) any broker-dealer that purchases Notes from the Company
to resell pursuant to Rule 144A or any other available exemption) without
compliance with the registration and prospectus delivery provisions of the
Securities Act, provided that such New 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 New Notes and are not
participating in, and do not intend to participate in, the distribution of such
New Notes. If any holder has any arrangement or understanding with respect to
the distribution of the New Notes to be acquired pursuant to the Exchange Offer,
such holders (i) could not rely on the applicable interpretations of the staff
of the Commission and (ii) must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with a secondary
resale transaction. A broker-dealer who holds Existing Notes that were acquired
for its own account as a result of market making or other trading activities may
be deemed to be an "underwriter" within the meaning of the Securities Act and
must, therefore, deliver a prospectus meeting the requirements of the Securities
Act in connection with any resale of New Notes. Each such broker-dealer that
receives New Notes for its own account in exchange for Existing Notes, where
such Existing Notes were acquired by such broker-dealer as a result of
market-making activities or other trading activities, must acknowledge in the
Letter of Transmittal that it will deliver a prospectus in connection with any
resale of such New Notes. See "Plan of Distribution."
In addition, to comply with the securities laws of certain jurisdictions, if
applicable, the New Notes may not be offered or sold unless they have been
registered or qualified for sale in such jurisdiction or an exemption from
registration or qualification is available and is complied with. The Company has
agreed, pursuant to the Registration Rights Agreements and subject to certain
specified limitations therein, to register or qualify the New Notes for offer or
sale under the securities or blue sky laws of such jurisdictions as any holder
of the Notes reasonably requests in writing.
Participation in the Exchange Offer is voluntary, and holders of Existing
Notes should carefully consider whether to participate. Holders of the Existing
Notes are urged to consult their financial and tax advisors in making their own
decision on what action to take.
As a result of the making of, and upon acceptance for exchange of all
validly tendered Existing Notes pursuant to the terms of, this Exchange Offer,
the Company, the Guarantor and the Subordinated Guarantor will have fulfilled a
covenant contained in the Registration Rights Agreements. Holders of Existing
Notes who do not tender their Existing Notes in the Exchange Offer will continue
to hold such Existing Notes and will be entitled to all the rights, and
limitations applicable thereto, under the Indenture, except for any such rights
under the Registration Rights Agreements that by their terms terminate or cease
to have further effectiveness as a result of the making of this Exchange Offer.
See "Description of Exchange Notes." All untendered Existing Notes will continue
to be subject to the restriction on transfer set forth in the Indenture. To the
extent that Existing Notes are tendered and accepted in the Exchange Offer, the
trading market for untendered Existing Notes could be adversely affected.
The Company may in the future seek to acquire untendered Existing Notes in
open market or privately negotiated transactions, through subsequent exchange
offers or otherwise. The Company has no present plan to acquire any Existing
Notes which are not tendered in the Exchange Offer.
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BUSINESS
GENERAL
Founded in 1946, Scotsman is the second largest lessor of mobile office
units in the United States with over 44,100 units leased through 65 branch
offices in 35 states. The Company's mobile office units provide high quality,
cost-effective relocatable space solutions to over 12,500 customers in 450
industries including construction, education, healthcare and retail. In recent
years, Scotsman's leasing operations have generated recurring revenues due to
high levels of repeat business and average lease periods of approximately 19
months. In addition to its core leasing operations, Scotsman sells new and
previously leased mobile office units and provides delivery, installation and
other ancillary products and services. For the twelve months ended June 30,
1997, Scotsman generated revenues and EBITDA of $216.3 million and $83.1
million, respectively.
The Company's fleet is generally comprised of standardized, versatile
products that can be configured to meet a wide variety of customer needs. The
units are fitted with axles and hitches and are towed to various locations. Most
units are wood frame construction, contain materials used in conventional
buildings, and are equipped with air conditioning and heating, electrical
outlets and, where necessary, plumbing facilities. Mobile office units are
durable and have estimated useful life of 20 years. The average age of the
Company's fleet is approximately 8 years. From January 1, 1994 to December 31,
1996, the Company was able to sell used units in the ordinary course of its
business (excluding units sold pursuant to purchase options) at an average of
more than 95% of their total capitalized costs and a 20% premium to net book
value. Capitalized costs include the costs of units as well as the costs of
significant improvements made to the units.
Based on its experience, management believes that the mobile office industry
(excluding manufacturing operations) exceeds $2.0 billion and has grown
significantly in recent years. This growth has been primarily driven by
population shifts, demographic trends, economic expansion, and the increased
demand for outsourcing space needs (for example, school expansion programs,
construction starts, recreation and entertainment activities). By outsourcing
their space needs, the Company's customers are able to achieve flexibility,
preserve capital for core operations, and convert fixed costs into variable
costs.
From 1993 to 1996, the Company increased revenues at a CAGR of 17.9% to
$195.1 million. Over the same period, EBITDA grew at a CAGR of 28.2% to $75.4
million, lease fleet units grew by 59.0% to 40,662 units and the average annual
utilization rate of its lease fleet increased from 81.1% to 85.5%. The Company
has achieved this growth by expanding its lease fleet through factory purchases
and acquisitions, expanding its branch network, increasing ancillary high margin
services and product lines and improving fleet management.
The Company has its principal executive offices located at 8211 Town Center
Drive, Baltimore, Maryland 21236. The telephone number of the Company's
executive offices is (410) 931-6000.
COMPETITIVE STRENGTHS
The Company attributes its success in the mobile office industry to the
following competitive strengths:
MARKET LEADERSHIP. The Company is one of two national operators competing
in the highly fragmented mobile office industry and believes its lease fleet is
more than three times larger than that of its next largest competitor. The
Company is the first or second largest provider of leased fleet units in most of
its regional markets.
NATIONAL PRESENCE AND CUSTOMER DIVERSITY. The Company's national presence
provides it with the benefits of (i) customer and geographic diversification,
(ii) less sensitivity to regional economic downturns, (iii) the ability to
redeploy units within its branch network to optimize utilization levels, respond
to
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regional economic downturns and reduce the need for new unit purchases and (iv)
economies of scale. The Company has over 12,500 customers, the largest of which
accounted for only 2.3% of 1996 revenues.
EFFECTIVE FLEET MANAGEMENT. The Company's lease fleet is actively managed
to maximize customer satisfaction, optimize fleet utilization and improve fleet
quality and flexibility. Scotsman's proprietary management information system
provides comprehensive fleet statistics and lease information that allows the
Company to effectively monitor and allocate its units throughout its branch
network. Effective fleet management has helped to improve the average annual
utilization rate from 81.1% in 1993 to 85.5% in 1996.
Scotsman has undertaken a number of fleet management initiatives designed to
improve operations and increase profitability, including: (i) standardization of
products, (ii) quality improvement, (iii) redeployment and (iv) fleet pruning.
These initiatives are outlined in more detail below:
- EMPHASIS ON STANDARDIZATION OF PRODUCTS. The Company has shifted its fleet
composition to more standardized products through a combination of new
fleet purchasing guidelines and the conversion of non-standard units into
more standard configurations. Product standardization allows Scotsman to
easily modify its structures to meet specific customer needs and thus
increase utilization. Conversions of existing units from non-standard to
standardized units can be completed, on average, at less than the cost of
purchasing new units. Overall, the Company believes that the majority of
its fleet is comprised of standardized, highly versatile products.
- FLEET QUALITY. Because the Company believes that rental rates are based
upon physical condition rather than age, Scotsman monitors its fleet on a
regular basis and has improved the quality of its products over the past
three years through refurbishment of units in poor condition or through
targeted sales programs. Units classified as "unrentable" have been
reduced to less than 1.0% of the total fleet at December 31, 1996. This
reduction increased the Company's total rentable fleet, resulting in
increased utilization.
- PORTABILITY OF FLEET AND FLEET REDEPLOYMENT. The Company capitalizes on
its nationwide franchise and inventory management systems by actively
redeploying excess fleet to areas of higher customer demand. The
portability and standardized nature of the units allow them to be
relocated to surrounding areas at relatively low cost and with immediate
potential for leasing at higher rental rates, thus allowing the Company to
minimize capital expenditures for new fleet purchases. For example, during
1995, in response to an economic slowdown, the Company was able to shift
over 300 units from its Northeast region to the Midwest and Southeast
regions. As part of its fleet purchasing and conversion activities,
Scotsman generally has its units built or converted to meet industrialized
building codes for use in several surrounding states, thus allowing them
to be redeployed as necessary.
- FLEET PRUNING. From time to time, the Company will sell excess or idle
units from its fleet. Pruning activities allow the Company to manage fleet
quality and composition.
DEDICATED MARKETING AND CUSTOMER SERVICE. Through extensive marketing and
customer service programs, the Company focuses on maintaining and expanding
long-term customer relationships. Scotsman is the only industry operator that
maintains its own full-service national support staff to prepare units for lease
and maintain units while on lease. As a result of this extensive customer
service, Scotsman's leasing operations have generated recurring revenues due to
high levels of repeat business.
PROVEN TRACK RECORD. Since 1993, the current management team has
substantially increased the Company's utilization rate of its fleet, increased
the size of its fleet by approximately 18,700 units or 73%, doubled the size of
its branch network and completed 16 strategic acquisitions. As a result of these
and other factors, since 1993, EBITDA has increased at a CAGR of 28.2% to $75.4
million in 1996. Seven of the top eight executive officers of the Company
(including the President, Chief Financial Officer and the
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Northern and Southern Division Managers) retained all of their common stock and
stock options in Holdings (a total of $10.9 million at the Common Stock
Repurchase price) as part of the Recapitalization. This represents a significant
economic commitment and participation in the continued success of the Company.
BUSINESS AND GROWTH STRATEGY
Management's business and growth strategy includes the following:
FLEET AND BRANCH EXPANSION. The Company plans to continue to capitalize on
the industry's favorable growth trends by increasing customer penetration and
fleet size in existing markets. In addition, the Company plans to open branches
in new markets where positive business fundamentals exist. From January 1, 1994
to June 30, 1997, the Company increased its number of branches from 30 to 65 and
the number of units from approximately 25,500 to 44,100. The Company plans to
continue expanding its network.
SELECTIVE FLEET ACQUISITIONS. To complement its fleet and branch expansion,
the Company plans to capitalize on the industry's fragmentation and expand its
geographic coverage by making selective acquisitions of mobile offices and
storage product lease fleets. From January 1, 1994 to June 30, 1997, Scotsman
made 16 acquisitions of approximately 10,800 units for a total purchase price of
$56.1 million. These units have accounted for approximately 28% of the value of
the Company's total fleet purchases during that period.
The Company has generally been able to acquire units at less than the cost
of new factory purchased units. Typically, there is a low cost of integrating
acquired fleets and acquired units have existing leases that generate immediate
revenues and EBITDA. In addition, the Company has historically been able to
improve the financial operating performance, utilization and growth rates of
acquired fleets.
ANCILLARY PRODUCTS AND SERVICES. The Company continues to identify new
applications for its existing products, diversify into new product offerings and
deliver ancillary products and services to leverage the Company's existing
branch network. For example, in 1996, the Company began focusing on the market
for storage product units, which are used for secured storage space. Since
January 1, 1996, the Company has completed five acquisitions totaling
approximately 2,400 storage units. Ancillary products and services include the
rental of steps, ramps and furniture.
EDUCATION MARKET TRENDS. The Company believes that the education market
accounted for approximately 19% of 1996 revenues and offers growth opportunities
as a result of the following: (i) an increase in state and local initiatives
governing maximum class sizes, (ii) state and local governmental pressures to
decrease spending and find cost-effective ways to expand classroom capacity, and
(iii) increased interstate and intrastate migrations necessitating rapid
expansion of education space. For example, California has mandated a statewide
classroom size reduction initiative to lower class sizes to 20 students from an
average of approximately 29 in kindergarden through third grade, which the
Company believes will increase demand for mobile office units for classrooms in
California.
RECESSION RESISTANCE
Although a portion of the Company's business is with customers in industries
that are cyclical in nature and subject to changes in general economic
conditions, management believes that certain characteristics of the mobile
office leasing industry and Scotsman's operating strategies should help to
mitigate the effects of economic downturns. These characteristics include (i)
the Company's typical lease terms which include contractual provisions requiring
customers to retain units on lease for, on average, 12 months, (ii) the
flexibility and low cost offered to Scotsman's customers by leasing which may be
an attractive alternative to capital purchases, (iii) the Company's ability to
redeploy units during regional recessions (for example, during 1995, in response
to an economic slowdown the Company moved over 300 units from its
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Northeast region to the Midwest and Southeast regions) and (iv) the diversity of
the Company's industry segments and the geographic balance of the Company's
operations (historically during economic slowdowns, the Company has observed
that the construction industry, which the Company believes represents 26% of its
1996 revenues, experiences declines in utilization rates, while the other
customer segments including education are more stable). The Company estimates
that the current annual capital expenditures (net of replacement costs) required
to maintain its lease fleet and facilities at their current size and condition
is approximately $20 million.
PRODUCTS
The Company's products can be used to meet a variety of customer needs.
Sample applications include classrooms, sales offices and special events
headquarters. The Company's mobile office fleet ranges from single-unit
facilities to section modular structures which combine mobile offices into one
structure for applications that require more space. Units typically range in
size from 8 to 14 feet in width and 16 to 70 feet in length and are generally
constructed using a steel frame and undercarriage with an exterior of wood or
aluminum. The units are fitted with axles and hitches and are towed to various
locations. Most units are wood frame construction, contain materials used in
conventional buildings, and are equipped with air conditioning and heating,
electrical outlets and, where necessary, plumbing facilities. Mobile office
units are extremely durable and have an estimated economic useful life of 20
years. During 1996, the average purchase price for new mobile office units was
$10,750 and the average unit was leased for approximately $280 per month,
although rates vary depending upon size, product type and features. Products are
leased on a short-term basis with average contractual terms of 12 months.
However, most customers retain the product for a longer period as evidenced by
an average existing lease term of 19 months at March 31, 1997.
The Company's specific product offerings are described below:
MOBILE OFFICES. Mobile offices are the most functional and versatile units
in the Company's lease fleet. Units typically have "open interiors" which can be
modified using movable partitions. Mobile offices currently comprise
approximately one half of the Company's lease fleet and commonly include tile
floors, air conditioning/heating units, partitions and, if requested, toilet
facilities.
SECTION MODULARS. Section modulars are two or more units combined into one
structure. Interiors are customized to match the customer needs. Among its many
uses, section modulars have been used as hospital diagnostic annexes, special
events headquarters and golf pro shops.
CLASSROOMS. Classroom units are standard units adapted specifically for use
by school systems or universities. Classroom units usually feature chalkboards
and teaching aids, air conditioning/heating units, windows along side-walls and,
if requested, toilet facilities.
SALES OFFICES. Sales offices are marketed to businesses that require site
located space for sales presentations. Exteriors are typically wood-sided with
some models offering recessed front entries. The Company's "Executive Line"
sales offices are larger, more expensive versions of the standard sales office
with more amenities.
STORAGE PRODUCTS. Storage products are windowless and are typically used
for secure storage space. There are generally two types: ground-level entry
storage containers and storage trailers with axles and wheels. The basic storage
unit features a roll-up or swing door at one end. Units are made of heavy
exterior metals for security and water tightness.
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BRANCH NETWORK
As a key element to its market leadership strategy, the Company maintains a
network of 65 branch offices throughout 35 states. This network enables the
Company to increase its product availability and customer service within its
regional and local markets. Customers benefit because they are provided with (i)
improved service availability, (ii) reduced time to occupancy, (iii) better
access to sales representatives; (iv) the ability to inspect units prior to
rental; and (v) lower freight costs which are typically paid by the customer.
The Company benefits because it is able to spread regional overhead and
marketing costs over a larger lease base, redeploy units within its branch
network to optimize utilization, discourage potential competitors by providing
ample local supply and offer profitable short-term leases which would not be
profitable without a local market presence.
Management believes geographic diversification of the Company's branch
network spreads economic and operating risk. In 1996, the Southeast, Northeast,
Western and Midwest regions accounted for 30%, 27%, 27% and 16% of the Company's
revenues, respectively.
Each branch is indirectly supervised by one of four regional managers (these
managers average 15 years of industry experience and 11 years with the Company)
and generally headed by a branch manager. Management believes it is important to
encourage employees to achieve revenue and profit levels and to provide a high
level of service to Scotsman's customers. Approximately 40% of the regional
managers' compensation is based upon the financial performance of their branches
and approximately 40% of branch managers' compensation is tied to budgeted
EBITDA levels. Sales representatives' compensation is commission driven and
based on the gross profits of new business.
OPERATIONS
LEASING. Leasing revenue is a function of average monthly rental rate,
fleet size and utilization. The Company monitors fleet utilization at each
branch. In 1996, average fleet utilization by region ranged from 82.0% to 88.8%
and for the Company was 85.5%. While the Company adjusts its pricing to respond
to local competition in its markets, it believes that it generally achieves a
rental rate equal to or above that of its competitors because of the quality of
its products and its high level of customer service. Based upon its 1996 average
utilization rate and fleet size, the Company estimates that a $1.00 change in
the average monthly rental rates would result in a $0.4 million impact on
EBITDA. Management estimates that a one percentage point decrease in overall
Company utilization rates would have reduced 1996 EBITDA by $1.1 million.
As part of its leasing operations, the Company sells used mobile office
units from its lease fleet either at fair market value or to a lesser extent
pursuant to pre-established lease purchase options included in the terms of its
lease agreements. Due in part to an active fleet maintenance program, the
Company's units maintain a significant percentage of their original value.
During the period fiscal from 1993 to 1996, the Company was able to sell used
units in the ordinary course of business (excluding units sold pursuant to
purchase options) for an average between 97% and 102% of their total capitalized
cost and a 20% premium to net book value. Such costs include the cost of the
units as well as costs of significant improvements made to the unit. However, no
assurance can be given that such percentages would have been realized from the
sale of the entire lease fleet or will be realized in the future.
NEW UNIT SALES. New unit sales include sales of newly-manufactured mobile
office units. The Company does not generally purchase new units for resale until
it has obtained firm purchase orders (which are generally non-cancelable) for
such units. New mobile units are generally purchased more heavily in the late
spring and summer months due to seasonal classroom and construction market
requirements.
DELIVERY AND INSTALLATION. The Company provides delivery, site-work,
installation and other services to its customers as part of its leasing and
sales operations. Revenues from delivery, site-work and installation result from
the transportation of units to a customer's location, site-work required prior
to
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installation and installation of the mobile units which have been leased or
sold. Typically units are placed on temporary foundations constructed by
Scotsman service technicians, and service personnel will also generally install
the Company's ancillary products. The Company also derives revenues from the
tear-down of units and removal once a lease expires.
OTHER. The Company also derives revenue from the sale of other products and
services, including: rental of steps, furniture and ramps; sales of parts,
supplies and security systems; and charges for granting insurance waivers (i.e.,
charging a fee to customers who do not provide their own insurance certificate)
and for damage billings.
FLEET PURCHASES
The Company closely monitors fleet purchases to manage capital expenditures
and inventory levels. Generally, fleet purchases are controlled by regional and
corporate lease fleet managers, and must pass the Company's fleet purchasing
policy guidelines (which include ensuring that utilization rates and unrentable
units levels are acceptable, that redeployment, refurbishment and conversion
options have been evaluated, and that specific return on investment criteria
have been met). Scotsman purchases its units through approximately 30
third-party suppliers (most suppliers have only one factory, which generally
serves a market within 300 to 400 miles), with no significant dependence on any
supplier. The top three suppliers of units during the twelve months ended
December 31, 1996 represented approximately 26% of all purchases. The Company
believes that it has an excellent working relationship with its suppliers.
The Company believes that its fleet purchases are flexible and can be
adjusted to match business needs and prevailing economic conditions. Scotsman is
not "locked in" to long-term purchase contracts with manufacturers, and can
modify its new fleet purchases and acquisition activities to meet customer
demand. New fleet purchases are the result of the Company's growth and branch
expansion initiatives. The Company supplements its new fleet purchases with
acquisitions. Although the timing and amount of acquisitions are difficult to
predict, management considers its acquisition strategy to be opportunistic and
will adjust its fleet spending patterns as fleet acquisition opportunities
become available.
MARKETING
In addition to opening new branches, the Company uses a number of marketing
tools to generate new business and customers. By maintaining a detailed and
updated customer and prospect tracking system, marketing and sales personnel
generally can identify when a particular customer or prospect typically utilizes
the Company's products and may contact such customer or prospect regarding their
future needs.
Through its marketing and sales efforts, the Company has successfully
expanded the uses for its products. For example, since 1993, the number of
industries (as measured by SIC code) that lease or purchase the Company's
products has increased from 360 to 450. Additionally, Scotsman expects to
continue to increase its penetration of other industries that would benefit from
the usage of the Company's products. See "--Customer Base."
Developing new customers is an integral part of the sales process and is
monitored through the use of quarterly goals for each employee with sales
responsibility. In addition to its prospect tracking data bases, Scotsman
conducts direct mail campaigns (over 700,000 informational brochures were mailed
in 1996) and is a heavy user of print advertising, including the yellow pages
and customer trade publications. The Company has developed a toll-free telephone
number network so that customers can call and speak to a sales representative in
the branch location nearest the site where the call was placed. In addition, the
Company participates in numerous regional and national trade shows, and Scotsman
sales personnel joins local trade groups and associations. The Company also
designs marketing campaigns targeted at specific market niches.
During 1996, the Company began developing national accounts. To date, the
Company has established 50 national accounts and continues to pursue other
national account relationships. The relationships are
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coordinated by a national account manager and serviced by the branch network.
Due to its broad geographic capabilities, this program allows the Company to
further differentiate itself from many of its "mom-and-pop" competitors by
providing consistent service on a national basis.
CUSTOMER BASE
The Company's customer base is comprised of approximately 12,500 companies
which operate in approximately 450 diverse industries, a significant increase
over 1993 levels of 7,700 customers in 360 industries. The Company believes that
the construction and education industries accounted for approximately 26% and
19% of 1996 total revenues and that no other industry accounted for more than
10% of 1996 total revenues. During 1996 no single customer accounted for more
than 2.3% of the Company's total revenues and its top ten customers accounted
for approximately 6.6% of total revenues. The Company's customer base as
categorized by SIC Code and as a percentage of total revenues for 1996 is
estimated as follows:
CONSTRUCTION: The Company provides office and storage space to a broad
array of contractors associated with both residential and nonresidential
buildings, commercial offices and warehouses; highway, street, bridge and
tunnel contractors; water, sewer, communication and power line contractors;
and special construction trades, including glass, glazing and demolition.
The Company believes its construction customer base is characterized by a
wide variety of contractors, who are associated with original construction
as well as capital improvements in the commercial, institutional,
residential and municipal arenas.
EDUCATION: Rapid and unpredictable shifts in population within states
often necessitate quick expansion of educational facilities particularly in
elementary and secondary schools. State and local governmental budgetary
pressures have made mobile offices, especially multi-sectional offices, a
convenient and cost-effective way to expand classroom, laboratory and
library capacity. The Company's quality products are well suited for
educational institutions which demand a high level of maintenance and
service support.
PROFESSIONAL SERVICES: Customers in this category include professionals
from a broad array of industry sectors including engineering, architectural,
accounting, legal, insurance and sales.
HEALTH CARE: Health care customers are frequent users of multi-sectional
facilities as administrative offices, waiting rooms, MRI and other
diagnostic annexes adjacent to existing hospitals.
UTILITIES: Mobile offices have traditionally been leased to utilities
involved in electrical service, natural gas distribution and production, and
other energy-related services. Units are used as meeting rooms, reception
and visitor centers, security offices and, during periods of utility plant
reconstruction, as facilities to house the operations staff.
GOVERNMENT: Governmental users consist of federal, state and local
public sector organizations such as the United States Environmental
Protection Agency and state highway administrations. The Company has enjoyed
particular success in focused niches such as prisons and jails, courthouses,
national security buildings and NASA facilities. The Company's strategy of
concentrated regional focus has been particularly helpful in obtaining
business from local governmental customers.
CHEMICAL AND PHARMACEUTICAL: Chemical and pharmaceutical companies have
been long-time users of temporary office space. Mobile offices are
particularly well suited for laboratory usage where space is needed for the
duration of a specific project or for an off-site or isolated laboratory.
COMMERCIAL/INDUSTRIAL AND OTHER: The Commercial/Industrial and Other
segment includes a variety of industries and product uses which help
diversify the Company's revenue stream. Common examples include:
entertainment, recreation, transportation terminals, recycling, retail and
fast food establishments, metal processing and refining and disaster relief.
Although there are a number of
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different industries in this category, the Company believes that no single
industry included in this segment was material to it in 1996.
The Company continually seeks to expand its user base and the applications
for its products. Other industries offering potential increasing sources of
revenue for the Company include childcare and care for the elderly. There is
also potential for a wider number of commercial applications for the Company's
products. For example, the Company is marketing its mobile office products to
companies for use as designated smoking facilities and to the agricultural
industry for use as weigh stations.
MANAGEMENT INFORMATION SYSTEMS
The Company utilizes a proprietary management information system which
substantially differentiates Scotsman from the majority of its competitors.
Scotsman's information system is instrumental to its lease fleet management and
targeted marketing efforts and allows management to monitor operations at its
branches on a daily, weekly, and monthly basis. Lease fleet information is input
daily at the branch level and verified through a monthly physical inventory by
branch personnel. This provides management with on-line access to utilization,
lease fleet unit levels, and rental revenues by branch or geographic region.
This information, among other data, is reviewed in weekly reports by management.
In addition, an electronic file for each unit showing its lease history and
current location/status is maintained in the information system. Branch
salespeople utilize the information system to obtain information regarding
potential and current customers as well as unit availability. The information
data base tracks individual units by serial number and includes complete cost,
condition and other financial and specific unit information.
In 1994, the Company initiated a 4-year $7 million upgrade plan to improve
its information systems of which approximately $3.7 million had been spent as of
December 31, 1996. The initiatives funded by this plan will increase operating
efficiencies and access to management information as these needs grow with the
expansion of the business.
MOTOR VEHICLE REGULATIONS
A portion of the Company's units is subject to regulation in certain states
under motor vehicle and similar registration and certificate of title statutes.
The Company believes that it has complied in all material respects with all
motor vehicle registration and similar certificate of title statutes in states
where such statutes clearly apply to mobile office units. The Company has not
taken actions under such statutes in states where it has determined that such
statutes do not apply to mobile office units. However, in certain states, the
applicability of such statutes to the Company's mobile office units is not clear
beyond doubt. Due to the difficulty, expense and burden of complying with all
possible motor vehicle and certificate of title requirements in such states, the
Company does not take action to comply with every possible motor vehicle and
similar registration and certificate of title requirement in such jurisdictions.
If additional registration and related requirements are deemed to be necessary
in such states or if the laws in such states or other states were to change to
require the Company to comply with such requirements, the Company could be
subject to additional costs, fees and taxes as well as administrative burdens in
order to comply with such statutes or requirements. The Company does not believe
the effect of such compliance will be material to its business and financial
condition.
COMPETITION
Although the Company's competition varies significantly by market, the
mobile office industry, in general, is highly competitive. The Company competes
primarily in terms of product availability, customer service and price. The
Company believes that its reputation for customer service and its ability to
offer a wide selection of units suitable for many varied uses at competitive
prices allow it to compete effectively. However, certain of the Company's
competitors, such as GE Capital Modular Space, are less leveraged,
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have greater market share or product availability in a given market and have
greater financial resources and pricing flexibility than the Company.
PROPERTIES
The Company leases approximately 72% of its 65 branch locations and owns the
balance as well as its headquarters in Baltimore, Maryland. Management believes
that none of the Company's leased facilities, individually, is material to the
operations of the Company.
LEGAL PROCEEDINGS
The Company is involved in certain legal actions arising in the ordinary
course of business. The Company believes that none of these actions, either
individually or in the aggregate, will have a material adverse effect on the
Company's business, results of operations or financial condition.
EMPLOYEES
As of June 30, 1997, the Company had 625 employees. None of the Company's
employees are covered by a collective bargaining agreement. Management believes
its relationship with its employees is good. The Company has never experienced
any material labor disruption and is unaware of any efforts or plans to organize
its employees.
THE GUARANTORS
The Company acquired the Guarantor in 1994. As of April 30, 1997, the
Guarantor transferred substantially all of its assets, consisting primarily of
mobile office units, to the Company and ceased operations which were limited to
leasing its mobile office units to the Company under a master lease. The
operations of the Guarantor are currently limited to issuing the Guarantee. The
Subordinated Guarantor is a newly-created special purpose Delaware limited
liability company formed to hold certain existing and future Rental Equipment
(as defined in "Description of the Notes--Certain Definitions") as to which the
Company has not, due to the difficulties in establishing the status thereof
under applicable law and the expenses and administrative burden of discerning
the requirements of each such jurisdiction's certificate of title or similar
statute, taken all possible steps which might be necessary to perfect beyond
doubt the first priority lien thereon intended to secure the Company's
obligations under the New Credit Facility. At June 30, 1997, the assets of the
Subordinated Guarantor included approximately 33,600 of the Company's units and
represented approximately 56% of the total consolidated assets of the Company.
Under the Subordinated Guarantor's operating agreement, the executive committee
of the Subordinated Guarantor is required, for so long as any indebtedness
remains outstanding under the New Credit Facility, to included at least one
"special executive" who has no interest in or special relationship with Holdings
or its subsidiaries, and the affirmative vote of the "special executive" is
required, among other things, to authorize the filing of a bankruptcy petition
with respect to the Subordinated Guarantor or the making of any other act of
bankruptcy by the Subordinated Guarantor.
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The Company's directors and executive officers are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---------------------------------------------- --- ------------------------------------------------------------
<S> <C> <C>
Barry P. Gossett.............................. 57 Director and Chairman of the Board
Gerard E. Holthaus............................ 48 President and Chief Executive Officer, Director
James N. Alexander............................ 37 Director
Daniel L. Doctoroff........................... 38 Director
Michael F. Finley............................. 35 Director
Robert B. Henske.............................. 35 Director
James L. Singleton............................ 41 Director
David P. Spalding............................. 42 Director
J. Collier Beall.............................. 49 Senior Vice President and Southern Division Manager
Joseph F. Donegan............................. 46 Senior Vice President and Northern Division Manager
Gerard E. Keefe............................... 40 Senior Vice President and Chief Financial Officer
James D. Funk................................. 50 Vice President and Midwestern Regional Manager
Katherine K. Giannelli........................ 36 Vice President and Controller
Robert W. Hansen.............................. 40 Vice President and Western Regional Manager
William C. LeBuhn............................. 34 Vice President--Human Resources
John B. Ross.................................. 48 Vice President and Corporate Counsel
William J. Wyatt.............................. 57 Vice President--Marketing and Sales Support
</TABLE>
Mr. Gossett has been Chairman of the Board since April 1997. He formerly
served as Chairman and Chief Executive Officer from October 1995 to April 1997.
Prior to this, he served as President and Chief Executive Officer of the Company
from 1990 to October 1995. Mr. Gossett has been a director and employee of the
Company or its predecessor for over twenty-five years. Before joining the
Company, Mr. Gossett was a partner at Buchanan and Company, a Washington, D.C.
accounting firm. Mr. Gossett was one of the founders of the Modular Building
Institute, an industry trade group which represents member companies.
Mr. Holthaus has been President and Chief Executive Officer of the Company
since April 1997. He has been with the Company since June 1994, and served as
President and Chief Operating Officer from October 1995 to April 1997 and was
Executive Vice President and Chief Financial Officer prior thereto. He has
served as a director since June 1994. Before joining the Company, Mr. Holthaus
served as Senior Vice President of MNC Financial, Inc. from April 1988 to June
1994. From 1971 to 1988, Mr. Holthaus was associated with the accounting firm of
Ernst & Young (Baltimore), where he served as a partner from 1982 to 1988.
Mr. Alexander was elected as a director of the Company in May 1997. Mr.
Alexander has been a Vice President of Keystone and a Principal of Arbor
Investors, L.L.C. since August 1995. Prior to joining Keystone, he worked at
Goldman, Sachs & Co. where he was a Vice President in the Fixed Income Division
from August 1993 to July 1995. He serves on the Boards of Directors of FW
Strategic Partners, L.P. and Pipeline Power Partners, L.P. and on the Board of
Advisors of FEP Capital Holdings, L.P.
Mr. Doctoroff was elected as a director of the Company in May 1997. Mr.
Doctoroff has been a Vice President of Keystone since October 1992, a Managing
Director of Oak Hill Partners, Inc. and its predecessor, which provides
investment advisory services to Acadia Partners, L.P. ("Acadia"), since August
1987, Vice President and Director of Acadia MGP, Inc., a corporate general
partner of Acadia since March 1992 and a managing partner of Insurance Partners
Advisors, L.P., which provides investment advisory services to Insurance
Partners, L.P., since February 1994. Mr. Doctoroff is also a director of Bell &
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Howell Holdings Company, CapStar Hotel Company, Specialty Foods Corporation and
Kemper Corporation.
Mr. Finley was elected as a director of the Company in May 1997. Mr. Finley
has been a Principal of Cypress since its formation in April 1994. Prior to
joining Cypress, he was a Vice President in the Merchant Banking Group at Lehman
Brothers Inc. from 1989 to 1994.
Mr. Henske was elected as a director of the Company in May 1997. From
January 1997 to the present, Mr. Henske has been a Vice President of Keystone
and a Principal at Arbor Investors, L.L.C. From January 1996 to December 1996,
he was Executive Vice President and Chief Financial Officer of American Savings
Bank, F.A., a federally-chartered thrift. From 1986 to January 1996, he was a
partner and held various other positions with Bain & Company, a management
consulting firm.
Mr. Singleton was elected as a director of the Company in May 1997. Mr.
Singleton has been a Vice Chairman of Cypress since its formation in April 1994.
Prior to joining Cypress, he was a Managing Director in the Merchant Banking
Group at Lehman Brothers Inc. Mr. Singleton is also a director of Able Body
Corporation, L.P. Thebault Company and Cinemark USA, Inc.
Mr. Spalding was elected as a director of the Company in May 1997. Mr.
Spalding has been Vice Chairman of Cypress since it formation in April 1994.
Prior to joining Cypress, he was a Managing Director in the Merchant Banking
Group at Lehman Brothers Inc. from February 1991 to April 1994. Previously, he
held the position of Senior Vice President of Lehman Brothers Inc. from
September 1988 to February 1991. From April 1987 to September 1988, he was
Senior Vice President of General Electric Capital Corporation Corporate Finance
Group, Inc. Prior to 1987 he was a Vice President of The First National Bank of
Chicago. Mr. Spalding is also a director of Lear Corporation and AMTROL Inc.
Mr. Beall has been Senior Vice President and Southern Division Manager of
the Company since September 1996 and was the Southeastern Region Manager prior
thereto. Mr. Beall's responsibilities include the implementation of corporate
policies, attainment of branch profitability, fleet utilization management and
development of personnel. Prior to joining the Company in 1977, Mr. Beall was a
Regional Manager for Modular Sales and Leasing Company based in Georgia.
Mr. Donegan has been Senior Vice President and Northern Division Manager of
the Company since September 1996 and served as the Northeast Region Manager
prior thereto. Mr. Donegan's responsibilities include the implementation of
region profitability, fleet utilization and development of personnel. Mr.
Donegan has over 20 years of experience within the industry. From 1991 through
May 1994, Mr. Donegan held similar positions with Space Master Buildings,
Kullman Industries and Bennett Mobile Offices.
Mr. Keefe has been Senior Vice President and Chief Financial Officer of the
Company since April 1997. He formerly served as Vice President, Fleet and
Finance, with responsibilities including overall fleet management and
purchasing, treasury functions, pricing and budgeting from February 1995 to
April 1997. Prior to joining the Company, Mr. Keefe was with The Ryland Group, a
national homebuilder headquartered in Columbia, Maryland, from 1993 to 1995.
From 1991 to 1993, he was a management consultant serving the management,
distribution and financial services industries, and from 1977 to 1991, he was
with Ernst & Young, (Baltimore), most recently as a Senior Manager.
Mr. Funk has been Vice President and Midwestern Regional Manager of the
Company since 1986. Mr. Funk's responsibilities include the implementation of
corporate policies, attainment of branch profitability, fleet utilization
management and development of personnel in his region. Prior to joining the
Company in 1986, Mr. Funk was a branch manager for IISCOM, a distributor of
computer products based in Florida.
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Ms. Giannelli has been Vice President and Controller of the Company with
responsibilities for the Company's accounting department including regulatory
reporting since 1990. Prior to joining the Company, Ms. Giannelli was a Senior
Manager of KPMG Peat Marwick in Baltimore, Maryland where she had been employed
from 1982 to 1990.
Mr. Hansen has been Vice President and Western Regional Manager with
responsibility for Sales and Operations in the 13 Western States since 1994. His
duties include attainment of branch profitability, fleet management, development
of personnel and implementation of corporate policy in his region. Prior to
joining the Company in 1983, Mr. Hansen was General Manager of Duracite Mfg., a
cabinetwork and construction firm in the San Francisco Bay Area.
Mr. LeBuhn has been Vice President of Human Resources since January 1994.
Mr. LeBuhn's responsibilities include the management of human resources related
programs. Prior to joining the Company, Mr. LeBuhn was Human Resources Manager
for Sherwin-Williams Eastern Division from 1992 to January 1994 and Director of
Human Resources for Consolidated International Insurance Group, Inc. from 1985
to 1992.
Mr. Ross has been Corporate Counsel for the Company since February 1995.
Prior to joining Scotsman, Mr. Ross was Corporate Counsel for MNC Leasing
Corporation from 1983 to 1991 and Special Assets Counsel for MNC Financial, Inc.
from 1991 to 1993. Prior to joining MNC Leasing Corporation, he was engaged in
the private practice of law in both North Carolina and Maryland.
Mr. Wyatt has been Vice President, Marketing and Sales Support since 1994.
He was Director of Sales and Marketing for the Mobile Offices Division from 1990
to 1994 and was National Sales Manager of Williams from 1988 to 1990. Before
joining Scotsman, Mr. Wyatt operated W.J. Wyatt and Company, Inc., a consulting
firm providing sales development, market planning, convention and meeting
management and publishing services.
Each director of the Company is currently also a director of Holdings and
the Guarantor. Messrs. Holthaus, Keefe, and Ross and Ms. Giannelli are officers
of Holdings in the same capacities as they are at the Company. Messrs. Holthaus
and Keefe are officers of the Guarantor in the same capacities as they are at
the Company. Ms. Giannelli is the Controller of the Guarantor.
COMPENSATION OF DIRECTORS
No director of the Company or the Guarantor receives any fee for attendance
at Board of Directors meetings or meetings of Committees of the Board of
Directors. Executive officers of the Company and the Guarantor are elected by
the Board of Directors and serve at the discretion of the Board of Directors.
44
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth certain information concerning the
compensation for the last three completed years of those persons who were, at
December 31, 1996, the five highest paid officers of the Company:
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION SECURITIES
--------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS(1) COMPENSATION(2)
- -------------------------------------------------- --------- ---------- --------- ------------- ----------------
<S> <C> <C> <C> <C> <C>
Barry P. Gossett(3)............................... 1996 $ 225,000 $ 51,000 -- $ 20,374
Chairman and Chief Executive Officer 1995 205,770 51,000 -- 18,066
1994 200,000 52,000 -- 3,287
Gerard E. Holthaus(4)............................. 1996 $ 200,000 $ 50,500 27,000 $ 15,422
President and Chief Operating Officer 1995 180,769 50,500 7,800 12,968
1994 78,327 50,000 -- 8,297
J. Collier Beall.................................. 1996 $ 216,881 $ 20,000 10,000 $ 9,825
Senior Vice President and Southern Division 1995 171,390 28,000 2,300 7,200
Manager 1994 155,901 23,750 -- 7,200
Joseph F. Donegan................................. 1996 $ 200,557 $ 20,000 10,000 $ 9,625
Senior Vice President and Northern Division 1995 148,635 25,000 1,950 8,138
Manager 1994 54,609 15,000 -- 3,600
James D. Funk..................................... 1996 $ 147,357 $ 20,000 7,000 $ 9,144
Vice President and Midwestern Regional Manager 1995 158,338 20,000 1,950 7,875
1994 166,018 21,875 -- 7,450
</TABLE>
- ------------------------
(1) Represents options granted to purchase shares of Holdings pursuant to the
Scotsman Holdings, Inc. 1994 Employee Stock Option Plan.
(2) Represents disability insurance premium, key man life insurance premium, car
allowance or lease amounts and employer match under the 401(k) Plan.
(3) Mr. Gossett has been Chairman of the Board since April 1997. He formerly
served as Chairman and Chief Executive Officer.
(4) Mr. Holthaus became President and Chief Executive Officer of the Company in
April 1997.
SCOTSMAN HOLDINGS, INC. 1994 EMPLOYEE STOCK OPTION PLAN
In March 1995, a stock option plan was adopted for certain key employees. In
March 1995, options for 38,200 shares of Holdings were granted to members of
management of the Company at an exercise price of $13.78 per share. Additional
options were granted in March 1996 for 115,050 shares at an exercise price of
$28.80 per share and in February 1997 for 107,530 shares at an exercise price of
$55.18 per share. The options are exercisable for a period of 10 years from date
of grant and became fully vested upon consummation of the Recapitalization.
Under the terms of the Recapitalization Agreement, members of management had the
option of (i) retaining their common stock and options in Holdings or (ii)
surrendering their shares for $91.50 per share and their options for the
difference of $91.50 per share and the exercise price per share of such option.
Seven of the top nine executive officers (including the President and Chief
Executive Officer, Chief Financial Officer and the Northern and Southern
Division Managers) retained all of their common stock and stock options in
Holdings as part of the Recapitalization.
45
<PAGE>
LONG TERM INCENTIVE PLAN
The Company adopted a long term incentive plan (the "Incentive Compensation
Plan"). Under the terms of the Incentive Compensation Plan which was terminated
upon the consummation of the Recapitalization, certain management employees have
been or would have been entitled to receive, for each of fiscal years 1994
through 1998, cash compensation if certain targets are or were met. In February
1997, $400,000 was paid to approximately 40 management employees based upon the
Company's 1996 operating performance. Upon consummation of the Recapitalization,
$6.2 million of deferred compensation was paid to, or deferred by, certain
management employees under the Incentive Compensation Plan (including all
executive officers of the Company) and such plan was terminated. The Company
expects to adopt a new option program and annual bonus plan, although the terms
of such plan have not been finalized.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No director or executive officer of the Company was or is a director or
executive officer of any corporation, other than Holdings, that has a director
or executive officer who is also a director of the Company or a member of a
committee of the Board of Directors. During 1996, no officers or employees of
the Company, other than Messrs. Gossett and Holthaus, participated in
deliberations of the Company's Board of Directors concerning executive officer
compensation.
46
<PAGE>
CERTAIN TRANSACTIONS
THE RECAPITALIZATION
Holdings, Odyssey, certain other existing stockholders of Holdings, certain
partnerships affiliated with Cypress and Scotsman Partners, L.P., a limited
partnership whose direct and indirect partners include Keystone and Strategic
Partners ("Scotsman Partners"), are parties to the Recapitalization Agreement.
Pursuant to the Recapitalization Agreement, Holdings (i) repurchased 3,210,679
shares of outstanding Holdings Common Stock from Odyssey and certain other
existing stockholders (including management) for an aggregate of approximately
$293.8 million (or a price of $91.50 per share) in cash and approximately $21.8
million of Promissory Notes and (ii) issued 1,475,410 shares of Holdings Common
Stock to the Investor Group for an aggregate of approximately $135.0 million (or
a price of $91.50 per share) in cash. The Promissory Notes are supported by a
stand-by letter of credit in the amount of $22.7 million issued on behalf of the
Company for the benefit of the holders of the Promissory Notes. Mr. Gossett sold
183,000 shares of Holdings Common Stock in the Common Stock Repurchase. After
giving effect to the Common Stock Repurchase and the Common Stock Issuance, on a
primary basis, (i) the Investor Group (including certain partnerships affiliated
with Cypress, Scotsman Partners and BT Investment Partners, Inc. ("BTIP") and
(ii) Odyssey and certain other stockholders of Holdings (including members of
senior management) own approximately 90% and 10%, respectively, of the Holdings
Common Stock.
Under the Recapitalization Agreement, the holders of options to purchase
shares of Holdings Common Stock (including the executive officers of the
Company) had the option of either receiving a cash payment or continuing their
investment in Holdings. Seven of the top nine executive officers of the Company
(including the President and Chief Executive Officer, Chief Financial Officer
and the Northern and Southern Division Managers) retained all of their Holdings
Common Stock and stock options in Holdings following the Recapitalization. See
"Management--Long Term Incentive Plan" for a description of certain other
amounts that were paid to, or deferred by, the executive officers of the Company
upon the consummation of the Recapitalization.
The Recapitalization included (i) the Common Stock Repurchase, (ii) the
Common Stock Issuance, (iii) a tender offer and related consent solicitation for
the Holdings Notes for aggregate consideration of $1,073.60 per $1,000 principal
amount of the Holdings Notes plus accrued and unpaid interest from March 1,
1997, (iv) a tender offer and related consent solicitation for the Senior
Secured Notes for a purchase price equal to $1,048.30 per $1,000 amount of the
Senior Secured Notes plus accrued and unpaid interest, (v) the refinancing of
all outstanding indebtedness under the Existing Credit Facility with the New
Credit Facility, (vi) the Offering and (vii) the use of the proceeds from the
Common Stock Issuance, the New Credit Facility and the Offering to finance the
transactions described above. In connection with the Recapitalization on May 22,
1997, (i) Holdings completed the tender offer for the Holdings Notes and
accepted for payment all its outstanding Holdings Notes (approximately $29.3
million prior to acceptance), (ii) the Company completed the tender offer for
its Senior Secured Notes and accepted for payment approximately 99.8% of its
outstanding Senior Secured Notes (approximately $165 million prior to
acceptance) and (iii) the Company borrowed an aggregate of $109.1 million under
the New Credit Facility (including approximately $2.8 million the Company
expects to borrow within the next sixty days to fund expenses related to the
Recapitalization). As part of the Recapitalization, the Subordinated Guarantor
was created to acquire and hold certain Rental Equipment primarily in cases
where such Rental Equipment is not evidenced by certificates of title. The
Company transferred approximately $177.4 million to Holdings, its parent
corporation, to partially fund the Recapitalization. See "Use of Proceeds." The
goals of the Recapitalization were to fund the Common Stock Repurchase, to
eliminate all of the indebtedness of Holdings, to refinance the indebtedness of
Scotsman and to provide Scotsman with an expanded bank credit facility to fund
future business opportunities. As part of the Recapitalization, members of the
Investor Group and their affiliates received fees of approximately $4 million in
the aggregate and reimbursement of expenses.
47
<PAGE>
Each existing stockholder of Holdings had the option, subject to certain
conditions, to receive either cash or Promissory Notes in exchange for their
Holdings Common Stock in the Common Stock Repurchase. The Promissory Notes
mature on January 15, 1998 and bear interest at a fixed rate based on forward
LIBOR. To fund the Promissory Notes upon their maturity, the Company will
transfer sufficient funds to Holdings in the form of a dividend. The Company
currently expects to borrow such funds under the New Credit Facility.
Approximately $21.8 million aggregate principal amount of the Promissory Notes
were issued.
STOCKHOLDERS' AGREEMENT
The Investor Group, certain management stockholders of Holdings (the
"Management Stockholders") and Holdings are parties to a Second Amended and
Restated Management Stockholders' and Optionholders' Agreement (the
"Stockholders' Agreement"), which amends and restates the previous agreement
among Odyssey, the Management Stockholders and Holdings, and which contains
certain rights and restrictions with respect to the transfer of each Management
Stockholder's shares of Holdings Common Stock. The Stockholders' Agreement
prohibits the transfer of shares of Holdings Common Stock by each Management
Stockholder (other than sales required in connection with the disposition of all
shares of Holdings Common Stock owned by the Investor Group and their
affiliates) until the earlier of fifteen months after an initial public offering
of the equity of Holdings or the day after the Investor Group and their
affiliates have disposed of more than 33 1/3% of the aggregate shares of
Holdings Common Stock originally acquired by the Investor Group, and thereafter,
the aggregate number of shares which may be transferred by each Management
Stockholder in any calendar year (other than certain required sales) may not
exceed 25% of the number of shares acquired by such Management Stockholder at
the time of Odyssey's acquisition of Holdings plus the number of any shares
acquired pursuant to the exercise of stock purchase options. In addition, the
Stockholders' Agreement restricts the transfer of shares of Holdings Common
Stock by each Management Stockholder for a period of five years from the date of
purchase of such shares, except certain permitted transfers and transfers
pursuant to an effective registration statement or in accordance with Rule 144
under the Securities Act. Upon the expiration of such five-year period, subject
to the foregoing restrictions, each Management Stockholder may transfer his
shares after giving the Investor Group and Holdings, respectively, a right of
first refusal to purchase such shares.
Each Management Stockholder has the right (and in limited circumstances the
obligation) to sell his shares in connection with certain dispositions of shares
by the Investor Group and the right to cause his shares to be included in
certain registrations of Holdings Common Stock on behalf of the Investor Group.
Each Management Stockholder has granted to the Investor Group an irrevocable
proxy that permits the Investor Group to vote his shares. In addition, upon
termination of any Management Stockholder's employment, Holdings may elect to
require such Management Stockholder to sell to Holdings all of his shares.
The previous Stockholders' Agreement among Odyssey, certain management
stockholders of Holdings and the Company, which contained certain rights and
restrictions with respect to the transfer of such management stockholders'
shares of Holdings Common Stock, was superseded and replaced in its entirety by
the new Stockholders' Agreement.
INVESTOR STOCKHOLDERS AGREEMENT
Upon consummation of the Recapitalization, Holdings, certain partnerships
affiliated with Cypress (the "Cypress Stockholders") and Scotsman Partners
(collectively, including their permitted transferees, the "Investor
Stockholders") and Odyssey, Barry Gossett, BTIP and certain other stockholders
(including their permitted transferees and the Investor Stockholders, the
"Stockholders") entered into an investor stockholders agreement (the "Investor
Stockholders Agreement").
Under the terms of the Investor Stockholders Agreement, unless otherwise
agreed by the Investor Stockholders, the board of directors of Holdings will
consist of eight directors: three persons nominated by the Cypress Stockholders,
three persons nominated by Scotsman Partners, the Chairman of the Board and
48
<PAGE>
the President of Holdings. Each of the Investor Stockholders agree to vote (or
cause their affiliates to vote) in favor of the persons nominated under the
Investor Stockholders Agreement and to vote (or cause their affiliates to vote)
to remove and replace each other's nominees in accordance with appropriate
instructions. If the Holdings Common Stock held by either the Cypress
Stockholders or Scotsman Partners is reduced to an amount less than 20% of the
outstanding Holdings Common Stock but 5% or more of the outstanding Holdings
Common Stock, the Cypress Stockholders or Scotsman Partners, as the case may be,
will be entitled to designate one director. Each of the Cypress Stockholders or
Scotsman Partners will lose the right to designate one director when the Cypress
Stockholders or Scotsman Partners, as the case may be, no longer holds at least
5% of the outstanding Holdings Common Stock.
Without the approval of a majority of the directors designated by each of
the Cypress Stockholders and Scotsman Partners, respectively, Holdings will not
take certain actions (including mergers, consolidations, sales of all or
substantially all assets, electing or removing the Chairman or President of
Holdings, issuing securities, incurring certain indebtedness, making certain
acquisitions, approving operating and capital budgets and other major
transactions).
Under the Investor Stockholders Agreement, prior to the consummation of an
initial public offering of Holdings Common Stock (an "IPO"), each Stockholder
will have the right to acquire shares of Holdings Common Stock in connection
with certain new issuances of Holdings Common Stock, on the same terms and
conditions, for the amount necessary to allow the participating Stockholder to
maintain its percentage holding of the outstanding Holdings Common Stock.
The Investor Stockholders Agreement will contain provisions limiting the
ability of Stockholders to transfer their shares in certain circumstances. Among
other provisions, the Investor Stockholders Agreement will include (i) rights of
first offer in favor of the Investor Stockholders with respect to proposed
transfers of shares to a third party and (ii) tag-along rights in favor of each
Stockholder pursuant to which a selling Stockholder would be required to permit
the other Stockholders to participate on a proportional basis in a transfer of
shares to a third party. Also, if the Investor Stockholders determine to sell
shares to a third party, in certain circumstances the Investor Stockholders will
have the right to require the other Stockholders to sell their shares to such
third party.
Under the Investor Stockholders Agreement, the Stockholders will have the
right to require the Company to register their shares of Holdings Common Stock
under the Securities Act in certain circumstances, including upon the demand of
certain of the Stockholders.
The Investor Stockholders Agreement (other than the registration rights
provisions) will terminate (unless earlier terminated as specified in the
Investor Stockholders Agreement) upon the earlier of (i) 10 years from the
closing date and (ii) completion of an IPO.
EMPLOYEE LOANS
On July 27, 1994, the Company loaned Mr. Holthaus $100,000 in connection
with the purchase of Holdings' common stock pursuant to a subscription agreement
between Mr. Holthaus and Holdings dated June 1994. Interest accrued under the
loan at a rate of 6.5%, corresponding to the Adjusted Federal Interest Rate. The
loan was payable in annual principal payments of $25,000 plus accrued interest
beginning January 1995. The loan was repaid in 1996.
ODYSSEY INVESTORS MANAGEMENT AGREEMENT
The Company and Odyssey Investors, Inc. ("Odyssey Investors"), a wholly
owned subsidiary of Odyssey Partners, entered into a management agreement (the
"Management Agreement"), dated as of December 16, 1993, which provided that the
Company pay to Odyssey Investors an annual fee of up to $250,000 in
consideration of certain management, consulting, and financial advisory services
rendered by Odyssey Investors. The terms of the Management Agreement were not
the result of arms' length bargaining and were not reviewed as to fairness by
any independent party and no determination was made as to whether the terms of
the Management Agreement were as favorable as those which might have been
obtained from unaffiliated parties. The Company incurred expense of $250,000 for
these services in 1994, 1995 and 1996. The Management Agreement terminated upon
the Recapitalization.
49
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
All of the issued and outstanding shares of common stock of the Company are
owned by Holdings. The following table sets forth certain information regarding
the beneficial ownership of the Holdings Common Stock by (i) all persons owning
of record or beneficially to the knowledge of the Company 5% or more of the
issued and outstanding Holdings Common Stock, (ii) each director individually,
(iii) each executive officer named in the Summary Compensation Table, and (iv)
all executive officers and directors as a group. The Company is the beneficial
owner of 100% of the Guarantor's common stock and the Subordinated Guarantor's
limited liability company interests.
<TABLE>
<CAPTION>
SHARES OF PERCENTAGE
NAME COMMON STOCK OWNED
- ----------------------------------------------------------------------------------- ---------------- -----------
<S> <C> <C>
Cypress Merchant Banking Partners L.P.(1)(2)(3)
c/o The Cypress Group L.L.C.
65 East 55th Street
New York, NY 10022............................................................... 675,401 41.18%
Cypress Offshore Partners L.P.(1)(2)(3)
Bank of Bermuda (Cayman) Limited
P.O. Box 513 G.T.
Third Floor
British American Tower
George Town, Grand Cayman
Cayman Islands, B.W.I............................................................ 34,982 2.13
Scotsman Partners, L.P.(2)(3)(4)
201 Main Street
Fort Worth, TX 76102............................................................. 710,383 43.31
Odyssey Partners, L.P.(3)(5)
31 West 52nd Street
New York, NY 10019............................................................... 96,741 5.90
James N. Alexander(6).............................................................. -- --
Daniel L. Doctoroff(6)............................................................. -- --
Michael F. Finley(7)............................................................... -- --
Robert B. Henske(6)................................................................ -- --
James L. Singleton(7).............................................................. -- --
David P. Spalding(7)............................................................... -- --
Barry P. Gossett(3)(8)(9).......................................................... 41,469 2.53
Gerard E. Holthaus(8)(9)........................................................... 74,030(10) 4.51
J. Collier Beall(8)(9)............................................................. 23,800(10) 1.45
Joseph F. Donegan(8)(9)............................................................ 23,150(10) 1.41
All executive officers and directors as a group.................................... 250,074(10) 15.25
</TABLE>
50
<PAGE>
(1) Cypress Merchant Banking Partners L.P. and Cypress Offshore Partners L.P.
are controlled by The Cypress Group L.L.C. or affiliates thereof. Certain
executives of The Cypress Group L.L.C., including Messrs. Jeffrey P. Hughes,
James L. Singleton, David P. Spalding and James A. Stern, may be deemed to
share beneficial ownership of the shares shown as beneficially owned by
Cypress Merchant Banking Partners L.P. and Cypress Offshore Partners L.P.
Each of such individuals disclaims beneficial ownership of such shares.
(2) Does not include shares beneficially owned by Mr. Gossett and members of
management, as to which the Investor Group has an irrevocable proxy.
(3) Under the Investor Stockholders Agreement, the Cypress Stockholders and
Scotsman Partners have agreed to vote their shares for certain nominees for
director and other matters and the Cypress Stockholders, Scotsman Partners,
Odyssey and Mr. Gossett have agree to restrict the transfer of their shares
subject to certain exceptions. See "Certain Transactions--Investor
Stockholders Agreement."
(4) The shares of Holdings Common Stock beneficially owned by Scotsman Partners
may be deemed to be owned by J. Taylor Crandall, Group 31, Inc. ("Group 31")
and Arbor Scotsman, L.P. ("AS"). Mr. Crandall is the sole stockholder of
Group 31, which is the general partner of AS, which, in turn, is the general
partner of Scotsman Partners. Group 31 and AS disclaim such beneficial
ownership. The address of Mr. Crandall, Group 31 and AS is the same as
Scotsman Partners. Mr. Crandall is the Chief Financial Officer of Keystone.
(5) The shares of common stock beneficially owned by Odyssey may be deemed to
be beneficially owned by the general partners of Odyssey: Stephen Berger,
Brian Wruble, Leon Levy, Jack Nash and Joshua Nash (collectively, the
"General Partners"), who will share voting and investing control over such
shares. The General Partners disclaim such beneficial ownership. The address
of each of the General Partners is the address of Odyssey.
(6) Such person's address is c/o Scotsman Partners, L.P.
(7) Such person's address is c/o Cypress Merchant Banking Partners L.P.
(8) Such person's address is the address of the Company's principal executive
offices.
(9) Each member of management is a party to the Stockholders' Agreement whereby
he or she has agreed to limit the transferability of his or her shares. See
"Certain Transactions--Stockholders' Agreement."
(10) Includes 61,330, 22,300 and 21,950 and 186,430 shares held as options by
Messrs. Holthaus, Beall and Donegan and all executive officers as a group,
respectively, that vested upon the consummation of the Recapitalization.
51
<PAGE>
DESCRIPTION OF THE NEW CREDIT FACILITY
GENERAL
As part of the Recapitalization, the Company entered into the New Credit
Facility with a syndicate of banks, as lenders, and BT Commercial Corporation
("BTCC"), as agent (the "Agent"). The New Credit Facility allows the Company to
obtain revolving credit loans and issue letters of credit for the account of the
Company from time to time to make payments in connection with the
Recapitalization and for working capital, acquisitions and general corporate
purposes. The New Credit Facility provides for a total line of revolving credit
of up to $300 million subject to the satisfaction of certain requirements
(including a borrowing base test). At the Company's option, the revolving credit
loans may be maintained as (a) Base Rate Loans (as defined in the New Credit
Facility) which will bear interest at the higher of (x) 1/2 of 1% in excess of
the Federal Reserve reported certificate of deposit rate and (y) the prime rate
of the Agent, plus 1% or (b) Eurodollar Loans (as defined in the New Credit
Facility) which will bear interest at the Eurodollar Rate (as defined in the New
Credit Facility) as determined by the Agent plus 2.25%. Beginning in 1998, the
applicable margin used to calculate such interest rates may be reduced if the
Company satisfies certain leverage ratios. The Company paid certain fees with
respect to the New Credit Facility. The New Credit Facility will have a term of
five years, unless terminated sooner upon an event of default (to be defined in
the New Credit Facility), and outstanding revolving credit loans will be payable
on such date or such earlier date as may be accelerated following the occurrence
of any event of default. As of June 30, 1997, the outstanding indebtedness under
the New Credit Facility was $104.4 million.
The obligations under the New Credit Facility are guaranteed by Holdings and
certain of the Company's subsidiaries (the "Credit Agreement Guarantors"). The
obligations under the New Credit Facility are be secured by a first priority
lien (subject to permitted encumbrances) on substantially all of the Company's
and each Credit Agreement Guarantor's property and on all of the capital stock
of the Company and certain of its subsidiaries, and all proceeds thereof. The
Notes will be effectively subordinated to the obligations under the New Credit
Facility to the extent of the value of the assets securing the New Credit
Facility. Upon consummation of the Exchange Offer, the Guarantor and the
Subordinated Guarantor will be the only Credit Agreement Guarantors.
The Subordinated Guarantor is a newly-created special purpose limited
liability company formed to hold certain existing and future Rental Equipment as
to which the Company has not, due to the difficulties in establishing the status
thereof under applicable law and the expenses and administrative burden of
discerning the requirements of each such jurisdiction's certificate of title or
similar statute, taken all possible steps which might be necessary to perfect
beyond doubt the first priority lien thereon intended to secure the Company's
obligations under the New Credit Facility. At June 30, 1997, the assets of the
Subordinated Guarantor included approximately 33,600 of the Company's units and
represented approximately 56% of the total consolidated assets of the Company.
CERTAIN COVENANTS
The New Credit Facility contains various covenants that restrict the Company
from taking various actions and that require that the Company achieve and
maintain certain financial covenants. The New Credit Facility includes covenants
relating to minimum interest coverage ratio, minimum utilization, and
limitations on capital expenditures, indebtedness, mergers, acquisitions,
disposition of assets, change in business activities, and certain corporate
activities. The New Credit Facility also prohibits the Company from prepaying
the Notes and to prohibit certain changes in control of the Company or Holdings.
EVENTS OF DEFAULT
The New Credit Facility contains events of default, including nonpayment of
principal, interest or fees, violation of covenants, inaccuracy of
representations or warranties in any material respect, cross default and cross
acceleration to certain other indebtedness, bankruptcy, ERISA, environmental
matters, material judgments and material liabilities and change of control.
52
<PAGE>
DESCRIPTION OF THE NOTES
Except as otherwise indicated, the following description relates both to the
Existing Notes issued in the Offering and the New Notes to be issued in exchange
for Existing Notes in connection with the Exchange Offer. The form and terms of
the New Notes are the same as the form and terms of the Existing Notes, except
that the New Notes have been registered under the Securities Act and therefore
will not bear legends restricting the transfer thereof.
GENERAL
The Existing Notes were, and the New Notes will be, issued under an
Indenture, dated as of May 15, 1997 (the "Indenture"), among Williams Scotsman
Inc., as issuer (the "Issuer"), Mobile Field Office Company, as guarantor (the
"Guarantor"), Willscot Equipment, LLC, as subordinated guarantor (the
"Subordinated Guarantor") and The Bank of New York, as Trustee (the "Trustee").
The following is a summary of certain provisions of the Indenture, the
Notes, the Guarantees and the Subordinated Guarantee, copies of which will be
made available to prospective investors upon request. The following summaries of
certain provisions of the Indenture do not purport to be complete and are
subject to, and are qualified in their entirety by references to, all the
provisions of the Indenture, including the definitions of certain terms therein
and those terms made a part thereof by the Trust Indenture Act of 1939, as
amended (the "TIA"). Principal of, premium, if any, and interest on the Notes
will be payable, and the Notes may be exchanged or transferred, at the office or
agency of the Issuer in the Borough of Manhattan, The City of New York (which
initially shall be the corporate trust office of the Trustee, at 101 Barclay
Street, New York, New York 10286).
The Notes will be issued only in fully registered form, without coupons, in
denominations of $1,000 and any integral multiple of $1,000. No service charge
shall be made for any registration of transfer or exchange of Notes, but the
Issuer may require payment of a sum sufficient to cover any transfer tax or
other similar governmental charge payable in connection therewith.
PRINCIPAL, MATURITY AND INTEREST
The Notes (and the Exchange Notes) are limited in aggregate principal amount
to $550 million, of which $400 million was issued in the offering of the
Existing Notes and will mature on June 1, 2007. Additional amounts may be issued
in one or more series from time to time, subject to the limitations set forth
under "--Certain Covenants--Limitation on Indebtedness." The Notes will bear
interest at the rate per annum of 9 7/8% from May 22, 1997 (the "Issue Date"),
or from the most recent date to which interest has been paid or provided for,
payable semiannually to Holders of record at the close of business on the May 15
or November 15 immediately preceding the interest payment date on June 1 and
December 1 of each year, commencing December 1, 1997. Interest will be computed
on the basis of a 360-day year comprised of twelve 30-day months.
The interest rate on the Notes is subject to increase in certain
circumstances if the registration statement for the Existing Notes is not
declared effective on a timely basis or if certain other conditions are not
satisfied, all as further described in "The Exchange Offer."
The Notes will not be entitled to the benefit of any mandatory sinking fund.
OPTIONAL REDEMPTION
Except as set forth in the following paragraph, the Notes will not be
redeemable at the option of the Issuer prior to June 1, 2002. Thereafter, the
Notes will be redeemable, at the Issuer's option, in whole or in part, at any
time or from time to time, upon not less than 30 nor more than 60 days' prior
notice mailed by first-class mail to each Holder's registered address, at the
following redemption prices (expressed in percentages of the principal amount
thereof), plus accrued and unpaid interest to the redemption date (subject to
the right of Holders of record on the relevant record date to receive interest
due on the relevant
53
<PAGE>
interest payment date), if redeemed during the 12-month period commencing on
June 1 of the years set forth below:
<TABLE>
<CAPTION>
PERIOD REDEMPTION PRICE
- -------------------------- ----------------
<S> <C>
2002...................... 104.938%
2003...................... 102.469
2004 and thereafter....... 100.000
</TABLE>
In addition, at any time and from time to time on or prior to June 1, 2000,
the Issuer may, at its option, redeem in the aggregate up to 40% of the $400
million original principal amount of the Notes with the proceeds of one or more
Public Equity Offerings (provided that if the Public Equity Offering is a public
offering of any class of common stock of Holdings or another issuer, a portion
of the Net Cash Proceeds thereof equal to the amount required to redeem any such
Notes is contributed to the equity capital of the Issuer), at a redemption price
(expressed as a percentage of principal amount) of 109.875% plus accrued and
unpaid interest to the redemption date (subject to the right of Holders of
record on the relevant record date to receive interest due on the relevant
interest payment date); PROVIDED, HOWEVER, that at least 60% of the $400 million
aggregate principal amount of the Notes originally issued must remain
outstanding after each such redemption.
At any time on or prior to June 1, 2002, the Notes may also be redeemed as a
whole but not in part at the option of the Issuer upon the occurrence of a
Change of Control, upon not less than 30 nor more than 60 days prior notice
(exercisable no later than 30 days after such Change of Control) such Change of
Control mailed by first-class mail to each Holder's registered address, at a
redemption price equal to 100% of the principal amount thereof plus the
Applicable Premium as of, and accrued interest to the redemption date (subject
to the right of Holders of record on the relevant record date to receive
interest due on the relevant interest payment date).
"Applicable Premium" means, with respect to a Note at any redemption date,
the greater of (i) 1.0% of the principal amount of such Note and (ii) the excess
of (A) the present value at such time of (1) the redemption price of such Note
at June 1, 2002 plus (2) all required interest payments due on such Note through
June 1, 2002, computed using a discount rate equal to the Treasury Rate plus 100
basis points, over (B) the principal amount of such Note.
"Treasury Rate" means the yield to maturity at the time of computation of
United States Treasury securities with a constant maturity (as compiled and
published in the most recent Federal Reserve Statistical Release H.15 (519)
which has become publicly available at least two business days prior to the
Redemption Date (or, if such Statistical Release is no longer published, any
publicly available source or similar market data)) most nearly equal to the
period from the redemption date to June 1, 2002; PROVIDED, HOWEVER, that if the
period from the redemption date to June 1, 2002 is not equal to the constant
maturity of a United States Treasury security for which a weekly average yield
is given, the Treasury Rate shall be obtained by linear interpolation
(calculated to the nearest one-twelfth of a year) from the weekly average yields
of United States Treasury securities for which such yields are given, except
that if the period from the redemption date to June 1, 2002 is less than one
year, the weekly average yield on actually traded United States Treasury
securities adjusted to a constant maturity of one year shall be used.
In the case of any partial redemption, selection of the Notes for redemption
will be made by the Trustee on a pro rata basis, by lot or by such other method
as the Trustee in its sole discretion shall deem to be fair and appropriate,
although no Note of $1,000 in principal amount or less shall be redeemed in
part; PROVIDED, HOWEVER, that any redemption pursuant to the second paragraph of
this section shall be PRO RATA among recordholders. If any Note is to be
redeemed in part only, the notice of redemption relating to such Note shall
state the portion of the principal amount thereof to be redeemed. A new Note in
principal amount equal to the unredeemed portion thereof will be issued in the
name of the Holder thereof upon cancellation of the original Note. Notes that
are redeemed by the Issuer or that are purchased by the Issuer pursuant to an
"Exceeds Proceeds Offer" as described under "--Certain Covenants--Limitation on
Sales of Assets and Subsidiary Stock" and pursuant to a Change of Control Offer
as described under "--
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Certain Covenants--Change of Control" or that are otherwise acquired by the
Issuer will be surrendered to the Trustee for cancellation.
MANDATORY REDEMPTION OR OFFER TO PURCHASE
Except as set forth below under "--Certain Covenants--Limitation on Sales of
Assets and Subsidiary Stock" and "--Certain Covenants--Change of Control," the
Issuer will not be required to make any mandatory redemption or repurchase with
respect to the Notes.
RANKING
The Notes are general unsecured obligations of the Issuer. The Notes rank on
a parity in right of payment with all existing and future unsubordinated
Indebtedness of the Issuer and senior in right of payment to all future
subordinated Indebtedness of the Issuer.
The Notes are effectively subordinated to all secured Indebtedness of the
Issuer (including all Indebtedness outstanding under the Credit Agreement) to
the extent of the value of the assets securing such Indebtedness and to all
Subordinated Guarantor Senior Indebtedness of the Subordinated Guarantor and to
all Indebtedness of the other Subsidiaries of the Issuer (other than the
Guarantors). The Guarantees are effectively subordinated to all existing and
future secured Indebtedness of the related Guarantor (including all Indebtedness
outstanding under the Credit Agreement and guaranteed by the Guarantors) to the
extent of the value of the assets securing such Indebtedness. The Subordinated
Guarantee is a general unsecured obligation of the Subordinated Guarantor and is
subordinated in right of payment to all existing and future Subordinated
Guarantor Senior Indebtedness of the Subordinated Guarantor (including the
Subordinated Guarantor's guarantee on a senior secured basis of all obligations
of the Issuer under or in respect of the New Credit Facility (and refinancings
thereof). At June 30, 1997, the assets of the Subordinated Guarantor included
approximately 33,600 of the Company's units and represented approximately 56% of
the total consolidated assets of the Company.
As of June 30, 1997, the Company had approximately $504.7 million of
Indebtedness outstanding (including approximately $104.4 million of Secured
Indebtedness outstanding under the New Credit Facility). All of the outstanding
Indebtedness under the New Credit Facility is guaranteed by the Guarantors and
the Subordinated Guarantor on a secured basis. The New Credit Facility provides
for a total line of revolving credit of up to $300 million subject to the
satisfaction of certain requirements (including a borrowing base test).
Although the Indenture contains limitations on the amount of additional
Indebtedness that the Issuer may incur, under certain circumstances the amount
of such Indebtedness could be substantial and, in any case, such Indebtedness
may be secured. Although the Indenture limits the incurrence of Indebtedness and
the issuance of preferred stock of certain of the Issuer's subsidiaries, such
limitation is subject to a number of significant qualifications. Moreover, the
Indenture does not impose any limitation on the incurrence by such subsidiaries
of liabilities that are not considered Indebtedness under the Indenture. See
"--Certain Covenants--Limitation on Indebtedness."
GUARANTEES OF THE NOTES
The Indenture provides that each Guarantor will unconditionally guarantee on
a senior basis jointly and severally to each Holder, all of the Issuer's
obligations under the Notes, including its obligations to pay principal,
premium, if any, and interest with respect to the Notes. The obligations of each
Guarantor are limited to the maximum amount which, after giving effect to all
other contingent and fixed liabilities of such Guarantor 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, will result in the
obligations of such Guarantor under the applicable 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 shall be
entitled to a contribution from each other Guarantor in an amount PRO RATA,
based on the net assets of each Guarantor
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determined in accordance with GAAP. Except as provided in "--Certain Covenants"
below, the Issuer is not restricted from selling or otherwise disposing of any
of the Guarantors. The Guarantors will also be jointly and severally
guaranteeing all obligations of the Issuer under the Credit Agreement, and each
Guarantor will be granting a security interest in all or substantially all of
its assets to secure its respective guarantee of the obligations of the Issuer
under the Credit Agreement.
The Guarantors include (i) Mobile Field Office Company, (ii) any Significant
Subsidiary, whether formed or acquired after the Issue Date, and (iii) any
Subsidiary, whether formed or acquired after the Issue Date, that guarantees any
Indebtedness outstanding under the Credit Agreement; PROVIDED, HOWEVER, that any
Subsidiary acquired after the Issue Date which is prohibited from entering into
a Guarantee pursuant to restrictions contained in any debt instrument or other
agreement in existence at the time such Subsidiary was so acquired and not
entered into in anticipation or contemplation of such acquisition shall not be
required to become a Guarantor so long as any such restriction is in existence
and to the extent of any such restriction; PROVIDED, FURTHER, that if any
Guarantor is released from its guarantee of all outstanding Indebtedness of the
Issuer under the Credit Agreement, such Guarantor shall be automatically
released from its obligations as Guarantor and, from and after such date, such
Guarantor shall cease to constitute a Guarantor; AND PROVIDED, FURTHER, that the
Subordinated Guarantor shall not be a Guarantor except to the extent permitted
below. Notwithstanding the foregoing, any Subsidiary that is a Securization
Subsidiary or is an Unrestricted Subsidiary and that, in each case, does not
guarantee any indebtedness under the Credit Agreement shall not be required to
become a Guarantor. Mobile Field Office Company is the only Guarantor. If
permitted by the holders of the then outstanding Subordinated Guarantor Senior
Indebtedness, the Subordinated Guarantor may notify the Trustee that it desires
to become a Guarantor. In such case, the subordination provisions with respect
to the Subordinated Guarantee shall cease to apply and the guarantee of the
Subordinated Guarantee shall be amended to have terms substantially equivalent
to those of a Guarantee.
The Indenture provides that if the Notes thereunder are defeased in
accordance with the terms of the Indenture, or if all or substantially all of
the assets of any Guarantor or all of the Capital Stock of any Guarantor is sold
(including by stock sale or issuance or otherwise) by the Issuer in a
transaction constituting an Asset Disposition, and if (x) the Net Available Cash
from such Asset Disposition is used in accordance with the covenant described
under "--Certain Covenants--Limitation on Sales of Assets and Subsidiary Stock"
or (y) the Issuer delivers to the Trustee an Officers' Certificate to the effect
that the Net Available Cash from such Asset Disposition shall be used in
accordance with the covenant described under "--Certain Covenants--Limitations
on Sales of Assets and Subsidiary Stock" and within the time limits specified by
such covenant, then such Guarantor (in the event of a sale or other disposition
of all of the Capital Stock of such Guarantor) or the person acquiring such
assets (in the event of a sale or other disposition of all or substantially all
of the assets of such Guarantor) shall be released and discharged of its
Guarantee obligations in respect of the Indenture and the Notes issued
thereunder (including, without limitation, the provisions applicable to
Guarantors described in "--Certain Covenants--Merger and Consolidation").
The Guarantees are general unsecured obligations of each Guarantor. The
Guarantees rank on a parity in right of payment with all existing and future
unsubordinated Indebtedness of the Guarantor and senior in right of payment to
all future subordinated indebtedness of the Guarantor. The obligations of each
Guarantor under a Guarantee are effectively subordinated to all Secured
Indebtedness of the Guarantor (including all Indebtedness outstanding under the
Credit Agreement and guaranteed by such Guarantor) to the extent of the value of
the assets securing such Indebtedness.
SUBORDINATED GUARANTEE OF THE NOTES
The Indenture provides that the Subordinated Guarantor will unconditionally
guarantee to each holder, subject to the subordination provisions described
below, the full and prompt performance of the Issuer's obligations under the
Indenture and the Notes, including the payment of principal of, premium, if any,
and interest on the Notes. The obligations of the Subordinated Guarantor are
limited to the maximum
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amount (after giving effect to its guarantee of the New Credit Facility) which
will result in the obligations of the Subordinated Guarantor under the
Subordinated Guarantee not constituting a fraudulent conveyance or fraudulent
transfer under federal or state law. The Subordinated Guarantor also guarantees
on a senior basis all obligations of the Issuer under the Credit Agreement and
grants a security interest in all or substantially all of its assets to secure
such guarantee of the obligations of the Issuer under the Credit Agreement. See
"Description of New Credit Facility."
The Indenture provides that if the Notes thereunder are defeased in
accordance with the terms of the Indenture, or if all or substantially all of
the assets of the Subordinated Guarantor or all of the Capital Stock of the
Subordinated Guarantor is sold (including by stock sale or issuance or
otherwise) by the Issuer in a transaction constituting an Asset Disposition, and
if (x) the Net Available Cash from such Asset Disposition is used in accordance
with the covenant described under "--Certain Covenants--Limitation on Sales of
Assets and Subsidiary Stock" or (y) the Issuer delivers to the Trustee an
Officers' Certificate to the effect that the Net Available Cash from such Asset
Disposition shall be used in accordance with the covenant described under
"--Certain Covenants--Limitations on Sales of Assets and Subsidiary Stock" and
within the time limits specified by such covenant, then the Subordinated
Guarantor (in the event of a sale or other disposition of all of the Capital
Stock of the Subordinated Guarantor) or the person acquiring such assets (in the
event of a sale or other disposition of all or substantially all of the assets
of the Subordinated Guarantor) shall be released and discharged of its
Subordinated Guarantee obligations in respect of the Indenture and the Notes
issued thereunder (including, without limitation, the provisions applicable to
the Subordinated Guarantor described in "Certain Covenants--Merger and
Consolidation").
The payment by the Subordinated Guarantor of all obligations on the
Subordinated Guarantee is subordinated in right of payment to the prior payment
in full, in cash or cash equivalents, of all obligations on Subordinated
Guarantor Senior Indebtedness. Upon any payment or distribution of assets of the
Subordinated Guarantor to creditors upon any liquidation, dissolution, winding
up, reorganization, assignment for the benefit of creditors or marshaling of
assets of the Subordinated Guarantor, or in a bankruptcy, reorganization,
insolvency, receivership or similar proceeding relating to the Subordinated
Guarantor or its property, whether voluntary or involuntary, all obligations
with respect to all Subordinated Guarantor Senior Indebtedness shall first be
paid in full, in cash or cash equivalents, before any payment or distribution of
any kind of character, whether in cash, property, or securities is made on
account of any obligations on the Subordinated Guarantee or for the acquisition
of all or any part of the Subordinated Guarantee for cash or property or
otherwise; and until all such obligations with respect to all Subordinated
Guarantor Senior Indebtedness are paid in full, in cash or cash equivalents, any
distribution to which the holders of the Subordinated Guarantee would be
entitled but for the subordination provisions will be made to the holders of
Subordinated Guarantor Senior Indebtedness as their interests may appear. If (i)
any default occurs and is continuing in the payment when due, whether at
maturity, upon any redemption, by declaration or otherwise, of any principal of,
interest on, or other amounts due and owing on, any Subordinated Guarantor
Senior Indebtedness or (ii) any default occurs and is continuing with respect to
any Subordinated Guarantor Senior Indebtedness resulting in the acceleration of
the maturity of all or any portion of such Subordinated Guarantor Senior
Indebtedness, no payment shall be made by or on behalf of the Subordinated
Guarantor or any of its Subsidiaries or any other person on its or their behalf
with respect to any obligations on the Subordinated Guarantee or to acquire all
or any part of the obligations covered by the Subordinated Guarantee for cash or
property or otherwise; PROVIDED, HOWEVER, that, except to the extent provided in
the second succeeding paragraph, the forgoing provisions shall not restrict the
Issuer from making payments of principal, premium or interest on or with respect
to the Notes (including, without limitation, by redemption, repurchase or other
acquisition). In addition, if any other event of default occurs and is
continuing (or if such an event of default would occur upon any payment with
respect to the Subordinated Guarantee) with respect to the Subordinated
Guarantor Senior Indebtedness, as such event of default is defined in the
instrument creating or evidencing or guaranteeing such Subordinated Guarantor
Senior Indebtedness permitting the holders of such Subordinated Guarantor Senior
Indebtedness then outstanding, or their Representative, to accelerate the
maturity thereof (or the
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obligations guaranteed thereby) and if the respective Representative for the
Subordinated Guarantor Senior Indebtedness gives written notice of the event of
default to the Trustee (a "Default Notice"), then, unless and until the date, if
any, on which all Subordinated Guarantor Senior Indebtedness to which such event
of default relates is paid in full in cash or cash equivalents or the
Representative for the respective Subordinated Guarantor Senior Indebtedness
gives notice that all events of default have been cured or waived or have ceased
to exist or the Trustee receives written notice from the Representative for the
respective Subordinated Guarantor Senior Indebtedness terminating the Blockage
Period (as defined below), during the 179 days after the delivery of such
Default Notice (the "Blockage Period"), none of the Subordinated Guarantor or
any of its Subsidiaries or any other person on its or their behalf shall (x)
make any payment with respect to any obligations evidenced by the Subordinated
Guarantee or (y) acquire all or any part of the obligations covered by the
Subordinated Guarantee for cash or property or otherwise. Notwithstanding
anything herein to the contrary, in no event will a Blockage Period extend
beyond 179 days from the date of the commencement thereof. Only one such
Blockage Period may be commenced within any 360 consecutive days; PROVIDED,
HOWEVER, that, except to the extent provided in the second succeeding paragraph,
the forgoing provisions shall not restrict the Issuer from making payments of
principal, premium or interest on or with respect to the Notes (including,
without limitation, by redemption, repurchase or other acquisition). No event of
default which existed or was continuing (it being acknowledged that (x) any
action of the Issuer, the Subordinated Guarantor or any of their respective
Subsidiaries occurring subsequent to delivery of a Default Notice that would
give rise to any event of default pursuant to any provision under which an event
of default previously existed (or was continuing at the time of delivery of such
Default Notice) and (y) any breach of a financial covenant for a period ended
after the date of the commencement of a Blockage Period, in each case shall
constitute a new event of default for this purpose) on the date of the
commencement of any Blockage Period with respect to the Subordinated Guarantor
Senior Indebtedness shall be, or be made, the basis for the commencement of a
second Blockage Period by the Representative of the Subordinated Guarantor
Senior Indebtedness whether or not within a period of 360 consecutive days,
unless such event of default shall have been cured or waived for a period of not
less than 90 consecutive days.
By reason of such subordination, in the event of the insolvency of the
Subordinated Guarantor, creditors of the Subordinated Guarantor who are not
holders of Subordinated Guarantor Senior Indebtedness, including the holders of
the Subordinated Guarantee, may recover less, ratably, than holders of
Subordinated Guarantor Senior Indebtedness.
The Indenture also provides that the Noteholders will acknowledge and agree,
on behalf of themselves and all their successors and assigns as Noteholders,
that the claims of the Noteholders against the Subordinated Guarantor, and
against the assets from time to time held by the Subordinated Guarantor
(including, without limitation, all units, leases and proceeds therefrom at any
time transferred to the Subordinated Guarantor), are limited to the claims
expressly provided pursuant to the Subordinated Guarantee. To induce the lenders
pursuant to the Credit Agreement (and pursuant to any Hedging Obligations from
time to time entered into) to make the extensions of credit to the Issuer, the
Noteholders will agree, on their behalf and on behalf of all their successors
and assigns, that in no event (whether pursuant to a proceeding under the
Bankruptcy Code or otherwise), shall they (or any representative on their behalf
including the Trustee) assert that the assets of the Subordinated Guarantor
should be substantively consolidated or otherwise combined with the assets of
the Issuer, Holdings or any of their other Subsidiaries, or otherwise returned
(whether under claims of fraudulent conveyance or otherwise) to any such person.
Furthermore, in the event that pursuant to any proceeding pursuant to the
Bankruptcy Code or otherwise the assets (or any of the assets) of the
Subordinated Guarantor are substantively consolidated or otherwise combined in a
similar fashion with the assets of the Issuer, Holdings or any other of their
Subsidiaries, or otherwise returned to any such person, then, as between the
Noteholders (and their successors and assigns) and the lenders pursuant to the
Credit Agreement (and pursuant to any Hedging Obligations from time to time
entered into); the Noteholders agree that all distributions received by them
(and their successors and assigns) to the extent attributable to the assets, or
representing any
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proceeds from any disposition of assets, which were held by the Subordinated
Guarantor prior to any such consolidation, combination or return of assets shall
be treated by the Noteholders as if received pursuant to the Subordinated
Guarantee and shall be fully subject to the subordination provisions with
respect thereto in the Indenture.
CERTAIN DEFINITIONS
"Additional Assets" means (i) any property or assets (other than
Indebtedness and Capital Stock) in a Permitted Business; (ii) Indebtedness of a
Person engaged in a Permitted Business if such Indebtedness is acquired in
connection with the acquisition of the Permitted Business (other than
Indebtedness Incurred to provide all or a portion of the funds or credit support
utilized to consummate the acquisition); (iii) the Capital Stock of a Person
that becomes a Restricted Subsidiary as a result of the acquisition of such
Capital Stock by the Issuer or another Restricted Subsidiary; or (iv) Capital
Stock constituting a minority interest in any Person that at such time is a
Restricted Subsidiary PROVIDED, HOWEVER, that any such Restricted Subsidiary
described in clauses (iii) or (iv) above is primarily engaged in a Permitted
Business.
"Adjusted Consolidated Assets" means at any time the total amount of assets
of the Issuer and its consolidated Restricted Subsidiaries (less applicable
depreciation, amortization and other valuation reserves), after deducting
therefrom all current liabilities of the Issuer and its consolidated Restricted
Subsidiaries (excluding intercompany items, the current portion of long-term
debt and Indebtedness outstanding under the Credit Agreement), all as set forth
on the consolidated balance sheet of the Issuer and its consolidated Restricted
Subsidiaries as of the end of the most recent fiscal quarter for which financial
statements are available prior to the date of determination.
"Affiliate" means, with respect to any specified Person, any other Person,
directly or indirectly, controlling or controlled, by or under direct or
indirect common control with such specified Person. For the purposes of this
definition, "control" when used with respect to any Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing. For purposes of the provisions described under "--Certain Covenants--
Limitation on Restricted Payments," "--Certain Covenants--Limitation on
Affiliate Transactions" and "--Certain Covenants--Limitations on Sales of Assets
and Subsidiary Stock" only, "Affiliate" shall also mean any beneficial owner of
Capital Stock representing 10% or more of the total voting power of the Voting
Stock (on a fully diluted basis) of the Issuer or of rights or warrants to
purchase such Capital Stock (whether or not currently exercisable) and any
Person who would be an Affiliate of any such beneficial owner pursuant to the
first sentence hereof.
"Asset Disposition" means any sale, lease, transfer or other disposition (or
series of related sales, leases, transfers or other dispositions) by the Issuer
or any Restricted Subsidiary, including any disposition by means of a merger,
consolidation or similar transaction (each referred to for the purposes of this
definition as a "disposition"), of (i) any shares of Capital Stock of a
Restricted Subsidiary (other than directors' qualifying shares or shares
required by applicable law to be held by a Person other than the Issuer or a
Restricted Subsidiary), (ii) all or substantially all the assets of any division
or line of business of the Issuer or any Restricted Subsidiary or (iii) any
other assets of the Issuer or any Restricted Subsidiary outside of the ordinary
course of business of the Issuer or such Restricted Subsidiary (other than, in
the case of (i), (ii) and (iii) above, (v) a disposition by a Restricted
Subsidiary to the Issuer by the Issuer or a Restricted Subsidiary to a Wholly
Owned Subsidiary, (w) for purposes of the covenant described under "-- Certain
Covenants--Limitation on Sales of Assets and Subsidiary Stock" only, a
disposition that constitutes a Restricted Payment permitted by the covenant
described under "--Certain Covenants--Limitation on Restricted Payments", (x) a
disposition of assets with a fair market value of less than $1,000,000, (y) any
Permitted Units Financing and (z) any Scheduled Asset Disposition).
"Attributable Debt" in respect of a Sale/Leaseback Transaction means, as at
the time of determination, the present value (discounted at the interest rate
borne by the Notes, compounded annually) of the
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total obligations of the lessee for rental payments during the remaining term of
the lease included in such Sale/Leaseback Transaction (including any period for
which such lease has been extended).
"Average Life" means, as of the date of determination, with respect to any
Indebtedness or Preferred Stock, the quotient obtained by dividing (i) the sum
of the products of numbers of years from the date of determination to the dates
of each successive scheduled principal payment of such Indebtedness or
redemption or similar payment with respect to such Preferred Stock multiplied by
the amount of such payment by (ii) the sum of all such payments.
"Board of Directors" means the Board of Directors of the Issuer or any
committee thereof duly authorized to act on behalf of such Board.
"Business Day" means each day other than a Saturday, Sunday or legal holiday
on which commercial banks in New York, New York are authorized to close.
"Capital Lease Obligations" means an obligation that is required to be
classified and accounted for as a capital lease for financial reporting purposes
in accordance with GAAP, and the amount of Indebtedness represented by such
obligation shall be the capitalized amount of such obligation determined in
accordance with GAAP; and the Stated Maturity thereof shall be the date of the
last payment of rent or any other amount due under such lease prior to the first
date upon which such lease may be terminated by the lessee without payment of a
penalty.
"Capital Stock" of any Person means any and all shares, interests, rights to
purchase, warrants, options, participations or other equivalents of or interests
in (however designated) equity of such Person, including any Preferred Stock,
but excluding any debt securities convertible into such equity.
"Change of Control" means the occurrence of any of the following events:
(i) prior to the first Public Equity Offering, the Permitted Holders in the
aggregate cease to be the "beneficial owner" (as defined in Rules 13d-3 and
13d-5 under the Exchange Act), directly or indirectly, of a majority in the
aggregate of the total voting power of the Voting Stock of the Issuer, whether
as a result of issuance of securities of the Issuer, any merger, consolidation,
liquidation or dissolution of the Issuer, any direct or indirect transfer of
securities or otherwise (for purposes of this clause (i) and clause (ii) below,
the Permitted Holders shall be deemed to beneficially own any Voting Stock of a
partnership, limited liability company or corporation (the "specified
corporation") held by any other partnership, limited liability company or
corporation (the "parent corporation") so long as the Permitted Holders
beneficially own (as so defined), directly or indirectly, in the aggregate a
majority of the voting power of the Voting Stock of the parent corporation);
(ii) on or after the first Public Equity Offering, any "person" (as such
term is used in Sections 13(d) and 14(d) of the Exchange Act), other than one or
more Permitted Holders, is or becomes the beneficial owner (as defined in clause
(i) above, except that for purposes of this clause (ii) such person shall be
deemed to have "beneficial ownership" of all shares that any such person has the
right to acquire, whether such right is exercisable immediately or only after
the passage of time), directly or indirectly, of more than 35% of the total
voting power of the Voting Stock of the Issuer; PROVIDED, HOWEVER, that the
Permitted Holders beneficially own (as defined in clause (i) above), directly or
indirectly, in the aggregate a lesser percentage of the total voting power of
the Voting Stock of the Issuer 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 (for the purposes of this clause
(ii), such other person shall be deemed to beneficially own any Voting Stock of
a specified corporation held by a parent corporation, if such other person is
the beneficial owner (as defined in this clause (ii)), directly or indirectly,
of more than 35% of the voting power of the Voting Stock of such parent
corporation and the Permitted Holders beneficially own (as defined in clause (i)
above), directly or indirectly, in the aggregate a lesser percentage of the
voting power of the Voting Stock of such parent corporation 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 such parent corporation);
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(iii) during any period of two consecutive years, individuals who at the
beginning of such period constituted the Board of Directors (together with any
new directors whose election by such Board of Directors or whose nomination for
election by the shareholders of the Issuer was approved by a vote of 66 2/3% of
the directors of the Issuer then still in office who were either directors at
the beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
Board of Directors then in office; or
(iv) the merger or consolidation of the Issuer with or into another Person
or the merger or consolidation of another Person with or into the Issuer, or the
sale of all or substantially all the assets of the Issuer to another Person
(other than a Person that is controlled by the Permitted Holders in the
aggregate), and, in the case of any such merger or consolidation, the securities
of the Issuer that are outstanding immediately prior to such transaction and
which represent 100% of the aggregate voting power of the Voting Stock of the
Issuer are changed into or exchanged for cash, securities or property, unless
pursuant to such transaction such securities are changed into or exchanged for,
in addition to any other consideration, securities of the surviving corporation
that represent, immediately after such transaction, at least a majority of the
aggregate voting power of the Voting Stock of the surviving corporation.
"Code" means the Internal Revenue Code of 1986, as amended.
"Consolidated Coverage Ratio" as of any date of determination means the
ratio of (i) the aggregate amount of EBITDA for the period of the most recent
four consecutive fiscal quarters for which financial statements are available
prior to the date of such determination to (ii) Consolidated Interest Expense
for such four fiscal quarters; PROVIDED, HOWEVER, that (1) if the Issuer or any
Restricted Subsidiary has Incurred any Indebtedness since the beginning of such
period that remains outstanding or if the transaction giving rise to the need to
calculate the Consolidated Coverage Ratio is an Incurrence of Indebtedness, or
both, EBITDA and Consolidated Interest Expense for such period shall be
calculated after giving effect on a pro forma basis to such Indebtedness as if
such Indebtedness had been Incurred on the first day of such period and the
discharge of any other Indebtedness repaid, repurchased, defeased or otherwise
discharged with the proceeds of such new Indebtedness as if such discharge had
occurred on the first day of such period (except that, in making such
computation, the amount of Indebtedness under any revolving credit facility
outstanding on the date of such calculation shall be computed based on (A) the
average daily balance of such Indebtedness (and any Indebtedness under a
revolving credit facility replaced by such Indebtedness) during such four fiscal
quarters or such shorter period when such facility and any replaced facility was
outstanding or (B) if such facility was created after the end of such four
fiscal quarters, the average daily balance of such Indebtedness (and any
Indebtedness under a revolving credit facility replaced by such Indebtedness)
during the period from the date of creation of such facility to the date of the
calculation), (2) if the Company or any Restricted Subsidiary has repaid,
repurchased, defeased or otherwise discharged any Indebtedness since the
beginning of such period or if any Indebtedness is to be repaid, repurchased,
defeased or otherwise discharged (in each case other than Indebtedness Incurred
under any revolving credit facility unless such Indebtedness has been
permanently repaid and has not been replaced) on the date of the transaction
giving rise to the need to calculate the Consolidated Coverage Ratio, EBITDA and
Consolidated Interest Expense for such period shall be calculated on a pro forma
basis as if such discharge had occurred on the first day of such period and as
if the Company or such Restricted Subsidiary has not earned the interest income
actually earned during such period in respect of cash or Temporary Cash
Investments used to repay, repurchase, defease or otherwise discharge such
Indebtedness, (3) if since the beginning of such period the Issuer or any
Restricted Subsidiary shall have made any Asset Disposition (other than sales or
lease of Rental Equipment in the ordinary course of the business of the Issuer
and its Restricted Subsidiaries), the EBITDA for such period shall be reduced by
an amount equal to the EBITDA (if positive) directly attributable to the assets
which are the subject of such Asset Disposition for such period, or increased by
an amount equal to the EBITDA (if negative), directly attributable thereto for
such period, and Consolidated Interest Expense for such period shall be reduced
by an amount equal to the Consolidated Interest Expense directly attributable to
any Indebtedness of the Issuer or any Restricted Subsidiary repaid, repurchased,
defeased or otherwise discharged with respect to the Issuer and its
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continuing Restricted Subsidiaries in connection with such Asset Disposition for
such period (or, if the Capital Stock of any Restricted Subsidiary is sold, the
Consolidated Interest Expense for such period directly attributable to the
Indebtedness of such Restricted Subsidiary to the extent the Issuer and its
continuing Restricted Subsidiaries are no longer liable for such Indebtedness
after such sale), (4) if since the beginning of such period the Issuer or any
Restricted Subsidiary (by merger or otherwise) shall have made an Investment in
any Restricted Subsidiary (or any person which becomes a Restricted Subsidiary)
or an acquisition of assets, including any acquisition of assets occurring in
connection with a transaction requiring a calculation to be made hereunder,
which constitutes all or substantially all of an operating unit of a business or
a division or a line of business thereof, EBITDA and Consolidated Interest
Expense for such period shall be calculated after giving pro forma effect
thereto (including the Incurrence of any Indebtedness) as if such Investment or
acquisition occurred on the first day of such period and (5) if since the
beginning of such period any Person (that subsequently became a Restricted
Subsidiary or was merged with or into the Issuer or any Restricted Subsidiary
since the beginning of such period) shall have made any Asset Disposition, any
Investment or acquisition of assets that would have required an adjustment
pursuant to clause (3) or (4) above if made by the Issuer or a Restricted
Subsidiary during such period, EBITDA and Consolidated Interest Expense for such
period shall be calculated after giving pro forma effect thereto as if such
Asset Disposition, Investment or acquisition occurred on the first day of such
period. For purposes of this definition, whenever pro forma effect is to be
given to an acquisition of assets, the amount of income or earnings relating
thereto and the amount of Consolidated Interest Expense associated with any
Indebtedness Incurred in connection therewith, the pro forma calculations shall
be determined in good faith by a responsible financial or accounting Officer of
the Issuer. If any Indebtedness bears a floating rate of interest and is being
given pro forma effect, the interest of such Indebtedness shall be calculated as
if the rate in effect on the date of determination had been the applicable rate
for the entire period (taking into account any Interest Rate Agreement
applicable to such Indebtedness if such Interest Rate Agreement has a remaining
term in excess of 12 months).
"Consolidated Interest Expense" means, for any period, the total interest
expense of the Issuer and its consolidated Restricted Subsidiaries, net of any
interest income of the Issuer and its consolidated Restricted Subsidiaries for
such period, as determined in accordance with GAAP, PLUS, to the extent not
included in such total interest expense, and to the extent incurred by the
Issuer or its Restricted Subsidiaries, without duplication, (i) interest expense
attributable to capital leases and the interest expense attributable to leases
constituting part of a Sale/Leaseback Transaction, (ii) amortization of debt
discount, (iii) capitalized interest, (iv) commissions, discounts and other fees
and charges owed with respect to letters of credit and bankers' acceptance
financing, (v) net costs associated with Hedging Obligations (including
amortization of fees), (vi) Preferred Stock dividends in respect of all
Preferred Stock (other than pay in kind dividends or accretions to liquidation
value of Preferred Stock that is not Disqualified Stock) held by Persons other
than the Issuer or a Wholly Owned Subsidiary, (vii) interest incurred in
connection with Investments in discontinued operations, (viii) interest accruing
on any Indebtedness of any other Person to the extent such Indebtedness is
guaranteed by (or secured by the assets of) the Issuer or any Restricted
Subsidiary, (ix) the cash contributions to any employee stock ownership plan or
similar trust to the extent such contributions are used by such plan or trust to
pay interest or fees to any Person (other than the Issuer) in connection with
Indebtedness Incurred by such plan or trust and (x) interest-equivalent costs
associated with any Permitted Units Financing, whether accounted for as interest
expense or loss on the sale of Units and Related Assets and LESS, to the extent
included in such total interest expense, the amortization during such period of
capitalized financing costs associated with the Recapitalization and financing
thereof.
"Consolidated Net Income" means, for any period, the net income of the
Issuer and its consolidated Subsidiaries; PROVIDED, HOWEVER, that there shall
not be included in such Consolidated Net Income:
(i) any net income of any Person (other than the Issuer) if such Person is
not a Restricted Subsidiary, except that (A) subject to the exclusion contained
in clause (iv) below, the Issuer's equity in the net income of any such Person
for such period shall be included in such Consolidated Net Income up to the
aggregate
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amount of cash actually distributed by such Person during such period to the
Issuer or a Restricted Subsidiary as a dividend or other distribution (subject,
in the case of a dividend or other distribution paid to a Restricted Subsidiary,
to the limitations contained in clause (iii) below) and (B) the Issuer's equity
in a net loss of any such Person for such period shall be included in
determining such Consolidated Net Income;
(ii) any net income (or loss) of any Person acquired by the Issuer or a
Subsidiary in a pooling of interests transaction for any period prior to the
date of such acquisition;
(iii) any net income of any Restricted Subsidiary if such Restricted
Subsidiary is subject to restrictions, directly or indirectly, on the payment of
dividends or the making of distributions by such Restricted Subsidiary, directly
or indirectly, to the Issuer, except that (A) subject to the exclusion contained
in clause (iv) below, the Issuer's equity in the net income of any such
Restricted Subsidiary for such period shall be included in such Consolidated Net
Income up to the aggregate amount of cash that could have been distributed by
such Restricted Subsidiary during such period to the Issuer or another
Restricted Subsidiary as a dividend or other distribution (subject, in the case
of a dividend or other distribution paid to another Restricted Subsidiary, to
the limitation contained in this clause) and (B) the Issuer's equity in a net
loss of any such Restricted Subsidiary for such period shall be included in
determining such Consolidated Net Income;
(iv) any gain (or loss) realized upon the sale or other disposition of any
assets of the Issuer or its consolidated Subsidiaries (including pursuant to any
sale-and-leaseback arrangement) which is not sold or otherwise disposed of in
the ordinary course of business and any gain (or loss) realized upon the sale or
other disposition of any Capital Stock of any Person;
(v) extraordinary gains or losses; and
(vi) the cumulative effect of a change in accounting principles.
Notwithstanding the foregoing, for the purposes of the covenant described
under "--Certain Covenants--Limitation on Restricted Payments" only, there shall
be excluded from Consolidated Net Income any dividends, repayments of loans or
advances or other transfers of assets (including any sale of an Investment) to
the Issuer or a Restricted Subsidiary to the extent such dividends, repayments
or transfers increase the amount of Restricted Payments permitted under such
covenant pursuant to clause (a)(3)(D) thereof.
"Consolidated Net Worth" means the total of the amounts shown on the balance
sheet of the Issuer and its consolidated Subsidiaries, determined on a
consolidated basis in accordance with GAAP, as of the end of the most recent
fiscal quarter of the Issuer for which financial statements are available, as
(i) the par or stated value of all outstanding Capital Stock of the Issuer plus
(ii) paid-in capital or capital surplus relating to such Capital Stock plus
(iii) any retained earnings or earned surplus less (A) any accumulated deficit
and (B) any amounts attributable to Disqualified Stock.
"Credit Agreement" means, collectively, the Credit Agreement dated as of May
22, 1997, among Holdings, the Issuer, the Lenders, BT Commercial Corporation as
agent, and Bankers Trust Company, as Issuing Bank (including any guarantee
agreements and related security documents), in each case as such agreements or
documents may be amended (including any amendment, restatement or restructuring
thereof), supplemented or otherwise modified or replaced from time to time,
including any agreement extending the maturity of, refunding, refinancing,
increasing the amount available under or replacing such agreement or document or
any successor or replacement agreement or document and whether by the same or
any other agent, lender or group of lenders.
"Currency Agreement" means in respect of a Person any foreign exchange
contract, currency swap agreement or other similar agreement to which such
Person is a party or a beneficiary.
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"Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.
"Disqualified Stock" means, with respect to any Person, any Capital Stock
which by its terms (or by the terms of any security into which it is convertible
or for which it is exchangeable) or upon the happening of any event (i) matures
or is mandatorily redeemable pursuant to a sinking fund obligation or otherwise,
(ii) is convertible or exchangeable for Indebtedness or Disqualified Stock or
(iii) is redeemable at the option of the holder thereof, in whole or in part, in
each case on or prior to the 123rd day following the Stated Maturity of the
Notes; PROVIDED, HOWEVER, that any Capital Stock that would not constitute
Disqualified Stock but for provisions thereof giving holders thereof the right
to require such Person to repurchase or redeem such Capital Stock upon the
occurrence of an "asset sale" or "change of control" occurring prior to the
first anniversary of the Stated Maturity of the Notes shall not constitute
Disqualified Stock if the "asset sale" or "change of control" provisions
applicable to such Capital Stock are not more favorable to the holders of such
Capital Stock than the provisions described under "--Certain
Covenants--Limitation on Sales of Assets and Subsidiary Stock" and "--Certain
Covenants--Change of Control."
"EBITDA" for any period means the sum of Consolidated Net Income, plus
Consolidated Interest Expense, plus the following to the extent deducted in
calculating such Consolidated Net Income: (a) all income tax expense of the
Issuer and its consolidated Restricted Subsidiaries, (b) depreciation expense of
the Issuer and its consolidated Restricted Subsidiaries, (c) amortization
expense of the Issuer and its consolidated Restricted Subsidiaries (excluding
amortization expense attributable to a prepaid cash item that was paid in a
prior period), (d) all other non-cash charges of the Issuer and its consolidated
Restricted Subsidiaries (excluding any such non-cash charge to the extent that
it represents an accrual of or reserve for cash expenditures in any future
period), (e) income attributable to discontinued operations and (f) any cash
charges (including from the write-up of assets) or write-offs associated with
the transactions contemplated by the Recapitalization and the financing thereof.
Notwithstanding the foregoing, the provision for taxes based on the income or
profits of, and the depreciation and amortization and non-cash charges of, a
Restricted Subsidiary shall be added to Consolidated Net Income to compute
EBITDA only to the extent (and in the same proportion) that the net income of
such Restricted Subsidiary was included in calculating Consolidated Net Income
and only if a corresponding amount would be permitted at the date of
determination to be dividended to the Issuer by such Restricted Subsidiary
without prior approval (that has not been obtained), pursuant to the terms of
its charter and all agreements, instruments, judgments, decrees, orders,
statutes, rules and governmental regulations applicable to such Restricted
Subsidiary or its stockholders.
"Eligible Accounts Receivable" has the meaning specified in the Credit
Agreement.
"Eligible Rental Equipment" has the meaning specified in the Credit
Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect as of the Issue Date, including those set forth in (i)
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants, (ii) statements and
pronouncements of the Financial Accounting Standards Board, (iii) such other
statements by such other entity as approved by a significant segment of the
accounting profession and (iv) the rules and regulations of the SEC governing
the inclusion of financial statements (including pro forma financial statements)
in periodic reports required to be filed pursuant to Section 13 of the Exchange
Act, including opinions and pronouncements in staff accounting bulletins and
similar written statements from the accounting staff of the SEC.
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"guarantee" means any obligation, contingent or otherwise, of any Person,
directly or indirectly, guaranteeing any Indebtedness or other obligation of any
Person and any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness or other obligation of such Person (whether
arising by virtue of partnership arrangements, or by agreements to keep-well, to
take-or-pay or to maintain financial statement conditions or otherwise) or (ii)
entered into for the purpose of assuring in any other manner the obligee of such
Indebtedness or other obligation of the payment thereof or to protect such
obligee against loss in respect thereof (in whole or in part); PROVIDED,
HOWEVER, that the term "guarantee" shall not include endorsements for collection
or deposit in the ordinary course of business. The term "guarantee" used as a
verb has a corresponding meaning.
"Guarantee" means the guarantee of the Notes by the Guarantors.
"Guarantor" means, individually and collectively, (i) Mobile Field Office
Company, (ii) each Significant Subsidiary, whether formed or acquired after the
Issue Date, and (iii) any Subsidiary, whether formed or acquired after the Issue
Date, that guarantees any Indebtedness outstanding under the Credit Agreement;
PROVIDED, HOWEVER, that any Subsidiary acquired after the Issue Date which is
prohibited from entering into a Guarantee pursuant to restrictions contained in
any debt instrument in existence at the time such Subsidiary was so acquired and
not entered into in anticipation or contemplation of such acquisition shall not
be required to become a Guarantor so long as any such restriction is in
existence and to the extent of any such restriction; PROVIDED, FURTHER, that if
any Guarantor is released from its guarantee of the outstanding Indebtedness of
the Issuer under the Credit Agreement and the pledge by it, directly or
indirectly, of any of its assets as security for such Indebtedness at a time
when no Default or Event of Default has occurred and is continuing, such
Guarantor shall be automatically released from its obligations as a Guarantor
and, from and after such date, such Guarantor shall cease to constitute a
Guarantor; AND PROVIDED, FURTHER, that the Subordinated Guarantor shall not be a
Guarantor except to the extent permitted below. Notwithstanding the foregoing,
any Subsidiary that is a Securitization Subsidiary or is designated an
Unrestricted Subsidiary and that, in each case, does not guarantee or so pledge
any of its assets as security for any Indebtedness under the Credit Agreement
shall not be required to become a Guarantor. If permitted by the holders of the
then outstanding Subordinated Guarantor Senior Indebtedness, the Subordinated
Guarantor may notify the Trustee that it desires to become a Guarantor. In such
case, the subordination provisions with respect to the Subordinated Guarantee
shall cease to apply and the guarantee of the Subordinated Guarantee shall be
amended to have terms substantially equivalent to those of a Guarantee.
"Hedging Obligations" of any Person means the obligations of such Person
pursuant to any Interest Rate Agreement or Currency Agreement.
"Holder" or "Noteholder" means the Person in whose name a Note is registered
on the Registrar's books.
"Holdings" means Scotsman Holdings, Inc. and its successors.
"Incur" means issue, assume, guarantee, incur or otherwise become liable for
Indebtedness or Capital Stock; PROVIDED, HOWEVER, that any Indebtedness or
Capital Stock of a Person existing at the time such Person becomes a Subsidiary
(whether by merger, consolidation, acquisition or otherwise) shall be deemed to
be Incurred by such Subsidiary at the time it becomes a Subsidiary. The term
"Incurrence" when used as a noun shall have a correlative meaning. The accretion
of principal of a non-interest bearing or other discount security shall not be
deemed the Incurrence of Indebtedness.
"Indebtedness" means, with respect to any Person on any date of
determination (without duplication),
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(i) the principal of and premium (if any) in respect of (A) indebtedness of
such Person for money borrowed and (B) indebtedness evidenced by notes,
debentures, bonds or other similar instruments for the payment of which such
Person is responsible or liable;
(ii) all Capital Lease Obligations of such Person and all Attributable Debt
in respect of Sale/ Leaseback Transactions entered into by such Person;
(iii) all obligations of such Person issued or assumed as the deferred
purchase price of property, all conditional sale obligations of such Person and
all obligations of such Person under any title retention agreement (but
excluding trade accounts payable arising in the ordinary course of business);
(iv) all obligations of such Person for the reimbursement of any obligor on
any letter of credit, banker's acceptance or similar credit transaction (other
than obligations with respect to letters of credit securing obligations (other
than obligations described in clauses (i) through (iii) above) entered into in
the ordinary course of business of such Person to the extent such letters of
credit are not drawn upon or, if and to the extent drawn upon, such drawing is
reimbursed no later than the 30th day following payment on the letter of
credit);
(v) the amount of all obligations of such Person with respect to the
redemption, repayment or other repurchase of any Disqualified Stock or, with
respect to any Subsidiary of such Person, the liquidation preference with
respect to, any Preferred Stock (but excluding, in each case, any accrued
dividends);
(vi) all obligations of the type referred to in clauses (i) through (v) of
other Persons and all dividends of other Persons for the payment of which, in
either case, such Person is responsible or liable, directly or indirectly, as
obligor, guarantor or otherwise, including by means of any guarantee;
(vii) all obligations of the type referred to in clauses (i) through (vi) of
other Persons secured by any Lien on any property or asset of such Person
(whether or not such obligation is assumed by such Person), the amount of such
obligation being deemed to be the lesser of the value of such property or assets
or the amount of the obligation so secured; and
(viii) to the extent not otherwise included in this definition, Hedging
Obligations of such Person.
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 the maximum liability, upon the occurrence of the contingency giving
rise to the obligation, of any contingent obligations at such date; PROVIDED,
HOWEVER, that the amount outstanding at any time of any Indebtedness Incurred
with original issue discount is the face 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.
"Interest Rate Agreement" means any interest rate swap agreement, interest
rate cap agreement or other financial agreement or arrangement designed to
protect the Issuer or any Restricted Subsidiary against fluctuations in interest
rates.
"Investment" in any Person means any direct or indirect advance (other than
advances to customers in the ordinary course of business that are recorded as
accounts receivable on the balance sheet of the lender), loan or other
extensions of credit (including by way of guarantee or similar arrangement) or
capital contribution to (by means of any transfer of cash or other property to
others or any payment for property or services for the account or use of
others), or any purchase or acquisition of Capital Stock, Indebtedness or other
similar instruments issued by such Person. For purposes of the definition of
"Unrestricted Subsidiary," the definition of "Restricted Payment" and the
covenant described under "-- Certain Covenants--Limitation on Restricted
Payments," (i) "Investment" shall include the portion (proportionate to the
Issuer's equity interest in such Subsidiary) of the fair market value of the net
assets of any Subsidiary of the Issuer at the time that such Subsidiary is
designated an Unrestricted Subsidiary;
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PROVIDED, HOWEVER, that upon a redesignation of such Subsidiary as a Restricted
Subsidiary, the Issuer shall be deemed to continue to have a permanent
"Investment" in an Unrestricted Subsidiary equal to an amount (if positive)
equal to (x) the Issuer's "Investment" in such Subsidiary at the time of such
redesignation less (y) the portion (proportionate to the Issuer's equity
interest in such Subsidiary) of the fair market value of the net assets of such
Subsidiary at the time of such redesignation; and (ii) any property transferred
to or from an Unrestricted Subsidiary shall be valued at its fair market value
at the time of such transfer, in each case as determined in good faith by the
Board of Directors.
"Issue Date" means the date on which the Notes are originally issued.
"Issuer" means Williams Scotsman, Inc. and its successors.
"Lenders" has the meaning specified in the Credit Agreement.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including any conditional sale or other title retention
agreement or lease in the nature thereof).
"Net Available Cash" from an Asset Disposition means cash payments received
therefrom (including any cash payments received by way of deferred payment of
principal pursuant to a note or installment receivable or otherwise and proceeds
from the sale or other disposition of any securities received as consideration,
but only as and when received, but excluding any other consideration received in
the form of assumption by the acquiring Person of Indebtedness or other
obligations relating to such properties or assets or received in any other
noncash form) in each case net of (i) all legal, title and recording tax
expenses, commissions and other fees and expenses incurred (including, without
limitation, all broker's and finder's fees and expenses, all investment banking
fees and expenses, employee severance and termination costs, and trade payable
and similar liabilities solely related to the assets sold or otherwise disposed
of and required to be paid by the seller as a result thereof), and all Federal,
state, provincial, foreign and local taxes required to be paid or accrued as a
liability under GAAP, as a consequence of such Asset Disposition, (ii) all
relocation expenses relating to any Rental Equipment incurred as a result
thereof, (iii) all payments made on any Indebtedness which is secured by any
assets subject to such Asset Disposition, in accordance with the terms of any
Lien upon or other security agreement of any kind with respect to such assets,
or which must by its terms, or in order to obtain a necessary consent to such
Asset Disposition, or by applicable law be, repaid out of the proceeds from such
Asset Disposition, (iv) all distributions and other payments required to be made
to minority interest holders in Subsidiaries or joint ventures as a result of
such Asset Disposition and (v) the deduction of appropriate amounts provided by
the seller as a reserve, in accordance with GAAP, against any liabilities
associated with the property or other assets disposed in such Asset Disposition
and retained by the Issuer or any Restricted Subsidiary after such Asset
Disposition.
"Net Cash Proceeds," with respect to any issuance or sale of Capital Stock,
means the cash proceeds of such issuance or sale net of attorneys' fees,
accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees actually incurred in
connection with such issuance or sale and net of taxes paid or payable as a
result thereof.
"Permitted Business" means (i) all or any part of the business of selling
and leasing mobile offices and modular structures or any other equipment sold or
leased to a similar customer base, (ii) any other business conducted by the
Company or its Restricted Subsidiaries on the Issue Date and (iii) any business
or services related, ancillary or complementary to such businesses.
"Permitted Holders" means (i) The Cypress Group L.L.C., Cypress Merchant
Banking Partners L.P., Cypress Offshore Partners L.P., Keystone, Inc., FW
Strategic Partners, L.P., Scotsman Partners, L.P. and any Person who on the
Issue Date is an Affiliate of any of the foregoing, (ii) any Person who is a
member of the senior management of the Issuer or Holdings and a stockholder of
Holdings on the Issue Date and
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(iii) an affiliate of BT Securities Corporation, Odyssey and any Person who is
an Affiliate on the Issue Date of either of them.
"Permitted Investment" means an Investment by the Issuer or any Restricted
Subsidiary in (i) a Restricted Subsidiary or a Person that will, upon the making
of such Investment, become a Restricted Subsidiary; (ii) another Person if as a
result of such Investment such other Person is merged or consolidated with or
into, or transfers or conveys all or substantially all its assets to, the Issuer
or a Restricted Subsidiary; PROVIDED, HOWEVER, that such Person's primary
business is a Permitted Business; (iii) Temporary Cash Investments; (iv)
Investments existing on the Issue Date; (v) receivables owing to the Issuer or
any Restricted Subsidiary if created or acquired in the ordinary course of
business and payable or dischargeable in accordance with customary trade terms;
PROVIDED, HOWEVER, that such trade terms may include such concessionary trade
terms as the Issuer or any such Restricted Subsidiary deems reasonable under the
circumstances; (vi) payroll, travel and similar advances to cover matters that
are expected at the time of such advances ultimately to be treated as expenses
for accounting purposes and that are made in the ordinary course of business;
(vii) loans or advances to employees made in the ordinary course of business
consistent with past practices of the Issuer or such Restricted Subsidiary;
(viii) stock, obligations or securities received in settlement of debts created
in the ordinary course of business and owing to the Issuer or any Restricted
Subsidiary or in satisfaction of judgments; (ix) Investments made in connection
with any Asset Disposition or other sale, lease, transfer or other disposition
permitted under the Indenture; (x) Investments made in Holdings by the Issuer,
the proceeds of which enable Holdings to fund the transactions contemplated by
the Recapitalization (including the payment of fees and expenses), to pay
interest and principal on the Promissory Notes and to pay interest on and to
repurchase, redeem, defease or pay on maturity any Holdings Notes (including any
accrued interest, principal and premium, if any, thereon) (to the extent not
repurchased as part of the Recapitalization); and (xi) additional Investments in
an aggregate amount which, together with all other Investments made pursuant to
this clause that are then outstanding, does not exceed $20.0 million.
"Permitted Liens" means (a) Liens of the Issuer and its Restricted
Subsidiaries securing Indebtedness of the Issuer or any of its Restricted
Subsidiaries Incurred under the Credit Agreement to the extent permitted to be
Incurred under clause (b)(1) or (b)(14) of the description of the "Limitation on
Indebtedness" covenant below; (b) Liens in favor of the Issuer or its
Wholly-Owned Restricted Subsidiaries; (c) Liens on property of a person existing
at the time such person becomes a Restricted Subsidiary of the Issuer or is
merged into or consolidated with the Issuer or any Restricted Subsidiary of the
Issuer; PROVIDED that such Liens were not incurred in connection with, or in
contemplation of, such merger or consolidation and such Liens do not extend to
or cover any property other than such property, improvements thereon and any
proceeds therefrom; (d) Liens of the Issuer securing Indebtedness of the Issuer
incurred under clause (b)(2) or (b)(8) of the description of the "Limitation on
Indebtedness" covenant below; (e) Liens of the Issuer and its Restricted
Subsidiaries securing Indebtedness of the Issuer or any of its Restricted
Subsidiaries (including under a Sale/Leaseback Transaction) permitted to be
Incurred under clause (b)(9), (b)(11) or (b)(12) of the description of the
"Limitation on Indebtedness" covenant below so long as the Capital Stock,
property (real or personal) or equipment to which such Lien attaches solely
consists of the Capital Stock, property or equipment which is the subject of
such acquisition, purchase, lease, improvement, Sale/Leaseback Transaction and
additions and improvements thereto (and the proceeds therefrom); (f) Liens on
property existing at the time of acquisition thereof by the Issuer or any
Restricted Subsidiary of the Issuer; PROVIDED that such Liens were not incurred
in connection with, or in contemplation of, such acquisition and such Liens do
not extend to or cover any property other than such property, additions and
improvements thereon and any proceeds therefrom; (g) Liens incurred or deposits
made to secure the performance of tenders, bids, leases, statutory obligations,
surety or appeal bonds, government contracts, performance and return of money
bonds or other obligations of a like nature incurred in the ordinary course of
business; (h) Liens existing on the Issue Date (including, without limitation,
Liens securing the Senior Secured Notes) and any additional Liens created under
the terms of the agreements relating to such Liens existing on the Issue Date;
(i) Liens for taxes, assessments or
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governmental charges or claims that are not yet delinquent or that are being
contested in good faith by appropriate proceedings; PROVIDED that any reserve or
other appropriate provision as shall be required in conformity with GAAP shall
have been made therefor; (j) Liens incurred in the ordinary course of business
of the Issuer or any Restricted Subsidiary with respect to obligations that do
not exceed $20.0 million in the aggregate at any one time outstanding and that
(1) are not incurred in connection with or in contemplation of the borrowing of
money or the obtaining of advances or credit (other than trade credit in the
ordinary course of business) and (2) do not in the aggregate materially detract
from the value of the property or materially impair the use thereof in the
operation of the business by the Issuer or such Restricted Subsidiary; (k)
statutory Liens of landlords and warehousemen's, carrier's, mechanics',
suppliers', materialmen's, repairmen's or other like Liens (including
contractual landlords' liens) arising in the ordinary course of business of the
Issuer and its Restricted Subsidiaries; (l) Liens incurred or deposits made in
the ordinary course of business of the Issuer and its Restricted Subsidiaries in
connection with workers' compensation, unemployment insurance and other types of
social security; (m) easements, rights of way, restrictions, minor defects or
irregularities in title and other similar charges or encumbrances not
interfering in any material respect with the business of the Issuer or any of
its Restricted Subsidiaries; (n) Liens securing reimbursement obligations with
respect to letters of credit permitted under the covenant entitled "Limitation
on Indebtedness" which encumber only cash and marketable securities and
documents and other property relating to such letters of credit and the products
and proceeds thereof; (o) judgment and attachment Liens not giving rise to an
Event of Default; (p) any interest or title of a lessor in the property subject
to any Capital Lease Obligation permitted under the covenant entitled
"Limitation on Indebtedness"; (q) Liens encumbering the residual interest of the
Issuer or any of its Restricted Subsidiaries under any lease of mobile office
units, modular structures or similar equipment to third parties (i) that is
accounted for as a sale of such units, structures or equipment and (ii) the
interest in which lease is sold to a third party financing source on a
non-recourse basis; (r) leases or subleases of mobile office units, modular
structures or similar equipment granted to others in the ordinary course of
business and consistent with the past practice of the Issuer and its Restricted
Subsidiaries and any other lease or sublease not interfering in any material
respect with the business of the Issuer and its Restricted Subsidiaries; (s)
Liens on cash and cash equivalents posted as margin pursuant to any Hedging
Obligations permitted under the covenant entitled "Limitation on Indebtedness";
(t) Liens securing Refinancing Indebtedness to the extent such Liens do not
extend to or cover any property of the Issuer not previously subjected to Liens
relating to the Indebtedness being refinanced; (u) Liens to secure Indebtedness
incurred in a developmental financing provided by a governmental entity which is
on terms more favorable than those available (at the time of such financing)
from third party sources; PROVIDED that such Liens do not cover any property
other than the property subject to such financing, any additions and
improvements thereon and the proceeds therefrom; (v) Liens on pledges of the
capital stock of any Unrestricted Subsidiary securing any Indebtedness of such
Unrestricted Subsidiary; or (w) Liens on Units and Related Assets securing
Indebtedness or otherwise permitted to be incurred in each case, with a
Permitted Units Financing.
"Permitted Secured Indebtedness" means Indebtedness of the Issuer or any
Restricted Subsidiary permitted to be incurred or outstanding under the
Indenture which is secured by a Permitted Lien.
"Permitted Units Financing" means a transaction or series of transactions
(including amendments, supplements, extensions, renewals, replacements,
refinancings or modifications thereof) pursuant to which a Securitization
Subsidiary purchases Units and Related Assets from the Issuer or any Restricted
Subsidiary and finances such Units and Related Assets through the issuance of
indebtedness or equity interests or through the sale of the Units and Related
Assets or a fractional undivided interest in the Units and Related Assets;
PROVIDED that (i) the Board of Directors shall have determined in good faith
that such Permitted Units Financing is economically fair and reasonable to the
Issuer and the Securitization Subsidiary; (ii) all sales of Units and Related
Assets to or by the Securitization Subsidiary are made at fair market value (as
determined in good faith by the Board of Directors of the Issuer); (iii) the
financing terms, covenants, termination events and other provisions thereof
shall be market terms (as determined in
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good faith by the Board of Directors of the Issuer); (iv) no portion of the
Indebtedness of a Securitization Subsidiary is guaranteed by or is recourse to
the Issuer or any Restricted Subsidiary (other than (i) recourse of customary
representations, warranties, covenants and indemnities relating solely to title,
use or condition of the Units and Related Assets subject thereto and the Capital
Stock of the Securitization Subsidiary and (ii) as permitted under clause
(b)(10)(B) of the description of the "Limitation on Indebtedness" covenant
below) and (v) neither the Issuer nor any Restricted Subsidiary has any
obligation to maintain or preserve the Securitization Subsidiary's financial
condition.
"Person" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization, government or any agency or political subdivision thereof or any
other entity.
"Preferred Stock," as applied to the Capital Stock of any corporation, means
Capital Stock of any class or classes (however designated) which is preferred as
to the payment of dividends, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such corporation, over
shares of Capital Stock of any other class of such corporation.
"principal" of a Note means the principal of the Note plus the premium, if
any, payable on the Note which is due or overdue or is to become due at the
relevant time.
"Public Equity Offering" means an underwritten primary public offering of
common stock or common equity of the Issuer, Holdings or any other Person that
directly or indirectly owns 100% of the common stock of the Issuer pursuant to
an effective registration statement under the Securities Act.
"Recapitalization Agreement" means the Recapitalization Agreement dated as
of April 11, 1997 among Holdings, Cypress Merchant Banking Partners L.P.,
Cypress Offshore Partners L.P., Keystone, Inc., FW Strategic Partners, L.P.,
Odyssey Partners, L.P. and certain other stockholders of Holdings, as the same
may from time to time be amended, modified or supplemented.
"Refinance" means, in respect of any Indebtedness, to refinance, extend,
renew, refund, repay, prepay, redeem, defease or retire, or to issue other
Indebtedness in exchange or replacement for, such indebtedness. "Refinanced" and
"Refinancing" shall have correlative meanings.
"Refinancing Indebtedness" means Indebtedness that Refinances any
Indebtedness of the Issuer or any Restricted Subsidiary existing on the Issue
Date or Incurred in compliance with the Indenture, including Indebtedness that
Refinances Refinancing Indebtedness; PROVIDED, HOWEVER, that (i) such
Refinancing Indebtedness has a Stated Maturity no earlier than the Stated
Maturity of the Indebtedness being Refinanced, (ii) such Refinancing
Indebtedness has an Average Life at the time such Refinancing Indebtedness is
Incurred that is equal to or greater than the Average Life of the Indebtedness
being Refinanced and (iii) such Refinancing Indebtedness has an aggregate
principal amount (or if Incurred with original issue discount, an aggregate
issue price) that is equal to or less than the aggregate principal amount (or if
Incurred with original issue discount, the aggregate accreted value) then
outstanding or committed (plus fees and expenses, including any premium and
defeasance costs) under the Indebtedness being Refinanced; PROVIDED FURTHER,
HOWEVER, that Refinancing Indebtedness shall not include (x) Indebtedness of a
Subsidiary that Refinances Indebtedness of the Issuer or (y) Indebtedness of the
Issuer or a Restricted Subsidiary that Refinances Indebtedness of an
Unrestricted Subsidiary.
"Rental Equipment" means all mobile office units or other equipment held for
rental (or at the time being rented) or sale by the Issuer and its Restricted
Subsidiaries in the ordinary course of business.
"Representative" means, for any issue of Subordinated Guarantor Senior
Indebtedness, the agent, trustee or similar representative for the holders of
the respective issue of such Indebtedness or, in the absence of any such
representative, the holders of a majority of the outstanding amount of such
Subordinated Guarantor Senior Indebtedness.
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"Restricted Payment" with respect to any Person means (i) the declaration or
payment of any dividends or any other distributions of any sort in respect of
its Capital Stock (including any such payment in connection with any merger or
consolidation involving such Person) or similar payment to the direct or
indirect holders of its Capital Stock (other than dividends or distributions
payable solely in its Capital Stock (other than Disqualified Stock) and
dividends or distributions payable solely to the Issuer or a Restricted
Subsidiary, and other than pro rata dividends or other distributions made by a
Subsidiary that is not a Wholly Owned Subsidiary to minority stockholders (or
owners of an equivalent interest in the case of a Subsidiary that is an entity
other than a corporation)), (ii) the purchase, redemption or other acquisition
or retirement for value of any Capital Stock of the Issuer or Holdings held by
any Person or of any Capital Stock of a Restricted Subsidiary held by any
Affiliate of the Issuer (other than a Restricted Subsidiary), including the
exercise of any option to exchange any Capital Stock (other than into Capital
Stock of the Issuer that is not Disqualified Stock), (iii) the purchase,
repurchase, redemption, defeasance or other acquisition or retirement for value,
prior to scheduled maturity, scheduled repayment or scheduled sinking fund
payment of any Subordinated Indebtedness (other than the purchase, repurchase or
other acquisition of Subordinated Indebtedness purchased in anticipation of
satisfying a sinking fund obligation, principal installment or final maturity,
in each case due within one year of the date of acquisition) or (iv) the making
of any Investment (other than a Permitted Investment) in any Person.
"Restricted Subsidiary" means any Subsidiary of the Issuer that is not an
Unrestricted Subsidiary.
"Sale/Leaseback Transaction" means an arrangement relating to property now
owned or hereafter acquired whereby the Issuer or a Restricted Subsidiary
transfers such property to a Person and the Issuer or a Restricted Subsidiary
leases it from such Person.
"Scheduled Asset Dispositions" means an Asset Disposition of any of the real
property and any equipment located at sites in Berlin, N.J., North East,
Maryland and Lawrenceville, Georgia on the Issue Date.
"Scotsman" means the Issuer.
"SEC" means the Securities and Exchange Commission.
"Secured Indebtedness" means any Indebtedness of the Issuer or a Restricted
Subsidiary secured by a Lien.
"Securitization Subsidiary" means a Subsidiary (all the Voting Stock (other
than directors' qualifying shares) of which is owned by the Issuer or one or
more Wholly Owned Subsidiaries) which is established for the limited purpose of
acquiring and financing Units and Related Assets and engaging in activities
ancillary thereto; provided, however, that the Subordinated Guarantor shall not
be a Securitization Subsidiary.
"Significant Subsidiary" means any Restricted Subsidiary that would be a
"Significant Subsidiary" of the Issuer within the meaning of Rule 1-02 under
Regulation S-X promulgated by the SEC.
"Subordinated Guarantor Senior Indebtedness" means (i) all Indebtedness of
the Subordinated Guarantor Incurred pursuant to the Credit Agreement (whether
Incurred pursuant to clause (b) (1) or (b) (14) or Incurred pursuant to clause
(b) (7) in respect of Indebtedness Incurred pursuant to clause (b) (1) or (b)
(14) as described below under "--Certain Covenants--Limitation on
Indebtedness"), and all Indebtedness under any guarantee by the Subordinated
Guarantor of Indebtedness described above incurred by the Issuer or any
Guarantor, and all expenses, fees, reimbursements, indemnities, unpaid drawings,
interest (including interest at the contract rate accruing on or after the
filing of any petition in bankruptcy or reorganization relating to the Issuer or
the Subordinated Guarantor whether or not a claim for post-filing interest is
allowed in such proceeding) and other amounts owing in respect thereof and (ii)
all Indebtedness of the Subordinated Guarantor incurred pursuant to clause
(b)(2) or (b)(8) or incurred
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pursuant to clause (b)(7) in respect of Indebtedness incurred pursuant to clause
(b)(2) or (b)(8) as described below under "--Certain Covenants-- Limitation on
Indebtedness", and all Indebtedness under any guarantee thereof by the
Subordinated Guarantor, and all expenses, fees, reimbursements, indemnities and
other amounts owing with respect thereto; provided, that Subordinated Guarantor
Senior Indebtedness will not be deemed to include (a) any Indebtedness,
guarantee or obligation of the Subordinated Guarantor which is expressly
subordinate or junior by its terms in any respect to any other Indebtedness,
guarantee or obligations of the Subordinated Guarantor or (b) that portion of
any Indebtedness incurred in violation of the "Limitation of Indebtedness"
covenant; provided, further, that clause (b) of the immediately preceding
proviso shall not apply to any Indebtedness which the respective lenders
believed, at the time of the extension thereof, was permitted to be incurred in
accordance with the "Limitation of Indebtedness" covenant so long as the Issuer
or its respective Subsidiary which was the direct obligor thereon represented,
at the time of such extension of credit, that such extension did not violate the
provisions of the Indenture.
"Stated Maturity" means, with respect to any security, the date specified in
such security as the fixed date on which the final payment of principal of such
security is due and payable, including pursuant to any mandatory redemption
provision (but excluding any provision providing for the repurchase of such
security at the option of the holder thereof upon the happening of any
contingency unless such contingency has occurred).
"Subordinated Guarantee" means the subordinated guarantee of the Notes by
the Subordinated Guarantor.
"Subordinated Guarantor" means Willscot Equipment, LLC.
"Subordinated Indebtedness" means any Indebtedness of the Issuer or any
Guarantor (whether outstanding on the Issue Date or thereafter Incurred), as the
case may be, which is subordinate or junior in right of payment to the Notes or
the Guarantor's Guarantee, as the case may be, pursuant to a written agreement
to that effect.
"Subsidiary" means, in respect of any Person, any corporation, association,
partnership or other business entity of which more than 50% of the total voting
power of shares of Capital Stock or other interests (including partnership
interests) entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers or trustees thereof is at the time
owned or controlled, directly or indirectly, by (i) such Person, (ii) such
Person and one or more Subsidiaries of such Person or (iii) one or more
Subsidiaries of such Person.
"Tax Sharing Agreement" means any tax sharing agreement between the Issuer
and Holdings or any other Person with which the Issuer is required to, or is
permitted to, file a consolidated tax return or with which the Issuer is or
could be part of a consolidated group for tax purposes.
"Temporary Cash Investments" means any of the following:
(i) any investment in direct obligations of the United States of America
or any agency thereof or obligations guaranteed by the United States of
America or any agency thereof,
(ii) investments in time deposit accounts, certificates of deposit and
money market deposits maturing within one year of the date of acquisition
thereof issued by a bank or trust company which is organized under the laws
of the United States of America, any state thereof or any foreign country
recognized by the United States, and which bank or trust company has
capital, surplus and undivided profits aggregating in excess of $50,000,000
(or the foreign currency equivalent thereof) and has outstanding debt which
is rated "A" (or such similar equivalent rating) or higher by at least one
nationally recognized statistical rating organization (as defined in Rule
436 under the Securities Act) or any money-market fund sponsored by a
registered broker-dealer or mutual fund distributor,
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(iii) repurchase obligations with a term of not more than 30 days for
underlying securities of the types described in clause (i) above entered
into with a bank meeting the qualifications described in clause (ii) above,
(iv) investments in commercial paper, maturing not more than one year
after the date of acquisition, issued by a corporation (other than an
Affiliate of the Issuer) organized and in existence under the laws of the
United States of America or any foreign country recognized by the United
States of America with a rating at the time as of which any investment
therein is made of "P-1" (or higher) according to Moody's Investors Service,
Inc. or "A-1" (or higher) according to Standard and Poor's Ratings Group,
and
(v) investments in securities with maturities of one year or less from
the date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States of America, or by any
political subdivision or taxing authority thereof, and rated at least "A" by
Standard & Poor's Ratings Group or "A" by Moody's Investors Service, Inc.
"Units and Related Assets" means mobile office units, modular structures or
other equipment leased or sold to a similar customer base, leases, general
intangibles and other similar assets, in each case relating to such mobile
office units, modular structures or other equipment, related contractual rights,
guarantees, insurance proceeds, collections, other related assets and proceeds
of all of the foregoing.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Issuer that at the
time of determination shall be designated an Unrestricted Subsidiary by the
Board of Directors in the manner provided below and (ii) any Subsidiary of an
Unrestricted Subsidiary; provided, however, that the Subordinated Guarantor
shall not be, or be designated as, an Unrestricted Subsidiary. The Board of
Directors may designate any Subsidiary of the Issuer (including any newly
acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary unless
such Subsidiary or any of its Subsidiaries owns any Capital Stock or
Indebtedness of, or holds any Lien on any property of, the Issuer or any other
Subsidiary of the Issuer that is not a Subsidiary of the Subsidiary to be so
designated; PROVIDED, HOWEVER, that either (A) the Subsidiary to be so
designated has total assets of $1,000 or less or (B) if such Subsidiary has
assets greater than $1,000, such designation would be permitted under the
covenant described under "--Certain Covenants--Limitation on Restricted
Payments." The Board of Directors may designate any Unrestricted Subsidiary
(other than a Guarantor) to be a Restricted Subsidiary; PROVIDED, HOWEVER, that
immediately after giving effect to such designation (x) the Issuer could Incur
$1.00 of additional Indebtedness under paragraph (a) of the covenant described
under "--Certain Covenants--Limitation on Indebtedness" and (y) no Default shall
have occurred and be continuing. Any such designation by the Board of Directors
shall be by the Issuer to the Trustee by promptly filing with the Trustee a copy
of the board resolution giving effect to such designation and an Officers'
Certificate certifying that such designation complied with the foregoing
provisions.
"U.S. Government Obligations" means direct obligations (or certificates
representing an ownership interest in such obligations) of the United States of
America (including any agency or instrumentality thereof) for the payment of
which the full faith and credit of the United States of America is pledged and
which are not callable at the Issuer's option.
"Voting Stock" of a Person means all classes of Capital Stock or other
interests (including partnership interests) of such Person then outstanding and
normally entitled (without regard to the occurrence of any contingency) to vote
in the election of directors, managers or trustees thereof.
"Wholly Owned Subsidiary" means a Restricted Subsidiary all the Capital
Stock of which (other than directors' qualifying shares) is owned by the Issuer
or one or more Wholly Owned Subsidiaries.
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CERTAIN COVENANTS
The Indenture contains covenants including, among others, the following:
LIMITATION ON INDEBTEDNESS. (a) The Issuer shall not, and shall not permit
its Restricted Subsidiaries to, Incur, directly or indirectly, any Indebtedness;
PROVIDED, HOWEVER, that the Issuer may Incur Indebtedness if, on the date of
such Incurrence and after giving effect thereto, the Consolidated Coverage Ratio
exceeds 2.0 to 1.0.
(b) Notwithstanding the foregoing paragraph (a), the Issuer and its
Restricted Subsidiaries may Incur any or all of the following Indebtedness:
(1) Indebtedness of the Issuer Incurred pursuant to the Credit
Agreement; PROVIDED, HOWEVER, that, after giving effect to any such
Incurrence, the aggregate principal amount of such Indebtedness then
outstanding does not exceed the greater of $300 million or the sum of (i)
75% of the net book value of Eligible Rental Equipment of the Issuer and its
Restricted Subsidiaries and (ii) 85% of the book value of the Eligible
Accounts Receivable of the Issuer and its Restricted Subsidiaries (less (i)
the amount of net proceeds which have been received in connection with a
Permitted Units Financing permitted under clause (b)(13)(i) of this covenant
(provided that such reduction shall apply only to the extent of any
outstanding balance on such financing and for so long as such Permitted
Units Financing is in effect) and (ii) the amount of any outstanding
Attributable Debt incurred under clause (b)(12) of this covenant);
(2) Indebtedness of the Issuer Incurred pursuant to an Interest Rate
Agreement or Currency Agreement entered into with any of the Lenders
directly related to (as determined in good faith by the Issuer) Indebtedness
Incurred pursuant to the Credit Agreement;
(3) Indebtedness owed to and held by the Issuer or a Wholly Owned
Subsidiary; PROVIDED, HOWEVER, that any subsequent issuance or transfer of
any Capital Stock which results in any such Wholly Owned Subsidiary ceasing
to be a Wholly Owned Subsidiary, or any subsequent transfer of such
Indebtedness (other than to the Issuer or another Wholly Owned Subsidiary)
shall be deemed, in each case, to constitute the Incurrence of such
Indebtedness by the issuer thereof;
(4) the Notes and the Exchange Notes and the Guarantees thereof;
(5) Indebtedness outstanding on the Issue Date (other than Indebtedness
described in clause (b)(1), (2), (3) and (4) of this covenant);
(6) Indebtedness or Preferred Stock of a Restricted Subsidiary Incurred
and outstanding on or prior to the date on which such Restricted Subsidiary
was acquired by the Issuer (other than Indebtedness or Preferred Stock
Incurred in connection with, or to provide all or any portion of the funds
or credit support utilized to consummate, the transaction or series of
related transactions pursuant to which such Restricted Subsidiary became a
Restricted Subsidiary or was acquired by the Issuer); PROVIDED, HOWEVER,
that on the date of such acquisition and after giving effect thereto, the
Issuer would have been able to Incur at least $1.00 of additional
Indebtedness pursuant to clause (a) above;
(7) Refinancing Indebtedness in respect of Indebtedness Incurred
pursuant to clause (a) or pursuant to clause (b)(2), (4), (5), (6), (8) or
(12) or this clause (b)(7); PROVIDED, HOWEVER, that to the extent such
Refinancing Indebtedness directly or indirectly Refinances Indebtedness or
Preferred Stock of a Restricted Subsidiary described in clause (b)(6), such
Refinancing Indebtedness shall be Incurred only by such Restricted
Subsidiary;
(8) Hedging Obligations consisting of Interest Rate Agreements directly
related (as determined in good faith by the Issuer) to Indebtedness
permitted to be Incurred by the Issuer and its Restricted
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Subsidiaries pursuant to the Indenture and Currency Agreements Incurred in
the ordinary course of business;
(9) Indebtedness (including Capitalized Lease Obligations) of the Issuer
or any Restricted Subsidiary financing the purchase, lease or improvement of
property (real or personal) or equipment (whether through the direct
purchase of assets or the Capital Stock of any Person owning such assets),
in each case Incurred no more than 180 days after such purchase, lease or
improvement of such property, and any Refinancing Indebtedness in respect of
such Indebtedness; PROVIDED, HOWEVER, that at the time of the Incurrence of
such Indebtedness and after giving effect thereto, the aggregate principal
amount of all Indebtedness Incurred pursuant to this clause (b)(9) and then
outstanding shall not exceed the greater of $40 million and 10% of Adjusted
Consolidated Assets;
(10)(A) Any guarantee by the Issuer of Indebtedness of any Restricted
Subsidiary (other than the Subordinated Guarantor) so long as the Incurrence
of such Indebtedness Incurred by such Restricted Subsidiary is permitted
under the terms of the Indenture and any guarantee by any Restricted
Subsidiary of Indebtedness of the Issuer Incurred pursuant to clause (a) or
clause (b)(1), (2), (4), (5), (8), (9), (11), (12) or (14) or clause (b)(7)
in respect of Indebtedness of the Issuer Incurred pursuant to clause (b)(1),
(2), (4), (5) ,(8) or (12) or (B) any guarantee of the Issuer or a
Restricted Subsidary of Indebtedness of an Unrestricted Subsidiary or a
Securization Subsidiary provided that such guarantee is recourse only to the
Capital Stock of such Unrestricted Subsidiary or Securization Subsidiary
(and the proceeds therefrom);
(11) Indebtedness of the Issuer or any Guarantor Incurred in connection
with the acquisition of a Permitted Business and any Refinancing
Indebtedness in respect of such Indebtedness; PROVIDED, HOWEVER, that the
aggregate amount of Indebtedness Incurred pursuant to this clause (b)(11)
and then outstanding shall not exceed $10 million;
(12) Attributable Debt in respect of a Sale/Leaseback Transaction
entered into by the Issuer or any Restricted Subsidiary on or before
December 31, 1998 in respect of Rental Equipment; PROVIDED, HOWEVER, that at
the time of the incurrence of such Attributable Debt and after giving effect
thereto, the aggregate principal amount of all Attributable Debt incurred
pursuant to this clause (12) and then outstanding shall not exceed $50
million; and
(13) Indebtedness of a Securitization Subsidiary pursuant to a Permitted
Units Financing, provided that after giving effect to the Incurrence
thereof, either (i) the amount of net proceeds to be received in such
Permitted Units Financing and any net proceeds for all previous Permitted
Units Financing (only to the extent of any outstanding balance on such
financing and for so long as any such Permitted Units Financings is in
effect) does not exceed the greater of $300 million or the sum of (A) 75% of
the net book value of Eligible Rental Equipment of the Issuer and its
Restructed Subsidiaries and (B) 85% of the book value of the Eligible
Accounts Receivable of the Issuer and its Restructured Subsidiaries or (ii)
the Issuer could Incur at least $1.00 of Indebtedness under clause (a) of
this covenant;
(14) Indebtedness of the Issuer, any Guarantor or the Subordinated
Guarantor (which may be but need not be issued pursuant to the Credit
Agreement) in an aggregate principal amount which, together with all other
Indebtedness of the Issuer, any Guarantor or the Subordinated Guarantor
outstanding on the date of such Incurrence (other than Indebtedness
permitted by clauses (b)(1) through (13) above or paragraph (a)) does not
exceed $50 million.
(c) For purposes of determining compliance with the foregoing covenant, (i)
in the event that an item of Indebtedness meets the criteria of more than one of
the types of Indebtedness described above (including subclauses of different
types of Indebtedness in clause (b) above), the Issuer, in its sole discretion,
will classify such item of Indebtedness and only be required to include the
amount and type of such Indebtedness in one of the above clauses (or subclauses)
and (ii) an item of Indebtedness may be
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divided and classified in more than one of the types of Indebtedness described
above (including subclauses of different types of Indebtedness in clause (b)
above).
(d) Notwithstanding paragraphs (a) and (b) above, the Issuer shall not Incur
(i) any Indebtedness if such Indebtedness is subordinate or junior in ranking in
any respect to any Indebtedness, unless such Indebtedness is expressly
subordinated in right of payment to the Notes and the Exchange Notes or (ii) any
Secured Indebtedness (other than Permitted Secured Indebtedness) unless
contemporaneously therewith effective provision is made to secure the Notes
equally and ratably with such Secured Indebtedness for so long as such Secured
Indebtedness is secured by a Lien.
(e) Notwithstanding paragraphs (a) and (b) above, a Guarantor shall not
Incur (i) any Indebtedness if such Indebtedness is subordinate or junior in
ranking in any respect to any Indebtedness of such Guarantor, unless such
Indebtedness is expressly subordinated in right of payment to such Guarantor's
Guarantee of the Notes and the Exchange Notes or (ii) any Secured Indebtedness
(other than Permitted Secured Indebtedness) unless contemporaneously therewith
effective provision is made to secure such Guarantor's Guarantee of the Notes
equally and ratably with such Secured Indebtedness for so long as such Secured
Indebtedness is secured by a Lien.
(f) Notwithstanding paragraphs (a) and (b) above, the Subordinated Guarantor
shall not incur (i) any Indebtedness if such Indebtedness is expressly by its
terms subordinate or junior in right of payment to any Indebtedness of the
Subordinated Guarantor and senior in respect of payment to the Subordinated
Guarantee; or (ii) any Indebtedness other than Subordinated Guarantor Senior
Indebtedness and Indebtedness permitted to be Incurred by a Restricted
Subsidiary pursuant to paragraph (b) above.
LIENS. The Indenture provides that neither the Issuer nor any of its
Restricted Subsidiaries may directly or indirectly create, incur, assume or
suffer to exist any Lien on any asset of the Issuer or any Restricted Subsidiary
whether now owned or hereafter acquired, or on any income or profits therefrom
or assign or otherwise convey any right to receive income or profits therefrom
except, in each case, Permitted Liens.
LIMITATION ON RESTRICTED PAYMENTS. (a) The Issuer shall not, and shall not
permit any Restricted Subsidiary, directly or indirectly, to, make a Restricted
Payment if at the time the Issuer or such Restricted Subsidiary makes such
Restricted Payment: (1) a Default shall have occurred and be continuing (or
would result therefrom); (2) the Issuer is not able to Incur an additional $1.00
of Indebtedness pursuant to paragraph (a) of the covenant described under
"--Limitation on Indebtedness"; or (3) the aggregate amount of such Restricted
Payment and all other Restricted Payments since the Issue Date would exceed the
sum of:
(A) 50% of the Consolidated Net Income accrued during the period (treated as
one accounting period) from the beginning of the fiscal quarter immediately
following the fiscal quarter during which the Notes are originally issued to the
end of the most recent fiscal quarter for which financial statements are
available prior to the date of such Restricted Payment (or, in case such
Consolidated Net Income shall be a deficit, minus 100% of such deficit);
(B) the aggregate Net Cash Proceeds received by the Issuer from the issuance
or sale of its Capital Stock (other than Disqualified Stock) and the aggregate
cash received by the Issuer as a capital contribution from its shareholders, in
each case subsequent to the Issue Date (other than an issuance or sale to a
Subsidiary of the Issuer and other than an issuance or sale to an employee stock
ownership plan or to a trust established by the Issuer or any of its
Subsidiaries for the benefit of its employees);
(C) the amount by which Indebtedness of the Issuer is reduced on the
Issuer's balance sheet upon the conversion or exchange (other than by a
Subsidiary of the Issuer) subsequent to the Issue Date, of any Indebtedness of
the Issuer for Capital Stock (other than Disqualified Stock) of the Issuer (less
the amount
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of any cash, or the fair value of any other property (other than such Capital
Stock), distributed by the Issuer upon such conversion or exchange);
(D) an amount equal to the sum of (i) the net reduction in Investments in
any Person resulting from dividends, repayments of loans or advances or other
transfers of assets (including any sale of such Investment), in each case to the
Issuer or any Restricted Subsidiary, and (ii) the portion (proportionate to the
Issuer's equity interest in such Subsidiary) of the fair market value of the net
assets of an Unrestricted Subsidiary at the time such Unrestricted Subsidiary is
designated a Restricted Subsidiary; PROVIDED, HOWEVER, that the foregoing sum
shall not exceed, in the case of any Person (including any Unrestricted
Subsidiary), the amount of Investments previously made in such Person (and
treated as a Restricted Payment) by the Issuer and the Restricted Subsidiaries;
and
(E) $15 million.
(b) The provisions of the foregoing paragraph (a) shall not prohibit:
(i) (x) any Restricted Payment made on the Issue Date to fund the
transactions contemplated by the Recapitalization (including fees and expenses),
(y) any Restricted Payment made to fund Holdings' payment of interest and
principal on the Promissory Notes, and to fund interest on, and the redemption,
repurchase, defeasance or payment upon maturity of the Holdings Notes after the
Issue Date (including any accrued interest, principal and premium thereon) and
(z) any other Restricted Payment made by exchange for, or out of the proceeds of
the substantially concurrent sale of, or capital contribution in respect of,
Capital Stock of the Issuer (other than Disqualified Stock and other than
Capital Stock issued or sold to a Subsidiary of the Issuer or an employee stock
ownership plan or to a trust established by the Issuer or any of its
Subsidiaries for the benefit of its employees); PROVIDED, HOWEVER, that (A) each
such Restricted Payment described in clauses (x), (y) and (z) shall be excluded
in the calculation of the amount of Restricted Payments and (B) if applicable,
the Net Cash Proceeds of each such sale shall be excluded from the calculation
of amounts under clause (3)(B) of paragraph (a) above;
(ii) any purchase, repurchase, redemption, defeasance or other acquisition
or retirement for value of Subordinated Indebtedness made by exchange for, or
out of the proceeds of the substantially concurrent sale of, Subordinated
Indebtedness or Capital Stock of the Issuer which is permitted to be Incurred
pursuant to the covenant described under "--Limitation on Indebtedness";
PROVIDED, HOWEVER, that such purchase, repurchase, redemption, defeasance or
other acquisition or retirement for value shall be excluded from the calculation
of the amount of Restricted Payments;
(iii) dividends paid within 60 days after the date of declaration thereof if
at such date of declaration such dividend would have complied with this
covenant; PROVIDED, HOWEVER, that such dividend shall be included in the
calculation of the amount of Restricted Payments;
(iv) the repurchase of shares of, or options to purchase shares of, common
stock of Holdings, the Issuer or any of their respective Subsidiaries from
employees, former employees, directors or former directors of Holdings, the
Issuer or any of its Subsidiaries (or permitted transferees of such employees,
former employees, directors or former directors), pursuant to the terms of the
agreements (including employment agreements) or plans (or amendments thereto)
approved by the board of directors of Holdings or the Issuer under which such
individuals purchase or sell, or are granted the option to purchase or sell,
shares of such common stock (or any Restricted Payment made to Holdings solely
to fund at the time made such payments); PROVIDED, HOWEVER, that the aggregate
amount of such repurchases or Restricted Payments shall not exceed $2,000,000 in
any calendar year; PROVIDED, FURTHER, HOWEVER, that such repurchases or
Restricted Payments shall be excluded from the calculation of the amount of
Restricted Payments;
(v) following the initial Public Equity Offering, dividends or Common Stock
buybacks by Holdings, the Issuer or another issuer in an aggregate amount in any
year not to exceed 6% of the aggregate Net Cash Proceeds received by the Issuer
in connection with such initial Public Equity Offering and any
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subsequent Public Equity Offering (or any Restricted Payment made to Holdings or
such other issuer solely to fund at the time made such payments);; PROVIDED,
HOWEVER, that at the time of payment of such dividends, no other Default shall
have occurred and be continuing (or result therefrom); PROVIDED, FURTHER,
HOWEVER, that such dividends or common stock buybacks shall be included in the
calculation of the amount of Restricted Payments;
(vi) repurchases of Capital Stock deemed to occur upon exercise of stock
options if such Capital Stock represents a portion of the exercise price of such
options; PROVIDED, HOWEVER, that such repurchase shall be excluded from the
calculation of the amount of Restricted Payments;
(vii) any payment by the Issuer to Holdings pursuant to the Tax Sharing
Agreement; PROVIDED, HOWEVER, that the amount of any such payment shall not
exceed the amount of taxes that the Issuer would have been liable for on a
stand-alone basis; PROVIDED, FURTHER, HOWEVER, that such dividends shall be
excluded in the calculation of the amount of Restricted Payments; and
(viii) dividends to Holdings to the extent required to pay for general
corporate and overhead expenses incurred by Holdings; PROVIDED, HOWEVER, that
such dividends shall not exceed $1,000,000 in any calendar year; PROVIDED,
FURTHER, HOWEVER that such dividends shall be excluded from the calculation of
the amount of Restricted Payments.
LIMITATION ON RESTRICTIONS ON DISTRIBUTIONS FROM RESTRICTED
SUBSIDIARIES. The Issuer shall not, and shall not permit any Restricted
Subsidiary to, create or otherwise cause or permit to exist or become effective
any consensual encumbrance or restriction on the ability of any Restricted
Subsidiary (a) to pay dividends or make any other distributions on its Capital
Stock to the Issuer or a Restricted Subsidiary or pay any Indebtedness owed to
the Issuer, (b) to make any loans or advances to the Issuer or (c) to transfer
any of its property or assets to the Issuer, except:
(i) any encumbrance or restriction pursuant to an agreement in effect at or
entered into on the Issue Date (including the Credit Agreement and related
security documents and the Senior Secured Notes and any related agreements);
(ii) any encumbrance or restriction with respect to a Restricted Subsidiary
pursuant to an agreement relating to any Indebtedness Incurred by such
Restricted Subsidiary on or prior to the date on which such Restricted
Subsidiary was acquired by the Issuer (other than Indebtedness Incurred as
consideration in, or to provide all or any portion of the funds or credit
support utilized to consummate, the transaction or series of related
transactions pursuant to which such Restricted Subsidiary became a Restricted
Subsidiary or was acquired by the Issuer) and outstanding on such date;
(iii) any encumbrance or restriction pursuant to an agreement effecting a
Refinancing of Indebtedness Incurred pursuant to an agreement referred to in
clause (i) or (ii) of this covenant or this clause (iii) or contained in any
amendment to an agreement referred to in clause (i) or (ii) of this covenant or
this clause (iii); PROVIDED, HOWEVER, that the encumbrances and restrictions
with respect to such Restricted Subsidiary contained in any such refinancing
agreement or amendment are no less favorable to the Noteholders than
encumbrances and restrictions with respect to such Restricted Subsidiary
contained in such agreements;
(iv) any such encumbrance or restriction consisting of customary
non-assignment or subletting provisions in leases governing leasehold interests
to the extent such provisions restrict the transfer of the lease or the property
leased thereunder;
(v) in the case of clause (c) above, restrictions contained in security
agreements or mortgages securing Indebtedness of a Restricted Subsidiary to the
extent such restrictions restrict the transfer of the property subject to such
security agreements or mortgages;
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(vi) any restriction with respect to a Restricted Subsidiary imposed
pursuant to an agreement entered into for the sale or disposition of all or
substantially all the Capital Stock or any assets of such Restricted Subsidiary
pending the closing of such sale or disposition;
(vii) any encumbrance or restriction pursuant to an agreement entered into
after the Issue Date governing Indebtedness incurred by a Restricted Subsidiary
in compliance with the covenant described under "Limitation on Indebtedness";
PROVIDED, HOWEVER, that the encumbrances and restrictions with respect to any
Restricted Subsidiary contained in any such agreement are no less favorable to
the Holders of the Notes than encumbrances and restrictions with respect to such
Restricted Subsidiary in the Credit Agreement on the Issue Date;
(viii) any encumbrance or restriction pursuant to an agreement with a
governmental entity providing for developmental financing on terms which are
more favorable (at the time such agreement is entered into) than those available
from third party financing sources;
(ix) with respect to a Securitization Subsidiary, an agreement relating to
Indebtedness of a Securitization Subsidiary which is permitted under
"--Limitation on Indebtedness" above or pursuant to an agreement relating to a
Permitted Units Financing by a Securitization Subsidiary; or
(x) the Indenture.
LIMITATION ON SALES OF ASSETS AND SUBSIDIARY STOCK. (a) In the event and to
the extent that the Net Available Cash received by the Issuer or any Restricted
Subsidiary from one or more Asset Dispositions occurring on or after the Issue
Date in any period of 12 consecutive months exceeds the greater of $40 million
or 10% of Adjusted Consolidated Assets as of the beginning of such 12-month
period, then the Issuer shall (i) no later than 360 days after the date such Net
Available Cash so received exceeds such $40 million or 10% of Adjusted
Consolidated Assets (A) apply an amount equal to such excess Net Available Cash
to repay any Indebtedness (other than Subordinated Indebtedness) of the Issuer
or of any Restricted Subsidiary, in each case owing to a Person other than the
Issuer or any Affiliate of the Issuer, or (B) invest or commit to invest an
equal amount, or the amount not so applied pursuant to clause (A), in Additional
Assets; PROVIDED, HOWEVER, that in the case of any commitment to invest, such
investment must be made within six months thereafter, and any amount not so
invested shall be treated as Excess Proceeds (as defined below); and (ii) apply
such excess Net Available Cash (to the extent not applied pursuant to clause
(i)) as provided in the following paragraphs of the covenant described
hereunder. The amount of such excess Net Available Cash required to be applied
during the applicable period and not applied as so required by the end of such
period shall constitute "Excess Proceeds."
If, as of the first day of any calendar month, the aggregate amount of
Excess Proceeds not theretofore subject to an Excess Proceeds Offer (as defined
below) totals at least $20 million, the Issuer must, not later than the
fifteenth Business Day of such month, make an offer (an "Excess Proceeds Offer")
to purchase from the Holders on a pro rata basis an aggregate principal amount
of Notes equal to the Excess Proceeds (rounded down to the nearest multiple of
$1,000) on such date, at a purchase price equal to 100% of the principal amount
of such Notes, plus, in each case, accrued interest (if any) to the date of
purchase (the "Excess Proceeds Payment").
The Issuer will comply, to the extent applicable, with the requirements of
Section 14(e) of the Exchange Act and any other securities laws or regulations
thereunder in the event that such Excess Proceeds are received by the Issuer
under the covenant described hereunder and the Issuer is required to repurchase
Notes as described above. To the extent that the provisions of any securities
laws or regulations conflict with the provisions of the covenant described
hereunder, the Issuer shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations under the
covenant described hereunder by virtue thereof.
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(b) In the event of the transfer of substantially all (but not all) the
property and assets of the Issuer as an entirety to a Person in a transaction
permitted by the covenant described under "--Merger and Consolidation," the
Successor Issuer (as defined therein) shall be deemed to have sold the
properties and assets of the Issuer not so transferred for purposes of the
covenant described hereunder, and shall comply with the provisions of the
covenant described hereunder with respect to such deemed sale as if it were an
Asset Disposition, and the Successor Company shall be deemed to have received
Net Available Cash in an amount equal to the fair market value (as determined in
good faith by the Board of Directors) of the properties and assets not so
transferred or sold.
LIMITATION ON AFFILIATE TRANSACTIONS. (a) The Issuer shall not, and shall
not permit any Restricted Subsidiary to, enter into or permit to exist any
transaction (including the purchase, sale, lease or exchange of any property,
employee compensation arrangements or the rendering of any service) with any
Affiliate of the Issuer (an "Affiliate Transaction") unless the terms thereof
(1) are no less favorable to the Issuer or such Restricted Subsidiary than those
that could be obtained at the time of such transaction in arm's-length dealings
with a Person who is not such an Affiliate, (2) if such Affiliate Transaction
involves an amount in excess of $5.0 million, (i) are set forth in writing and
(ii) have been approved by a majority of the members of the Board of Directors
having no personal stake in such Affiliate Transaction and (3) if such Affiliate
Transaction involves an amount in excess of $10.0 million, have been determined
by a nationally recognized accounting or investment banking firm (an
"Independent Financial Advisor") to be fair, from a financial standpoint, to the
Issuer and its Restricted Subsidiaries. Notwithstanding clause (2)(ii) above, in
the event that there are less than two members of the Board of Directors not
having a personal stake in any Affiliate Transaction, such Affiliate Transaction
shall be permitted to exist so long as an Independent Financial Advisor has
determined the terms of such Affiliate Transaction to be fair, from a financial
standpoint, to the Issuer and its Restricted Subsidiaries.
(b) The provisions of the foregoing paragraph (a) shall not prohibit (i) any
Restricted Payment permitted to be made pursuant to the covenant described under
"--Limitation on Restricted Payments" or a Permitted Investment in Holdings as
described in clause (x) of such definition, (ii) any issuance of securities, or
other payments, benefits, awards or grants in cash, securities or otherwise,
pursuant to, or the funding of, employment arrangements, stock options and stock
ownership plans approved by the Board of Directors, (iii) the grant of stock
options or similar rights to employees and directors of the Issuer pursuant to
plans approved by the Board of Directors, (iv) loans or advances to employees in
the ordinary course of business in accordance with the past practices of the
Issuer or its Restricted Subsidiaries, but in any event not to exceed $2.5
million in the aggregate outstanding at any one time, (v) the payment of
reasonable fees to directors of the Issuer and its Restricted Subsidiaries who
are not employees of the Issuer or its Restricted Subsidiaries, (vi) any Tax
Sharing Agreement; PROVIDED, HOWEVER, that the aggregate amount payable by the
Issuer pursuant thereto shall not exceed the amount of taxes that the Issuer
would have been liable for on a stand-alone basis, (vii) indemnification
agreements with, and the payment of fees and indemnities to, directors, officers
and employees of the Issuer and its Restricted Subsidiaries, in each case in the
ordinary course of business, (viii) any employment, noncompetition or
confidentiality agreement entered into by the Issuer and its Restricted
Subsidiaries with its employees in the ordinary course of business, (ix) the
payment by the Issuer of fees, expenses and other amounts to the Permitted
Holders and their respective Affiliates in connection with the Recapitalization,
(x) payments by the Issuer or any of its Restricted Subsidiaries to the
Permitted Holders (described in clause (i) of such defintion) and their
Affiliates made pursuant to any financial advisory, financing, underwriting or
placement agreement, or in respect of other investment banking activities, in
each case as determined by the Board of Directors in good faith, (xi) any
Affiliate Transaction between the Issuer and a Wholly Owned Subsidiary or
between Wholly Owned Subsidiaries, (xii) any Affiliate Transaction between the
Issuer and a Restricted Subsidiary or between Restricted Subsidiaries, in each
and approved by the Board of Directors in good faith, (xiii) execution, delivery
and performance by Holdings, the Issuer and any Subsidiary or Holdings or the
Issuer of the Recapitalization Agreement as in effect on the Issuer Date, (xiv)
the pledge of any Capital Stock of Unrestricted Subsidiaries to support the
Indebtedness thereof and (xv) transactions in connection with a
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Permitted Units Financing (as to which the Board approval requirements, in the
definition of Permitted Units Financing will apply).
CHANGE OF CONTROL. (a) Upon a Change of Control, if either (i) the Issuer
does not redeem the Notes as described in "Optional Redemption" or (ii) such
Change of Control occurs after June 1, 2002, the Issuer will be required to make
an offer to repurchase the Notes at a purchase price equal to 101% of the
principal amount thereof together with accrued and unpaid interest, if any, to
the date of repurchase (subject to the right of Holders of record on the
relevant record date to receive interest on the relevant interest payment date),
in accordance with the terms contemplated in paragraph (b) below.
(b) Within 30 days following any Change of Control (unless the Issuer has
mailed a redemption notice with respect to all the outstanding Notes in
connection with such Change of Control), the Issuer shall mail or cause to be
mailed a notice to each Holder with a copy to the Trustee stating: (1) that a
Change of Control has occurred and that such Holder has the right to require the
Issuer to purchase such Holder's Notes at a purchase price in cash equal to 101%
of the principal amount thereof plus accrued and unpaid interest, if any, to the
date of purchase (subject to the right of Holders of record on the relevant
record date to receive interest on the relevant interest payment date); (2) the
circumstances and relevant facts regarding such Change of Control; (3) the
repurchase date (which shall be no earlier than 30 days nor later than 60 days
from the date such notice is mailed); and (4) the instructions determined by the
Issuer, consistent with the covenant described hereunder, that a Holder must
follow in order to have its Notes purchased.
(c) The Issuer shall comply, to the extent applicable, with the requirements
of Section 14(e) of the Exchange Act and any other securities laws or
regulations in connection with the repurchase of Notes pursuant to this covenant
described hereunder. To the extent that the provisions of any securities laws or
regulations conflict with the provisions of the covenant described hereunder,
the Issuer shall comply with the applicable securities laws and regulations and
shall not be deemed to have breached its obligations under the covenant
described hereunder by virtue thereof.
The Change of Control purchase feature is a result of negotiations between
the Issuer and the Initial Purchasers. Management has no present intention to
engage in a transaction involving a Change of Control, although it is possible
that the Issuer would decide to do so in the future. Subject to the limitations
discussed below, the Issuer could, in the future, enter into certain
transactions, including acquisitions, refinancings or other recapitalizations,
that would not constitute a Change of Control under the Indenture, but that
could increase the amount of Indebtedness outstanding at such time or otherwise
affect the Issuer's capital structure or credit ratings. Restrictions on the
ability of the Issuer to incur additional Indebtedness are contained in the
covenant described under "--Limitation on Indebtedness." Such restrictions can
only be waived with the consent of the Holders of a majority in principal amount
of the Notes then outstanding. Except for the limitations contained in such
covenants, however, the Indenture will not contain any covenants or provisions
that may afford Holders of the Notes protection in the event of a highly
leveraged transaction.
Future indebtedness of the Issuer may contain prohibitions on the occurrence
of certain events that would constitute a Change of Control or require such
indebtedness to be repurchased upon a Change of Control. Moreover, the exercise
by the holders of their right to require the Issuer to repurchase the Notes
could cause a default under such indebtedness, even if the Change of Control
itself does not, due to the financial effect of such repurchase on the Issuer.
Finally, the Issuer's ability to pay cash to the holders of Notes following the
occurrence of a Change of Control may be limited by the Issuer's then existing
financial resources. There can be no assurance that sufficient funds will be
available when necessary to make any required repurchases.
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The provisions under the Indenture relative to the Issuer's obligation to
make an offer to repurchase the Notes as a result of a Change of Control may be
waived or modified with the written consent of the holders of a majority in
principal amount of the Notes.
LIMITATION ON THE SALE OR ISSUANCE OF CAPITAL STOCK OF RESTRICTED
SUBSIDIARIES. The Issuer shall not sell or otherwise dispose of any Capital
Stock of a Restricted Subsidiary, and shall not permit any Restricted
Subsidiary, directly or indirectly, to issue or sell or otherwise dispose of any
of its Capital Stock except (i) to the Issuer or a Wholly Owned Subsidiary or to
any director of a Restricted Subsidiary to the extent required as director's
qualifying shares, (ii) if, immediately after giving effect to such issuance,
sale or other disposition, neither the Issuer nor any of its Restricted
Subsidiaries owns any Capital Stock of such Restricted Subsidiary or (iii) if,
immediately after giving effect to such issuance, sale or other disposition,
such Restricted Subsidiary would no longer constitute a Restricted Subsidiary
and any Investment in such Person remaining after giving effect thereto would
have been permitted to be made under the covenant described under "--Limitation
on Restricted Payments" if made on the date of such issuance, sale or other
disposition or (iv) any sale of Capital Stock in connection with a Permitted
Units Financing.
MERGER AND CONSOLIDATION. The Issuer shall not consolidate with or merge
with or into, or convey, transfer or lease, in one transaction or a series of
transactions, all or substantially all its assets to, any Person (including
Holdings), unless: (i) the resulting, surviving or transferee Person (the
"Successor Issuer") shall be a Person organized and existing under the laws of
the United States of America, any State thereof or the District of Columbia and
the Successor Issuer (if not the Issuer) shall expressly assume, by an indenture
supplemental thereto, executed and delivered to the Trustee, in form reasonably
satisfactory to the Trustee, all the obligations of the Issuer under the Notes
and the Indenture; (ii) immediately after giving effect to such transaction (and
treating any Indebtedness which becomes an obligation of the Successor Issuer or
any Subsidiary as a result of such transaction as having been Incurred by such
Successor Issuer or such Subsidiary at the time of such transaction), no Default
shall have occurred and be continuing, (iii) immediately after giving effect to
such transaction, the Successor Issuer would be able to Incur an additional
$1.00 of Indebtedness pursuant to paragraph (a) of the covenant described under
"-- Limitation on Indebtedness"; (iv) immediately after giving effect to such
transaction, the Successor Company shall have Consolidated Net Worth in an
amount that is not less than the Consolidated Net Worth of the Issuer prior to
such transaction; and (v) the Issuer shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if any)
comply with the Indenture. Notwithstanding clause (iii) above, a Wholly-Owned
Subsidiary (other than the Subordinated Guarantor) may be consolidated with or
merged into the Issuer and the Issuer may consolidate with or merge with or into
(A) another Person, if such Person is a single purpose corporation that has not
conducted any business or Incurred any Indebtedness or other liabilities and
such transaction is being consummated solely to change the state of
incorporation of the Issuer and (B) Holdings; PROVIDED, HOWEVER, that, in the
case of clause (B), (x) Holdings shall not have owned any assets other than the
Capital Stock of the Issuer (and other immaterial assets incidental to its
ownership of such Capital Stock) or conducted any business other than owning the
Capital Stock of the Issuer, (y) Holdings shall not have any Indebtedness or
other liabilities (other than ordinary course liabilities incidental to its
ownership of the Capital Stock of the Issuer) and (z) immediately after giving
effect to such consolidation or merger, the Successor Company shall have a pro
forma Consolidated Coverage Ratio that is not less than Consolidated Coverage
Ratio of the Issuer immediately prior to such consolidation or merger; AND,
PROVIDED FURTHER, that the Subordinated Guarantor may be consolidated with, may
be merged into or may transfer all or substantially all its assets to the Issuer
with the consent of the holders of all Subordinated Guarantor Senior
Indebtedness outstanding (in which case, if such consent has been given, the
Subordinated Guarantee (including, the subordination provisions described above)
shall terminate and be extinguished).
The Successor Company shall be the successor to the Issuer and shall succeed
to, and be substituted for, and may exercise every right and power of, the
Issuer under the Indenture, but the predecessor
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Company in the case of a conveyance, transfer or lease shall not be released
from the obligation to pay the principal of and interest on the Notes.
Each Guarantor shall not and the Issuer shall not permit any Guarantor to
consolidate with or merge with or into, or convey, transfer or lease, in one
transaction or a series of transactions, all or substantially all its assets to,
any Person other than the Issuer or any other Guarantor, unless: (i) the
resulting, surviving or transferee Person (the "Successor Guarantor") shall be a
Person organized and existing under the laws of the United States of America,
any State thereof or the District of Columbia and the Successor Guarantor (if
not the Issuer) shall expressly assume, by an indenture supplemental thereto,
executed and delivered to the Trustee, in form reasonably satisfactory to the
Trustee, all the obligations of the Guarantor on the Guarantee and in the
Indenture; (ii) immediately after 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, and the use of any proceeds therefrom
on a pro forma basis, the Issuer could satisfy the provisions of clauses (iii)
and (iv) of the first paragraph of this Section.
Except as provided above, the Issuer shall not permit the Subordinated
Guarantor, and the Subordinated Guarantor shall not, consolidate with or merge
into or with, or convey, transfer or lease, in any transaction or a series of
related transactions, all or substantially all of its assets to any Person;
PROVIDED that the Subordinated Guarantor may be consolidated with, merged with
or into, or transfer all or substantially all its assets to, any Guarantor with
the consent of the holders of all Subordinated Guarantor Senior Indebtedness
outstanding (in which case, if such consent has been given, the subordination
provisions described above) with respect to the Subordinated Guarantee shall
terminate and be extinguished. Notwithstanding the above provisions, the
Subordinated Guarantor may lease any or all of its assets to the Company or any
Wholly Owned Subsidiary of the Company at any time.
SEC REPORTS. Notwithstanding that the Issuer may not be, or may not be
required to remain, subject to the reporting requirements of Section 13 or 15(d)
of the Exchange Act, the Issuer shall file or continue to file with the SEC and
provide the Trustee and any Noteholder (upon the request of such Noteholder)
with such annual reports and such information, documents and other reports as
are specified in Sections 13 and 15(d) of the Exchange Act and applicable to a
U.S. corporation subject to such Sections, such information, documents and other
reports to be so filed and provided at the times specified for the filing of
such information, documents and reports under such Sections.
ACTIVITIES OF THE ISSUER AND ITS RESTRICTED SUBSIDIARIES. The Issuer shall
not, and shall not permit any Restricted Subsidiary to, engage in any business
other than developing, owning, engaging in and dealing with a Permitted
Business.
ADDITIONAL GUARANTEES. The Issuer will cause each Subsidiary which becomes
a Guarantor after the Issue Date (i) to execute and deliver to the Trustee a
supplemental indenture, in form reasonably satisfactory to the Trustee, pursuant
to which such Subsidiary shall unconditionally guarantee all of the Issuer's
obligations under the Notes and the Indenture on the terms set forth in the
Indenture and (ii) to deliver to the Trustee an opinion of counsel that such
supplemental indenture has been duly authorized, executed and delivered by such
Subsidiary and constitutes a legal, valid binding and enforceable obligation of
such Subsidiary. Thereafter, such Subsidiary shall be a Guarantor for all
purposes of this Indenture until it ceases to be such pursuant to the definition
of Guarantor contained herein.
ACTIVITIES OF SUBORDINATED GUARANTOR. The Issuer shall not permit the
Subordinated Guarantor to, and the Subordinated Guarantor shall not: (i) engage
in any activity other than acquiring, owning, holding, managing, marketing,
maintaining, leasing, selling or disposing of Rental Equipment and activities
directly incidental thereto (including leasing such Rental Equipment to the
Company or any of its Subsidiaries) or (ii) incur any Indebtedness other than
Indebtedness incurred in compliance with the covenant described under
"--Limitations on Indebtedness".
Neither the Issuer nor any of the Restricted Subsidiaries will sell,
transfer or otherwise convey to the Subordinated Guarantor any of its or their
respective assets other than Rental Equipment (and related
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leases) which Rental Equipment, at the time of transfer, (x) is not evidenced by
a certificate of title under applicable motor vehicle registration, certificate
of title and other applicable state laws or (y) if evidenced by a certificate of
title as described in preceding clause (x), where counsel to the Issuer is
unable to conclude that the notation of a security interest thereon (or another
similar procedure) is effective under applicable state law to create a fully
perfected security interest therein.
All Rental Equipment (and related leases) sold, transferred or otherwise
conveyed by the Issuer or any of the Restricted Subsidiaries to the Subordinated
Guarantor shall be transferred, sold or otherwise conveyed only by way of a
capital contribution to the common equity of the Subordinated Guarantor.
The Subordinated Guarantor is not permitted to have any Subsidiaries.
DEFAULTS
An Event of Default is defined in the Indenture as (i) a default in the
payment of interest on the Notes when due, continued for 30 days, (ii) a default
in the payment of principal of any Note when due at its Stated Maturity, upon
optional redemption, upon required repurchase, upon declaration or otherwise
(including the failure to make a payment to purchase Notes tendered pursuant to
Change of Control or an Excess Proceeds Payment), (iii) the failure by the
Issuer to comply with its obligations under "--Certain Covenants--Merger and
Consolidation" above, (iv) the failure by the Issuer to comply for 30 days after
notice with any of its obligations in the covenants described above under
"--Certain Covenants" under "-- Limitation on Indebtedness," "--Limitation on
Restrictions on Distributions from Restricted Subsidiaries," "--Limitation on
Restricted Payments," "Limitation on Sales of Assets and Subsidiary Stock"
(other than a failure to purchase Notes), "--Limitation on Affiliate
Transactions," "--Limitation on the Sale or Issuance of Capital Stock of
Restricted Subsidiaries," "--Change of Control" (other than a failure to
purchase Notes), "--SEC Reports," or "--Activities of Subordinated Guarantor",
(v) the failure by the Issuer to comply for 60 days after notice with its other
agreements contained in the Indenture, (vi) Indebtedness of the Issuer or any
Significant Subsidiary is not paid within any applicable grace period after
final maturity or is accelerated by the holders thereof because of a default and
the total amount of such Indebtedness unpaid or accelerated exceeds $25.0
million (the "cross acceleration provision"), (vii)(a) certain events of
bankruptcy, insolvency or reorganization of the Issuer or (b) certain events of
bankruptcy, insolvency or reorganization of a Significant Subsidiary (the
"bankruptcy provisions"), (viii) any judgment or decree for the payment of money
in excess of $25.0 million (net of applicable insurance coverage provided that
the insurance carriers have acknowledged coverage) is rendered against the
Issuer or any Significant Subsidiary, remains outstanding for a period of 60
days following such judgment and is not discharged, waived or stayed within 10
days after notice or an enforcement proceeding is commenced upon such judgment
or decree (the "judgment default provision"), or (ix) any of the Guarantees or
the Subordinated Guarantee ceases to be in full force and effect or any of the
Guarantees or the Subordinated Guarantee is declared to be null and void and
unenforceable or any of the Guarantees or the Subordinated Guarantee is found to
be invalid, in each case by a court of competent jurisdiction in a final
non-appealable judgment, or any of the Guarantors or the Subordinated Guarantor
denies its liability under its Guarantee or the Subordinated Guarantee (other
than by reason of release of a Guarantor or the Subordinated Guarantor in
accordance with the terms of the Indenture). However, a default under clauses
(iv), (v) and (viii) will not constitute an Event of Default until the Trustee
or the holders of 25% in principal amount of the outstanding Notes notify the
Issuer of the default and the Issuer does not cure such default within the time
specified after receipt of such notice.
If an Event of Default occurs and is continuing, the Trustee or the holders
of at least 25% in principal amount of the outstanding Notes may declare the
principal of and accrued but unpaid interest on all the Notes to be due and
payable. Upon such a declaration, such principal and interest shall be due and
payable immediately. If an Event of Default relating to certain events of
bankruptcy, insolvency or reorganization of the Issuer occurs and is continuing,
the principal of and interest on all the Notes will IPSO FACTO become and be
immediately due and payable without any declaration or other act on the part of
the Trustee or any holders of the Notes. Under certain circumstances, the
holders of a majority in principal amount of the outstanding Notes may rescind
any such acceleration with respect to the Notes and its consequences.
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Subject to the provisions of the Indenture relating to the duties of the
Trustee, in case an Event of Default occurs and is continuing, the Trustee will
be under no obligation to exercise any of the rights or powers under the
Indenture at the request or direction of any of the holders of the Notes unless
such holders have offered to the Trustee reasonable indemnity or security
against any loss, liability or expense. Except to enforce the right to receive
payment of principal, premium (if any) or interest when due, no holder of a Note
may pursue any remedy with respect to the Indenture or the Notes unless (i) such
holder has previously given the Trustee notice that an Event of Default is
continuing, (ii) holders of at least 25% in principal amount of the outstanding
Notes have requested the Trustee to pursue the remedy, (iii) such holders have
offered the Trustee reasonable security or indemnity against any loss, liability
or expense, (iv) the Trustee has not complied with such request within 60 days
after the receipt thereof and the offer of security or indemnity and (v) the
holders of a majority in principal amount of the outstanding Notes have not
given the Trustee a direction inconsistent with such request within such 60-day
period. Subject to certain restrictions, the holders of a majority in principal
amount of the outstanding Notes are given the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee
or of exercising any trust or power conferred on the Trustee. The Trustee,
however, may refuse to follow any direction that conflicts with law or the
Indenture or that the Trustee determines is unduly prejudicial to the rights of
any other holder of a Note or that would involve the Trustee in personal
liability.
The Indenture provides that if a Default occurs and is continuing and is
known to the Trustee, the Trustee must mail to each holder of the Notes notice
of the Default within 90 days after it occurs. Except in the case of a Default
in the payment of principal of or interest on any Note, the Trustee may withhold
notice if and so long as a committee of its trust officers determines that
withholding notice is not opposed to the interest of the holders of the Notes.
In addition, the Issuer is required to deliver to the Trustee, within 120 days
after the end of each fiscal year, a certificate indicating whether the signers
thereof know of any Default that occurred during the previous year. The Issuer
also is required to deliver to the Trustee, within 30 days after the occurrence
thereof, written notice of any event which would constitute certain Defaults,
their status and what action the Issuer is taking or proposes to take in respect
thereof.
AMENDMENTS AND WAIVERS
Subject to certain exceptions, the Indenture may be amended with the consent
of the holders of a majority in principal amount of the Notes then outstanding
(including consents obtained in connection with a tender offer or exchange for
the Notes) and any past default or compliance with any provisions may also be
waived with the consent of the holders of a majority in principal amount of the
Notes then outstanding. However, without the consent of each holder of an
outstanding Note affected thereby, no amendment may, among other things, (i)
reduce the amount of Notes whose holders must consent to an amendment, (ii)
reduce the rate of or extend the time for payment of interest on any Note, (iii)
reduce the principal of or extend the Stated Maturity of any Note, (iv) reduce
the premium payable upon the redemption of any Note or change the time at which
any Note may be redeemed as described under "--Optional Redemption" above, (v)
make any Note payable in money other than that stated in the Note, (vi) impair
the right of any holder of the Notes to receive payment of principal of and
interest on such holder's Notes on or after the due dates therefor or to
institute suit for the enforcement of any payment on or with respect to such
holder's Notes, (vii) make any change in the amendment provisions which require
each holder's consent or in the waiver provisions, or (viii) release any
Guarantor or the Subordinated Guarantor from any of its obligations under its
Guarantee or Subordinated Guarantee, as the case may be, or the Indenture
otherwise then in accordance with the terms of the Indenture.
Without the consent of any holder of the Notes, the Issuer, the Guarantors,
the Subordinated Guarantor and the Trustee may amend the Indenture to cure any
ambiguity, omission, defect or inconsistency, to provide for the assumption by a
successor issuer or guarantor of the obligations of the Issuer, the Guarantor or
the Subordinated Guarantor under the Indenture, to provide for uncertificated
Notes in addition to or in place of certificated Notes (provided that the
uncertificated Notes are issued in registered
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form for purposes of Section 163(f) of the Code, or in a manner such that the
uncertificated Notes are described in Section 163(f)(2)(B) of the Code), to add
guarantees with respect to the Notes or to provide for the release of the
Subordinated Guarantee as described in the definition of Guarantor, to secure
the Notes, to add to the covenants of the Issuer, Guarantors or the Subordinated
Guarantor for the benefit of the holders of the Notes or to surrender any right
or power conferred upon the Issuer, Guarantors or the Subordinated Guarantor, to
make any change that does not adversely affect the rights of any holder of the
Notes or to comply with any requirement of the SEC in connection with the
qualification of the Indenture under the Trust Indenture Act.
The consent of the holders of the Notes is not necessary under the Indenture
to approve the particular form of any proposed amendment. It is sufficient if
such consent approves the substance of the proposed amendment.
After an amendment under the Indenture becomes effective, the Issuer is
required to mail to holders of the Notes a notice briefly describing such
amendment. However, the failure to give such notice to all holders of the Notes,
or any defect therein, will not impair or affect the validity of the amendment.
TRANSFER
The Notes will be issued in registered form and will be transferable only
upon the surrender of the Notes being transferred for registration of transfer.
The Issuer may require payment of a sum sufficient to cover any tax, assessment
or other governmental charge payable in connection with certain transfers and
exchanges.
DEFEASANCE
The Issuer may, at its option and at any time may elect to have its
obligations and the obligations of the Guarantors and the Subordinated Guarantor
discharged with respect to the Notes and the Indenture ("legal defeasance"),
except for certain obligations, including those respecting the defeasance trust
and obligations to register the transfer or exchange of the Notes, to replace
mutilated, destroyed, lost or stolen Notes and to maintain a registrar and
paying agent in respect of the Notes. The Issuer at any time may terminate its
obligations under the covenants described under "--Certain Covenants" (other
than the covenant described under "--Merger and Consolidation"), the operation
of the cross acceleration provision, the bankruptcy provisions with respect to
Significant Subsidiaries and the Subordinated Guarantor and the judgment default
provision described under "--Defaults" above, the Events of Default specified in
clause (iv) under "--Defaults" above and the limitations contained in clauses
(iii), (iv) and (z) in the first paragraph and clause (iii) of the third
paragraph under "--Certain Covenants--Merger and Consolidation" above ("covenant
defeasance").
The Issuer may exercise its legal defeasance option notwithstanding its
prior exercise of its covenant defeasance option. If the Issuer exercises its
legal defeasance option, payment of the Notes may not be accelerated because of
an Event of Default with respect thereto. If the Issuer exercises its covenant
defeasance option, payment of the Notes may not be accelerated because of an
Event of Default specified in clause (iv), (vi), (vii) (with respect only to
Significant Subsidiaries) or (viii) under "--Defaults" above or because of the
failure of the Issuer to comply with clause (iii) or (iv) under "--Certain
Covenants--Merger and Consolidation" above.
In order to exercise either defeasance option, the Issuer must irrevocably
deposit in trust (the "defeasance trust") with the Trustee money or U.S.
Government Obligations for the payment of principal and interest on the Notes to
redemption or maturity, as the case may be, and must comply with certain other
conditions, including delivery to the Trustee of an Opinion of Counsel to the
effect that holders of the Notes will not recognize income, gain or loss for
Federal income tax purposes as a result of such deposit and defeasance 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 and defeasance had
not
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occurred (and, in the case of legal defeasance only, (i) such Opinion of Counsel
must be based on a ruling of the Internal Revenue Service or other change in
applicable Federal income tax law and (ii) such Opinion of Counsel shall not be
required to be delivered if such legal defeasance occurs within one year of the
Stated Maturity of the Notes or the earliest possible optional redemption date
for the Notes (June 1, 2002).
CONCERNING THE TRUSTEE
The Bank of New York is to be the Trustee under the Indenture and has been
appointed by the Issuer as Registrar and Paying Agent with regard to the Notes.
The Holders of a majority in principal amount of the outstanding Notes will
have the right to direct the time, method and place of conducting any proceeding
for exercising any remedy available to the Trustee, subject to certain
exceptions. The Indenture provides that if an Event of Default occurs (and is
not cured), the Trustee will be required, in the exercise of its power, to use
the degree of care of a prudent man in the conduct of his own affairs. Subject
to such provisions, the Trustee will be under no obligation to exercise any of
its rights or powers under the Indenture at the request of any Holder of Notes,
unless such Holder shall have offered to the Trustee security and indemnity
satisfactory to it against any loss, liability or expense and then only to the
extent required by the terms of the Indenture.
BOOK-ENTRY; DELIVERY AND FORM
Except as set forth below, the New Notes will be issued in the form of one
or more registered notes in global form without coupons (each a "Global Note").
Each Global Note will be deposited with, or on behalf of, The Depository Trust
Company (the "Depository") and registered in the name of Cede & Co., as nominee
of the Depository, or will remain in the custody of the Trustee pursuant to the
FAST Balance Certificate Agreement between the Depository and the Trustee.
The Depository has advised the Company that it is (i) a limited purpose
trust company organized undee the laws of the State of New York, (ii) a member
of the Federal Reserve System, (iii) a "clearing corporation" within the meaning
of the Uniform Commercial Code, as amended, and (iv) a "Clearing Agency"
registered pursuant to Section 17A of the Exchange Act. The Depository was
created to hold securities for its participants (collectively, the
"Participants") and facilitates the clearance and settlement of securities
transactions between Participants through electronic book-entry changes to the
accounts of its Participants, thereby eliminating the need for physical transfer
and delivery of certificates. The Depository's Participants include securities
brokers and dealers (including the Initial Purchasers), banks and trust
companies, clearing corporations and certain other organizations. Access to the
Depository's system is also available to other entities such as banks, brokers,
dealers and trust companies (collectively, the "Indirect Participants") that
clear through or maintain a custodial relationship with a Participant, either
directly or indirectly.
The Company expects that pursuant to procedures established by the
Depository (i) upon deposit of the Global Notes, the Depository will credit the
accounts of Participants with an interest in the Global Note and (ii) ownership
of the New Notes will be shown on, and the transfer of ownership thereof will be
effected only through, records maintained by the Depository (with respect to the
Interest of Participants), the Participants and the Indirect Participants. The
laws of some states require that certain persons take physical delivery in
definitive form of securities that they own and that security interests in
negotiable instruments can only be perfected by delivery of certificates
representing the instruments. Consequently, the ability to transfer New Notes to
pledge the New Notes as collateral will be limited to such extent.
So long as the Depository or its nominee is the registered owner of a Global
Note, the Depository or such nominee, as the case may be, will be considered the
sole owner or Holder of the New Notes represented by the Global Note for all
purposes under the Indenture. Except as provided below, owners of
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beneficial interests in a Global Note will not be entitled to have New Notes
represented by such Global Note registered in their names, will not receive or
be entitled to receive physical delivery of Certificated Securities, and will
not be considered the owners or Holders thereof under the Indenture for any
purpose, including with respect to the giving of any directions, instruction or
approval to the Trustee thereunder. As a result, the ability of a person having
a beneficial interest in New Notes represented by a Global Note to pledge such
interest to persons or entities that do not participate in the Depository's
system or to otherwise take action with respect to such interest, may be
affected by the lack of a physical certificate evidencing such interest.
Accordingly, each Person owning a beneficial interest in a Global Note must
rely on the procedures of the Depository and, if such Person is not a
Participant or an Indirect Participant, on the procedures of the Participant
through which such Person owns its interest, to exercise any rights of a Holder
under the indenture or such Global Note. The Company, the Guarantor and the
Subordinated Guarantor understand that under existing industry practice, in the
event the Company requests any action of Holders or a Person that is an owner of
a beneficial interest in a Global Note desires to take any action that the
Depository, as the Holder of such Global Note, is entitled to take, the
Depository would authorize the Participants to take such action and the
Participant would authorize Persons owning through such Participants to take
such action or would otherwise act upon the instruction of such Persons. Neither
the Company, the Guarantor and the Subordinated Guarantor, nor the Trustee will
have any responsibility or liability for any aspect of the records relating to
or payments made on account of Notes by the Depository, or for maintaining,
supervising or reviewing any records of the Depository relating to such Notes.
Payments with respect to the principal of, premium, if any, and interest on
any New Notes represented by a Global Note registered in the name of the
Depository or its nominee on the applicable record date will be payable by the
Trustee to or at the direction of the Depository or its nominee in its capacity
as the registered Holder of the Global Note representing such New Notes under
the Indenture. Under the terms of the Indenture, the Company, the Guarantor and
the Subordinated Guarantor and the Trustee may treat the persons in whose names
the New Notes, including the Global Notes, are registered as the owners thereof
for the purpose of receiving such payment and for any and all other purposes
whatsoever. Consequently, neither the Company, the Guarantor and the
Subordinated Guarantor nor the Trustee has or will have any responsibility or
liability for the payment of such amounts to beneficial owners of New Notes
(including principal, premium, if any, and interest), or to immediately credit
the accounts of the relevant Participants with such payment, in amounts
proportionate to their respective holdings in principal amount of beneficial
interest in the Global Note as shown on the records of the Depository. Payments
by the Participants and the Indirect Participants to the beneficial owners of
Notes will be governed by standing instructions and customary practice and will
be the responsibility of the Participants of the Indirect Participants.
GOVERNING LAW
The Indenture provides that it, the Notes and the Guarantees will be
governed by, and construed in accordance with, the laws of the State of New York
without giving effect to applicable principles of conflicts of law to the extent
that the application of the law of another jurisdiction would be required
thereby.
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CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following discussion of certain of the anticipated federal income tax
consequences of an exchange of Existing Notes for New Notes and of the purchase,
ownership, and disposition of the New Notes is based upon the provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), the final, temporary,
and proposed regulations promulgated thereunder, and administrative rulings and
judicial decisions now in effect, all of which are subject to change (possibly
with retroactive effect) or different interpretations. This summary does not
purport to deal with all aspects of federal income taxation that may be relevant
to a particular investor, nor any tax consequences arising under the laws of any
state, locality, or foreign jurisdiction, and it is not intended to be
applicable to all categories of investors, some of which, such as dealers in
securities, banks, insurance companies, tax-exempt organizations, foreign
persons, persons that hold New Notes as part of a straddle or conversion
transaction, or holders subject to the alternative minimum tax, may be subject
to special rules. In addition, the summary is limited to persons that will hold
the New Notes as "capital assets" (generally, property held for investment)
within the meaning of Section 1221 of the Code. ALL INVESTORS ARE ADVISED TO
CONSULT THEIR OWN TAX ADVISERS REGARDING THE FEDERAL, STATE, LOCAL, AND FOREIGN
TAX CONSEQUENCES OF THE EXCHANGE AND THE OWNERSHIP AND DISPOSITION OF NEW NOTES.
TAXATION OF HOLDERS ON EXCHANGE
Although the matter is not free from doubt, an exchange of Existing Notes
for New Notes should not be a taxable event to holders of Existing Notes and
holders should not recognize any taxable gain or loss as a result of such an
exchange. Accordingly, a holder would have the same adjusted basis and holding
period in the New Notes as it had in the Existing Notes immediately before the
exchange. Further, the tax consequences of ownership and disposition of any New
Notes should be the same as the tax consequences of ownership and disposition of
Existing Notes.
MARKET DISCOUNT
If a holder purchases a Note for an amount that is less than its principal
amount, the amount of the difference will be treated as "market discount" for
federal income tax purposes, unless such difference is less than a specified de
minimis amount. Under the market discount rules, a holder will be required to
treat any principal payment on, or any gain on the sale, exchange, retirement or
other disposition of, a Note as ordinary income to the extent of the market
discount which has not previously been included in income and is treated as
having accrued on such a Note at the time of such payment or disposition. In
addition, the holder may be required to defer, until the maturity of the Note or
its earlier disposition in a taxable transaction, the deduction of all or a
portion of the interest expense on any indebtedness incurred or continued to
purchase or carry such Note.
Any market discount will be considered to accrue ratably during the period
from the date of acquisition to the maturity date of the Note, unless the holder
elects to accrue on a constant interest method. A holder of a Note may elect to
include market discount in income currently as it accrues (on either a ratable
or constant interest method), in which case the rule described above regarding
deferral of interest deductions will not apply. This election to include market
discount in income currently, once made, applies to all market discount
obligations acquired on or after the first taxable year to which the election
applies and may not be revoked without the consent to the Internal Revenue
Service (the "IRS").
AMORTIZABLE BOND PREMIUM
A holder that purchases a Note for an amount in excess of the sum of its
principal amount will be considered to have purchased the Note at a "premium." A
holder generally may elect to amortize the premium over the remaining term of
the Note on a constant yield method. The amount amortized in any year will be
treated as a reduction of the holder's interest income from the Note. Bond
premium on a Note
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held by a holder that does not make such an election will decrease the gain or
increase the loss otherwise recognized on disposition of the Note. The election
to amortize premium on a constant yield method once made applies to all debt
obligations held or subsequently acquired by the electing holder on or after the
first day of the first taxable year to which the election applies and may not be
revoked without the consent of the IRS.
SALE, EXCHANGE AND RETIREMENT OF NOTES
A holder's tax basis in a Note will, in general, be the holder's cost
therefor, increased by market discount previously included in income by the
holder and reduced by any amortized premium. Upon the sale, exchange or
retirement of a Note, a holder will recognize gain or loss equal to the
difference between the amount realized upon the sale, exchange or retirement
(less any accrued interest, which will be taxable as such) and the adjusted tax
basis of the Note. Except as described above with respect to market discount,
such gain or loss will be capital gain or loss and will be long-term capital
gain or loss if at the time of sale, exchange or retirement the Note has been
held for more than one year. Under current law, long-term capital gains of
individuals are, under certain circumstances, taxed at lower rates than items of
ordinary income. The deductibility of capital losses is subject to limitations.
BACKUP WITHHOLDING
In general, information reporting requirements will apply to certain
payments of principal, interest and premium paid on Notes and to the proceeds of
sale of a Note made to holders other than certain exempt recipients (such as
corporations). A 31% backup withholding tax will apply to such payments if the
holder fails to provide a taxpayer identification number or certification of
foreign or other exempt status or fails to report in full dividend and interest
income.
Any amounts withheld under the backup withholding rules will be allowed as a
refund or a credit against such holder's U.S. federal income tax liability
provided the required information is furnished to the IRS.
THE FOREGOING SUMMARY OF THE PRINCIPAL FEDERAL INCOME TAX CONSEQUENCES TO
HOLDERS DOES NOT DISCUSS ALL ASPECTS OF FEDERAL INCOME TAXATION THAT MAY BE
RELEVANT TO A PARTICULAR HOLDER OF NOTES IN LIGHT OF HIS PARTICULAR
CIRCUMSTANCES AND INCOME TAX SITUATION. EACH HOLDER OF NOTES SHOULD CONSULT SUCH
HOLDER'S TAX ADVISOR AS TO THE SPECIFIC TAX CONSEQUENCES TO SUCH HOLDER OF THE
OWNERSHIP AND DISPOSITION OF THE NOTES, INCLUDING THE APPLICATION AND EFFECT OF
STATE, LOCAL, FOREIGN AND OTHER TAX LAWS, OR SUBSEQUENT VERSIONS THEREOF.
ERISA CONSIDERATIONS
Sections 406 and 407 of the Employee Reitrement Income Security Act of 1974,
as amended ("ERISA"), and Section 4975 of the Code prohibit certain employee
benefit plans, individual retirement accounts, individual retirement annuities,
and employee annuity plans ("Plans") from engaging in certain transactions with
persons who, with respect to such Plan, are "parties in interest" under ERISA or
"disqualified persons" under the Code. A violation of these "prohibited
transactions" rules may generate excise taxes under the Code and other
liabilities under ERISA for such persons. Possible violations of the prohibited
transaction rules occur if the Notes are purchased with the assets of any Plan
if the Company or any of its affiliates is a party in interest or disqualified
person with respect to such Plan, unless such acquisition is subject to a
statutory or administrative exemption.
The foregoing discussion is general in nature and is not intended to be
all-inclusive. Any fiduciary of a Plan considering the purchase of the Notes
should consult its legal advisors regarding the consequences of such purchases
under ERISA and the Code. If the Plan is not subject to ERISA, the fiduciary
should consult its legal advisors regarding the consequences of any state law or
Code considerations.
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PLAN OF DISTRIBUTION
Based on certain no action letters issued by the staff of the commission to
third parties in unrelated transactions, the Company believes that New Notes
issued pursuant to the Exchange Offer may be offered for resale, resold or
otherwise transferred by holders thereof (other than (i) any holder who is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act or (ii) any broker-dealer that purchases Notes from the Company to resell
pursuant to Rule 144A under the Securities Act ("Rule 144A") or any other
available exemption) without compliance with the registration and prospectus
delivery provisions of the Securities Act, provided that such New Notes are
acquired in the ordinary course of the holder's business and such holders have
no arrangement or understanding with any person to participate in a distribution
of such New Notes and are not participating in, and do not intend to participate
in, the distribution of such New Notes. In addition, to comply with the
securities laws of certain jurisdictions, if applicable, the New Notes may not
be offered or sold unless they have been registered or qualified for sale in
such jurisdiction or an exemption from registration or qualification is
available and complied with. The Company has agreed, pursuant to the
Registration Rights Agreement and subject to certain specified limitations
therein, to register to qualify the New Notes for offer or sale under the
securities or blue sky laws of such jurisdictions as any holder of the Notes
reasonably request in writing.
Each broker-dealer that receives New 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 New Notes. 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 New Notes received in exchange for Existing Notes
where such Existing Notes were acquired as a result of market-making activities
or other trading activities. The Company, Guarantor and Subordinated Guarantor
have agreed that, for a period of 120 days after the Expiration Date, they will
make this Prospectus, as amended or supplemented, available to any broker-dealer
for use in connection with any such resale.
The Company, the Guarantor and the Subordinated Guarantor will not receive
any proceeds from any sale of New Notes by broker-dealers. New 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 New 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 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 or the purchasers of any such New Notes.
Any broker-dealer that resells New 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 New Notes may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit on any
such resale of New Notes and any commission 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.
For a period of 120 days after the close of the Exchange Offer the Company,
the Guarantor and the Subordinated Guarantor 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. The
Company, the Guarantor and the Subordinated Guarantor have agreed to pay all
expenses incident to the Exchange Offer other than commissions or concessions of
any brokers or dealers and will indemnify the holders of the Existing Notes
(including any broker-dealers) against certain liabilities, including
liabilities under the Securities Act.
91
<PAGE>
EXPERTS
The consolidated financial statements of the Company as of December 31, 1995
and 1996 and for the years then ended, included in the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1996, have been audited by
Ernst & Young LLP, independent auditors, as stated in their report with respect
thereto. The consolidated financial statements of the Company for the year ended
December 31, 1994, included in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996, have been audited by KPMG Peat Marwick LLP,
independent auditors, as stated in their report with respect thereto. The
consolidated financial statements are included in reliance upon such reports
given upon the authority of such firms as experts in accounting and auditing.
LEGAL MATTERS
The validity of the New Notes, the Guarantees and the Subordinated Guarantee
offered hereby will be passed upon for the Company, the Guarantor and the
Subordinated Guarantor by Paul, Weiss, Rifkind, Wharton & Garrison, New York,
New York. Certain matters with respect to the laws of New Jersey and Maryland
will be passed upon for the Company and the Guarantor by Piper & Marbury L.L.P.,
Baltimore, Maryland.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements under "Prospectus Summary," "The Recapitalization," "Use
of Proceeds," "Selected Historical Financial Data," "Management's Discussion and
Analysis of Financial Condition and Results of Operations," "Business" and
elsewhere in this Prospectus and in the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1996 and Quarterly Report on Form 10-Q for
the quarter ended June 30, 1997 constitute "forward-looking statements" within
the meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results, levels of
activity, performance or achievements of the Company, or industry results, to be
materially different from any future results, levels of activity, performance or
achievements expressed or implied by such forward-looking statements. Such
factors include, among others, the following: substantial leverage and ability
to service debt; changing market trends in the mobile office industry; general
economic and business conditions including a prolonged or substantial recession;
the ability of the Company to implement its business and growth strategy and
maintain and enhance its competitive strengths; the ability to finance fleet and
branch expansion, locate and finance acquisitions, and integrate recently
acquired businesses into the Company; the ability of the Company to obtain
financing for general corporate purposes; competition; availability of key
personnel; industry over capacity; and changes in, or the failure to comply
with, government regulations. See "Risk Factors." As a result of the foregoing
and other factors, no assurance can be given as to future results, levels of
activity and achievements and neither the Company nor any other person assumes
responsibility for the accuracy and completeness of these forward-looking
statements.
92
<PAGE>
ANNEX A
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1996
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 033-68444
WILLIAMS SCOTSMAN, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
MARYLAND 52-0665775
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
8211 TOWN CENTER DRIVE 21236
BALTIMORE, MARYLAND (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
</TABLE>
Registrants' telephone number, including area code: (410) 931-6000
Securities registered pursuant to Section 12(b) of the Act:
<TABLE>
<CAPTION>
<S> <C>
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
- --------------------------------------------- ---------------------------------------------
None None
</TABLE>
Securities registered pursuant to Section 12(g) of the Act:
None
- --------------------------------------------------------------------------------
(TITLE OF CLASS)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/ No / /
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. /X/
The Registrant is a wholly-owned subsidiary of Scotsman Holdings, Inc., a
Delaware corporation. As of March 28, 1997, Scotsman Holdings, Inc. owned
3,320,000 shares of common stock ("Common Stock") of the Registrant.
A-1
<PAGE>
PART I
ITEM 1. BUSINESS
GENERAL
Williams Scotsman, Inc., formerly known as The Scotsman Group, Inc.,
("Scotsman" or the "Company") believes, based upon management's assessment of
the industry, it is the second largest lessor of mobile office units in the
United States as ranked by lease fleet size and revenues. The Company maintains
a fleet of approximately 40,600 units which are leased through a network of 56
branch offices in 32 states. To a lesser extent, the Company also sells new and
used mobile office units and sells and leases modular structures. The Company's
products provide flexible, relocatable, cost-effective and timely solutions for
space requirements. The Company has over 12,500 customers operating in
approximately 450 diverse industries including education, utilities, health
care, chemicals, engineering services and construction.
The Company's primary business is the leasing of mobile office units. These
units typically range in size from eight to 14 feet in width and 16 to 70 feet
in length and are generally constructed using a steel frame undercarriage with
an exterior of wood or aluminum. The Company has the flexibility to readily
adapt its lease fleet units to meet a wide variety of customer needs. Units can
be configured using any combination of the Company's standard products which are
offered in a variety of sizes and floor plans. The basic functional design of
mobile office units has remained virtually unchanged since the inception of the
industry in the 1940s. Mobile office units are extremely durable and, due in
part to an active maintenance program, the Company's units retain a significant
percentage of their original value. The Company's lease fleet units have an
average age of approximately eight years and an estimated economic useful life
of approximately 20 years.
To a lesser extent, the Company also sells, leases and services modular
structures, which compete with conventional space alternatives. Modular
structures revenues represented less than 1% of total revenues in the year ended
December 31, 1996. Each modular structure typically is three thousand square
feet or more in size and comprises several smaller units which are assembled
into a single structure at the building site. Modular structures can generally
be dismantled and refurbished as individual mobile office units and returned to
the Company's lease fleet.
On December 16, 1993, Scotsman Holdings, Inc. ("Holdings") acquired all of
the issued and outstanding capital stock of the Company. In connection with the
acquisition and related refinancing (the "Acquisition"), the Company issued
$165.0 million aggregate principal amount of 9 1/2% Senior Secured Notes Due
2000 and entered into a Loan and Security Agreement with Congress Financial
Corporation. Upon consummation of the Acquisition, the Company retired certain
existing indebtedness consisting of $175.0 million principal amount of 11.31%
Senior Secured Notes and a $15.6 million senior secured credit facility.
The Company and its predecessors have operated in the mobile office and
modular structures industry since 1945. In 1990 the Company more than doubled
its size through the combination of Scotsman Manufacturing Co., Inc. ("Scotsman
Manufacturing") with Williams Mobile Offices, Inc. ("Williams"). Since 1990, the
Company has substantially eliminated duplicate functions of the two predecessor
companies, eliminated manufacturing operations, and repositioned the Company to
significantly reduce its modular structures operations and focus on its core
leasing activities, which accounted for substantially all of the total gross
profit in the year ended December 31, 1996.
The Company purchases its new units through third-party suppliers. The
Company believes there are numerous manufacturers and suppliers of mobile office
units and modular structures which supply these products at competitive prices
throughout the United States. The Company anticipates being able to procure an
adequate supply of product on acceptable terms for its projected operational
requirements.
A-2
<PAGE>
The Company does not believe that the loss of any one of its suppliers would
have a material adverse effect on its operations.
RECENT DEVELOPMENTS
The Company has announced that its parent company, Scotsman Holdings, Inc.,
is considering various strategic alternatives, including a sale of the Company.
In this connection, Scotsman Holdings has retained Goldman, Sachs & Co. as its
financial advisor. There can be no assurance that any transaction will be
consummated.
OPERATING STRATEGY
Due to the local and regional nature of its business, the Company's goals
are to become the leader in each of the local markets in which it competes and
to expand its coverage to additional local markets. To achieve market
leadership, the Company has implemented a strategy which emphasizes (i) superior
service, (ii) a well maintained, readily available and versatile lease fleet,
(iii) effective fleet management using proprietary information systems, and (iv)
targeted marketing through an experienced and motivated sales force. The Company
believes that it is generally the first or second largest provider of
relocatable space in each of its regional markets as measured by lease fleet
size and revenues. The Company's branch offices are distributed throughout the
United States and are located in the majority of the major metropolitan areas.
To further its market leadership, expand its coverage to additional local
markets and leverage its existing cost structure, the Company plans to continue
to capitalize on the industry's fragmentation by acquiring mobile office lease
fleets. During 1994, the Company acquired approximately 5,500 units through the
acquisition of Mobile Holdings, Inc. ("MFO") in September and from other lease
fleet acquisitions. During 1995 and 1996, the Company acquired a total of
approximately 3,600 units through the acquisition of various lease fleets. See
note 1 of Notes to Financial Statements included elsewhere herein. Increased
penetration in existing markets through acquisitions of competitors allows the
elimination of duplicate branch offices and overhead, an expanded customer base
and facilitates higher profitability. Expanded coverage to additional local
markets allows the Company to capitalize on market-specific opportunities,
diversify geographically and further leverage its cost structure.
COMPETITION
Although the Company's competition varies significantly by market, the
mobile office and modular structure industry, in general, is highly competitive.
The Company competes primarily in terms of product availability, customer
service and price. The Company believes that its reputation for customer service
and its ability to offer a wide selection of units suitable for many varied uses
at competitive prices allow it to compete effectively. However, certain of the
Company's competitors are less leveraged, have greater market share or product
availability in a given market and have greater financial resources than the
Company.
EMPLOYEES
At December 31, 1996, the Company employed 607 persons. None of the
Company's employees are covered by a collective bargaining agreement. The
Company considers its relationship with its employees to be good.
REGULATORY MATTERS
The Company must comply with various federal, state and local environmental,
health and safety laws and regulations in connection with its operations. The
Company believes that it is in substantial compliance with applicable
environmental, health and safety laws and regulations. In addition to compliance
A-3
<PAGE>
costs, the Company may incur costs related to alleged environmental damage
associated with past or current properties owned or leased by the Company. The
Company believes that its liability, if any, for any environmental remediation
will have no material adverse effect on its financial condition.
ITEM 2. PROPERTIES
The Company's headquarters is a three-story modular office structure located
on 3.1 acres in suburban Baltimore, Maryland. The location, ownership status,
approximate size and primary use of the Company's other principal properties are
set forth in the table below.
<TABLE>
<CAPTION>
OWNERSHIP SIZE
LOCATION STATUS IN ACRES PRIMARY USE
- ---------------------------------------------------------------- ----------- --------- -------------------------
<S> <C> <C> <C>
Albuquerque, NM................................................. Owned 2.0 Branch Office
Albuquerque, NM................................................. Leased 1.7 Drop Lot
Allentown, PA................................................... Leased 4.8 Branch Office
Atlanta, GA..................................................... Owned 6.2 Branch Office
Atlanta, GA..................................................... Owned 30.82 Branch Office (future )
Baltimore, MD................................................... Owned 7.3 Branch Office
Berlin, NJ...................................................... Owned 26.0 Branch Office
Birmingham, AL.................................................. Leased 4.9 Branch Office
Boise, ID....................................................... Leased 2.0 Branch Office
Casper, WY...................................................... Leased 2.0 Branch Office
Charles City, VA................................................ Owned 9.2 Branch Office (future )
Charleston, SC.................................................. Leased 3.0 Branch Office
Charleston, SC.................................................. Owned 1.5 Branch Office
Charlestown, WV................................................. Leased 10.5 Branch Office
Cherry Hill, NJ................................................. Owned 4.3 Branch Office
Cherry Hill, NJ................................................. Leased 18.6 Branch Office (future )
Cherry Hill (Mt. Laurel), NJ.................................... Leased 7.5 Storage Lot
Cheshire, CT.................................................... Leased 9.6 Branch Office
Chicago, IL..................................................... Owned 6.5 Branch Office
Cincinnati, OH.................................................. Owned 6.2 Branch Office
Cleveland, OH................................................... Owned 8.0 Branch Office
Columbus, OH.................................................... Leased 1.1 Branch Office
Dallas, TX...................................................... Leased 4.4 Branch Office
Denver, CO...................................................... Leased 4.0 Branch Office
Detroit, MI..................................................... Leased 4.6 Branch Office
Durham, NC...................................................... Leased 4.4 Branch Office
Ellwood City, PA................................................ Leased 5.0 Storage Lot
Fresno, CA...................................................... Leased 3.5 Branch Office
Ft. Lauderdale, FL.............................................. Leased 6.0 Branch Office
Ft. Myers, FL................................................... Owned 8.9 Branch Office
Ft. Myers, FL................................................... Owned 1.9 Storage Lot
Grand Junction, CO.............................................. Leased 0.65 Branch Office
Houston, TX..................................................... Owned 7.87 Branch Office
Jacksonville, FL................................................ Leased 2.3 Branch Office
Langhorne, PA................................................... Leased LESS.THAN1 Sales Office
Kansas City, MO................................................. Leased 2.19 Branch Office
Irmo, SC........................................................ Owned 5.0 Branch Office
</TABLE>
A-4
<PAGE>
<TABLE>
<CAPTION>
OWNERSHIP SIZE
LOCATION STATUS IN ACRES PRIMARY USE
- ---------------------------------------------------------------- ----------- --------- -------------------------
<S> <C> <C> <C>
Kingwood, TX.................................................... Leased LESS.THAN1 ac. Administrative Office
Kinston, NC..................................................... Leased 3.0 Storage Lot
Lafayette, LA................................................... Leased 4.0 Branch Office
Las Vegas, NV................................................... Leased 2.5 Branch Office
Long Island, NY................................................. Leased 3.1 Storage Lot
Louisville, KY.................................................. Leased 3.0 Branch Office
Manassas, VA.................................................... Leased 2.7 Branch Office
Mira Loma, CA................................................... Leased 17.0 Branch/Storage
Mobile, AL...................................................... Leased 3.0 Branch Office
New Orleans, LA................................................. Leased 10.15 Branch Office
Norfolk, VA..................................................... Leased 5.5 Branch Office (future )
North East, MD.................................................. Owned 33.1 Leased Property
Orlando, FL..................................................... Leased 5.5 Branch Office
Orlando, FL..................................................... Owned 4.0 Service Facility
Pelham, NH...................................................... Owned 16.0 Branch Office
Phoenix, AZ..................................................... Leased 2.2 Branch Office
Phoenix, AZ..................................................... Leased 10.0 Branch Office (future )
Pittsburgh, PA.................................................. Leased 2.0 Branch Office
Portland, OR.................................................... Leased 1.3 Branch Office
Richmond, VA.................................................... Owned 6.6 Branch Office
Riverside, CA................................................... Leased 13.5 Branch Office
Rotterdam, NY................................................... Leased 2.1 Branch Office
Salt Lake City, UT.............................................. Leased 4.7 Branch Office
San Antonio, TX................................................. Leased 2.6 Branch Office
San Diego, CA................................................... Leased 1.3 Branch Office
Santa Fe Springs, CA............................................ Leased 16.5 Branch Office
Seattle, WA..................................................... Leased 1.4 Branch Office
South Kearny, NJ................................................ Leased 5.0 Branch Office
St. Charles, MO................................................. Leased 2.5 Branch Office
Statesville, NC................................................. Leased 3.0 Storage Lot
Syracuse, NY.................................................... Leased 5.0 Branch Office
Tampa, FL....................................................... Owned 4.8 Branch Office
Tulsa, OK....................................................... Leased 2.1 Branch Office
Tulsa, OK....................................................... Owned 4.3 Branch Office
Vacaville, CA................................................... Leased 11.0 Branch Office
</TABLE>
The Company believes that its existing owned and leased facilities are
adequate for its operations.
ITEM 3. LEGAL PROCEEDINGS
The Company is involved in certain legal actions arising in the ordinary
course of business. The Company believes that none of these actions, either
individually or in the aggregate, will have a material adverse effect on the
Company's business, results of operations or financial condition.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
A-5
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
There is no established public trading market for the Company's Common
Stock. The Company is a wholly-owned subsidiary of Scotsman Holdings, Inc., a
Delaware corporation.
During 1996, the Company paid dividends to Holdings in the aggregate amount
of $2,070,000, in accordance with provisions of the Note Indenture. The Company
does not intend to pay any further dividends in the foreseeable future but
reserves the right to do so.
Pursuant to the Scotsman Holdings, Inc. 1994 Employee Stock Option Plan (the
"Plan"), options for 115,050 shares of Holdings were granted during 1996. No
shares of Holdings' common stock were issued during 1996 upon the exercise of
the options previously granted under the Plan. This transaction was exempt from
the registration requirements of the Securities Act of 1933, as amended,
pursuant to Section 4(2) thereunder.
A-6
<PAGE>
ITEM 6. SELECTED HISTORICAL FINANCIAL DATA
The following tables summarize certain selected historical financial data
which should be read in conjunction with "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and the Financial Statements
appearing elsewhere herein. The selected historical financial data set forth
below for the fiscal years ended December 31, 1992, 1993, 1994, 1995 and 1996
and as of the end of each of such periods have been derived from the audited
Financial Statements.
<TABLE>
<CAPTION>
FISCAL YEARS ENDED (1)
----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1992 1993 1994 1995 1996
---------- ---------- ---------- ---------- ----------
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Leasing............................................ $ 72,744 $ 73,384 $ 79,342 $ 96,498 $ 116,769
New units sales.................................... 27,709 18,501 22,290 23,126 28,042
Delivery and installation.......................... 28,369 24,237 26,511 28,162 32,767
Other.............................................. 3,712 3,011 5,832 10,734 17,564
---------- ---------- ---------- ---------- ----------
Total............................................ $ 132,534 $ 119,133 $ 133,975 $ 158,520 $ 195,142
Gross profit:
Leasing............................................ $ 41,146 $ 39,340 $ 39,960 $ 49,978 $ 59,534
New unit sales..................................... 3,354 2,534 2,854 3,853 4,999
Delivery and installation.......................... 4,874 3,363 4,942 6,114 7,520
Other.............................................. 2,515 1,639 4,285 8,108 13,590
---------- ---------- ---------- ---------- ----------
Total............................................ $ 51,889 $ 46,876 $ 52,041 $ 68,053 $ 85,643
Selling, general and administrative expenses......... $ 28,237 $ 24,264 $ 29,303 $ 36,295 $ 42,260
Restructuring costs (2).............................. 1,921 6,082 912 -- --
Earnings (loss) from continuing operations before
extraordinary item................................. (582) (3,841) 1,072 4,559 9,195
Earnings (loss) from continuing operations before
extraordinary item per common share................ (0.17) (1.15) 0.32 1.37 2.77
---------- ---------- ---------- ---------- ----------
Ratio of earnings to fixed charges (3)............... 1.0x 0.7x 1.1x 1.3x 1.6x
BALANCE SHEET DATA (4):
Rental equipment, net................................ $ 209,388 $ 246,550 $ 283,181 $ 324,207 $ 356,183
Total assets......................................... 263,287 295,882 335,633 383,679 428,697
Long-term debt....................................... 191,019 176,408 206,346 242,695 268,753
Stockholder's equity................................. 17,585 56,877 57,949 62,508 69,633
</TABLE>
- ------------------------
(1) On December 16, 1993, Holdings purchased all of the issued and outstanding
stock of Scotsman. The acquisition was accounted for under the purchase
method of accounting by Holdings, and the Company restated its balance sheet
to "push down" the effects of the purchase accounting adjustments.
(2) Restructuring costs consist primarily of costs incurred in connection with
the acquisition of Scotsman by Holdings in December 1993.
(3) The ratio of earnings to fixed charges is computed by dividing fixed charges
into earnings from continuing operations before income taxes and
extraordinary items plus fixed charges. Fixed charges include interest,
expensed or capitalized, including amortization of deferred financing costs
and debt discount and the estimated interest component of rent expense.
(4) Balance sheet data at December 31, 1993 reflect the acquisition of Scotsman
by Holdings and the related "push down" of the purchase accounting
adjustments. See note (1) above.
A-7
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion regarding the financial condition and results of
operations of the Company for the three fiscal years ended December 31, 1996
should be read in conjunction with the more detailed information and Financial
Statements included elsewhere herein.
GENERAL
The Company derives its revenues and earnings from the leasing and sale of
mobile office units and modular structures and their delivery and installation.
Leasing operations account for a majority of the Company's revenues and gross
profits and are primarily comprised of the leasing of mobile office units and
the sale of units from the Company's lease fleet. Used mobile office units are
sold by the Company in the ordinary course of its business at either fair market
value or pursuant to pre-established lease purchase options. The Company's cash
flow from leasing operations is favorably affected by the sale of used units
from the Company's lease fleet, as the costs of such units generally have been
incurred in previous fiscal periods. Accordingly, the sale of used units results
in the availability of the total cash proceeds and the reporting of gross profit
on such sales.
New unit sales revenues are derived from the sale of new mobile offices,
similar to those units rented by the Company, and from the sale of modular
structures. Revenues from delivery and installation result from activities
related to the transportation and installation of and site preparation for both
leased and sold products. Other revenues are derived from the sale of parts,
granting of insurance waivers, rental and sale of steps and furniture and other
services provided by the Company.
The Company's business is affected by the economic conditions of the local
or regional markets in which it operates. Economic conditions have an impact
upon rental rates, fleet utilization and new unit sales. The Company, however,
believes that mobile office leasing is less affected by unfavorable economic
conditions than its other operations and that during periods of economic
uncertainty many businesses postpone or delay making major capital expenditures
for space needs and instead choose the flexibility and lower cost of leasing
mobile offices.
RESULTS OF OPERATIONS
FISCAL 1996 COMPARED WITH FISCAL 1995. Revenues in fiscal 1996 were $195.1
million, a $36.6 million or 23.1% increase from revenues of $158.5 million in
fiscal 1995. The increase resulted from a $20.3 million or 21.0% increase in
leasing revenue, a $4.9 million or 21.3% increase in new sales revenue, a $4.6
million or 16.4% increase in delivery and installation revenue and a $6.8
million or 63.3% increase in other revenue. The increase in leasing revenue is
attributable to a 10% increase in the average lease fleet to approximately
38,600 units, an increase in the average fleet utilization of approximately four
percentage points to 85% and an increase of $10 in the average monthly rental
rate. The increase in new sales revenue is primarily due to the overall branch
expansion that the Company has experienced during 1995 and 1996. The increase in
delivery and installation revenue is attributable to the increases in the
leasing and new unit sales revenue described above. Other revenue increased as a
result of increases in the rental of steps, ramps and furniture as well as
miscellaneous revenue related to services provided for customer-owned units.
Gross profit in fiscal 1996 was $85.6 million, a $17.6 million or 25.8%
increase from fiscal 1995 gross profit of $68.1 million. This increase is
primarily a result of an increase in leasing gross profit of $9.6 million or
19.1% and gross profit from other revenue of $5.5 million or 67.6%. The increase
in gross profit from leasing is a result of the increase in leasing revenue
described above while the leasing profit margins dropped slightly. This decline
in leasing profit margins is a result of the increases in depreciation and
amortization expense during fiscal 1996. Excluding depreciation and
amortization, leasing margins increased from 76.1% for fiscal 1995 to 77.2% for
fiscal 1996. The increase in gross profit from other revenue is due to the
increase in other revenue described above.
A-8
<PAGE>
Selling, general and administrative (S,G&A) expenses increased by $6.0
million or 16.4% from fiscal 1995, primarily due to an increase in field related
expenses. This increase is a result of the branch expansion activity experienced
by the Company during fiscal 1995 and 1996 and is comprised of a $3.6 million
increase in personnel expenses and a $0.7 million increase in occupancy
expenses.
Interest expense increased by 14.7% to $25.8 million in fiscal 1996 from
$22.5 million in fiscal 1995 primarily as a result of the increase in the
average balances outstanding under the revolving line of credit. The increase is
due to financing the fleet expansion and growth experienced by the Company
during 1996.
FISCAL 1995 COMPARED WITH FISCAL 1994. Revenues in fiscal 1995 were $158.5
million, a $24.5 million or 18.3% increase from revenues of $134.0 million in
fiscal 1994. The increase resulted primarily from a $17.2 million or 21.6%
increase in leasing revenue and a $4.9 million or 84.1% increase in other
revenue. The increase in leasing revenue is attributable to a 23.9% increase in
the average lease fleet to approximately 35,000 units, while average rental
rates declined slightly due to a change in the fleet mix and utilization dropped
slightly. The increase in the fleet reflects the acquisition activity by the
Company during 1995 as well as general fleet expansion. The increase in other
revenue is due to the overall increases in revenue enhancement programs,
primarily the rental of steps, as well as miscellaneous revenue related to
services provided for customer-owned units.
Gross profit in fiscal 1995 was $68.1 million, a $16.0 million or 30.8%
increase from fiscal 1994 gross profit of $52.0 million. This increase is
primarily a result of an increase in leasing gross profit of $10.0 million or
25.1% and gross profit from other revenue which increased by $3.8 million or
89.2%. The increase in gross profit from leasing is a result of the increase in
leasing revenue described above as well as an increase in the leasing profit
margin to 51.8% from 50.4% in 1994. Excluding depreciation and amortization,
leasing margins increased from 74.1% in fiscal 1994 to 76.1% in fiscal 1995. The
increase in gross profit from other revenue is due to the increase in other
revenue described above.
Selling, general and administrative (S,G&A) expenses increased by $7.0
million or 23.9% from fiscal 1994. This increase is comprised of a $5.1 million
increase in field related expenses, a $0.8 million increase in expenses related
to the deferred compensation plan and a $1.1 million increase in other S,G&A
expenses. The increase in field related expenses is the result of lease fleet
acquisitions and branch expansion activity experienced by the Company during
fiscal 1995 and is comprised primarily of a $3.9 million increase in personnel
expenses and a $0.9 million increase in occupancy expenses.
Interest expense increased by 20.2% to $22.5 million in 1995 from $18.7
million in fiscal 1994 primarily as a result of the increase in the average
balances outstanding under the revolving line of credit during 1995. This
increase is the result of financing fleet expansion and acquisitions made by the
Company.
LIQUIDITY AND CAPITAL RESOURCES
During fiscal 1994, 1995, and 1996, the Company's principal sources of funds
consisted of cash flow from operating and financing sources. Cash flow from
operating activities of $21.8 million in fiscal 1994, $33.9 million in fiscal
1995 and $46.0 million in fiscal 1996 was largely generated by its leasing
operations which included the rental and sale of units from the Company's lease
fleet. Mobile office leasing operations have been the most reliable source of
the Company's cash flow.
The Company has increased its EBITDA and believes that EBITDA provides the
best indicator of its financial performance and provides the best measure of its
ability to meet historical debt service requirements. The Company defines EBITDA
as net income before depreciation, amortization, interest, provision for
deferred compensation, and income taxes. EBITDA as defined by the Company does
not represent cash flow from operations as defined by generally accepted
accounting principles and should not be considered as an alternative to cash
flow as a measure of liquidity, nor should it be considered as an alternative to
net income as an indicator of the Company's operating performance. The Company's
EBITDA increased by $18.8 million or 33.3% to $75.4 million in fiscal 1996
compared to $56.6 million in
A-9
<PAGE>
fiscal 1995. This increase in EBITDA is a result of increased leasing activity
resulting from the overall increase in the number of units in the fleet and new
unit sales activity, partially offset by increased SG&A expenses to support the
increased activities during fiscal 1996.
Cash flow used in investing activities was $46.7 million in fiscal 1994,
$68.0 million in fiscal 1995 and $70.0 million in fiscal 1996. The Company's
primary capital requirements are for the purchase of new units for its lease
fleet and units purchased through acquisition. The Company seeks to maintain its
lease fleet in good condition at all times and generally increases the size of
its lease fleet only in those local or regional markets experiencing economic
growth. During fiscal 1994, 1995 and 1996, the Company significantly increased
its net capital expenditures through purchases of new units for the rental
fleet, capital improvements and betterments for existing units and the
acquisitions of existing rental fleets including the acquisition of MFO in 1994,
increasing the size of the rental fleet by approximately 8,000 units during
1994, 4,000 units during 1995 and 3,000 units during 1996. This increased
activity was in response to increased customer demand and the implementation of
the Company's acquisition strategy. The following table sets forth the Company's
investment in its lease fleet for the periods indicated.
<TABLE>
<CAPTION>
FISCAL YEARS ENDED
DECEMBER 31,
-------------------------------
<S> <C> <C> <C>
1994 1995 1996
--------- --------- ---------
<CAPTION>
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Gross capital expenditures for rental equipment:
Acquisitions........................................................................... $ 21.2 $ 25.0 $ 3.1
New units and betterments.............................................................. 40.6 47.1 69.2
--------- --------- ---------
61.8 72.1 72.3
Book values of sold, used units.......................................................... (6.4) (7.7) (9.7)
--------- --------- ---------
Net capital expenditures for rental equipment............................................ $ 55.4 $ 64.4 $ 62.6
--------- --------- ---------
Lease fleet maintenance expenses......................................................... $ 13.9 $ 15.3 $ 16.7
--------- --------- ---------
--------- --------- ---------
</TABLE>
The Company believes it can manage its capital requirements for its lease
fleet, and thus its cash flow, through the careful monitoring of its lease fleet
additions. For instance, the Company believes that during an economic downturn
it can sell used units while limiting additions to its lease fleet to maintain
cash flow. Selling used units during an economic downturn may result in lower
sales prices for the Units. During fiscal 1994, 1995 and 1996, selling prices
for used units (excluding units sold pursuant to purchase options) averaged
approximately 102%, 101% and 97%, respectively, of total capitalized cost of the
unit. Such costs include the cost of the unit as well as costs of significant
improvements made to the unit. See further explanation below and note 2 of Notes
to Financial Statements. Historically, the Company has recognized net gains on
the sale of used units.
Lease fleet maintenance expenses represent the costs for repairing,
refurbishing and servicing used units and are included in the Company's cost of
leasing. Generally, costs of improvements and betterments aggregating less than
$1,000 per unit are expensed as incurred. Expenditures greater than $1,000 that
significantly extend the economic useful life of a unit or that materially alter
a unit's composition are capitalized. The Company's maintenance and
refurbishment program is designed to help (i) maintain the value of lease fleet
units and (ii) realize rental rates and operating cash flows from older units
comparable to those from newer units. The sale of used units helps preserve the
overall high quality of the Company's lease fleet and enhances cash flow.
Other capital expenditures of $1.2 million, $6.9 million and $10.3 million
in fiscal 1994, 1995 and 1996, respectively, consist of those capital
expenditures for items not directly related to the lease fleet such as branch or
headquarters equipment, leasehold improvements and management information
systems.
A-10
<PAGE>
Cash provided by financing activities was $24.2 million in 1994, $33.8
million in 1995 and $23.9 million in 1996. Cash flow was generated primarily
from borrowings of long-term debt net of repayments thereon, offset by the
dividends paid to Holdings.
The Company's credit facility, at December 31, 1996, provides for a total
line of credit up to an aggregate principal amount of $120.0 million at any time
outstanding. Effective January 31, 1997, the facility was amended to increase
the total line of credit to an aggregate principal amount of $140.0 million. The
credit facility has three components, as amended: (i) a revolving line of credit
in an aggregate amount of up to $20.0 million at any one time outstanding to be
used by the Company for general operating and working capital purposes of the
Company and other corporate purposes (other than non-ordinary course
acquisitions), (ii) a line of credit in an amount of up to $110.0 million to be
used to purchase new fleet or to pay the cash purchase price (and related
expenses) for future arm's length acquisitions of assets or stock of companies
in the same or similar businesses as the business in which the Company is
currently engaged and (iii) a line of credit in an aggregate amount of up to
$10.0 million which may be used either for the purposes described in subsection
(i) or subsection (ii) above at the Company's option. The credit facility, as
amended, matures on December 16, 1997, is secured by a first lien on
substantially all of the assets of the Company and can be extended to December
16, 1998 at the option of the Company. Approximately $103.8 million is
outstanding under the credit facility at December 31, 1996. The credit facility
contains certain financial covenants and provides for certain events of default
as are customarily contained in facilities of a similar type.
Interest on the loans under the credit facility, as amended, is payable
monthly at the rate of 0.25% per annum in excess of the prime rate from time to
time publicly announced by Philadelphia National Bank, changing monthly with
each change in prime rate or 2.50% per annum in excess of LIBOR, with the
applicable rate to be selected at the option of the Company.
The Company believes it will have, for the next 12 months, sufficient
liquidity under its credit facility and from cash generated from operations to
meet its expected obligations as they arise.
SEASONALITY
The Company's operations are somewhat seasonal, with some effect on revenues
but little or no seasonal effect upon earnings.
INFLATION
The Company believes that inflation has not had a material effect on its
results of operations. However, an inflationary environment could materially
increase interest rates on the Company's floating rate debt and the replacement
cost of units in the Company's lease fleet. The price of used units sold by the
Company could also increase in such an environment. In addition, the Company may
seek to limit its exposure to interest rate fluctuations by utilizing certain
hedging mechanisms, although it is under no obligation to do so.
A-11
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Independent Auditors' Reports............................................................................. A-13
Consolidated Balance Sheets at December 31, 1996 and 1995................................................. A-15
Consolidated Statements of Operations for the years ended December 31, 1996, 1995 and 1994................ A-16
Consolidated Statements of Changes in Stockholder's Equity for the years ended December 31, 1996, 1995 and
1994.................................................................................................... A-17
Consolidated Statements of Cash Flows for the years ended December 31, 1996, 1995 and 1994................ A-18
Notes to Consolidated Financial Statements................................................................ A-19
</TABLE>
INDEX TO FINANCIAL STATEMENTS SCHEDULES
Schedule II -- Valuation and Qualifying Accounts................................
A-37
All schedules not listed have been omitted because of the absence of the
conditions under which they are required or the required information is included
elsewhere in the financial statements or notes thereto.
A-12
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors
Williams Scotsman, Inc.
(formerly The Scotsman Group, Inc.)
We have audited the accompanying consolidated balance sheets of Williams
Scotsman, Inc. (formerly The Scotsman Group, Inc.) and subsidiary as of December
31, 1996 and 1995, and the related consolidated statements of operations,
stockholder's equity and cash flows for the years then ended. Our audits also
included the 1996 and 1995 financial statement schedule listed in the Index at
Item 14(a). These consolidated financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on the
consolidated 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 1996 and 1995 consolidated financial statements referred
to above present fairly, in all material respects, the financial position of
Williams Scotsman, Inc. (formerly The Scotsman Group, Inc.) and subsidiary as of
December 31, 1996 and 1995, and the results of their operations and their cash
flows for the years then ended in conformity with generally accepted accounting
principles. Also, in our opinion, the related 1996 and 1995 financial statement
schedule, when considered in relation to the basic financial statements taken as
a whole, presents fairly in all material respects the information set forth
therein.
ERNST & YOUNG LLP
Baltimore, Maryland
January 24, 1997
A-13
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Williams Scotsman, Inc.
(formerly The Scotsman Group, Inc.):
We have audited the accompanying consolidated statements of operations,
changes in stockholder's equity and cash flows of Williams Scotsman, Inc.
(formerly The Scotsman Group, Inc.) and subsidiary (Scotsman) for the year ended
December 31, 1994. These consolidated financial statements are the
responsibility of Scotsman's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the results of operations and cash
flows of Williams Scotsman, Inc. (formerly The Scotsman Group, Inc.) and
subsidiary for the year ended December 31, 1994 in conformity with generally
accepted accounting principles.
KPMG PEAT MARWICK LLP
Baltimore, Maryland
March 10, 1995
A-14
<PAGE>
WILLIAMS SCOTSMAN, INC.
(FORMERLY THE SCOTSMAN GROUP, INC.) AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1996 1995
---------- ----------
<S> <C> <C>
(IN THOUSANDS)
ASSETS
Cash, and temporary investments of $13 in 1996 and $263 in 1995........................... $ 351 $ 679
Trade accounts receivable, net of allowance for doubtful accounts of $258 in 1996 and $447
in 1995 (Note 3)........................................................................ 23,145 17,372
Prepaid expenses and other current assets................................................. 9,295 7,048
Rental equipment, net of accumulated depreciation of $67,520 in 1996 and $40,162 in 1995
(Note 3)................................................................................ 356,183 324,207
Property, plant and equipment, net (Notes 2 & 3).......................................... 29,032 21,088
Deferred financing costs, net............................................................. 5,494 7,830
Other assets.............................................................................. 5,197 5,455
---------- ----------
$ 428,697 $ 383,679
---------- ----------
---------- ----------
LIABILITIES AND STOCKHOLDER'S EQUITY
Accounts payable.......................................................................... $ 9,826 $ 6,667
Accrued expenses.......................................................................... 8,924 8,114
Rents billed in advance................................................................... 10,621 9,809
Long-term debt (Note 3)................................................................... 268,753 242,695
Deferred compensation (Note 7)............................................................ 3,300 1,900
Deferred income taxes (Note 5)............................................................ 57,640 51,986
---------- ----------
Total liabilities....................................................................... 359,064 321,171
---------- ----------
Stockholder's equity:
Common stock, $.01 par value. Authorized 10,000,000 shares; issued and outstanding
3,320,000 shares...................................................................... 33 33
Additional paid-in capital.............................................................. 56,844 56,844
Retained earnings....................................................................... 12,756 5,631
---------- ----------
Total stockholder's equity................................................................ 69,633 62,508
---------- ----------
$ 428,697 $ 383,679
---------- ----------
---------- ----------
</TABLE>
See accompanying notes to consolidated financial statements.
A-15
<PAGE>
WILLIAMS SCOTSMAN, INC.
(FORMERLY THE SCOTSMAN GROUP, INC.) AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------
<S> <C> <C> <C>
1996 1995 1994
----------- ----------- -----------
<CAPTION>
(IN THOUSANDS EXCEPT PER SHARE
AMOUNTS)
<S> <C> <C> <C>
REVENUES
Leasing.................................................................... $ 116,769 $ 96,498 $ 79,342
Sales of new units......................................................... 28,042 23,126 22,290
Delivery and installation.................................................. 32,767 28,162 26,511
Other...................................................................... 17,564 10,734 5,832
----------- ----------- -----------
Total revenues....................................................... 195,142 158,520 133,975
----------- ----------- -----------
COST OF SALES AND SERVICES
Leasing:
Depreciation and amortization............................................ 30,588 23,417 18,804
Other direct leasing costs............................................... 26,647 23,103 20,578
Sales of new units......................................................... 23,043 19,273 19,436
Delivery and installation.................................................. 25,247 22,048 21,569
Other...................................................................... 3,974 2,626 1,547
----------- ----------- -----------
Total cost of sales and services..................................... 109,499 90,467 81,934
----------- ----------- -----------
Gross profit......................................................... 85,643 68,053 52,041
----------- ----------- -----------
Selling, general and administrative expenses............................... 42,260 36,295 30,215
Other depreciation and amortization........................................ 2,411 1,851 1,349
Interest, including amortization of deferred financing costs of $2,449,
$1,601 and $1,439........................................................ 25,797 22,485 18,705
----------- ----------- -----------
Total operating expenses............................................. 70,468 60,631 50,269
----------- ----------- -----------
Income before income taxes........................................... 15,175 7,422 1,772
Income tax expense (Note 5)................................................ 5,980 2,863 700
----------- ----------- -----------
Net income........................................................... $ 9,195 $ 4,559 $ 1,072
----------- ----------- -----------
----------- ----------- -----------
Net income per common share.......................................... $ 2.77 $ 1.37 $ 0.32
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
See accompanying notes to consolidated financial statements.
A-16
<PAGE>
WILLIAMS SCOTSMAN, INC.
(FORMERLY THE SCOTSMAN GROUP, INC.) AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
------------------------ PAID-IN RETAINED
SHARES AMOUNT CAPITAL EARNINGS TOTAL
----------- ----------- -------------- --------- ---------
<S> <C> <C> <C> <C> <C>
(IN THOUSANDS)
Balance at December 31, 1993............................. 3,320 $ 33 $ 56,844 $ -- $ 56,877
Net income............................................... -- -- -- 1,072 1,072
----- --- ------- --------- ---------
Balance at December 31, 1994............................. 3,320 33 56,844 1,072 57,949
Net income............................................... -- -- -- 4,559 4,559
----- --- ------- --------- ---------
Balance at December 31, 1995............................. 3,320 33 56,844 5,631 62,508
Dividends--$.62 per share................................ -- -- -- (2,070) (2,070)
Net income............................................... -- -- -- 9,195 9,195
----- --- ------- --------- ---------
Balance at December 31, 1996............................. 3,320 $ 33 $ 56,844 $ 12,756 $ 69,633
----- --- ------- --------- ---------
----- --- ------- --------- ---------
</TABLE>
See accompanying notes to consolidated financial statements.
A-17
<PAGE>
WILLIAMS SCOTSMAN, INC.
(FORMERLY THE SCOTSMAN GROUP, INC.) AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------
<S> <C> <C> <C>
1996 1995 1994
----------- ----------- -----------
<CAPTION>
(IN THOUSANDS)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income................................................................. $ 9,195 $ 4,559 $ 1,072
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization............................................ 35,448 26,869 21,592
Provision for bad debts.................................................. 2,209 1,509 1,207
Deferred income tax expense.............................................. 5,654 2,763 600
Provision for deferred compensation...................................... 1,400 1,375 525
Gain on sale of rental equipment......................................... (2,618) (2,080) (1,620)
Increase in net trade accounts receivable................................ (7,982) (4) (2,072)
Other.................................................................... 2,721 (1,087) 513
----------- ----------- -----------
Net cash provided by operating activities............................ 46,027 33,904 21,817
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Redemption of certificates of deposit...................................... 250 1,255 1,267
Rental equipment additions................................................. (72,277) (72,096) (45,174)
Proceeds from sales of rental equipment.................................... 12,331 9,733 8,045
Purchase of property, plant and equipment, net............................. (10,284) (6,871) (1,286)
Net assets of business acquired, including rental equipment of $16,648
(Note 1)................................................................. -- -- (9,538)
----------- ----------- -----------
Net cash used in investing activities................................ $ (69,980) $ (67,979) $ (46,686)
----------- ----------- -----------
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term debt............................................... $ 219,420 $ 204,389 $ 173,401
Repayment of long-term debt................................................ (193,362) (168,040) (148,968)
Increase in deferred financing costs....................................... (113) (2,555) (281)
Cash dividends paid........................................................ (2,070) -- --
----------- ----------- -----------
Net cash provided by (used in) financing activities........................ 23,875 33,794 24,152
----------- ----------- -----------
Net decrease in cash................................................. (78) (281) (717)
Cash at beginning of period................................................ 416 697 1,414
----------- ----------- -----------
Cash at end of period...................................................... $ 338 $ 416 $ 697
----------- ----------- -----------
----------- ----------- -----------
Supplemental cash flow information:
Cash paid for (received from) income taxes............................... $ 110 $ (5) $ (453)
----------- ----------- -----------
----------- ----------- -----------
Cash paid for interest................................................... $ 23,888 $ 21,068 $ 17,086
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
See accompanying notes to consolidated financial statements.
A-18
<PAGE>
WILLIAMS SCOTSMAN, INC.
(FORMERLY THE SCOTSMAN GROUP, INC.) AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
1. ORGANIZATION AND BASIS OF PRESENTATION
Williams Scotsman, Inc. (the Company) is a wholly-owned subsidiary of
Scotsman Holdings, Inc. (Holdings), a corporation which was organized in
November 1993 for the purpose of acquiring the Company. The Company changed its
name from The Scotsman Group, Inc. to Williams Scotsman, Inc. effective January
1, 1997.
The operations of the Company consist of the leasing and sale of mobile
offices and, to a lesser extent, modular structures (equipment) and their
delivery and installation. Leasing operations account for a majority of the
Company's revenues and gross profits and are primarily comprised of the leasing
of mobile office and storage units and the sale of units from the Company's
lease fleet.
1994 ACQUISITION
On September 14, 1994, the Company purchased all of the outstanding shares
of common stock of Mobile Holdings, Inc. (Mobile) for an aggregate cost of
$9,538. The acquisition, which was effective as of August 31, 1994, was
accounted for under the purchase method of accounting and, accordingly, the
total cost has been allocated to the assets acquired and liabilities assumed
based on their estimated fair values as follows:
<TABLE>
<S> <C>
Rental equipment................................................... $ 16,648
Property, plant and equipment...................................... 2,055
Long-term debt assumed............................................. (5,505)
Deferred income taxes recorded..................................... (4,313)
Other net liabilities assumed...................................... (702)
---------
Net assets acquired................................................ 8,183
---------
Excess of cost over net assets acquired (goodwill)................. 1,355
---------
Total cost......................................................... $ 9,538
---------
---------
</TABLE>
The long-term debt was repaid subsequent to the acquisition. A deferred
income tax liability was recorded for the tax effect of differences between the
bases of Mobile's assets and liabilities for tax and financial reporting
purposes.
Unaudited pro forma results of operations for the year ended December 31,
1994 assuming that the acquisition of Mobile had occurred on January 1, 1994,
are presented below:
<TABLE>
<S> <C>
Total revenue..................................................... $ 140,365
Net income........................................................ 1,242
Net income per share.............................................. $ 0.37
</TABLE>
The pro forma results include the historical accounts of the Company and the
historical accounts for the acquired business adjusted to reflect (1)
depreciation and amortization of the acquired identifiable tangible and
intangible assets based on the new cost basis of the acquisition, (2) interest
on acquisition financing and (3) the elimination of non-recurring expenses. The
pro forma results of operations are not necessarily indicative of actual results
which might have occurred had the operations and management teams of the Company
and the acquired company been combined in prior years.
A-19
<PAGE>
WILLIAMS SCOTSMAN, INC.
(FORMERLY THE SCOTSMAN GROUP, INC.) AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (CONTINUED)
1. ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying consolidated financial statements include the accounts of
the Company and its wholly owned subsidiary. Significant intercompany accounts
and transactions have been eliminated in consolidation.
(A) USE OF ESTIMATES
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from these estimates.
(B) LEASING OPERATIONS
Equipment is leased generally under operating leases and, occasionally, under
sales-type lease arrangements. Operating lease terms generally range from 3
months to 36 months, and contractually averaged approximately 12 months at
December 31, 1996. Rents billed in advance are initially deferred and
recognized as revenue over the term of the operating leases. Rental equipment
is depreciated by the straight-line method using an estimated economic useful
life of 10 to 20 years and an estimated residual value of either $1,000 or
20%. Costs of improvements and betterments are capitalized, whereas costs of
replacement items, repairs and maintenance are expensed as incurred. Costs
incurred for equipment to meet particular lease specifications are
capitalized and depreciated over the lease term. However, costs aggregating
less than $1,000 per unit are generally expensed as incurred.
(C) DEFERRED FINANCING COSTS
Costs of obtaining long-term debt are amortized over the term of the debt by
the interest method.
(D) PROPERTY, PLANT AND EQUIPMENT
Depreciation is computed by the straight-line method over estimated useful
lives ranging from 20 to 40 years for buildings and improvements and 3 to 12
years for furniture and equipment. Maintenance and repairs are charged to
expense as incurred.
(E) INCOME TAXES
Deferred tax assets and liabilities are recognized for the estimated future
tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax
rates in effect for the year in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period
that includes the enactment date. The Company is included in the consolidated
federal income
A-20
<PAGE>
WILLIAMS SCOTSMAN, INC.
(FORMERLY THE SCOTSMAN GROUP, INC.) AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (CONTINUED)
1. ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED)
tax return of Holdings. Income taxes are included in the accompanying
financial statements on a separate return basis.
(F) EARNINGS PER SHARE
Earnings per share is computed based on weighted average number of common
shares outstanding of 3,320,000 shares for 1996, 1995 and 1994.
2. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
<S> <C> <C>
1996 1995
---------- ----------
Land.................................................................. $ 6,889 $ 5,018
Buildings and improvements............................................ 12,820 11,052
Furniture and equipment............................................... 13,870 7,428
---------- ----------
33,579 23,498
Less accumulated depreciation......................................... 4,547 2,410
---------- ----------
Net property, plant and equipment..................................... $ 29,032 $ 21,088
---------- ----------
---------- ----------
</TABLE>
3. LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
<S> <C> <C>
1996 1995
---------- ----------
Borrowings under revolving credit facility............................ $ 103,753 $ 77,695
9.5% senior secured notes............................................. 165,000 165,000
---------- ----------
$ 268,753 $ 242,695
---------- ----------
---------- ----------
</TABLE>
The loan agreement for the revolving credit facility, as amended, provides
for a $120,000 revolving credit facility which matures December 16, 1997 and can
be extended for an additional year at the option of the Company. Interest is
payable at a rate of either prime plus .25% or LIBOR plus 2.50% at the option of
the Company. The weighted average interest rate was 8.18% at December 31, 1996.
Borrowings under the credit facility are secured by a first priority lien on and
security interest in the Company's rental equipment, accounts receivable and
property, plant and equipment. In addition to the restrictions and limitations
described under the note agreement, the credit facility loan agreement requires
compliance with certain financial covenants including maintenance of minimum net
worth, working capital, number of units in the lease fleet and fleet
utilization.
The 9.5% senior secured notes are due December 15, 2000 with interest
payable semi-annually on June 15 and December 15 of each year. On or after
December 15, 1997, the notes are redeemable at the
A-21
<PAGE>
WILLIAMS SCOTSMAN, INC.
(FORMERLY THE SCOTSMAN GROUP, INC.) AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (CONTINUED)
3. LONG-TERM DEBT (CONTINUED)
option of the Company, at redemption prices of 103.167% and 101.583% during the
12 month periods beginning December 15, 1997 and 1998, respectively, and 100%
thereafter (subject to price adjustment under certain events). Upon the
occurrence of a change of control, the holders of the notes have the right to
require the Company to repurchase the notes at a purchase price of 101%. The
notes are secured by a second priority lien on and security interest in the
collateral under the revolving credit facility loan agreement. The note
agreement limits or restricts the Company's ability to incur additional
indebtedness, issue preferred stock, make distributions of capital in an amount
not to exceed 50% of accumulated earnings, dispose of property, incur liens on
property and merge with or acquire other companies.
At December 31, 1996 and 1995, the fair value of long-term debt was
approximately $274,000 and $246,000, respectively, based on the quoted market
price of the senior secured notes and the book value of the revolving credit
facility, which is an adjustable rate note.
4. OBLIGATIONS OF PARENT COMPANY
On March 2, 1994, Holdings completed a private placement of 21,250
securities consisting of $21,250 principal amount of 11% Series A senior notes
due March 1, 2004 and 173,648 shares of Holdings common stock. The common stock
was assigned a value of $2,042 based on a per share price of $11.76. The
remaining proceeds of $19,208 were assigned to the notes. The discount on the
notes of $2,042 is being accreted over the maturity period. The proceeds of this
offering were used to retire unsecured convertible notes payable to a
stockholder of Holdings of $20,000. Interest on the 11% notes is payable
semi-annually in additional notes or cash through March 1, 1999, and payable in
cash thereafter. Holdings elected to pay all interest payments due under the
notes in additional notes payable aggregating $6,514. These notes bear interest
at 11% and are due March 1, 2004. On or after March 1, 1999, the notes are
redeemable at the option of Holdings at redemption prices of 104.125%, 102.750%
and 101.375%, during the twelve month periods beginning March 1, 1999, 2000 and
2001 respectively, and 100% thereafter. Upon the occurrence of a change in
control, the holders of the notes have the right to require Holdings to
repurchase the notes at a purchase price of 101%.
Effective, August 12, 1994, Holdings completed the registration of 11%
Series B notes. Such notes have been exchanged for all of the outstanding 11%
Series A senior notes. The form and terms of the Series B notes are identical to
the form and terms of the Series A notes except that the Series B notes have
been registered under the Securities Act of 1933, as amended, and do not bear
any legends restricting the transfer thereof.
The Holdings notes are not secured by the Company's assets or common stock
and the Company has no plans to assume or otherwise become liable with respect
to the notes.
A-22
<PAGE>
WILLIAMS SCOTSMAN, INC.
(FORMERLY THE SCOTSMAN GROUP, INC.) AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (CONTINUED)
5. INCOME TAXES
Deferred income taxes related to temporary differences between the tax bases
of assets and liabilities and the respective amounts reported in the financial
statements are summarized as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1996 1995
--------- ---------
<S> <C> <C>
Deferred tax liabilities:
Cost basis in excess of tax basis of assets and accelerated tax
depreciation:
Rental equipment.................................................... $ 94,050 $ 86,718
Property, plant and equipment....................................... 983 983
--------- ---------
Total deferred tax liabilities.................................. 95,033 87,701
--------- ---------
Deferred tax assets:
Allowance for doubtful accounts......................................... 100 177
Rents billed in advance................................................. 3,317 2,759
Pre-acquisition separate company net operating loss carryovers.......... 25,816 26,273
Net operating loss carryovers........................................... 3,547 2,728
Alternative minimum tax credit carryovers............................... 1,465 1,296
Investment tax credit carryovers........................................ 860 860
Other................................................................... 2,288 1,622
--------- ---------
Total deferred tax assets....................................... 37,393 35,715
--------- ---------
Net deferred tax liabilities............................................ $ 57,640 $ 51,986
--------- ---------
--------- ---------
</TABLE>
In December 1993, Holdings purchased all of the issued and outstanding
shares of common stock of the Company. For financial statement purposes, the
acquisition was accounted for under the purchase method of accounting by
Holdings, and the Company restated its balance sheet to "push down" the effects
of the purchase accounting adjustments. In connection with the acquisition of
the Company, the tax bases of the assets and liabilities of the Company prior to
the acquisition are carried over and continue as the tax bases of the Company.
As a result, the Company recorded deferred income tax liabilities of $13,455
representing the tax effect of the differences between such tax bases and the
related amounts recorded as the cost of the acquisition for financial reporting
purposes.
At December 31, 1996, the Company had net operating loss carryovers
available for federal income tax purposes of approximately $76,120, including
pre-acquisition separate company loss carryovers available for federal income
tax purposes of approximately $67,315 and investment tax credit carryovers of
approximately $860. These carryovers expire at various dates from 2000 to 2009.
Also, alternative minimum tax credit carryovers of approximately $1,465 are
available without expiration limitations. The annual utilization of the
preacquisition net operating loss carryovers is subject to certain limitations
under the Internal Revenue Code.
A-23
<PAGE>
WILLIAMS SCOTSMAN, INC.
(FORMERLY THE SCOTSMAN GROUP, INC.) AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (CONTINUED)
5. INCOME TAXES (CONTINUED)
The income tax expense consists of the following:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Current.......................................................... $ 326 $ 100 $ 100
Deferred......................................................... 5,654 2,763 600
--------- --------- ---------
$ 5,980 $ 2,863 $ 700
--------- --------- ---------
--------- --------- ---------
Federal.......................................................... $ 5,145 $ 2,453 $ 600
State............................................................ 835 408 100
--------- --------- ---------
$ 5,980 $ 2,863 $ 700
--------- --------- ---------
--------- --------- ---------
</TABLE>
The provision for income taxes is reconciled to the amount computed by
applying the Federal corporate tax rate of 34% to income before income taxes as
follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Income tax at statutory rate....................................... $ 5,311 $ 2,524 $ 602
State income taxes, net of federal tax benefit..................... 543 308 66
Other.............................................................. 126 31 32
--------- --------- ---------
$ 5,980 $ 2,863 $ 700
--------- --------- ---------
--------- --------- ---------
</TABLE>
6. COMMITMENTS
The Company is obligated under noncancellable operating leases of certain
equipment, vehicles and parcels of land. At December 31, 1996 approximate future
minimum rental payments are as follows:
<TABLE>
<S> <C>
1997................................................................ $ 1,525
1998................................................................ 883
1999................................................................ 758
2000................................................................ 495
2001 and thereafter................................................. 126
---------
$ 3,787
---------
---------
</TABLE>
Rent expense was $2,875 in 1996, $2,605 in 1995 and $2,288 in 1994.
7. EMPLOYEE BENEFIT PLANS
The Company has adopted a defined contribution plan (the 401(k) Plan) which
is intended to satisfy the tax qualification requirements of Sections 401(a),
401(k), and 401(m) of the Internal Revenue Code of 1986 (the Code). The 401(k)
Plan covers substantially all employees and permits participants to contribute
the lessor of (i) 15% of their annual compensation from the Company and (ii) the
dollar limit described in
A-24
<PAGE>
WILLIAMS SCOTSMAN, INC.
(FORMERLY THE SCOTSMAN GROUP, INC.) AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (CONTINUED)
7. EMPLOYEE BENEFIT PLANS (CONTINUED)
Section 402(g) of the Code ($9,500 in 1996). All amounts under this salary
reduction feature are fully vested.
The 401(k) Plan has a "matching" contribution feature under which the
Company may contribute a percentage of the amount deferred by each participant.
The Plan also has a "profit sharing" feature, under which the Company may
contribute, at its discretion, an additional amount allocable to the accounts of
active participants meeting the aforementioned eligibility requirements.
Contributions by the Company to the 401(k) Plan were approximately $243 in
1996, $129 in 1995, and $54 in 1994.
The Company recorded $925, $1,775, and $1,800 of management incentive
compensation in 1994, 1995, and 1996 respectively, including deferred
compensation of $525 in 1994, $1,375 in 1995 and $1,400 in 1996, in connection
with the Incentive Compensation Plan (the Plan). The Plan covers approximately
40 management members of the Company. Under the terms of the Plan, incentive
compensation is payable annually to members of the Plan, based upon the Company
achieving certain earnings before interest, income taxes, provision for deferred
compensation, depreciation and amortization (EBITDA) targets. In addition, if
certain cumulative EBITDA targets are met over the five year period ending
December 31, 1998, additional compensation will be payable in 1999.
In March 1995, the Company adopted a stock option plan for certain key
employees. Under the plan, employees may be granted options to purchase up to a
total of 7.5% of Holdings' outstanding common stock. The options are granted
with an exercise price equal to the fair value of the shares as of the date of
grant. The options vest ratably over 5 years and expire 10 years from the date
of the grant. The Company accounts for stock option grants in accordance with
APB Opinion No. 25, "Accounting for Stock Issued to Employees", and,
accordingly, recognizes no compensation expense for the stock option grants.
Pro forma information regarding net income and earnings per share is
required by Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation," and has been determined as if the Company had
accounted for its employee stock options under the minimum value method of that
Statement. The minimum value for these options was estimated at the date of
grant by calculating the excess of the fair value of the stock at the date of
grant over the present value of both the exercise price and the expected
dividend payments, each discounted at the risk free rate, over the expected
exercise life of the option. The following weighted average assumptions were
used for 1995 and 1996: risk-free interest rate of 6%; weighted average expected
life of the options of 5 years; and no dividends.
For purposes of pro forma disclosures, the estimated minimum value of the
options is amortized to expense over the options' vesting period. Note that the
effects of applying SFAS 123 for pro forma disclosure in the current year are
not necessarily representative of the effects on pro forma net income for future
years. The Company's pro forma information follows:
<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
Pro forma net income....................................................... $ 9,076 $ 4,543
Pro forma earnings per share............................................... $ 2.73 $ 1.37
</TABLE>
A-25
<PAGE>
WILLIAMS SCOTSMAN, INC.
(FORMERLY THE SCOTSMAN GROUP, INC.) AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (CONTINUED)
7. EMPLOYEE BENEFIT PLANS (CONTINUED)
A summary of stock option activity and related information for the years
ended December 31 follows:
<TABLE>
<CAPTION>
1996 1995
---------------------- ------------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE
EXERCISE EXERCISE
OPTIONS PRICE OPTIONS PRICE
--------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Beginning balance....................................................... 38,200 $ 13.78 -- --
Granted................................................................. 115,050 28.80 38,200 $ 13.78
Exercised............................................................... -- -- -- --
Forfeited............................................................... (2,200) 20.61 -- --
--------- ----------- ----------- -----------
Ending balance.......................................................... 151,050 $ 25.12 38,200 $ 13.78
Exercisable at end of year.............................................. 37,610 $ 22.89 7,640 $ 13.78
Weighted average minimum value of options granted during year........... $ 7.28 $ 3.48
</TABLE>
Exercise prices for options outstanding as of December 31, 1996 are $13.78
and $28.80. The weighted-average remaining contractual life of those options is
8.75 years.
8. RELATED PARTY TRANSACTIONS
In connection with the acquisition of the Company by Holdings, the Company
entered into a management agreement with a subsidiary of the principal
stockholder of Holdings. The agreement provides that the Company will pay an
annual fee of up to $250 in consideration for certain management, consulting and
financial advisory services. The Company incurred expenses of $250 for these
services in 1996, 1995 and 1994.
9. OTHER
Holdings is considering various strategic alternatives, including a sale of
the Company. There can be no assurance that any transaction will be consummated.
A-26
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
DIRECTORS AND OFFICERS
The Company's directors and executive officers are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---------------------------------------------- --- ------------------------------------------------------------
<S> <C> <C>
Barry P. Gossett.............................. 56 Chairman and Chief Executive Officer; Director
Gerard E. Holthaus............................ 47 President and Chief Operating Officer; Director
Marietta F. Adamo............................. 46 Executive Vice President--Administration
Stephen Berger................................ 57 Director
Muzzafar Mirza................................ 39 Director
Brian Kwait................................... 35 Director
</TABLE>
The directors are elected annually and serve until their successors are duly
elected and qualified. No director of the Company receives any fee for
attendance at Board of Directors meetings or meetings of Committees of the Board
of Directors. Outside directors are reimbursed for their expenses for any
meeting attended.
Executive officers of the Company are elected by the Board of Directors and
serve at the discretion of the Board of Directors.
In addition to the executive officers of the Company identified above, the
following persons are instrumental to the management of the Company:
<TABLE>
<S> <C> <C>
J. Collier Beall..................... 49 Senior Vice President and Southern Division
Manager
Joseph F. Donegan.................... 46 Senior Vice President and Northern Division
Manager
James D. Funk........................ 52 Vice President--Midwestern Regional Manager
Katherine K. Giannelli............... 36 Vice President and Controller
Robert W. Hansen..................... 40 Vice President--Western Regional Manager
Gerard E. Keefe...................... 40 Vice President--Fleet and Finance
William C. LeBuhn.................... 34 Vice President--Human Resources
John B. Ross......................... 48 Vice President and Corporate Counsel
William H. Ryan...................... 51 Vice President--Customer Development Services
William J. Wyatt..................... 57 Vice President--Marketing and Sales Support
</TABLE>
Mr. Gossett was elected Chairman and Chief Executive Officer in October
1995. Prior to this, he served as President and Chief Executive Officer of the
Company from 1990 to October 1995. Mr. Gossett has been a director and employee
of the Company or its predecessor for over twenty-five years. Before joining the
Company, Mr. Gossett was a partner at Buchanan and Company, a Washington, D.C.
accounting firm. Mr. Gossett was one of the founders of the Modular Building
Institute, an industry trade group which represents 160 member companies.
Mr. Holthaus was appointed President and Chief Operating Officer of the
Company in October 1995. Prior to this, he served as the Executive Vice
President, Chief Financial Officer of the Company from June 1994 to October
1995. He has been a director of the Company since June 1994. Before joining the
Company, Mr. Holthaus served as Senior Vice President of MNC Financial, Inc.
from April 1988 to
A-27
<PAGE>
June 1994. From 1971 to 1988, Mr. Holthaus was associated with the accounting
firm of Ernst and Young (Baltimore), where he served as a partner from 1982 to
1988.
Ms. Adamo has been the Executive Vice President--Administration since 1990,
and was Vice President of Administration of Williams from 1988 to 1990. Ms.
Adamo is responsible for corporate and branch office administrative services, as
well as the Company's Productivity Improvement initiatives.
Mr. Berger has been a director of the Company since December 1993. Mr.
Berger has been a General Partner of Odyssey Partners, a private New York
investment firm, since July 1993. From July 1990 to July 1993, he was employed
by General Electric Capital Corporation, most recently as Executive Vice
President and as Chairman of a subsidiary of such company. From October 1985 to
June 1990, he served as the Executive Director of the New York and New Jersey
Port Authority. Mr. Berger is also a director of Forstmann & Co. Inc. and
Hugoton Energy Corporation.
Mr. Mirza has been a director of the Company since December 1993. Mr. Mirza
has been a principal of Odyssey Partners since July 1993. From May 1988 to June
1993, he was employed by General Electric Capital Corporation, as Managing
Director of Merchant Banking for the GE Capital Corporate Finance Group. From
1983 to 1988, he was a Vice President of Marine Midland Bank, N.A. Mr. Mirza is
also a director of JPS Textile Group, Inc.
Mr. Kwait has been a director of the Company since December 1993. Mr. Kwait
has been a principal of Odyssey Partners since August 1989. From July 1988 to
August 1989, he was an associate with Bear, Stearns & Company. From 1986 to
1988, he attended the Wharton Business School at the University of Pennsylvania.
Mr. Kwait is also a director of CellNet Data Systems.
Mr. Beall was appointed Senior Vice President and Southern Division Manager
in October 1996. In addition, he serves as the Southeastern Regional Manager of
the Company. Mr. Beall's responsibilities include the implementation of
corporate policies, attainment of branch profitability, fleet utilization
management and development of personnel. Prior to joining Williams in 1977, Mr.
Beall was a Regional Manager for Modular Sales and Leasing Company based in
Georgia.
Mr. Donegan was appointed Senior Vice President and Northern Division
Manager in October 1996. In addition, he serves as the Northeastern Regional
Manager of the Company, a position he has held since June 1994, and also prior
to 1991. Mr. Donegan's responsibilities include the implementation of corporate
policies, attainment of branch profitability, fleet utilization management and
development of personnel. Mr. Donegan has over 20 years of experience within the
industry. From 1991 through May 1994, Mr. Donegan held similar positions with
Space Master Buildings, Kullman Industries and Bennett Mobile Offices.
Mr. Funk is the Midwestern Regional Manager of the Company. Mr. Funk's
responsibilities include the implementation of corporate policies, attainment of
branch profitability, fleet utilization management and development of personnel.
Prior to joining the Company in 1986, Mr. Funk was a branch manager for IISCOM,
a distributor of computer products based in Florida.
Ms. Giannelli has served as Controller of the Company since 1990, with
responsibilities for the Company's accounting department including regulatory
reporting. Prior to joining the Company, Ms. Giannelli was a Senior Manager of
KPMG Peat Marwick in Baltimore, Maryland where she had been employed since 1982.
Mr. Hansen is the Western Regional Manager of the Company. Mr. Hansen's
responsibilities include the implementation of corporate policies, attainment of
branch profitability, fleet utilization management and development of personnel.
Prior to joining the Company in 1983, Mr. Hansen was General Manager of Duracite
Mfg., a cabinetwork and construction firm in the San Francisco Bay Area.
Mr. Keefe was appointed Vice President, Fleet and Finance in February, 1995,
with responsibilities including overall fleet management and purchasing,
treasury functions, planning and budgeting. Prior to
A-28
<PAGE>
joining the Company, Mr. Keefe was with The Ryland Group, a national homebuilder
headquartered in Columbia, Maryland, from 1993 to 1995. From 1991 to 1993, he
was a management consultant serving the manufacturing, distribution and
financial services industries, and from 1977 to 1991, he was with Ernst & Young
in Baltimore, Maryland, most recently as a Senior Manager.
Mr. LeBuhn has served as Vice President of Human Resources since January
1994. Mr. LeBuhn's responsibilities include the management of human resources
related programs. Prior to joining the Company, Mr. LeBuhn was Human Resources
Manager for Sherwin-Williams Eastern Division from 1992 to January 1994 and
Director of Human Resources for Consolidated International Insurance Group, Inc.
from 1985 to 1992.
Mr. Ross has been Corporate Counsel for the Company since February 1995.
Prior to joining on, Mr. Ross was Corporate Counsel for MNC Leasing Corporation
from 1983 to 1991 and Special Assets Counsel for MNC Financial, Inc. from 1991
to 1993. He has engaged in the private practice of law in both North Carolina
and Maryland.
Mr. Ryan has served as Vice President of Customer Development Services since
October 1994, responsible for the rental and sales of revenue enhancement
products to Scotsman's existing customer base and national accounts. From 1990
to 1994, Mr. Ryan was Vice President of Scotsman Buildings, responsible for the
Company's Modular Structures Division. Prior to joining on, Mr. Ryan was
employed as Vice President of Sales for Cardinal Industries, Inc., a
manufacturer and builder of modular buildings.
Mr. Wyatt has served as Director of Marketing and Sales Support since
February 1994, was Director of Sales and Marketing for the Mobile Offices
Division from 1990 to 1994 and was National Sales Manager of Williams from 1988
to 1990. Before joining on, Mr. Wyatt operated W.J. Wyatt and Company, Inc., a
consulting firm providing sales development, market planning, convention and
meeting management and publishing services.
A-29
<PAGE>
ITEM 11.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information concerning the
compensation for the last three completed fiscal years of the five highest paid
officers of the Company who received total compensation in excess of $100,000
during 1996.
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
-------------
ANNUAL COMPENSATION SECURITIES
--------------------- UNDERLYING ALL OTHER
YEAR SALARY BONUS OPTIONS COMPENSATION
--------- ---------- --------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Barry P. Gossett
Chairman and Chief Executive Officer................ 1996 $ 225,000 $ 51,000 -- $ 20,374(2)
1995 205,770 51,000 -- 18,066(2)
1994 200,000 52,000 -- 3,287(2)
Gerard E. Holthaus
President and Chief Operating Officer............... 1996 200,000 50,500 27,000(1) 15,422(2)
1995 180,769 50,500 7,800(1) 12,968(2)
1994 78,327 50,000 -- 8,297(2)
J. Collier Beall
Senior Vice President and Southern Division
Manager........................................... 1996 216,881 20,000 10,000(1) 9,825(2)
1995 171,390 28,000 2,300(1) 7,200(2)
1994 155,901 23,750 -- 7,200(2)
Joseph F. Donegan
Senior Vice President and Northern Division
Manager........................................... 1996 200,557 20,000 10,000(1) 9,625(2)
1995 148,635 25,000 1,950(1) 8,138(2)
1994 54,609 15,000 -- 3,600(2)
James D. Funk
Vice President--Midwestern Regional Manager......... 1996 147,357 20,000 7,000(1) 9,144(2)
1995 158,338 20,000 1,950(1) 7,875(2)
</TABLE>
- ------------------------
(1) Represents options granted to purchase shares of Holdings pursuant to the
Scotsman Holdings, Inc. 1994 Employee Stock Option Plan.
(2) Represents disability insurance premium, key man life insurance premium, car
allowance or lease amounts and employer match under the 401(k) Plan.
1994 MANAGEMENT EQUITY OFFERING
In 1994, certain management employees were offered the opportunity to
purchase up to 1.6% of Holdings' common stock at a purchase price of $11.76 per
share, representing fair market value of the shares. A total of 54,082 shares
were offered and purchased under this plan. See a description of the restriction
on these shares in "Item 13--Stockholders' Agreement".
A-30
<PAGE>
SCOTSMAN HOLDINGS, INC. 1994 EMPLOYEE STOCK OPTION PLAN
In March 1995, a stock option plan was adopted for certain key employees. In
February 1997, options for 107,530 shares of Holdings were granted at an offer
price of $55.18 per share. Under this plan, certain key employees may be granted
options to purchase up to a total of 7.5% of Holdings' outstanding common stock.
The options are exercisable for a period of 10 years from date of grant and have
a five year vesting schedule.
LONG TERM INCENTIVE PLAN
The Company adopted a long term incentive plan (the "Incentive Compensation
Plan") under which certain management employees will be entitled to receive, for
each of fiscal years 1994 through 1998, cash compensation, if certain operating
targets (EBITDA) are met. Each participant under the Incentive Compensation Plan
may be entitled to an additional lump sum payment following the end of the
Company's 1998 fiscal year, depending on the extent to which cumulative EBITDA
of the Company for the five year period beginning in fiscal 1994 and ending in
fiscal 1998 exceeds the EBITDA target amount for the same period. In February
1997, $400,000 was paid to approximately 40 management employees based upon the
Company's 1996 operating performance.
401(K)/DEFINED CONTRIBUTION PLAN
On May 1, 1993 the Company adopted a defined contribution plan (the "401(k)
Plan") which is intended to satisfy the tax qualification requirements of
Sections 401(a), 401(k), and 401(m) of the Internal Revenue Code of 1986, as
amended (the "Code"). Each employee of the Company who completes one hour of
service with the Company is eligible to participate in the salary reduction
feature of the 401(k) Plan. The 401(k) Plan permits participants to contribute
the lesser of (i) 15% of their annual compensation from the Company and (ii) the
dollar limit described in Section 402(g) of the Code ($9,500 in 1996). All
amounts deferred under the 401(k) Plan's salary reduction feature by a
participant are fully vested.
The 401(k) Plan has a "matching" contribution feature under which the
Company may contribute a percentage of the amount deferred by each participant
who makes salary reduction deferrals to the 401(k) Plan, has been employed for
12 consecutive months by the Company, completes 1,000 hours of service with the
Company during the Plan year and is employed by the Company on the last day of
the year. This percentage, if any, is determined by the Board of Directors at
their discretion and is communicated to 401(k) Plan participants during the year
for which the matching contribution will be made. Matching contributions made on
behalf of a 401(k) Plan participant are subject to a deferred vesting schedule
based on the number of years a participant has been employed by the Company. A
participant becomes 20%, 40%, 60%, and 100% vested in the matching contributions
made to the 401(k) Plan on his or her behalf after completion of 2, 3, 4 and 5
years of service with the Company, respectively.
The 401(k) Plan also has a "profit sharing" feature, under which the Company
may contribute, in its discretion, an additional amount which is allocated to
the accounts of active participants who have been employed for 12 consecutive
months by the Company, who have completed 1,000 hours of service during the Plan
Year and who are employed on the last day of the year, based on such
participants' compensation for the year.
A participant's 401(k) Plan benefits generally are payable upon the
participant's death, disability, retirement, or other termination of employment.
Payments under the 401(k) Plan are made in a lump sum.
In 1996, the Company made matching contributions to the 401(k) Plan
participants in an aggregate amount of $242,913.
A-31
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No director or executive officer of the Company was or is a director or
executive officer of any corporation, other than Holdings, that has a director
or executive officer who is also a director of the Company or a member of a
committee of the Board of Directors. During 1996, no officers or employees of
the Company other than Messrs. Gossett and Holthaus participated in
deliberations of the Company's Board of Directors concerning executive officer
compensation.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
All of the issued and outstanding shares of Common Stock of the Company are
owned by Holdings. The following table sets forth certain information regarding
the ownership of Holding's Common Stock as of the date of this Report by (i) all
persons owning of record or beneficially to the knowledge of the Company 5% or
more of the issued and outstanding Common Stock of Holdings, (ii) each director
individually and (iii) all executive officers and directors as a group:
<TABLE>
<CAPTION>
PERCENTAGE
NAME SHARES OWNED
- ----------------------------------------------------------------------------------------- ---------- -------------
<S> <C> <C>
Odyssey Partners, L.P. (1)
Stephen Berger (2)
Brian Wruble (2)
Leon Levy (2)
Jack Nash (2)
Joshua Nash (2)
31 West 52nd Street
New York, New York 10019................................................................. 2,989,201(3) 88.6%
Barry P. Gossett(1)(4)................................................................... 259,469 7.7%
Gerard E. Holthaus(1)(4)................................................................. 12,700 0.4%
All executive officers and directors as a group.......................................... 3,285,020 97.3%
</TABLE>
- ------------------------
(1) Deemed a beneficial owner of the Company's Common Stock by virtue of
ownership of shares of common stock of Holdings, the parent company of the
Company.
(2) The shares of common stock beneficially owned by Odyssey Partners may be
deemed to be beneficially owned by the general partners of Odyssey Partners:
Stephen Berger, Brian Wruble, Leon Levy, Jack Nash and Joshua Nash
(collectively, the "General Partners"), who will share voting and investing
control over such shares. The General Partners disclaim such beneficial
ownership. The address of each of the General Partners is the address of
Odyssey Partners.
(3) Does not include shares beneficially owned by Mr. Gossett, as to which
Odyssey Partners has an irrevocable proxy. See "Item 13--Stockholders'
Agreement."
(4) Mr. Gossett's and Mr. Holthaus' address is the address of the Company's
principal executive offices.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ODYSSEY INVESTORS MANAGEMENT AGREEMENT
The Company and Odyssey Investors, Inc. ("Odyssey Investors"), a wholly
owned subsidiary of Odyssey Partners, entered into a management agreement (the
"Management Agreement"), dated as of December 16, 1993, which provides that the
Company will pay Odyssey Investors an annual fee of up to $250,000 in
consideration of certain management, consulting, and financial advisory services
to be rendered by Odyssey Investors, until such time, if any, as the Company has
outstanding publicly-held shares of Common Stock. The terms of the Management
Agreement were not the result of arms' length bargaining and have not been
reviewed as to fairness by any independent party and no determination has
A-32
<PAGE>
been made as to whether the terms of the Management Agreement were as favorable
as those which might have been obtained from unaffiliated parties. The Company
incurred expense of $250,000 for these services in 1996.
STOCKHOLDERS' AGREEMENT
Odyssey Partners, the Management Stockholders and the Company are parties to
an Amended and Restated Management Stockholders' and Optionholders' Agreement
dated as of June 6, 1994 (the "Stockholders' Agreement"), which amends and
restates the Management Stockholders' and Optionholders' Agreement dated as of
November 9, 1993, and which contains certain rights and restrictions with
respect to the transfer of each Management Stockholder's shares of Common Stock.
The Stockholders' Agreement prohibits the transfer of any shares of Common Stock
by each Management Stockholder (other than sales required in connection with the
disposition of all shares of Common Stock owned by Odyssey Partners and its
affiliates) until the earlier of fifteen months after an initial public offering
of the equity of the Company or the day after Odyssey Partners and its
affiliates have disposed of more than 33 1/3% of the shares of Common Stock
originally acquired by Odyssey Partners, and thereafter, the aggregate number of
shares which may be transferred by each Management Stockholder in any calendar
year (other than certain required sales) may not exceed 25% of the number of
shares acquired in connection with the Acquisition plus the number of any shares
acquired pursuant to the exercise of stock purchase options. In addition, the
Stockholders' Agreement restricts the transfer of shares of Common Stock by each
Management Stockholder for a period of five years from the date of purchase of
such shares, except certain permitted transfers and transfers pursuant to an
effective registration statement or in accordance with Rule 144 under the
Securities Act. Upon the expiration of such five-year period, subject to the
foregoing restrictions, each Management Stockholder may transfer his shares
after giving to Odyssey Partners and the Company, respectively, a right of first
refusal to purchase such shares.
Each Management Stockholder has the right (and in limited circumstances the
obligation) to sell his shares in connection with certain dispositions of shares
by Odyssey Partners and the right to cause his shares to be included in certain
registrations of Common Stock on behalf of Odyssey Partners. Each Management
Stockholder has granted to Odyssey Partners an irrevocable proxy that permits
Odyssey partners to vote his shares. In addition, upon termination of any
Management Stockholder's employment, the Company may elect to require such
Management Stockholder to sell to the Company all of his shares.
A-33
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) Financial Statements and Financial Statement Schedules (1) and (2) See
Index to Financial Statements and Supplemental Schedules at Item 8 of this
Annual Report on Form 10-K.
(b) Reports on Form 8-K filed in the fourth quarter of 1996.
In a report on Form 8-K dated November 27, 1996, the Company reported a
change in the Registrant's name from The Scotsman Group, Inc. to Williams
Scotsman, Inc., effective January 1, 1997.
(c) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
- -----------
<S> <C>
3.1 --Certificate of Incorporation of Williams Scotsman, Inc., as amended. (Incorporated by reference to
Exhibit 3(i) of Form 8-K dated November 27, 1996).
3.2 --By-laws of Williams Scotsman, Inc. (Incorporated by reference to Exhibit 3.2 of Registration Statement
on Form S-l, Commission File No. 33-68444).
4.1 --Indenture dated as of December 16, 1993 between The Scotsman Group, Inc. and Continental Bank National
Association, as trustee (Incorporated by reference to Exhibit 10.1 to the annual report on Form 10-K of
The Scotsman Group, Inc. for the year ended December 31, 1993 (the "Scotsman 1993 10-K")).
10.1 --Loan and Security Agreement dated December 16, 1993 between Congress Financial Corporation and The
Scotsman Group, Inc. (Incorporated by reference to Exhibit 10.2 to the Scotsman 1993 10-K).
10.2 --Amendment No. 1 to Loan and Security Agreement dated June 15, 1994 between Congress Financial
Corporation and The Scotsman Group, Inc. (Incorporated by reference to Exhibit 10.2 to the annual
report on Form 10-K of The Scotsman Group, Inc. for the year ended December 31, 1994 (the "Scotsman
1994 10-K")).
10.3 --Amendment No. 2 to Loan and Security Agreement dated September 14, 1994 between Congress Financial
Corporation and The Scotsman Group, Inc. (Incorporated by reference to Exhibit 10.3 to the Scotsman
1994 10-K).
10.4 --Amendment No. 3 to Loan and Security Agreement dated March 24, 1995 between Congress Financial
Corporation and The Scotsman Group, Inc. (Incorporated by reference to Exhibit 10.4 to the Scotsman
1994 10-K).
10.5 --Amendment No. 4 to Loan and Security Agreement dated March 28, 1995 between Congress Financial
Corporation and The Scotsman Group, Inc. (Incorporated by reference to Exhibit 10.5 to the annual
report on Form 10-K of The Scotsman Group, Inc. for the year ended December 31, 1995 (the "Scotsman
1995 10-K")).
10.6 --Amendment No.5 to Loan and Security Agreement dated August 1, 1995 between Congress Financial
Corporation and The Scotsman Group, Inc. (Incorporated by reference to Exhibit 10.6 to the Scotsman
1995 10-K).
10.7 --Amendment No.6 to Loan and Security Agreement dated October 13, 1995 between Congress Financial
Corporation and The Scotsman Group, Inc. (Incorporated by reference to Exhibit 10.7 to the Scotsman
1995 10-K).
</TABLE>
A-34
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
- -----------
<S> <C>
10.8 --Amendment No. 7 to Loan and Security Agreement dated January 30, 1996 between Congress Financial
Corporation and The Scotsman Group, Inc. (Incorporated by reference to Exhibit 10.8 to the Scotsman
1995 10-K).
10.9 --Amendment No. 8 to Loan and Security Agreement dated September 30, 1996 between Congress Financial
Corporation and The Scotsman Group, Inc.
10.10 --Amendment No. 9 to Loan and Security Agreement dated January 31, 1997 between Congress Financial
Corporation and Williams Scotsman, Inc.
10.11 --Intercreditor Agreement dated December 16, 1993 among The Scotsman Group, Inc., Congress Financial
Corporation and Continental Bank National Association, as trustee (Incorporated by reference to Exhibit
10.3 to the Scotsman 1993 10-K).
10.12 --Amended and Restated Management Stockholders' and Optionholders' Agreement dated as of June 6, 1994,
amending and restating the Management Stockholders' and Optionholders' Agreement dated as of November
9, 1993 by and among Scotsman Holdings, Inc., Odyssey Partners, L.P. and the parties identified as
management stockholders on the signature pages thereto. (Incorporated by reference to Exhibit 10.4 of
Registration Statement on Form S-l of Scotsman Holdings, Inc., Commission File No. 33-68444).
10.13 --Management Agreement, dated as of December 16, 1993 between The Scotsman Group, Inc. and Odyssey
Investors, Inc. (Incorporated by reference to Exhibit 10.5 of Registration Statement on Form S-l of
Scotsman Holdings, Inc., Commission File No. 33-68444).
10.14 --Agreement, dated as of June 30, 1993 by and among The Scotsman Group, Inc., Simon E. Dragan and Whitley
Manufacturing Co., Inc. (Incorporated by reference to Exhibit 10.6 of Registration Statement on Form
S-l, Commission File No. 33-68444).
10.15 --Supply Agreement, dated as of August 25, 1993, by and between Whitley Manufacturing Co., Inc. and The
Scotsman Group, Inc. (Incorporated by reference to Exhibit 10.7 of Registration Statement on Form S-l,
Commission File No.3-68444).
10.16 --Scotsman Holdings, Inc. Employee Stock Purchase Plan. (Incorporated by reference to Exhibit 10.8 of
Registration Statement on Form S-l of Scotsman Holdings, Inc., Commission File No. 33-68444).
10.17 --Scotsman Holdings, Inc. 1994 Employee Stock Option Plan. (Incorporated by reference to Exhibit 10.11 of
the Scotsman 1994 10-K).
12. --Statement regarding computation of ratios.
21. --Subsidiaries of Registrant: Mobile Field Office Company
</TABLE>
A-35
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Amendment to be signed
on its behalf by the undersigned, thereunto duly authorized.
<TABLE>
<S> <C> <C>
WILLIAMS SCOTSMAN, INC.
By: /s/ GERARD E. HOLTHAUS
-----------------------------------------
Gerard E. Holthaus
PRESIDENT
</TABLE>
Dated: March 28, 1997
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Gerard E. Holthaus, his or her attorney-in-fact,
with the power of substitution, for him or her in any and all capacities, to
sign any amendments to this Report, and to file the same with exhibits thereto
and other documents in connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming all that each of said
attorney-in-fact, or his substitute or substitute or substitutes, may do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
NAME CAPACITY DATE
- ------------------------------ -------------------------- -------------------
/s/ BARRY P. GOSSETT
- ------------------------------ Chief Executive Officer March 28, 1997
Barry P. Gossett and Director
/s/ GERARD E. HOLTHAUS
- ------------------------------ President, Chief Operating March 28, 1997
Gerard E. Holthaus Officer and Director
/s/ KATHERINE K. GIANNELLI
- ------------------------------ Controller March 28, 1997
Katherine K. Giannelli
/s/ STEPHEN BERGER
- ------------------------------ Director March 28, 1997
Stephen Berger
/s/ MUZZAFAR MIRZA
- ------------------------------ Director March 28, 1997
Muzzafar Mirza
/s/ BRIAN KWAIT
- ------------------------------ Director March 28, 1997
Brian Kwait
A-36
<PAGE>
WILLIAMS SCOTSMAN, INC. AND SUBSIDIARY
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(IN THOUSANDS)
<TABLE>
<CAPTION>
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Allowance for Doubtful Accounts:
Balance at beginning of the period.............................................. $ 447 $ 444 $ 416
Provision charged to expense.................................................... 2,209 1,509 1,207
Purchase of Mobile Holdings, Inc................................................ -- -- 65
Accounts receivable written-off (net of recoveries)............................. (2,398) (1,468) (1,282)
--------- --------- ---------
Balance at end of the period...................................................... $ 258 $ 447 $ 406
--------- --------- ---------
--------- --------- ---------
</TABLE>
A-37
<PAGE>
ANNEX B
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 1997
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 033-68444
WILLIAMS SCOTSMAN, INC.
(Exact name of Registrant as specified in its Charter)
<TABLE>
<S> <C>
MARYLAND 52-0665775
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8211 TOWN CENTER DRIVE 21236
BALTIMORE, MARYLAND (Zip Code)
(Address of principal executive offices)
</TABLE>
(410) 931-6000
(Registrant's telephone number, including area code)
NONE
(Former name, former address and former fiscal year - if changed since last
report)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/ No / /
The Registrant is a wholly-owned subsidiary of Scotsman Holdings, Inc., a
Delaware corporation. As of June 30, 1997, Scotsman Holdings, Inc. owned
3,320,000 shares of common stock ("Common Stock") of the Registrant.
B-1
<PAGE>
WILLIAMS SCOTSMAN, INC.
INDEX
FORM 10-Q
<TABLE>
<CAPTION>
PART I -- FINANCIAL INFORMATION PAGE
---------
<S> <C>
Item 1. Financial Statements
Consolidated Balance Sheets at June 30, 1997
and December 31, 1996............................................................ B-3
Consolidated Statements of Operations for the six months
and three months ended June 30, 1997 and 1996.................................... B-4
Consolidated Statements of Cash Flows for the six
months ended June 30, 1997 and 1996.............................................. B-5
Notes to Consolidated Financial Statements....................................... B-6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations......................... B-7
PART II -- OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K..................................... B-10
</TABLE>
B-2
<PAGE>
PART I--FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
WILLIAMS SCOTSMAN, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30,
1997 DECEMBER 31,
(UNAUDITED) 1996
----------- ------------
<S> <C> <C>
(DOLLARS IN THOUSANDS)
ASSETS
Cash and temporary investments........................................................ $ 284 351
Trade accounts receivable, less allowance for doubtful accounts....................... 25,974 23,145
Prepaid expenses and other current assets............................................. 13,340 9,295
Rental equipment, at cost............................................................. 459,286 423,703
Less accumulated depreciation....................................................... 82,615 67,520
----------- ------------
Net rental equipment.............................................................. 376,671 356,183
----------- ------------
Property, plant and equipment, net.................................................... 33,837 29,032
Deferred financing costs, net......................................................... 21,412 5,494
Other assets.......................................................................... 10,249 5,197
----------- ------------
$ 481,767 428,697
----------- ------------
----------- ------------
LIABILITIES AND STOCKHOLDER'S EQUITY
Accounts payable...................................................................... $ 9,033 9,826
Accrued expenses...................................................................... 15,395 8,924
Rents billed in advance............................................................... 11,882 10,621
Long-term debt........................................................................ 504,699 268,753
Deferred compensation................................................................. 2,443 3,300
Deferred income taxes................................................................. 53,126 57,640
----------- ------------
Total liabilities................................................................. 596,578 359,064
----------- ------------
Stockholder's equity:
Common stock, $.01 par value. Authorized 10,000,000 shares; issued and outstanding
3,320,000 shares.................................................................. 33 33
Additional paid-in capital.......................................................... 56,844 56,844
Retained earnings (deficit)......................................................... (171,688) 12,756
----------- ------------
Total stockholder's equity (deficit).............................................. (114,811) 69,633
----------- ------------
$ 481,767 428,697
----------- ------------
----------- ------------
</TABLE>
See accompanying notes to consolidated financial statements.
B-3
<PAGE>
WILLIAMS SCOTSMAN, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
---------------------- ----------------------
<S> <C> <C> <C> <C>
1997 1996 1997 1996
---------- ---------- ---------- ----------
<CAPTION>
(IN THOUSANDS EXCEPT SHARE AND PER SHARE
AMOUNTS)
<S> <C> <C> <C> <C>
Revenues:
Leasing..................................................... $ 32,067 28,025 63,306 54,540
Sales of new units.......................................... 9,292 4,934 17,837 10,943
Delivery and installation................................... 9,379 7,450 17,552 13,953
Other....................................................... 5,253 4,467 10,012 8,084
---------- ---------- ---------- ----------
Total revenues.......................................... 55,991 44,876 108,707 87,520
---------- ---------- ---------- ----------
Costs of sales and services:
Leasing:
Depreciation and amortization............................. 8,120 7,929 16,062 15,000
Other direct leasing costs................................ 6,587 6,317 13,626 12,315
New units................................................. 7,857 4,016 15,055 9,056
Delivery and installation................................. 6,736 5,320 12,861 10,441
Other..................................................... 1,472 924 2,715 1,571
---------- ---------- ---------- ----------
Total costs............................................. 30,772 24,506 60,319 48,383
---------- ---------- ---------- ----------
Gross profit............................................ 25,219 20,370 48,388 39,137
---------- ---------- ---------- ----------
Selling, general and administrative expenses.................. 11,634 10,495 23,752 21,359
Recapitalization expenses..................................... 5,105 -- 5,105 --
Other depreciation and amortization........................... 641 538 1,253 1,093
Interest, including amortization of deferred financing
costs....................................................... 9,613 6,235 16,360 12,498
---------- ---------- ---------- ----------
Total operating expenses................................ 26,993 17,268 46,470 34,950
---------- ---------- ---------- ----------
Earnings (loss) before income taxes and extraordinary
item.................................................. (1,774) 3,102 1,918 4,187
Income tax expense (benefit).................................. (684) 1,197 740 1,615
---------- ---------- ---------- ----------
Earnings (loss) before extraordinary item..................... (1,090) 1,905 1,178 2,572
Extraordinary loss on extinguishment of debt, net............. 8,245 -- 8,245 --
---------- ---------- ---------- ----------
Net earnings (loss)................................. $ (9,335) 1,905 (7,067) 2,572
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Per common share:
Earnings (loss) before extraordinary item............... $ (0.33) 0.57 0.35 0.77
Net earnings (loss)..................................... (2.81) 0.57 (2.13) 0.77
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Weighted average shares outstanding........................... 3,320,000 3,320,000 3,320,000 3,320,000
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
See accompanying notes to consolidated financial statements.
B-4
<PAGE>
WILLIAMS SCOTSMAN, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
1997 1996
----------- ---------
<S> <C> <C>
(DOLLARS IN THOUSANDS)
Cash flows from operating activities:
Net earnings (loss)..................................................................... $ (7,067) 2,572
Adjustments to reconcile net earnings (loss) to net cash provided by operating
activities:
Extraordinary loss on extinguishment of debt.......................................... 13,423 --
Depreciation and amortization......................................................... 18,359 17,307
Provision for bad debts............................................................... 1,214 858
Deferred income tax expense (benefit)................................................. (4,514) 1,565
Provision for deferred compensation................................................... 367 550
Gain on sale of rental equipment...................................................... (1,430) (1,176)
Increase in net trade accounts receivable............................................. (4,043) (4,616)
(Increase) decrease in other assets................................................... (5,052) 46
Increase in accrued expenses.......................................................... 6,471 1,339
Other................................................................................. (4,964) 2,778
----------- ---------
Net cash provided by operating activities........................................... 12,764 21,223
----------- ---------
Cash flows from investing activities:
Redemption of certificates of deposit................................................... -- 250
Rental equipment additions.............................................................. (41,311) (30,377)
Proceeds from sales of rental equipment................................................. 6,191 5,406
Purchases of property, plant and equipment, net......................................... (6,023) (2,972)
----------- ---------
Net cash used in investing activities............................................... $ (41,143) (27,693)
----------- ---------
Cash flows from financing activities:
Proceeds from long-term debt............................................................ 632,025 88,622
Repayment of long-term debt............................................................. (396,078) (80,120)
Increase in deferred financing costs.................................................... (21,636) (35)
Payment of dividends.................................................................... (177,378) (2,070)
Extraordinary loss on extinguishment of debt............................................ (8,621) --
----------- ---------
Net cash provided by financing activities........................................... 28,312 6,397
----------- ---------
Net decrease in cash...................................................................... (67) (73)
Cash at beginning of period............................................................... 338 416
----------- ---------
Cash at end of period..................................................................... $ 271 343
----------- ---------
----------- ---------
Supplemental cash flow information:
Cash paid for income taxes.............................................................. $ 119 81
----------- ---------
----------- ---------
Cash paid for interest.................................................................. $ 10,474 11,299
----------- ---------
----------- ---------
</TABLE>
See accompanying notes to consolidated financial statements.
B-5
<PAGE>
WILLIAMS SCOTSMAN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) FINANCIAL STATEMENTS
The financial information for the six months ended June 30, 1997 and 1996
includes the accounts of Williams Scotsman, Inc. and its wholly owned
subsidiaries Mobile Field Office Company and Willscot Equipment, LLC (Willscot).
Willscot, a special purpose subsidiary, was formed in May 1997 and is a
guarantor of the Company's credit facility and acts as a full, unconditional and
joint and several subordinated guarantor of the 9 7/8% Senior Notes. The
operations of Willscot are limited to the leasing of its mobile office units to
the Company under a master lease and issuing the guarantee.
The financial information referred to above has not been audited. In the
opinion of management, the unaudited financial statements contain all
adjustments (consisting only of normal, recurring adjustments) necessary to
present fairly the Company's financial position as of June 30,1997 and its
operating results and cash flows for the three and six month periods ended June
30, 1997 and 1996. The results of operations for the periods ended June 30, 1997
and 1996 are not necessarily indicative of the operating results for the full
year.
Certain information and footnote disclosure normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been omitted. It is suggested that these financial statements be read in
conjunction with the financial statements and notes thereto included in the
Company's latest Form 10-K.
(2) EARNINGS PER SHARE
Earnings per common share is computed by dividing net earnings by the
weighted average number of common shares outstanding during the periods.
(3) RECAPITALIZATION
Pursuant to a recapitalization agreement, on May 22, 1997, Scotsman
Holdings, Inc. (Holdings), the Company's parent company, (i) repurchased
3,210,679 shares of its outstanding common stock for an aggregate of
approximately $293.8 million in cash and approximately $21.8 million in
promissory notes due January 1998 and (ii) issued 1,475,410 shares of common
stock for an aggregate of approximately $135.0 million (or a price of $91.50 per
share) in cash. In related transactions on the same date, (i) Holdings purchased
all of its outstanding Series B 11% Senior Notes due 2004 ($29.2 million
aggregate principal amount) for approximately $32.2 million, including accrued
interest and fees, (ii) the Company purchased $164.7 million aggregate principal
amount of its 9 1/2% Senior Secured Notes due 2000 for approximately $179.8
million, including accrued interest and fees and (iii) the Company repaid all of
its outstanding indebtedness ($119.0 million) under its prior credit facility.
In connection with the recapitalization, (i) the Company accelerated the
payment of deferred compensation under its long term incentive plan, (ii) all
outstanding stock options under Holdings' employee stock option plan vested and
became immediately exercisable and (iii) the Company canceled a portion of the
outstanding stock options. Accordingly, in the second quarter of 1997, the
Company recognized $5.1 million of recapitalization expenses including $2.5
million in connection with the acceleration of deferred compensation and $2.6
million in connection with the cancellation of the stock options, and recognized
an extraordinary loss on debt extinguishment of $13.4 million.
In order to finance the recapitalization transaction, on May 22, 1997, the
Company issued $400 million in 9 7/8% Senior Notes due 2007 and entered into a
$300 million revolving bank facility. The Company paid a dividend of $177.4
million to Holdings to effect the repurchase of common stock and the purchase of
the 11% Senior Notes.
B-6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1997 COMPARED WITH THREE MONTHS ENDED JUNE 30,
1996. Revenues in the quarter ended June 30, 1997 were $56.0 million, an $11.1
million or 24.8% increase from revenues of $44.9 million in the same period of
1996. This increase resulted primarily from a $4.0 million or 14.4% increase in
leasing revenue, a $4.4 million or 88.3% increase in new sales revenue and a
$1.9 million or 25.9% increase in revenue from delivery and installation. The
increase in leasing revenue is attributable to an increase in the average number
of units in the fleet of 13.5% to approximately 43,000 for the second quarter of
1997 and an increase in fleet utilization of approximately two percentage points
to 86%. Average monthly rental rates remained relatively stable, resulting from
a combination of modest rate increases offset by changes in fleet mix. The
increase in new sales revenue is primarily attributable to a large volume of
classroom sales in the Western Region during the quarter. The increase in
delivery and installation revenue is due to the increases in the leasing and new
sales activity described above.
Gross profit for the quarter was $25.2 million, a $4.8 million or 23.8%
increase from the second quarter of 1996. This increase is primarily due to an
increase in leasing gross profit of $3.6 million or 26.0%, an increase in gross
profit from new sales of $0.5 million or 56.3% and an increase in gross profit
from delivery and installation of $0.5 million or 24.1%. The increase in leasing
gross profit is due to an increase in the leasing activity described above
combined with an increase in leasing margins from 49.2% for the second quarter
of 1996 to 54.1% for the second quarter of 1997. Excluding depreciation and
amortization, leasing margins increased from 77.5% in 1996 to 79.5% in 1997. The
increase in the gross profit from new sales revenue is due to the increased
activity described above. The increase in delivery and installation gross profit
is due to the increases in leasing and new sales described above.
Selling, general and administrative (SG&A) expenses increased by $1.1
million or 10.9% from the second quarter of 1996. This increase is the result of
the growth experienced by the Company, both in terms of fleet size and number of
branches as compared to the second quarter of 1996. The Company's branch network
has expanded from 53 branches at June 30, 1996 to more than 60 branches at June
30, 1997 while the fleet has grown by approximately 5,800 units from June 30,
1996. The overall increases in SG&A expenses are due to increases in branch
related expenses, primarily payroll and occupancy expenses incurred in
connection with this branch expansion.
Recapitalization expenses of $5.1 million relate to amounts incurred in
connection with the recapitalization of the Company's parent, Scotsman Holdings,
Inc., in May 1997 (the Recapitalization) and are comprised of deferred
compensation and stock option expenses.
Interest expense increased by $3.4 million or 54.2% in the second quarter of
1997. This increase is a result of increased borrowings to finance the
Recapitalization as noted above and as a result of financing the fleet and
branch growth described above.
An extraordinary loss of $8.2 million (net of income taxes) arose from the
extinguishment of the Company's debt in connection with the Recapitalization.
SIX MONTHS ENDED JUNE 30, 1997 COMPARED WITH SIX MONTHS ENDED JUNE 30,
1996. Revenues in the six months ended June 30, 1997 were $108.7 million, a
$21.2 million or 24.2% increase from revenues of $87.5 million in the six months
ended June 30, 1996. The increase resulted primarily from a $8.8 million or
16.1% increase in leasing revenue, a $6.9 million or 63.0% increase in new sales
revenue and a $3.6 million or 25.8% increase in revenue from delivery and
installation. The increase in leasing revenue is attributable to an increase in
the average number of units in the lease fleet of 11.6% to approximately 42,000
units for the first six months of 1997, an increase in utilization of
approximately three percentage points to 86% and an increase of approximately $3
in the average monthly rental rate for the comparable periods. The increase in
new sales revenue is attributable primarily to a large volume of classroom sales
occurring in the
B-7
<PAGE>
Western Region during the first half of 1997. The increase in delivery and
installation revenue is due to the increases in the leasing and new sales
activity described above.
Gross profit for the six months ended June 30, 1997 was $48.4 million, a
$9.3 million or 23.6% increase from gross profit of $39.1 million during the
same period of 1996. This increase is primarily due to an increase in leasing
gross profit of $6.4 million or 23.5%, an increase in new sales gross profit of
$0.9 million or 47.4% and an increase in gross profit from delivery and
installation of $1.2 million or 33.6%. The increase in leasing gross profit is
due to the increase in leasing revenue described above combined with an increase
in the leasing margins from 49.9% in 1996 to 53.1% in 1997. Excluding
depreciation and amortization, leasing margins increased from 77.4% in 1996 to
78.5% in 1997. Gross profit from new sales increased as a result of the
increased volume of sales noted above. Delivery and installation gross profit
increased as a result of the increases in leasing and new sales activity noted
above.
Selling, general and administrative expenses for the six months ended June
30, 1997 increased by $2.4 million or 11.2% from the same period of 1996. The
overall increase in SG&A expenses is due primarily to branch related activities
and is comprised of increases in payroll and occupancy expenses. These increases
are due to the Company's growth described above.
Recapitalization expenses of $5.1 million relate to amounts incurred in
connection with the Recapitalization as noted above and are comprised of
deferred compensation and stock option expenses.
Interest expense increased by $3.9 million or 30.9% in the six months ended
June 30, 1997 from the same period in 1996. This increase is primarily a result
of the Recapitalization noted above. Additionally, average balances under the
line of credit were higher during 1997 as a result of financing the fleet and
branch growth described above.
An extraordinary loss of $8.2 million (net of income taxes) arose from the
extinguishment of the Company's debt in connection with the Recapitalization.
LIQUIDITY AND CAPITAL RESOURCES
During the six months ended June 30, 1997 and 1996, the Company's principal
sources of funds consisted of cash flow from operating and financing sources.
Cash flow from operating activities of $12.8 million and $21.2 million for the
six months ended June 30, 1997 and 1996, respectively, was largely generated by
the Company's leasing operation, which includes the rental and sale of units
from its lease fleet. Excluding the recapitalization expenses of $5.1 million
and the effect of the accelerated payment of $3.7 million of deferred
compensation which had been accrued in prior periods, cash flow from operating
activities for the six months ended June 30, 1997 would have been $21.6 million.
The Company has increased its EBITDA and believes that EBITDA provides the
best indication of its financial performance and provides the best measure of
its ability to meet historical debt service requirements. The Company defines
EBITDA as net income before depreciation, amortization, and provision for
deferred compensation, recapitalization expenses, interest and taxes. EBITDA as
defined by the Company does not represent cash flow from operations as defined
by generally accepted accounting principles and should not be considered as an
alternative to cash flows as a measure of liquidity, nor should it be considered
as an alternative to net income as an indicator of the Company's operating
performance. The Company's EBITDA increased by $7.7 million or 23.2% to $41.1
million for the first half of 1997 compared to $33.3 million for the same period
of 1996. This increase in EBITDA is a result of increased leasing activity
resulting from the overall increases in the number of units in the fleet as well
as the increase in the average monthly rental rate, offset by the increased SG&A
expenses required to support the increased activities during the six months
ended June 30, 1997.
Cash flow used in investing activities was $41.1 million and $27.7 million
in the six months ended June 30, 1997 and 1996, respectively. The Company's
primary capital expenditures are for the discretionary purchase of new units for
the lease fleet and units purchased through acquisition. The Company seeks to
B-8
<PAGE>
maintain its lease fleet in good condition at all times and generally increases
the size of its lease fleet only in those local or regional markets experiencing
economic growth and established unit demand. Cash provided by financing
activities of $28.3 million in the six months ended June 30, 1997 was primarily
the result of a series of transactions related to the Recapitalization in May
1997 and is comprised of net borrowings from long term debt offset by dividends
paid to the parent company primarily to effect the repurchase of its common
stock and purchase its 11% Senior Notes. Cash provided by financing activities
of $6.4 million for the six months ended June 30, 1996 was primarily from
borrowings under the line of credit.
The Company believes it will have, for the next 12 months, sufficient
liquidity under its revolving line of credit and from cash generated from
operations to meet its expected obligations as they arise.
B-9
<PAGE>
PART II--OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
None
(b) Reports on Form 8-K.
In a report on form 8-K dated May 22, 1997, the Company reported the
following:
The completion of the sale and recapitalization of its parent company,
Scotsman Holdings, Inc. (Holdings).
The completion of the tender offer of Holdings' 11% Senior Notes and
the Company's 9 1/2% Senior Secured Notes.
B-10
<PAGE>
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 thereunto duly authorized.
WILLIAMS SCOTSMAN, INC.
By: /s/ GERARD E. KEEFE
-----------------------------------------
Gerard E. Keefe
SENIOR VICE PRESIDENT AND CHIEF FINANCIAL
OFFICER
Dated: August 13, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
NAME CAPACITY DATE
- ------------------------------ --------------------------- -------------------
/s/ GERARD E. KEEFE Senior Vice President and
- ------------------------------ Chief Financial Officer August 13, 1997
Gerard E. Keefe
/s/ KATHERINE K. GIANNELLI Vice President and
- ------------------------------ Controller August 13, 1997
Katherine K. Giannelli
B-11
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON, OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE EXCHANGE OFFER COVERED BY THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL OR THE SOLICITATION OF ANY OFFER TO BUY ANY SECURITY OTHER THAN
THOSE TO WHICH IT RELATES, NOR DOES IT 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
ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY
SINCE THE DATE HEREOF NOR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF
ANY TIME SUBSEQUENT TO THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary........................................................ 3
Risk Factors.............................................................. 15
Use of Proceeds........................................................... 20
Capitalization............................................................ 20
Selected Historical Financial Data........................................ 21
Management's Discussion and Analysis of Financial Condition and Results of
Operations.............................................................. 23
The Exchange Offer........................................................ 25
Business.................................................................. 33
Management................................................................ 42
Certain Transactions...................................................... 47
Security Ownership of Certain Beneficial Owners and Management............ 50
Description of the New Credit Facility.................................... 52
Description of the Notes.................................................. 53
Certain Federal Income Tax Considerations................................. 89
ERISA Considerations...................................................... 90
Plan of Distribution...................................................... 91
Experts................................................................... 92
Legal Matters............................................................. 92
Special Note Regarding Forward-Looking Statements......................... 92
Annex A--Annual Report on Form 10-K....................................... A-1
Annex B--Quarterly Report on Form 10-Q.................................... B-1
</TABLE>
----------------------------
PROSPECTUS
----------------------
$400,000,000
[LOGO]
WILLIAMS SCOTSMAN, INC.
OFFER TO EXCHANGE $400,000,000 OF ITS 9 7/8% SENIOR NOTES DUE 2007 WHICH HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT FOR $400,000,000 OF ITS OUTSTANDING
9 7/8% SENIOR NOTES DUE 2007
SEPTEMBER 25, 1997
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Williams Scotsman, Inc. (the "Company") is a Maryland corporation. Section
2-418 of the Maryland General Corporation law contains detailed provisions on
indemnification of directors and officers of a Maryland corporation. In general,
indemnification is permitted against judgements, penalties, fines, settlements,
and reasonable expenses actually incurred in connection with a proceeding if a
director acted in good faith, reasonably believed his conduct to be in the best
interests of the corporation, and, in the case of a criminal proceeding, had no
reasonable cause to believe that his conduct was unlawful. In addition,
indemnification may, unless limited by the corporation's charter, be required
against reasonable expenses incurred by a director in connection with a
proceeding as to which is defense was successful, on the merits or otherwise.
Indemnification may be required under certain other circumstances as well, upon
application to a court of appropriate jurisdiction. Unless limited by a
corporation's charter, officers are required to be indemnified to the same
extent that directors are required to be indemnified. Additionally, officers are
permitted to be indemnified to the same extent that directors are permitted to
be indemnified.
The Company's Articles of Incorporation, as amended, provides in Article
EIGHT that the Corporation shall indemnify its directors and officers to the
full extent permitted by the Laws of the State of Maryland.
Mobile Field Office Company is a New Jersey corporation. Section 14A3-5 of
the New Jersey Business Corporation Act permits indemnification of officers and
directors under certain circumstances. In general, indemnification of
liabilities and expenses is permitted in connection with any proceeding
involving the officer or director if such officer or director acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation and with respect to any criminal proceeding, such
officer or director had no reasonable cause to believe his conduct was unlawful.
Willscot Equipment, LLC (the "Subordinated Guarantor") is a Delaware limited
liability company. Section 18-108 of the Delaware Limited Liability Company Act
(the "LLCA") grants a Delaware limited liability company the power, subject to
such standards and restrictions, if any, as are set forth in its limited
liability company agreement to indemnify and hold harmless any member or manager
or other person from and against any and all claims and demands whatsoever.
Section 8.3 of the Subordinated Guarantor's limited liability company
agreement provides that the Subordinated Guarantor shall indemnify any member,
any executive committee member, any affiliate of the member or executive
committee member or any shareholders, partners, members, employees,
representatives or agents of the member or executive committee member or their
respective affiliates, any officer or any employee or agent of the Subordinated
Guarantor (each a "Covered Person") who was or is a party or is threatened to be
made a party to any threatened, pending or completed action, suit or proceeding
brought by or against the Subordinated Guarantor or otherwise, whether civil,
criminal, administrative or investigative, including, without limitation, any
action by or in the right of the Subordinated Guarantor to procure a judgment in
its favor, by reason of the fact that such Covered Person is or was the member,
executive committee member, officer, employee or agent of the Subordinated
Guarantor, or that such Covered Person is or was serving at the request of the
Subordinated Guarantor as a partner, member, director, officer, trustee,
employee or agent of another person, against all expenses, including attorneys'
fees and disbursements, judgments, fines and amounts paid in settlement actually
and reasonably incurred by such Covered Person in connection with such action,
suit or proceeding. Notwithstanding the foregoing, no indemnification shall be
provided to or on behalf of any Covered Person if a judgment or other form of
adjudication adverse to such Covered Person establishes that his or her acts
constituted intentional misconduct or gross negligence.
II-1
<PAGE>
Pursuant to Section 7 of the registration rights agreements relating to the
Existing Notes, the holders of such securities have agreed to indemnify the
directors, officers and controlling persons of the registrant against certain
liabilities, costs and expenses that may be incurred in connection with the
registration of such securities, to the extent that such liabilities, costs and
expenses that may be incurred in connection with the registration of such
securities to the extent that such liabilities, costs and expenses arise from an
omission or untrue statement contained in information provided to the registrant
by the holders of such securities.
The Company's Directors' and Officers' Liability and Reimbursement Insurance
Policies are designed to reimburse the Company for any payments made by it
pursuant to the foregoing indemnification. The Purchase Agreements, dated as of
May 16, 1997, among the Company, the Guarantor and the Subordinated Guarantor
and the Initial Purchasers and among the Company, the Guarantor and the
Subordinated Guarantor and Oak Hill Securities Fund, L.P. ("OHSF"), contain
provisions by which the Initial Purchasers and OHSF agree to indemnify the
Company and its affiliates (including its officers, directors, employees, agents
and controlling persons) against certain liabilities.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits:
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF DOCUMENT
- ------------- -----------------------------------------------------------------------------------------------------
<C> <S>
2.1 Recapitalization Agreement, dated as of April 11, 1997. (Incorporated by reference to Exhibit 2 of
Form 8-K dated May 22, 1997.)
3.1 Certificate of Incorporation of the Company as amended. (Incorporated by reference to Exhibit 3(i) of
Form 8-K dated November 27, 1996.)
3.2 By-laws of the Company (Incorporated by reference to Exhibit 3.2 of Registration Statement on Form
S-1, Commission File No. 33-68444.)
3.3 Certificate of Incorporation of the Guarantor filed with the Secretary of State of New Jersey.*
3.4 By-laws of the Guarantor.*
3.5 Limited Liability Company Operating Agreement of the Subordinated Guarantor.*
4.1 Indenture dated as of May 15, 1997 among the Company, the Guarantor, the Subordinated Guarantor and
The Bank of New York, as trustee.*
4.2 Registration Rights Agreement, dated as of May 22, 1997, among the Company, the Guarantor, the
Subordinated Guarantor, BT Securities Corporation, Alex. Brown & Sons Incorporated and Donaldson,
Lufkin & Jenrette Securities Corporation.*
4.3 Registration Rights Agreement, dated as of May 22, 1997, among the Company, the Guarantor, the
Subordinated Guarantor, and Oak Hill Securities Fund, L.P.*
4.4 Specimen certificate of the Existing Note (included as Exhibit A to Exhibit 4.1).*
4.5 Specimen certificate of the New Note (included as Exhibit B to Exhibit 4.1).*
4.6 Letter to Commission regarding long-term debt.*
5.1 Opinion of Paul, Weiss, Rifkind, Wharton & Garrison, regarding legality of the securities being
registered.*
5.2 Opinion of Piper & Marbury L.L.P., regarding legality of the securities being registered.*
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF DOCUMENT
- ------------- -----------------------------------------------------------------------------------------------------
<C> <S>
10.1 Credit Agreement, dated as of May 22, 1997, by and among, the Company, Scotsman Holdings, Inc.
("Holdings"), each of the financial institutions named therein, Bankers Trust Company, as issuing
bank and BT Commercial Corporation, as agent.*
10.3 Stockholder Agreement, dated as of May 22, 1997, among Scotsman Partners, L.P., Cypress Merchant
Banking Partners, L.P., Cypress Offshore Partners, L.P., Odyssey Partners, L.P., Barry Gossett, BT
Investment Partners, Inc. and certain other stockholders.*
10.4 Second Amended and Restated Management Stockholders' and Optionholders' Agreement, dated as of May
22, 1997, among Scotsman Partners, L.P., Cypress Merchant Banking Partners, L.P., Cypress Offshore
Partners, L.P., Odyssey Partners, L.P. and certain management stockholders of Holdings.*
10.5 Scotsman Holdings, Inc. Employee Stock Purchase Plan. (Incorporated by reference to Exhibit 10.8 of
Registration Statement on Form S-1 of Scotsman Holdings, Inc., Commission File No. 33-68444.)
10.6 Scotsman Holdings, Inc. 1994 Employee Stock Option Plan. (Incorporated by reference to Exhibit 10.11
of the Company's Form 1994 10-K for the year ended December 31, 1994.)
12.1 Statement regarding computation of ratios.*
21.1 Subsidiaries of Registrant.*
23.1 Consent of Paul, Weiss, Rifkind, Wharton & Garrison (included in their opinion filed as Exhibit 5.1)*
23.2 Consent of Piper & Marbury L.L.P. (included in their opinion filed as Exhibit 5.2)*
23.3 Consent of Ernst & Young LLP.*
23.4 Consent of KPMG Peat Marwick LLP.*
24.1 Powers of Attorney (included on signature pages).+
25.1 Statement of eligibility of Trustee.*
99.1 Form of Letter of Transmittal.*
99.2 Form of Notice of Guaranteed Delivery.*
99.3 Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9.*
99.4 Form of Securities Dealers, Commercial Banks, Trust Companies and Other Nominees Letter.*
99.5 Form of Client Letter.*
* Filed with this Amendment.
+ Previously filed.
</TABLE>
(B) SCHEDULES
Schedule II - Valuation and Qualifying Accounts (Incorporated by reference
to Schedule II of the Company's Form 1996 10-K for the year
ended December 31, 1996.)
II-3
<PAGE>
ITEM 22. UNDERTAKINGS
That insofar as indemnification for liabilities arising under the Securities
Act 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 Securities 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, officers 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
matters 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 Securities Act and will be governed by
the final adjudication of such issue.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement;
(iii) To include any material information with respect to theplan of
distribution not previously disclosed in the registration statement or any
material change to such information in the Registration Statement;
(2) That, for the purpose of determining any liability under the
Securities Act, 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.
(3) To remove from registration by means of post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.
(4) To respond to requests for information that is incorporated by
reference into the prospectus pursuant to Item 4, 10(b), 11 or 12 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 include information contained in documents filed subsequent to the
effective date of the registration statement through the date of responding
to the request.
(5) To supply by means of a post-effective amendment all information
concerning the Exchange Offer that was not the subject of and included in
the Registration Statement when it became effective.
II-4
<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 Baltimore, Maryland, on the 25th day
of September, 1997.
WILLIAMS SCOTSMAN, INC.
By: /s/ GERARD E. KEEFE
-----------------------------------------
Gerard E. Keefe
Senior Vice President and
Chief Financial Officer
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.
SIGNATURE TITLE DATE
- ------------------------------ --------------------------- -------------------
* Chairman of the Board
- ------------------------------ September 25, 1997
Barry P. Gossett
* Chief Executive Officer
- ------------------------------ (principal executive September 25, 1997
Gerard E. Holthaus officer) and Director
Senior Vice President and
/s/ GERARD E. KEEFE Chief Financial Officer
- ------------------------------ (principal financial September 25, 1997
Gerard E. Keefe officer)
* Director
- ------------------------------ September 25, 1997
James N. Alexander
* Director
- ------------------------------ September 25, 1997
Daniel L. Doctoroff
* Director
- ------------------------------ September 25, 1997
Michael F. Finley
* Director
- ------------------------------ September 25, 1997
Robert B. Henske
* Director
- ------------------------------ September 25, 1997
James L. Singleton
* Director
- ------------------------------ September 25, 1997
David P. Spalding
* Controller (principal
- ------------------------------ accounting officer) September 25, 1997
Katherine K. Giannelli
*By: /s/ GERARD E. KEEFE
-------------------------
Gerard E. Keefe
ATTORNEY-IN-FACT
II-5
<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 Baltimore, Maryland, on the 25th day
of September, 1997.
MOBILE FIELD OFFICE COMPANY
By: /s/ GERARD E. KEEFE
------------------------------------------
Gerard E. Keefe
Senior Vice President and
Chief Financial Officer
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.
SIGNATURE TITLE DATE
- ------------------------------ --------------------------- -------------------
* Chairman of the Board September 25, 1997
- ------------------------------
Barry P. Gossett
* President (principal September 25, 1997
- ------------------------------ executive officer) and
Gerard E. Holthaus Director
/s/ GERARD E. KEEFE Chief Financial Officer September 25, 1997
- ------------------------------ (principal financial
Gerard E. Keefe officer)
* Director September 25, 1997
- ------------------------------
James N. Alexander
* Director September 25, 1997
- ------------------------------
Daniel L. Doctoroff
* Director September 25, 1997
- ------------------------------
Michael F. Finley
* Director September 25, 1997
- ------------------------------
Robert B. Henske
* Director September 25, 1997
- ------------------------------
James L. Singleton
* Director September 25, 1997
- ------------------------------
David P. Spalding
* Controller (principal September 25, 1997
- ------------------------------ accounting officer)
Katherine K. Giannelli
<TABLE>
<S> <C>
*By: /s/ GERARD E. KEEFE
-------------------------------------
Gerard E. Keefe
ATTORNEY-IN-FACT
</TABLE>
II-6
<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 Baltimore, Maryland, on the 25th day
of September, 1997.
<TABLE>
<S> <C> <C> <C> <C>
WILLSCOT EQUIPMENT, LLC
Williams
Scotsman,
By: Inc.,
its
Member
By:
<CAPTION>
/s/ GERARD E. KEEFE
---------------------------------------
Gerard E. Keefe
Senior Vice President and
Chief Financial Officer
</TABLE>
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.
SIGNATURE TITLE DATE
- ------------------------------ --------------------------- -------------------
* Chairman of the Board of
- ------------------------------ Member of Registrant September 25, 1997
Barry P. Gossett
Chief Executive Officer
* (principal executive
- ------------------------------ officer) and Director of September 25, 1997
Gerard E. Holthaus Member of Registrant
Senior Vice President and
/s/ GERARD E. KEEFE Chief Financial Officer
- ------------------------------ (principal financial September 25, 1997
Gerard E. Keefe officer) of Member of
Registrant
* Director of Member of
- ------------------------------ Registrant September 25, 1997
James N. Alexander
* Director of Member of
- ------------------------------ Registrant September 25, 1997
Daniel L. Doctoroff
* Director of Member of
- ------------------------------ Registrant September 25, 1997
Michael F. Finley
* Director of Member of
- ------------------------------ Registrant September 25, 1997
Robert B. Henske
* Director of Member of
- ------------------------------ Registrant September 25, 1997
James L. Singleton
* Director of Member of
- ------------------------------ Registrant September 25, 1997
David P. Spalding
* Controller (principal
- ------------------------------ accounting officer) of September 25, 1997
Katherine K. Giannelli Member of Registrant
<TABLE>
<S> <C>
By: /s/ GERARD E. KEEFE
--------------------------------
Gerard E. Keefe
ATTORNEY-IN-FACT
</TABLE>
II-7
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. PAGE
- ------------- ---------
<C> <S> <C>
2.1 Recapitalization Agreement, dated as of April 11, 1997. (Incorporated by reference to Exhibit
2 of Form 8-K dated May 22, 1997.)
3.1 Certificate of Incorporation of the Company as amended. (Incorporated by reference to Exhibit
3(i) of Form 8-K dated November 27, 1996.)
3.2 By-laws of the Company (Incorporated by reference to Exhibit 3.2 of Registration Statement on
Form S-1, Commission File No. 33-68444.)
3.3 Certificate of Incorporation of the Guarantor filed with the Secretary of State of New
Jersey.*
3.4 By-laws of the Guarantor.*
3.5 Limited Liability Company Operating Agreement of the Subordinated Guarantor.*
4.1 Indenture dated as of May 15, 1997 among the Company, the Guarantor, the Subordinated
Guarantor and The Bank of New York, as trustee.*
4.2 Registration Rights Agreement, dated as of May 22, 1997, among the Company, the Guarantor,
the Subordinated Guarantor, BT Securities Corporation, Alex. Brown & Sons Incorporated and
Donaldson, Lufkin & Jenrette Securities Corporation.*
4.3 Registration Rights Agreement, dated as of May 22, 1997, among the Company, the Guarantor,
the Subordinated Guarantor, and Oak Hill Securities Fund, L.P.*
4.4 Specimen certificate of the Existing Note (included as Exhibit A to Exhibit 4.1).*
4.5 Specimen certificate of the New Note (included as Exhibit B to Exhibit 4.1).*
4.6 Letter to Commission regarding long-term debt.*
5.1 Opinion of Paul, Weiss, Rifkind, Wharton & Garrison, regarding legality of the securities
being registered.*
5.2 Opinion of Piper & Marbury L.L.P., regarding legality of the securities being registered.*
10.1 Credit Agreement, dated as of May 22, 1997, by and among, the Company, Scotsman Holdings,
Inc. ("Holdings"), each of the financial institutions named therein, Bankers Trust Company,
as issuing bank and BT Commercial Corporation, as agent.*
10.3 Stockholder Agreement, dated as of May 22, 1997, among Scotsman Partners, L.P., Cypress
Merchant Banking Partners, L.P., Cypress Offshore Partners, L.P., Odyssey Partners, L.P.,
Barry Gossett, BT Investment Partners, Inc. and certain other stockholders.*
10.4 Second Amended and Restated Management Stockholders' and Optionholders' Agreement, dated as
of May 22, 1997, among Scotsman Partners, L.P., Cypress Merchant Banking Partners, L.P.,
Cypress Offshore Partners, L.P., Odyssey Partners, L.P. and certain management stockholders
of Holdings.*
10.5 Scotsman Holdings, Inc. Employee Stock Purchase Plan. (Incorporated by reference to Exhibit
10.8 of Registration Statement on Form S-1 of Scotsman Holdings, Inc., Commission File No.
33-68444.)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. PAGE
- ------------- ---------
<C> <S> <C>
10.6 Scotsman Holdings, Inc. 1994 Employee Stock Option Plan. (Incorporated by reference to
Exhibit 10.11 of the Company's Form 1994 10-K for the year ended December 31, 1994.)
12.1 Statement regarding computation of ratios.*
21.1 Subsidiaries of Registrant.*
23.1 Consent of Paul, Weiss, Rifkind, Wharton & Garrison (included in their opinion filed as
Exhibit 5.1)*
23.2 Consent of Piper & Marbury L.L.P. (included in their opinion filed as Exhibit 5.2)
23.3 Consent of Ernst & Young LLP.*
23.4 Consent of KPMG Peat Marwick LLP.*
24.1 Powers of Attorney (included on signature pages).+
25.1 Statement of eligibility of Trustee.*
99.1 Form of Letter of Transmittal.*
99.2 Form of Notice of Guaranteed Delivery*.
99.3 Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9.*
99.4 Form of Securities Dealers, Commercial Banks, Trust Companies and Other Nominees Letter.*
99.5 Form of Client Letter.*
</TABLE>
- ------------------------
* Filed with this Amendment.
+ Previously filed.
<PAGE>
Exhibit 3.3
1
CERTIFICATE OF INCORPORATION
OF
MOBILE FIELD OFFICE CO.
THIS IS TO CERTIFY That we, ANTHONY M. TRANCHITELLA, ANN L.
TRANCHITELLA and ELIZABETH F. BUFFLER, do hereby associate ourselves into a
corporation, under and by virtue of the provisions of Title 14, Corporations,
General, Revised Statutes, and the several supplements thereto and acts
amendatory thereof, and do severally agree to take the number of shares of
capital stock set opposite our respective names.
FIRST: The name of the corporation is MOBILE FIELD OFFICE CO.
SECOND: The location of the principal office is 426 Market Street,
in the City of Camden, County of Camden.
The name of the agent therein and in charge thereof, upon whom
process against this corporation may be served, is Benjamin F. Friedman.
THIRD: The objects for which this corporation is formed are: To
carry on and conduct the business of manufacturing, buying, selling, leasing,
dealing, importing and exporting trailers, motors, automobiles, motor trucks,
buses, and their appliances, fuels and accessories; to operate and maintain
sales and storage facilities and service stations, and to store, repair, rent
and lease trailers, automobiles, motor trucks, buses and other vehicles; to
manufacture, buy, sell and repair vehicles of every description, and to do
generally all and every other
<PAGE>
2
thing necessary and incident to the business of a trailer or vehicle company, or
necessary and incident to the enjoyment of the powers and privileges herein
granted.
To acquire the good will, business, property and assets, and to
assume or undertake the whole or any part of the liabilities of any person,
firm, association or corporation, and to pay for the same in cash, stock, bonds,
debentures or other securities of this corporation, or otherwise, as the
directors may determine.
To deal with patents, acquire those taken out by others, acquire or
grant licenses in respect to patents, or work, transfer, or do whatever else
with them may be thought fit.
To borrow money, to make and issue promissory notes, bills of
exchange, bonds, debentures and obligations and evidences of indebtedness of all
kinds, whether secured by mortgage, pledge or otherwise, without limit as to
amount, and to secure the same by mortgage, pledge or otherwise.
To conduct its business and have one or more offices, and
unlimitedly and without restriction to hold, purchase, lease, mortgage and
convey real and personal property, in or out of this state, and in such place
and places in the several states and territories of the United States, colonial
possessions or territorial acquisitions of the United States, and in foreign
countries, as shall from time to time be found necessary and convenient for the
purposes of the company's business.
The corporation shall also have power to conduct its business in all
its branches, have one or more offices, and unlimitedly to hold, purchase,
mortgage and convey real and personal property in any State, Territory or Colony
of the United States and in any foreign country or place.
<PAGE>
3
FOURTH: The total authorized capital stock of this corporation is
One Hundred Thousand ($100,000.00) dollars, divided into One Thousand shares of
a par value of One Hundred ($100.00) dollars each.
FIFTH: The names and post office addresses of the incorporators and
the number of shares subscribed for by each, the aggregate of which ($18,000.00)
is the amount of capital stock with which this company will commence business,
are as follows:
Name Post-Office Address Number of Shares
- --------------------------------------------------------------------------------
Anthony M. Tranchitella 2750 Turner Ave. 59
Roslyn, Pa.
Ann L. Tranchitella 2750 Turner Ave. 1
Roslyn, Pa.
Elizabeth F. Buffler 238 Burrwood Ave. 120
Collingswood, N.J.
SIXTH: The period of existence of this corporation is unlimited.
IN WITNESS WHEREOF, we have hereunto set our hands and seals
on the 25th day of June A.D. nineteen hundred and fifty-seven.
Signed, sealed and delivered
in the presence of:
/s/ Anthony M. Tranchitella
-----------------------------(SEAL)
Anthony M. Tranchitella
/s/ Ann L. Tranchitella
-----------------------------(SEAL)
Ann L. Tranchitella
/s/ Elizabeth F. Buffler
-----------------------------(SEAL)
Elizabeth F. Buffler
<PAGE>
4
STATE OF PENNSYLVANIA :
ss.
COUNTY OF PHILADELPHIA :
BE IT REMEMBERED, That on this 25th day of June A.D. nineteen
hundred and fifty-seven, before me, a Notary Public, personally appeared,
Anthony M. Tranchitella and Ann L. Tranchitella, who I am satisfied are the
persons named in and who executed the foregoing certificate, and I having first
made known to them the contents thereof, they did each acknowledge that they
signed, sealed and delivered the same as their voluntary act and deed, for the
uses and purposes therein expressed.
STATE OF NEW JERSEY :
ss.
COUNTY OF CAMDEN :
BE IT REMEMBERED, That on this 28th day of June A.D. nineteen
hundred and fifty-seven, before me, a Master of the Superior Court of New
Jersey, personally appeared, Elizabeth F. Buffler, who I am satisfied is one of
the persons named in and who executed the foregoing certificate, and I having
first made known to her the contents thereof, she did acknowledge that she
signed, sealed and delivered the same as her voluntary act and deed, for the
uses and purposes therein expressed.
<PAGE>
Exhibit 3.4
BY-LAWS
--------
Article I
OFFICES
Sec. 1. PLACE. The principal office of the corporation shall be at
426 Market Street, Camden, New Jersey.
Sec. 2. OTHER PLACES. The corporation may have other offices at
such other places as may from time to time be determined by the Board of
Directors.
Sec. 3. SIGN. The name of the corporation shall be conspicuously
displayed at the entrance of such offices at all times.
Article II
STOCKHOLDERS' MEETINGS
Sec. 1. ANNUAL MEETING. The meeting of Stockholders shall be held
at the principal office of the Corporation, on the 1st day of July of each year,
at 10 o'clock in the fore noon of that day. If the day so designated falls upon
a Sunday or a legal holiday, then the meeting shall be held upon the first
business day thereafter. The Secretary shall serve personally, or by mail, a
written notice thereof, addressed to each stockholder at his address as it
appears on the stock book; not less than 2 not more than 5 days, but at any
meeting at which all stockholders shall be present, or of which all stockholders
not present have waived notice in writing, the giving of notice as above
required may be dispensed with.
Sec. 2. QUORUM. The presence, in person or by proxy, in writing, of
the holders of all of the outstanding stock entitled to vote shall be
<PAGE>
BY-LAWS
--------
necessary to constitute a quorum for the transaction of business, but a lesser
number may adjourn to some future time not less than 2 nor more than 5 days
later, and the Secretary shall thereupon give at least 2 days' notice by mail to
each stockholder entitled to vote who was absent from such meeting.
Sec. 3. SPECIAL MEETINGS. Special Meetings of Stockholders other
than those regulated by statute, may be called at any time by a majority of the
Directors. Notice of such meeting stating the purpose for which it is called
shall be served personally or by mail, not less than 3 days before the date set
for such meeting. If mailed, it shall be directed to a stockholder at his
address as it appears on the stock book; but at any meeting at which all
stockholders shall be present, or of which stockholders not present have waived
notice in writing, the giving of notice as above described may be dispensed
with. The Board of Directors shall also, in like manner, call a special meeting
of stockholders whenever so requested in writing by stockholders representing
not less than all of the capital stock of the company. No business other than
that specified in the call for the meeting, shall be transacted at any meeting
of the stockholders.
Sec. 4. VOTING. At all meetings of the Stockholders all questions,
the manner of deciding which is not specifically regulated by statute, shall be
determined by a full vote of the Stockholders present in person or by proxy;
provided, however, that any qualified voter may demand a stock vote, in which
case each Stockholder present, in person or by proxy, shall be entitled to cast
one vote for each share of stock owned or represented by him. All voting shall
be viva voce, except that a stock vote shall be by ballot, each of which shall
state the name of the
2
<PAGE>
BY-LAWS
--------
Stockholder voting and the number of shares owned by him, and in addition, if
such ballot be cast by proxy, the name of the proxy shall be stated. The
casting of all votes at special meetings of stockholders shall be governed by
the provisions of the Corporation Laws of this State.
Sec. 5. INSPECTORS. At all elections of directors, the polls shall
be opened and closed, the ballots and proxies received and all questions
touching upon the qualifications of voters shall be determined by two inspectors
of election who shall be chosen by the presiding officers. Such inspectors
shall not be candidates for any office.
Such Inspectors shall, before entering into the performance of their
duties, execute and verify their oath of office and they shall file in writing
with the secretary of the corporation the result of the election.
Sec. 6. ORDER OF BUSINESS. The order of business at all meetings of
the stockholders shall be as follows:
1. Roll Call.
2. Proof of notice of meeting or waiver of notice.
3. Reading of minutes of preceding meeting.
4. Reports of Officers.
5. Reports of Committees.
6. Election of Inspectors of Election.
7. Election of Directors.
8. Unfinished Business.
9. New Business.
3
<PAGE>
BY-LAWS
--------
Article III
DIRECTORS
Sec. 1. NUMBER. The affairs and business of this Corporation shall
be managed by a Board of Directors composed of 3 members, who shall be
stockholders of record, and at least one of such directors shall at all times be
an actual resident of the State of New Jersey.
Sec. 2. HOW ELECTED. At the annual meeting of Stockholders, the 3
persons receiving all of the votes cast shall be directors and shall constitute
the Board of Directors for the ensuing year.
Sec. 3. TERM OF OFFICE. The term of office of each of the Directors
shall be one year, and thereafter until his successor has been elected.
Sec. 4. DUTIES OF DIRECTORS. The Board of Directors shall have the
control and general management of the affairs and business of the Corporation.
Such Directors shall in all cases act as a Board, regularly convened, by a
majority, and they may adopt such rules and regulations for the conduct of their
meetings and the management of the Corporation, as they may deem proper, not
inconsistent with these By-Laws and the laws of the State of New Jersey.
Sec. 5. DIRECTORS' MEETINGS. Regular meetings of the Board of
Directors shall be held at the principal office of the corporation and at such
times as the Board of Directors may determine. Special meetings of the Board of
Directors may be called by the President at any time, and shall be called by the
President or the Secretary upon the written request of directors.
4
<PAGE>
BY-LAWS
--------
Sec. 6. NOTICE OF MEETINGS. Notice of meetings of the Board of
Directors shall be given by service upon each Director in person, or by mailing
to him at his last known post-office address, at least 3 days before the date
therein designated for such meeting, including that day of mailing, of a written
or printed notice thereof specifying the time and place of such meeting. At any
meeting at which every member of the Board of Directors shall be present,
although held without notice and each of the directors having waived such
notice, any business may be transacted which might have been transacted if the
meeting had been duly called.
Sec. 7. QUORUM. At any meeting of the Board of Directors, 100
percent of the Board shall constitute a quorum for the transaction of business;
but in the event of a quorum not being present, a lesser number may adjourn the
meeting to some future time, not more than 3 days later.
Sec. 8. VOTING. At all meetings of the Board of Directors, each
Director is to have one vote, irrespective of the number of shares of stock that
he may hold.
Sec. 9. VACANCIES. Vacancies in the Board occurring between annual
meetings shall be filled for the unexpired portion of the term by a majority of
the remaining Directors.
Article IV
OFFICERS
Sec. 1. NUMBER. At the first meeting after their election the
Board of Directors shall elect the officers of the corporation. It shall be
necessary
5
<PAGE>
BY-LAWS
--------
that the person chosen as President shall be a member of the Board of Directors;
in addition they shall elect:
Treasurer
Secretary
Sec. 2. ELECTION. All officers of the corporation shall be elected
annually by the Board of Directors at its meeting held immediately after the
meeting of stockholders, and shall hold office for the term of one year or until
their successors are duly elected.
Sec. 3. DUTIES OF OFFICERS. The duties and powers of the officers
of the corporation shall be as follows:
PRESIDENT
The President shall preside at all meetings of the Board of Directors
and Stockholders.
He shall present at each annual meeting of the Stockholders and
Directors a report of the condition of the business of the corporation.
He shall cause to be called regular and special meetings of the
Stockholders and Directors in accordance with these By-Laws.
He shall have general control of the business of the Corporation,
subject to the direction of the Board of Directors.
He shall appoint and remove, employ and discharge, and fix the
compensation of all servants, agents, employees and clerks of the Corporation
other than the duly appointed officers, subject to the approval of the Board of
Directors.
6
<PAGE>
BY-LAWS
--------
He shall sign and make all contracts and agreements in the name of the
Corporation.
He shall see that the books, reports, statements, and certificates
required by the statutes are properly kept, made and filed according to law.
He may sign all certificates of stock, notes, drafts or bills of
exchange, warrants or other orders for the payment of money duly drawn by the
Treasurer.
He shall enforce these By-Laws and perform all the duties incident to
the position and office, and which are required by law.
VICE-PRESIDENT
During the absence and/or inability of the President to render and
perform his duties or exercise his powers, as set forth in these By-Laws or in
the acts under which this Corporation is organized, the same shall be performed
and exercised by the Vice-President; and when so acting, he shall have all the
powers and be subject to all the responsibilities hereby given to or imposed
upon such President.
SECRETARY
The Secretary shall keep the minutes of the meetings of the Board of
Directors and of the Stockholders in appropriate books.
He shall give and serve all notices of the Corporation.
He shall be custodian of the records and of the seal, and affix the
latter when required.
He shall keep the stock and transfer books in the manner prescribed by
law, so as to show at all times the amount of capital stock, the manner and the
time the same was paid in, the names of the owners thereof, alphabetically
arranged, their
7
<PAGE>
BY-LAWS
--------
respective places of residence, their post office address, the number of shares
owned by each, the time at which each person became such owner, and the amount
paid thereon; and keep such stock and transfer books open daily during business
hours at the office of the Corporation, subject to the inspection of any
Stockholder of the Corporation, and permit such Stockholder to make extracts
from said books to the extent and as prescribed by law.
He may sign all certificates of stock.
He shall present to the Board of Directors at their stated meetings
all communications addressed to him officially by the President or any officer
or shareholder of the Corporation.
He shall attend to all correspondence and perform all the duties
incident to the office of Secretary.
TREASURER
The Treasurer shall have the care and custody of and be responsible
for all the funds and securities of the Corporation, and deposit all such funds
in the name of the Corporation in such bank or banks, trust company or trust
companies or safe deposit vaults as the Board of Directors may designate.
He may sign, make, and endorse in the name of the Corporation, all
checks, drafts, warrants and orders for the payment of money, and pay out and
dispose of same and receipt therefor, under the direction of the President or
the Board of Directors.
8
<PAGE>
BY-LAWS
--------
He shall exhibit at all reasonable times his books and accounts to any
director or stockholder of the Corporation upon application at the office of the
Corporation during business hours.
He may sign all certificates of stock.
He shall render a statement of the condition of the finances of the
Corporation at each regular meeting of the Board of Directors, and at such other
times as shall be required of him, and a full financial report at the annual
meeting of the stockholders.
He shall keep at the office of the Corporation, correct books of
account of all its business and transactions and other books of account as the
Board of Directors may require.
He shall do and perform all duties pertaining to the office of
Treasurer.
Sec. 4. BOND. The Treasurer shall, if required by the Board of
Directors, give to the Corporation such security for the faithful discharge of
his duties as the Board may direct.
Sec. 5. VACANCIES, HOW FILLED. All vacancies in any office shall be
filled by the Board of Directors without undue delay, at its regular meeting, or
at a meeting specially called for that purpose.
Sec. 6. COMPENSATION OF OFFICERS. The officers shall receive such
salary or compensation as may be determined by the Board of Directors.
Sec. 7. REMOVAL OF OFFICERS. The Board of Directors may remove any
officer, by a full vote, at any time with or without cause.
9
<PAGE>
BY-LAWS
--------
Sec. 8. DELEGATED DUTIES. In case of the absence of any officer of
the Corporation, or for any other reason that may seem sufficient to the board,
the directors may, by a majority vote of the board, delegate the powers and
duties of -such officer, for the time being, to any other officer, or to any
director.
Article V
SEAL
Sec. 1. The seal of the Corporation shall be as follows:
10
<PAGE>
BY-LAWS
--------
Article VI
CERTIFICATES OF STOCK
Sec. 1. DESCRIPTION OF STOCK CERTIFICATES. The certificates of
stock shall be numbered and registered in the order in which they are issued.
They shall be bound in a book and shall be issued in consecutive order
therefrom, and in the margin thereof shall be entered the name of the person
owning the shares therein represented, with the number of shares and the date
thereof. Such certificates shall exhibit the holder's name and the number of
shares. They shall be signed by the President or Vice-President, and
countersigned by the Secretary or Treasurer and sealed with the seal of the
Corporation.
Sec. 2. TRANSFER OF STOCK. The stock of the corporation shall be
assignable and transferable on the books of the Corporation only by the person
in whose name it appears on said books, or his legal representatives. In case
of transfer by attorney, the power of attorney, duly executed and acknowledged,
shall be deposited with the Secretary. In all cases of transfer, the former
certificate must be surrendered up and canceled before a new certificate be
issued. No transfer shall be made upon the books of the Corporation within days
next preceding the annual meeting of the shareholders.
Article VII
DIVIDENDS
Sec. 1. WHEN DECLARED. The Board of Directors shall by vote declare
dividends from the surplus profits of the Corporation whenever, in their
11
<PAGE>
BY-LAWS
--------
opinion, the condition of the Corporation's affairs will render it expedient for
such dividends to be declared.
Sec. 2. WHEN PAYABLE. Dividends upon the capital stock of the
Corporation shall be payable on the day of each calendar year.
Article VIII
BILLS, NOTES, ETC.
Sec. 1. HOW MADE. All bills payable, notes, checks or other
negotiable instruments of the Corporation shall be made in the name of the
Corporation, and may be signed by the President or Treasurer. No officer or
agent of the Corporation, either singly or jointly with others, shall have the
power to make any bill payable, note, check, draft or warrant or other
negotiable instrument, or endorse the same in the name of the Corporation, or
contract or cause to be contracted any debt or liability in the name or in
behalf of the Corporation, except as herein expressly prescribed and provided.
Article IX
FISCAL YEAR
Sec. 1. WHEN TO BEGIN. The fiscal year of the Corporation shall
commence on the first day of January of each calendar year.
Article X
AMOUNTS
Sec. 1. HOW AMENDED. These By-Laws may be altered, amended,
repealed or added to by an affirmative vote of the stockholders representing
12
<PAGE>
BY-LAWS
--------
all of the entire outstanding capital stock having voting power, at an annual
meeting or at a special meeting called for that purpose, provided that a written
notice shall have been sent to each stockholder of record, which notice shall
state the alterations, amendments or changes which are proposed to be made in
such By-Laws. Only such changes as have been specified in the notice shall be
made. If, however, all the stockholders shall be present at any regular or
special meeting, these By-Laws may be amended by a unanimous vote, without any
previous notice.
Sec. 2. BOARD OF DIRECTORS MAY AMEND. The Board of Directors may
amend these By-Laws provided that not less than 3 nor more than 5 days' notice
shall be given to each of the directors of the proposed amendment.
13
<PAGE>
Exhibit 3.5
================================================================================
Willscot Equipment, LLC
LIMITED LIABILITY COMPANY AGREEMENT
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS AND USAGE............................................1
ARTICLE II
FORMATION; NAME; TERM............................................4
2.1 Formation..............................................4
2.2 Company Name...........................................4
2.3 Effective Date.........................................4
2.4 Term...................................................4
2.5 Registered Agent and Office............................5
2.6 Principal Place of Business............................5
2.7 Filings................................................5
2.8 Purpose................................................5
2.9 Powers of the Company..................................5
2.10 Authorized Person......................................5
2.11 Certificate of Interest................................5
ARTICLE III CAPITAL CONTRIBUTION...................................6
ARTICLE IV DISTRIBUTIONS..........................................6
4.1 General................................................6
4.2 Limits on Distributions................................6
4.3 Withholding............................................6
ARTICLE V ACCOUNTING; FINANCIAL AND TAX MATTERS..................6
5.1 Accounting Method......................................6
5.2 Accounting Records.....................................6
5.3 Fiscal Year............................................6
5.4 Reports................................................7
5.5 Bank and Investment Accounts...........................7
5.6 Tax Elections and Accounting Decisions.................7
5.7 Tax Classification.....................................7
ARTICLE VI MANAGEMENT BY THE MEMBER...............................7
6.1 Management by the Members..............................7
6.2 Admission of New Members...............................7
6.3 Power of Members.......................................8
6.4 Events of Bankruptcy...................................8
ARTICLE VI EXECUTIVE COMMITTEE....................................8
7.1 Executive Committee....................................8
7.2 Meetings of the Executive Committee....................9
i
<PAGE>
Page
----
7.3 Quorum and Voting......................................9
7.4 Procedural Matters of the Executive Committee.........10
7.5 Actions of the Company................................10
7.6 Power of the Executive Committee......................11
ARTICLE VII LIABILITY; EXCULPATION; INDEMNIFICATION...............12
8.1 Liability of Members and Executive Committee..........12
8.2 Duties and Liabilities of Covered Persons.............12
8.3 Indemnification.......................................13
ARTICLE IX TRANSFERS.............................................13
9.1 General Restrictions..................................13
9.2 Violative Transfers...................................13
ARTICLE X TERMINATION; DISSOLUTION; LIQUIDATION AND WINDING-UP
10.1 Termination of the Company............................14
10.2 Events of Dissolution.................................14
10.3 Liquidation and Winding-Up............................14
10.4 Survival of Rights, Duties and Obligations............15
ARTICLE XI GENERAL PROVISIONS....................................15
11.1 Notices...............................................15
11.2 Entire Agreement; Non-Waiver..........................15
11.3 Further Assurances....................................15
11.4 Applicable Law........................................15
11.5 Severability..........................................16
11.6 Table of Contents and Headings........................16
EXHIBITS
A Certificate of Formation
B Form of Certificate of Interest
C Assets Contributed to the Company by Williams Scotsman, Inc.
ii
<PAGE>
1
LIMITED LIABILITY COMPANY AGREEMENT
OF
WILLSCOT EQUIPMENT, LLC
This Limited Liability Company Agreement (this "Agreement") of
Willscot Equipment, LLC, a Delaware limited liability company (the "Company"),
dated as of May 22, 1997, is adopted and entered into by Williams Scotsman,
Inc., a Maryland corporation ("Scotsman"), as sole Member ("Member"), (the
"Member" and collectively, with all other Persons who from time to time become
Members pursuant to this Agreement, the "Members"), pursuant to and in
accordance with the Delaware Limited Liability Company Act (6 Del. C. ss. 18-10,
et seq.), as amended from time to time (the "Act"), and the terms of this
Agreement.
WHEREAS, the Company was formed on May 12, 1997, pursuant to the
Act, and the Company's sole member, Scotsman, contributed certain Rental
Equipment (as defined below) and other related assets to the Company on May 22,
1997; and
WHEREAS, the Company was specifically formed to acquire, own, hold,
manage, market, maintain, lease, sell or dispose of Rental Equipment and other
related assets and to engage in any and all activities directly incidental to
the foregoing (including, without limitation, leasing such Rental Equipment to
Scotsman or any of its Subsidiaries (as defined below);
NOW, THEREFORE, the Member hereby agrees as follows:
ARTICLE I
DEFINITIONS AND USAGE
1.1 "Affiliate" shall mean, with respect to any Person, any other
Person, directly or indirectly, controlling, controlled by, or under direct or
indirect common control with, such Person. For the purposes of this definition
"control," when used with respect to any specified Person, shall mean the power
to direct or cause the direction of the management and policies of such Person,
directly or indirectly, whether through ownership of voting securities or
partnership or other ownership interests, by contract or otherwise; and the
terms "controlling" and "controlled" shall have correlative meanings.
1.2 "Bill of Sale" shall mean the Bill of Sale, dated as of May 22,
1997, between Scotsman and the Company.
1.3 "Certificate of Formation" shall mean the certificate of
formation of the Company substantially in the form attached hereto as Exhibit A.
<PAGE>
2
1.4 "Certificate of Interest" shall mean the certificate evidencing
the Member's interest in the Company, substantially in the form attached hereto
as Exhibit B.
1.5 "Collateral Agent" shall mean BT Commercial Corporation acting
in its capacity as collateral agent under the Pledge Agreement, Subsidiaries
Guaranty and Security Agreement, as the case may be.
1.6 "Credit Agreement" shall mean the Credit Agreement, dated as of
May 22, 1997, among Bankers Trust Company, as issuing bank, BT Commercial
Corporation, as agent, the financial institutions named therein, as lenders,
Scotsman Holdings, Inc., as guarantor, and Scotsman, as borrower.
1.7 "Credit Documents" shall have the meaning given such term in
Section 1.1 of the Credit Agreement.
1.8 "Executive Committee" shall mean the Executive Committee
established pursuant to Section 7.1.
1.9 "GAAP" shall mean generally accepted accounting principles as in
effect in the United States from time to time.
1.10 "Holdings" shall mean Scotsman Holdings, Inc. a Delaware
corporation.
1.11 "Indebtedness" shall mean the indebtedness and other
obligations incurred under the Credit Agreement.
1.12 "Indenture" shall mean the Amended and Restated Indenture,
dated as of May 22, 1997, between Scotsman and First Trust National Association,
as trustee.
1.13 "Master Lease Agreement" shall mean the Master Lease Agreement,
dated as of May 22, 1997, between the Company and Scotsman.
1.14 "Person" shall mean any individual, partnership, company,
corporation, limited liability company, trust, estate, unincorporated
association, syndicate, joint venture or organization, or any government or any
department, agency or political subdivision thereof, or any other entity.
1.15 "Pledge Agreement" shall mean that certain pledge agreement
dated as of May 22, 1997 made by Scotsman, Holdings, the Subsidiary Guarantors
and each other Subsidiary of Scotsman that is required to execute a counterpart
thereof pursuant to Section 23 therein, in each case, in favor of BT Commercial
Corporation, as Collateral Agent (including any successor collateral agent) for
the benefit of the Secured Creditors (as such term is defined therein), as same
may be amended, modified or supplemented from time to time.
1.16 "Rental Equipment" shall mean all existing and future mobile
office and storage container units or other equipment held for rental (or
presently being rented) or sale by Scotsman and its Subsidiaries in the ordinary
course of business.
<PAGE>
3
1.17 "Scotsman" shall mean Williams Scotsman, Inc., a Maryland
corporation.
1.18 "Security Agreement" shall mean that certain security agreement
dated as of May 22, 1997, between Scotsman, Holdings, the Subsidiary Guarantors
and BT Commercial Corporation, as Collateral Agent for the Secured Creditors (as
such term is defined therein), as same may be amended, modified or supplemented
from time to time.
1.19 "Special Executive" shall mean a Person designated by the
Member who is not, at the time of initial appointment to the Executive Committee
and, at any time during the one year period immediately preceding the time of
initial appointment, was not (a) an employee, officer, director, shareholder or
partner of Scotsman or any of its Affiliates; (b) a customer, supplier or other
Person who derives greater than 10% of its revenues from its activities with
Scotsman or any of its Affiliates; (c) a Person or other entity controlling or
under common control with any such employee, officer, director, shareholder,
partner, customer, supplier or other Person; or (d) a member of the immediate
family of any such employee, officer, director, shareholder, partner, customer,
supplier or other Person.
1.20 "Subsidiary" shall mean, in respect of any Person, any
corporation, association, partnership or other business entity of which more
than 50% of the total voting power of shares of capital stock or other interests
(including partnership interests) entitled (without the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by (i) such Person,
(ii) such Person and one or more Subsidiaries of such Person or (iii) one or
more Subsidiaries of such Person.
1.21 "Subsidiary Security Agreement" shall mean the Subsidiary
Security Agreement made as of May 22, 1997 by the Company in favor of First
Trust National Association, in its capacity as collateral agent.
1.22 "Subsidiaries Guaranty" shall mean that certain subsidiaries
guaranty dated as of May 22, 1997, made by each Subsidiary Guarantor of
Scotsman, as same be amended, modified or supplemented from time to time.
1.23 "Subsidiary Guarantee" shall mean the Subsidiary Guarantee made
as of May 22, 1997 by the Company in favor of First National Association, in its
capacity as collateral agent and trustee.
1.24 "Subsidiary Guarantor" shall mean each Wholly-Owned Domestic
Subsidiary (as such term is defined in the Credit Agreement) of Scotsman.
1.25 "Transfer" shall mean any transfer, sale, assignment, pledge,
lease, hypothecation, mortgage, gift or creation of security interest, lien or
trust (voting or otherwise) or other encumbrance or other disposition of any
interests. "Transferor" and "Transferee" have correlative meanings and, in
addition, shall mean any Person who, in the case of a Transferor, issues
securities and, in the case of a Transferee, acquires securities so issued.
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1.26 Cross References. Each of the following terms shall have the
meaning assigned thereto in the Section of this Agreement set forth below
opposite such term:
Agreement.......................................... Preamble
Company.............................................Preamble
Covered Person........................................8.2(a)
Dissolution Event.......................................10.2
Effective Date...........................................2.3
Members.............................................Preamble
1.27. Usage Generally. The definitions in Article I shall apply
equally to both the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. All references herein to Articles, Sections, Exhibits
and Schedules shall be deemed to be references to Articles and Sections of, and
Exhibits and Schedules to, this Agreement unless the context shall otherwise
require. All Exhibits and Schedules attached hereto shall be deemed incorporated
herein as if set forth in full herein and, unless otherwise defined therein, all
terms used in any Exhibit or Schedule shall have the meaning ascribed to such
term in this Agreement. The words "include", "includes" and "including" shall be
deemed to be followed by the phrase "without limitation". All accounting terms
not defined in this Agreement shall have the meanings determined by GAAP. The
words "hereof", "herein" and "hereunder" and words of similar import when used
in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. Unless otherwise expressly provided
herein, any agreement, instrument or statute defined or referred to herein or in
any agreement or instrument that is referred to herein means such agreement,
instrument or statute as from time to time amended, modified, replaced or
supplemented, including (in the case of agreements or instruments) by waiver or
consent and (in the case of statutes) by succession of comparable successor
statutes and references to all attachments thereto and instruments incorporated
therein.
ARTICLE II
FORMATION; NAME; TERM
2.1 Formation. Scotsman formed the Company as a limited liability
company on May 12, 1997 under and pursuant to the provisions of the Act. The
Member hereby agrees that the Company shall be governed by the terms and
conditions of this Agreement.
2.2 Company Name. The name of the Company shall be Willscot
Equipment, LLC.
2.3 Effective Date. This Agreement shall become effective upon the
execution by the Member (the "Effective Date").
2.4 Term. The Company shall have perpetual existence unless sooner
dissolved or terminated as provided in the Act or this Agreement.
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2.5 Registered Agent and Office. The Company's registered agent and
office in Delaware shall be the National Corporate Research, Ltd., 9 East
Loockerman Street, Dover, Delaware 19901.
2.6 Principal Place of Business. The principal place of business of
the Company shall be at 8211 Town Center Drive, Baltimore, Maryland 21236 or at
such other or additional place or places as the Member shall determine from time
to time. The Company may have other offices, either within or outside of the
State of Delaware, at such place or places as the Member may from time to time
designate or the business of the Company may require.
2.7 Filings. The Member promptly shall cause the execution and
delivery of such documents and performance of such acts consistent with the
terms of this Agreement as may be necessary to comply with the requirements of
law for the formation, qualification and operation of a limited liability
company under the laws of each jurisdiction in which the Company shall conduct
business.
2.8 Purpose. The purposes of the Company shall be to (i) acquire,
own, hold, manage, market, maintain, lease, sell or dispose of Rental Equipment
and other related assets; (ii) execute, deliver and perform its obligations
under the Subsidiary Guarantee, the Subsidiary Security Agreement and any other
documents that may be required from time to time under the Indenture, (iii)
execute, deliver and perform its obligations under the Credit Documents to which
it is, or may in the future be required to be or choose to be, a party,
including without limitation, the Pledge Agreement, Security Agreement and
Subsidiaries Guaranty, (iv) incur indebtedness permitted under the Indenture and
the Credit Agreement and (v) engage in any and all activities directly
incidental to the foregoing (including, without limitation, leasing such Rental
Equipment to Scotsman or any of its Subsidiaries). In no event shall the Company
acquire any real property or other material asset or engage in any business
activities other than those specified in the preceding sentence.
2.9 Powers of the Company. Except as otherwise limited in this
Agreement, the Company shall have the power and authority to take any and all
actions necessary, appropriate, proper, advisable, convenient or incidental to
or for the furtherance of the purposes set forth in Section 2.8.
2.10 Authorized Person. Christopher G. Lanning hereby is designated
as an authorized person, within the meaning of the Act, to execute, deliver and
file the Certificate of Formation.
2.11 Certificate of Interest. The Member's interest in the Company
shall be evidenced by a Certificate of Interest issued by the Company on the
Effective Date.
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ARTICLE III
CAPITAL CONTRIBUTION
On or prior to the Effective Date, Scotsman will contribute to the
capital of the Company the assets listed on Schedule A hereto.
ARTICLE IV
DISTRIBUTIONS
4.1 General. The Company shall make such distributions as shall be
determined by the Member. The Member shall be entitled to receive any
distribution from the Company except as provided in this Agreement.
4.2 Limits on Distributions. Notwithstanding any provision to the
contrary contained in this Agreement, the Company shall not make a distribution
to any Member with respect to such Member's interest if such distribution would
violate Section 18-607 of the Act or other applicable law.
4.3 Withholding. Any payments required to be made by the Company to
the Member hereunder shall be net of any and all amounts required to be deducted
and withheld from such payments under applicable law. The Member hereby consents
to the deduction and withholding of any such amounts, agrees to cooperate fully
with the Company in determining the amount of any required withholdings, and
agrees promptly to return to the Company upon request any amounts that the
Company erroneously fails to deduct and withhold from any payment hereunder.
ARTICLE V
ACCOUNTING; FINANCIAL AND TAX MATTERS
5.1 Accounting Method. The Company shall keep its accounting records
and shall report its profits or losses on the accrual method of accounting in
accordance with GAAP.
5.2 Accounting Records. The Company shall keep complete and accurate
business and accounting records reflecting all transactions of the Company. The
Company's records shall be maintained at the principal place of business of the
Company and shall be subject to inspection or examination by the Member at all
reasonable times.
5.3 Fiscal Year. The fiscal year of the Company initially shall end
on December 31 of each year.
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5.4 Reports.
(a) As soon as practicable but in any event within 90 days after the
close of each fiscal year of the Company, the Company shall prepare and deliver,
or cause to be prepared and delivered, to the Member the following financial
statements: (i) a balance sheet of the Company as at the end of such fiscal
year; (ii) a statement of net profit and net loss for such fiscal year; and
(iii) a statement of cash flows of the Company for such fiscal year.
(b) The Company shall prepare, or cause to be prepared, and shall
file all tax returns, be they information returns or otherwise, which are
required to be filed with the Internal Revenue Service, state and local tax
authorities and foreign tax jurisdictions, if any. A copy of such returns shall
be furnished to the Member.
(c) The Company shall furnish the Member with all Company
information required to be reported in the tax returns of the Member for tax
jurisdictions in which the Company is considered to be doing business, including
a report indicating the Member's share for income tax purposes of the Company's
income, gain, credits, losses and deductions within 180 days after the end of
the Company's fiscal year.
5.5 Bank and Investment Accounts. All funds of the Company shall be
deposited in its name, or in such name as may be designated by the Member, in
such checking, savings or other accounts, or held in its name in the form of
such other investments as shall be designated by the Member. The funds of the
Company shall not be commingled with the funds of any Person. All withdrawals of
such deposits or liquidations of such investments by the Company shall be made
exclusively upon the signature or signatures of a duly authorized officer of the
Member.
5.6 Tax Elections and Accounting Decisions. All determinations as to
tax elections and accounting principles shall be made by the Member.
5.7 Tax Classification. The Member intends that the Company be
disregarded as an entity separate from the Member for tax purposes effective as
of the date of this Agreement. The Member shall not file any election for the
Company to be taxable as an association for Federal tax purposes.
ARTICLE VI
MANAGEMENT BY THE MEMBER
6.1 Management by the Members. Except to the extent (i) provided in
Section 7.5(a) below or (ii) delegated to the Executive Committee by the Member
in writing, the Company shall be managed exclusively by the Member.
6.2 Admission of New Members. One or more additional members of the
Company may be admitted to the Company with the consent of the Member or in
accordance with the transfer provisions contained in Article IX. Prior to the
admission of any such additional member of the Company, the Member shall amend
this Agreement to make such
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8
changes as the Member shall determine to reflect the fact that the Company shall
have more than one Member.
6.3 Power of Members. The Member shall have the power to exercise
any and all rights or powers granted to the Member pursuant to the express terms
of this Agreement. The Member shall have the power to pledge (pursuant to the
Pledge Agreement or otherwise) or grant a security interest, lien or other
encumbrance in or against, any or all of the Member's interest and such pledge
or grant shall not cause the Member to cease to be a Member or to cease to have
the power to exercise any rights or powers of a Member. Except as otherwise
specifically provided by this Agreement or required by the Act, no Member shall
have the power to act for or on behalf of, or to bind, the Company.
6.4 Events of Bankruptcy. Scotsman shall continue to be a Member
notwithstanding the occurrence of any or all of the "bankruptcy events"
specified in Section 18-304 of the Act.
ARTICLE VII
EXECUTIVE COMMITTEE
7.1 Executive Committee.
(a) For so long as the Indebtedness remains outstanding under
the Credit Agreement, an Executive Committee shall be established and shall
consist of the Member, one Special Executive and such other persons who shall be
designated from time to time by the Member. Notwithstanding anything in the
foregoing to the contrary, the Member shall retain full and complete power,
authority and discretion to take such action as the Member deems necessary or
appropriate concerning any matter with respect to which the Member consults the
Executive Committee, except for those matters specified in Section 7.5(b).
(b) Each Executive Committee member designated by the Member
(including, the Special Executive) shall serve until his successor is duly
designated by the Member or, if earlier, until such officer's death, resignation
or removal by the Member. A vacancy in any office because of death, resignation,
removal or any other cause shall be filled upon the direction of, and as
designated by, the Member.
(c) Any Executive Committee member may resign at any time by
so notifying the Member in writing. Such resignation shall take effect upon
receipt of such notice or at such later time as is therein specified, and unless
otherwise specified, the acceptance of such resignation shall not be necessary
to make it effective. Any Executive Committee member may be removed with or
without cause by the Member. The designation of an individual as an Executive
Committee member shall not of itself create a right to continued employment with
the Company.
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9
(d) Salaries or other compensation of the Executive Committee
members of the Company shall be fixed from time to time by the Member. Such
compensation, if any, will be paid by the Company out of its own funds.
7.2 Meetings of the Executive Committee. The Executive Committee
shall hold regular meetings at least once during each fiscal year at such time
during normal business hours and place as shall be determined by the Member.
Special meetings of the Executive Committee may be called at any time by the
Member. Except as otherwise determined by the Member, all special and regular
meetings of the Executive Committee shall be held at the principal office of the
Company. No notice shall be required with respect to any regular meeting of the
Executive Committee. Unless waived by all of the Executive Committee members in
writing (before or after a meeting) or with respect to any Executive Committee
member at such meeting, prior notice of any special meeting shall be given to
each Executive Committee member at least three (3) business days before the date
of such meeting. Notice of any meeting need not be given to any Executive
Committee member who shall submit, either before or after such meeting, a signed
waiver of notice. Attendance of an Executive Committee member at a meeting shall
constitute a waiver of notice of such meeting, except when the Executive
Committee member attends the meeting for the express purpose of objecting at the
beginning thereof to the transaction of any business because the meeting is not
properly called or convened. Notice of any adjourned meeting, including the
place, date and time of the new meeting, shall be given by the Member to all
Executive Committee members not present at the time of the adjournment, as well
as to the Executive Committee members present at the time of the adjournment
unless the place, date and time of the new meeting is announced by the Member at
such time.
7.3 Quorum and Voting.
(a) No action may be taken by the Executive Committee unless a
quorum is present, and the affirmative vote of a majority of the Executive
Committee members present shall be required for any act or decision thereof.
Subject to Section 7.5, in the event that the Executive Committee shall be
unable to make a determination to accept or reject a matter presented to it for
decision or approval, such deadlock shall be decided by the Member who shall be
entitled to cast an additional vote in all such situations. No Executive
Committee member shall be disqualified from acting on any matter because such
member is interested in the matter to be acted upon by the Executive Committee.
A quorum for any meeting of the Executive Committee shall be comprised of the
Member and at least two (2) other Executive Committee members or, if the
Executive Committee is comprised of two (2) individuals, a quorum shall be
comprised of the Member and the other Executive Committee member. Each member of
the Executive Committee shall have one vote (other than the Member in the case
of a deadlock, as aforesaid).
(b) Notwithstanding anything in the foregoing to the contrary,
except as otherwise expressly provided for in Section 7.5 below or as delegated
in writing by the Member, the Executive Committee shall not be entitled to vote
on any matter relating to the affairs of the Company, including, without
limitation, any matter set forth in Exhibit D.
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7.4 Procedural Matters of the Executive Committee.
(a) Any action required or permitted to be taken by the
Executive Committee may be taken without a meeting, if all of the Executive
Committee members consent in writing to such action. Such consent shall have the
same effect as a unanimous vote of the Executive Committee.
(b) The Executive Committee shall cause to be kept a book of
minutes of all of its actions by written consent and in which there shall be
recorded with respect to each meeting of the Executive Committee the time and
place of such meeting, whether regular or special (and if special, how called),
the names of those present and the proceedings thereof.
(c) Executive Committee members may participate in a meeting
of the Executive Committee by conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
one another, and such participation shall constitute presence in person at such
meeting.
7.5 Actions of the Company.
(a) For so long as the Indebtedness remains outstanding, the
Company and the Member, in its capacity as manager of the Company, shall not
take, approve or otherwise ratify any of the following actions except with the
consent of at least a majority of the members constituting the entire Executive
Committee; provided; that, such majority include the Special Executive:
(i) file a bankruptcy, insolvency or reorganization
petition or otherwise institute insolvency proceedings or otherwise seek
any relief under any laws relating to the relief from debts or the
protection of debtors generally;
(ii) seek or consent to the appointment of a receiver,
liquidator, assignee, trustee, sequestrator, custodian or any similar
official for it or all or any portion of its properties;
(iii) make any general assignment for the benefit of its
creditors;
(iv) merge or consolidate with or into any Person or
convey or transfer all or substantially all of its properties and assets
to any Person, except as permitted by the Credit Agreement;
(v) engage in any transaction or joint activity of any
kind with an Affiliate or any other Person, except as permitted under the
Credit Agreement;
(vi) amend this Agreement, except as permitted under the
Credit Agreement;
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(vii) take title to any personal or real property other
than in the name of the Company; or
(viii) dissolve or wind up its affairs.
(b) The Company and the Member, in its capacity as manager of the
Company, shall:
(i) not commingle the Company's property with the
property of any Affiliate of the Company, except as permitted under the
Credit Agreement;
(ii) pay from the Company's assets all obligations of
any kind incurred by the Company and not pay from the Company's assets the
obligations of any other Person, except as permitted under the Credit
Agreement;
(iii) conduct business in the Company's name;
(iv) hold the Company out to Persons as an independent
entity separate from its Affiliates;
(v) not enter into or be a party to any transaction with
any Affiliate, except on terms which are no less favorable to the Company
than would be obtained in a comparable arm's length transaction with an
unrelated third party, or except as permitted under the Credit Agreement;
(vi) not make loans to any other Person or hold evidence
of indebtedness issued by any other Person, except as permitted under the
Credit Agreement;
(vii) maintain its bank accounts, books and records and
financial statements on a separate basis from those of any other Person
and maintain a principal executive and administrative office through which
its business is conducted separate from that of any Affiliate; provided,
however, that the Company and any of its Affiliates may have offices in
the same location if there is a fair and appropriate allocation of
overhead costs, if any, among the Company and any such Affiliates;
(viii) correct any known misunderstanding regarding the
Company's existence as an independent entity separate from its Affiliates;
(ix) not identify the Company as a division of any other
Person;
(x) not be the obligor or guarantor of, or otherwise be
responsible for, the payment of any obligations for borrowed money, except
as required or permitted under the Credit Agreement.
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7.6 Power of the Executive Committee. Each Executive Committee member
shall have the power to exercise any and all rights or powers granted to such
member pursuant to the express terms of this Agreement. Except as otherwise
specifically provided by this Agreement or required by the Act, no member of the
Executive Committee shall have the power to act for or on behalf of, or to bind,
the Company.
ARTICLE VIII
LIABILITY; EXCULPATION; INDEMNIFICATION
8.1 Liability of Members and Executive Committee; Reimbursement. The
Member and each Executive Committee member shall not have any liability for the
obligations or liabilities of the Company except to the extent provided in the
Act and other applicable law. The Member and each Executive Committee member
shall not be personally liable for any indebtedness, liability or obligation of
the Company, except that the Member shall remain personally liable for the
payment of any capital contributions required by Article III, and as otherwise
set forth in this Agreement, the Act and any other applicable law. The Member
and each Executive Committee member shall be entitled to reimbursement from the
Company for all reasonable out-of-pocket expenses that are incurred by the
Member and each Executive Committee member in its performance of the services
rendered as Member or Executive Committee member, as the case may be, of the
Company or that otherwise directly relate to the purpose of the Company as
provided in Section 2.8 hereof.
8.2 Duties and Liabilities of Covered Persons.
(a) To the extent that, at law or in equity, the Member, any
Executive Committee member, any Affiliate of the Member or Executive Committee
member or any shareholders, partners, members, employees, representatives or
agents of the Member or Executive Committee member or their respective
Affiliates, any officer or any employee or agent of the Company (each a "Covered
Person") has duties (including fiduciary duties) and liabilities related thereto
to the Company or to any other Covered Person, a Covered Person acting under
this Agreement shall not be liable to the Company or to any other Covered Person
for its good faith reliance on the provisions of this Agreement.
(b) Unless otherwise expressly provided herein, (i) whenever a
conflict of interest exists or arises between Covered Persons or (ii) whenever
this Agreement or any other agreement contemplated herein provides that a
Covered Person shall act in a manner that is, or provides terms that are, fair
and reasonable to the Company or the Member, the Covered Person shall resolve
such conflict of interest, taking such action or providing such terms,
considering in each case the relative interest of each party (including its own
interest) to such conflict, agreement, transaction or situation and the benefits
and burdens relating to such interests, any customary or accepted industry
practices, and any applicable generally accepted accounting practices or
principles. In the absence of bad faith by the Covered Person, the resolution,
action or term so made, taken or provided by the Covered Person shall not
constitute a breach of this Agreement or any other agreement contemplated herein
or of any duty or obligation of the Covered Person at law or in equity or
otherwise.
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(c) Whenever in this Agreement a Covered Person is permitted
or required to make a decision (i) in its "discretion" or under a grant of
similar authority or latitude, the Covered Person shall be entitled to consider
only such interests and factors as it desires, including its own interests, and
shall have no duty or obligation to give any consideration to any interest of or
factors affecting the Company or any other Person, or (ii) in its "good faith"
or under another express standard, the Covered Person shall act under such
express standard and shall not be subject to any other or different standard
imposed by this Agreement or other applicable law.
8.3 Indemnification.
(a) The Company shall indemnify any Covered Person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding brought by or against the Company or
otherwise, whether civil, criminal, administrative or investigative, including,
without limitation, an action by or in the right of the Company to procure a
judgment in its favor, by reason of the fact that such Covered Person is or was
the Member, Executive Committee member, officer, employee or agent of the
Company, or that such Covered Person is or was serving at the request of the
Company as a partner, member, director, officer, trustee, employee or agent of
another Person, against all expenses, including attorneys' fees and
disbursements, judgments, fines and amounts paid in settlement actually and
reasonably incurred by such Covered Person in connection with such action, suit
or proceeding. Notwithstanding the foregoing, no indemnification shall be
provided to or on behalf of any Covered Person if a judgment or other final
adjudication adverse to such Covered Person establishes that his or her acts
constituted intentional misconduct or gross negligence.
(b) The indemnification provided by this Section 8.3 shall not
be deemed exclusive of any other rights to indemnification to which those
seeking indemnifi cation may be entitled under any agreement, determination of
the Member or otherwise. The rights to indemnification and reimbursement or
advancement of expenses provided by, or granted pursuant to, this Section 8.3
shall continue as to a Covered Person who has ceased to be a Member, Executive
Committee member, officer, employee or agent (or other person indemnified
hereunder) and shall inure to the benefit of the executors, administrators,
legatees and distributees of such person.
ARTICLE IX
TRANSFERS
9.1 General Restrictions. The Member may not Transfer all or any
portion of its interest (including any beneficial interest therein), unless an
instrument of Transfer (the "Instrument of Transfer") executed by the Transferor
and the Transferee of the interest shall be delivered to the Company; provided
however that the completion by BT Commercial Corporation, as Collateral Agent,
of the stock powers accompanying the Member's interest and duly pledged to BT
Commercial Corporation, as Collateral Agent, pursuant to the Pledge Agreement
shall constitute the execution of an Instrument of Transfer sufficient to
Transfer all of the Member's interest to BT Commercial Corporation, as
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14
Collateral Agent. Such Transferee shall be admitted as a Member in accordance
with the terms and conditions provided for in the Instrument of Transfer. Any
Person that acquires an interest pursuant to this Article VIII shall not be
liable for the obligations of the transferring Member to make contributions of
property or services to the Company.
9.2 Violative Transfers. The Member may not make a Transfer of an
interest in the Company in violation of Section 9.1, and any such Transfer shall
be null, void and without effect.
ARTICLE X
TERMINATION; DISSOLUTION; LIQUIDATION AND WINDING-UP
10.1 Termination of the Company. In the event of (i) the occurrence
of a Dissolution Event (as defined herein) or (ii) subject to Section 7.5, the
written consent to a dissolution by the Member, the Company shall be terminated
on the 90th day after the occurrence of such event; provided, however, in all
cases, the Special Executive shall have the right to continue the Company.
10.2 Events of Dissolution. The Company shall be dissolved upon the
bankruptcy, resignation, dissolution, withdrawal, death, retirement or expulsion
(each a "Dissolution Event") of the Member.
10.3 Liquidation and Winding-Up. If the Company is dissolved
pursuant to Section 10.1, the Company shall be liquidated and wound up in
accordance with the Act and the following provisions:
(a) The assets, properties and business of the Company shall
be liquidated by the Member as promptly as possible, but in an orderly and
businesslike manner so as not to involve undue sacrifice. Notwithstanding the
foregoing, if it is determined by the Member not to sell all or any portion of
the properties and assets of the Company, such properties and assets shall be
distributed in kind in the order of priority set forth in subsection (b);
provided, however, that the fair market value of such properties and assets
shall be used in determining the extent and amount of a distribution in kind of
such properties and assets in lieu of actual cash proceeds of any sale or other
disposition thereof.
(b) The proceeds of sale of all or substantially all of the
properties and assets of the Company and all other properties and assets of the
Company not sold, as provided in subsection (a) above, and valued at the fair
market value thereof as provided in such subsection (a), shall be applied and
distributed as follows, and in the following order or priority:
(i) First, to the payment of all debts and liabilities
of the Company and the expenses of liquidation not otherwise adequately
provided for;
(ii) Second, to the setting up of any reserves that are
reasonably necessary for any contingent unforeseen liabilities or
obligations of the
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Company or of the Member arising out of, or in connection with, the
Company; and
(iii) Third, to the Member.
(c) A Certificate of Cancellation shall be filed with the
Secretary of State of the State of Delaware by the Member.
10.4 Survival of Rights, Duties and Obligations. Termination,
dissolution, liquidation or winding up of the Company for any reason shall not
release any party from any liability which at the time of such termination,
dissolution, liquidation or winding up already had accrued to any other party or
which thereafter may accrue in respect to any act or omission prior to such
termination, dissolution, liquidation or winding up.
ARTICLE XI
GENERAL PROVISIONS
11.1 Notices. Wherever provision is made in this Agreement for the
giving of any notice, such notice shall be in writing and shall be deemed to
have been duly given if mailed by first class United States mail, postage
prepaid, addressed to the party entitled to receive the same or delivered
personally to such party, or telegraphed, telexed, sent by facsimile
transmission or sent by overnight courier, in each case to the addresses or
facsimile telephone numbers therefor set forth below:
If to Willscot Equipment, LLC:
Willscot Equipment, LLC
8211 Town Center Drive
Baltimore, Maryland 21236
Attn: John B. Ross, Secretary of Williams Scotsman, Inc.
or to such other address, in any such case, as the Member shall have last
designated by notice to the Company. Notice shall be deemed to have been given
on the day that it is so delivered personally, telegraphed, telexed or sent by
facsimile transmission and the appropriate answer back received or, if sent by
overnight courier, shall be deemed to have been given one day after delivery by
the courier company, or if mailed, three days following the date on which such
notice was so mailed.
11.2 Entire Agreement; Non-Waiver. This Agreement constitutes the
entire agreement of the Member. No delay on the part of the Member in exercising
any right hereunder shall operate as a waiver thereof, nor shall any waiver,
express or implied, by the Member of any right hereunder or of any failure to
perform or breach hereof by any other party constitute or be deemed a waiver of
any other right hereunder or of any other failure to perform or breach hereof by
the Member, whether of a similar or dissimilar nature thereof.
11.3 Further Assurances. The Member hereby agrees to execute and
deliver all such other and additional instruments and documents and to do such
other acts and
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16
things as may be reasonably necessary or appropriate to carry out the intent and
purposes of this Agreement.
11.4 Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware (other than its
rules of conflicts of law to the extent that the application of the laws of
another jurisdiction would be required thereby).
11.5 Severability. In the event that any provision of this Agreement
shall be declared to be invalid, illegal or unenforceable, such provision shall
survive to the extent it is not so declared, and the validity, legality and
enforceability of the other provisions hereof shall not in any way be affected
or impaired thereby, unless such action would substantially impair the benefits
to either party of the remaining provisions of this Agreement.
11.6 Table of Contents and Headings. The table of contents and
headings in this Agreement are solely for convenience of reference and shall not
affect the interpre tation or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the party hereto has caused this Agreement to be
executed, by its duly authorized officer, on the date first above written.
MEMBER
WILLIAMS SCOTSMAN, INC.
By: /s/ John B. Ross
-----------------
Name: John B. Ross
Title: Secretary
<PAGE>
17
EXHIBIT A
CERTIFICATE OF FORMATION
<PAGE>
18
EXHIBIT B
FORM OF CERTIFICATE
CERTIFICATE
FOR
COMMON MEMBERSHIP INTERESTS
IN
WILLSCOT EQUIPMENT, LLC
No. 001
WILLSCOT EQUIPMENT, LLC (the "Company"), a Delaware limited
liability company, hereby certifies that Williams Scotsman, Inc. is the
registered owner of a 100% interest in the Company (the "Membership Interest").
The rights, preferences, and limitations of the Membership Interest are set
forth in the Limited Liability Agreement of the Company, as the same may be
amended from time to time (the "Operating Agreement"), copies of which are on
file at the Company's principal office at 8211 Town Center Drive, Baltimore,
Maryland 21236. The Membership Interest represented hereby is subject to
restrictions on transfer as provided in the Operating Agreement.
This Certificate and the Membership Interest evidenced hereby are
transferable, subject to the terms of the Operating Agreement, only on the books
of the Company by the holder hereof in person or by duly authorized attorney
upon surrender of this certificate properly endorsed.
WITNESS, the signature of the duly authorized Member of the Company.
Dated: Williams Scotsman, Inc.
By:
----------------------------
Name:
Title:
BY ACCEPTANCE OF THIS CERTIFICATE, AND AS A CONDITION TO ENTITLEMENT TO ANY
RIGHTS IN OR BENEFITS WITH RESPECT TO THE MEMBERSHIP INTEREST EVIDENCED HEREBY,
A HOLDER HEREOF (INCLUDING ANY TRANSFEREE HEREOF) IS DEEMED TO HAVE AGREED TO
COMPLY WITH AND BE BOUND BY ALL TERMS AND CONDITIONS OF THE OPERATING AGREEMENT.
THE MEMBERSHIP INTEREST REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") AND SUCH MEMBERSHIP
INTEREST MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN
ACCORDANCE WITH THE TERMS OF THE OPERATING AGREEMENT AND THEN ONLY (1) PURSUANT
TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS UNDER THE ACT, THE AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO
THE SATISFACTION OF THE COMPANY, OR (2) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE
SECURITIES LAWS OR BLUE SKY LAWS OF ANY STATE OF THE UNITED STATES.
<PAGE>
19
EXHIBIT C
ASSETS CONTRIBUTED TO THE COMPANY BY WILLIAMS SCOTSMAN, INC.
32,423 mobile offices and storage units are being contributed to the
Company.
<PAGE>
Exhibit 4.1
================================================================================
WILLIAMS SCOTSMAN, INC.,
as Issuer,
MOBILE FIELD OFFICE COMPANY,
as Guarantor,
WILLSCOT EQUIPMENT, LLC,
as Subordinated Guarantor
and
THE BANK OF NEW YORK,
as Trustee
----------------------
INDENTURE
Dated as of May 15, 1997
----------------------
up to $550,000,000
9 7/8% Senior Notes due 2007
============================================================================
<PAGE>
CROSS-REFERENCE TABLE
TIA Indenture
Section Section
- ------- -------
310 (a)(1)................................................ 7.10
(a)(2)................................................ 7.10
(a)(3)................................................ N.A.
(a)(4)................................................ N.A.
(a)(5)................................................ 7.10
(b)................................................... 7.08; 7.10;
10.02
(c)................................................... N.A.
311 (a)................................................... 7.11
(b)................................................... 7.11
(c)................................................... N.A.
312 (a)................................................... 2.05
(b)................................................... 10.03
(c)................................................... 10.03
313 (a)................................................... 7.06
(b)(1)................................................ N.A.
(b)(2)................................................ 7.06
(c)................................................... 7.06; 10.02
(d)................................................... 7.06
314 (a)................................................... 4.06; 4.08;
10.02
(b)................................................... N.A.
(c)(1)................................................ 10.04
(c)(2)................................................ 10.04
(c)(3)................................................ N.A.
(d)................................................... N.A.
(e)................................................... 10.05
(f)................................................... N.A.
315 (a)................................................... 7.01(b)
(b)................................................... 7.05; 10.02
(c)................................................... 7.01(a)
(d)................................................... 7.01(c)
(e)................................................... 6.11
316 (a)(last sentence).................................... 2.09
(a)(1)(A)............................................. 6.05
(a)(1)(B)............................................. 6.04
(a)(2)................................................ N.A.
(b)................................................... 6.07
(c)................................................... 9.04
317 (a)(1)................................................ 6.08
(a)(2)................................................ 6.09
(b)................................................... 2.04
318 (a)................................................... 10.01
(c)................................................... 10.01
<PAGE>
TABLE OF CONTENTS
Page
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ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions...................................... 1
SECTION 1.02. Incorporation by Reference of TIA................ 33
SECTION 1.03. Rules of Construction............................ 33
ARTICLE TWO
THE NOTES
SECTION 2.01. Form and Dating.................................. 34
SECTION 2.02. Execution and Authentication; Aggregate
Principal Amount.............................. 36
SECTION 2.03. Registrar and Paying Agent....................... 37
SECTION 2.04. Paying Agent To Hold Assets in Trust............. 38
SECTION 2.05. Holder Lists..................................... 39
SECTION 2.06. Transfer and Exchange............................ 39
SECTION 2.07. Replacement Notes................................ 40
SECTION 2.08. Outstanding Notes................................ 41
SECTION 2.09. Treasury Notes................................... 41
SECTION 2.10. Temporary Notes.................................. 42
SECTION 2.11. Cancellation..................................... 42
SECTION 2.12. Defaulted Interest............................... 43
SECTION 2.13. CUSIP Number..................................... 44
SECTION 2.14. Deposit of Monies................................ 44
SECTION 2.15. Restrictive Legends.............................. 45
SECTION 2.16. Book-Entry Provisions for Global Note............ 47
SECTION 2.17. Special Transfer Provisions...................... 49
SECTION 2.18. Liquidated Damages Under Registration
Rights Agreement.............................. 52
ARTICLE THREE
REDEMPTION
SECTION 3.01. Notices to Trustee............................... 52
SECTION 3.02. Selection of Notes To Be Redeemed................ 53
SECTION 3.03. Optional Redemption.............................. 53
SECTION 3.04. Notice of Redemption............................. 55
SECTION 3.05. Effect of Notice of Redemption................... 57
SECTION 3.06. Deposit of Redemption Price...................... 57
SECTION 3.07. Notes Redeemed in Part........................... 58
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Page
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ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Notes................................. 58
SECTION 4.02. Maintenance of Office or Agency.................. 59
SECTION 4.03. Corporate Existence.............................. 59
SECTION 4.04. Compliance Certificate; Notice of Default........ 60
SECTION 4.05. SEC Reports...................................... 61
SECTION 4.06. Waiver of Stay, Extension or Usury Laws.......... 61
SECTION 4.07. Limitation on Restricted Payments................ 62
SECTION 4.08. Limitation on Affiliate Transactions............. 65
SECTION 4.09. Limitation on Indebtedness....................... 67
SECTION 4.10. Limitation on Restrictions on
Distributions from Restricted
Subsidiaries.................................. 72
SECTION 4.11. Change of Control................................ 74
SECTION 4.12. Limitation on Sale of Assets and
Subsidiary Stock.............................. 76
SECTION 4.13. Limitation on Sale or Issuance of Capital
Stock of Restricted Subsidiaries.............. 78
SECTION 4.14. Limitation on Liens.............................. 79
SECTION 4.15. Additional Guarantees............................ 79
SECTION 4.16. Activities of the Issuer and the
Restricted Subsidiaries....................... 80
SECTION 4.17. Activities of Subordinated Guarantor............. 80
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. Merger and Consolidation......................... 81
ARTICLE SIX
REMEDIES
SECTION 6.01. Events of Default................................ 84
SECTION 6.02. Acceleration..................................... 87
SECTION 6.03. Other Remedies................................... 87
SECTION 6.04. Waiver of Past Defaults.......................... 88
SECTION 6.05. Control by Majority.............................. 88
SECTION 6.06. Limitation on Suits.............................. 88
SECTION 6.07. Rights of Holders to Receive Payment............. 89
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Page
----
SECTION 6.08. Collection Suit by Trustee....................... 90
SECTION 6.09. Proofs of Claim.................................. 90
SECTION 6.10. Priorities....................................... 90
SECTION 6.11. Undertaking for Costs............................ 91
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. Duties of Trustee................................ 92
SECTION 7.02. Rights of Trustee................................ 94
SECTION 7.03. Individual Rights of Trustee..................... 95
SECTION 7.04. Trustee's Disclaimer............................. 96
SECTION 7.05. Notice of Default................................ 96
SECTION 7.06. Reports by Trustee to Holders.................... 96
SECTION 7.07. Compensation and Indemnity....................... 97
SECTION 7.08. Replacement of Trustee........................... 98
SECTION 7.09. Successor Trustee by Merger, Etc................. 99
SECTION 7.10. Eligibility; Disqualification.................... 100
SECTION 7.11. Preferential Collection of Claims Against
Issuer........................................ 100
ARTICLE EIGHT
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 8.01. Termination of Issuer's Obligations.............. 101
SECTION 8.02. Application of Trust Money....................... 104
SECTION 8.03. Repayment to the Issuer.......................... 104
SECTION 8.04. Reinstatement.................................... 105
SECTION 8.05. Acknowledgment of Discharge by Trustee........... 105
ARTICLE NINE
AMENDMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders....................... 106
SECTION 9.02. With Consent of Holders.......................... 107
SECTION 9.03. Compliance with Trust Indenture Act.............. 109
SECTION 9.04. Revocation and Effect of Consents and
Waivers....................................... 109
SECTION 9.05. Notation on or Exchange of Notes................. 110
SECTION 9.06. Trustee To Sign Amendments....................... 110
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<PAGE>
Page
----
ARTICLE TEN
MISCELLANEOUS
SECTION 10.01. TIA Controls..................................... 111
SECTION 10.02. Notices.......................................... 111
SECTION 10.03. Communications by Holders with Other
Holders....................................... 112
SECTION 10.04. Certificate and Opinion as to Conditions
Precedent..................................... 113
SECTION 10.05. Statements Required in Certificate or
Opinion....................................... 113
SECTION 10.06. Rules by Trustee, Paying Agent, Registrar........ 114
SECTION 10.07. Legal Holidays................................... 114
SECTION 10.08. Governing Law.................................... 114
SECTION 10.09. No Adverse Interpretation of Other
Agreements.................................... 115
SECTION 10.10. No Personal Liability............................ 115
SECTION 10.11. Successors....................................... 116
SECTION 10.12. Duplicate Originals.............................. 116
SECTION 10.13. Severability..................................... 116
SECTION 10.14. Independence of Covenants........................ 116
SECTION 10.15. Agent for Service; Submission to
Jurisdiction; Waiver of Immunities............ 117
ARTICLE ELEVEN
GUARANTEE OF NOTES
SECTION 11.01. Unconditional Guarantee.......................... 118
SECTION 11.02. Subordinated Guarantee of the
Subordinated Guarantor; Waiver of
Substantive Consolidation by
Noteholders; etc.............................. 120
SECTION 11.03. Limitations on Guarantees........................ 126
SECTION 11.04. Execution and Delivery of Guarantee.............. 127
SECTION 11.05. Release of a Guarantor or the
Subordinated Guarantor........................ 128
SECTION 11.06. Waiver of Subrogation............................ 129
SECTION 11.07. Immediate Payment................................ 130
SECTION 11.08. No Set-Off....................................... 131
SECTION 11.09. Obligations Continuing........................... 131
SECTION 11.10. Obligations Reinstated........................... 131
SECTION 11.11. Obligations Not Affected......................... 132
SECTION 11.12. Waiver........................................... 132
SECTION 11.13. No Obligation To Take Action Against the
Issuer........................................ 133
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<PAGE>
Page
----
SECTION 11.14. Dealing with the Issuer and Others............... 133
SECTION 11.15. Default and Enforcement.......................... 134
SECTION 11.16. Amendment, Etc................................... 134
SECTION 11.17. Acknowledgment................................... 135
SECTION 11.18. No Waiver; Cumulative Remedies................... 135
SECTION 11.19. Survival of Obligations.......................... 135
SECTION 11.20. Guarantee in Addition to Other
Obligations................................... 136
SECTION 11.21. Severability..................................... 136
SECTION 11.22. Successors and Assigns........................... 136
SECTION 11.23. No Personal Liability............................ 137
Exhibit A - Form of Initial Note................................... A-1
Exhibit B - Form of Exchange Note.................................. B-1
Exhibit C - Form of Certificate To Be Delivered in
Connection with Transfers to Non-QIB
Accredited Investors................................ C-1
Exhibit D - Form of Certificate To Be Delivered in
Connection with Transfers Pursuant to
Regulation S........................................ D-1
Exhibit E - Form of Guarantee...................................... E-1
Exhibit F - Form of Subordinated Guarantee......................... F-1
Note: This Table of Contents shall not, for any purpose, be deemed
to be part of the Indenture
-v-
<PAGE>
INDENTURE, dated as of May 15, 1997, among WILLIAMS SCOTSMAN, INC.,
a Maryland corporation (the "Issuer"), MOBILE FIELD OFFICE COMPANY, a New Jersey
corporation ("MFO"), as a Guarantor (as defined herein), WILLSCOT EQUIPMENT,
LLC, a Delaware corporation ("Willscot"), as Subordinated Guarantor (as defined
herein) and THE BANK OF NEW YORK, as Trustee (the "Trustee").
Each party hereto agrees as follows for the benefit of the other
parties and for the equal and ratable benefit of the Holders of the Notes.
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
"Additional Assets" means (i) any property or assets (other than
Indebtedness and Capital Stock) in a Permitted Business; (ii) Indebtedness of a
Person engaged in a Permitted Business if such Indebtedness is acquired in
connection with the acquisition of the Permitted Business (other than
Indebtedness Incurred to provide all or a portion of the funds or credit support
utilized to consummate the acquisition); (iii) the Capital Stock of a Person
that becomes a Restricted Subsidiary as a result of the acquisition of such
Capital Stock by the Issuer or another Restricted Subsidiary; or (iv) Capital
Stock constituting a minority interest in any Person that at such time is a
Restricted Subsidiary; provided, however, that any such Restricted Subsidiary
described in clauses (iii) or (iv) above is primarily engaged in a Permitted
Business.
"Additional Interest" shall have the meaning set forth in the
applicable Registration Rights Agreement.
"Adjusted Consolidated Assets" means at any time the total amount of
assets of the Issuer and its consolidated Restricted Subsidiaries (less
applicable depreciation, amortization and other valuation reserves), after
deducting therefrom all current liabilities of the Issuer and its consolidated
Restricted Subsidiaries (excluding intercompany items, the current portion of
long-term debt and Indebtedness outstanding under the Credit Agreement), all as
set forth on the consolidated balance sheet of the Issuer and its consolidated
Restricted Subsidiaries as of the end of the most recent fiscal quarter for
which financial statements are available prior to the date of determination.
<PAGE>
"Affiliate" means, with respect to any specified Person, any other
Person, directly or indirectly, controlling or controlled by, or under direct or
indirect common control with, such specified Person. For the purposes of this
definition, "control" when used with respect to any Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing. For purposes of Sections 4.07, 4.08, and 4.12 only, "Affiliate" shall
also mean any beneficial owner of Capital Stock representing 10% or more of the
total voting power of the Voting Stock (on a fully diluted basis) of the Issuer
or of rights or warrants to purchase such Capital Stock (whether or not
currently exercisable) and any Person who would be an Affiliate of any such
beneficial owner pursuant to the first sentence hereof.
"Affiliate Transaction" has the meaning provided in Section 4.11.
"Agent" means any Registrar, Paying Agent or co-Registrar.
"Agent Members" has the meaning provided in Section 2.16.
"Applicable Premium" has the meaning provided in Section 3.03.
"Asset Disposition" means any sale, lease, transfer or other
disposition (or series of related sales, leases, transfers or other
dispositions) by the Issuer or any Restricted Subsidiary, including any
disposition by means of a merger, consolidation or similar transaction (each
referred to for the purposes of this definition as a "disposition"), of (i) any
shares of Capital Stock of a Restricted Subsidiary (other than directors'
qualifying shares or shares required by applicable law to be held by a Person
other than the Issuer or a Restricted Subsidiary), (ii) all or substantially all
the assets of any division or line of business of the Issuer or any Restricted
Subsidiary or (iii) any other assets of the Issuer or any Restricted Subsidiary
outside of the ordinary course of business of the Issuer or such Restricted
Subsidiary (other than, in the case of (i), (ii) and (iii) above, (v) a
disposition by a Restricted Subsidiary to the Issuer or by the Issuer or a
Restricted Subsidiary to a Wholly Owned Subsidiary, (w) for purposes of Section
4.12 only, a disposition that constitutes a Restricted Payment permitted by
Section 4.07, (x) a disposition of assets with a fair market value of less than
-2-
<PAGE>
$1,000,000, (y) any Permitted Units Financing and (z) any Scheduled Asset
Disposition).
"Attributable Debt" in respect of a Sale/Leaseback Transaction
means, as at the time of determination, the present value (discounted at the
interest rate borne by the Notes, compounded annually) of the total obligations
of the lessee for rental payments during the remaining term of the lease
included in such Sale/Leaseback Transaction (including any period for which such
lease has been extended).
"Authenticating Agent" has the meaning provided in Section 2.02.
"Average Life" means, as of the date of determination, with respect
to any Indebtedness or Preferred Stock, the quotient obtained by dividing (i)
the sum of the products of the numbers of years from the date of determination
to the dates of each successive scheduled principal payment of such Indebtedness
or redemption or similar payment with respect to such Preferred Stock multiplied
by the amount of such payment by (ii) the sum of all such payments.
"Bankruptcy Law" means Title 11, U.S. Code or any similar Federal,
state or foreign law for the relief of debtors.
"Blockage Period" shall have the meaning provided in Section 11.02.
"Board of Directors" means the board of directors of the Issuer or
any committee thereof duly authorized to act on behalf of such Board.
"Board Resolution" means, with respect to any Person, a copy of a
resolution certified by the Secretary or an Assistant Secretary of such Person
to have been duly adopted by the board of directors of such Person and to be in
full force and effect on the date of such certification and delivered to the
Trustee.
"BTCC" means BT Commercial Corporation, a Delaware corporation.
"Business Day" means each day other than a Saturday, Sunday or legal
holiday on which commercial banks in New York, New York are authorized to close.
"Capital Lease Obligations" means an obligation that is required to
be classified and accounted for as a capital lease for financial reporting
purposes in accordance with GAAP,
-3-
<PAGE>
and the amount of Indebtedness represented by
such obligation shall be the capitalized amount of such obligation determined in
accordance with GAAP; and the Stated Maturity thereof shall be the date of the
last payment of rent or any other amount due under such lease prior to the first
date upon which such lease may be terminated by the lessee without payment of a
penalty.
"Capital Stock" of any Person means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, including any Preferred
Stock, but excluding any debt securities convertible into such equity.
"Change of Control" means the occurrence of any of the following
events:
(i) prior to the first Public Equity Offering, the Permitted
Holders, in the aggregate, cease to be the "beneficial owner" (as defined
in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly,
of a majority in the aggregate of the total voting power of the Voting
Stock of the Issuer, whether as a result of issuance of securities of the
Issuer, any merger, consolidation, liquidation or dissolution of the
Issuer, any direct or indirect transfer of securities or otherwise (for
purposes of this clause (i) and clause (ii) below, the Permitted Holders
shall be deemed to beneficially own any Voting Stock of a partnership,
limited liability company or corporation (the "specified corporation")
held by any other partnership, limited liability company or corporation
(the "parent corporation") so long as the Permitted Holders beneficially
own (as so defined), directly or indirectly, in the aggregate a majority
of the voting power of the Voting Stock of the parent corporation);
(ii) on or after the first Public Equity Offering, any "person" (as
such term is used in Sections 13(d) and 14(d) of the Exchange Act), other
than one or more Permitted Holders, is or becomes the beneficial owner (as
defined in clause (i) above, except that for purposes of this clause (ii)
such person shall be deemed to have "beneficial ownership" of all shares
that any such person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time), directly or
indirectly, of more than 35% of the total voting power of the Voting Stock
of the Issuer; provided, however, that the Permitted Holders beneficially
own (as defined in clause (i) above), directly or indirectly, in the
aggregate a lesser percentage of the total voting power of the Voting
Stock of the Issuer than such other person and
-4-
<PAGE>
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 (for
the purposes of this clause (ii), such other person shall be deemed to
beneficially own any Voting Stock of a specified corporation held by a
parent corporation, if such other person is the beneficial owner (as
defined in this clause (ii)), directly or indirectly, of more than 35% of
the voting power of the Voting Stock of such parent corporation and the
Permitted Holders beneficially own (as defined in clause (i) above),
directly or indirectly, in the aggregate a lesser percentage of the voting
power of the Voting Stock of such parent corporation 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 such parent
corporation);
(iii) during any period of two consecutive years, individuals who at
the beginning of such period constituted the Board of Directors (together
with any new directors whose election by such Board of Directors or whose
nomination for election by the shareholders of the Issuer was approved by
a vote of 66 2/3% of the directors of the Issuer then still in office who
were either directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason
to constitute a majority of the Board of Directors then in office; or
(iv) the merger or consolidation of the Issuer with or into another
Person or the merger or consolidation of another Person with or into the
Issuer, or the sale of all or substantially all the assets of the Issuer
to another Person (other than a Person that is controlled by the Permitted
Holders in the aggregate), and, in the case of any such merger or
consolidation, the securities of the Issuer that are outstanding
immediately prior to such transaction and which represent 100% of the
aggregate voting power of the Voting Stock of the Issuer are changed into
or exchanged for cash, securities or property, unless pursuant to such
transaction such securities are changed into or exchanged for, in addition
to any other consideration, securities of the surviving corporation that
represent, immediately after such transaction, at least a majority of the
aggregate voting power of the Voting Stock of the surviving corporation.
"Code" means the Internal Revenue Code of 1986, as amended.
-5-
<PAGE>
"Commission" means the U.S. Securities and Exchange Commission.
"Common Stock" of any Person means any and all shares, interests or
other participations in, and other equivalents (however designated and whether
voting or non-voting) of such Person's common stock, whether outstanding on the
Issue Date or issued after the Issue Date, and includes, without limitation, all
series and classes of such common stock.
"Consolidated Coverage Ratio" as of any date of determination means
the ratio of (i) the aggregate amount of EBITDA for the period of the most
recent four consecutive fiscal quarters for which financial statements are
available prior to the date of such determination to (ii) Consolidated Interest
Expense for such four fiscal quarters; provided, however, that (1) if the Issuer
or any Restricted Subsidiary has Incurred any Indebtedness since the beginning
of such period that remains outstanding or if the transaction giving rise to the
need to calculate the Consolidated Coverage Ratio is an Incurrence of
Indebtedness, or both, EBITDA and Consolidated Interest Expense for such period
shall be calculated after giving effect on a pro forma basis to such
Indebtedness as if such Indebtedness had been Incurred on the first day of such
period and the discharge of any other Indebtedness repaid, repurchased, defeased
or otherwise discharged with the proceeds of such new Indebtedness as if such
discharge had occurred on the first day of such period (except that, in making
such computation, the amount of Indebtedness under any revolving credit facility
outstanding on the date of such calculation shall be computed based on (A) the
average daily balance of such Indebtedness (and any Indebtedness under a
revolving credit facility replaced by such Indebtedness) during such four fiscal
quarters or such shorter period when such facility and any replaced facility was
outstanding or (B) if such facility was created after the end of such four
fiscal quarters, the average daily balance of such Indebtedness (and any
Indebtedness under a revolving credit facility replaced by such Indebtedness)
during the period from the date of creation of such facility to the date of the
calculation), (2) if the Issuer or any Restricted Subsidiary has repaid,
repurchased, defeased or otherwise discharged any Indebtedness since the
beginning of such period or if any Indebtedness is to be repaid, repurchased,
defeased or otherwise discharged (in each case other than Indebtedness Incurred
under any revolving credit facility unless such Indebtedness has been
permanently repaid and has not been replaced) on the date of the transaction
giving rise to the need to calculate the Consolidated Coverage Ratio, EBITDA and
Consolidated Interest Expense for such period shall be calculated on a pro forma
basis as if such discharge had occurred on the first day of such period and as
if the Issuer or such Restricted Subsidiary had not earned the in-
-6-
<PAGE>
terest income actually earned during such period in respect of cash or Temporary
Cash Investments used to repay, repurchase, defease or otherwise discharge such
Indebtedness, (3) if since the beginning of such period the Issuer or any
Restricted Subsidiary shall have made any Asset Disposition (other than sales or
lease of Rental Equipment in the ordinary course of the business of the Issuer
and its Restricted Subsidiaries), the EBITDA for such period shall be reduced by
an amount equal to the EBITDA (if positive) directly attributable to the assets
which are the subject of such Asset Disposition for such period, or increased by
an amount equal to the EBITDA (if negative) directly attributable thereto for
such period, and Consolidated Interest Expense for such period shall be reduced
by an amount equal to the Consolidated Interest Expense directly attributable to
any Indebtedness of the Issuer or any Restricted Subsidiary repaid, repurchased,
defeased or otherwise discharged with respect to the Issuer and its continuing
Restricted Subsidiaries in connection with such Asset Disposition for such
period (or, if the Capital Stock of any Restricted Subsidiary is sold, the
Consolidated Interest Expense for such period directly attributable to the
Indebtedness of such Restricted Subsidiary to the extent the Issuer and its
continuing Restricted Subsidiaries are no longer liable for such Indebtedness
after such sale), (4) if since the beginning of such period the Issuer or any
Restricted Subsidiary (by merger or otherwise) shall have made an Investment in
any Restricted Subsidiary (or any Person which becomes a Restricted Subsidiary)
or an acquisition of assets, including any acquisition of assets occurring in
connection with a transaction requiring a calculation to be made hereunder,
which constitutes all or substantially all of an operating unit of a business or
a division or a line of business thereof, EBITDA and Consolidated Interest
Expense for such period shall be calculated after giving pro forma effect
thereto (including the Incurrence of any Indebtedness) as if such Investment or
acquisition occurred on the first day of such period and (5) if since the
beginning of such period any Person (that subsequently became a Restricted
Subsidiary or was merged with or into the Issuer or any Restricted Subsidiary
since the beginning of such period) shall have made any Asset Disposition, any
Investment or acquisition of assets that would have required an adjustment
pursuant to clause (3) or (4) above if made by the Issuer or a Restricted
Subsidiary during such period, EBITDA and Consolidated Interest Expense for such
period shall be calculated after giving pro forma effect thereto as if such
Asset Disposition, Investment or acquisition occurred on the first day of such
period. For purposes of this definition, whenever pro forma effect is to be
given to an acquisition of assets, the amount of income or earnings relating
thereto and the amount of Consolidated Interest Expense associated with any
Indebtedness Incurred in connection therewith, the pro forma calculations shall
be determined in good
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faith by a responsible financial or accounting Officer of the Issuer. If any
Indebtedness bears a floating rate of interest and is being given pro forma
effect, the interest on such Indebtedness shall be calculated as if the rate in
effect on the date of determination had been the applicable rate for the entire
period (taking into account any Interest Rate Agreement applicable to such
Indebtedness if such Interest Rate Agreement has a remaining term in excess of
12 months).
"Consolidated Interest Expense" means, for any period, the total
interest expense of the Issuer and its consolidated Restricted Subsidiaries, net
of any interest income of the Issuer and its consolidated Restricted
Subsidiaries for such period, as determined in accordance with GAAP, plus, to
the extent not included in such total interest expense, and to the extent
incurred by the Issuer or its Restricted Subsidiaries, without duplication, (i)
interest expense attributable to capital leases and the interest expense
attributable to leases constituting part of a Sale/Leaseback Transaction, (ii)
amortization of debt discount, (iii) capitalized interest, (iv) commissions,
discounts and other fees and charges owed with respect to letters of credit and
bankers' acceptance financing, (v) net costs associated with Hedging Obligations
(including amortization of fees), (vi) Preferred Stock dividends in respect of
all Preferred Stock (other than pay in kind dividends or accretions to
liquidation value of Preferred Stock that is not Disqualified Stock) held by
Persons other than the Issuer or a Wholly Owned Subsidiary, (vii) interest
incurred in connection with Investments in discontinued operations, (viii)
interest accruing on any Indebtedness of any other Person to the extent such
Indebtedness is guaranteed by (or secured by the assets of) the Issuer or any
Restricted Subsidiary, (ix) the cash contributions to any employee stock
ownership plan or similar trust to the extent such contributions are used by
such plan or trust to pay interest or fees to any Person (other than the Issuer)
in connection with Indebtedness Incurred by such plan or trust and (x)
interest-equivalent costs associated with any Permitted Units Financing, whether
accounted for as interest expense or loss on the sale of Units and Related
Assets, and less, to the extent included in such total interest expense, the
amortization during such period of capitalized financing costs associated with
the Recapitalization and the financing thereof.
"Consolidated Net Income" means, for any period, the net income of
the Issuer and its consolidated Subsidiaries; provided, however, that there
shall not be included in such Consolidated Net Income:
(i) any net income of any Person (other than the Issuer) if such
Person is not a Restricted Subsidiary, ex-
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cept that (A) subject to the exclusion contained in clause (iv) below, the
Issuer's equity in the net income of any such Person for such period shall
be included in such Consolidated Net Income up to the aggregate amount of
cash actually distributed by such Person during such period to the Issuer
or a Restricted Subsidiary as a dividend or other distribution (subject,
in the case of a dividend or other distribution paid to a Restricted
Subsidiary, to the limitations contained in clause (iii) below) and (B)
the Issuer's equity in a net loss of any such Person for such period shall
be included in determining such Consolidated Net Income;
(ii) any net income (or loss) of any Person acquired by the Issuer
or a Subsidiary in a pooling of interests transaction for any period prior
to the date of such acquisition;
(iii) any net income of any Restricted Subsidiary if such Restricted
Subsidiary is subject to restrictions, directly or indirectly, on the
payment of dividends or the making of distributions by such Restricted
Subsidiary, directly or indirectly, to the Issuer, except that (A) subject
to the exclusion contained in clause (iv) below, the Issuer's equity in
the net income of any such Restricted Subsidiary for such period shall be
included in such Consolidated Net Income up to the aggregate amount of
cash that could have been distributed by such Restricted Subsidiary during
such period to the Issuer or another Restricted Subsidiary as a dividend
or other distribution (subject, in the case of a dividend or other
distribution paid to another Restricted Subsidiary, to the limitation
contained in this clause) and (B) the Issuer's equity in a net loss of any
such Restricted Subsidiary for such period shall be included in
determining such Consolidated Net Income;
(iv) any gain (or loss) realized upon the sale or other disposition
of any assets of the Issuer or its consolidated Subsidiaries (including
pursuant to any sale-and-leaseback arrangement) which is not sold or
otherwise disposed of in the ordinary course of business and any gain (or
loss) realized upon the sale or other disposition of any Capital Stock of
any Person;
(v) extraordinary gains or losses; and
(vi) the cumulative effect of a change in accounting principles.
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Notwithstanding the foregoing, for the purposes of Section 4.07
only, there shall be excluded from Consolidated Net Income any dividends,
repayments of loans or advances or other transfers of assets (including any sale
of an Investment) to the Issuer or a Restricted Subsidiary to the extent such
dividends, repayments or transfers increase the amount of Restricted Payments
permitted under such covenant pursuant to clause (a)(3)(D) thereof.
"Consolidated Net Worth" means the total of the amounts shown on the
balance sheet of the Issuer and its consolidated Subsidiaries, determined on a
consolidated basis in accordance with GAAP, as of the end of the most recent
fiscal quarter of the Issuer for which financial statements are available, as
(i) the par or stated value of all outstanding Capital Stock of the Issuer plus
(ii) paid-in capital or capital surplus relating to such Capital Stock plus
(iii) any retained earnings or earned surplus less (A) any accumulated deficit
and (B) any amounts attributable to Disqualified Stock.
"Corporate Trust Office" means the office of the Trustee at which at
any particular time its corporate trust business shall be principally
administered, which office at the date of execution of this Indenture is located
at 101 Barclay Street, Floor 21 West, New York, NY 10286.
"Covenant Defeasance" has the meaning set forth in Section 8.01.
"Credit Agreement" means, collectively, the Credit Agreement dated
as of May 22, 1997, among Holdings, the Issuer, the Lenders, BT Commercial
Corporation as agent, and Bankers Trust Company, as Issuing Bank (including any
guarantee agreements and related security documents), in each case as such
agreements or documents may be amended (including any amendment, restatement or
restructuring thereof), supplemented or otherwise modified or replaced from time
to time, including any agreement extending the maturity of, refunding,
refinancing, increasing the amount available under or replacing such agreement
or document or any successor or replacement agreement or document and whether by
the same or any other agent, lender or group of lenders.
"Currency Agreement" means in respect of a Person any foreign
exchange contract, currency swap agreement or other similar agreement to which
such Person is a party or a beneficiary.
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
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"Default" means any event which is, or after notice or passage of
time or both would be, an Event of Default.
"Default Notice" shall have the meaning provided in Section 11.02.
"Depository" means The Depository Trust Company, its nominees and
successors.
"Direct Investor" means Oak Hill Securities Fund, L.P.
"Disqualified Stock" means, with respect to any Person, any Capital
Stock which by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable) or upon the happening of any event
(i) matures or is mandatorily redeemable pursuant to a sinking fund obligation
or otherwise, (ii) is convertible or exchangeable for Indebtedness or
Disqualified Stock or (iii) is redeemable at the option of the holder thereof,
in whole or in part, in each case on or prior to the 123rd day following the
Stated Maturity of the Notes; provided, however, that any Capital Stock that
would not constitute Disqualified Stock but for provisions thereof giving
holders thereof the right to require such Person to repurchase or redeem such
Capital Stock upon the occurrence of an "asset sale" or "change of control"
occurring prior to the first anniversary of the Stated Maturity of the Notes
shall not constitute Disqualified Stock if the "asset sale" or "change of
control" provisions applicable to such Capital Stock are not more favorable to
the holders of such Capital Stock than the provisions set forth in Sections 4.11
and 4.12.
"EBITDA" for any period means the sum of Consolidated Net Income,
plus Consolidated Interest Expense, plus the following to the extent deducted
(or, in the case of clause (e) below only, not included) in calculating such
Consolidated Net Income: (a) all income tax expense of the Issuer and its
consolidated Restricted Subsidiaries, (b) depreciation expense of the Issuer and
its consolidated Restricted Subsidiaries, (c) amortization expense of the Issuer
and its consolidated Restricted Subsidiaries (excluding amortization expense
attributable to a prepaid cash item that was paid in a prior period), (d) all
other non-cash charges of the Issuer and its consolidated Restricted
Subsidiaries (including the amortization during such period of capitalized
financing costs associated with the Recapitalization and the financing thereof
and excluding any non-cash charge to the extent that it represents an accrual of
or reserve for cash expenditures in any future period),(e) income attributable
to discontinued operations and (f) any cash charges (including from the write-up
of assets) or write-offs associated with the transactions contemplated by the
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Recapitalization and the financing thereof. Notwithstanding the foregoing, the
provision for taxes based on the income or profits of, and the depreciation and
amortization and non-cash charges of, a Restricted Subsidiary shall be added to
Consolidated Net Income to compute EBITDA only to the extent (and in the same
proportion) that the net income of such Restricted Subsidiary was included in
calculating Consolidated Net Income and only if a corresponding amount would be
permitted at the date of determination to be dividended to the Issuer by such
Restricted Subsidiary without prior approval (that has not been obtained),
pursuant to the terms of its charter and all agreements, instruments, judgments,
decrees, orders, statutes, rules and governmental regulations applicable to such
Restricted Subsidiary or its stockholders.
"Eligible Accounts Receivable" has the meaning specified in the
Credit Agreement.
"Eligible Rental Equipment" has the meaning specified in the Credit
Agreement.
"Event of Default" has the meaning provided in Section 6.01.
"Excess Proceeds" has the meaning provided in Section 4.12.
"Excess Proceeds Offer" has the meaning provided in Section 4.12.
"Excess Proceeds Payment" has the meaning provided in Section 4.12.
"Excess Proceeds Payment Date" has the meaning provided in Section
4.12.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Notes" means the 9 7/8% Senior Notes due 2007 to be issued
in exchange for the Initial Notes pursuant to each Registration Rights Agreement
or, with respect to Initial Notes issued under this Indenture subsequent to the
Issue Date pursuant to Section 2.02, a registration rights agreement
substantially identical to the Registration Rights Agreement with the Initial
Purchasers.
"fair market value" means, with respect to any asset or property,
the price which could be negotiated in an arm's-length, free market transaction,
for cash, between a willing seller and a willing and able buyer, neither of whom
is under
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undue pressure or compulsion to complete the transaction. Fair market value
shall be determined by the Board of Directors of the Issuer acting reasonably
and in good faith and shall be evidenced by a Board Resolution of the Board of
Directors of the Issuer, as the case may be, delivered to the Trustee.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect as of the Issue Date, including those set forth
in (i) the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants, (ii) statements and
pronouncements of the Financial Accounting Standards Board, (iii) such other
statements by such other entity as approved by a significant segment of the
accounting profession and (iv) the rules and regulations of the Commission
governing the inclusion of financial statements (including pro forma financial
statements) in periodic reports required to be filed pursuant to Section 13 of
the Exchange Act, including opinions and pronouncements in staff accounting
bulletins and similar written statements from the accounting staff of the
Commission.
"Global Note" has the meaning provided in Section 2.01.
"guarantee" means any obligation, contingent or otherwise, of any
Person, directly or indirectly guaranteeing any Indebtedness or other obligation
of any Person and any obligation, direct or indirect, contingent or otherwise,
of such Person (i) to purchase or pay (or advance or supply funds for the
purchase or payment of) such Indebtedness or other obligation of such Person
(whether arising by virtue of partnership arrangements, or by agreements to
keep-well, to take-or-pay or to maintain financial statement conditions or
otherwise) or (ii) entered into for the purpose of assuring in any other manner
the obligee of such Indebtedness or other obligation of the payment thereof or
to protect such obligee against loss in respect thereof (in whole or in part);
provided, however, that the term "guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The term "guarantee"
used as a verb has a corresponding meaning.
"Guarantee" means the guarantee of the Notes by the Guarantors.
"Guarantor" and "Guarantors" mean, individually and collectively,
(i) MFO, (ii) each Significant Subsidiary, whether formed or acquired after the
Issue Date, and (iii) any Subsidiary, whether formed or acquired after the Issue
Date, that guarantees any Indebtedness outstanding under the Credit Agreement;
provided, however, that any Subsidiary acquired after the Issue Date which is
prohibited from entering into a
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Guarantee pursuant to restrictions contained in any debt instrument in existence
at the time such Subsidiary was so acquired and not entered into in anticipation
or contemplation of such acquisition shall not be required to become a Guarantor
so long as any such restriction is in existence and to the extent of any such
restriction; provided, further, that if any Guarantor is released from its
guarantee of the Outstanding Indebtedness of the Issuer under the Credit
Agreement and the pledge by it, directly or indirectly, of any of its assets as
security for any such Indebtedness at a time when no Default or Event of Default
has occurred and is continuing, such Guarantor shall be automatically released
from its obligations as a Guarantor and, from and after such date, such
Guarantor shall cease to constitute a Guarantor; and provided, further, that the
Subordinated Guarantor shall not be a Guarantor except to the extent permitted
below. Notwithstanding the foregoing, any Subsidiary that is a Securitization
Subsidiary or is designated an Unrestricted Subsidiary and that, in each case,
does not guarantee or so pledge any of its assets as security for any
Indebtedness under the Credit Agreement shall not be required to become a
Guarantor. If consented to by the requisite holders of the then outstanding
Subordinated Guarantor Senior Indebtedness, the Subordinated Guarantor may
notify the Trustee and the Noteholders in writing that it irrevocably elects to
become a Guarantor. So long as such consents have in fact been received, upon
receipt by the Trustee of such written notice together with an Officers'
Certificate to the effect that such consent has been received and that such
change can be effected, the provisions of Section 11.02 hereof and the
Subordinated Guarantee shall terminate and cease to be effective and the terms
and conditions of the Subordinated Guarantee shall be deemed to have been
amended to have terms and conditions identical to those of a Guarantee.
"Hedging Obligations" of any Person means the obligations of such
Person pursuant to any Interest Rate Agreement or Currency Agreement.
"Holder" or "Noteholder" means the Person in whose name a Note is
registered on the Registrar's books.
"Holdings" means Scotsman Holdings, Inc. and its successors.
"Incur" means issue, assume, guarantee, incur or otherwise become
liable for Indebtedness or Capital Stock; provided, however, that any
Indebtedness or Capital Stock of a Person existing at the time such Person
becomes a Subsidiary (whether by merger, consolidation, acquisition or
otherwise) shall be deemed to be Incurred by such Subsidiary at the time it
becomes a Subsidiary. The term "Incurrence" when used as a noun
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shall have a correlative meaning. The accretion of principal of a non-interest
bearing or other discount security shall not be deemed the Incurrence of
Indebtedness.
"Indebtedness" means, with respect to any Person on any date of
determination (without duplication),
(i) the principal of and premium (if any) in respect of (A)
indebtedness of such Person for money borrowed and (B) indebtedness
evidenced by notes, debentures, bonds or other similar instruments for the
payment of which such Person is responsible or liable;
(ii) all Capital Lease Obligations of such Person and all
Attributable Debt in respect of Sale/Leaseback Transactions entered into
by such Person;
(iii) all obligations of such Person issued or assumed as the
deferred purchase price of property, all conditional sale obligations of
such Person and all obligations of such Person under any title retention
agreement (but excluding trade accounts payable arising in the ordinary
course of business);
(iv) all obligations of such Person for the reimbursement of any
obligor on any letter of credit, banker's acceptance or similar credit
transaction (other than obligations with respect to letters of credit
securing obligations (other than obligations described in clauses (i)
through (iii) above) entered into in the ordinary course of business of
such Person to the extent such letters of credit are not drawn upon or, if
and to the extent drawn upon, such drawing is reimbursed no later than the
30th day following payment on the letter of credit);
(v) the amount of all obligations of such Person with respect to the
redemption, repayment or other repurchase of any Disqualified Stock or,
with respect to any Subsidiary of such Person, the liquidation preference
with respect to any Preferred Stock (but excluding, in each case, any
accrued dividends);
(vi) all obligations of the type referred to in clauses (i) through
(v) of other Persons and all dividends of other Persons for the payment of
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which, in either case, such Person is responsible or liable, directly or
indirectly, as obligor, guarantor or otherwise, including by means of any
guarantee;
(vii) all obligations of the type referred to in clauses (i) through
(vi) of other Persons secured by any Lien on any property or asset of such
Person (whether or not such obligation is assumed by such Person), the
amount of such obligation being deemed to be the lesser of the value of
such property or assets or the amount of the obligation so secured; and
(viii) to the extent not otherwise included in this definition,
Hedging Obligations of such Person.
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 the
maximum liability, upon the occurrence of the contingency giving rise to the
obligation, of any contingent obligations at such date; provided, however, that
the amount outstanding at any time of any Indebtedness Incurred with original
issue discount is the face 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.
"Indenture" means this Indenture, as amended or supplemented from
time to time in accordance with the terms hereof.
"Independent Financial Advisor" shall have the meaning provided in
Section 4.08.
"Initial Notes" means, collectively, (i) the 9 7/8% Senior Notes due
2007 of the Issuer issued on the Issue Date and (ii) one or more series of 9
7/8% Senior Notes due 2007 that are issued under this Indenture subsequent to
the Issue Date pursuant to Section 2.02, in each case for so long as such
securities constitute Restricted Securities.
"Initial Purchasers" means, collectively, BT Securities Corporation,
Alex. Brown & Sons Inc. and Donaldson, Lufkin & Jenrette Securities Corporation.
"Insolvency or Liquidation Proceeding" means with respect to any
Person (i) any insolvency or bankruptcy case or proceeding, or any receivership,
liquidation, reorganization or other similar case or proceeding in connection
therewith, re-
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lating to such Person or its assets, or (ii) any liquidation, dissolution or
other winding up of such Person, whether voluntary or involuntary or whether or
not involving insolvency or bankruptcy, or (iii) any assignment for the benefit
of creditors or any other marshaling of assets or liabilities of such Person.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) or (7)
under the Securities Act.
"interest" when used with respect to any Note means the amount of
all interest accruing on such Note, including any applicable defaulted interest
pursuant to Section 2.12 and any Additional Interest pursuant to the
Registration Rights Agreement.
"Interest Payment Date" means the stated maturity of an installment
of interest on the Notes.
"Interest Rate Agreement" means any interest rate swap agreement,
interest rate cap agreement or other financial agreement or arrangement designed
to protect the Issuer or any Restricted Subsidiary against fluctuations in
interest rates.
"Investment" in any Person means any direct or indirect advance
(other than advances to customers in the ordinary course of business that are
recorded as accounts receivable on the balance sheet of the lender), loan or
other extension of credit (including by way of guarantee or similar arrangement)
or capital contribution to (by means of any transfer of cash or other property
to others or any payment for property or services for the account or use of
others), or any purchase or acquisition of Capital Stock, Indebtedness or other
similar instruments issued by, such Person. For purposes of the definition of
"Unrestricted Subsidiary," the definition of "Restricted Payment" and Section
4.07, (i) "Investment" shall include the portion (proportionate to the Issuer's
equity interest in such Subsidiary) of the fair market value of the net assets
of any Subsidiary of the Issuer at the time that such Subsidiary is designated
an Unrestricted Subsidiary; provided, however, that upon a redesignation of such
Subsidiary as a Restricted Subsidiary, the Issuer shall be deemed to continue to
have a permanent "Investment" in an Unrestricted Subsidiary equal to an amount
(if positive) equal to (x) the Issuer's "Investment" in such Subsidiary at the
time of such redesignation less (y) the portion (proportionate to the Issuer's
equity interest in such Subsidiary) of the fair market value of the net assets
of such Subsidiary at the time of such redesignation; and (ii) any property
transferred to or from an Unrestricted Subsidiary shall be valued at its fair
market value at
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the time of such transfer, in each case as determined in good faith by the Board
of Directors.
"Issue Date" means the first date on which the initial $400 million
aggregate principal amount of the Notes are originally issued.
"Issuer" means Williams Scotsman, Inc. and its successors.
"Legal Defeasance" has the meaning set forth in Section 8.01.
"Lenders" has the meaning specified in the Credit Agreement.
"Lien" means any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including any conditional sale or other title
retention agreement or lease in the nature thereof).
"Maturity Date" means June 1, 2007.
"MFO" means Mobile Field Office Company, a New Jersey corporation.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Net Available Cash" from an Asset Disposition means cash payments
received therefrom (including any cash payments received by way of deferred
payment of principal pursuant to a note or installment receivable or otherwise
and proceeds from the sale or other disposition of any securities received as
consideration, but only as and when received, but excluding any other
consideration received in the form of assumption by the acquiring Person of
Indebtedness or other obligations relating to such properties or assets or
received in any other non-cash form) in each case net of (i) all legal, title
and recording tax expenses, commissions and other fees and expenses incurred
(including, without limitation, all broker's and finder's fees and expenses, all
investment banking fees and expenses, employee severance and termination costs,
and trade payable and similar liabilities solely related to the assets sold or
otherwise disposed of and required to be paid by the seller as a result
thereof), and all Federal, state, provincial, foreign and local taxes required
to be paid or accrued as a liability under GAAP, as a consequence of such Asset
Disposition, (ii) all relocation expenses related to any Rental Equipment
incurred as a result thereof, (iii) all payments made on any Indebtedness which
is secured by any assets subject to such Asset Disposition, in accordance with
the terms of any Lien upon or other security agreement of any kind with respect
to such assets, or which must by its terms, or in order to obtain a necessary
consent to such Asset Disposi-
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tion, or by applicable law, be repaid out of the proceeds from such Asset
Disposition, (iv) all distributions and other payments required to be made to
minority interest holders in Subsidiaries or joint ventures as a result of such
Asset Disposition and (v) the deduction of appropriate amounts provided by the
seller as a reserve, in accordance with GAAP, against any liabilities associated
with the property or other assets disposed of in such Asset Disposition and
retained by the Issuer or any Restricted Subsidiary after such Asset
Disposition.
"Net Cash Proceeds," with respect to any issuance or sale of Capital
Stock, means the cash proceeds of such issuance or sale net of attorneys' fees,
accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees actually incurred in
connection with such issuance or sale and net of taxes paid or payable as a
result thereof.
"Non-U.S. Person" means a person who is not a U.S. person, as
defined in Regulation S.
"Notes" means, collectively, the Initial Notes, the Private Exchange
Notes, if any, and the Unrestricted Notes, treated as a single class of
securities, as amended or supplemented from time to time in accordance with the
terms hereof, that are issued pursuant to this Indenture.
"Obligations" means all obligations for principal, premium,
interest, penalties, fees, indemnifications, reimbursements, damages and other
liabilities payable under the documentation governing any Indebtedness.
"Offering Memorandum" means the confidential Offering Memorandum
dated May 16, 1997 of the Issuer relating to the offering of the Notes.
"Officer" means, with respect to any Person, the Chairman of the
Board of Directors, the Chief Executive Officer, the President, any Vice
President, the Chief Financial Officer, the Treasurer, the Controller, or the
Secretary of such Person, or any other officer designated by the Board of
Directors serving in a similar capacity.
"Officers' Certificate" means a certificate signed by two Officers
of the Issuer.
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"Opinion of Counsel" means a written opinion from legal counsel who
is reasonably acceptable to the Trustee complying with the requirements of
Sections 10.04 and 10.05, as they relate to the giving of an Opinion of Counsel.
"Paying Agent" has the meaning provided in Section 2.03.
"Permitted Business" means (i) all or any part of the business of
selling and leasing mobile offices and modular structures or any other equipment
sold or leased to a similar customer base, (ii) any other business conducted by
the Issuer or its Restricted Subsidiaries on the Issue Date and (iii) any
business or services related, ancillary or complementary to such businesses.
"Permitted Holders" means (i) The Cyress Group L.L.C., Cypress
Merchant Banking Partners L.P., Cypress Offshore Partners L.P., Keystone, Inc.,
FW Strategic Partners, L.P., Scotsman Partners, L.P. and any Person who on the
Issue Date is an Affiliate of any of the foregoing, (ii) any Person who is a
member of the senior management of the Issuer or Holdings and a stockholder of
Holdings on the Issue Date and (iii) BT Capital Partners, Inc., Odyssey
Partners, L.P. and any Person who is an Affiliate on the Issue Date of either of
them.
"Permitted Investment" means an Investment by the Issuer or any
Restricted Subsidiary in (i) a Restricted Subsidiary or a Person that will, upon
the making of such Investment, become a Restricted Subsidiary; (ii) another
Person if as a result of such Investment such other Person is merged or
consolidated with or into, or transfers or conveys all or substantially all its
assets to, the Issuer or a Restricted Subsidiary; provided, however, that such
Person's primary business is a Permitted Business; (iii) Temporary Cash
Investments; (iv) Investments existing on the Issue Date; (v) receivables owing
to the Issuer or any Restricted Subsidiary if created or acquired in the
ordinary course of business and payable or dischargeable in accordance with
customary trade terms; provided, however, that such trade terms may include such
concessionary trade terms as the Issuer or any such Restricted Subsidiary deems
reasonable under the circumstances; (vi) payroll, travel and similar advances to
cover matters that are expected at the time of such advances ultimately to be
treated as expenses for accounting purposes and that are made in the ordinary
course of business; (vii) loans or advances to employees made in the ordinary
course of business consistent with past practices of the Issuer or such
Restricted Subsidiary; (viii) stock, obligations or securities received in
settlement of debts created in the ordinary course of business and owing to the
Issuer or any Restricted Subsidiary or in satisfaction of judgments; (ix)
In-
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vestments made in connection with any Asset Disposition or other sale, lease,
transfer or other disposition permitted under this Indenture; (x) Investments
made in Holdings by the Issuer, the proceeds of which enable Holdings to fund
the transactions contemplated by the Recapitalization (including the payment of
fees and expenses), to pay interest and principal on the Promissory Notes and to
pay interest on and to repurchase, redeem, defease or pay on maturity any
Holdings Notes (including any accrued interest, principal and premium, if any,
thereon) (to the extent not repurchased as part of the Recapitalization); and
(xi) additional Investments in an aggregate amount which, together with all
other Investments made pursuant to this clause that are then outstanding, does
not exceed $20.0 million.
"Permitted Liens" means (a) Liens of the Issuer and its Restricted
Subsidiaries securing Indebtedness of the Issuer or any of its Restricted
Subsidiaries Incurred under the Credit Agreement to the extent permitted to be
Incurred under Section 4.09(b)(1) or (b)(14); (b) Liens in favor of the Issuer
or its Wholly-Owned Restricted Subsidiaries; (c) Liens on property of a Person
existing at the time such Person becomes a Restricted Subsidiary of the Issuer
or is merged into or consolidated with the Issuer or any Restricted Subsidiary
of the Issuer; provided that such Liens were not incurred in connection with, or
in contemplation of, such merger or consolidation and such Liens do not extend
to or cover any property other than such property, improvements thereon and any
proceeds therefrom; (d) Liens of the Issuer securing Indebtedness of the Issuer
Incurred under clause (b)(2) or (b)(8) of Section 4.09; (e) Liens of the Issuer
and its Restricted Subsidiaries securing Indebtedness of the Issuer or any of
its Restricted Subsidiaries (including under a Sale/Leaseback Transaction)
permitted to be Incurred under clause (b)(9), (b)(11) or (b)(12) of Section 4.09
so long as the Capital Stock, property (real or personal) or equipment to which
such Lien attaches solely consists of the Capital Stock, property or equipment
which is the subject of such acquisition, purchase, lease, improvement,
Sale/Leaseback Transaction and additions and Improvements thereto (and the
proceeds therefrom); (f) Liens on property existing at the time of acquisition
thereof by the Issuer or any Restricted Subsidiary of the Issuer; provided that
such Liens were not incurred in connection with, or in contemplation of, such
acquisition and such Liens do not extend to or cover any property other than
such property, additions and improvements thereon and any proceeds therefrom;
(g) Liens incurred or deposits made to secure the performance of tenders, bids,
leases, statutory obligations, surety or appeal bonds, government contracts,
performance and return of money bonds or other obligations of a like nature
incurred in the ordinary course of business; (h) Liens existing on the Issue
Date (including, without limitation,
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Liens securing the Senior Secured Notes) and any additional Liens created under
the terms of the agreements relating to such Liens existing on the Issue Date;
(i) Liens for taxes, assessments or governmental charges or claims that are not
yet delinquent or that are being contested in good faith by appropriate
proceedings; provided that any reserve or other appropriate provision as shall
be required in conformity with GAAP shall have been made therefor; (j) Liens
incurred in the ordinary course of business of the Issuer or any Restricted
Subsidiary with respect to obligations that do not exceed $20.0 million in the
aggregate at any one time outstanding and that (1) are not incurred in
connection with or in contemplation of the borrowing of money or the obtaining
of advances or credit (other than trade credit in the ordinary course of
business) and (2) do not in the aggregate materially detract from the value of
the property or materially impair the use thereof in the operation of the
business by the Issuer or such Restricted Subsidiary; (k) statutory Liens of
landlords and warehousemen's, carriers', mechanics', suppliers', materialmen's,
repairmen's or other like Liens (including contractual landlords' liens) arising
in the ordinary course of business of the Issuer and its Restricted
Subsidiaries; (l) Liens incurred or deposits made in the ordinary course of
business of the Issuer and its Restricted Subsidiaries in connection with
workers' compensation, unemployment insurance and other types of social
security; (m) easements, rights of way, restrictions, minor defects or
irregularities in title and other similar charges or encumbrances not
interfering in any material respect with the business of the Issuer or any of
its Restricted Subsidiaries; (n) Liens securing reimbursement obligations with
respect to letters of credit permitted under Section 4.09 which encumber only
cash and marketable securities and documents and other property relating to such
letters of credit and the products and proceeds thereof; (o) judgment and
attachment Liens not giving rise to an Event of Default; (p) any interest or
title of a lessor in the property subject to any Capital Lease Obligation
permitted under Section 4.09; (q) Liens encumbering the residual interest of the
Issuer or any of its Restricted Subsidiaries under any lease of mobile office
units, modular structures or similar equipment to third parties (i) that is
accounted for as a sale of such units, structures or equipment and (ii) the
interest in which lease is sold to a third party financing source on a
non-recourse basis; (r) leases or subleases of mobile office units, modular
structures or similar equipment granted to others in the ordinary course of
business and consistent with the past practice of the Issuer and its Restricted
Subsidiaries and any other lease or sublease not interfering in any material
respect with the business of the Issuer and its Restricted Subsidiaries; (s)
Liens on cash and cash equivalents posted as margin pursuant to any Hedging
Obligations permitted under Section 4.09; (t) Liens securing Refi-
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nancing Indebtedness to the extent such Liens do not extend to or cover any
property of the Issuer not previously subjected to Liens relating to the
Indebtedness being refinanced; (u) Liens to secure Indebtedness Incurred in a
developmental financing provided by a governmental entity which is on terms more
favorable than those available (at the time of such financing) from third party
sources; provided that such Liens do not cover any property other than the
property subject to such financing, any additions and improvements thereon and
the proceeds therefrom; (v) Liens on pledges of the capital stock of any
Unrestricted Subsidiary securing any Indebtedness of such Unrestricted
Subsidiary; or (w) Liens on Units and Related Assets securing Indebtedness or
otherwise permitted to be Incurred, in each case, with a Permitted Units
Financing.
"Permitted Secured Indebtedness" means Indebtedness of the Issuer or
any Restricted Subsidiary permitted to be incurred or outstanding under this
Indenture which is secured by a Permitted Lien.
"Permitted Units Financing" means a transaction or series of
transactions (including amendments, supplements, extensions, renewals,
replacements, refinancings or modifications thereof) pursuant to which a
Securitization Subsidiary purchases Units and Related Assets from the Issuer or
any Restricted Subsidiary and finances such Units and Related Assets through the
issuance of indebtedness or equity interests or through the sale of the Units
and Related Assets or a fractional undivided interest in the Units and Related
Assets; provided that (i) the Board of Directors shall have determined in good
faith that such Permitted Units Financing is economically fair and reasonable to
the Issuer and the Securitization Subsidiary; (ii) all sales of Units and
Related Assets to or by the Securitization Subsidiary are made at fair market
value (as determined in good faith by the Board of Directors of the Issuer);
(iii) the financing terms, covenants, termination events and other provisions
thereof shall be market terms (as determined in good faith by the Board of
Directors of the Issuer); (iv) no portion of the Indebtedness of a
Securitization Subsidiary is guaranteed by or is recourse to the Issuer or any
Restricted Subsidiary (other than (i) recourse of customary representations,
warranties, covenants and indemnities relating solely to title, use or condition
of the Units and Related Assets subject thereto and the Capital Stock of the
Securitization Subsidiary and (ii) as permitted under clause (b)(10)(B) of
Section 4.09); and (v) neither the Issuer nor any Restricted Subsidiary has any
obligation to maintain or preserve the Securitization Subsidiary's financial
condition.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association,
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joint-stock company, trust, unincorporated organization, government or any
agency or political subdivision thereof or any other entity.
"Physical Notes" has the meaning provided in Section 2.01.
"plan of liquidation" means, with respect to any Person, a plan
(including by operation of law) that provides for, contemplates or the
effectuation of which is preceded or accompanied by (whether or not
substantially contemporaneously) (a) the sale, lease, conveyance or other
disposition of all or substantially all of the assets of such Person otherwise
than as an entirety or substantially as an entirety and (b) the distribution of
all or substantially all of the proceeds of such sale, lease, conveyance or
other disposition and all or substantially all of the remaining assets of such
Person to holders of Capital Stock of such Person.
"Preferred Stock," as applied to the Capital Stock of any
corporation, means Capital Stock of any class or classes (however designated)
which is preferred as to the payment of dividends, or as to the distribution of
assets upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
"principal" of a Note means the principal of the Note plus the
premium, if any, payable on the Note which is due or overdue or is to become due
at the relevant time.
"Private Exchange Notes" has the meaning set forth in the
Registration Rights Agreement.
"Private Placement Legend" means the legend initially set forth on
the Notes in the form set forth in Section 2.15.
"pro forma" means, with respect to any calculation made or required
to be made pursuant to the terms of this Indenture, a calculation in accordance
with Article 11 of Regulation S-X under the Securities Act in effect as of the
Issue Date, as determined by the Board of Directors of Holdings in consultation
with its independent public accountants.
"Promissory Notes" means the promissory notes due January 15, 1998
issued by Holdings on the Issue Date to its existing stockholders pursuant to
the Recapitalization Agreement to fund the repurchase of its common stock.
"Public Equity Offering" means an underwritten primary public
offering of common stock or common equity of the
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Issuer, Holdings or any other Person that directly or indirectly owns 100% of
the common stock of the Issuer pursuant to an effective registration statement
under the Securities Act.
"Qualified Institutional Buyer" or "QIB" shall have the meaning
specified in Rule 144A under the Securities Act.
"Recapitalization" has the meaning set forth in the Offering
Memorandum.
"Recapitalization Agreement" means the Recapitalization Agreement
dated as of April 11, 1997 among Holdings, Cypress Merchant Banking Partners
L.P., Cypress Offshore Partners L.P., Keystone, Inc., FW Strategic Partners,
L.P., Odyssey Partners, L.P. and certain other stockholders of Holdings, as the
same may from time to time be amended, modified or supplemented.
"Record Date" means the Record Dates specified in the Notes.
"Redemption Date," when used with respect to any Note to be
redeemed, means the date fixed for such redemption pursuant to this Indenture
and the Notes.
"redemption price," when used with respect to any Note to be
redeemed, means the price fixed for such redemption, including principal and
premium, if any, pursuant to this Indenture and the Notes.
"Refinance" means, in respect of any Indebtedness, to refinance,
extend, renew, refund, repay, prepay, redeem, defease or retire, or to issue
other Indebtedness in exchange or replacement for, such indebtedness.
"Refinanced" and "Refinancing" shall have correlative meanings.
"Refinancing Indebtedness" means Indebtedness that Refinances any
Indebtedness of the Issuer or any Restricted Subsidiary existing on the Issue
Date or Incurred in compliance with this Indenture, including Indebtedness that
Refinances Refinancing Indebtedness; provided, however, that (i) such
Refinancing Indebtedness has a Stated Maturity no earlier than the Stated
Maturity of the Indebtedness being Refinanced, (ii) such Refinancing
Indebtedness has an Average Life at the time such Refinancing Indebtedness is
Incurred that is equal to or greater than the Average Life of the Indebtedness
being Refinanced and (iii) such Refinancing Indebtedness has an aggregate
principal amount (or if Incurred with original issue discount, an aggregate
issue price) that is equal to or less than the aggregate principal amount (or if
Incurred with original issue discount, the aggregate accreted value) then
outstanding or
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committed (plus fees and expenses, including any premium and defeasance costs)
under the Indebtedness being Refinanced; provided, further, however, that
Refinancing Indebtedness shall not include (x) Indebtedness of a Subsidiary that
Refinances Indebtedness of the Issuer or (y) Indebtedness of the Issuer or a
Restricted Subsidiary that Refinances Indebtedness of an Unrestricted
Subsidiary.
"Registrar" has the meaning provided in Section 2.03.
"Registration Rights Agreements" means, collectively, the
Registration Rights Agreement dated the Issue Date among the Issuer, MFO, the
Subordinated Guarantor and the Initial Purchasers and the Registration Rights
Agreement dated the Issue Date among the Issuer, MFO, the Subordinated Guarantor
and Oak Hill Securities Fund, L.P.
"Regulation S" means Regulation S under the Securities Act.
"Related Business" means any business related, ancillary or
complementary to the businesses of the Issuer and its Restricted Subsidiaries on
the Issue Date.
"Rental Equipment" means all mobile office units or other equipment
held for rental (or at the time being rented) or sale by the Issuer and its
Restricted Subsidiaries in the ordinary course of business.
"Representative" means, for any issue of Subordinated Guarantor
Senior Indebtedness, the agent, trustee or similar representative for the
holders of the respective issue of such Indebtedness or, in the absence of any
such representative, the holders of a majority of the outstanding amount of such
Subordinated Guarantor Senior Indebtedness.
"Restricted Payment" with respect to any Person means (i) the
declaration or payment of any dividends or any other distributions of any sort
in respect of its Capital Stock (including any such payment in connection with
any merger or consolidation involving such Person) or similar payment to the
direct or indirect holders of its Capital Stock (other than dividends or
distributions payable solely in its Capital Stock (other than Disqualified
Stock) and dividends or distributions payable solely to the Issuer or a
Restricted Subsidiary, and other than pro rata dividends or other distributions
made by a Subsidiary that is not a Wholly Owned Subsidiary to minority
stockholders (or owners of an equivalent interest in the case of a Subsidiary
that is an entity other than a corporation)), (ii) the purchase, redemption or
other acquisition or retirement for value of any Capital Stock of the Issuer or
Holdings
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held by any Person or of any Capital Stock of a Restricted Subsidiary
held by any Affiliate of the Issuer (other than a Restricted Subsidiary),
including the exercise of any option to exchange any Capital Stock (other than
into Capital Stock of the Issuer that is not Disqualified Stock), (iii) the
purchase, repurchase, redemption, defeasance or other acquisition or retirement
for value, prior to scheduled maturity, scheduled repayment or scheduled sinking
fund payment, of any Subordinated Indebtedness (other than the purchase,
repurchase or other acquisition of Subordinated Indebtedness purchased in
anticipation of satisfying a sinking fund obligation, principal installment or
final maturity, in each case due within one year of the date of acquisition) or
(iv) the making of any Investment (other than a Permitted Investment) in any
Person.
"Restricted SecuritySecurity" has the meaning assigned to such term
in Rule 144(a)(3) under the Securities Act; provided, however, that the Trustee
shall be entitled to request and conclusively rely on an Opinion of Counsel with
respect to whether any Note constitutes a SecurityRestricted Security.
"Restricted Subsidiary" means any Subsidiary of the Issuer that is
not an Unrestricted Subsidiary.
"Rule 144A" means Rule 144A under the Securities Act.
"S&P" means Standard & Poor's Rating Services, a division of The
McGraw Hill Companies, Inc., and its successors.
"Sale/Leaseback Transaction" means an arrangement relating to
property now owned or hereafter acquired whereby the Issuer or a Restricted
Subsidiary transfers such property to a Person and the Issuer or a Restricted
Subsidiary leases it from such Person.
"Scheduled Asset Dispositions" means an Asset Disposition of any of
the real property and any equipment located at sites in Berlin, N.J., North
East, Maryland and Lawrenceville, Georgia on the Issue Date.
"Scotsman" means the Issuer.
"SEC" means the Securities and Exchange Commission.
"Secured Indebtedness" means any Indebtedness of the Issuer or a
Restricted Subsidiary secured by a Lien.
"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations of the Commission promulgated thereunder.
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"Securitization Subsidiary" means a Subsidiary (all the voting stock
(other than directors' qualifying shares) of which is owned by the Issuer or one
or more Wholly Owned Subsidiaries) which is established for the limited purpose
of acquiring and financing Units and Related Assets and engaging in activities
ancillary thereto; provided, however, that the Subordinated Guarantor shall not
be a Securitization Subsidiary.
"Senior Indebtedness" means (i) Indebtedness and all other monetary
obligations of the Issuer pursuant to the Credit Agreement and (ii) Indebtedness
of the Issuer, whether outstanding on the Issue Date or thereafter Incurred,
unless in the case of (ii) in the instrument creating or evidencing the same or
pursuant to which the same is outstanding, it is provided that such Indebtedness
is subordinate in right of payment to the Notes.
"Senior Secured Notes" means the 9 1/2% Senior Secured Notes due
2000 of the Issuer.
"Significant Subsidiary" means any Restricted Subsidiary that would
be a "Significant Subsidiary" of the Issuer within the meaning of Rule 1-02
under Regulation S-X promulgated by the SEC.
"Stated Maturity" means, with respect to any security, the date
specified in such security as the fixed date on which the final payment of
principal of such security is due and payable, including pursuant to any
mandatory redemption provision (but excluding any provision providing for the
repurchase of such security at the option of the holder thereof upon the
happening of any contingency unless such contingency has occurred).
"Subordinated Guarantee" means the subordinated guarantee of the
Notes by the Subordinated Guarantor
"Subordinated Guarantor" means Willscot Equipment, LLC, a
special-purpose Subsidiary of the Company formed under the laws of the State of
Delaware to hold certain Rental Equipment.
"Subordinated Guarantor Senior Indebtedness" means (i) all
Indebtedness of the Subordinated Guarantor Incurred pursuant to the Credit
Agreement (whether Incurred pursuant to clause (b)(1) or (b)(14) of Section 4.09
or Incurred pursuant to clause (b)(7) of Section 4.09 in respect of Indebtedness
Incurred pursuant to clause (b)(1) or (b)(14) of Section 4.09), and all
Indebtedness under any guarantee by the Subordinated Guarantor of Indebtedness
described above incurred by the Issuer or any Guarantor, and all expenses, fees,
reimbursements,
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indemnities, unpaid drawings, interest (including interest at the contract rate
accruing on or after the filing of any petition in bankruptcy or reorganization
relating to the Issuer or the Subordinated Guarantor whether or not a claim for
post-filing interest is allowed in such proceeding) and other amounts owing in
respect thereof and (ii) all Indebtedness of the Subordinated Guarantor incurred
pursuant to clause (b)(2) or (b)(8) or incurred pursuant to clause (b)(7) in
respect of Indebtedness incurred pursuant to clause (b)(2) or (b)(8) of Section
4.09, and all Indebtedness under any guarantee thereof by the Subordinated
Guarantor, and all expenses, fees, reimbursements, indemnities and other amounts
owing with respect thereto; provided, that Subordinated Guarantor Senior
Indebtedness will not be deemed to include (a) any Indebtedness, guarantee or
obligation of the Subordinated Guarantor which is expressly subordinate or
junior by its terms in any respect to any other Indebtedness, guarantee or
obligations of the Subordinated Guarantor or (b) that portion of any
Indebtedness incurred in violation of Section 4.09; provided, further, that
clause (b) of the immediately preceding proviso shall not apply to any
Indebtedness which the respective lenders believed, at the time of the extension
thereof, was permitted to be incurred in accordance with Section 4.09 so long as
the Issuer or its respective Subsidiary which was the direct obligor thereon
represented, at the time of such extension of credit, that such extension did
not violate the provisions of this Indenture.
"Subordinated Indebtedness" means any Indebtedness of the Issuer,
any Guarantor or the Subordinated Guarantor (whether outstanding on the Issue
Date or thereafter Incurred), as the case may be, which is subordinate or junior
in right of payment to the Notes or, in the case of a Guarantor, to such
Guarantor's Guarantee or, in the case of the Subordinated Guarantor, to the
Subordinated Guarantee, as the case may be, pursuant to a written agreement to
that effect.
"Subsidiary" means, in respect of any Person, any corporation,
association, partnership or other business entity of which more than 50% of the
total voting power of shares of Capital Stock or other interests (including
partnership interests) entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by (i) such Person,
(ii) such Person and one or more Subsidiaries of such Person or (iii) one or
more Subsidiaries of such Person.
"Successor Issuer" shall have the meaning set forth in Section 5.01.
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"Tax Sharing Agreement" means any tax sharing agreement between the
Issuer and Holdings or any other Person with which the Issuer is required to, or
is permitted to, file a consolidated tax return or with which the Issuer is or
could be part of a consolidated group for tax purposes.
"Temporary Cash Investments" means any of the following:
(i) any investment in direct obligations of the United States of
America or any agency thereof or obligations guaranteed by the United
States of America or any agency thereof,
(ii) investments in time deposit accounts, certificates of deposit
and money market deposits maturing within one year of the date of
acquisition thereof issued by a bank or trust company which is organized
under the laws of the United States of America, any state thereof or any
foreign country recognized by the United States, and which bank or trust
company has capital, surplus and undivided profits aggregating in excess
of $50,000,000 (or the foreign currency equivalent thereof) and has
outstanding debt which is rated "A" (or such similar equivalent rating) or
higher by at least one nationally recognized statistical rating
organization (as defined in Rule 436 under the Securities Act) or any
money market fund sponsored by a registered broker-dealer or mutual fund
distributor,
(iii) repurchase obligations with a term of not more than 30 days
for underlying securities of the types described in clause (i) above
entered into with a bank meeting the qualifications described in clause
(ii) above,
(iv) investments in commercial paper, maturing not more than one
year after the date of acquisition, issued by a corporation (other than an
Affiliate of the Issuer) organized and in existence under the laws of the
United States of America or any foreign country recognized by the United
States of America with a rating at the time as of which any investment
therein is made of "P-1" (or higher) according to Moody's or "A-1" (or
higher) according to S&P, and
(v) investments in securities with maturities of one year or less
from the date of acquisition issued or fully guaranteed by any state,
common-
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wealth or territory of the United States of America, or by any political
subdivision or taxing authority thereof, and rated at least "A" by S&P or
"A" by Moody's.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb), as amended, as in effect on the date of this Indenture, except as
otherwise provided in Section 9.03.
"Treasury Rate" has the meaning provided in Section 3.03.
"Trust Officer" means any officer or assistant officer of the
Trustee assigned by the Trustee to administer this Indenture, or in the case of
a successor trustee, an officer assigned to the department, division or group
performing the corporation trust work of such successor and assigned to
administer this Indenture.
"Trustee" means the party named as such in this Indenture until a
successor replaces it in accordance with the provisions of this Indenture and
thereafter means such successor.
"Units and Related Assets" means mobile office units, modular
structures or other equipment leased or sold to a similar customer base, leases,
general intangibles and other similar assets, in each case, relating to such
mobile office units, modular structures or other equipment, related contractual
rights, guarantees, insurance proceeds, collections, other related assets and
proceeds of all of the foregoing.
"Unrestricted Notes" means one or more Notes that do not and are not
required to bear the Private Placement Legend in the form set forth in Section
2.15, including, without limitation, the Exchange Notes.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Issuer
that at the time of determination shall be designated an Unrestricted Subsidiary
by the Board of Directors in the manner provided below and (ii) any Subsidiary
of an Unrestricted Subsidiary; provided, however, that the Subordinated
Guarantor shall not be, or be designated as, an Unrestricted Subsidiary. The
Board of Directors may designate any Subsidiary of the Issuer (including any
newly acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary
unless such Subsidiary or any of its Subsidiaries owns any Capital Stock or
Indebtedness of, or holds any Lien on any property of, the Issuer or any other
Subsidiary of the Issuer that is not a Subsidiary of the Subsidiary to be so
designated; provided, how-
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ever, that either (A) the Subsidiary to be so designated has total assets of
$1,000 or less or (B) if such Subsidiary has assets greater than $1,000, such
designation would be permitted under the covenant described under Section 4.07.
The Board of Directors may designate any Unrestricted Subsidiary (other than a
Guarantor) to be a Restricted Subsidiary; provided, however, that immediately
after giving effect to such designation (x) the Issuer could Incur $1.00 of
additional Indebtedness under paragraph (a) of the covenant described in Section
4.09 and (y) no Default shall have occurred and be continuing. Any such
designation by the Board of Directors shall be made by the Issuer to the Trustee
by promptly filing with the Trustee a copy of the Board Resolution giving effect
to such designation and an Officers' Certificate certifying that such
designation complied with the foregoing provisions.
"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and which are not callable at the issuer's option.
"U.S. Legal Tender" means such coin or currency of the United States
of America for payment of which the full faith and credit of the United States
of America is pledged.
"Voting Stock" of a Person means all classes of Capital Stock or
other interests (including partnership interests) of such Person then
outstanding and normally entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof.
"Wholly Owned Subsidiary" means a Restricted Subsidiary all the
Capital Stock of which (other than directors' qualifying shares) is owned by the
Issuer or one or more Wholly Owned Subsidiaries.
"Willscot" means Willscot Equipment, LLC, a Delaware limited
liability company.
SECTION 1.02. Incorporation by Reference of TIA.
Whenever this Indenture refers to a provision of the TIA, such
provision is incorporated by reference in, and made a part of, this Indenture.
The following TIA terms used in this Indenture have the following meanings:
"indenture securities" means the Notes.
"indenture security holder" means a Holder.
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"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on this Indenture securities means the Issuer or any other
obligor on the Notes.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by Commission rule
and not otherwise defined herein have the meanings assigned to them therein.
SECTION 1.03. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and words in the
plural include the singular;
(5) "herein," "hereof" and other words of similar import refer to
this Indenture as a whole and not to any particular Article, Section or
other subdivision; and
(6) any reference to a statute, law or regulation means that
statute, law or regulation as amended and in effect from time to time and
includes any successor statute, law or regulation; provided, however, that
any reference to the Bankruptcy Law shall mean the Bankruptcy Law as
applicable to the relevant case.
ARTICLE TWO
THE NOTES
SECTION 2.01. Form and Dating.
The Initial Notes and the Trustee's certificate of authentication
relating thereto shall be substantially in the form of Exhibit A hereto. The
Exchange Notes and the Trustee's certificate of authentication relating thereto
shall be substantially in the form of Exhibit B hereto. The Notes may have
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notations, legends or endorsements required by law, stock exchange rule or
depository rule or usage. The Issuer and the Trustee shall approve the form of
the Notes and any notation, legend or endorsement on them. If required, the
Notes may bear the appropriate legend regarding any original issue discount for
federal income tax purposes. Each Note shall be dated the date of its issuance
and shall show the date of its authentication. Each Note shall have an executed
Guarantee from each of the Guarantors and an executed Subordinated Guarantee
from the Subordinated Guarantor endorsed thereon substantially in the forms of
Exhibits E and F hereto, respectively.
The terms and provisions contained in the Notes, annexed hereto as
Exhibits A and B, shall constitute, and are hereby expressly made, a part of
this Indenture and, to the extent applicable, the Issuer, the Guarantors, the
Subordinated Guarantor and the Trustee, by their execution and delivery of this
Indenture, expressly agree to such terms and provisions and to be bound thereby.
Notes sold in reliance on Rule 144A and Notes offered and sold in
reliance on Regulation S shall be issued initially in the form of one or more
permanent global Notes in registered form, substantially in the form set forth
in Exhibit A (the "Global Note"), deposited with the Trustee, as custodian for
the Depository, duly executed by the Issuer (and having an executed Guarantee
and Subordinated Guarantee endorsed thereon) and authenticated by the Trustee as
hereinafter provided and shall bear the legend set forth in Section 2.15. The
aggregate principal amount of the Global Note may from time to time be increased
or decreased by adjustments made on the records of the Trustee, as custodian for
the Depository, as hereinafter provided.
Notes issued in exchange for interests in a Global Note pursuant to
Section 2.16 or Notes originally purchased by or transferred to Institutional
Accredit Investors who are not QIBs will be issued in the form of permanent
certificated Notes in registered form in substantially the form set forth in
Exhibit A (the "Physical Notes"). All Notes offered and sold in reliance on
Regulation S shall remain in the form of a Global Note until the consummation of
the Exchange Offer pursuant to the applicable Registration Rights Agreement;
provided, however, that all of the time periods specified in the applicable
Registration Rights Agreement to be complied with by the Issuer have been so
complied with.
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SECTION 2.02. Execution and Authentication; Aggregate Principal
Amount.
Two Officers, or an Officer and an Assistant Secretary of the Issuer
and each Guarantor and the Subordinated Guarantor, shall sign, or one Officer
shall sign and one Officer or an Assistant Secretary (each of whom shall, in
each case, have been duly authorized by all requisite corporate actions) shall
attest to, the Notes for the Issuer, the Guarantees for the Guarantors and the
Subordinated Guarantee for the Subordinated Guarantor by manual or facsimile
signature.
If an Officer or Assistant Secretary whose signature is on a Note, a
Guarantee or a Subordinated Guarantee was an Officer or Assistant Secretary at
the time of such execution but no longer holds that office or position at the
time the Trustee authenticates the Note, the Note shall nevertheless be valid.
A Note shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Note. The
signature shall be conclusive evidence that the Note has been authenticated
under this Indenture.
The Trustee shall authenticate (i) Initial Notes for original issue
in the aggregate principal amount not to exceed $550,000,000 in one or more
series, (ii) Private Exchange Notes from time to time only in exchange for a
like principal amount of Initial Notes and (iii) Unrestricted Notes from time to
time only (x) in exchange for a like principal amount of Initial Notes or (y) in
an aggregate principal amount of not more than the excess of $550,000,000 over
the sum of the aggregate principal amount of (A) Initial Notes then outstanding,
(B) Private Exchange Notes then outstanding and (C) Unrestricted Notes issued in
accordance with (iii)(x) above, in each case upon a written order of the Issuer
in the form of an Officers' Certificate of the Issuer. Each such written order
shall specify the amount of Notes to be authenticated and the date on which the
Notes are to be authenticated, whether the Notes are to be Initial Notes,
Private Exchange Notes or Unrestricted Notes and whether the Notes are to be
issued as Physical Notes or Global Notes or such other information as the
Trustee may reasonably request. In addition, with respect to authentication
pursuant to clauses (ii) or (iii) of the first sentence of this paragraph, the
first such written order from the Issuer shall be accompanied by an Opinion of
Counsel of the Issuer in a form reasonably satisfactory to the Trustee stating
that the issuance of the Private Exchange Notes or the Unrestricted Notes, as
the case may be, complies with this Indenture and has been duly authorized by
the Issuer. The aggregate principal amount
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of Notes outstanding at any time may not exceed $550,000,000, except as provided
in Sections 2.07 and 2.08.
In the event that the Issuer shall issue and the Trustee shall
authenticate any Notes issued under this Indenture subsequent to the Issue Date
pursuant to clauses (i) and (iii) of the first sentence of the immediately
preceding paragraph, the Issuer shall use its reasonable efforts to obtain the
same "CUSIP" number for such Notes as is printed on the Notes outstanding at
such time; provided, however, that if any series of Notes issued under this
Indenture subsequent to the Issue Date is determined, pursuant to an Opinion of
Counsel of the Issuer in a form reasonably satisfactory to the Trustee, to be a
different class of security than the Notes outstanding at such time for federal
income tax purposes, the Issuer may obtain a "CUSIP" number for such Notes that
is different than the "CUSIP" number printed on the Notes then outstanding.
Notwithstanding the foregoing, all Notes issued under this Indenture shall vote
and consent together on all matters as one class and no series of Notes will
have the right to vote or consent as a separate class on any matter.
The Trustee may appoint an authenticating agent (the "Authenticating
Agent") reasonably acceptable to the Issuer to authenticate Notes. Unless
otherwise provided in the appointment, an Authenticating Agent may authenticate
Notes whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such Authenticating
Agent. An Authenticating Agent has the same rights as an Agent to deal with the
Issuer or with any Affiliate of the Issuer.
The Notes shall be issuable in fully registered form only, without
coupons, in denominations of $1,000 and any integral multiple thereof.
SECTION 2.03. Registrar and Paying Agent.
The Issuer shall maintain an office or agency (which shall be
located in the Borough of Manhattan in the City of New York, State of New York)
where (a) Notes may be presented or surrendered for registration of transfer or
for exchange ("Registrar"), (b) Notes may be presented or surrendered for
payment ("Paying Agent") and (c) notices and demands to or upon the Issuer in
respect of the Notes and this Indenture may be served. The Registrar shall keep
a register of the Notes and of their transfer and exchange. The Issuer, upon
prior written notice to the Trustee, may have one or more co-Registrars and one
or more additional paying agents reasonably acceptable to the Trustee. The term
"Paying Agent" includes any additional Paying Agent. The Issuer may act as its
own Paying Agent.
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The Issuer shall enter into an appropriate agency agreement with any
Agent not a party to this Indenture, which agreement shall incorporate the
provisions of the TIA and implement the provisions of this Indenture that relate
to such Agent. The Issuer shall notify the Trustee, in advance, of the name and
address of any such Agent. If the Issuer fails to maintain a Registrar or Paying
Agent, or fails to give the foregoing notice, the Trustee shall act as such.
The Issuer initially appoints the Trustee as Registrar, Paying Agent
and agent for service of demands and notices in connection with the Notes, until
such time as the Trustee has resigned or a successor has been appointed. Any of
the Registrar, the Paying Agent or any other agent may resign upon 30 days'
notice to the Issuer.
SECTION 2.04. Paying Agent To Hold Assets in Trust.
The Issuer shall require each Paying Agent other than the Trustee to
agree in writing that such Paying Agent shall hold in trust for the benefit of
the Holders or the Trustee all assets held by the Paying Agent for the payment
of principal of, premium, if any, or interest on, the Notes (whether such assets
have been distributed to it by the Issuer or any other obligor on the Notes),
and the Issuer and the Paying Agent shall notify the Trustee of any Default by
the Issuer (or any other obligor on the Notes) in making any such payment. The
Issuer at any time may require a Paying Agent to distribute all assets held by
it to the Trustee and account for any assets disbursed and the Trustee may at
any time during the continuance of any payment Default, upon written request to
a Paying Agent, require such Paying Agent to distribute all assets held by it to
the Trustee and to account for any assets distributed. Upon distribution to the
Trustee of all assets that shall have been delivered by the Issuer to the Paying
Agent, the Paying Agent shall have no further liability for such assets.
SECTION 2.05. Holder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
the Holders. If the Trustee is not the Registrar, the Issuer shall furnish or
cause the Registrar to furnish to the Trustee before each Record Date and at
such other times as the Trustee may request in writing a list as of such date
and in such form as the Trustee may reasonably require of the names and
addresses of the Holders, which list may be conclusively relied upon by the
Trustee.
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SECTION 2.06. Transfer and Exchange.
When Notes are presented to the Registrar or a co-Registrar with a
request to register the transfer of such Notes or to exchange such Notes for an
equal principal amount of Notes or other authorized denominations, the Registrar
or co-Registrar shall register the transfer or make the exchange as requested if
its requirements for such transaction are met; provided, however, that the Notes
presented or surrendered for registration of transfer or exchange shall be duly
endorsed or accompanied by a written instrument of transfer in form satisfactory
to the Issuer, the Trustee and the Registrar or co-Registrar, duly executed by
the Holder thereof or his attorney duly authorized in writing. To permit
registration of transfers and exchanges, the Issuer shall execute and the
Trustee shall authenticate Notes and each of the Guarantors shall execute a
Guarantee thereon and the Subordinated Guarantor shall execute a Subordinated
Guarantee thereon at the Registrar's or co-Registrar's request. No service
charge shall be made for any registration of transfer or exchange, but the
Issuer may require payment of a sum sufficient to cover any transfer tax, fee or
similar governmental charge payable in connection therewith (other than any such
transfer taxes or similar governmental charge payable upon exchanges or
transfers pursuant to Sections 2.10, 3.04, 4.11, 4.12 or 9.05, in which event
the Issuer shall be responsible for the payment of such taxes).
The Registrar or co-Registrar shall not be required to register the
transfer of or exchange of any Note (i) during a period beginning at the opening
of business 15 days before the mailing of a notice of redemption of Notes and
ending at the close of business on the day of such mailing and (ii) selected for
redemption in whole or in part pursuant to Article Three, except the unredeemed
portion of any Note being redeemed in part.
Any Holder of a beneficial interest in a Global Note shall, by
acceptance of such Global Note, agree that transfers of beneficial interests in
such Global Notes may be effected only through a book entry system maintained by
the Holder of such Global Note (or its agent), and that ownership of a
beneficial interest in the Note shall be required to be reflected in a book
entry system.
SECTION 2.07. Replacement Notes.
If a mutilated Note is surrendered to the Trustee or if the Holder
of a Note claims that the Note has been lost, destroyed or wrongfully taken, the
Issuer shall issue and the Trustee shall authenticate a replacement Note and
each of the Guarantors shall execute a Guarantee thereon and the Subordi-
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nated Guarantor shall execute a Subordinated Guarantee thereon if the Trustee's
requirements are met. If required by the Trustee or the Issuer, such Holder must
provide an indemnity bond or other indemnity of reasonable tenor, sufficient in
the reasonable judgment of the Issuer, the Guarantors and the Trustee, to
protect the Issuer, the Guarantors, the Subordinated Guarantor, the Trustee or
any Agent from any loss which any of them may suffer if a Note is replaced.
Every replacement Note shall constitute an additional obligation of the Issuer,
the Guarantors and the Subordinated Guarantor.
SECTION 2.08. Outstanding Notes.
Notes outstanding at any time are all the Notes that have been
authenticated by the Trustee except those canceled by it, those delivered to it
for cancellation and those described in this Section as not outstanding. Subject
to the provisions of Section 2.09, a Note does not cease to be outstanding
because an Issuer or any of its Affiliates holds the Note.
If a Note is replaced pursuant to Section 2.07 (other than a
mutilated Note surrendered for replacement), it ceases to be outstanding unless
the Trustee receives proof satisfactory to it that the replaced Note is held by
a bona fide purchaser. A mutilated Note ceases to be outstanding upon surrender
of such Note and replacement thereof pursuant to Section 2.07.
If on a Redemption Date or the Maturity Date the Paying Agent holds
U.S. Legal Tender or U.S. Government Obligations sufficient to pay all of the
principal, premium, if any, and interest due on the Notes payable on that date
and is not prohibited from paying such money to the Holders thereof pursuant to
the terms of this Indenture, then on and after that date such Notes shall be
deemed not to be outstanding and interest on them shall cease to accrue.
SECTION 2.09. Treasury Notes.
In determining whether the Holders of the required principal amount
of Notes have concurred in any direction, waiver, consent or notice, Notes owned
by the Issuer or an Affiliate of the Issuer shall be considered as though they
are not outstanding, except that for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, waiver or consent,
only Notes which a Trust Officer of the Trustee actually knows are so owned
shall be so considered. The Issuer shall notify the Trustee, in writing, when it
or, to its knowledge, any of its Affiliates repurchases or otherwise acquires
Notes, of the aggregate principal amount of such Notes so repurchased or
otherwise acquired and such other
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information as the Trustee may reasonably request and the Trustee shall be
entitled to rely thereon.
SECTION 2.10. Temporary Notes.
Until definitive Notes are ready for delivery, the Issuer may
prepare and the Trustee shall authenticate temporary Notes upon receipt of a
written order of the Issuer in the form of an Officers' Certificate. The
Officers' Certificate shall specify the amount of temporary Notes to be
authenticated and the date on which the temporary Notes are to be authenticated.
Temporary Notes shall be substantially in the form of definitive Notes but may
have variations that the Issuer considers appropriate for temporary Notes and so
indicate in the Officers' Certificate. Without unreasonable delay, the Issuer
shall prepare, the Trustee shall authenticate and the Guarantors shall execute
Guarantees on, and the Subordinated Guarantor shall execute a Subordinated
Guarantee thereon upon receipt of a written order of the Issuer pursuant to
Section 2.02, definitive Notes in exchange for temporary Notes.
SECTION 2.11. Cancellation.
The Issuer at any time may deliver Notes to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Notes surrendered to them for transfer, exchange or payment. The Trustee, or
at the direction of the Trustee, the Registrar or the Paying Agent, and no one
else, shall cancel and, shall return to the Issuer all Notes surrendered for
transfer, exchange, payment or cancellation. Subject to Section 2.07, the Issuer
may not issue new Notes to replace Notes that they have paid or delivered to the
Trustee for cancellation. If the Issuer shall acquire any of the Notes, such
acquisition shall not operate as a redemption or satisfaction of the
Indebtedness represented by such Notes unless and until the same are surrendered
to the Trustee for cancellation pursuant to this Section 2.11. Any Notes so
acquired by or on behalf of the Issuer shall be surrendered to the Trustee for
cancellation pursuant to this Section 2.11.
SECTION 2.12. Defaulted Interest.
The Issuer will pay interest on overdue principal from time to time
on demand at the rate of interest then borne by the Notes. The Issuer shall, to
the extent lawful, pay interest on overdue installments of interest (without
regard to any applicable grace periods) from time to time on demand at the rate
of interest then borne by the Notes. Interest will be computed on the basis of a
360-day year comprised of twelve 30-day months, and, in the case of a partial
month, the actual number of days elapsed.
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If the Issuer defaults in a payment of interest on the Notes, it
shall pay the defaulted interest, plus (to the extent lawful) any interest
payable on the defaulted interest, to the Persons who are Holders on a
subsequent special record date, which special record date shall be the fifteenth
day next preceding the date fixed by the Issuer for the payment of defaulted
interest or the next succeeding Business Day if such date is not a Business Day.
The Issuer shall notify the Trustee in writing of the amount of defaulted
interest proposed to be paid on each Note and the date of the proposed payment
(a "Default Interest Payment Date"), and at the same time the Issuer shall
deposit with the Trustee an amount of money equal to the aggregate amount
proposed to be paid in respect of such defaulted interest or shall make
arrangements reasonably satisfactory to the Trustee for such deposit on or prior
to the date of the proposed payment, such money when deposited to be held in
trust for the benefit of the Persons entitled to such defaulted interest as
provided in this Section; provided, however, that in no event shall the Issuer
deposit monies proposed to be paid in respect of defaulted interest later than
11:00 a.m. New York City time of the proposed Default Interest Payment Date. At
least 15 days before the subsequent special record date, the Issuer shall mail
(or cause to be mailed) to each Holder, as of a recent date selected by the
Issuer, with a copy to the Trustee, a notice that states the subsequent special
record date, the payment date and the amount of defaulted interest, and interest
payable on such defaulted interest, if any, to be paid. Notwithstanding the
foregoing, any interest which is paid prior to the expiration of the 30-day
period set forth in Section 6.01(a) shall be paid to Holders as of the regular
record date for the Interest Payment Date for which interest has not been paid.
Notwithstanding the foregoing, the Issuer may make payment of any defaulted
interest in any other lawful manner not inconsistent with the requirements of
any securities exchange on which the Notes may be listed, and upon such notice
as may be required by such exchange.
SECTION 2.13. CUSIP Number.
The Issuer in issuing the Notes may use a "CUSIP" number, and, if
so, the Trustee shall use the CUSIP number in notices of redemption or exchange
as a convenience to Holders; provided, however, that no representation is hereby
deemed to be made by the Trustee as to the correctness or accuracy of the CUSIP
number printed in the notice or on the Notes, and that reliance may be placed
only on the other identification numbers printed on the Notes. The Issuer shall
promptly notify the Trustee of any change in the CUSIP number.
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SECTION 2.14. Deposit of Monies.
Prior to 11:00 a.m. New York City time on each Interest Payment
Date, Maturity Date, Redemption Date, Change of Control repurchase date and
Excess Proceeds Payment Date, the Issuer shall have deposited with the Paying
Agent in immediately available funds money sufficient to make cash payments, if
any, due on such Interest Payment Date, Maturity Date, Redemption Date, Change
of Control repurchase date and Excess Proceeds Payment Date, as the case may be,
in a timely manner which permits the Paying Agent to remit payment to the
Holders on such Interest Payment Date, Maturity Date, Redemption Date, Change of
Control repurchase date and Excess Proceeds Payment Date, as the case may be.
SECTION 2.15. Restrictive Legends.
Each Global Note and Physical Note that constitutes a Restricted
Security or is sold in compliance with Regulation S shall bear the following
legend (the "Private Placement Legend") on the face thereof until after the
second anniversary of the later of the Issue Date and the last date on which the
Issuer or any Affiliate of the Issuer was the owner of such Note (or any
predecessor security) (or such shorter period of time as permitted by Rule
144(k) under the Securities Act or any successor provision thereunder) (or such
longer period of time as may be required under the Securities Act or applicable
state securities laws in the opinion of counsel for the Issuer, unless otherwise
agreed by the Issuer and the Holder thereof):
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, U.S.PERSONS EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION
HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR
(B) IT IS AN "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2),
(3), OR (7) UNDER THE SECURITIES ACT), (AN "ACCREDITED INVESTOR") OR (C)
IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (2)
AGREES THAT IT WILL NOT WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF
THIS NOTE RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO WILLIAMS
SCOTSMAN INC. (THE "COMPANY") OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE
UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE
144A UNDER THE SECURITIES ACT, (C) INSIDE THE
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UNITED STATES TO AN ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER,
FURNISHES (OR HAS FURNISHED ON ITS BEHALF BY A U.S. BROKER-DEALER) TO THE
TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS NOTE (THE FORM OF WHICH
LETTER CAN BE OBTAINED FROM THE TRUSTEE FOR THIS SECURITY), (D) OUTSIDE
THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904
UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION
PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), OR (F)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN
CONNECTION WITH ANY TRANSFER OF THIS SECURITY WITHIN TWO YEARS AFTER THE
ORIGINAL ISSUANCE OF THIS SECURITY, IF THE PROPOSED TRANSFEREE IS AN
ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO
THE TRUSTEE AND THE COMPANY SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER
INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH
TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS
USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S.
PERSON" HAVE THE MEANING GIVEN TO THEM BY REGULATION S UNDER THE
SECURITIES ACT.
Each Global Note shall also bear the following legend on the face
thereof:
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES
IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE
BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY, OR BY ANY SUCH NOMINEE
OF THE DEPOSITORY, OR BY THE DEPOSITORY OR NOMINEE OF SUCH SUCCESSOR
DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF
SUCH SUCCESSOR DEPOSITORY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN
THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
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REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE
OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR
THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS
GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN SECTION 2.17 OF THE INDENTURE.
SECTION 2.16. Book-Entry Provisions for Global Note.
(a) The Global Notes initially shall (i) be registered in the name
of the Depository or the nominee of such Depository, (ii) be delivered to the
Trustee as custodian for such Depository and (iii) bear legends as set forth in
Section 2.15.
Members of, or participants in, the Depository ("Agent Members")
shall have no rights under this Indenture with respect to any Global Note held
on their behalf by the Depository, or the Trustee as its custodian, or under the
Global Notes, and the Depository may be treated by the Issuer, the Trustee and
any Agent of the Issuer or the Trustee as the absolute owner of such Global Note
for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall
prevent the Issuer, the Trustee or any Agent of the Issuer or the Trustee from
giving effect to any written certification, proxy or other authorization
furnished by the Depository or impair, as between the Depository and its Agent
Members, the operation of customary practices governing the exercise of the
rights of a Holder of any Note.
(b) Transfers of a Global Note shall be limited to transfers in
whole, but not in part, to the Depository, its successors or their respective
nominees. Interests of beneficial owners in a Global Note may be transferred or
exchanged for Physical Notes in accordance with the rules and procedures of the
Depository and the provisions of Section 2.17. In addition, Physical Notes shall
be transferred to all beneficial owners in exchange for their beneficial
interests in a Global Note if (i) the Depository notifies the Issuer that it is
unwilling or unable to continue as Depository for the Global Notes and a
successor depositary is not appointed by the Issuer within 90 days of such
notice or (ii) an Event of Default has occurred and is continuing and the
Registrar has received a written request from the Depository to issue Physical
Notes.
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(c) In connection with any transfer or exchange of a portion of the
beneficial interest in a Global Note to beneficial owners pursuant to paragraph
(b), the Registrar shall (if one or more Physical Notes are to be issued)
reflect on its books and records the date and a decrease in the principal amount
of such Global Note in an amount equal to the principal amount of the beneficial
interest in the Global Note to be transferred, and the Issuer shall execute, the
Guarantors shall execute Guarantees on and the Subordinated Guarantor shall
execute a Subordinated Guarantee thereon, and the Trustee shall authenticate and
deliver, one or more Physical Notes of like tenor and amount.
(d) In connection with the transfer of an entire Global Note to
beneficial owners pursuant to paragraph (b), such Global Note shall be deemed to
be surrendered to the Trustee for cancellation, and the Issuer shall execute,
the Guarantors shall execute Guarantees on and the Subordinated Guarantor shall
execute a Subordinated Guarantee thereon and the Trustee shall authenticate and
deliver, to each beneficial owner identified by the Depository in exchange for
its beneficial interest in the Global Note, an equal aggregate principal amount
of Physical Notes of authorized denominations
(e) Any Physical Note constituting a Restricted Security delivered
in exchange for an interest in a Global Note pursuant to paragraph (b) or (c)
shall, except as otherwise provided by paragraphs (a)(i)(x) and (c) of Section
2.17, bear the legend regarding transfer restrictions applicable to the Physical
Notes set forth in Section 2.15.
(f) The Holder of a Global Note may grant proxies and otherwise
authorize any Person, including Agent Members and Persons that may hold
interests through Agent Members, to take any action which a Holder is entitled
to take under this Indenture or the Notes.
SECTION 2.17. Special Transfer Provisions.
(a) Transfers to Non-QIB Institutional Accredited Investors and
Non-U.S. Persons. The following provisions shall apply with respect to the
registration of any proposed transfer of a Note constituting a Restricted
Security to any Institutional Accredited Investor which is not a QIB or to any
Non-U.S. Person:
(i) the Registrar shall register the transfer of any Note
constituting a Restricted Security whether or not such Note bears the
Private Placement Legend, if (x) the requested transfer is after the
second anniversary of the Issue Date (provided, however, that neither the
Issuer nor
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any Affiliate of the Issuer has held any beneficial interest in such Note,
or portion thereof, at any time on or prior to the second anniversary of
the Issue Date) or (y) (1) in the case of a transfer to an Institutional
Accredited Investor which is not a QIB (excluding Non-U.S.Persons), the
proposed transferee has delivered to the Registrar a certificate
substantially in the form of Exhibit C hereto and any legal opinions and
certifications required thereby (except in the case of a transfer of a
Note subsequent to the initial transfer, the provisions of paragraph 1 of
Exhibit C shall not apply) or (2) in the case of a transfer to a Non-U.S.
Person, the proposed transferor has delivered to the Registrar a
certificate substantially in the form of Exhibit D hereto; and
(ii) if the proposed transferor is an Agent Member holding a
beneficial interest in the Global Note, upon receipt by the Registrar of
(x) the certificate, if any, required by paragraph (i) above and (y)
written instructions given in accordance with the Depository's and the
Registrar's procedures,
whereupon (a) the Registrar shall reflect on its books and records the date and
(if the transfer does not involve a transfer of outstanding Physical Notes) a
decrease in the principal amount of such Global Note in an amount equal to the
principal amount of the beneficial interest in the Global Note to be
transferred, and (b) the Issuer shall execute, the Guarantors shall execute the
Guarantees on and the Subordinated Guarantor shall execute a Subordinated
Guarantee thereon and the Trustee shall authenticate and make available for
delivery one or more Physical Notes of like tenor and amount.
(b) Transfers to QIBs. The following provisions shall apply with
respect to the registration of any proposed transfer of a Note constituting a
Restricted Security to a QIB (excluding transfers to Non-U.S. Persons):
(i) the Registrar shall register the transfer if such transfer is
being made by a proposed transferor who has checked the box provided for
on the form of Note stating, or has otherwise advised the Issuer and the
Registrar in writing, that the sale has been made in compliance with the
provisions of Rule 144A to a transferee who has signed the certification
provided for on the form of Note stating, or has otherwise advised the
Issuer and the Registrar in writing, that it is purchasing the Note for
its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a QIB within the
meaning of Rule 144A, and is aware that the sale to it is being made in
reliance on
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Rule 144A and acknowledges that it has received such information regarding
the Issuer as it has requested pursuant to Rule 144A or has determined not
to request such information and that it is aware that the transferor is
relying upon its foregoing representations in order to claim the exemption
from registration provided by Rule 144A; and
(ii) if the proposed transferee is an Agent Member, and the Notes to
be transferred consist of Physical Notes which after transfer are to be
evidenced by an interest in a Global Note, upon receipt by the Registrar
of written instructions given in accordance with the Depository's and the
Registrar's procedures, the Registrar shall reflect on its books and
records the date and an increase in the principal amount of such Global
Note in an amount equal to the principal amount of the Physical Notes to
be transferred, and the Trustee shall cancel the Physical Notes so
transferred.
(c) Private Placement Legend. Upon the transfer, exchange or
replacement of Notes not bearing the Private Placement Legend, the Registrar
shall deliver Notes that do not bear the Private Placement Legend. Upon the
transfer, exchange or replacement of Notes bearing the Private Placement Legend,
the Registrar shall deliver only Notes that bear the Private Placement Legend
unless (i) the requested transfer is after the second anniversary of the Issue
Date (provided, however, that neither the Issuer nor any Affiliate of the Issuer
has held any beneficial interest in such Note, or portion thereof, at any time
prior to or on the second anniversary of the Issue Date), or (ii) there is
delivered to the Registrar an Opinion of Counsel reasonably satisfactory to the
Issuer and the Trustee to the effect that neither such legend nor the related
restrictions on transfer are required in order to maintain compliance with the
provisions of the Securities Act.
(d) General. By its acceptance of any Note bearing the Private
Placement Legend, each Holder of such a Note acknowledges the restrictions on
transfer of such Note set forth in this Indenture and in the Private Placement
Legend and agrees that it will transfer such Note only as provided in this
Indenture.
The Registrar shall retain copies of all letters, notices and other
written communications received pursuant to Section 2.16 or this Section 2.17.
The Issuer shall have the right to inspect and make copies of all such letters,
notices or other written communications at any reasonable time during the
Registrar's normal business hours upon the giving of reasonable written notice
to the Registrar.
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(e) Transfers of Notes Held by Affiliates. Any certificate (i)
evidencing a Note that has been transferred to an Affiliate of an Issuer within
two years after the Issue Date, as evidenced by a notation on the Assignment
Form for such transfer or in the representation letter delivered in respect
thereof or (ii) evidencing a Note that has been acquired from an Affiliate
(other than by an Affiliate) in a transaction or a chain of transactions not
involving any public offering, shall, until two years after the last date on
which either the Issuer or any Affiliate of the Issuer was an owner of such
Note, in each case, bear a legend in substantially the form set forth in Section
2.15 hereof, unless otherwise agreed by the Issuer (with written notice thereof
to the Trustee).
SECTION 2.18. Liquidated Damages Under Registration Rights
Agreement.
Under certain circumstances, the Issuer shall be obligated to pay
certain liquidated damages to the Holders, all as set forth in the applicable
Registration Rights Agreement applicable to such Holders. The terms thereof are
hereby incorporated herein by reference. Notwithstanding such incorporation by
reference, the Trustee shall have no duties or obligations under any
Registration Rights Agreement. The Issuer shall notify the Trustee if any
Additional Interest is payable on the Notes.
ARTICLE THREE
REDEMPTION
SECTION 3.01. Notices to Trustee.
If the Issuer elects to redeem Notes pursuant to Paragraph 6 of the
Notes and Section 3.03, it shall notify the Trustee and the Paying Agent in
writing of the Redemption Date and the principal amount of the Notes to be
redeemed.
The Issuer shall give each notice provided for in this Section 3.01
60 days before the Redemption Date (unless a shorter notice period shall be
satisfactory to the Trustee, as evidenced in a writing signed on behalf of the
Trustee), together with an Officers' Certificate stating that such redemption
shall comply with the conditions contained herein and in the Notes.
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SECTION 3.02. Selection of Notes To Be Redeemed.
In the event that less than all of the Notes are to be redeemed at
any time, selection of such Notes for redemption will be made by the Trustee in
compliance with the requirements of the principal national securities exchange,
if any, on which such Notes are listed or, if such Notes are not then listed on
a national securities exchange, on a pro rata basis, by lot or by such method as
the Trustee shall deem fair and appropriate; provided, however, that no Notes of
original principal amount of U.S. $1,000 or less shall be redeemed in part;
provided, further, that if a partial redemption is made with the proceeds of a
Public Equity Offering, selection of the Notes or portions thereof for
redemption shall be made by the Trustee only on a pro rata basis or on as nearly
a pro rata basis as is practicable (subject to DTC procedures), unless such
method is otherwise prohibited. Notice of redemption shall be mailed by
first-class mail at least 30 but not more than 60 days before the redemption
date to each Holder of Notes to be redeemed at its registered address. If any
Note is to be redeemed in part only, the notice of redemption that relates to
such Note shall state the portion of the principal amount thereof to be
redeemed. A new Note in 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 the Redemption Date, interest will cease to
accrue on Notes or portions thereof called for redemption as long as the Issuer
has deposited with the Paying Agent funds in satisfaction of the applicable
redemption price pursuant to this Indenture.
SECTION 3.03. Optional Redemption.
(a) Except as set forth in the following paragraph, the Notes will
not be redeemable at the option of the Issuer prior to June 1, 2002. Thereafter,
the Notes will be redeemable, at the Issuer's option, in whole or in part, at
any time and from time to time, upon not less than 30 nor more than 60 days'
prior notice mailed by first-class mail to each Holder's registered address, at
the following redemption prices (expressed as percentages of the principal
amount thereof), plus accrued and unpaid interest to the Redemption Date
(subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant Interest Payment Date), if redeemed during
the twelve-month period commencing on June 1 of the years set forth below:
Year Percentage
---- ----------
2002............................ 104.938%
2003............................ 102.469%
2004 and thereafter............. 100.000%
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(b) At any time, or from time to time, on or prior to June 1, 2000,
the Issuer may, at its option, redeem up to $160 million aggregate principal
amount of the Notes with the proceeds of one or more Public Equity Offerings
(provided that if the Public Equity Offering is a public offering of any class
of common stock of Holdings or another issuer, a portion of the Net Cash
Proceeds thereof equal to the amount required to redeem any such Notes is
contributed to the equity capital of the Issuer) at a redemption price
(expressed as a percentage of principal amount) of 109.875% plus accrued and
unpaid interest thereon, if any, to the Redemption Date (subject to the right of
Holders of record on the relevant Record Date to receive interest due on the
relevant Interest Payment Date); provided, however, that at least $240 million
aggregate principal amount of Notes originally issued remains outstanding
immediately after any such redemption (it being expressly agreed that for
purposes of determining whether this condition is satisfied, Notes owned by the
Issuer shall be deemed not to be outstanding). In order to effect the foregoing
redemption with the proceeds of any Public Equity Offering, the Issuer shall
make such redemption not more than 120 days after the consummation of any such
Public Equity Offering.
At any time on or prior to June 1, 2002, the Notes may also be
redeemed as a whole but not in part at the option of the Issuer upon the
occurrence of a Change of Control, upon not less than 30 nor more than 60 days'
prior notice (exercisable no later than 30 days after such Change of Control)
mailed by first-class mail to each Holder's registered address, at a redemption
price equal to 100% of the principal amount thereof plus the Applicable Premium
as of, and accrued and unpaid interest, if any, to, the Redemption Date (subject
to the right of Holders of record on the relevant Record Date to receive
interest due on the relevant Interest Payment Date)
"Applicable Premium" means, with respect to a Note at any Redemption
Date, the greater of (i) 1.0% of the principal amount of such Note and (ii) the
excess of (A) the present value at such time of (1) the redemption price of such
Note at 2002 as described above plus (2) all required interest payments due on
such Note through June 1, 2002, computed by using a discount rate equal to the
Treasury Rate plus 100 basis points, over (B) the principal amount of such Note.
"Treasury Rate" means the yield to maturity at the time of
computation of United States Treasury securities with a constant maturity (as
compiled and published in the most recent Federal Reserve Statistical Release
H.15(519) which has become publicly available at lease two business days prior
to the Redemption Date (or, if such Statistical Release is no longer published,
any publicly available source of similar market
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data)) most nearly equal to the period from the Redemption Date to June 1, 2002;
provided, however, that if the period from the Redemption Date to June 1, 2002
is not equal to the constant maturity of a United States Treasury security for
which a weekly average yield is given, the Treasury Rate shall be obtained by
linear interpolation (calculated to the nearest one-twelfth of a year) from the
weekly average yields of United States Treasury securities for which such yields
are given, except that if the period from the Redemption Date to June 1, 2002 is
less than one year, the weekly average yield on actually traded United States
Treasury securities adjusted to a constant maturity of one year shall be used.
SECTION 3.04. Notice of Redemption.
At least 30 days but not more than 60 days before the Redemption
Date, the Issuer shall mail or cause to be mailed a notice of redemption by
first class mail to each Holder of Notes to be redeemed at its registered
address, with a copy to the Trustee and any Paying Agent. At the Issuer's
request, the Trustee shall give the notice of redemption in the Issuer's name
and at the Issuer's expense. The Issuer shall provide such notices of redemption
to the Trustee at least five days before the intended mailing date.
Each notice of redemption shall identify (including the CUSIP
number) the Notes to be redeemed and shall state:
(1) the Redemption Date;
(2) the redemption price and the amount of accrued interest, if any,
to be paid;
(3) the name and address of the Paying Agent;
(4) the subparagraph of the Notes pursuant to which such redemption
is being made;
(5) that Notes called for redemption must be surrendered to the
Paying Agent to collect the redemption price plus accrued interest, if
any;
(6) that, unless the Issuer defaults in making the redemption
payment, interest on Notes or applicable portions thereof called for
redemption ceases to accrue on and after the Redemption Date, and the only
remaining right of the Holders of such Notes is to receive payment of the
redemption price plus accrued interest as of the Redemption Date, if any,
upon surrender to the Paying Agent of the Notes redeemed;
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(7) if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the
Redemption Date, and upon surrender of such Note, a new Note or Notes in
the aggregate principal amount equal to the unredeemed portion thereof
will be issued; and
(8) if fewer than all the Notes are to be redeemed, the
identification of the particular Notes (or portion thereof) to be
redeemed, as well as the aggregate principal amount of Notes to be
redeemed and the aggregate principal amount of Notes to be outstanding
after such partial redemption.
The Issuer will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the purchase
of Notes.
SECTION 3.05. Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section 3.04,
such notice of redemption shall be irrevocable and Notes called for redemption
become due and payable on the Redemption Date and at the redemption price plus
accrued interest as of such date, if any. Upon surrender to the Trustee or
Paying Agent, such Notes called for redemption shall be paid at the redemption
price plus accrued interest thereon to the Redemption Date, but installments of
interest, the maturity of which is on or prior to the Redemption Date, shall be
payable to Holders of record at the close of business on the relevant Record
Dates referred to in the Notes. Interest shall accrue on or after the Redemption
Date and shall be payable only if the Issuer defaults in payment of the
redemption price.
SECTION 3.06. Deposit of Redemption Price.
On or before the Redemption Date and in accordance with Section
2.14, the Issuer shall deposit with the Paying Agent U.S. Legal Tender
sufficient to pay the redemption price plus accrued interest, if any, of all
Notes to be redeemed on that date. The Paying Agent shall promptly return to the
Issuer any U.S. Legal Tender so deposited which is not required for that
purpose, except with respect to monies owed as obligations to the Trustee
pursuant to Article Seven.
Unless the Issuer fails to comply with the preceding paragraph and
defaults in the payment of such redemption price plus accrued interest, if any,
interest on the Notes to be redeemed will cease to accrue on and after the
applicable Redemption Date, whether or not such Notes are presented for payment.
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SECTION 3.07. Notes Redeemed in Part.
Upon surrender of a Note that is to be redeemed in part, the Trustee
shall authenticate for the Holder a new Note or Notes equal in principal amount
to the unredeemed portion of the Note surrendered.
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Notes.
(a) The Issuer shall pay the principal of, premium, if any, and
interest on the Notes on the dates and in the manner provided in the Notes and
in this Indenture.
(b) An installment of principal of or interest on the Notes shall be
considered paid on the date it is due if the Trustee or Paying Agent holds,
prior to 11:00 a.m. New York City time on that date, U.S. Legal Tender
designated for and sufficient to pay the installment in full and is not
prohibited from paying such money to the Holders pursuant to the terms of this
Indenture or the Notes.
(c) Notwithstanding anything to the contrary contained in this
Indenture, the Issuer, the Guarantor or the Subordinated Guarantor may, to the
extent they are required to do so by law, deduct or withhold income or other
similar taxes imposed by the United States of America from principal or interest
payments hereunder.
SECTION 4.02. Maintenance of Office or Agency.
The Issuer shall maintain the office or agency required under
Section 2.03. The Issuer shall give prior written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Issuer shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, any presentations,
surrenders, notices and demands in respect of the Notes may be made or served at
the address of the Trustee set forth in Section 10.02.
SECTION 4.03. Corporate Existence.
Except as provided in Article Five, the Issuer shall do or shall
cause to be done all things reasonably necessary to preserve and keep in full
force and effect its corporate exis-
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ence and the corporate, partnership or other existence of each Restricted
Subsidiary in accordance with the respective organizational documents of the
Issuer and each such Restricted Subsidiary and the rights (charter and
statutory) and material franchises of the Issuer and each Restricted Subsidiary;
provided, however, that the Issuer and the Restricted Subsidiaries shall not be
required to preserve any such right, or the corporate, partnership, limited
liability or other existence (other than, except as provided in Article Five,
the existence of the Issuer), if the Issuer or such Restricted Subsidiary shall
determine that the preservation thereof is no longer desirable in the conduct of
the business of the Issuer and its Restricted Subsidiaries, taken as a whole,
and that the loss thereof does not, and will not have, a material adverse effect
on the Holders.
SECTION 4.04. Compliance Certificate; Notice of Default.
(a) The Issuer shall deliver to the Trustee, within 120 days after
the end of its fiscal year, an Officers' Certificate of the Issuer (provided,
however, that one of the signatories to each such Officers' Certificate shall be
the Issuer's principal executive officer, principal financial officer or
principal accounting officer), as to such Officers' knowledge of the Issuer's
and the Restricted Subsidiaries' compliance with all conditions and covenants
under this Indenture (without regard to any period of grace or requirement of
notice provided hereunder) and in the event any Default or Event of Default
exists, such Officers shall specify the nature of such Default or Event of
Default. Each such Officers' Certificate shall also notify the Trustee should
the Issuer elect to change the manner in which it fixes its fiscal year end.
(b) So long as not contrary to the then generally accepted auditing
and accounting standards, the annual financial statements delivered pursuant to
Section 4.05 shall be accompanied by a written report of the Issuer's
independent public accountants (who shall be a firm of established national
reputation) stating (A) that their audit examination has included a review of
the terms of this Indenture and the form of the Notes as they relate to
accounting matters, and (B) whether, in connection with their audit examination,
any Default or Event of Default has come to their attention and if such a
Default or Event of Default has come to their attention, specifying the nature
and period of existence thereof; provided, however, that, without any
restriction as to the scope of the audit examination, such independent certified
public accountants shall not be liable by reason of any failure to obtain
knowledge of any such Default or Event of Default that would not be disclosed in
the course of an audit examination
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conducted in accordance with generally accepted auditing standards.
(c) If any Default or Event of Default has occurred and is
continuing, the Issuer shall deliver to the Trustee, at its address set forth in
Section 10.02 hereof, by registered or certified mail or by facsimile
transmission followed by hard copy by registered or certified mail an Officers'
Certificate specifying such event, notice or other action within 30 days of its
becoming aware of such occurrence.
SECTION 4.05. SEC Reports.
Notwithstanding that the Issuer may not be, or may not be required
to remain, subject to the reporting requirements of Section 13 or 15(d) of the
Exchange Act, the Issuer shall file or continue to file with the SEC and provide
the Trustee and Holders (upon the written request of such Holder) with such
annual reports and such information, documents and other reports as are
specified in Sections 13 and 15(d) of the Exchange Act and applicable to a U.S.
corporation subject to such Sections, such information, documents and reports to
be so filed and provided at the times specified for the filing of such
information, documents and reports under such Sections. The Issuer also shall
comply with the other provisions of TIA ss. 314(a).
SECTION 4.06. Waiver of Stay, Extension or Usury Laws.
The Issuer covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law or any usury law or
other law that would prohibit or forgive the Issuer from paying all or any
portion of the principal of or interest on the Notes as contemplated herein,
wherever enacted, now or at any time hereafter in force, or which may affect the
covenants or the performance of this Indenture; and (to the extent that it may
lawfully do so) the Issuer hereby expressly waives all benefit or advantage of
any such law, and covenants that it will not hinder, delay or impede the
execution of any power herein granted to the Trustee, but will suffer and permit
the execution of every such power as though no such law had been enacted.
SECTION 4.07. Limitation on Restricted Payments.
(a) The Issuer shall not, and shall not permit any Restricted
Subsidiary, directly or indirectly, to make a Re-
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tricted Payment if at the time the Issuer or such Restricted Subsidiary makes
such Restricted Payment:
(1) a Default shall have occurred and be continuing (or would result
therefrom);
(2) the Issuer is not able to Incur an additional $1.00 of
Indebtedness pursuant to Section 4.09(a); or
(3) the aggregate amount of such Restricted Payment and all other
Restricted Payments since the Issue Date would exceed the sum of:
(A) 50% of the Consolidated Net Income accrued during the
period (treated as one accounting period) from the beginning of the
fiscal quarter immediately following the fiscal quarter during which
the Notes are originally issued to the end of the most recent fiscal
quarter for which financial statements are available prior to the
date of such Restricted Payment (or, in case such Consolidated Net
Income shall be a deficit, minus 100% of such deficit);
(B) the aggregate Net Cash Proceeds received by the Issuer
from the issuance or sale of its Capital Stock (other than
Disqualified Stock) and the aggregate cash received by the Issuer as
a capital contribution from its shareholders, in each case
subsequent to the Issue Date (other than an issuance or sale to a
Subsidiary of the Issuer and other than an issuance or sale to an
employee stock ownership plan or to a trust established by the
Issuer or any of its Subsidiaries for the benefit of their
employees);
(C) the amount by which Indebtedness of the Issuer is reduced
on the Issuer's balance sheet upon the conversion or exchange (other
than by a Subsidiary of the Issuer) subsequent to the Issue Date, of
any Indebtedness of the Issuer for Capital Stock (other than
Disqualified Stock) of the Issuer (less the amount of any cash, or
the fair value of any other property other than such Capital Stock,
distributed by the Issuer upon such conversion or exchange);
(D) an amount equal to the sum of (i) the net reduction in
Investments in any Person resulting from dividends, repayments of
loans or advances or other transfers of assets (including any sale
of such Investment), in each case to the Issuer or any Restricted
Subsidiary, and (ii) the portion (propor-
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ionate to the Issuer's equity interest in such Subsidiary) of the
fair market value of the net assets of an Unrestricted Subsidiary at
the time such Unrestricted Subsidiary is designated a Restricted
Subsidiary; provided, however, that the foregoing sum shall not
exceed, in the case of any Person (including any Unrestricted
Subsidiary), the amount of Investments previously made in such
Person (and treated as a Restricted Payment) by the Issuer and the
Restricted Subsidiaries; and
(E) $15 million.
(b) The provisions of this Section 4.07 shall not prohibit:
(i) (x) any Restricted Payment made to fund the transactions
contemplated by the Recapitalization (including fees and expenses), (y)
any Restricted Payment made to fund Holdings' payment of interest and
principal on the Promissory Notes, and to fund interest on, and the
redemption, repurchase, defeasance or payment upon maturity of the
Holdings Notes after the Issue Date (including any accrued interest,
principal and premium thereon) and (z) any other Restricted Payment made
by exchange for, or out of the proceeds of the substantially concurrent
sale of, or capital contribution in respect of, Capital Stock of the
Issuer (other than Disqualified Stock and other than Capital Stock issued
or sold to a Subsidiary of the Issuer or an employee stock ownership plan
or to a trust established by the Issuer or any of its Subsidiaries for the
benefit of their employees); provided, however, that (A) each such
Restricted Payment described in clauses (x),(y) and (z) shall be excluded
in the calculation of the amount of Restricted Payments and (B) if
applicable, the Net Cash Proceeds from each such sale shall be excluded
from the calculation of amounts under clause (3)(B) of Section 4.07(a);
(ii) any purchase, repurchase, redemption, defeasance or other
acquisition or retirement for value of Subordinated Indebtedness made by
exchange for, or out of the proceeds of the substantially concurrent sale
of, Subordinated Indebtedness or Capital Stock of the Issuer which is
permitted to be Incurred pursuant to Section 4.09; provided, however, that
such purchase, repurchase, redemption, defeasance or other acquisition or
retirement for value shall be excluded in the calculation of the amount of
Restricted Payments;
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(iii) dividends paid within 60 days after the date of declaration
thereof if at such date of declaration such dividend would have complied
with Section 4.07(a); provided, however, that such dividend shall be
included in the calculation of the amount of Restricted Payments;
(iv) the repurchase of shares of, or options to purchase shares of,
Common Stock of Holdings, the Issuer or any of their respective
Subsidiaries from employees, former employees, directors or former
directors of Holdings, the Issuer or any of its Subsidiaries (or permitted
transferees of such employees, former employees, directors or former
directors), pursuant to the terms of the agreements (including employment
agreements) or plans (or amendments thereto) approved by the board of
directors of Holdings or the Issuer under which such individuals purchase
or sell or are granted the option to purchase or sell, shares of such
Common Stock (or any Restricted Payment made to Holdings solely to fund at
the time made such payments); provided, however, that the aggregate amount
of such repurchases or Restricted Payments shall not exceed $2,000,000 in
any calendar year; provided, further, however, that such repurchases or
Restricted Payments shall be excluded in the calculation of the amount of
Restricted Payments;
(v) following the initial Public Equity Offering, dividends or
Common Stock buybacks by Holdings, the Issuer or another issuer in an
aggregate amount in any year not to exceed 6% of the aggregate Net Cash
Proceeds received by the Issuer in connection with such initial Public
Equity Offering and any subsequent Public Equity Offering (or any
Restricted Payment made to Holdings or such other issuer solely to fund at
the time made such payments); provided, however, that at the time of
payment of such dividends, no other Default shall have occurred and be
continuing (or result therefrom); provided, further, however, that such
dividends or common stock buybacks shall be included in the calculation of
the amount of Restricted Payments;
(vi) repurchases of Capital Stock deemed to occur upon exercise of
stock options if such Capital Stock represents a portion of the exercise
price of such options; provided, however, that such repurchase shall be
excluded in the calculation of the amount of Restricted Payments;
(vii) any payment by the Issuer to Holdings pursuant to the Tax
Sharing Agreement; provided, however, that the amount of any such payment
shall not exceed the amount of taxes that the Issuer would have been
liable for on a stand-alone basis; provided, further, however, that such
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dividends shall be excluded in the calculation of the amount of Restricted
Payments; and
(viii) dividends to Holdings to the extent required to pay for
general corporate and overhead expenses incurred by Holdings; provided
however, that such dividends shall not exceed $1,000,000 in any calendar
year; provided, further, however, that such dividends shall be excluded in
the calculation of the amount of Restricted Payments.
SECTION 4.08. Limitation on Affiliate Transactions.
(a) The Issuer shall not, and shall not permit any Restricted
Subsidiary to, enter into or permit to exist any transaction (including the
purchase, sale, lease or exchange of any property, employee compensation
arrangements or the rendering of any service) with any Affiliate of the Issuer
(an "Affiliate Transaction") unless the terms thereof (1) are no less favorable
to the Issuer or such Restricted Subsidiary than those that could be obtained at
the time of such transaction in arm's-length dealings with a Person who is not
such an Affiliate, (2) if such Affiliate Transaction involves an amount in
excess of $5.0 million, (i) are set forth in writing and (ii) have been approved
by a majority of the members of the Board of Directors having no personal stake
in such Affiliate Transaction and (3) if such Affiliate Transaction involves an
amount in excess of $10.0 million, have been determined by nationally recognized
accounting or investment banking firm (an "Independent Financial Advisor") to be
fair, from a financial standpoint, to the Issuer and its Restricted
Subsidiaries. Notwithstanding clause (2)(ii) above, in the event that there are
less than two members of the Board of Directors not having a personal stake in
any Affiliate Transaction, such Affiliate Transaction shall be permitted to
exist so long as an Independent Financial Advisor has determined the terms of
such Affiliate Transaction to be fair, from a financial standpoint, to the
Issuer and its Restricted Subsidiaries.
(b) The provisions of Section 4.08(a) shall not prohibit (i) any
Restricted Payment permitted to be paid pursuant to Section 4.08 or a Permitted
Investment in Holdings as described in clause (x) of the definition of Permitted
Investment, (ii) any issuance of securities, or other payments, benefits, awards
or grants in cash, securities or otherwise pursuant to, or the funding of,
employment arrangements, stock options and stock ownership plans approved by the
Board of Directors, (iii) the grant of stock options or similar rights to
employees and directors of the Issuer pursuant to plans approved by the Board of
Directors, (iv) loans or advances to employees in the ordinary course of
business in accordance with the past
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practices of the Issuer or its Restricted Subsidiaries, but in any event not to
exceed $2.5 million in the aggregate outstanding at any one time, (v) the
payment of reasonable fees to directors of the Issuer and its Restricted
Subsidiaries who are not employees of the Issuer or its Restricted Subsidiaries,
(vi) any Tax Sharing Agreement; provided, however, that the aggregate amount
payable by the Issuer pursuant thereto shall not exceed the amount of taxes that
the Issuer would have been liable for on a stand-alone basis, (vii)
indemnification agreements with, and the payment of fees and indemnities to,
directors, officers and employees of the Issuer and its Restricted Subsidiaries,
in each case in the ordinary course of business, (viii) any employment,
non-competition or confidentiality agreement entered into by the Issuer and its
Restricted Subsidiaries with its employees in the ordinary course of business,
(ix) the payment by the Issuer of fees, expenses and other amounts to the
Permitted Holders and their respective Affiliates in connection with the
Recapitalization, (x) payments by the Issuer or any of its Restricted
Subsidiaries to the Permitted Holders (described in clause (i) of the definition
of Permitted Holders) and their Affiliates made pursuant to any financial
advisory, financing, underwriting or placement agreement, or in respect of other
investment banking activities, in each case as determined by the Board of
Directors in good faith, (xi) any Affiliate Transaction between the Issuer and a
Wholly Owned Subsidiary or between Wholly Owned Subsidiaries, (xii) any
Affiliate Transaction between the Issuer and a Restricted Subsidiary or between
Restricted Subsidiaries, in each case approved by the Board of Directors in good
faith, (xiii) execution, delivery and performance by Holdings, the Issuer, and
any Subsidiary of Holdings or the Issuer of the Recapitalization Agreement as in
effect on the Issue Date, (xiv) the pledge of any Capital Stock of Unrestricted
Subsidiaries to support the Indebtedness thereof and (xv) transactions in
connection with a Permitted Units Financing (as to which the Board approval
requirements in the definition of Permitted Units Financing will apply).
SECTION 4.09. Limitation on Indebtedness.
(a) The Issuer shall not, and shall not permit its Restricted
Subsidiaries to, Incur, directly or indirectly, any Indebtedness; provided,
however, that the Issuer may Incur Indebtedness if, on the date of such
Incurrence and after giving effect thereto, the Consolidated Coverage Ratio
exceeds 2.0 to 1.0.
(b) Notwithstanding the foregoing paragraph (a), the Issuer and its
Restricted Subsidiaries may Incur any or all of the following Indebtedness:
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(1) Indebtedness of the Issuer Incurred pursuant to the Credit
Agreement; provided, however, that, after giving effect to any such
Incurrence, the aggregate principal amount of such Indebtedness then
outstanding does not exceed the greater of $300 million or the sum of (i)
75% of the net book value of Eligible Rental Equipment of the Issuer and
its Restricted Subsidiaries and (ii) 85% of the book value of the Eligible
Accounts Receivable of the Issuer and its Restricted Subsidiaries (less
(i) the amount of net proceeds which has been received in connection with
a Permitted Units Financing permitted under clause (b)(13)(i) of this
Section 4.09 (provided that such reduction shall apply only to the extent
of any outstanding balance on such financing and for so long as such
Permitted Units Financing is in effect) and (ii) the amount of any
outstanding Attributable Debt Incurred under clause (b)(12) of this
Section 4.09);
(2) Indebtedness of the Issuer Incurred pursuant to an Interest
Rate Agreement or Currency Agreement entered into with any of the Lenders
directly related to (as determined in good faith by the Issuer)
Indebtedness Incurred pursuant to the Credit Agreement;
(3) Indebtedness owed to and held by the Issuer or a Wholly Owned
Subsidiary; provided, however, that any subsequent issuance or transfer of
any Capital Stock which results in any such Wholly Owned Subsidiary
ceasing to be a Wholly Owned Subsidiary or any subsequent transfer of such
Indebtedness (other than to the Issuer or another Wholly Owned Subsidiary)
shall be deemed, in each case, to constitute the Incurrence of such
Indebtedness by the issuer thereof;
(4) $400 million aggregate principal amount of the Notes issued on
the Issue Date and the Exchange Notes issued therefor and the Guarantees
thereof issued on the Issue Date;
(5) Indebtedness outstanding on the Issue Date (other than
Indebtedness described in clauses (1), (2), (3) and (4) of this Section
4.09(b));
(6) Indebtedness or Preferred Stock of a Restricted Subsidiary
Incurred and outstanding on or prior to the date on which such Restricted
Subsidiary was acquired by the Issuer (other than Indebtedness or
Preferred Stock Incurred in connection with, or to provide all or any
portion of the funds or credit support utilized to consummate, the
transaction or series of related transactions pursuant to which such
Restricted Subsidiary became a Re-
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tricted Subsidiary or was acquired by the Issuer); provided, however, that
on the date of such acquisition and after giving effect thereto, the
Issuer would have been able to Incur at least $1.00 of additional
Indebtedness pursuant to Section 4.09(a);
(7) Refinancing Indebtedness in respect of Indebtedness Incurred
pursuant to Section 4.09(a) or pursuant to clause (2), (4), (5), (6), (8)
or (12) of this Section 4.09(b) or this clause (7); provided, however,
that to the extent such Refinancing Indebtedness directly or indirectly
Refinances Indebtedness or Preferred Stock of a Restricted Subsidiary
described in clause (6) of this Section 4.09(b), such Refinancing
Indebtedness shall be Incurred only by such Restricted Subsidiary;
(8) Hedging Obligations consisting of Interest Rate Agreements
directly related (as determined in good faith by the Issuer) to
Indebtedness permitted to be Incurred by the Issuer and its Restricted
Subsidiaries pursuant to this Indenture and Currency Agreements Incurred
in the ordinary course of business;
(9) Indebtedness (including Capitalized Lease Obligations) of the
Issuer or any Restricted Subsidiary financing the purchase, lease or
improvement of property (real or personal) or equipment (whether through
the direct purchase of assets or the Capital Stock of any Person owning
such assets), in each case Incurred no more than 180 days after such
purchase, lease or improvement of such property and any Refinancing
Indebtedness in respect of such Indebtedness; provided, however, that at
the time of the Incurrence of such Indebtedness and after giving effect
thereto, the aggregate principal amount of all Indebtedness Incurred
pursuant to this clause (9) and then outstanding shall not exceed the
greater of $40 million and 10% of Adjusted Consolidated Assets;
(10) (A) Any guarantee by the Issuer of Indebtedness of any
Restricted Subsidiary (other than the Subordinated Guarantor) so long as
the Incurrence of such Indebtedness Incurred by such Restricted Subsidiary
is permitted under the terms of this Indenture and any guarantee by any
Restricted Subsidiary of Indebtedness of the Issuer Incurred pursuant to
Section 4.09(a) or clause (b)(1), (2), (4), (5), (8), (9), (11), (12) or
(14) of this Section 4.09 or clause (b)(7) of this Section 4.09 in respect
of Indebtedness of the Issuer Incurred pursuant to clause (b)(1), (2),
(4), (5), (8) or (12) of this Section 4.09 or (B) any guarantee of the
Issuer or a Restricted Subsidiary of Indebtedness of an Unrestricted
Subsidiary or a Securitiza-
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ion Subsidiary, provided that such guarantee is recourse only to the
Capital Stock of such Unrestricted Subsidiary or Securitization Subsidiary
(and the proceeds therefrom);
(11) Indebtedness of the Issuer or any Guarantor Incurred in
connection with the acquisition of a Permitted Business and any
Refinancing Indebtedness in respect of such Indebtedness; provided,
however, that the aggregate amount of Indebtedness Incurred pursuant to
this clause (11) and then outstanding shall not exceed $10 million;
(12) Attributable Debt in respect of a Sale/Leaseback Transaction
entered into by the Issuer or any Restricted Subsidiary on or before
December 31, 1998 in respect of Rental Equipment; provided, however, that
at the time of the incurrence of such Attributable Debt and after giving
effect thereto, the aggregate principal amount of all Attributable Debt
incurred pursuant to this clause (12) and then outstanding shall not
exceed $50 million;
(13) Indebtedness of a Securitization Subsidiary pursuant to a
Permitted Units Financing, provided that after giving effect to the
Incurrence thereof, either (i) the amount of net proceeds to be received
in such Permitted Units Financing and any net proceeds for all previous
Permitted Units Financing (only to the extent of any outstanding balance
on such financing and for so long as any such Permitted Units Financing is
in effect) does not exceed the greater of $300 million or the sum of (A)
75% of the net book value of Eligible Rental Equipment of the Issuer and
its Restricted Subsidiaries and (B) 85% of the book value of the Eligible
Accounts Receivable of the Issuer and its Restricted Subsidiaries or (ii)
the Issuer could Incur at least $1.00 of Indebtedness under Section 4.09;
and
(14) Indebtedness of the Issuer, any Guarantor or the Subordinated
Guarantor (which may be but need not be issued pursuant to the Credit
Agreement) in an aggregate principal amount which, together with all other
Indebtedness of the Issuer, any Guarantor or the Subordinated Guarantor
outstanding on the date of such Incurrence (other than Indebtedness
permitted by clauses (1) through (13) of this Section 4.09(b) or Section
4.09(a)) does not exceed $50 million.
(c) For purposes of determining compliance with this Section 4.09,
(i) in the event that an item of Indebtedness meets the criteria of more than
one of the types of Indebtedness described herein (including subclauses of
different types of Indebtedness in clause (b) of this Section 4.09), the Is-
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suer, in its sole discretion, will classify such item of Indebtedness and only
be required to include the amount and type of such Indebtedness in one of the
above clauses (or subclauses) and (ii) an item of Indebtedness may be divided
and classified in more than one of the types of Indebtedness described herein
(including subclauses of different types of Indebtedness in clause (b) of this
Section 4.09).
(d) Notwithstanding Section 4.09(a) and Section 4.09(b), the Issuer
shall not Incur (i) any Indebtedness if such Indebtedness is subordinate or
junior in ranking in any respect to any Indebtedness, unless such Indebtedness
is expressly subordinated in right of payment to the Notes, or (ii) any Secured
Indebtedness (other than Permitted Secured Indebtedness) unless
contemporaneously therewith effective provision is made to secure the Notes
equally and ratably with such Secured Indebtedness for so long as such Secured
Indebtedness is secured by a Lien.
(e) Notwithstanding Section 4.09(a) and Section 4.09(b) above, a
Guarantor shall not Incur (i) any Indebtedness if such Indebtedness is
subordinate or junior in ranking in any respect to any Indebtedness of such
Guarantor, unless such Indebtedness is expressly subordinated in right of
payment to such Guarantor's Guarantee of the Notes, or (ii) any Secured
Indebtedness (other than Permitted Secured Indebtedness) unless
contemporaneously therewith effective provision is made to secure such
Guarantor's Guarantee of the Notes equally and ratably with such Secured
Indebtedness for so long as such Secured Indebtedness is secured by a Lien.
(f) Notwithstanding paragraphs (a) and (b) above, the Subordinated
Guarantor shall not incur (i) any Indebtedness if such Indebtedness is expressly
by its terms subordinate or junior in right of payment to any Indebtedness of
the Subordinated Guarantor and senior in respect of payment to the Subordinated
Guarantee; or (ii) any Indebtedness other than Subordinated Guarantor Senior
Indebtedness and Indebtedness permitted to be Incurred by a Restricted
Subsidiary pursuant to paragraph (b) above.
SECTION 4.10. Limitation on Restrictions on Distributions from
Restricted Subsidiaries.
The Issuer shall not, and shall not permit any Restricted Subsidiary
to, create or otherwise cause or permit to exist or become effective any
consensual encumbrance or restriction on the ability of any Restricted
Subsidiary (a) to pay dividends or make any other distributions on its Capital
Stock to the Issuer or a Restricted Subsidiary or pay any In-
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debtedness owed to the Issuer, (b) to make any loans or advances to the
Issuer or (c) to transfer any of its property or assets to the Issuer,
except:
(i) any encumbrance or restriction pursuant to an agreement in
effect at or entered into on the Issue Date (including the Credit
Agreement and related security documents and the Senior Secured Notes and
any related agreements);
(ii) any encumbrance or restriction with respect to a Restricted
Subsidiary pursuant to an agreement relating to any Indebtedness Incurred
by such Restricted Subsidiary on or prior to the date on which such
Restricted Subsidiary was acquired by the Issuer (other than Indebtedness
Incurred as consideration in, or to provide all or any portion of the
funds or credit support utilized to consummate, the transaction or series
of related transactions pursuant to which such Restricted Subsidiary
became a Restricted Subsidiary or was acquired by the Issuer) and
outstanding on such date;
(iii) any encumbrance or restriction pursuant to an agreement
effecting a Refinancing of Indebtedness Incurred pursuant to an agreement
referred to in clause (i) or (ii) of this Section 4.10 or this clause
(iii) or contained in any amendment to an agreement referred to in clause
(i) or (ii) of this Section 4.10 or this clause (iii); provided, however,
that the encumbrances and restrictions with respect to such Restricted
Subsidiary contained in any such refinancing agreement or amendment are no
less favorable to the Noteholders than encumbrances and restrictions with
respect to such Restricted Subsidiary contained in such agreements;
(iv) any such encumbrance or restriction consisting of customary
non-assignment or subletting provisions in leases governing leasehold
interests to the extent such provisions restrict the transfer of the lease
or the property leased thereunder;
(v) in the case of clause (c) above, restrictions contained in
security agreements or mortgages securing Indebtedness of a Restricted
Subsidiary to the extent such restrictions restrict the transfer of the
property subject to such security agreements or mortgages;
(vi) any restriction with respect to a Restricted Subsidiary imposed
pursuant to an agreement entered into for the sale or disposition of all
or substantially all
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the Capital Stock or any assets of such Restricted Subsidiary pending the
closing of such sale or disposition;
(vii) any encumbrance or restriction pursuant to an agreement
entered into after the Issue Date governing Indebtedness Incurred by a
Restricted Subsidiary in compliance with Section 4.09; provided, however,
that the encumbrances and restrictions with respect to any Restricted
Subsidiary contained in any such agreement are no less favorable to the
Holders of the Note than encumbrances and restrictions with respect to
such Restricted Subsidiary in the Credit Agreement on the Issue Date;
(viii) any encumbrance or restriction pursuant to an agreement with
a governmental entity providing for developmental financing on terms which
are more favorable (at the time such agreement is entered into) than those
available from third party financing sources;
(ix) with respect to a Securitization Subsidiary, an agreement
relating to Indebtedness of a Securitization Subsidiary which is permitted
under Section 4.09 above or pursuant to an agreement relating to a
Permitted Units Financing by a Securitization Subsidiary; or
(x) this Indenture.
SECTION 4.11. Change of Control.
(a) Upon a Change of Control, if either (i) the Issuer does not
redeem the Notes under Section 3.03 or (ii) such Change of Control occurs after
June 1, 2002, the Issuer will be required to make an offer to repurchase Notes
at a purchase price equal to 101% of the principal amount thereof together with
accrued and unpaid interest, if any, to the date of repurchase (subject to the
right of Holders of record on the relevant Record Date to receive interest on
the relevant Interest Payment Date), in accordance with the terms contemplated
in Section 4.11(b).
(b) Within 30 days following any Change of Control (unless the
Issuer has mailed a redemption notice with respect to all the outstanding Notes
in connection with such Change of Control), the Issuer shall mail or shall cause
to be mailed a notice to each Holder with a copy to the Trustee stating:
(1) that a Change of Control has occurred and that such Holder has
the right to require the Issuer to purchase such Holder's Notes at a
purchase price in cash equal to 101% of the principal amount thereof plus
accrued and unpaid interest, if any, to the date of purchase
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(subject to the right of Holders of record on the relevant Record Date to
receive interest on the relevant Interest Payment Date);
(2) the circumstances and relevant facts regarding such Change of
Control;
(3) the repurchase date (which shall be no earlier than 30 days nor
later than 60 days from the date such notice is mailed); and
(4) the instructions determined by the Issuer, consistent with this
Section, that a Holder must follow in order to have its Notes purchased.
(c) Holders electing to have a Note purchased will be required to
surrender the Note, together with the form entitled "Option of Holder to Elect
Purchase" on the reverse side of the Note completed, to the Issuer at the
address specified in the notice at least three Business Days prior to the
purchase date. Holders will be entitled to withdraw their election if the
Trustee or the Issuer receives not later than three Business Days prior to the
purchase date, a facsimile transmission or letter setting forth the name of the
Holder, the principal amount of the Note which was delivered for purchase by the
Holder and a statement that such Holder is withdrawing his election to have such
Note purchased.
(d) On the purchase date, all Notes purchased by the Issuer under
this Section shall be delivered by the Trustee for cancellation, and the Issuer
shall pay the purchase price plus accrued and unpaid interest, if any, to the
Holders entitled thereto.
(e) The Issuer shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Notes pursuant to this
Section. To the extent that the provisions of any securities laws or regulations
conflict with provisions of this Section 4.11, the Issuer shall comply with the
applicable securities laws and regulations and shall not be deemed to have
breached its obligations under this Section 4.11 by virtue thereof.
SECTION 4.12. Limitation on Sale of Assets and Subsidiary Stock.
(a) In the event and to the extent that the Net Available Cash
received by the Issuer or any Restricted Subsidiary from one or more Asset
Dispositions occurring on or after the Issue Date in any period of 12
consecutive months ex-
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ceeds the greater of $40 million or 10% of Adjusted Consolidated Assets as of
the beginning of such 12-month period, then the Issuer shall (i) no later than
360 days after the date such Net Available Cash so received exceeds such $40
million or 10% of Adjusted Consolidated Assets (A) apply an amount equal to such
excess Net Available Cash to repay any Indebtedness (other than Subordinated
Indebtedness) of the Issuer or of any Restricted Subsidiary, in each case owing
to a Person other than the Issuer or any Affiliate of the Issuer, or (B) invest
or commit to invest an equal amount, or the amount not so applied pursuant to
clause (A), in Additional Assets; provided, however, that in the case of any
commitment to invest, such investment must be made within six months thereafter,
and any amount not so invested shall be treated as Excess Proceeds (as defined
below); and (ii) apply such excess Net Available Cash (to the extent not applied
pursuant to clause (i)) as provided in the following paragraphs of this Section
4.12. The amount of such excess Net Available Cash required to be applied during
the applicable period and not applied as so required by the end of such period
shall constitute "Excess Proceeds."
(b) (i) If, as of the first day of any calendar month, the aggregate
amount of Excess Proceeds not theretofore subject to an Excess Proceeds Offer
totals at least $20 million, the Issuer must, not later than the fifteenth
Business Day of such month, make an offer (an "Excess Proceeds Offer") to
purchase from the Holders on a pro rata basis an aggregate principal amount of
Notes equal to the Excess Proceeds (rounded down to the nearest multiple of
$1,000) on such date, at a purchase price equal to 100% of the principal amount
of such Notes, plus, in each case, accrued and unpaid interest (if any) to the
date of purchase (the "Excess Proceeds Payment").
(ii) The Issuer shall commence any Excess Proceeds Offer with respect
to the Notes by mailing or causing to be mailed a notice to the Trustee and each
Holder stating: (A) that the Excess Proceeds Offer is being made pursuant to
this Section 4.12 and that all Notes validly tendered will be accepted for
payment on a pro rata basis; (B) the purchase price and the date of purchase
(which shall be a Business Day no earlier than 30 days nor later than 60 days
from the date such notice is mailed) (the "Excess Proceeds Payment Date"); (C)
that any Note not tendered will continue to accrue interest pursuant to its
terms; (D) that, unless the Issuer defaults in the payment of the Excess
Proceeds Payment, any Note accepted for payment pursuant to the Excess Proceeds
offer shall cease to accrue interest on and after the Excess Proceeds Payment
Date; (E) that Holders electing to have a Note purchased pursuant to the Excess
Proceeds Offer will be required to surrender the Note, together with the form
entitled "Option of Holder to Elect Purchase" on the reverse side of the Note
completed, to
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the Paying Agent at the address specified in the notice prior to the close of
business on the third Business Day immediately preceding the Excess Proceeds
Payment Date; (F) that Holders will be entitled to withdraw their election if
the Paying Agent receives, not later than the close of business on the third
Business Day immediately preceding the Excess Proceeds Payment Date, a facsimile
transmission or letter setting forth the name of such Holder, the principal
amount of Notes delivered for purchase and a statement that such Holder is
withdrawing his election to have such Notes purchased; and (G) that Holders
whose Notes are being purchased only in part will be issued new Notes equal in
principal amount to the unpurchased portion of the Notes surrendered; provided,
however, that each Note purchased and each new Note issued shall be in a
principal amount of $1,000 or integral multiples thereof.
(iii) On the Excess Proceeds Payment Date, the Issuer shall (A) accept
for payment on a pro rata basis Notes or portions thereof tendered pursuant to
the Excess Proceeds Offer, (B) deposit with the Paying Agent money sufficient to
pay the purchase price of all Notes or portions thereof so accepted, and (C)
deliver, or cause to be delivered, to the Trustee all Notes or portions thereof
so accepted together with an Officers' Certificate specifying the Notes or
portions thereof so accepted for payment by the Issuer. The Paying Agent shall
promptly mail to the Holders of Notes so accepted payment in an amount equal to
the purchase price, and the Trustee shall promptly authenticate and make
available for delivery to such Holders a new Note equal in principal amount to
any unpurchased portion of the Note surrendered; provided, however, that each
Note purchased and each new Note issued shall be in a principal amount of $1,000
or integral multiples thereof. The Issuer will publicly announce the results of
the Excess Proceeds Offer as soon as practicable after the Excess Proceeds
Payment Date.
(iv) The Issuer shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations thereunder in the event that such Excess Proceeds are received by
the Issuer under this Section 4.12 and the Issuer is required to repurchase
Notes as described above. To the extent that the provisions of any securities
laws or regulations conflict with the provisions of this Section 4.12, the
Issuer shall comply with the applicable securities laws and regulations and
shall not be deemed to have breached its obligations under this Section 4.12 by
virtue thereof.
(c) In the event of the transfer of substantially all (but not all)
the property and assets of the Issuer as an entirety to a Person in a
transaction permitted by Section 5.01, the Successor Issuer shall be deemed to
have sold
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the properties and assets of the Issuer not so transferred for purposes of this
Section 4.12, and shall comply with the provisions of this Section 4.12 with
respect to such deemed sale as if it were an Asset Disposition and the Successor
Issuer shall be deemed to have received Net Available Cash in an amount equal to
the fair market value (as determined in good faith by the Board of Directors) of
the properties and assets not so transferred or sold.
SECTION 4.13. Limitation on Sale or Issuance of Capital Stock of
Restricted Subsidiaries.
The Issuer shall not sell or otherwise dispose of any Capital Stock
of a Restricted Subsidiary, and shall not permit any Restricted Subsidiary,
directly or indirectly, to issue or sell or otherwise dispose of any of its
Capital Stock except (i) to the Issuer or a Wholly Owned Subsidiary or to any
director of a Restricted Subsidiary to the extent required as director's
qualifying shares, (ii) if, immediately after giving effect to such issuance,
sale or other disposition, neither the Issuer nor any of its Restricted
Subsidiaries owns any Capital Stock of such Restricted Subsidiary, (iii) if,
immediately after giving effect to such issuance, sale or other disposition,
such Restricted Subsidiary would no longer constitute a Restricted Subsidiary
and any Investment in such Person remaining after giving effect thereto would
have been permitted to be made under Section 4.07 if made on the date of such
issuance, sale or other disposition or (iv) any sale of Capital Stock in
connection with a Permitted Units Financing.
SECTION 4.14. Limitation on Liens.
The Issuer shall not, and shall not cause or permit any Restricted
Subsidiary to, directly or indirectly, create, incur, assume or suffer to exist
any Lien on any assets of the Issuer or any Restricted Subsidiary whether owned
on the Issue Date or acquired after the Issue Date, or any proceeds therefrom,
or assign or otherwise convey any right to receive income or profits therefrom
(other than, in each case, Permitted Liens).
SECTION 4.15. Additional Guarantees.
The Issuer will cause each Subsidiary which becomes a Guarantor
after the Issue Date (i) to execute and deliver to the Trustee a supplemental
indenture, in form reasonably satisfactory to the Trustee, pursuant to which
such Subsidiary shall unconditionally guarantee all of the Issuer's obligations
under the Notes and the Indenture on the terms set forth in the Indenture and
(ii) to deliver to the Trustee an opinion of coun-
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sel that such supplemental indenture has been duly authorized, executed and
delivered by such Subsidiary and constitutes a legal, valid, binding and
enforceable obligation of such Subsidiary. Thereafter, such Subsidiary shall be
a Guarantor for all purposes of this Indenture until it ceases to be such
pursuant to the definition of Guarantor contained herein.
SECTION 4.16. Activities of the Issuer and the Restricted
Subsidiaries.
The Issuer shall not, and shall not permit any Restricted Subsidiary
to, engage in any business other than developing, owning, engaging in and
dealing with a Permitted Business.
SECTION 4.17. Activities of Subordinated Guarantor.
(a) The Issuer shall not permit the Subordinated Guarantor to, and
the Subordinated Guarantor shall not: (i) engage in any activity other than
acquiring, owning, holding, managing, marketing, maintaining, leasing, selling
or disposing of Rental Equipment and activities directly incidental thereto
(including leasing such Rental Equipment to the Issuer or any of its
Subsidiaries) or (ii) incur any Indebtedness other than Indebtedness incurred in
compliance with Section 4.09.
(b) Neither the Issuer nor any of the Restricted Subsidiaries will
sell, transfer or otherwise convey to the Subordinated Guarantor any of its or
their respective assets other than Rental Equipment (and related leases) which
Rental Equipment, at the time of transfer, (x) is not evidenced by a certificate
of title under applicable motor vehicle registration, certificate of title and
other applicable state laws or (y) if evidenced by a certificate of title as
described in the preceding clause (x), where counsel to the Issuer is unable to
conclude that the notation of a security interest thereon (or another similar
procedure) is effective under applicable state law to create a fully perfected
security interest therein.
(c) All Rental Equipment (and related leases) sold, transferred or
otherwise conveyed by the Issuer or any of the Restricted Subsidiaries to the
Subordinated Guarantor shall be transferred, sold or otherwise conveyed only by
way of a capital contribution to the common equity of the Subordinated
Guarantor.
(d) The Issuer shall not permit the Subordinated Guarantor to, and
the Subordinated Guarantor shall not, have any Subsidiaries.
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ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. Merger and Consolidation.
The Issuer shall not consolidate with or merge with or into, or
convey, transfer or lease, in one transaction or a series of transactions, all
or substantially all its assets to, any Person (including Holdings), unless:
(i) the resulting, surviving or transferee Person (the "Successor
Issuer") shall be a Person organized and existing under the laws of the
United States of America, any State thereof or the District of Columbia
and the Successor Issuer (if not the Issuer) shall expressly assume, by an
indenture supplemental thereto, executed and delivered to the Trustee, in
form reasonably satisfactory to the Trustee, all the obligations of the
Issuer under the Notes and this Indenture;
(ii) immediately after giving effect to such transaction (and
treating any Indebtedness which becomes an obligation of the Successor
Issuer or any Subsidiary as a result of such transaction as having been
Incurred by such Successor Issuer or such Subsidiary at the time of such
transaction), no Default shall have occurred and be continuing;
(iii) immediately after giving effect to such transaction, the
Successor Issuer would be able to Incur an additional $1.00 of
Indebtedness pursuant to Section 4.09(a);
(iv) immediately after giving effect to such transaction, the
Successor Issuer shall have Consolidated Net Worth in an amount that is
not less than the Consolidated Net Worth of the Issuer prior to such
transaction; and
(v) the Issuer shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if any)
comply with this Indenture.
Notwithstanding clause (iii) above, a Wholly-Owned Subsidiary (other
than the Subordinated Guarantor) may be consolidated with or merged into the
Issuer and the Issuer may consolidate with or merge with or into (A) another
Person, if such Person is a single purpose corporation that has not conducted
any business or Incurred any Indebtedness or other li-
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abilities and such transaction is being consummated solely to change the state
of incorporation of the Issuer and (B) Holdings; provided, however, that, in the
case of clause (B), (x) Holdings shall not have owned any assets other than the
Capital Stock of the Issuer (and other immaterial assets incidental to its
ownership of such Capital Stock) or conducted any business other than owning the
Capital Stock of the Issuer, (y) Holdings shall not have any Indebtedness or
other liabilities (other than ordinary course liabilities incidental to its
ownership of the Capital Stock of the Issuer) and (z) immediately after giving
effect to such consolidation or merger, the Successor Issuer shall have a pro
forma Consolidated Coverage Ratio that is not less than the Consolidated
Coverage Ratio of the Issuer immediately prior to such consolidation or merger;
and, provided further, that the Subordinated Guarantor may be consolidated with,
may be merged into or may transfer all or substantially all its assets to the
Issuer with the consent of the holders of all Subordinated Guarantor Senior
Indebtedness then outstanding (in which case, if such consent has been given,
the Subordinated Guarantee (including, without limitation, the provisions of
Section 11.02) shall terminate and be extinguished).
The Successor Issuer shall be the successor to the Issuer and shall
succeed to, and be substituted for, and may exercise every right and power of,
the Issuer under this Indenture, but the predecessor Issuer in the case of a
conveyance, transfer or lease shall not be released from the obligation to pay
the principal of and interest on the Notes.
The Issuer shall not permit any Guarantor to, and no Guarantor
shall, consolidate with or merge with or into, or convey, transfer or lease, in
one transaction or a series of transactions, all or substantially all its assets
to, any Person other than the Issuer or any other Guarantor, unless:
(i) the resulting, surviving, or transferee Person (the "Successor
Guarantor") shall be a Person organized and existing under the laws of the
United States of America, any State thereof or the District of Columbia
and the Successor Guarantor (if not the Issuer) shall expressly assume, by
an indenture supplemental thereto, executed and delivered to the Trustee,
in form reasonably satisfactory to the Trustee, all the obligations of the
Guarantor on the Guarantee and in this Indenture;
(ii) immediately after giving effect to such transaction, no Default
shall have occurred and be continuing; and
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(iii) immediately after giving effect to such transaction, and the
use of any proceeds therefrom on a pro forma basis, the Issuer could
satisfy the provisions of clauses (iii) and (iv) of the first paragraph of
this Section 5.01.
Except as provided above in the last proviso to the second paragraph
of this Section 5.01, the Issuer shall not permit the Subordinated Guarantor to,
and the Subordinated Guarantor shall not, consolidate with or merge into or
with, or convey, transfer or lease, in any transaction or a series of related
transactions, all or substantially all of its assets to any Person; provided
that the Subordinated Guarantor may be consolidated with, merged with or into,
or transfer all or substantially all its assets to, any Guarantor with the
consent of the holders of all Subordinated Guarantor Senior Indebtedness then
outstanding (in which case, if such consent has been given, the provisions of
the Subordinated Guarantee and Section 11.02 of this Indenture shall terminate
and be extinguished).
Notwithstanding the above provisions, (x) one or more transfers of
assets to the Subordinated Guarantor pursuant to Section 4.17(b) shall be
permitted and (y) the Subordinated Guarantor may lease any or all of its assets
to the Issuer or any Wholly Owned Subsidiary of the Issuer at any time.
ARTICLE SIX
REMEDIES
SECTION 6.01. Events of Default.
An "Event of Default" occurs if:
(1) the Issuer defaults in any payment of interest on any Note when
the same becomes due and payable and such default continues for a period
of 30 days;
(2) the Issuer defaults in the payment of the principal of any Note
when the same becomes due and payable at its Stated Maturity, upon
optional redemption, upon required repurchase, upon declaration or
otherwise (including the failure to make a payment to purchase Notes
tendered pursuant to a Change of Control or an Excess Proceeds Payment),
whether or not such payment shall be prohibited by Article Eleven;
(3) the Issuer fails to comply with Section 5.01;
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(4) the Issuer fails to comply with Section 4.05, 4.07, 4.08, 4.09,
4.10, 4.11, 4.12, 4.13 or 4.17 (other than a failure to purchase Notes
when required under Section 4.11 or 4.12) and such failure continues for
30 days after the notice specified below;
(5) the Issuer fails to comply with any of its agreements in the
Notes or this Indenture and such failure continues for 60 days after the
notice specified below;
(6) Indebtedness of the Issuer or any Significant Subsidiary is not
paid within any applicable grace period after final maturity or is
accelerated by the holders thereof because of a default and the total
amount of such Indebtedness unpaid or accelerated exceeds $25.0 million
(the "cross acceleration provisions");
(7) the Issuer or any Significant Subsidiary pursuant to or within
the meaning of any Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief against it in
an involuntary case;
(C) consents to the appointment of a Custodian of it or for
any substantial part of its property; or
(D) makes a general assignment for the benefit of its
creditors;
or takes any comparable action under any foreign laws relating to
insolvency;
(8) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(A) is for relief against the Issuer or any Significant
Subsidiary in an involuntary case;
(B) appoints a Custodian of the Issuer or any Significant
Subsidiary or for any substantial part of its property; or
(C) orders the winding up or liquidation of the Issuer or any
Significant Subsidiary;
or any similar relief is granted under any foreign laws and the order or
decree remains unstayed and in effect for 60 days;
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(9) any judgment or decree for the payment of money in excess of
$25.0 million (net of applicable insurance coverage provided that the
applicable insurance carriers have acknowledged coverage) is rendered
against the Issuer or any Significant Subsidiary, remains outstanding for
a period of 60 days following the entry of such judgment or decree and is
not discharged, waived or the execution thereof stayed within 10 days
after the notice specified below or an enforcement proceeding is commenced
upon such judgment or decree (the "judgment default provision"); or
(10) any of the Guarantees or the Subordinated Guarantee ceases to
be in full force and effect or any of the Guarantees or the Subordinated
Guarantee is declared to be null and void and unenforceable or any of the
Guarantees or the Subordinated Guarantee is found to be invalid, in each
case by a court of competent jurisdiction in a final non-appealable
judgment, or any of the Guarantors or the Subordinated Guarantor denies
its liability under its Guarantee or the Subordinated Guarantee (other
than by reason of release of a Guarantor or the Subordinated Guarantor in
accordance with the terms of this Indenture).
The foregoing will constitute Events of Default whatever the reason
for any such Event of Default and whether it is voluntary or involuntary or is
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body.
A Default under clause (4), (5) or (9) above is not an Event of
Default until the Trustee or the Holders of at least 25% in principal amount of
the outstanding Notes notify the Issuer of the Default and the Issuer does not
cure such Default within the time specified after receipt of such notice. Such
notice must specify the Default, demand that it be remedied and state that such
notice is a "Notice of Default".
The Issuer shall deliver to the Trustee, within 30 days after the
occurrence thereof, written notice in the form of an Officer's Certificate of
any Event of Default under clause (6) above and any event which with the giving
of notice or the lapse of time would become an Event of Default under clause
(4), (5) or (9) above, its status and what action the Issuer is taking or
proposes to take with respect thereto.
SECTION 6.02. Acceleration.
If an Event of Default occurs and is continuing, the Trustee by
notice to the Issuer, or the Holders of at least 25% in principal amount of the
outstanding Notes by notice to the
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Issuer and the Trustee, may declare the principal of and accrued interest on all
the outstanding Notes to be due and payable immediately. Upon such a
declaration, such principal and interest shall be due and payable immediately.
If an Event of Default specified in Section 6.01(7) or (8) with respect to the
Issuer occurs, the principal of and interest on all the Notes shall ipso facto
become and be immediately due and payable without any declaration or other act
on the part of the Trustee or any Noteholders. The Holders of a majority in
principal amount of the Notes by notice to the Trustee may rescind an
acceleration and its consequences if the rescission would not conflict with any
judgment or decree and if all existing Events of Default have been cured or
waived except nonpayment of principal or interest that has become due solely
because of acceleration. No such rescission shall affect any subsequent Default
or impair any right consequent thereto.
SECTION 6.03. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy to collect the payment of principal of or interest
on the Notes or to enforce the performance of any provision of the Notes or this
Indenture.
The Trustee may maintain a proceeding even if it does not possess
any of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any holder of the Notes in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative to the
extent provided by law.
SECTION 6.04. Waiver of Past Defaults.
The Holders of a majority in principal amount of the Notes then
outstanding (including consents obtained in connection with a tender offer or
exchange for the Notes) by notice to the Trustee may waive an existing Default
and its consequences except (i) a Default in the payment of the principal of or
interest or premium on a Note or (ii) a Default in respect of a provision that
under Section 9.02 cannot be amended without the consent of each Noteholder
affected. When a Default is waived, it is deemed cured, but no such waiver shall
extend to any subsequent or other Default or impair any consequent right.
SECTION 6.05. Control by Majority.
The Holders of a majority in principal amount of the Notes may
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee or of exer-
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cising any trust or power conferred on the Trustee. However, the Trustee may
refuse to follow any direction that conflicts with law or this Indenture or,
subject to Section 7.01, that the Trustee determines is unduly prejudicial to
the rights of other Holders of the Notes or would involve the Trustee in
personal liability; provided, however, that the Trustee may take any other
action deemed proper by the Trustee that is not inconsistent with such
direction. Prior to taking any action hereunder, the Trustee shall be entitled
to indemnification reasonably satisfactory to it against all losses and expenses
caused by taking or not taking such action.
SECTION 6.06. Limitation on Suits.
A Noteholder may not pursue any remedy with respect to this
Indenture or the Notes except to enforce the right to receive payment of
principal, premium (if any) or interest when due unless:
(1) the Holder gives to the Trustee written notice stating that an
Event of Default is continuing;
(2) the Holders of at least 25% in principal amount of the
outstanding Notes make a written request to the Trustee to pursue the
remedy;
(3) such Holder or Holders offer to the Trustee reasonable security
or indemnity satisfactory to the Trustee against any loss, liability or
expense;
(4) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer of security or indemnity; and
(5) the Holders of a majority in principal amount of the outstanding
Notes do not give the Trustee a direction inconsistent with the request
during such 60-day period.
A Holder may not use this Indenture to prejudice the rights of
another Holder or to obtain a preference or priority over another Holder.
SECTION 6.07. Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of
any Holder to receive payment of principal of and interest on the Notes held by
such Holder, on or after the respective due dates expressed in the Notes, or to
bring suit for the enforcement of any such payment on or after such
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respective dates, shall not be impaired or affected without the consent of such
Holder.
SECTION 6.08. Collection Suit by Trustee.
If an Event of Default specified in Section 6.01(l) or (2) occurs
and is continuing, the Trustee may recover judgment in its own name and as
trustee of an express trust against the Issuer for the whole amount then due and
owing (together with interest on any unpaid interest to the extent lawful) and
the amounts provided for in Section 7.07.
SECTION 6.09. Proofs of Claim.
The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee and the Holders allowed in any judicial proceedings relative to the
Issuer, any Guarantor, the Subordinated Guarantor, their respective creditors or
their respective property and, unless prohibited by law or applicable
regulations, may vote on behalf of the Holders in any election of a trustee in
bankruptcy or other Person performing similar functions, and any Custodian in
any such judicial proceeding is hereby authorized by each Holder to make
payments to the Trustee and, in the event that the Trustee shall consent to the
making of such payments directly to the Holders, to pay to the Trustee any
amount due it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and its counsel, and any other amounts due
the Trustee under Section 7.07.
SECTION 6.10. Priorities.
If the Trustee collects or property pursuant to this Article Six, it
shall pay out the money or property in the following order:
FIRST: to the Trustee for amounts due under Section 7.07;
SECOND: to Holders of the Notes for amounts due and unpaid on the
Notes for principal (including any premium) and interest, ratably, without
preference or priority of any kind, according to the amounts due and
payable on the Notes for principal (including any premium) and interest,
respectively;
THIRD: without duplication, to Holders for any other Obligations
owing to Holders under this Indenture or the Notes; and
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FOURTH: the balance, if any, to the Issuer or to such party as a
court of competent jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment
to Holders of the Notes pursuant to this Section. At least 15 days before such
record date, the Issuer shall mail or cause to be mailed to each Noteholder and
the Trustee a notice that states the record date, the payment date and amount to
be paid.
SECTION 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees and expenses, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section does not apply to a suit by the Trustee, a suit by a
Holder pursuant to Section 6.07 or a suit by Holders of more than 10% in
principal amount of the Notes.
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture and use the same degree of care and skill in its exercise thereof as a
prudent person would exercise or use under the circumstances in the conduct of
his own affairs.
(b) Except during the continuance of an Event of Default:
(1) The Trustee need perform only those duties as are specifically
set forth in this Indenture and no covenants or obligations shall be
implied in this Indenture that are adverse to the Trustee.
(2) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the
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statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Trustee and conforming to the
requirements of this Indenture. However, in the case of any such
certificates or opinions that by any provision hereof are specifically
required to be furnished to the Trustee, the Trustee shall examine the
certificates and opinions to determine whether or not they conform to the
requirements of this Indenture.
(c) Notwithstanding anything to the contrary herein contained, the
Trustee may not be relieved from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:
(1) This paragraph does not limit the effect of paragraph (b) of
this Section 7.01.
(2) The Trustee shall not be liable for any error of judgment made
in good faith by a Trust Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts.
(3) The Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.02, 6.04 or 6.05.
(d) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
(e) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b), (c) and (d) of this Section 7.01 and
Section 7.02.
(f) The Trustee shall not be liable for interest on any money or
assets received by it except as the Trustee may agree in writing with the
Issuer. Assets held in trust by the Trustee need not be segregated from other
assets except to the extent required by law.
SECTION 7.02. Rights of Trustee.
Subject to Section 7.01:
(a) The Trustee may rely and shall be fully protected in acting or
refraining from acting upon any docu-
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ment believed by it to be genuine and to have been signed or presented by
the proper Person. The Trustee need not investigate any fact or matter
stated in the document.
(b) Before the Trustee acts or refrains from acting, it may consult
with counsel of its selection and may require an Officers' Certificate or
an Opinion of Counsel, which shall conform to Sections 10.04 and 10.05.
The Trustee shall not be liable for any action it takes or omits to take
in good faith in reliance on such Officers' Certificate or Opinion of
Counsel.
(c) The Trustee may act through its attorneys and agents and shall
not be responsible for the misconduct or negligence of any agent appointed
with due care.
(d) The Trustee shall not be liable for any action that it takes or
omits to take in good faith which it reasonably believes to be authorized
or within its rights or powers.
(e) The Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, notice, request, direction, consent, order, bond,
debenture, or other paper or document, but the Trustee, in its discretion,
may make such further inquiry or investigation into such facts or matters
as it may see fit, and, if the Trustee shall determine to make such
further inquiry or investigation, it shall be entitled, upon reasonable
notice to the Issuer, to examine the books, records, and premises of the
Issuer, personally or by agent or attorney and to consult with the
officers and representatives of the Issuer, including the Issuer's
accountants and attorneys.
(f) The Trustee shall be under no obligation to exercise any of its
rights or powers vested in it by this Indenture at the request, order or
direction of any of the Holders pursuant to the provisions of this
Indenture, unless such Holders have offered to the Trustee reasonable
indemnity satisfactory to the Trustee against the costs, expenses and
liabilities which may be incurred by it in compliance with such request,
order or direction.
(g) The Trustee shall not be required to give any bond or surety in
respect of the performance of its powers and duties hereunder.
(h) Delivery of reports, information and documents to the Trustee
under Section 4.05 is for informational
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purposes only and the Trustee's receipt of the foregoing shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Issuer's
compliance with any of their covenants hereunder (as to which the Trustee
is entitled to rely exclusively on Officers' Certificates).
SECTION 7.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with Holdings, the Issuer, or
any of the Subsidiaries, or their respective Affiliates with the same rights it
would have if it were not Trustee. Any Agent may do the same with like rights.
However, the Trustee must comply with Sections 7.10 and 7.11.
SECTION 7.04. Trustee's Disclaimer.
The Trustee makes no representation as to the validity or adequacy
of this Indenture or the Notes, and it shall not be accountable for the Issuer's
use of the proceeds from the Notes, and it shall not be responsible for any
statement of the Issuer in this Indenture or the Notes other than the Trustee's
certificate of authentication.
SECTION 7.05. Notice of Default.
If a Default or an Event of Default occurs and is continuing and if
it is known to a Trust Officer, the Trustee shall mail to each Holder notice of
the uncured Default or Event of Default within 90 days after obtaining knowledge
thereof. Except in the case of a Default or an Event of Default in payment of
principal of, or interest on, any Note, including an accelerated payment, a
Default in payment on the Change of Control repurchase date or on the Excess
Proceeds Payment Date pursuant to an Excess Proceeds Offer, the Trustee may
withhold the notice if and so long as its Board of Directors, the executive
committee of its Board of Directors or a committee of its directors and/or Trust
Officers in good faith determines that withholding the notice is in the interest
of the Holders. The foregoing sentence of this Section 7.05 shall be in lieu of
the proviso to ss. 315(b) of the TIA and such proviso to ss. 315(b) of the TIA
is hereby expressly excluded from this Indenture and the Notes, as permitted by
the TIA.
SECTION 7.06. Reports by Trustee to Holders.
Within 60 days after January 1 of each year beginning with 1998, the
Trustee shall, to the extent that any of the events described in TIA ss. 313(a)
occurred within the previous
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twelve months, but not otherwise, mail to each Holder a brief report dated as of
such date that complies with TIA ss. 313(a). The Trustee also shall comply with
TIA ss.ss. 313(b), (c) and (d).
A copy of each report at the time of its mailing to Holders shall be
mailed to the Issuer and filed with the Commission and each stock exchange, if
any, on which the Notes are listed.
The Issuer shall promptly notify the Trustee if the Notes become
listed on any stock exchange and the Trustee shall comply with TIA ss. 313(d).
SECTION 7.07. Compensation and Indemnity.
The Issuer shall pay to the Trustee from time to time such
compensation for its services as has been agreed to in writing signed by the
Issuer and the Trustee. The Trustee's compensation shall not be limited by any
law on compensation of a trustee of an express trust. The Issuer shall reimburse
the Trustee upon request for all reasonable out-of-pocket expenses incurred or
made by it in connection with the performance of its duties under this
Indenture. Such expenses shall include the reasonable fees and expenses of the
Trustee's agents, counsel, accountants and experts.
The Issuer shall indemnify each of the Trustee (or any predecessor
Trustee) and its agents, employees, stockholders, Affiliates and directors and
officers for, and hold them each harmless against, any and all loss, liability,
damage, claim or expense (including reasonable fees and expenses of counsel),
including taxes (other than taxes based on the income of the Trustee), incurred
by them except for such actions to the extent caused by any negligence, bad
faith or willful misconduct on their part, arising out of or in connection with
the acceptance or administration of this trust including the reasonable costs
and expenses of defending themselves against any claim or liability in
connection with the exercise or performance of any of their rights, powers or
duties hereunder. The Trustee shall notify the Issuer promptly of any claim
asserted against the Trustee for which it may seek indemnity. The Issuer shall
defend the claim and the Trustee shall cooperate and may participate in the
defense. Alternatively, the Trustee may at its option have separate counsel of
its own choosing and the Issuer shall pay the reasonable fees and expenses of
such counsel.
When the Trustee incurs expenses or renders services after an Event
of Default specified in Section 6.01(7) or (8) occurs, such expenses and the
compensation for such services
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are intended to constitute expenses of administration under any Bankruptcy Law.
The provisions of this Section 7.07 shall survive the termination of
this Indenture.
SECTION 7.08. Replacement of Trustee.
The Trustee may resign at any time by so notifying the Issuer. The
Holders of a majority in principal amount of the outstanding Notes may remove
the Trustee and appoint a successor Trustee with the Issuer's consent, by so
notifying the Issuer and the Trustee. The Issuer may remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the Trustee
or its property; or
(4) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Issuer shall notify each Holder of such
event and shall promptly appoint a successor Trustee. Within one year after the
successor Trustee takes office, the Holders of a majority in aggregate principal
amount of the outstanding Notes may appoint a successor Trustee to replace the
successor Trustee appointed by the Issuer.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Issuer. Immediately after that,
the retiring Trustee shall transfer all property held by it as Trustee to the
successor Trustee, subject to the lien provided in Section 7.07, the resignation
or removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. The Issuer shall mail notice of such successor Trustee's appointment
to each Holder.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Issuer or the
Holders of at least 10% in aggregate principal amount of the outstanding Notes
may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
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If the Trustee fails to comply with Section 7.10, any Holder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
Notwithstanding any resignation or replacement of the Trustee
pursuant to this Section 7.08, the Issuer's obligations under Section 7.07 shall
continue for the benefit of the retiring Trustee.
SECTION 7.09. Successor Trustee by Merger, Etc.
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation, the resulting, surviving or transferee corporation without any
further act shall, if such resulting, surviving or transferee corporation is
otherwise eligible hereunder, be the successor Trustee; provided, however, that
such corporation shall be otherwise qualified and eligible under this Article
Seven.
SECTION 7.10. Eligibility; Disqualification.
This Indenture shall always have a Trustee who satisfies the
requirement of TIA ss.ss. 310(a)(1), (2) and (5). The Trustee (or, in the case
of a Trustee that is a subsidiary of another Bank or a corporation included in a
bank holding company system, the related bank or bank holding company) shall
have a combined capital and surplus of at least $50 million as set forth in its
most recent published annual report of condition, and have a Corporate Trust
Office in the City of New York. In addition, if the Trustee is a subsidiary of
another Bank or a corporation included in a bank holding company system, the
Trustee, independently of such bank or bank holding company, shall meet the
capital requirements of TIA ss. 310(a)(2). The Trustee shall comply with TIA ss.
310(b); provided, however, that there shall be excluded from the operation of
TIA ss. 310(b)(1) any indenture or indentures under which other securities, or
certificates of interest or participation in other securities, of the Issuer, a
Guarantor or the Subordinated Guarantor are outstanding, if the requirements for
such exclusion set forth in TIA ss. 310(b)(1) are met. The provisions of TIA ss.
310 shall apply to the Issuer, the Guarantors and the Subordinated Guarantor, as
obligors of the Notes.
SECTION 7.11. Preferential Collection of Claims Against Issuer.
The Trustee shall comply with TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee
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who has resigned or been removed shall be subject to TIA ss. 311(a) to the
extent indicated therein.
ARTICLE EIGHT
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 8.01. Termination of Issuer's Obligations.
This Indenture will be discharged and will cease to be of further
effect (except as to surviving rights of registration of transfer or exchange of
the Notes, as expressly provided for in this Indenture) as to all outstanding
Notes when (a) either (i) all Notes, theretofore authenticated and delivered
(except lost, stolen or destroyed Notes which have been replaced or paid and
Notes for whose payment money has theretofore been deposited in trust or
segregated and held in trust by the Issuer and thereafter repaid to the Issuer
or discharged from such trust) have been delivered to the Trustee for
cancellation or (ii) all Notes not theretofore delivered to the Trustee for
cancellation have become due and payable and the Issuer has irrevocably
deposited or caused to be deposited with the Trustee funds in an amount
sufficient to pay and discharge the entire Indebtedness on the Notes not
theretofore delivered to the Trustee for cancellation, for principal of,
premium, if any, and interest on the Notes to the date of deposit together with
irrevocable instructions from the Issuer directing the Trustee to apply such
funds to the payment thereof at maturity or redemption, as the case may be; (b)
the Issuer has paid all other sums payable under this Indenture by the Issuer;
and (c) the Issuer has delivered to the Trustee an officers' certificate and an
opinion of counsel stating that all conditions precedent under this Indenture
relating to the satisfaction and discharge of this Indenture have been complied
with; provided, however, that such counsel may rely, as to matters of fact, on a
certificate or certificates of officers of the Issuer.
The Issuer may, at its option and at any time, elect to have its
obligations and the obligations of the Guarantors and the Subordinated Guarantor
discharged with respect to the Notes, the Guarantees, the Subordinated Guarantee
and this Indenture ("Legal Defeasance"). Such Legal Defeasance means that the
Issuer shall be deemed to have paid and discharged the entire indebtedness
represented by the outstanding Notes, and satisfied all of its obligations with
respect to the Notes, except for (a) the rights of Holders to receive payments
in respect of the principal of and interest on the Notes when such payments are
due, (b) the Issuer's obligations with respect to the Notes concerning issuing
temporary Notes, registration of
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Notes, mutilated, destroyed, lost or stolen Notes and the maintenance of an
office or agency for payments, (c) the rights, powers, trust, duties and
immunities of the Trustee and the Issuer's obligations in connection therewith
and (d) the Legal Defeasance provisions of this Section 8.01. In addition, the
Issuer may, at its option and at any time, elect to have the obligations of the
Issuer, Holdings and the Guarantors, if any, released with respect to covenants
contained in Sections 4.05, 4.07 through 4.17 ("Covenant Defeasance"), clauses
(iii) and (iv) of the first paragraph of Section 5.01, clause (z) of the second
paragraph of Section 5.01 and clause (iv) of the fourth paragraph of Section
5.01 and thereafter any omission to comply with such obligations shall not
constitute a Default or Event of Default with respect to the Notes. In the event
of Covenant Defeasance, those events described under Section 6.01(4), (6), (7)
(as it relates to Significant Subsidiaries), (8) (as it relates to Significant
Subsidiaries), (9), (10) and (11) will no longer constitute an Event of Default
with respect to the Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Issuer must irrevocably deposit with the Trustee, in trust,
for the benefit of the Holders money or U.S. Government Obligations, or a
combination thereof, in such amounts as will be sufficient, in the opinion
of a nationally recognized firm of independent public accountants, to pay
the principal of, premium, if any, and interest on the Notes to redemption
or maturity, as the case may be;
(b) in the case of Legal Defeasance (other than within 12 months of
June 1, 2002 or the Maturity Date), the Issuer shall have delivered to the
Trustee an opinion of counsel in the United States reasonably acceptable
to the Trustee confirming that (i) the Issuer has received from, or there
has been published by, the Internal Revenue Service a ruling or (ii) since
the date of this Indenture, there has been a change in the applicable
federal income tax law, in either case to the effect that, and based
thereon such opinion of counsel shall confirm that, the Holders will not
recognize income, gain or loss for federal income tax purposes as a result
of such Legal Defeasance and in either case and (iii) the Holders will be
subject to U.S. federal income tax on the same amounts, in the same manner
and at the same times as would have been the case if such Legal Defeasance
had not occurred;
(c) in the case of Covenant Defeasance, the Issuer shall have
delivered to the Trustee an opinion of counsel
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in the United States reasonably acceptable to the Trustee confirming that
the Holders will not recognize income, gain or loss for federal income tax
purposes as a result of such Covenant Defeasance and will be subject to
federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such Covenant Defeasance had not
occurred;
(d) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit or insofar as Events of Default
under Section 6.01(7) or (8) from bankruptcy or insolvency events are
concerned, at any time in the period ending on the 91st day after the date
of deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not result in
a breach or violation of, or constitute a default under this Indenture or
any other material agreement or instrument to which the Issuer or any of
its Subsidiaries is a party or by which the Issuer or any of its
Subsidiaries is bound;
(f) the Issuer shall have delivered to the Trustee an officers'
certificate stating that the deposit was not made by the Issuer with the
intent of preferring the Holders over any other creditors of either Issuer
or with the intent of defeating, hindering, delaying or defrauding any
other creditors of the Issuer or others;
(g) the Issuer shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for or relating to the Legal Defeasance or the Covenant
Defeasance, as the case may be, have been complied with; provided,
however, that such counsel may rely, as to matters of fact, on a
certificate or certificates of officers of the Issuer; and
(h) the Issuer shall have delivered to the Trustee an Opinion of
Counsel to the effect that after the 91st day following the deposit, the
trust funds will not be subject to the effect of any applicable
bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally.
SECTION 8.02. Application of Trust Money.
The Trustee or Paying Agent shall hold in trust U.S. Legal Tender or
U.S. Government Obligations deposited with it pursuant to Section 8.01, and
shall apply the deposited U.S. Legal Tender and the money from U.S. Government
Obligations in
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accordance with this Indenture to the payment of the principal of and interest
on the Notes. The Trustee shall be under no obligation to invest said U.S. Legal
Tender or U.S. Government Obligations.
The Issuer shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the Legal Tender or U.S.
Government Obligations deposited pursuant to Section 8.01 or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of outstanding Notes.
SECTION 8.03. Repayment to the Issuer.
Subject to Section 8.01, the Trustee and the Paying Agent shall
promptly pay to the Issuer upon request any excess U.S. Legal Tender or U.S.
Government Obligations held by them at any time and thereupon shall be relieved
from all liability with respect to such money. The Trustee and the Paying Agent
shall pay to the Issuer upon request any money held by them for the payment of
principal or interest that remains unclaimed for two years; provided, however,
that the Trustee or such Paying Agent, before being required to make any
payment, may at the expense of the Issuer cause to be published once in a
newspaper of general circulation in the City of New York or mail to each Holder
entitled to such money notice that such money remains unclaimed and that after a
date specified therein which shall be at least 30 days from the date of such
publication or mailing any unclaimed balance of such money then remaining will
be repaid to the Issuer. After payment to the Issuer, Holders entitled to such
money must look to the Issuer for payment as general creditors unless an
applicable law designates another Person.
SECTION 8.04. Reinstatement.
If the Trustee or Paying Agent is unable to apply any U.S. Legal Tender or U.S.
Government Obligations in accordance with Section 8.01 by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, the
Issuer's obligations under this Indenture and the Notes shall be revived and
reinstated as though no deposit had occurred pursuant to Section 8.01 until such
time as the Trustee or Paying Agent is permitted to apply all such U.S. Legal
Tender or U.S. Government Obligations in accordance with Section 8.01; provided,
however, that if the Issuer has made any payment of interest on or principal of
any Notes because of the reinstatement of its obligations, the Issuer shall be
subrogated to the rights of the Holders of such Notes to receive
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such payment from the U.S. Legal Tender or U.S. Government Obligations held by
the Trustee or Paying Agent.
SECTION 8.05. Acknowledgment of Discharge by Trustee.
After (i) the conditions of Section 8.01 have been satisfied, (ii)
the Issuer has paid or caused to be paid all other sums payable hereunder by the
Issuer and (iii) the Issuer has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent referred to in clause (i) above relating to the satisfaction and
discharge of this Indenture have been complied with, the Trustee upon request
shall acknowledge in writing the discharge of the Issuer's, each Guarantor's and
the Subordinated Guarantor's obligations under this Indenture except for those
surviving obligations specified in Section 8.01; provided the legal counsel
delivering such Opinion of Counsel may rely as to matters of fact on one or more
Officers' Certificates of the Issuer.
ARTICLE NINE
AMENDMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders.
The Issuer, the Guarantors, the Subordinated Guarantor and the
Trustee may amend this Indenture or the Notes without notice to or consent of
any Holder:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Article Five;
(3) to provide for uncertificated Notes in addition to or in place
of certificated Notes; provided, however, that the uncertificated Notes
are issued in registered form for purposes of Section l63(f) of the Code
or in a manner such that the uncertificated Notes are described in Section
163(f)(2)(B) of the Code;
(4) to add guarantees with respect to the Notes or to secure the
Notes or to provide for the release of the Subordinated Guarantee as
described in the definition of Guarantor;
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(5) to add to the covenants of the Issuer, the Guarantors or the
Subordinated Guarantor for the benefit of the Holders or to surrender any
right or power herein conferred upon the Issuer, the Guarantors or the
Subordinated Guarantor;
(6) to comply with any requirements of the SEC in connection with
qualifying, or maintaining the qualification of, this Indenture under the
TIA; or
(7) to make any change that does not adversely affect the rights of
any Holder.
After an amendment under this Section becomes effective, the Issuer
shall mail to Noteholders a notice briefly describing such amendment. The
failure to give such notice to all Noteholders, or any defect therein, shall not
impair or affect the validity of an amendment under this Section.
SECTION 9.02. With Consent of Holders.
The Issuer and the Trustee may amend this Indenture or the Notes
without notice to any Holder but with the written consent of the Holders of at
least a majority in principal amount of the Notes (including consents obtained
in connection with a tender offer or exchange for the Notes) and any past
default or compliance with any provisions may be waived with the consent of the
Holders of a majority in principal amount of the Notes then outstanding.
However, without the consent of each Holder affected thereby, an amendment may
not:
(1) reduce the amount of Notes whose Holders must consent to an
amendment;
(2) reduce the rate of or extend the time for payment of interest on
any Note;
(3) reduce the principal of or extend the Stated Maturity of any
Note;
(4) reduce the premium payable upon the redemption of any Note or
change the time at which any Note may be redeemed in accordance with
Article Three;
(5) make any Note payable in money other than that stated in the
Note;
(6) make any change in Section 6.04 or 6.07 or the second sentence
of this Section; or
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(7) release any Guarantor or the Subordinated Guarantor from any of its
obligations under its Guarantee or the Subordinated Guarantee, as the case
may be, or this Indenture otherwise than in accordance with the terms of
this Indenture.
It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed amendment, but it shall
be sufficient if such consent approves the substance thereof.
An amendment under Section 9.01 or this Section 9.02 may not make
any change that adversely affects the rights of any holder of Subordinated
Guarantor Senior Indebtedness then outstanding in Article 5, Section 11.02,
Section 11.05, the definition of Guarantor in Section 1.01, any other provision
of this Indenture which requires the consent of the holders of such Subordinated
Guarantor Senior Indebtedness and any defined term to the extent used in any of
the foregoing provisions unless the holders of such Subordinated Guarantor
Senior Indebtedness (or any group or representative thereof authorized to give a
consent) consent to such change.
After an amendment under this Section 9.02 becomes effective, the
Issuer shall mail to Holders a notice briefly describing such amendment. The
failure to give such notice to all Holders, or any defect therein, shall not
impair or affect the validity of an amendment under this Section.
SECTION 9.03. Compliance with Trust Indenture Act.
Every amendment to this Indenture or the Notes shall comply with the
TIA as then in effect.
SECTION 9.04. Revocation and Effect of Consents and Waivers.
A consent to an amendment or a waiver by a Holder of a Note shall
bind the Holder and every subsequent Holder of that Note or portion of the Note
that evidences the same debt as the consenting Holder's Note, even if notation
of the consent or waiver is not made on the Note. However, any such Holder or
subsequent Holder may revoke the consent or waiver as to such Holder's Note or
portion of the Note if the Trustee receives the notice of revocation before the
date the amendment or waiver becomes effective. After an amendment or waiver
becomes effective, it shall bind every Holder. An amendment or waiver becomes
effective upon the execution of such amendment or waiver by the Trustee.
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The Issuer may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to give their consent or take
any other action described above or required or permitted to be taken pursuant
to this Indenture. If a record date is fixed, then notwithstanding the
immediately preceding paragraph, those Persons who were Holders at such record
date (or their duly designated proxies), and only those Persons, shall be
entitled to give such consent or to revoke any consent previously given or to
take any such action, whether or not such Persons continue to be Holders after
such record date. No such consent shall be valid or effective for more than 180
days after such record date.
SECTION 9.05. Notation on or Exchange of Notes.
If an amendment changes the terms of a Note, the Trustee may require
the Holder of the Note to deliver it to the Trustee. The Trustee may place an
appropriate notation on the Note regarding the changed terms and return it to
the Holder. Alternatively, if the Issuer or the Trustee so determines, the
Issuer in exchange for the Note shall issue and the Trustee shall authenticate a
new Note that reflects the changed terms. Failure to make the appropriate
notation or to issue a new Issuer shall not affect the validity of such
amendment.
SECTION 9.06. Trustee To Sign Amendments.
The Trustee shall sign any amendment authorized pursuant to this
Article Nine if the amendment does not adversely affect the rights, duties,
liabilities or immunities of the Trustee. If it does, the Trustee may but need
not sign it. In signing such amendment the Trustee shall be entitled to receive
indemnity reasonably satisfactory to it and to receive, and (subject to Section
7.01) shall be fully protected in relying upon, an Officers' Certificate and an
Opinion of Counsel stating that such amendment is authorized or permitted by
this Indenture.
ARTICLE TEN
MISCELLANEOUS
SECTION 10.01. TIA Controls.
If any provision of this Indenture limits, qualifies, or conflicts
with another provision which is required to be included in this Indenture by the
TIA, the required provision shall control; provided, however, that this Section
10.01 shall not of itself require that this Indenture or the Trustee be
qualified under the TIA or constitute any admission or acknowledgment by any
party hereto that any such qualification is required prior to the time this
Indenture and the Trustee are required by the TIA to be so qualified.
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SECTION 10.02. Notices.
Any notices or other communications required or permitted hereunder
shall be in writing, and shall be sufficiently given if made by hand delivery,
by telex, by telecopier or registered or certified mail, postage prepaid, return
receipt requested, addressed as follows:
if to the Issuer or any Guarantor
or the Subordinated Guarantor:
Williams Scotsman, Inc.
8211 Town Center Drive
Baltimore, Maryland 21236
Telecopier Number: (410) 931-6000
Attention: President and Chief Executive Officer
if to the Trustee:
The Bank of New York
101 Barclay Street, 21 West
New York, NY 10286
Telecopier Number: (212) 815-5915
Attention: Corporate Finance Group
The Issuer, the Guarantors and the Subordinated Guarantor and the
Trustee by written notice to the other may designate additional or different
addresses for notices to such Person. Any notice or communication to the Issuer,
the Guarantors and the Subordinated Guarantor or the Trustee shall be deemed to
have been given or made as of the date so delivered if hand delivered; when
answered back, if telexed; when receipt is acknowledged, if faxed; and five (5)
calendar days after mailing if sent by registered or certified mail, postage
prepaid (except that a notice of change of address shall not be deemed to have
been given until actually received by the addressee).
Any notice or communication mailed to a Holder shall be mailed to
him by first class mail or other equivalent means at his address as it appears
on the registration books of the Registrar ten (10) days prior to such mailing
and shall be sufficiently given to him if so mailed within the time prescribed.
Failure to mail a notice or communication to a Holder or any defect
in it shall not affect its sufficiency with respect to other Holders. If a
notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it.
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SECTION 10.03. Communications by Holders with Other Holders.
Holders may communicate pursuant to TIA ss. 312(b) with other
Holders with respect to their rights under this Indenture or the Notes. The
Issuer, the Guarantors, the Subordinated Guarantor, the Trustee, the Registrar
and any other Person shall have the protection of TIA ss. 312(c).
SECTION 10.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Issuer, the Subordinated
Guarantor or the Guarantors to the Trustee to take any action under this
Indenture, the Issuer shall furnish to the Trustee:
(1) an Officers' Certificate, in form and substance reasonably
satisfactory to the Trustee, stating that, in the opinion of the signers,
all conditions precedent to be performed by the Issuer, if any, provided
for in this Indenture relating to the proposed action have been complied
with; and
(2) an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent to be performed by the Issuer, if
any, provided for in this Indenture relating to the proposed action have
been complied with (which counsel, as to factual matters, may rely on an
Officers' Certificate).
SECTION 10.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture, other than the Officers'
Certificate required by Section 4.04, shall include:
(1) a statement that the Person making such certificate or opinion
has read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such Person, he has made
such examination or investigation as is reasonably necessary to enable him
to express an informed
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opinion as to whether or not such covenant or condition has been complied
with; and
(4) a statement as to whether or not, in the opinion of each such
Person, such condition or covenant has been complied with.
SECTION 10.06. Rules by Trustee, Paying Agent, Registrar.
The Trustee may make reasonable rules in accordance with the
Trustee's customary practices for action by or at a meeting of Holders. The
Paying Agent or Registrar may make reasonable rules for its functions.
SECTION 10.07. Legal Holidays.
If any payment date is not a Business Day, payment may be made at
such place on the next succeeding day that is a Business Day, and no interest
shall accrue for the intervening period.
SECTION 10.08. Governing Law.
THIS INDENTURE, THE NOTES, THE GUARANTEES AND THE SUBORDINATED
GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE
OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS. Each of the
parties hereto agrees to submit to the jurisdiction of the courts of the State
of New York in any action or proceeding arising out of or relating to this
Indenture, the Notes, the Guarantees or the Subordinated Guarantee.
SECTION 10.09. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan
or debt agreement of the Issuer or any of its Subsidiaries. Any such indenture,
loan or debt agreement may not be used to interpret this Indenture.
SECTION 10.10. No Personal Liability.
No director, officer, employee or stockholder, as such, of the
Issuer, the Subordinated Guarantor or any Guarantor, as such, shall have any
liability for any obligations of the Issuer, the Subordinated Guarantor or any
Guarantor under the Notes, this Indenture, the Guarantees, the Subordinated
Guarantee or the Registration Rights Agreements or for any claim based on, in
respect of, or by reason of, such obliga-
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tions or their creation. Each Holder of Notes by accepting a Note waives and
releases all such liability. The waiver and release are part of the
consideration for the issuance of the Notes.
SECTION 10.11. Successors.
All agreements of the Issuer in this Indenture and the Notes shall
bind its successors. All agreements of the Trustee in this Indenture shall bind
its successors.
SECTION 10.12. Duplicate Originals.
All parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together shall represent the
same agreement.
SECTION 10.13. Severability.
In case any one or more of the provisions in this Indenture or in
the Notes or the Guarantees shall be held invalid, illegal or unenforceable, in
any respect for any reason, the validity, legality and enforceability of any
such provision in every other respect and of the remaining provisions shall not
in any way be affected or impaired thereby, it being intended that all of the
provisions hereof shall be enforceable to the full extent permitted by law.
SECTION 10.14. Independence of Covenants.
All covenants and agreements in this Indenture, the Notes, the
Subordinated Guarantee and the Guarantees shall be given independent effect so
that if any particular action or condition is not permitted by any of such
covenants, the fact that it would be permitted by an exception to, or otherwise
be within the limitations of, another covenant shall not avoid the occurrence of
a Default or an Event of Default if such action is taken or condition exists.
SECTION 10.15. Agent for Service; Submission to Jurisdiction; Waiver
of Immunities.
By the execution and delivery of this Indenture, the Issuer, the
Subordinated Guarantor and each Guarantor (i) acknowledges that it has, by
separate written instrument, designated and appointed CT Corporation System (the
"Agent") (and any successor entity) as its authorized agent upon which process
may be served in any suit or proceeding arising out of or relating to this
Indenture or any Note, the Subordinated Guarantee or any Guarantee that may be
instituted in any federal or
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state court in the Borough of Manhattan, The City of New York, State of New York
or any Note or Guarantee and acknowledges that the Agent has accepted such
designation, (ii) submits to the jurisdiction of any such court in any such suit
or proceeding and (iii) agrees that service of process upon the Agent and
written notice of said service to the Issuer and the Guarantors in accordance
with this Section 10.15 shall be deemed in every respect effective service of
process upon the Issuer and the Guarantors in any such suit or proceeding. The
Issuer and the Guarantors further agree to take any and all action, including
the execution and filing of any and all such documents and instruments, as may
be necessary to continue such designation and appointment of the Agent in full
force and effect so long as any of the Notes shall be outstanding; provided,
however, that the Issuer and the Guarantors may (and, to the extent the Agent
ceases to be able to be served on the basis contemplated herein, shall), by
written notice to the Trustee and the holders of the Notes in accordance with
this Section 10.15 designate such additional or alternative agent for service of
process under this Section 10.15 that (i) maintains an office located in the
Borough of Manhattan, The City of New York, State of New York and (ii) is a
corporate service company which acts as agent for service of process for other
persons in the ordinary course of its business. Such written notice shall
identify the name of such agent for service of process and the address of the
office of such agent for service of process in the Borough of Manhattan, The
City of New York, State of New York.
To the extent that the Issuer or any Guarantor has or hereafter may
acquire any immunity from jurisdiction of any court or from any legal process
(whether through service of notice, attachment prior to judgment, attachment in
aid of execution, execution or otherwise) with respect to itself or its
property, it hereby irrevocably waives such immunity in respect of its
obligations under the above-referenced documents to the fullest extent permitted
by law.
ARTICLE ELEVEN
GUARANTEE OF NOTES
SECTION 11.01. Unconditional Guarantee.
Subject to the provisions of this Article Eleven, each Guarantor
hereby, jointly and severally, unconditionally and irrevocably guarantees, on a
senior basis (such guarantee to be referred to herein as a "Guarantee") to each
Holder of a Note authenticated and delivered by the Trustee and to the Trustee
and its successors and assigns, irrespective of the va-
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lidity and enforceability of this Indenture, the Notes or the obligations of the
Issuer or any other Guarantor to the Holders or the Trustee hereunder or
thereunder, that: (a) the principal of, premium, if any, and interest on the
Notes (and any Additional Interest payable thereon) shall be duly and punctually
paid in full when due, whether at maturity, upon redemption, upon repurchase at
the option of Holders pursuant to the provisions of the Notes relating thereto,
by acceleration or otherwise, and interest on the overdue principal and (to the
extent permitted by law) interest, if any, on the Notes and all other
obligations of the Issuer or the Guarantor to the Holders or the Trustee
hereunder or thereunder (including amounts due the Trustee under Section 7.07
hereof) and all other obligations shall be promptly paid in full or performed,
all in accordance with the terms hereof and thereof; and (b) in case of any
extension of time of payment or renewal of any Notes or any of such other
obligations, the same shall be promptly paid in full when due or performed in
accordance with the terms of the extension or renewal, whether at maturity, by
acceleration or otherwise. Failing payment when due of any amount so guaranteed,
or failing performance of any other obligation of the Issuer to the Holders
under this Indenture or under the Notes, for whatever reason, each Guarantor
shall be obligated to pay, or to perform or cause the performance of, the same
immediately. An Event of Default under this Indenture or the Notes shall
constitute an event of default under this Guarantee, and shall entitle the
Holders of Notes to accelerate the obligations of the Guarantor hereunder in the
same manner and to the same extent as the obligations of the Issuer.
Each of the Guarantors hereby agrees that its obligations hereunder
shall be unconditional, irrespective of the validity, regularity or
enforceability of the Notes or this Indenture, the absence of any action to
enforce the same, any waiver or consent by any Holder of the Notes with respect
to any provisions hereof or thereof, any release of any other Guarantor, the
recovery of any judgment against the Issuer, any action to enforce the same,
whether or not a Guarantee is affixed to any particular Note, or any other
circumstance which might otherwise constitute a legal or equitable discharge or
defense of a Guarantor. To the fullest extent permitted by law, each of the
Guarantors hereby waives the benefit of diligence, presentment, demand of
payment, filing of claims with a court in the event of insolvency or bankruptcy
of the Issuer, any right to require a proceeding first against the Issuer,
protest, notice and all demands whatsoever and covenants that its Guarantee
shall not be discharged except by complete performance of the obligations
contained in the Notes, this Indenture and this Guarantee. The Guarantee is a
guarantee of payment and not of collection. If any Holder or the Trustee is
required by any court or otherwise to return to the Issuer or
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to any Guarantor, or any custodian, trustee, liquidator or other similar
official acting in relation to the Issuer or such Guarantor, any amount paid by
the Issuer or such Guarantor to the Trustee or such Holder, the Guarantee, to
the extent theretofore discharged, shall be reinstated in full force and effect.
Each Guarantor further agrees that, as between it, on the one hand, and the
Holders of Notes and the Trustee, on the other hand, (a) subject to this Article
Eleven, the maturity of the obligations guaranteed hereby may be accelerated as
provided in Article Six hereof for the purposes of the Guarantee,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the obligations guaranteed hereby, and (b) in the
event of any acceleration of such obligations as provided in Article Six hereof,
such obligations (whether or not due and payable) shall forthwith become due and
payable by the Guarantors for the purpose of this Guarantee.
Each Guarantor that makes a payment or distribution under its
Guarantee shall be entitled to a contribution from each other Guarantor in an
amount pro rata based on the net assets of each Guarantor determined in
accordance with GAAP.
SECTION 11.02. Unconditional Guarantee of the Subordinated
Guarantor; Waiver of Substantive Consolidation by
Noteholders; etc.
Subject to the provisions of this Article Eleven, this Subordinated
Guarantor hereby unconditionally and irrevocably guarantees, on a subordinated
basis (such guarantee to be referred to herein as a "Subordinated Guarantee") to
each Holder of a Note authenticated and delivered by the Trustee and to the
Trustee and its successors and assigns, irrespective of the validity and
enforceability of this Indenture, the Notes or the obligations of the Issuer or
any Guarantor to the Holders or the Trustee hereunder or thereunder, that: (a)
the principal of, premium, if any, and interest on the Notes (and any Additional
Interest payable thereon) shall be duly and punctually paid in full when due,
whether at maturity, upon redemption, upon repurchase at the option of Holders
pursuant to the provisions of the Notes relating thereto, by acceleration or
otherwise, and interest on the overdue principal and (to the extent permitted by
law) interest, if any, on the Notes and all other obligations of the Issuer or
the Subordinated Guarantor to the Holders or the Trustee hereunder or thereunder
(including amounts due the Trustee under Section 7.07 hereof) and all other
obligations shall be promptly paid in full or performed, all in accordance with
the terms hereof and thereof; and (b) in case of any extension of time of
payment or renewal of any Notes or any of such other obligations, the same shall
be promptly paid in full when due or performed in accordance with the terms of
the
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extension or renewal, whether at maturity, by acceleration or otherwise. Failing
payment when due of any amount so guaranteed, or failing performance of any
other obligation of the Issuer to the Holders under this Indenture or under the
Notes, for whatever reason, the Subordinated Guarantor shall be obligated to
pay, or to perform or cause the performance of, the same immediately. An Event
of Default under this Indenture or the Notes shall constitute an event of
default under this Subordinated Guarantee, and, subject to this Article Eleven
shall entitle the Holders of Notes to accelerate the obligations of the
Subordinated Guarantor hereunder in the same manner and to the same extent as
the obligations of the Issuer.
The Subordinated Guarantor hereby agrees that its obligations
hereunder shall be unconditional, irrespective of the validity, regularity or
enforceability of the Notes or this Indenture, the absence of any action to
enforce the same, any waiver or consent by any Holder of the Notes with respect
to any provisions hereof or thereof, any release of any Guarantor, the recovery
of any judgment against the Issuer, any action to enforce the same, whether or
not a Subordinated Guarantee is affixed to any particular Note, or any other
circumstance which might otherwise constitute a legal or equitable discharge or
defense of the Subordinated Guarantor. To the fullest extent permitted by law,
the Subordinated Guarantor hereby waives the benefit of diligence, presentment,
demand of payment, filing of claims with a court in the event of insolvency or
bankruptcy of the Issuer, any right to require a proceeding first against the
Issuer, protest, notice and all demands whatsoever and covenants that its
Subordinated Guarantee shall not be discharged except by complete performance of
the obligations contained in the Notes, this Indenture and this Subordinated
Guarantee. The Subordinated Guarantee is a guarantee of payment and not of
collection. If any Holder or the Trustee is required by any court or otherwise
to return to the Issuer or to the Subordinated Guarantor, or any custodian,
trustee, liquidator or other similar official acting in relation to the Issuer
or the Subordinated Guarantor, any amount paid by the Issuer or the Subordinated
Guarantor to the Trustee or such Holder, the Subordinated Guarantee, to the
extent theretofore discharged, shall be reinstated in full force and effect. The
Subordinated Guarantor further agrees that, as between it, on the one hand, and
the Holders of Notes and the Trustee, on the other hand, (a) subject to this
Article Eleven, the maturity of the obligations guaranteed hereby may be
accelerated as provided in Article Six hereof for the purposes of the
Subordinated Guarantee, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the obligations
guaranteed hereby, and (b) in the event of any acceleration of such obligations
as provided in Article Six hereof, such obligations (whether or not due and
payable) shall
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forthwith become due and payable by the Subordinated Guarantor for the purpose
of this Subordinated Guarantee.
The payment by the Subordinated Guarantor of all Obligations on the
Subordinated Guarantee is subordinated, to the extent and in the manner provided
in this Article Eleven, in right of payment to the prior payment in full, in
cash or cash equivalents, of all Obligations on Subordinated Guarantor Senior
Indebtedness, which subordination is for the benefit of and enforceable by the
holders of such Subordinated Guarantor Senior Indebtedness.
Upon any payment or distribution of assets of the Subordinated
Guarantor to creditors upon any liquidation, dissolution, winding up,
reorganization, assignment for the benefit of creditors or marshaling of assets
of the Subordinated Guarantor, or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Subordinated Guarantor or its
property, whether voluntary or involuntary, all Obligations with respect to all
Subordinated Guarantor Senior Indebtedness shall first be paid in full, in cash
or cash equivalents, before any payment or distribution of any kind or
character, whether in cash, property, or securities, is made on account of any
Obligations on the Subordinated Guarantee or for the acquisition of all or any
part of the Subordinated Guarantee for cash or property or otherwise; and until
all such Obligations with respect to all Subordinated Guarantor Senior
Indebtedness are paid in full, in cash or cash equivalents, any distribution to
which the holders of the Subordinated Guarantee would be entitled but for the
subordination provisions will be made to the holders of Subordinated Guarantor
Senior Indebtedness as their interests may appear.
If (i) any default occurs and is continuing in the payment when due,
whether at maturity, upon any redemption, by declaration or otherwise, of any
principal of, interest on, or other amounts due and owing on, any Subordinated
Guarantor Senior Indebtedness or (ii) any default occurs and is continuing with
respect to any Subordinated Guarantor Senior Indebtedness resulting in the
acceleration of the maturity of all or any portion of such Subordinated
Guarantor Senior Indebtedness, no payment shall be made by or on behalf of the
Subordinated Guarantor or any of its Subsidiaries or any other person on its or
their behalf with respect to any obligations on the Subordinated Guarantee or to
acquire all or any part of the obligations covered by the Subordinated Guarantee
for cash or property or otherwise; provided, however, that, except to the extent
provided in the next succeeding paragraph, the forgoing provisions shall not
restrict the Issuer from making payments of principal or interest on or with
respect to the Notes (including, without limitation, by redemption, repurchase
or other
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acquisition). In addition, if any other event of default occurs and is
continuing (or if such an event of default would occur upon any payment with
respect to the Subordinated Guarantee) with respect to the Subordinated
Guarantor Senior Indebtedness, as such event of default is defined in the
instrument creating or evidencing or guaranteeing such Subordinated Guarantor
Senior Indebtedness permitting the holders of such Subordinated Guarantor Senior
Indebtedness then outstanding, or their Representative, to accelerate the
maturity thereof (or the obligations guaranteed thereby) and if the respective
Representative for the respective Subordinated Guarantor Senior Indebtedness
gives written notice of the event of default to the Trustee (a "Default
Notice"), then, unless and until the date, if any, on which all Subordinated
Guarantor Senior Indebtedness to which such event of default relates is paid in
full in cash or cash equivalents or the Representative for the respective
Subordinated Guarantor Senior Indebtedness gives notice that all events of
default have been cured or waived or have ceased to exist or the Trustee
receives written notice from the Representative for the respective Subordinated
Guarantor Senior Indebtedness terminating the Blockage Period (as defined
below), during the 179 days after the delivery of such Default Notice (the
"Blockage Period"), none of the Subordinated Guarantor or any of its
Subsidiaries or any other person on its or their behalf shall (x) make any
payment with respect to any obligations evidenced by the Subordinated Guarantee
or (y) acquire all or any part of the obligations covered by the Subordinated
Guarantee for cash or property or otherwise. Notwithstanding anything herein to
the contrary, in no event will a Blockage Period extend beyond 179 days from the
date of the commencement thereof. Only one such Blockage Period may be commenced
within any 360 consecutive days. No event of default which existed or was
continuing (it being acknowledged that (x) any action of the Issuer, the
Subordinated Guarantor or any of their respective Subsidiaries occurring
subsequent to delivery of a Default Notice that would give rise to any event of
default pursuant to any provision under which an event of default previously
existed (or was continuing at the time of delivery of such Default Notice) and
(y) any breach of a financial covenant for a period ended after the date of the
commencement of a Blockage Period, in each case shall constitute a new event of
default for this purpose) on the date of the commencement of any Blockage Period
with respect to the Subordinated Guarantor Senior Indebtedness shall be, or be
made, the basis for the commencement of a second Blockage Period by the
Representative of the Subordinated Guarantor Senior Indebtedness whether or not
within a period of 360 consecutive days, unless such event of default shall have
been cured or waived for a period of not less than 90 consecutive days.
The Noteholders acknowledge and agree, on behalf of themselves and
all their successors and assigns as Noteholders,
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that the claims of the Noteholders against the Subordinated Guarantor, and
against the assets from time to time held by the Subordinated Guarantor
(including, without limitation, all units, leases and proceeds therefrom at any
time transferred or purported to be transferred to the Subordinated Guarantor),
are limited to the claims expressly provided pursuant to the Subordinated
Guarantee. The Noteholders further agree, on behalf of themselves and all their
successors and assigns as Noteholders, that in no event (whether pursuant to a
proceeding under the Bankruptcy Law or otherwise) shall they (or any
representative on their behalf including the Trustee) assert that the assets of
the Subordinated Guarantor should be substantively consolidated or otherwise
combined with the assets of the Issuer, Holdings or any of their other
Subsidiaries, or otherwise returned (whether under claims of fraudulent
conveyance or otherwise) to any such person. Furthermore, in the event that
pursuant to any proceeding pursuant to the Bankruptcy Law or otherwise the
assets (or any of the assets) of the Subordinated Guarantor are substantively
consolidated or otherwise combined in a similar fashion with the assets of the
Issuer, Holdings or any other of their Subsidiaries or otherwise returned to any
such person, then, as between the Noteholders (and their successors and assigns)
and the lenders pursuant to the Credit Agreement (and pursuant to any Hedging
Obligations from time to time entered into); the Noteholders agree that all
distributions received by them (and their successors and assigns) to the extent
attributable to the assets, or representing any proceeds from any disposition of
assets, which were held by the Subordinated Guarantor prior to any such
consolidation, combination or return of assets shall be treated by the
Noteholders as if received pursuant to the Subordinated Guarantee and shall be
fully subject to the subordination provisions contained in this Section 11.02.
If a distribution is made to Noteholders that because of this
Section 11.02 should not have been made to them, the Noteholders who receive the
distribution shall hold it in trust for holders of Subordinated Guarantor Senior
Indebtedness and pay it over to them as their interests may appear.
This Section 11.02 defines the relative rights of the Noteholders
and the holders of Subordinated Guarantor Senior Indebtedness. Nothing in this
Section 11.02 shall:
(1) impair, as between the Issuer and the Noteholders, the
obligation of the Issuer, which is absolute and unconditional, to pay principal
of and interest on the Notes in accordance with their terms; or
(2) prevent the Trustee or any Noteholder from exercising its
available remedies upon a Default, subject to the rights of holders of
Subordinated Guarantor Senior Indebtedness
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to receive distributions otherwise payable to Noteholders as and to the extent
provided in this Section 11.02.
No right of any present or future holders of any Subordinated
Guarantor Senior Indebtedness to enforce the subordination provisions contained
in this Section 11.02 shall at any time in any way be prejudiced or impaired by
any act or failure to act on the part of the Issuer, the Subordinated Guarantor,
any other Subsidiary of the Issuer or by any act or failure to act in good faith
by any such holder, or by any noncompliance by the Issuer, the Subordinated
Guarantor or any other Subsidiary of the Issuer with the terms of this
Indenture, regardless of any knowledge thereof which any such holder may have or
be otherwise charged with.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Subordinated Guarantor Senior Indebtedness may, at any
time and from time to time, without the consent of or notice to the holders of
any Indebtedness of the Issuer, the Subordinated Guarantor or any other
Subsidiary of the Issuer, without incurring responsibility to the holders of any
Indebtedness of the Issuer, the Subordinated Guarantor or any other Subsidiary
of the Issuer, and without impairing or releasing the subordination provisions
contained in this Section 11.02, or the obligations hereunder of the holders of
the Indebtedness of the Issuer, the Subordinated Guarantor or any other
Subsidiary of the Issuer, do any one or more of the following: (i) change the
manner, place or terms of payment or extend the time of payment of, or renew or
alter, the Subordinated Guarantor Senior Indebtedness or any instrument
evidencing the same or any agreement under which Subordinated Guarantor Senior
Indebtedness is outstanding; (ii) sell, exchange, release or otherwise deal with
any property pledged, mortgaged or otherwise securing Subordinated Guarantor
Senior Indebtedness or fail to perfect or delay the perfection of any such lien;
(iii) release any person liable in any manner for the collection of Subordinated
Guarantor Senior Indebtedness; and (iv) exercise or refrain from exercising any
rights against the Issuer, the Subordinated Guarantor or any other Subsidiary of
the Issuer or any other Person.
Each Holder of the Securities by such Holder's acceptance thereof
authorizes and expressly directs the Trustee on such Holder's behalf to take
such action as may be necessary or appropriate to effectuate the subordination
provisions contained in this Section 11.02 and to protect the rights of the
Holders pursuant to this Indenture, and appoints the Trustee such Holder's
attorney-in-fact for such purpose, including, in the event of any dissolution,
winding up, liquidation or reorganization of the Subordinated Guarantor (whether
in bankruptcy, insolvency or receivership proceedings or upon an assignment
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for the benefit of creditors or any other marshaling of assets and liabilities
of the Subordinated Guarantor) tending towards liquidation of the business and
assets of the Subordinated Guarantor, the immediate filing of a claim for the
unpaid balance of his securities in the form required in said proceeding and
cause said claim to be approved. If the Trustee does not file a proper claim or
proof of debt in the form required in such proceeding prior to 30 days before
the expiration of the time to file such claim or claims, then the holders of the
Subordinated Guarantor Senior Indebtedness or their Representative are or is
hereby authorized to have the right to file and are or is hereby authorized to
file an appropriate claim for and on behalf of the Holders of said Securities.
Nothing herein contained shall be deemed to authorize the Trustee or the holders
of Subordinated Guarantor Senior Indebtedness or their Representative to
authorize or consent to or accept or adopt on behalf of any Holder any plan or
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder thereof, or to authorize the Trustee or the holders of
Subordinated Guarantor Senior Indebtedness or their Representative to vote in
respect of the claim of any Holder in any such proceeding.
The failure to make a payment on or in respect of the Notes by
reason of any provision in this Section 11.02 shall not be construed as
preventing the occurrence of a Default. Nothing in this Section 11.02 shall have
any effect on the right of the Noteholders or the Trustee to accelerate the
maturity of the Notes.
Notwithstanding anything contained in this Section 11.02 to the
contrary, payments from money or the proceeds of U.S. Government Obligations
held in trust under Article Eight by the Trustee for the payment of principal of
and interest on the Notes shall not be, so long as such monies (x) were not
directly deposited by the Subordinated Guarantor or (y) to the extent directly
deposited by the Subordinated Guarantor, the payment thereof at the time of
deposit did not violate the provisions of this Section 11.02, subordinated to
the prior payment of any Subordinated Guarantor Senior Indebtedness or subject
to the restrictions set forth in this Section 11.02, and none of the Noteholders
shall be obligated to pay over any such amount to the Issuer or any holder of
Subordinated Guarantor Senior Indebtedness or any other creditor of the Issuer.
SECTION 11.03. Limitations on Guarantees.
The obligations of each Guarantor under its Guarantee and the
Subordinated Guarantor under the Subordinated Guarantee are limited to the
maximum amount which, after giving effect to all other contingent and fixed
liabilities of such Guarantor (including, without limitation, its guarantee of
all obligations
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pursuant to the Credit Agreement) and the Subordinated Guarantor (including,
without limitation, all Subordinated Guarantor Senior Indebtedness) and after
giving effect to any collections from or payments made by or on behalf of any
other Guarantor or the Subordinated Guarantor, as the case may be, in respect of
the obligations of such other Guarantor under its Guarantee or the Subordinated
Guarantor under the Subordinated Guarantee, as the case may be, or pursuant to
its contribution obligations under this Indenture, will result in the
obligations of such Guarantor under the Guarantee and the Subordinated Guarantor
under the Subordinated Guarantee not constituting a fraudulent conveyance or
fraudulent transfer under any laws of the United States, any state of the United
States or the District of Columbia.
SECTION 11.04. Execution and Delivery of Guarantee.
To further evidence the Guarantee set forth in Section 11.01 and the
Subordinated Guarantee set forth in Section 11.02, each Guarantor and the
Subordinated Guarantor hereby agrees that a notation of such Guarantee and
Subordinated Guarantee, respectively, substantially in the form of Exhibit E
herein and Exhibit F herein, as the case may be, shall be endorsed on each Note
authenticated and delivered by the Trustee. Such Guarantee and Subordinated
Guarantee shall be executed on behalf of each Guarantor and the Subordinated
Guarantor by either manual or facsimile signature of two Officers of each
Guarantor and the Subordinated Guarantor, each of whom, in each case, shall have
been duly authorized to so execute by all requisite corporate or other action.
The validity and enforceability of any Guarantee and Subordinated Guarantee
shall not be affected by the fact that it is not affixed to any particular Note.
Each of the Guarantors and the Subordinated Guarantor hereby agrees
that its Guarantee or Subordinated Guarantee, as the case may be, set forth in
Section 11.01 or 11.02, as the case may be, shall remain in full force and
effect notwithstanding any failure to endorse on each Note a notation of such
Guarantee or Subordinated Guarantee, as the case may be.
If an Officer of a Guarantor or the Subordinated Guarantor whose
signature is on this Indenture or a Guarantee or the Subordinated Guarantee, as
the case may be, no longer holds that office at the time the Trustee
authenticates the Note on which such Guarantee or Subordinated Guarantee is
endorsed or at any time thereafter, such Guarantor's or Subordinated Guarantor's
Guarantee or Subordinated Guarantee of such Note shall be valid nevertheless.
The delivery of any Note by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of any Guarantee and the
Subordinated Guarantee set forth in
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this Indenture on behalf of each Guarantor and the Subordinated Guarantor.
SECTION 11.05. Release of a Guarantor or the Subordinated Guarantor
(a) If no Default exists or would exist under this Indenture, upon
the sale or disposition of all of the Capital Stock of a Guarantor or the
Subordinated Guarantor by the Issuer in a transaction constituting an Asset
Disposition the Net Cash Proceeds of which are applied in accordance with
Section 4.12 (or if the Issuer delivers to the Trustee an Officers' Certificate
to the effect that the Net Available Cash from such Asset Disposition shall be
applied in accordance with Section 4.12), or upon the consolidation or merger of
a Guarantor or the Subordinated Guarantor with or into any Person in compliance
with Article Five (in each case, other than to the Issuer or an Affiliate of the
Issuer), or if any Guarantor or the Subordinated Guarantor is dissolved or
liquidated in accordance with this Indenture (in each case described above to
the extent involving the Subordinated Guarantor, only so long as the consent of
the holders of all Subordinated Guarantor Senior Indebtedness then outstanding
has been obtained), such Guarantor's Guarantee or the Subordinated Guarantor's
Subordinated Guarantee, as the case may be, shall be released, and such
Guarantor and each Subsidiary of such Guarantor that is also a Guarantor and the
Subordinated Guarantor shall be deemed released from all obligations under this
Article Eleven without any further action required on the part of the Trustee or
any Holder. Any Guarantor or the Subordinated Guarantor not so released or the
entity surviving such Guarantor or the Subordinated Guarantor, as applicable,
shall remain or be liable under its Guarantee or Subordinated Guarantee as
provided in this Article Eleven.
(b) The Trustee shall deliver an appropriate instrument evidencing
the release of a Guarantor or the Subordinated Guarantor upon receipt of a
request by the Issuer or such Guarantor or the Subordinated Guarantor
accompanied by an Officers' Certificate and an Opinion of Counsel certifying as
to the compliance with this Section 11.05, provided the legal counsel delivering
such Opinion of Counsel may rely conclusively as to matters of fact on one or
more Officers Certificates of the Issuer.
The Trustee shall execute any documents reasonably requested by the
Issuer or a Guarantor or the Subordinated Guarantor in order to evidence the
release of such Guarantor or the Subordinated Guarantor from its obligations
under its Guarantee or the Subordinated Guarantee endorsed on the Notes and
under this Article Eleven.
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Except as set forth in Articles Four and Five (including, without
limitation, the provisos to the second and fifth paragraphs of Section 5.01) and
this Section 11.05, nothing contained in this Indenture or in any of the Notes
shall prevent any consolidation or merger of a Guarantor or the Subordinated
Guarantor with or into the Issuer, another Guarantor or the Subordinated
Guarantor or shall prevent any sale or conveyance of the property of a Guarantor
or the Subordinated Guarantor as an entirety or substantially as an entirety to
the Issuer, another Guarantor or the Subordinated Guarantor. Notwithstanding
anything to the contrary contained herein, if the Holders of the Notes
voluntarily release the Subordinated Guarantor from its obligations pursuant to
this Subordinated Guarantee either (x) without the requisite consent of the
holders of the then outstanding Subordinated Guarantor Senior Indebtedness or
(y) other than pursuant to and in accordance with Section 11.05, Article Five or
the definition of Guarantor in Section 1.01, then (and notwithstanding anything
to the contrary contained elsewhere in this Indenture), the provisions of the
fifth paragraph of Section 11.02 shall survive any such release for the benefit
of the holders of the Subordinated Guarantor Senior Indebtedness.
SECTION 11.06. Waiver of Subrogation.
Until this Indenture is discharged and all of the Notes are
discharged and paid in full, each Guarantor and the Subordinated Guarantor
hereby irrevocably waives and agrees to the fullest extent permitted by law not
to exercise any claim or other rights which it may now or hereafter acquire
against the Issuer that arise from the existence, payment, performance or
enforcement of the Issuer's obligations under the Notes or this Indenture and
such Guarantor's or the Subordinated Guarantor's obligations under the
Guarantees, the Subordinated Guarantee and this Indenture, in any such instance
including, without limitation, any right of subrogation, reimbursement,
exoneration, contribution, indemnification, and any right to participate in any
claim or remedy of the Holders against the Issuer, whether or not such claim,
remedy or right arises in equity, or under contract, statute or common law,
including, without limitation, the right to take or receive from the Issuer,
directly or indirectly, in cash or other property or by set-off or in any other
manner, payment or security on account of such claim or other rights. If any
amount shall be paid to any Guarantor or the Subordinated Guarantor in violation
of the preceding sentence and any amounts owing to the Trustee or the Holders of
Notes under the Notes, this Indenture, or any other document or instrument
delivered under or in connection with such agreements or instruments, shall not
have been paid in full, such amount shall have been deemed to have been paid to
such Guarantor or the Subordinated Guarantor, as the case may be, for the
benefit of, and held in trust for the benefit of, the Trustee or the Holders
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and shall forthwith be paid to the Trustee for the benefit of itself or such
Holders to be credited and applied to the obligations in favor of the Trustee or
the Holders, as the case may be, whether matured or unmatured, in accordance
with the terms of this Indenture. Each Guarantor and the Subordinated Guarantor
acknowledges that it will receive direct and indirect benefits from the
financing arrangements contemplated by this Indenture and that the waiver set
forth in this Section 11.06 is knowingly made in contemplation of such benefits.
SECTION 11.07. Immediate Payment.
Each Guarantor and, subject to the provisions of Section 11.02, the
Subordinated Guarantor agrees to make immediate payment to the Trustee on behalf
of the Holders of all Obligations owing or payable to the respective Holders
upon receipt of a demand for payment therefor by the Trustee to such Guarantor
and the Subordinated Guarantor in writing.
SECTION 11.08. No Set-Off.
Each payment to be made by a Guarantor and the Subordinated
Guarantor hereunder in respect of the Obligations shall be payable in the
currency or currencies in which such Obligations are denominated, and shall be
made without set-off, counterclaim, reduction or diminution of any kind or
nature.
SECTION 11.09. Obligations Continuing.
The obligations of each Guarantor and the Subordinated Guarantor
hereunder shall be continuing and shall remain in full force and effect until
all the Obligations have been paid and satisfied in full. Each Guarantor and the
Subordinated Guarantor agrees with the Trustee that it will from time to time
deliver to the Trustee suitable acknowledgments of this continued liability
hereunder.
SECTION 11.10. Obligations Reinstated.
The obligations of each Guarantor and the Subordinated Guarantor
hereunder shall continue to be effective or shall be reinstated, as the case may
be, if at any time any payment which would otherwise have reduced the
obligations of any Guarantor and the Subordinated Guarantor hereunder (whether
such payment shall have been made by or on behalf of the Issuer or by or on
behalf of a Guarantor and the Subordinated Guarantor) is rescinded or reclaimed
from any of the Holders upon the insolvency, bankruptcy, liquidation or
reorganization of the Issuer or any Guarantor or the Subordinated Guarantor or
otherwise, all as though such payment had not been made. If demand for, or
acceleration of the time for, payment by the Issuer is stayed
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upon the insolvency, bankruptcy, liquidation or reorganization of the Issuer,
all such Indebtedness otherwise subject to demand for payment or acceleration
shall nonetheless be payable by each Guarantor or the Subordinated Guarantor as
provided herein.
SECTION 11.11. Obligations Not Affected.
To the fullest extent permitted by law, the obligations of each
Guarantor and the Subordinated Guarantor hereunder shall not be affected,
impaired or diminished in any way by any act, omission, matter or thing
whatsoever, occurring before, upon or after any demand for payment hereunder
(and whether or not known or consented to by any Guarantor or the Subordinated
Guarantor or any of the Holders) which, but for this provision, might constitute
a whole or partial defense to a claim against any Guarantor or the Subordinated
Guarantor hereunder or might operate to release or otherwise exonerate any
Guarantor or the Subordinated Guarantor from any of its obligations hereunder or
otherwise affect such obligations, whether occasioned by default of any of the
Holders or otherwise.
SECTION 11.12. Waiver.
Without in any way limiting the provisions of Sections 11.01 and
11.02 hereof, to the fullest extent permitted by law, each Guarantor and the
Subordinated Guarantor hereby waives notice or proof of reliance by the Holders
upon the obligations of any Guarantor or the Subordinated Guarantor hereunder,
and diligence, presentment, demand for payment on the Issuer, protest or notice
of dishonor of any of the Obligations, or other notice or formalities to the
Issuer of any kind whatsoever.
SECTION 11.13. No Obligation To Take Action Against the Issuer.
Neither the Trustee nor any other Person shall have any obligation
to enforce or exhaust any rights or remedies or to take any other steps under
any security for the Obligations or against the Issuer or any other Person or
any property of the Issuer or any other Person before the Trustee is entitled to
demand payment and performance by any or all Guarantors and/or the Subordinated
Guarantor of their liabilities and obligations under their Guarantees or the
Subordinated Guarantee or under this Indenture.
SECTION 11.14. Dealing with the Issuer and Others.
The Holders, without releasing, discharging, limiting or otherwise
affecting in whole or in part the obligations and liabilities of any Guarantor
or the Subordinated Guarantor here-
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<PAGE>
under and without the consent of or notice to any Guarantor or the Subordinated
Guarantor, may
(a) grant time, renewals, extensions, compromises, concessions,
waivers, releases, discharges and other indulgences to the Issuer or any
other Person;
(b) take or abstain from taking security or collateral from the
Issuer or any Guarantor or the Subordinated Guarantor or from perfecting
security or collateral of the Issuer or any Guarantor or the Subordinated
Guarantor;
(c) release, discharge, compromise, realize, enforce or otherwise
deal with or do any act or thing in respect of (with or without
consideration) any and all collateral, mortgages or other security given
by the Issuer or any Guarantor or the Subordinated Guarantor or any third
party with respect to the obligations or matters contemplated by this
Indenture or the Notes;
(d) accept compromises or arrangements from the Issuer;
(e) apply all monies at any time received from the Issuer or any
Guarantor or the Subordinated Guarantor or from any security upon such
part of the Obligations as the Holders may see fit or change any such
application in whole or in part from time to time as the Holders may see
fit; and
(f) otherwise deal with, or waive or modify their right to deal
with, the Issuer and all other Persons and any security as the Holders or
the Trustee may see fit.
SECTION 11.15. Default and Enforcement.
If any Guarantor or the Subordinated Guarantor fails to pay in
accordance with Section 11.02 hereof, the Trustee may proceed in its name as
trustee hereunder in the enforcement of the Guarantee or Subordinated Guarantee
of any such Guarantor or the Subordinated Guarantor and such Guarantor's or
Subordinated Guarantor's obligations thereunder and hereunder by any remedy
provided by law, whether by legal proceedings or otherwise, and to recover from
such Guarantor or the Subordinated Guarantor the obligations.
SECTION 11.16. Amendment, Etc.
No amendment, modification or waiver of any provision of this
Indenture relating to any Guarantor or the Subordinated Guarantor or consent to
any departure by any Guarantor or the
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<PAGE>
Subordinated Guarantor or any other Person from any such provision will in any
event be effective unless it is signed by such Guarantor or the Subordinated
Guarantor, as the case may be, and the Trustee.
SECTION 11.17. Acknowledgment.
Each Guarantor and the Subordinated Guarantor hereby acknowledges
communication of the terms of this Indenture and the Notes and consents to and
approves of the same.
SECTION 11.18. No Waiver; Cumulative Remedies.
No failure to exercise and no delay in exercising, on the part of
the Trustee or the Holders, any right, remedy, power or privilege hereunder or
under this Indenture or the Notes, shall operate as a waiver thereof; nor shall
any single or partial exercise of any right, remedy, power or privilege
hereunder or under this Indenture or the Notes preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges in the Guarantees, the Subordinated
Guarantee and under this Indenture, the Notes and any other document or
instrument between a Guarantor, the Subordinated Guarantor and/or the Issuer and
the Trustee are cumulative and not exclusive of any rights, remedies, powers and
privilege provided by law.
SECTION 11.19. Survival of Obligations.
Without prejudice to the survival of any of the other obligations of
each Guarantor and the Subordinated Guarantor hereunder, the obligations of each
Guarantor under Section 11.01 and the obligations of the Subordinated Guarantor
under Section 11.02 shall be enforceable against such Guarantor and the
Subordinated Guarantor, respectively, without regard to and without giving
effect to any right of offset or counterclaim available to or which may be
asserted by the Issuer, any Guarantor or the Subordinated Guarantor.
SECTION 11.20. Guarantee in Addition to Other Obligations.
The obligations of each Guarantor under its Guarantee and this
Indenture and the obligations of the Subordinated Guarantor under the
Subordinated Guarantee and this Indenture are in addition to and not in
substitution for any other obligations to the Trustee or to any of the Holders
in relation to this Indenture or the Notes (including the Registration Rights
Agreements).
SECTION 11.21. Severability.
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<PAGE>
Any provision of this Article Eleven which is prohibited or
unenforceable in any jurisdiction shall not invalidate the remaining provisions
and any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction
unless its removal would substantially defeat the basic intent, spirit and
purpose of this Indenture and this Article Eleven.
SECTION 11.22. Successors and Assigns.
Each Guarantee and the Subordinated Guarantee shall be binding upon
and inure to the benefit of each Guarantor and the Subordinated Guarantor,
respectively, and the Trustee and the other Holders and their respective
successors and permitted assigns, except that none of the Guarantors or the
Subordinated Guarantor may assign any of its obligations hereunder or
thereunder.
SECTION 11.23. No Personal Liability
No stockholder, officer, director, employee or incorporator, past,
present or future, of any Guarantor or the Subordinated Guarantor, as such,
shall have any personal liability under the Guarantee or the Subordinated
Guarantee by reason of his, her or its status as such stockholder, officer,
director, employee or incorporator.
[Remainder of Page Intentionally Left Blank]
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<PAGE>
EXHIBIT A
CUSIP No.:
WILLIAMS SCOTSMAN, INC.
9 7/8% SENIOR NOTE DUE 2007
No. [ ]
WILLIAMS SCOTSMAN, INC., a Maryland corporation (the "Issuer", which
term includes any successor entities), for value received promises to pay to
[ ] or registered assigns the principal sum of
($ ) Dollars on June 1, 2007.
Interest Payment Dates: June 1 and December 1, commencing December
1, 1997
Record Dates: November 15 and May 15
Reference is made to the further provisions of this Note contained
herein, which will for all purposes have the same effect as if set forth at this
place.
IN WITNESS WHEREOF, the Issuer has caused this Note to be signed
manually or by facsimile by its duly authorized officers and a facsimile of its
corporate seal to be affixed hereto or imprinted hereon.
WILLIAMS SCOTSMAN, INC.
By:
-------------------------------
Name:
Title:
By:
-------------------------------
Name:
Title:
Dated:
Certificate of Authentication
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<PAGE>
This is one of the 9 7/8% Senior Notes due 2007 referred to in the
within-mentioned Indenture.
THE BANK OF NEW YORK,
as Trustee
By:
-------------------------------
Authorized Signatory
Date of Authentication:
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<PAGE>
(REVERSE OF NOTE)
9 7/8% Senior Note due 2007
1. Interest. WILLIAMS SCOTSMAN, INC., a Maryland corporation (the
"Issuer"), promises to pay interest on the principal amount of this Note at the
rate per annum shown above. Interest on the Notes will accrue from the most
recent date on which interest has been paid or, if no interest has been paid,
from May 22, 1997. The Issuer will pay interest semi-annually in arrears on each
Interest Payment Date, commencing December 1, 1997. Interest will be computed on
the basis of a 360-day year of twelve 30-day months and, in the case of a
partial month, the actual number of days elapsed.
The Issuer shall pay interest on overdue principal and on overdue
installments of interest from time to time on demand at the rate borne by the
Notes and on overdue installments of interest (without regard to any applicable
grace periods) to the extent lawful.
2. Method of Payment. The Issuer shall pay interest on the Notes
(except defaulted interest) to the Persons who are the registered Holders at the
close of business on the Record Date immediately preceding the Interest Payment
Date even if the Notes are cancelled on registration of transfer or registration
of exchange (including pursuant to an Exchange Offer (as defined in the
applicable Registration Rights Agreement)) after such Record Date. Holders must
surrender Notes to a Paying Agent to collect principal payments. The Issuer
shall pay principal and interest in money of the United States that at the time
of payment is legal tender for payment of public and private debts ("U.S. Legal
Tender"). However, the Issuer may pay principal and interest by its check
payable in such U.S. Legal Tender. The Issuer may deliver any such interest
payment to the Paying Agent or to a Holder at the Holder's registered address.
3. Paying Agent and Registrar. Initially, the Bank of New York (The
"Trustee") will act as Paying Agent and Registrar. The Issuer may change any
Paying Agent, Registrar or co-Registrar without notice to the Holders.
4. Indenture. The Issuer issued the Notes under an Indenture, dated
as of May 15, 1997 (the "Indenture"), among the Issuer, the Guarantors, the
Subordinated Guarantor and the Trustee. This Note is one of a duly authorized
issue of Initial Notes of the Issuer designated as its 9 7/8% Senior Notes due
2007 (the "Initial Notes"). The Notes are limited in ag-
A-3
<PAGE>
gregate principal amount to $550,000,000. The Notes include the Initial Notes,
the Private Exchange Notes (as defined in the Indenture) and the Unrestricted
Notes, as defined below, issued in exchange for the Initial Notes pursuant to
the Registration Rights Agreements or, with respect to Initial Notes issued
under the Indenture subsequent to the Issue Date, a registration rights
agreement substantially identical to the Registration Rights Agreements with the
Initial Purchasers. The Initial Notes and the Unrestricted Notes are treated as
a single class of securities under the Indenture. Capitalized terms herein are
used as defined in the Indenture unless otherwise defined herein. The terms of
the Notes include those stated in this Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (15 U.S. Code ss.ss.
77aaa-77bbbb) (the "TIA"), as in effect on the date of the Indenture.
Notwithstanding anything to the contrary herein, the Notes are subject to all
such terms, and Holders of Notes are referred to the Indenture and said Act for
a statement of them. The Notes are general unsecured obligations of the Issuer.
5. Indenture. Each Holder, by accepting a Note, agrees to be bound
by all of the terms and provisions of the Indenture, as the same may be amended
from time to time in accordance with its terms.
6. Redemption. Except as provided below, the Notes will not be
redeemable at the option of the Issuer prior to June 1, 2002. Thereafter, the
Notes will be redeemable, at the Issuer's option, in whole or in part at any
time and from time to time, upon not less than 30 nor more than 60 days' notice
mailed by first-class mail to each Holder's registered address, at the following
redemption prices (expressed as percentages of the principal amount thereof),
plus accrued interest to the redemption date (subject to the right of Holders of
record on the relevant Record Date to receive interest due on the relevant
Interest Payment Date), if redeemed during the twelve-month period commencing on
June 1 of the years set forth below:
Year Percentage
---- ----------
2002...................................... 104.938%
2003...................................... 102.469%
2004 and thereafter....................... 100.000%
At any time, or from time to time, on or prior to June 1, 2000, the
Issuer may redeem in the aggregate up to $160 million aggregate principal amount
of the Notes with the proceeds of one or more Public Equity Offerings (as
defined in the Indenture) (provided that if a Public Equity Offering is a public
offering of any class of Common Stock of Holdings or another issuer, a portion
of the Net Cash Proceeds thereof equal to the amount required to redeem any such
Notes is contributed
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<PAGE>
to the equity capital of the Issuer) at a redemption price (expressed as a
percentage of principal amount) of 109.875% plus accrued interest to the date of
redemption (subject to the right of Holders of record on the relevant record
date to receive interest due on the relevant interest payment date); provided,
however, that at least $240 million aggregate principal amount of Notes
originally issued remain outstanding immediately after any such redemption.
At any time on or prior to June 1, 2002, the Notes may also be
redeemed as a whole but not in part at the option of the Issuer upon the
occurrence of a Change of Control, upon not less than 30 nor more than 60 days'
prior notice (exercisable no later than 30 days after such Change of control)
mailed by first-class mail to each Holder's registered address, at a redemption
price equal to 100% of the principal amount thereof plus the Applicable Premium
as of, and accrued and unpaid interest to the redemption date (subject to the
right of Holders of record on the relevant record date to receive interest due
on the relevant Interest Payment Date).
7. Notice of Redemption. Notice of redemption will be mailed at
least 30 days but not more than 60 days before the Redemption Date to each
Holder of Notes to be redeemed at such Holder's registered address. Notes in
denominations larger than $1,000 may be redeemed in part.
Except as set forth in the Indenture, if monies for the redemption
of the Notes called for redemption shall have been deposited with the Paying
Agent for redemption on such Redemption Date, then, unless the Issuer defaults
in the payment of such redemption price plus accrued interest, if any, the Notes
called for redemption will cease to bear interest from and after such Redemption
Date and the only right of the Holders of such Notes will be to receive payment
of the redemption price plus accrued interest, if any.
8. Offers to Purchase. Sections 4.11 and 4.12 of the Indenture
provide that, after certain Asset Dispositions (as defined in the Indenture) and
upon the occurrence of a Change of Control (as defined in the Indenture), and
subject to further limitations contained therein, the Issuer will make an offer
to purchase certain amounts of the Notes in accordance with the procedures set
forth in the Indenture.
9. Registration Rights. Pursuant to a registration rights agreement
among the Issuer, the Guarantor and the Subordinated Guarantor and the Initial
Purchasers and a registration rights agreement among the Issuer, the Guarantor
and the Subordinated Guarantor and Oak Hill Securities Fund, L.P., the Issuer,
the Guarantor and
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<PAGE>
the Subordinated Guarantor will be obligated to consummate an exchange offer
pursuant to which the Holder of this Note shall have the right to exchange this
Note for the Issuer's 9 7/8% Senior Notes due 2007 (the "Unrestricted Notes"),
which have been registered under the Securities Act, in like principal amount
and having terms identical in all material respects as the Initial Notes. The
Holders of the Initial Notes shall be entitled to receive certain additional
interest payments in the event such exchange offer is not consummated and upon
certain other conditions, all pursuant to and in accordance with the terms of
such registration rights agreements.
10. Denominations; Transfer; Exchange. The Notes are in registered
form, without coupons, and in denominations of $1,000 and integral multiples of
$1,000. A Holder shall register the transfer of or exchange Notes in accordance
with the Indenture. The Registrar may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and to pay certain
transfer taxes or similar governmental charges payable in connection therewith
as permitted by the Indenture. The Registrar need not register the transfer of
or exchange of any Notes or portions thereof selected for redemption.
11. Persons Deemed Owners. The registered Holder of a Note shall be
treated as the owner of it for all purposes.
12. Unclaimed Money. If money for the payment of principal or
interest remains unclaimed for two years, the Trustee and the Paying Agent will
pay the money back to the Issuer. After that, all liability of the Trustee and
such Paying Agent with respect to such money shall cease.
13. Discharge Prior to Redemption or Maturity. If the Issuer at any
time deposits with the Trustee U.S. Government Obligations sufficient to pay the
principal of and interest on the Notes to redemption or maturity and complies
with the other provisions of the Indenture relating thereto, the Issuer will be
discharged from certain provisions of the Indenture and the Notes (including
certain covenants, but including, under certain circumstances, its obligation to
pay the principal of and interest on the Notes but without affecting the rights
of the Holders to receive such amounts from such deposits).
14. Amendment; Supplement; Waiver. Subject to certain exceptions set
forth in the Indenture, the Indenture or the Notes may be amended or
supplemented with the written consent of the Holders of a majority in aggregate
principal amount
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<PAGE>
of the Notes then outstanding, and any past Default or Event of Default or
noncompliance with any provision may be waived with the written consent of the
Holders of a majority in aggregate principal amount of the Notes then
outstanding. Without notice to or consent of any Holder, the parties thereto may
amend or supplement the Indenture or the Notes to, among other things, cure any
ambiguity, defect or inconsistency, provide for uncertificated Notes in addition
to or in place of certificated Notes, comply with any requirements of the
Commission in order to effect or maintain the qualification of the Indenture
under the TIA or comply with Article Five of the Indenture, to add guarantees
with respect to the Notes or to provide for the release of the Subordinated
Guarantee if permitted, to add covenants for the benefit of the Holder of the
Notes or make any other change that does not adversely affect the rights of any
Holder of a Note.
15. Restrictive Covenants. The Indenture imposes certain limitations
on the ability of the Issuer and its Restricted Subsidiaries to, among other
things, incur additional Indebtedness, make payments in respect of their Capital
Stock or certain Indebtedness, make certain Investments, create or incur liens,
enter into transactions with Affiliates, create dividend or other payment
restrictions affecting any Restricted Subsidiaries, and on the ability of the
Issuer to merge or consolidate with any other Person or sell, assign, transfer,
lease, convey or otherwise dispose of all or substantially all of the Issuer's
assets. Such limitations are subject to a number of important qualifications and
exceptions. Pursuant to Section 4.06 of the Indenture, the Issuer must annually
report to the Trustee on compliance with such limitations.
16. Successors. When a successor assumes, in accordance with the
Indenture, all the obligations of its predecessor under the Notes and the
Indenture, the predecessor, subject to certain exceptions, will be released from
those obligations.
17. Defaults and Remedies. If an Event of Default occurs and is
continuing, the Trustee or the Holders of not less than 25% in aggregate
principal amount of Notes then outstanding may declare all the Notes to be due
and payable in the manner, at the time and with the effect provided in the
Indenture. Holders of Notes may not enforce the Indenture or the Notes except as
provided in the Indenture. The Trustee is not obligated to enforce the Indenture
or the Notes unless it has received indemnity reasonably satisfactory to it. The
Indenture permits, subject to certain limitations therein provided, Holders of a
majority in aggregate principal amount of the Notes then outstanding to direct
the Trustee in its exercise of any trust or power. The Trustee may withhold from
Holders of
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<PAGE>
Notes notice of any continuing Default or Event of Default (except a Default in
payment of principal or interest when due, for any reason) if it determines that
withholding notice is in their interest.
18. Trustee Dealings with Issuer and Its Subsidiaries. The Trustee
under the Indenture, in its individual or any other capacity, may become the
owner or pledgee of Notes and may otherwise deal with the Issuer, its
Subsidiaries or their respective Affiliates as if it were not the Trustee.
19. No Recourse Against Others. No partner, director, officer,
employee or stockholder, as such, of the Issuer, any Guarantor or Subordinated
Guarantor, as such, shall have any liability for any obligations of the Issuer,
any Guarantor or Subordinated Guarantor under the Notes, the Indenture, the
Guarantees or the Subordinated Guarantee or any Registration Rights Agreement or
for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder of Notes by accepting a Note waives and releases all
such liability. The waiver and release are part of the consideration for the
issuance of the Notes.
20. Guarantees. This Note will be entitled to the benefits of
certain Guarantees and the Subordinated Guarantee, if any, made for the benefit
of the Holders. Reference is hereby made to the Indenture for a statement of the
respective rights, limitations of rights, duties and obligations thereunder of
the Guarantors and the Subordinated Guarantor, the Trustee and the Holders.
21. Waiver of Substantive Consolidation; Etc. Each holder of a Note
acknowledges and agrees, on behalf of itself and all its successors and assigns
as a Noteholder, that the claims of the Noteholders against the Subordinated
Guarantor, and against the assets from time to time held by the Subordinated
Guarantor (including, without limitation, all units, leases and proceeds
therefrom at any time transferred or purported to be transferred to the
Subordinated Guarantor), are limited to the claims expressly provided pursuant
to the Subordinated Guarantee. Each holder of a Note further agrees, on behalf
of itself and all its successors and assigns as a Noteholder, that in no event
(whether pursuant to a proceeding under the Bankruptcy Law or otherwise) shall
it (or any representative on its behalf including the Trustee) assert that the
assets of the Subordinated Guarantor should be substantively consolidated or
otherwise combined with the assets of the Issuer, Holdings or any of their other
Subsidiaries, or otherwise returned (whether under claims of fraudulent
conveyance or otherwise) to any such person. Furthermore, in the event that
pursuant to any proceeding pursuant to the Bankruptcy Law or otherwise the
assets (or any of the
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<PAGE>
assets) of the Subordinated Guarantor are substantively consolidated or
otherwise combined in a similar fashion with the assets of the Issuer, Holdings
or any other of their Subsidiaries or otherwise returned to any such person,
then, as between the Noteholders (and their successors and assigns) and the
lenders pursuant to the Credit Agreement (and pursuant to any Hedging
Obligations from time to time entered into); the Noteholders agree that all
distributions received by them (and their successors and assigns) to the extent
attributable to the assets, or representing any proceeds from any disposition of
assets, which were held by the Subordinated Guarantor prior to any such
consolidation, combination or return of assets shall be treated by the
Noteholders as if received pursuant to the Subordinated Guarantee and shall be
fully subject to the subordination provisions contained in Section 11.02 of the
Indenture.
22. Authentication. This Note shall not be valid until the Trustee
or Authenticating Agent manually signs the certificate of authentication on this
Note.
23. Governing Law. This Note and the Indenture shall be governed by
and construed in accordance with the laws of the State of New York, as applied
to contracts made and performed within the State of New York, without regard to
principles of conflict of laws. Each of the parties hereto agrees to submit to
the jurisdiction of the courts of the State of New York in any action or
proceeding arising out of or relating to this Note.
24. Abbreviations and Defined Terms. Customary abbreviations may be
used in the name of a Holder of a Note or an assignee, such as: TEN COM (=
tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint
tenants with right of survivorship and not as tenants in common), CUST (=
Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
25. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Note Identification Procedures, the Issuer has caused CUSIP
numbers to be printed on the Notes as a convenience to the Holders of the Notes.
No representation is made as to the accuracy of such numbers as printed on the
Notes and reliance may be placed only on the other identification numbers
printed hereon.
The Issuer will furnish to any Holder of a Note upon written
request and without charge a copy of the Indenture. Requests may be made
to: Williams Scotsman, Inc., 8211 Town Center Drive, Baltimore, Maryland
21236.
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<PAGE>
ASSIGNMENT FORM
If you the Holder want to assign this Note, fill in the form below
and have your signature guaranteed:
I or we assign and transfer this Note to:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type name, address and zip code and social security or tax ID number
of assignee)
and irrevocably appoint ________________________, agent to transfer this Note on
the books of the Issuer. The agent may substitute another to act for him.
Dated: Signed:
------------------ --------------------------------------------
(Sign exactly as your name appears on the
other side of this Note)
Signature Guarantee:
------------------------------------------------------------
Signatures must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Registrar, which requirements on and after
October 26, 1992 will include membership or participation in STAMP or such other
"signature guarantee program" as may be determined by the Registrar in addition
to, or in substitution for, STAMP, all in accordance with the Securities
Exchange Act of 1934, as amended.
In connection with any transfer of this Note occurring prior to the
date which is the earlier of (i) the date of the declaration by the Commission
of the effectiveness of a registration statement under the Securities Act of
1933, as amended (the "Securities Act") covering resales of this Note (which
effectiveness shall not have been suspended or terminated at the date of the
transfer) and (ii) [ ], the undersigned confirms that it has not utilized any
general solicitation or general advertising in connection with the transfer:
[Check One]
(1) __ to the Issuer or a subsidiary thereof; or
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<PAGE>
(2) __ pursuant to and in compliance with Rule 144A under the
Securities Act of 1933, as amended; or
(3) __ to an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act of 1933,
as amended) that has furnished to the Trustee a signed letter
containing certain representations and agreements (the form of
which letter can be obtained from the Trustee); or
(4) __ outside the United states to a "foreign person" in compliance
with Rule 904 of Regulation S under the Securities Act of
1933, as amended; or
(5) __ pursuant to the exemption from registration provided by Rule
144 under the Securities Act of 1933, as amended; or
(6) __ pursuant to an effective registration statement under the
Securities Act of 1933, as amended; or
(7) __ pursuant to another available exemption from the registration
requirements of the Securities Act of 1933, as amended.
and unless the box below is checked, the undersigned confirms that such Note is
not being transferred to an "affiliate" of the Issuer as defined in Rule 144
under the Securities Act of 1933, as amended (an "Affiliate"):
|_| The transferee is an Affiliate of the Issuer.
Unless one of the items is checked, the Trustee will refuse to
register any of the Notes evidenced by this certificate in the name of any
person other than the registered Holder thereof; provided, however, that if item
(3), (4), (5) or (7) is checked, the Issuer or the Trustee may require, prior to
registering any such transfer of the Notes, in their sole discretion, such
written legal opinions, certifications (including an investment letter in the
case of box (3) or (4)) and other information as the Trustee or the Issuer has
reasonably requested to confirm that such transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act of 1933, as amended.
If none of the foregoing items are checked, the Trustee or Registrar
shall not be obligated to register this Note in the name of any person other
than the Holder hereof unless and until the conditions to any such transfer of
registration
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<PAGE>
set forth herein and in Section 2.17 of the Indenture shall have been satisfied.
Dated: Signed:
------------------ --------------------------------------------
(Sign exactly as your name appears on the
other side of this Note)
Signature Guarantee:
------------------------------------------------------------
Signatures must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Registrar, which requirements on and after
October 26, 1992 will include membership or participation in STAMP or such other
"signature guarantee program" as may be determined by the Registrar in addition
to, or in substitution for, STAMP, all in accordance with the Securities
Exchange Act of 1934, as amended.
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TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing this
Note for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Issuer as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Dated:
------------------- --------------------------------------------------
NOTICE: To be executed by an executive officer
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<PAGE>
[OPTION OF HOLDER TO ELECT PURCHASE]
If you want to elect to have this Note purchased by the Issuer
pursuant to Section 4.11 or Section 4.12 of this Indenture, check the
appropriate box:
Section 4.11 [ ]
Section 4.12 [ ]
If you want to elect to have only part of this Note purchased by the
Issuer pursuant to Section 4.11 or Section 4.12 of this Indenture, state the
amount you elect to have purchased:
$
-------------------
Dated:
-------------------- --------------------------------------------------
NOTICE: The signature on this assignment must
correspond with the name as it appears upon the
face of the within Note in every particular
without alteration or enlargement or any change
whatsoever and be guaranteed.
Signature Guarantee:
------------------------------------------------------------
Signatures must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Registrar, which requirements on and after
October 26, 1992 will include membership or participation in STAMP or such other
"signature guarantee program" as may be determined by the Registrar in addition
to, or in substitution for, STAMP, all in accordance with the Securities
Exchange Act of 1934, as amended.
A-14
<PAGE>
EXHIBIT B
CUSIP No.:
WILLIAMS SCOTSMAN, INC.
9 7/8% SENIOR NOTE DUE 2007
No. [ ]
WILLIAMS SCOTSMAN, INC., a Maryland corporation (the "Issuer", which
term includes any successor entities), for value received promises to pay to
[ ] or registered assigns the principal sum of
($ ) Dollars on June 1, 2007.
Interest Payment Dates: June 1 and December 1, commencing December
1, 1997
Record Dates: November 15 and May 15
Reference is made to the further provisions of this Note contained
herein, which will for all purposes have the same effect as if set forth at this
place.
IN WITNESS WHEREOF, the Issuer has caused this Note to be signed
manually or by facsimile by its duly authorized officers and a facsimile of its
corporate seal to be affixed hereto or imprinted hereon.
WILLIAMS SCOTSMAN, INC.
By:
-------------------------------
Name:
Title:
By:
-------------------------------
Name:
Title:
Dated:
Certificate of Authentication
B-1
<PAGE>
This is one of the 9 7/8% Senior Notes due 2007 referred to in the
within-mentioned Indenture.
THE BANK OF NEW YORK,
as Trustee
By:
-------------------------------
Authorized Signatory
Date of Authentication:
B-2
<PAGE>
(REVERSE OF NOTE)
9 7/8% Senior Note due 2007
1. Interest. WILLIAMS SCOTSMAN, INC., a Maryland corporation (the
"Issuer"), promises to pay interest on the principal amount of this Note at the
rate per annum shown above. Interest on the Notes will accrue from the most
recent date on which interest has been paid or, if no interest has been paid,
from May 22, 1997. The Issuer will pay interest semi-annually in arrears on each
Interest Payment Date, commencing December 1, 1997. Interest will be computed on
the basis of a 360-day year of twelve 30-day months and, in the case of a
partial month, the actual number of days elapsed.
The Issuer shall pay interest on overdue principal and on overdue
installments of interest from time to time on demand at the rate borne by the
Notes and on overdue installments of interest (without regard to any applicable
grace periods) to the extent lawful.
2. Method of Payment. The Issuer shall pay interest on the Notes
(except defaulted interest) to the Persons who are the registered Holders at the
close of business on the Record Date immediately preceding the Interest Payment
Date even if the Notes are cancelled on registration of transfer or registration
of exchange after such Record Date. Holders must surrender Notes to a Paying
Agent to collect principal payments. The Issuer shall pay principal and interest
in money of the United States that at the time of payment is legal tender for
payment of public and private debts ("U.S. Legal Tender"). However, the Issuer
may pay principal and interest by its check payable in such U.S. Legal Tender.
The Issuer may deliver any such interest payment to the Paying Agent or to a
Holder at the Holder's registered address.
3. Paying Agent and Registrar. Initially, The Bank of New York (the
"Trustee") will act as Paying Agent and Registrar. The Issuer may change any
Paying Agent, Registrar or co-Registrar without notice to the Holders.
4. Indenture. The Issuer issued the Notes under an Indenture, dated
as of May 15, 1997 (the "Indenture"), among the Issuer, the Guarantor, the
Subordinated Guarantor and the Trustee. This Note is one of a duly authorized
issue of Unrestricted Notes of the Issuer designated as its 9 7/8% Senior Notes
due 2007 (the "Unrestricted Notes"). The Notes are limited in aggregate
principal amount to $550,000,000. The Notes include the 9 7/8% Notes due 2007
(the "Initial Notes") and the Unrestricted Notes, issued in exchange for the
Initial Notes pursuant to a registration rights agreement. The Initial
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<PAGE>
Notes, the Private Exchange Notes (as defined in the Indenture) and the
Unrestricted Notes are treated as a single class of securities under the
Indenture. Capitalized terms herein are used as defined in the Indenture unless
otherwise defined herein. The terms of the Notes include those stated in this
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (15 U.S. Code ss.ss. 77aaa-77bbbb) (the "TIA"), as in
effect on the date of the Indenture. Notwithstanding anything to the contrary
herein, the Notes are subject to all such terms, and Holders of Notes are
referred to the Indenture and said Act for a statement of them. The Notes are
general unsecured obligations of the Issuer.
5. Indenture. Each Holder, by accepting a Note, agrees to be bound
by all of the terms and provisions of the Indenture, as the same may be amended
from time to time in accordance with its terms.
6. Redemption. Except as provided below, the Notes will not be
redeemable at the option of the Issuer prior to June 1, 2002. Thereafter, the
Notes will be redeemable, at the Issuer's option, in whole or in part at any
time and from time to time, upon not less than 30 nor more than 60 days' notice
mailed by first-class mail to each Holder's registered address, at the following
redemption prices (expressed as percentages of the principal amount thereof),
plus accrued interest to the redemption date (subject to the right of Holders of
record on the relevant Record Date to receive interest due on the relevant
Interest Payment Date), if redeemed during the twelve-month period commencing on
June 1 of the years set forth below:
Year Percentage
---- ----------
2002................................... 104.938%
2003................................... 102.469%
2004 and thereafter.................... 100.000%
At any time, or from time to time, on or prior to June 1, 2000, the
Issuer may redeem in the aggregate up to $160 million aggregate principal amount
of the Notes with the proceeds of one or more Public Equity Offerings (as
defined in the Indenture) (provided that if a Public Equity Offering is a public
offering of any class of Common Stock of Holdings or another issuer, a portion
of the Net Cash Proceeds thereof equal to the amount required to redeem any such
Notes is contributed to the equity capital of the Issuer) at a redemption price
(expressed as a percentage of principal amount) of 109.875% plus accrued
interest to the date of redemption (subject to the right of Holders of record on
the relevant record date to receive interest due on the relevant interest
payment date); provided, however, that at least $240 million aggregate principal
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<PAGE>
amount of Notes originally issued remain outstanding immediately after any such
redemption.
At any time on or prior to June 1, 2002, the Notes may also be
redeemed as a whole but not in part at the option of the Issuer upon the
occurrence of a Change of Control, upon not less than 30 nor more than 60 days'
prior notice (exercisable no later than 30 days after such Change of control)
mailed by first-class mail to each Holder's registered address, at a redemption
price equal to 100% of the principal amount thereof plus the Applicable Premium
as of, and accrued and unpaid interest to the redemption date (subject to the
right of Holders of record on the relevant Record Date to receive interest due
on the relevant Interest Payment Date).
7. Notice of Redemption. Notice of redemption will be mailed at
least 30 days but not more than 60 days before the Redemption Date to each
Holder of Notes to be redeemed at such Holder's registered address. Notes in
denominations larger than $1,000 may be redeemed in part.
Except as set forth in the Indenture, if monies for the redemption
of the Notes called for redemption shall have been deposited with the Paying
Agent for redemption on such Redemption Date, then, unless the Issuer defaults
in the payment of such redemption price plus accrued interest, if any, the Notes
called for redemption will cease to bear interest from and after such Redemption
Date and the only right of the Holders of such Notes will be to receive payment
of the redemption price plus accrued interest, if any.
8. Offers to Purchase. Sections 4.11 and 4.12 of the Indenture
provide that, after certain Asset Dispositions (as defined in the Indenture) and
upon the occurrence of a Change of Control (as defined in the Indenture), and
subject to further limitations contained therein, the Issuer will make an offer
to purchase certain amounts of the Notes in accordance with the procedures set
forth in the Indenture.
9. Denominations; Transfer; Exchange. The Notes are in registered
form, without coupons, and in denominations of $1,000 and integral multiples of
$1,000. A Holder shall register the transfer of or exchange Notes in accordance
with the Indenture. The Registrar may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and to pay certain
transfer taxes or similar governmental charges payable in connection therewith
as permitted by the Indenture. The Registrar need not register the transfer of
or exchange of any Notes or portions thereof selected for redemption.
B-5
<PAGE>
10. Persons Deemed Owners. The registered Holder of a Note shall be
treated as the owner of it for all purposes.
11. Unclaimed Money. If money for the payment of principal or
interest remains unclaimed for two years, the Trustee and the Paying Agent will
pay the money back to the Issuer. After that, all liability of the Trustee and
such Paying Agent with respect to such money shall cease.
12. Discharge Prior to Redemption or Maturity. If the Issuer at any
time deposits with the Trustee U.S. Government Obligations sufficient to pay the
principal of and interest on the Notes to redemption and complies with the other
provisions of this Indenture relating thereto, the Issuer will be discharged
from certain provisions of the Indenture and the Notes (including certain
covenants, including, under certain circumstances, its obligation to pay the
principal of and interest on the Notes but without affecting the rights of the
Holders to receive such amounts from such deposit).
13. Amendment; Supplement; Waiver. Subject to certain exceptions set
forth in the Indenture, the Indenture or the Notes may be amended or
supplemented with the written consent of the Holders of a majority in aggregate
principal amount of the Notes then outstanding, and any past Default or Event of
Default or noncompliance with any provision may be waived with the written
consent of the Holders of a majority in aggregate principal amount of the Notes
then outstanding. Without notice to or consent of any Holder, the parties
thereto may amend or supplement the Indenture or the Notes to, among other
things, cure any ambiguity, defect or inconsistency, provide for uncertificated
Notes in addition to or in place of certificated Notes, comply with any
requirements of the Commission in order to effect or maintain the qualification
of the Indenture under the TIA or comply with Article Five of the Indenture, to
add guarantees with respect to the Notes or provide for the release of the
Subordinated Guarantee if permitted, to add covenants for the benefit of the
Holder of the Notes or make any other change that does not adversely affect the
rights of any Holder of a Note.
14. Restrictive Covenants. The Indenture imposes certain limitations
on the ability of the Issuer and its Restricted Subsidiaries to, among other
things, incur additional Indebtedness, make payments in respect of their Capital
Stock or certain Indebtedness, make certain Investments, create or incur liens,
enter into transactions with Affiliates, create dividend or other payment
restrictions affecting any Restricted Subsidiaries and on the ability of the
Issuer to merge or consolidate with any other Person or sell, assign, transfer,
lease, convey or otherwise dispose of all or substantially all
B-6
<PAGE>
of the Issuer's assets. Such limitations are subject to a number of important
qualifications and exceptions. Pursuant to Section 4.06 of the Indenture, the
Issuer must annually report to the Trustee on compliance with such limitations.
15. Successors. When a successor assumes, in accordance with the
Indenture, all the obligations of its predecessor under the Notes and the
Indenture, the predecessor, subject to certain exceptions, will be released from
those obligations.
16. Defaults and Remedies. If an Event of Default occurs and is
continuing, the Trustee or the Holders of not less than 25% in aggregate
principal amount of Notes then outstanding may declare all the Notes to be due
and payable in the manner, at the time and with the effect provided in the
Indenture. Holders of Notes may not enforce the Indenture or the Notes except as
provided in the Indenture. The Trustee is not obligated to enforce the Indenture
or the Notes unless it has received indemnity reasonably satisfactory to it. The
Indenture permits, subject to certain limitations therein provided, Holders of a
majority in aggregate principal amount of the Notes then outstanding to direct
the Trustee in its exercise of any trust or power. The Trustee may withhold from
Holders of Notes notice of any continuing Default or Event of Default (except a
Default in payment of principal or interest when due, for any reason) if it
determines that withholding notice is in their interest.
17. Trustee Dealings with Issuer and Its Subsidiaries. The Trustee
under the Indenture, in its individual or any other capacity, may become the
owner or pledgee of Notes and may otherwise deal with the Issuer, its
Subsidiaries or their respective Affiliates as if it were not the Trustee.
18. No Recourse Against Others. No partner, director, officer,
employee or stockholder, as such, of the Issuer, the Subordinated Guarantor or
any Guarantor, as such, shall have any liability for any obligations of the
Issuer, the Subordinated Guarantor or any Guarantor under the Notes, the
Indenture, the Guarantees, the Subordinated Guarantee or the Registration Rights
Agreement or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder of Notes by accepting a Note waives
and releases all such liability. The waiver and release are part of the
consideration for the issuance of the Notes.
19. Guarantees. This Note will be entitled to the benefits of
certain Guarantees and the Subordinated Guarantee, if any, made for the benefit
of the Holders. Reference is hereby made to the Indenture for a statement of the
respective rights, limitations of rights, duties and obligations thereun-
B-7
<PAGE>
der of the Guarantors and the Subordinated Guarantor, the Trustee and the
Holders.
20. Waiver of Substantive Consolidation; Etc. Each holder of a Note
acknowledges and agrees, on behalf of itself and all its successors and assigns
as a Noteholder, that the claims of the Noteholders against the Subordinated
Guarantor, and against the assets from time to time held by the Subordinated
Guarantor (including, without limitation, all units, leases and proceeds
therefrom at any time transferred or purported to be transferred to the
Subordinated Guarantor), are limited to the claims expressly provided pursuant
to the Subordinated Guarantee. Each holder of a Note further agrees, on behalf
of itself and all its successors and assigns as a Noteholder, that in no event
(whether pursuant to a proceeding under the Bankruptcy Law or otherwise) shall
it (or any representative on its behalf including the Trustee) assert that the
assets of the Subordinated Guarantor should be substantively consolidated or
otherwise combined with the assets of the Issuer, Holdings or any of their other
Subsidiaries, or otherwise combined in a similar fashion with the assets of the
Issuer, Holdings or any other of their Subsidiaries or otherwise returned
(whether under claims of fraudulent conveyance or otherwise) to any such person.
Furthermore, in the event that pursuant to any proceeding pursuant to the
Bankruptcy Law or otherwise the assets (or any of the assets) of the
Subordinated Guarantor are substantively consolidated or otherwise returned to
any such person, then, as between the Noteholders (and their successors and
assigns) and the lenders pursuant to the Credit Agreement (and pursuant to any
Hedging Obligations from time to time entered into); the Noteholders agree that
all distributions received by them (and their successors and assigns) to the
extent attributable to the assets, or representing any proceeds from any
disposition of assets, which were held by the Subordinated Guarantor prior to
any such consolidation, combination or return of assets shall be treated by the
Noteholders as if received pursuant to the Subordinated Guarantee and shall be
fully subject to the subordination provisions contained in Section 11.02 of the
Indenture.
21. Authentication. This Note shall not be valid until the Trustee
or Authenticating Agent manually signs the certificate of authentication on this
Note.
22. Governing Law. This Note and the Indenture shall be governed by
and construed in accordance with the laws of the State of New York, as applied
to contracts made and performed within the State of New York, without regard to
principles of conflict of laws. Each of the parties hereto agrees to submit to
the jurisdiction of the courts of the State of New York in any action or
proceeding arising out of or relating to this Note.
B-8
<PAGE>
23. Abbreviations and Defined Terms. Customary abbreviations may be
used in the name of a Holder of a Note or an assignee, such as: TEN COM (=
tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint
tenants with right of survivorship and not as tenants in common), CUST (=
Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
24. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Issuer has caused
CUSIP numbers to be printed on the Notes as a convenience to the Holders of the
Notes. No representation is made as to the accuracy of such numbers as printed
on the Notes and reliance may be placed only on the other identification numbers
printed hereon.
The Issuer will furnish to any Holder of a Note upon written request
and without charge a copy of the Indenture. Requests may be made to: Williams
Scotsman, Inc., 8211 Town Center Drive, Baltimore, Maryland 21236.
B-9
<PAGE>
ASSIGNMENT FORM
If you the Holder want to assign this Note, fill in the form below
and have your signature guaranteed:
I or we assign and transfer this Note to:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type name, address and zip code and social security or tax ID number
of assignee)
and irrevocably appoint ________________________, agent to transfer this Note on
the books of the Issuer. The agent may substitute another to act for him.
Dated: Signed:
------------------ --------------------------------------------
(Sign exactly as your name appears on the
other side of this Note)
Signature Guarantee:
------------------------------------------------------------
Signatures must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Registrar, which requirements on and after
October 26, 1992 will include membership or participation in STAMP or such other
"signature guarantee program" as may be determined by the Registrar in addition
to, or in substitution for, STAMP, all in accordance with the Securities
Exchange Act of 1934, as amended.
B-10
<PAGE>
[OPTION OF HOLDER TO ELECT PURCHASE]
If you want to elect to have this Note purchased by the Issuer
pursuant to Section 4.11 or Section 4.12 of this Indenture, check the
appropriate box:
Section 4.11 [ ]
Section 4.12 [ ]
If you want to elect to have only part of this Note purchased by the
Issuer pursuant to Section 4.11 or Section 4.12 of this Indenture, state the
amount you elect to have purchased:
$
-------------------
Dated:
-------------------- --------------------------------------------------
NOTICE: The signature on this assignment must
correspond with the name as it appears upon the
face of the within Note in every particular
without alteration or enlargement or any change
whatsoever and be guaranteed.
Signature Guarantee:
------------------------------------------------------------
Signatures must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Registrar, which requirements on and after
October 26, 1992 will include membership or participation in STAMP or such other
"signature guarantee program" as may be determined by the Registrar in addition
to, or in substitution for, STAMP, all in accordance with the Securities
Exchange Act of 1934, as amended.
B-11
<PAGE>
EXHIBIT C
Form of Certificate To Be
Delivered in Connection with
Transfers to Non-QIB Accredited Investors
[ ], [ ]
[ ]
[ ]
[ ]
Ladies and Gentlemen:
In connection with our proposed purchase of 9 7/8% Senior Notes due
2007 (the "Notes") of Williams Scotsman, Inc., a Maryland corporation
("Scotsman"), we confirm that:
1. We have received a copy of the Offering Memorandum (the "Offering
Memorandum"), dated May 16, 1997, relating to the Notes and such other
information as we deem necessary in order to make our investment decision.
We acknowledge that we have read and agreed to the matters stated in the
section entitled "Transfer Restrictions" of such Offering Memorandum.
2. We understand that any subsequent transfer of the Notes is
subject to certain restrictions and conditions set forth in the Indenture
relating to the Notes (the "Indenture") and the undersigned agrees to be
bound by, and not to resell, pledge or otherwise transfer the Notes except
in compliance with, such restrictions and conditions and the Securities
Act of 1933, as amended (the "Securities Act"), and all applicable State
securities laws.
3. We understand that the offer and sale of the Notes have not been
registered under the Securities Act, and that the Notes may not be offered
or sold within the United States or to, or for the account or benefit of,
U.S. persons except as permitted in the following sentence. We agree, on
our own behalf and on behalf of any accounts for which we are acting as
hereinafter stated, that if we should sell any Notes, we will do so only
(i) to Scotsman or any subsidiary thereof, (ii) inside the United States
in accordance with Rule 144A under the Securities Act to a "qualified
institutional buyer" (as defined in Rule 144A promulgated under the
Securities Act), (iii) inside the United States to an institutional
"accredited investor" (as defined below) that, prior to
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<PAGE>
such transfer, furnishes (or has furnished on its behalf by a U.S.
broker-dealer) to the Trustee (as defined in the Indenture) a signed
letter containing certain representations and agreements relating to the
restrictions on transfer of the Notes (the form of which letter can be
obtained from the Trustee), (iv) outside the United States in accordance
with Rule 904 of Regulation S promulgated under the Securities Act to
non-U.S. persons, (v) pursuant to the exemption from registration provided
by Rule 144 under the Securities Act (if available), or (vi) pursuant to
an effective registration statement under the Securities Act, and we
further agree to provide to any person purchasing any of the Notes from us
a notice advising such purchaser that resales of the Notes are restricted
as stated herein.
4. We understand that, on any proposed resale of any Notes, we will
be required to furnish to the Trustee and Scotsman such certification,
legal opinions and other information as the Trustee and Scotsman may
reasonably require to confirm that the proposed sale complies with the
foregoing restrictions. We further understand that the Notes purchased by
us will bear a legend to the foregoing effect.
5. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and
have such knowledge and experience in financial and business matters as to
be capable of evaluating the merits and risks of our investment in the
Notes, and we and any accounts for which we are acting are each able to
bear the economic risk of our or their investment, as the case may be.
6. We are acquiring the Notes purchased by us for our account or for
one or more accounts (each of which is an institutional "accredited
investor") as to each of which we exercise sole investment discretion.
C-2
<PAGE>
You, Scotsman, the Trustee and others are entitled to rely upon this
letter and are irrevocably authorized to produce this letter or a copy hereof to
any interested party in any administrative or legal proceeding or official
inquiry with respect to the matters covered hereby.
Very truly yours,
[Name of Transferee]
By:
---------------------------------
Name:
Title:
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<PAGE>
EXHIBIT D
Form of Certificate To Be Delivered
in Connection with Transfers
Pursuant to Regulation S
[ ], [ ]
[ ]
[ ]
[ ]
[ ]
Re: Williams Scotsman, Inc. ("Scotsman")
9 7/8% Senior Notes due 2007 (the "Notes")
Ladies and Gentlemen:
In connection with our proposed sale of $[ ] aggregate principal
amount of the Notes, we confirm that such sale has been effected pursuant to and
in accordance with Regulation S under the U.S. Securities Act of 1933, as
amended (the "Securities Act"), and, accordingly, we represent that:
(1) the offer of the Notes was not made to a person in the United
States;
(2) either (a) at the time the buy offer was originated, the
transferee was outside the United States or we and any person acting on
our behalf reasonably believed that the transferee was outside the United
States, or (b) the transaction was executed in, on or through the
facilities of a designated off-shore securities market and neither we nor
any person acting on our behalf knows that the transaction has been
pre-arranged with a buyer in the United States;
(3) no directed selling efforts have been made in the United States
in contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S, as applicable;
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act; and
(5) we have advised the transferee of the transfer restrictions
applicable to the Notes.
You, Scotsman and counsel for Scotsman are entitled to rely upon
this letter and are irrevocably authorized to produce this letter or a copy
hereof to any interested party in
D-1
<PAGE>
any administrative or legal proceedings or official inquiry with respect to the
matters covered hereby. Terms used in this certificate have the meanings set
forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:
----------------------------
Authorized Signature
D-2
<PAGE>
EXHIBIT E
GUARANTEE
For value received, the undersigned hereby unconditionally
guarantees, as principal obligor and not only as a surety, to the Holder of this
Note the cash payments in United States dollars of principal of, premium, if
any, and interest on this Note (and including Additional Interest payable
thereon) in the amounts and at the times when due and interest on the overdue
principal, premium, if any, and interest, if any, of this Note, if lawful, and
the payment or performance of all other obligations of the Issuer under the
Indenture (as defined below) or the Notes, to the Holder of this Note and the
Trustee, all in accordance with and subject to the terms and limitations of this
Note, Article Eleven of the Indenture and this Guarantee. This Guarantee will
become effective in accordance with Article Eleven of the Indenture and its
terms shall be evidenced therein. The validity and enforceability of any
Guarantee shall not be affected by the fact that it is not affixed to any
particular Note. Capitalized terms used but not defined herein shall have the
meanings ascribed to them in the Indenture dated as of May 15, 1997, among
Williams Scotsman, Inc., a Maryland corporation, as issuer (the "Issuer"),
Mobile Field Office Company, a New Jersey corporation, as guarantor and Willscot
Equipment, LLC, a Delaware limited liability company, as subordinated guarantor
and The Bank of New York, as trustee (the "Trustee"), as amended or supplemented
(the "Indenture").
The obligations of the undersigned to the Holders of Notes and to
the Trustee pursuant to this Guarantee and the Indenture are expressly set forth
in Article Eleven of the Indenture and reference is hereby made to the Indenture
for the precise terms of the Guarantee and all of the other provisions of the
Indenture to which this Guarantee relates.
THIS GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO PRINCIPLES OF
CONFLICTS OF LAW. Each Guarantor hereby agrees to submit to the jurisdiction of
the courts of the State of New York in any action or proceeding arising out of
or relating to this Guarantee.
This Guarantee is subject to release upon the terms set forth in the
Indenture.
E-1
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused its Guarantee to be
duly executed.
Date:____________________
MOBILE FIELD OFFICE COMPANY, as
Guarantor
By:
------------------------------------
Name:
Title:
E-2
<PAGE>
EXHIBIT F
SUBORDINATED GUARANTEE
For value received, the undersigned hereby unconditionally
guarantees, on a subordinated basis, to the Holder of this Note the cash
payments in United States dollars of principal of, premium, if any, and interest
on this Note (and including Additional Interest payable thereon) in the amounts
and at the times when due and interest on the overdue principal, premium, if
any, and interest, if any, of this Note, if lawful, and the payment or
performance of all other obligations of the Issuer under the Indenture (as
defined below) or the Notes, to the Holder of this Note and the Trustee, all in
accordance with and subject to the terms and limitations of this Note, Article
Eleven of the Indenture and this Subordinated Guarantee. This Subordinated
Guarantee will become effective in accordance with Article Eleven of the
Indenture and its terms shall be evidenced therein. The validity and
enforceability of any Subordinated Guarantee shall not be affected by the fact
that it is not affixed to any particular Note. Capitalized terms used but not
defined herein shall have the meanings ascribed to them in the Indenture dated
as of May 15, 1997, among Williams Scotsman, Inc., a Maryland corporation, as
issuer (the "Issuer"), Mobile Field Office Company, a New Jersey corporation, as
guarantor and Willscot Equipment, LLC, a Delaware limited liability company, as
subordinated guarantor and The Bank of New York, as trustee (the "Trustee"), as
amended or supplemented (the "Indenture").
The obligations of the undersigned to the Holders of Notes and to
the Trustee pursuant to this Subordinated Guarantee and the Indenture are
expressly set forth in Article Eleven of the Indenture and reference is hereby
made to the Indenture for the precise terms of the Subordinated Guarantee and
all of the other provisions of the Indenture to which this Subordinated
Guarantee relates.
THIS SUBORDINATED GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO
PRINCIPLES OF CONFLICTS OF LAW. Each Subordinated Guarantor hereby agrees to
submit to the jurisdiction of the courts of the State of New York in any action
or proceeding arising out of or relating to this Subordinated Guarantee.
This Subordinated Guarantee is subject to release upon the terms set
forth in the Indenture.
F-1
<PAGE>
IN WITNESS WHEREOF, the Subordinated Guarantor has caused its
Subordinated Guarantee to be duly executed.
Date:
-------------------
WILLSCOT EQUIPMENT, LLC, as
Subordinated Guarantor
By:
---------------------------------
Name:
Title:
F-2
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, all as of the date first written above.
WILLIAMS SCOTSMAN, INC.
By: /s/ John B. Ross
-----------------------------
Name: John B. Ross
Title: Vice President and Corporate
Counsel
MOBILE FIELD OFFICE COMPANY
By: /s/ John B. Ross
-------------------------------
Name: John B. Ross
Title: Secretary
WILLSCOT EQUIPMENT, LLC
By: Williams Scotsman, Inc.,
its member
By: /s/ John B. Ross
-----------------------------
Name: John B. Ross
Title: Vice President and Corporate
Counsel
THE BANK OF NEW YORK,
as Trustee
By: /s/ Mary Beth Lewicki
-------------------------------
Name: Mary Beth Lewicki
Title: Assistant Vice President
<PAGE>
Exhibit 4.2
WILLIAMS SCOTSMAN, INC.
REGISTRATION RIGHTS AGREEMENT
May 22, 1997
BT Securities Corporation
Alex. Brown & Sons Incorporated
Donaldson, Lufkin & Jenrette
Securities Corporation
c/o BT Securities Corporation
One Bankers Trust Plaza
New York, New York 10006
Dear Sirs and Mesdames:
Williams Scotsman, Inc., a Maryland corporation ("Company"),
proposes to issue and sell to BT Securities Corporation, Alex. Brown & Sons
Incorporated and Donaldson, Lufkin & Jenrette Securities Corporation
(collectively, the "Purchasers"), upon the terms set forth in a purchase
agreement of even date herewith (the "Purchase Agreement"), $300 million
principal amount of its 9 7/8% Senior Notes Due 2007 (the "Notes"). The Notes
will be guaranteed (the "Guarantee") on a senior basis by Mobile Field Office
Company ("MFO") and guaranteed on a subordinated basis (the "Subordinated
Guarantee") by WillScot Equipment, LLC (collectively with MFO, the
"Guarantors"). The Notes will be issued pursuant to the provisions of an
Indenture, dated as of May 15, 1997 (the "Indenture"), between the Company, as
issuer, the Guarantors and The Bank of New York, as Trustee (the "Trustee").
As an inducement to the Purchasers to enter into the Purchase
Agreement and in satisfaction of a condition to your obligations thereunder, the
Company and the Guarantors each agrees with the Purchasers, for the benefit of
the registered holders of the Notes (including, without limitation, the
Purchasers), the Exchange Notes (as defined below) and the Private Exchange
Notes (as defined below) (collectively, the "Holders"), as follows:
SECTION 1. Registration Exchange Offer. The Company and the
Guarantors shall use their respective best efforts to prepare and file within 45
days of the original issue of the Notes with the Securities and Exchange
Commission (the "Commission") a registration statement (the "Exchange Offer
Registration Statement") on an appropriate form under the Securities Act of
1933, as amended (the "Securities Act"), with respect to an offer (the
"Registration Exchange Offer") to the Holders of Transfer Restricted Notes (as
defined in Section 6 hereof), who are not prohibited by any law or policy of the
Commission from participating in the Registration Exchange Offer, to issue and
deliver to such Holders, in exchange for the Notes, a like aggregate principal
amount of debt securities (the "Exchange Notes") of the Company
<PAGE>
2
issued under the Indenture and identical in all material respects to the Notes
(except for the transfer restrictions relating to the Notes) that would be
registered under the Securities Act. The Company and the Guarantors shall use
their respective best efforts to cause such Exchange Offer Registration
Statement to become effective under the Securities Act within 150 days after the
date of original issue of the Notes and shall keep the Exchange Offer
Registration Statement effective for not less than 30 days (or longer, if
required by applicable law) after the date notice of the Registration Exchange
Offer is mailed to the Holders (such period being called the "Exchange Offer
Registration Period"). It is understood and agreed that the Exchange Offer
Registration Statement and the Registration Exchange Offer may include up to
$100 million of additional Exchange Notes which shall be offered to the holders
of $100 million of Notes originally sold to Oak Hill Securities Fund, L.P.
pursuant to a separate purchase agreement (the "Additional Notes"); provided,
however, that if and to the extent such inclusion of such additional Exchange
Notes shall delay or impede the filing or the declaration of the effectiveness
of the Exchange Offer Registration Statement or the registration of the Exchange
Notes beyond 150 days after the date of the original issue of the Notes, then
such additional Exchange Notes shall not be so included or, if so included, such
inclusion shall be promptly withdrawn.
If the Company and the Guarantors effect the Registration Exchange
Offer, the Company and the Guarantors will be entitled to close the Registration
Exchange Offer 30 days after the commencement thereof provided that the Company
and the Guarantors have accepted all the Notes theretofore validly tendered in
accordance with the terms of the Registration Exchange Offer.
Following the declaration of the effectiveness of the Exchange Offer
Registration Statement, the Company and the Guarantors shall promptly commence
the Registration Exchange Offer, it being the objective of such Registration
Exchange Offer to enable each Holder of Transfer Restricted Notes (as defined
below) electing to exchange such Transfer Restricted Notes for Exchange Notes
(assuming that such Holder is not an affiliate of the Company within the meaning
of the Securities Act, acquires the Exchange Notes in the ordinary course of
such Holder's business and has no arrangements with any person to participate in
the distribution of the Exchange Notes and is not prohibited by any law or
policy of the Commission from participating in the Registration Exchange Offer)
to trade such Exchange Notes from and after their receipt without any
limitations or restrictions under the Securities Act and without material
restrictions under the securities laws of the several states of the United
States. In connection with such Registration Exchange Offer, the Company and the
Guarantors shall use their respective best efforts to consummate the
Registration Exchange Offer and shall comply in all material respects with the
applicable requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") and other applicable laws and regulations in connection with the
Registration Exchange Offer.
The Company and the Guarantors each acknowledges that, pursuant to
current interpretations by the Commission's staff of Section 5 of the Securities
Act, in the absence of an applicable exemption therefrom, (i) each Holder which
is a
<PAGE>
3
broker-dealer electing to exchange Notes, acquired for its own account as a
result of market-making activities or other trading activities, for Exchange
Notes (an "Exchanging Dealer"), is required to deliver a prospectus containing
the information set forth in Annex A hereto on the cover, in Annex B hereto in
the "Exchange Offer Procedures" section and the "Purpose of the Exchange Offer"
section, and in Annex C hereto in the "Plan of Distribution" section of such
prospectus in connection with a sale of any such Exchange Notes received by such
Exchanging Dealer pursuant to the Registration Exchange Offer and (ii) if the
Purchasers are permitted to and elect to sell Exchange Notes acquired in
exchange for Notes constituting any portion of an unsold allotment, they are
required to deliver a prospectus containing the information required by Items
507 or 508 of Regulation S-K under the Securities Act, as applicable, in
connection with such sale.
The Company and the Guarantors shall include within the prospectus
contained in the Exchange Offer Registration Statement a section entitled "Plan
of Distribution", reasonably acceptable to the Purchasers, which shall contain a
summary statement of the positions taken or policies made by the staff of the
Commission with respect to the potential "underwriter" status of any
broker-dealer that is the beneficial owner (as defined in Rule 13d-3 under the
Exchange Act) of Exchange Notes received by such broker-dealer in the
Registration Exchange Offer (a "Participating Broker-Dealer"), whether such
positions or policies have been publicly disseminated by the staff of the
Commission or such positions or policies, in the reasonable judgment of the
Purchasers based upon advice of counsel (which may be in-house counsel),
represent the prevailing views of the staff of the Commission.
The Company and the Guarantors shall use their respective best
efforts to keep the Exchange Offer Registration Statement effective and to amend
and supplement the prospectus contained therein, in order to permit such
prospectus to be lawfully delivered by the Purchasers and all Exchanging Dealers
subject to the prospectus delivery requirements of the Securities Act and shall
make such prospectuses available to the Purchasers and such Exchanging Dealers
for such period of time after the consummation of the Registration Exchange
Offer as such persons must comply with such requirements in order to resell the
Exchange Notes; provided, however, that such period shall not exceed 120 days
(unless extended pursuant to Section 3(j) below); and, provided further, that
such persons shall not be authorized by the Company or the Guarantors to deliver
and shall not deliver any such prospectus after the expiration of such period in
connection with the resales contemplated by this paragraph.
The Company and the Guarantors shall make available for a period of
90 days after the consummation of the Registration Exchange Offer, a copy of the
prospectus, and any amendment or supplement thereto, forming part of the
Exchange Offer Registration Statement to any broker-dealer for use in connection
with any resale of any Exchange Notes.
If, upon consummation of the Registration Exchange Offer, any
Purchaser holds Notes acquired by it as part of its initial distribution, the
Company
<PAGE>
4
and the Guarantors, simultaneously with the delivery of the Exchange Notes
pursuant to the Registration Exchange Offer, shall issue and deliver to such
Purchaser upon the written request of such Purchaser, in exchange (the "Private
Exchange") for the Notes held by such Purchaser, a like principal amount of debt
securities of the Company issued under the Indenture and guaranteed by the
Guarantors pursuant to the Guarantee and the Subordinated Guarantee and
identical in all material respects (including the existence of restrictions on
transfer under the Securities Act and the securities laws of the several states
of the United States) to the Notes (the "Private Exchange Notes"). The Notes,
the Exchange Notes and the Private Exchange Notes are herein collectively called
the "Securities."
In connection with the Registration Exchange Offer, the Company and
the Guarantors shall:
(a) mail to each Holder a copy of the prospectus forming part
of the Exchange Offer Registration Statement, together with an appropriate
letter of transmittal and related documents;
(b) keep the Registration Exchange Offer open for not less
than 30 days (or longer, if required by applicable law) after the date
notice thereof is mailed to the Holders;
(c) utilize the services of a depositary for the Registration
Exchange Offer with an address in the Borough of Manhattan, The City of
New York, which may be the Trustee or an affiliate of the Trustee;
(d) permit Holders to withdraw tendered Notes at any time
prior to the close of business, New York time, on the last business day on
which the Registration Exchange Offer shall remain open; and
(e) otherwise comply in all material respects with all
applicable laws.
As soon as practicable after the close of the Registration Exchange
Offer or the Private Exchange, as the case may be, the Company and the
Guarantors shall:
(i) accept for exchange all the Notes validly tendered and
not withdrawn pursuant to the Registration Exchange Offer and the Private
Exchange;
(ii) deliver, or cause to be delivered, to the Trustee for
cancellation all the Notes so accepted for exchange; and
(iii) issue, and cause the Trustee to authenticate and deliver
promptly to each Holder of the Notes, Exchange Notes or Private Exchange
<PAGE>
5
Notes, as the case may be, equal in principal amount to the Notes of such
Holder so accepted for exchange.
The Indenture will provide that the Exchange Notes will not be
subject to the transfer restrictions set forth in the Indenture and that all the
Securities will vote and consent together on all matters as one class and that
none of the Securities will have the right to vote or consent as a class
separate from one another on any matter.
Interest on each Exchange Note and Private Exchange Note issued
pursuant to the Registration Exchange Offer and in the Private Exchange will
accrue (i) from the later of (a) the last interest payment date on which
interest was paid on the Notes surrendered in exchange therefor or, (b) if the
Note is 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
(ii) if no interest has been paid on the Notes, from the date of original issue
of the Notes.
Each Holder participating in the Registration Exchange Offer shall
be required to represent to the Company and the Guarantors that at the time of
the consummation of the Registration Exchange Offer (i) any Exchange Notes
received by such Holder will be acquired in the ordinary course of business,
(ii) such Holder will have no arrangements or understanding with any person to
participate in the distribution of the Notes or the Exchange Notes within the
meaning of the Securities Act, (iii) such Holder is not an "affiliate," as
defined in Rule 405 of the Securities Act, of the Company or any Guarantor or if
it is an affiliate, such Holder will comply with the registration and prospectus
delivery requirements of the Securities Act to the extent applicable, (iv) if
such Holder is not a broker-dealer, that it is not engaged in, and does not
intend to engage in, the distribution of the Exchange Notes and (v) if such
Holder is a broker-dealer, that it will receive Exchange Notes for its own
account in exchange for Notes that were acquired as a result of market-making
activities or other trading activities and that it will be required to
acknowledge that it will deliver a prospectus in connection with any resale of
such Exchange Notes.
Notwithstanding any other provisions hereof, the Company and the
Guarantors will ensure that (i) any Exchange Offer Registration Statement and
any amendment thereto and any prospectus forming part thereof and any supplement
thereto complies in all material respects with the Securities Act and the rules
and regulations thereunder, (ii) any Exchange Offer Registration Statement and
any amendment thereto does not, when it becomes effective, contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading and (iii) any
prospectus forming part of any Exchange Offer Registration Statement, and any
supplement to such prospectus, at the time of issuance does not include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the
<PAGE>
6
statements therein, in light of the circumstances under which they were made,
not misleading.
SECTION 2. Shelf Registration. If (i) the Company and the Guarantors
determine that a Registration Exchange Offer, as contemplated by Section I
hereof, is not available or may not be consummated as soon as practicable after
the last date the Registration Exchange Offer is open because it would violate
applicable law or the applicable interpretations of the staff of the Commission,
(ii) the Registration Exchange Offer is not consummated within 180 days of the
date of original issue of the Notes, (iii) the Purchasers so request with
respect to the Notes (or the Private Exchange Notes) not eligible to be
exchanged for Exchange Notes in the Registration Exchange Offer and held by them
following consummation of the Registration Exchange Offer or (iv) any Holder
(other than an Exchanging Dealer) is not eligible to participate in the
Registration Exchange Offer or, in the case of any Holder (other than an
Exchanging Dealer) that participates in the Registration Exchange Offer, such
Holder does not receive freely tradeable Exchange Notes on the date of the
exchange for validly tendered (and not withdrawn) Notes, the Company and the
Guarantors shall take the following actions:
(a) The Company and the Guarantors shall use all reasonable
efforts to prepare and file, as promptly as practicable, with the
Commission and thereafter to cause to be declared effective a registration
statement (the "Shelf Registration Statement" and, together with the
Exchange Offer Registration Statement, a "Registration Statement") on an
appropriate form under the Securities Act relating to the offer and sale
of the Transfer Restricted Notes, by the Holders thereof from time to time
in accordance with the methods of distribution set forth in the Shelf
Registration Statement and Rule 415 under the Securities Act (hereinafter,
the "Shelf Registration"); provided, however, that no Holder (other than
the Purchasers) shall be entitled to have any Securities held by it
covered by such Shelf Registration Statement unless such Holder agrees in
writing to be bound by all the provisions of this Agreement applicable to
such Holder. It is agreed that the holders of the Additional Notes are
entitled to have the Additional Notes held by them included in the Shelf
Registration Statement and that the provisions of the registration rights
agreement dated as of the date hereof, among the Company, the Guarantors
and Oak Hill Securities Fund, L.P. shall be applicable to such holders;
provided, however, that if and to the extent such inclusion of such
Additional Notes shall delay or impede the filing or the declaration of
the effectiveness of the Shelf Registration Registration Statement or the
registration of the Additional Notes beyond 180 days after the date of the
original issue of the Notes then such Additional Notes shall not be so
included or, if so included, such inclusion shall be promptly withdrawn.
(b) The Company and the Guarantors shall use all reasonable
efforts to keep the Shelf Registration Statement continuously effective in
order to permit the prospectus included therein to be lawfully delivered
by the Holders of the relevant Securities, until the period referred to in
Rule 144(k)
<PAGE>
7
under the Securities Act after the original issue date of the Notes
expires (or for such longer period if extended pursuant to Section 3(j)
below) or such shorter period that will terminate when all the Securities
covered by the Shelf Registration Statement have been sold pursuant
thereto.
(c) Notwithstanding any other provisions of this Agreement to
the contrary, the Company and the Guarantors shall cause the Shelf
Registration Statement and the related prospectus and any amendment or
supplement thereto, as of the effective date of the Shelf Registration
Statement, amendment or supplement, (i) to comply in all material respects
with the applicable requirements of the Securities Act and the rules and
regulations of the Commission and (ii) not to contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
SECTION 3. Registration Procedures. In connection with any Shelf
Registration contemplated by Section 2 hereof and, to the extent applicable, any
Registration Exchange Offer contemplated by Section I hereof, the following
provisions shall apply:
(a) The Company and the Guarantors shall (i) furnish to the
Purchasers, prior to the filing thereof with the Commission, a copy of the
Registration Statement and each amendment thereof and each supplement, if
any, to the prospectus included therein and shall not file any such
Registration Statement or amendment thereto or any prospectus or any
supplement thereto (including such documents which, upon filing, would be
incorporated or deemed to be incorporated by reference therein and
amendments to such documents other than documents required to be filed
pursuant to the Exchange Act) to which the Purchasers shall reasonably
object, except for any Registration Statement or amendment thereto or
prospectus or supplement thereto (a copy of which has been previously
furnished to the Purchasers and their counsel (and, in the case of a Shelf
Registration Statement, the Holders and their counsel)) which counsel to
the Company and the Guarantors has advised the Company and the Guarantors
in writing is required to be filed in order to comply with applicable law;
(ii) include information substantially to the effect set forth (A) in
Annex A hereto on the cover of a prospectus forming part of the Exchange
Offer Registration Statement, (B) in Annex B hereto in the "Exchange Offer
Procedures" section and the "Purpose of the Exchange Offer" section, (C)
in Annex C hereto in the "Plan of Distribution" section of the prospectus
forming a part of the Exchange Offer Registration Statement and (D)
include the information set forth in Annex D hereto in the Letter of
Transmittal delivered pursuant to the Registration Exchange Offer; (iii)
to the extent required by law or interpretation of the staff of the
Commission, if requested by the Purchasers, include the information
required by Items 507 or 508 of Regulation S-K under the Securities Act,
as applicable, in the prospectus forming a part of the Exchange Offer
Registration Statement;
<PAGE>
8
and (iv) to the extent required by law or interpretation of the staff of
the Commission, in the case of a Shelf Registration Statement, include the
names of the Holders who propose to sell Securities pursuant to the Shelf
Registration Statement as selling security holders.
(b) The Company and the Guarantors shall notify the
Purchasers, the Holders and any Participating Broker-Dealer from whom the
Company or any of the Guarantors has received prior written notice stating
that it will be a Participating Broker-Dealer in the Registration Exchange
Offer (which notice pursuant to clauses (ii) through (v) hereof shall be
accompanied by an instruction to suspend the use of the prospectus until
the requisite changes have been made) promptly, and, if requested by the
Purchasers, the Holders or any such Participating Broker-Dealer, confirm
such notice in writing:
(i) when the Registration Statement or any amendment
thereto has been filed with the Commission and when the Registration
Statement or any post-effective amendment thereto has become
effective;
(ii) of any request by the Commission for amendments or
supplements to the Registration Statement or the prospectus included
therein or for additional information;
(iii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose;
(iv) of the receipt by the Company or any of the Guarantors
or their legal counsel of any notification with respect to the
suspension of the qualification of the Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for
such purpose;
(v) of the happening of any event that requires the Company
or any of the Guarantors to make changes in the Registration
Statement or the prospectus in order that the Registration Statement
or the prospectus do not contain an untrue statement of a material
fact nor omit to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; and
(vi) of any determination by the Company or any of the
Guarantors that a post-effective amendment to a Registration
Statement would be appropriate.
<PAGE>
9
(c) The Company and the Guarantors shall make every reasonable
effort to prevent the issuance, and if issued to obtain the withdrawal at
the earliest possible time, of any order suspending the effectiveness of
the Registration Statement and shall provide prompt written notice to the
Purchasers and each Holder of the withdrawal of any such order.
(d) The Company and the Guarantors shall furnish to each
Holder of Securities included within the coverage of the Shelf
Registration, without charge, at least one conformed copy of the Shelf
Registration Statement and any post-effective amendment thereto, including
financial statements and schedules (without documents incorporated therein
by reference or exhibits thereto, unless a Holder so requests in writing).
(e) The Company and the Guarantors shall deliver to the
Purchasers, and to any other Holder that so requests, without charge, at
least one conformed copy of the Exchange Offer Registration Statement and
any post-effective amendment thereto, including financial statements and
schedules (without documents incorporated therein by reference or exhibits
thereto, unless the Purchasers or any such Holder so request in writing).
(f) The Company and the Guarantors shall deliver to each
Holder of Securities included within the coverage of the Shelf
Registration, without charge, as many copies of the prospectus (including
each preliminary prospectus) included in the Shelf Registration Statement
and any amendment or supplement thereto as such person may reasonably
request. The Company and each Guarantor consents, subject to the
provisions of this Agreement, to the use of the prospectus or any
amendment or supplement thereto by each of the selling Holders of the
Securities in connection with the offering and sale of the Securities
covered by, and as contemplated by, the prospectus, or any amendment or
supplement thereto, included in the Shelf Registration Statement.
(g) The Company and the Guarantors shall deliver to the
Purchasers, any Participating Broker-Dealer or any Exchanging Dealer,
without charge, as many copies of the final prospectus included in the
Exchange Offer Registration Statement and any amendment or supplement
thereto as such person may reasonably request, during the period not
exceeding 120 days following the consummation of the Registration Exchange
Offer. The Company and each Guarantor consents, subject to the provisions
of this Agreement, to the use of the prospectus or any amendment or
supplement thereto by the Purchasers, if necessary, any Participating
Broker-Dealer or Exchanging Dealer and such other persons required to
deliver a prospectus following the Registration Exchange Offer in
connection with the offering and sale of the Exchange Notes covered by the
prospectus, or any amendment or supplement thereto, included in such
Exchange Offer Registration Statement; provided, however, that such
persons shall not be authorized by the Company or any Guarantor to deliver
and shall not deliver
<PAGE>
10
any such prospectus after the expiration of the period referred to in the
immediately preceding sentence, in connection with the resales
contemplated by this paragraph.
(h) Prior to any public offering of the Securities pursuant to
any Registration Statement, the Company and the Guarantors shall use their
respective best efforts to register or qualify or cooperate with the
Holders of the Securities included therein and their respective counsel in
connection with the registration or qualification of the Securities for
offer and sale under the securities or Blue Sky laws of such states of the
United States as any Holder of the Securities reasonably requests in
writing and do any and all other acts or things necessary or advisable to
enable such Holder to offer and sell in such jurisdictions the Securities
covered by such Registration Statement owned by such Holder; provided,
however, that neither the Company nor any Guarantor shall be required to
(i) qualify generally or as a foreign corporation to do business in any
jurisdiction where it is not then so qualified or (ii) take any action
which would subject it to general service of process or to taxation in any
jurisdiction where it is not then so subject.
(i) The Company and the Guarantors shall cooperate with the
Holders of the Securities to facilitate the timely preparation and
delivery of certificates representing the Securities to be sold pursuant
to any Shelf Registration Statement free of any restrictive legends and in
such denominations (consistent with the provisions of the Indenture) and
registered in such names as the Holders may request at least two business
days prior to closing of any sale of the Securities pursuant to such Shelf
Registration Statement.
(j) If any event contemplated by paragraphs (ii) through (vi)
of Section 3(b) above occurs during the period for which the Company or
any Guarantor is required to maintain an effective Registration Statement,
the Company and the Guarantors shall promptly prepare and file a
post-effective amendment to the Registration Statement or a supplement to
the related prospectus and any other required document so that, as
thereafter delivered to Holders of the Notes or purchasers of Securities,
the prospectus will not contain an untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which
they were made, not misleading. If the Company or any Guarantor notifies
the Purchasers, the Holders of the Securities and any known Participating
Broker-Dealer in accordance with paragraphs (ii) through (vi) of Section
3(b) above to suspend the use of the prospectus until the requisite
changes to the prospectus have been made, then the Purchasers, the Holders
of the Securities and any such Participating Broker-Dealers shall suspend
use of such prospectus until the Company or such Guarantor has amended or
supplemented the prospectus to correct such misstatement or omission, and
the period of effectiveness of the Shelf Registration Statement provided
for in Section 2(b) above and the Exchange
<PAGE>
11
Offer Registration Statement provided for in Section 1 above shall each be
extended by the number of days from and including the date of the giving
of such notice to and including the date when the Purchasers, the Holders
of the Securities and any known Participating Broker-Dealer shall have
received such amended or supplemented prospectus pursuant to this Section
3(j); provided, however, that the minimum time period before the Company
or any Guarantor shall be entitled to close the Registration Exchange
Offer shall be extended only to the extent required by the Commission. The
Purchasers, each Holder and any Participating Broker-Dealers agree that
upon receipt of any such notice from the Company it will not distribute
copies of the prospectus that are the subject of such notice and will
retain such copies in its files.
(k) Not later than the effective date of the applicable
Registration Statement, the Company and the Guarantors will obtain a CUSIP
number for the Transfer Restricted Notes, the Exchange Notes or the
Private Exchange Notes, as the case may be, and provide the Trustee with
printed certificates for the Notes, the Exchange Notes or the Private
Exchange Notes, as the case may be, in a form eligible for deposit with
The Depository Trust Company.
(l) The Company and the Guarantors will comply in all material
respects with all rules and regulations of the Commission to the extent
and so long as they are applicable to the Registration Exchange Offer or
the Shelf Registration and will make generally available to its securities
holders (or otherwise provide in accordance with Section 11(a) of the
Securities Act) an earnings statement satisfying the provisions of Section
11(a) of the Securities Act, no later than 45 days after the end of a
12-month period (or 90 days, if such period is a fiscal year) beginning
with the first month of the Company's first fiscal quarter commencing
after the effective date of the Registration Statement, which statement
shall cover such 12-month period.
(m) The Company and the Guarantors shall cause the Indenture
to be qualified under the Trust Indenture Act of 1939, as amended, in a
timely manner and containing such changes, if any, as shall be necessary
for such qualification. In the event that such qualification would require
the appointment of a new trustee under the Indenture, the Company shall
appoint a new trustee thereunder pursuant to the applicable provisions of
the Indenture.
(n) The Company and the Guarantors may require each Holder of
Securities to be sold pursuant to the Shelf Registration Statement to
furnish to the Company and the Guarantors such information regarding the
Holder and the distribution of the Securities as the Company may from time
to time reasonably request for inclusion in the Shelf Registration
Statement, and the Company and the Guarantors may exclude from such
registration the Securities of any Holder that fails to furnish such
information within a reasonable time after receiving such request.
<PAGE>
12
(o) In the case of any Shelf Registration, the Company and the
Guarantors shall enter into such customary agreements (including if
requested an underwriting agreement in customary form) and take all such
other action, if any, as the Holders of a majority of the Securities being
sold shall reasonably request in order to facilitate the disposition of
the Securities pursuant to such Shelf Registration.
(p) In the case of any Shelf Registration, the Company and the
Guarantors shall make available for inspection by a representative of the
Holders of Securities being sold, its counsel and an accountant retained
by such Holders, in a manner designed to permit underwriters to satisfy
their due diligence investigation under the Securities Act, all financial
and other records, pertinent corporate documents and properties of the
Company and the Guarantors customarily inspected by underwriters in
primary underwritten offerings and cause the officers, directors and
employees of the Company and its subsidiaries (including the Guarantors)
to supply all information reasonably requested by, and customarily
supplied in connection with primary underwritten offerings to, any such
representative, attorney or accountant in connection with such
registration; provided, however, that any records, information or
documents that are designated by the Company or any Guarantor as
confidential at the time of delivery of such records, information or
documents shall be kept confidential by such persons, unless (i) such
records, information or documents are in the public domain or otherwise
publicly available, (ii) disclosure of such records, information or
documents is required by court or administrative order or (iii) disclosure
of such records, information or documents, in the written opinion of
counsel to such person, is otherwise required by law (including, without
limitation, pursuant to the requirements of the Securities Act).
(q) In the case of any Shelf Registration, the Company and the
Guarantors, if requested by any Holder of Securities covered thereby,
shall each (i) cause their counsel to deliver an opinion and updates
thereof relating to the Securities in customary form addressed to such
Holders and the managing underwriters, if any, and dated, in the case of
the initial opinion, the effective date of such Shelf Registration
Statement covering matters customarily covered in opinions requested in
underwritten offerings, (ii) cause its officers to execute and deliver
such documents and certificates and updates thereof as may be reasonably
requested by any underwriters of the applicable Securities, and which are
customarily delivered in underwritten offerings, to evidence the continued
validity of the representations and warranties of the Company and the
Guarantors made pursuant to, and to evidence compliance with any customary
conditions contained in, an underwriting agreement and (iii) cause its
independent public accountants to provide to the selling Holders of the
applicable Securities and any underwriter therefor a comfort letter in
customary form and covering matters of the type customarily covered in
comfort letters in connection with primary underwritten offerings, subject
to
<PAGE>
13
receipt of appropriate documentation as contemplated, and only if
permitted, by Statement of Auditing Standards No. 72.
(r) If a Registration Exchange Offer or a Private Exchange is
to be consummated, upon delivery of the Notes by Holders to the Company
and the Guarantors (or to such other Person as directed by the Company or
any Guarantor) in exchange for the Exchange Notes or the Private Exchange
Notes, as the case may be, the Company shall mark, or cause to be marked,
on the Notes so exchanged that such Notes are being canceled in exchange
for the Exchange Notes or the Private Exchange Notes, as the case may be,
and in no event shall the Notes be marked as paid or otherwise satisfied.
(s) The Company and the Guarantors will use their respective
best efforts to cause the Securities covered by a Shelf Registration
Statement to be rated by two nationally recognized statistical rating
organizations (as such term is defined in Rule 436(g)(2) under the
Securities Act) if so requested by Holders of a majority in aggregate
principal amount of Securities covered by such Shelf Registration
Statement, or by the managing underwriters, if any.
(t) In the event that any broker-dealer registered under the
Exchange Act shall underwrite any Securities or participate as a member of
an underwriting syndicate or selling group or "assist in the distribution"
(within the meaning of the Conduct Rules of the National Association of
Securities Dealers, Inc. ("NASD")) thereof, whether as a Holder of such
Securities or as an underwriter, a placement or sales agent or a broker or
dealer in respect thereof, or otherwise, the Company and the Guarantors
shall assist such broker-dealer in complying with the requirements of such
Rules and By-Laws, including by (i) if such Rules, including Rule 2720,
shall so require, engaging a "qualified independent underwriter" (as
defined in such Rule) to participate in the preparation of the
Registration Statement relating to such Securities, to exercise usual
standards of due diligence in respect thereto and, if any portion of the
offering contemplated by such Registration Statement is an underwritten
offering or is made through a placement or sales agent, to recommend the
yield of such Securities, (ii) indemnifying any such qualified independent
underwriter to the extent of the indemnification of underwriters provided
in Section 5 hereof and (iii) providing such information to such
broker-dealer as may be required in order for such broker-dealer to comply
with the requirements of the Conduct Rules of the NASD.
SECTION 4. Registration Expenses. The Company and the Guarantors
shall jointly and severally pay all fees and expenses incident to the
performance of or compliance with this Agreement by the Company and the
Guarantors including, without limitation, (i) all Commission, stock exchange or
NASD registration and filing fees, (ii) all fees and expenses incurred in
connection with compliance with state securities or Blue Sky laws (including
reasonable fees and disbursements of counsel for any underwriters or holders in
connection with Blue Sky
<PAGE>
14
qualification of any of the Securities), (iii) all expenses of any persons in
preparing or assisting in preparing, word processing, printing and distributing
any Registration Statement, any prospectus, any amendments or supplements
thereto, and all expenses of printing any underwriting agreements, securities
sales agreements and other documents relating to the performance of and
compliance with this Agreement, (iv) all rating agency fees, and (v) the fees
and disbursements of counsel for the Company and the Guarantors and in the event
of a Shelf Registration, the reasonable fees and disbursements of one firm of
counsel designated by the Holders of a majority in principal amount of the
Securities covered thereby and of the independent public accountants of the
Company, including the expense of any special audits or "cold comfort" letters
required by or incident to such performance and compliance, but excluding fees
and expenses of counsel to the underwriters and underwriting discounts and
commissions and transfer taxes, if any, relating to the sale or disposition of
Securities by a Holder.
SECTION 5. Indemnification. (a) The Company and each of the
Guarantors jointly and severally agree to indemnify and hold harmless each
Holder of the Securities, any Participating Broker-Dealer, and each person, if
any, who controls such Holder or such Participating Broker-Dealer within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act, or is under common control with, or is controlled by, such Holder or such
Participating Broker-Dealer, from and against any and all losses, claims,
damages and liabilities (including, without limitation, any legal or other
expenses reasonably incurred in connection with defending or investigating any
such action or claim) caused by any untrue statement or alleged untrue statement
of a material fact contained in a Registration Statement or prospectus (as
amended or supplemented if the Company or any Guarantor shall have furnished any
amendments or supplements thereto), or caused by any omission or alleged
omission to state therein a material fact required to be stated to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except insofar as such losses, claims, damages or liabilities
are caused by any such untrue statement or omission or alleged untrue statement
or omission based upon information relating to such Holder or Participating
Broker-Dealer furnished to the Company or any Guarantor in writing by such
Holder or Participating Broker-Dealer expressly for use therein; provided that
the foregoing indemnity with respect to any preliminary prospectus shall not
inure to the benefit of any Holder or Participating Broker-Dealer from whom the
person asserting any such losses, claims, damages or liabilities purchased
Securities, or any person controlling or affiliated with such Holder or
Participating Broker-Dealer, if a copy of the final prospectus (as then amended
or supplemented if the Company or any Guarantor shall have furnished any
amendments or supplements thereto) was not sent or given by or on behalf of such
Holder or Participating Broker-Dealer to such person, if required by law so to
have been delivered, at or prior to the written confirmation of the sale of the
Securities to such person, and if the final prospectus (as so amended or
supplemented) would have cured the defect giving rise to such loss, claim,
damage or liability.
<PAGE>
15
(b) Each Holder of the Securities, severally and not jointly, agrees
to indemnify and hold harmless the Company, each of the Guarantors, other
selling Holders, directors of the Company, directors of the Guarantors, the
officers of the Company or any Guarantor who sign a Registration Statement and
each person, if any, who controls the Company or any Guarantor or any selling
Holders, within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act to the same extent as the foregoing indemnity
from the Company and the Guarantors to such Holder, but only with reference to
information relating to such Holder furnished to the Company in writing by such
Holder expressly for use in a Registration Statement, any preliminary
prospectus, prospectus or any amendments or supplements thereto.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to either paragraph (a) or (b) above, such
person (the "indemnified party") shall promptly notify the person against whom
such indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the reasonable fees and expenses of such counsel related to such
proceeding. In any such proceeding, any indemnified party shall have the right
to retain its own counsel, but the fees and expenses of such counsel shall be at
the expense of such indemnified party unless (i) the indemnifying party and the
indemnified party shall have mutually agreed to the retention of such counsel or
(ii) the named parties to any such proceeding (including any impleaded parties)
include both the indemnifying party and the indemnified party and representation
of both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. It is understood that the
indemnifying party shall not, in respect of the legal expenses of any
indemnified party in connection with any proceeding or related proceedings in
the same jurisdiction, be liable for the reasonable fees and expenses of more
than one separate firm (in addition to any local counsel) for all such
indemnified parties and that all such reasonable fees and expenses shall be
reimbursed as they are incurred. If an indemnified party includes (x) the
Purchasers or such controlling persons of the Purchasers, such firm shall be
designated in writing by BT Securities Corporation or (y) Holders of Securities
(other than the Purchasers) or controlling persons of such Holders, such firm
shall be designated in writing by Holders of a majority-in aggregate principal
amount of such Securities. In all other cases, such firm shall be designated by
the Company. The indemnifying party shall not be liable for any settlement of
any proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment. Notwithstanding the
foregoing sentence, if at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel as contemplated by the second and third sentences of this paragraph, the
indemnifying party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such
<PAGE>
16
settlement is entered into more than 90 days after receipt by such indemnifying
party of the aforesaid request and (ii) such indemnifying party shall not have
reimbursed the indemnified party in accordance with such request prior to the
date of such settlement. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened proceeding in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter of
such proceeding and for which indemnity could have been sought hereunder.
(d) To the extent the indemnification provided for in paragraph (a)
or (b) of this Section 5 is unavailable to an indemnified party or insufficient
in respect of any losses, claims, damages or liabilities referred to therein,
then each indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the indemnifying party or parties on the one hand and the
indemnified party or parties on the other hand or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the indemnifying party or
parties on the one hand and the indemnified party or parties on the other hand
in connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company and the Guarantors
on the one hand and any such Holder, Participating Broker-Dealer or other party
on the other hand shall be deemed to be in the same respective proportions as
the net proceeds from the offering of the Notes (before deducting expenses)
received by the Company and the Guarantors and the total discounts and
commissions received or realized by such Holder, Participating Broker-Dealer or
other party in respect thereof, in each case as set forth in the Final
Memorandum, bear to the aggregate offering price of such Securities. The
relative fault of the parties shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company and the Guarantors or by such Holder, Participating
Broker-Dealer or other party and the parties relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission.
The Holders respective obligations to contribute pursuant to this Section 5 are
several in proportion to the respective amount of Notes they have purchased, not
joint.
(e) The Company and the Guarantors and each Holder agree that it
would not be just or equitable if contribution pursuant to this Section 5 were
determined by pro rata allocation or by any other method of allocation that does
not take account of the equitable considerations referred to in paragraph (d) of
this Section 5. The amount paid or payable by an indemnified party as a result
of the losses, claims, damages and liabilities referred to in paragraph (d)
above shall be
<PAGE>
17
deemed to include, subject to the limitations set forth above, any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 5, no Holder of Securities shall be required to
contribute any amount in excess of the amount by which the total price at which
the Securities were sold by such Holder pursuant to a Registration Statement
exceeds the amount of any damages that such Holders have otherwise been required
to pay by reason of such untrue or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
(f) The indemnity and contribution provisions contained in this
Section 5 shall remain operative and in full force and effect regardless of (i)
any termination of this Agreement, (ii) any investigation made by or on behalf
of any Holder or Participating Broker-Dealer or any person controlling such
Holder or Participating Broker-Dealer or by or on behalf of the Company, its
officers or directors or any person controlling the Company and (iii) the sale
of the Securities. The remedies provided for in this Section 5 are not exclusive
and shall not limit any rights or remedies which may otherwise be available to
any indemnified party at law or in equity.
SECTION 6. Additional Interest Under Certain Circumstances. (a)
Additional interest (the "Additional Interest") with respect to the Securities
shall be assessed as follows if any of the following events occur (each such
event in clauses (i) through (iii) below a "Failure to Register"):
(i) if by July 6, 1997, neither the Exchange Offer Registration
Statement nor a Shelf Registration Statement has been filed with the
Commission;
(ii) If by October 19, 1997, neither the Registration Exchange
Offer is consummated nor, if required in lieu thereof, the Shelf
Registration Statement is declared effective by the Commission; or
(iii) If, after November 18, 1997, and after either the Exchange
Offer Registration Statement or the Shelf Registration Statement is
declared effective, (A) such Registration Statement thereafter ceases to
be effective prior to completion of the Exchange Offer or the sale of all
the Transferred Restricted Notes registered pursuant to the Shelf
Registration Statement, as the case may be (except upon termination of the
period specified in Section 2(j) hereof or as permitted in paragraph (b)
of this Section 6); or (B) such Registration Statement or the related
prospectus ceases to be usable in connection with resales of Transfer
Restricted Notes during the periods specified in this Agreement (except as
permitted in paragraph (b) of this Section 6) because either (1) any event
occurs as a result of which the related prospectus forming part of such
Registration Statement would include any
<PAGE>
18
untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein in the light of the circumstances
under which they were made not misleading or (2) it shall be necessary to
amend such Registration Statement, or supplement the related prospectus,
to comply with the Securities Act or the Exchange Act or the respective
rules thereunder.
Additional Interest shall accrue on the Notes over and above the
interest set forth in the title of the Notes from and including the date on
which any such Failure to Register shall occur to but excluding the date on
which all such Failures to Register have been cured, at a rate of 0.50% per
annum.
(b) A Failure to Register referred to in Section 6(a)(iii) shall be
deemed not to have occurred and be continuing in relation to a Registration
Statement or the related prospectus if (i) such Failure to Register has occurred
solely as a result of (x) the filing of a post-effective amendment to such
Registration Statement to incorporate annual audited financial information with
respect to the Company and the Guarantors where such post-effective amendment is
not yet effective and needs to be declared effective to permit Holders to use
the related prospectus or (y) the occurrence of other material events or
developments with respect to the Company or any Guarantor that would need to be
described in such Registration Statement or the related prospectus and (ii) in
the case of clause (y), the Company and the Guarantors are proceeding promptly
and in good faith to amend or supplement such Registration Statement and related
prospectus to describe such events or, in the case of material developments that
the Company and the Guarantors determine in good faith must remain confidential
for business reasons, the Company and the Guarantors are proceeding promptly and
in good faith to take such steps as are necessary so that such developments need
no longer remain confidential; provided, however, that in any case, if such
Failure to Register occurs for a continuous period in excess of 45 days,
Additional Interest shall be payable in accordance with the above paragraph from
the day following such 45 day period until the date on which such Failure to
Register is cured.
(c) Any amounts of Additional Interest due pursuant to clause
(a)(i), (a)(ii) or (a)(iii) of Section 6 above will be payable in cash on the
regular interest payment dates with respect to the Notes. The amount of
Additional Interest will be determined by multiplying the applicable Additional
Interest rate by the principal amount of the Notes, multiplied by a fraction,
the numerator of which is the number of days such Additional Interest rate was
applicable during such period (determined on the basis of a 360-day year
comprised of twelve 30-day months), and the denominator of which is 360.
(d) "Transfer Restricted Notes" means each Security until (i) the
date on which such Transfer Restricted Note has been exchanged by a person other
than a broker-dealer for a freely transferable Exchange Note in the Registration
Exchange Offer, (ii) following the exchange by a broker-dealer in the
Registration Exchange Offer of a Transfer Restricted Note for an Exchange Note,
the date on which such Exchange Note is sold to a purchaser who receives from
such
<PAGE>
19
broker-dealer on or prior to the date of such sale a copy of the prospectus
contained in the Exchange Offer Registration Statement, (iii) the date on which
such Transfer Restricted Note has been effectively registered under the
Securities Act and disposed of in accordance with the Shelf Registration
Statement or (iv) the date on which such Transfer Restricted Note is distributed
to the public pursuant to Rule 144 under the Securities Act or is saleable
pursuant to Rule 144(k) under the Securities Act.
SECTION 7. Rules 144 and 144A. The Company and the Guarantors shall
use their respective best efforts to file the reports required to be filed by it
under the Securities Act and the Exchange Act in a timely manner (except to the
extent that any Guarantor is permitted to omit filing such reports in accordance
with the terms of any ruling or no-action letter issued by the Securities and
Exchange Commission) and, if at any time the Company or any Guarantor is not
required to file such reports, it will, upon the request of any Holder of
Transfer Restricted Notes, make publicly available other information so long as
necessary to permit sales of Securities pursuant to Rules 144 and 144A. The
Company and the Guarantors covenant that they will take such further action as
any Holder of Transfer Restricted Notes may reasonably request, all to the
extent required from time to time to enable such Holder to sell Transfer
Restricted Notes without registration under the Securities Act within the
limitation of the exemptions provided by Rules 144 and 144A (including the
requirements of Rule 144A(d)(4)). The Company and the Guarantors will provide a
copy of this Agreement to prospective purchasers of Notes identified to the
Company and the Guarantors by the Purchasers upon request. Upon the request of
any Holder of Transfer Restricted Notes, the Company and the Guarantors shall
deliver to such Holder a written statement as to whether it has complied with
such requirements. Notwithstanding the foregoing, nothing in this Section 7
shall be deemed to require the Company to register any of its securities
pursuant to the Exchange Act.
SECTION 8. Underwritten Registrations. If any of the Transfer
Restricted Notes covered by any Shelf Registration are to be sold in an
underwritten offering, the investment banker or investment bankers and manager
or managers that will administer the offering ("Managing Underwriters") will be
selected by the holders of a majority in aggregate principal amount of such
Transfer Restricted Notes and any Additional Notes included in such offering;
provided, however, that the Managing Underwriters shall be reasonably
satisfactory to the Company and the Guarantors.
No person may participate in any underwritten registration hereunder
unless such person (i) agrees to sell such person's Transfer Restricted Notes on
the basis reasonably provided in any underwriting arrangements approved by the
persons entitled hereunder to approve such arrangements and (ii) completes and
executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other: documents reasonably required under the terms of such
underwriting arrangements.
SECTION 9. Miscellaneous. (a) Amendments and Waivers. The
provisions of this Agreement may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given,
except
<PAGE>
20
by the Company, each of the Guarantors and the written consent of the Holders of
a majority in principal amount of the Securities affected by such amendment,
modification, supplement, waiver or consent.
(b) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand delivery, first-class mail,
facsimile transmission, or air courier which guarantees overnight delivery:
(1) if to a Holder of the Securities, at the most current address
given by such Holder to the Company and the Guarantors in accordance with
the provisions of this Section 9(b), which address initially is, with
respect to each Holder, the address of such Holder to which confirmation
of the sale of the Notes to such Holder was first sent by the Purchasers,
with a copy in like manner to you as follows:
BT Securities Corporation
One Bankers Trust Plaza
New York, New York 10006
Facsimile:(212) 250-7200
Attention:Joseph T. O'Donnell
with a copy to:
Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
Facsimile:(212) 269-5420
Attention:Gerard M. Meistrell
(2) if to the Company or any Guarantor, at the following
address:
Williams Scotsman, Inc.
8211 Town Center Drive
Baltimore, Maryland 21236
Attention:Mr. Gerard E. Holthaus
President and Chief Executive Officer
with a copy to:
The Cypress Group, L.L.C.
65 East 55th Street, 19th Floor
New York, New York 10022
Attention:Mr. David P. Spalding,
Vice Chairman
<PAGE>
21
Scotsman Partners, L.P.
201 Main Street, 26th Floor
Fort Worth, Texas 76102
Attention:Robert Cotham and Ray Pinson
- and -
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019
Attention:Matthew Nimetz
All such notices and communications shall be deemed to have been
duly given: at the time delivered by hand, if personally delivered; three
business days after being deposited in the mail, postage prepaid, if mailed;
when receipt is acknowledged by recipient's facsimile machine operator, if sent
by facsimile transmission; and on the day delivered, if sent by overnight air
courier guaranteeing next day delivery.
(c) No Inconsistent Agreements. Neither the Company nor any
Guarantor has, as of the date hereof, entered into, nor shall it, on or after
the date hereof, enter into, any agreement with respect to its Securities that
is inconsistent with the rights granted to the Holders herein or otherwise
conflicts with the provisions hereof.
(d) Successors and Assigns. This Agreement shall be binding upon
the Company and the Guarantors and their respective successors and assigns.
(e) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(f) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(g) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAW.
(h) Severability. If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable, the validity, legality and enforceability of any such
provision in every
<PAGE>
22
other respect and of the remaining provisions contained herein shall not be
affected or impaired thereby.
(i) Securities Held by the Company. Whenever the consent or approval
of Holders of a specified percentage of principal amount of Securities is
required hereunder, Securities held by the Company or its affiliates (including
the Guarantors) (other than subsequent Holders of Securities if such subsequent
Holders are deemed to be affiliates solely by reason of their holdings of such
Securities) shall not be counted in determining whether such consent or approval
was given by the Holders of such required percentage.
<PAGE>
23
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company and the Guarantors a
counterpart hereof, whereupon this instrument, along with all counterparts, will
become a binding agreement between the Purchasers and the Company and the
Guarantors in accordance with its terms.
Very truly yours,
WILLIAMS SCOTSMAN, INC.
By: /s/ John B. Ross
---------------------------------
Name: John B. Ross
Title: Vice President, Corporate
Counsel & Secretary
MOBILE FIELD OFFICE COMPANY
By: /s/ John B. Ross
---------------------------------
Name: John B. Ross
Title: Secretary
WILLSCOT EQUIPMENT, LLC
By: /s/ John B. Ross
---------------------------------
Name: John B. Ross
Title: Vice President, Corporate
Counsel & Secretary of
Member
Accepted as of the date hereof
BT Securities Corporation
Alex. Brown & Sons Incorporated
Donaldson, Lufkin & Jenrette
Securities Corporation
Acting severally on behalf of
themselves and the several
Purchasers
By BT SECURITIES CORPORATION
By: /s/ Alok Singh
---------------------------------
Name: Alok Singh
Title: Senior Managing Director
<PAGE>
24
<PAGE>
ANNEX A
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 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 Existing Notes where
such Existing Notes were acquired by such broker-dealer as a result of
market-making activities or other trading activities. The Company has agreed
that, for a period of 120 days after the Expiration Date (as definer herein), it
will make this Prospectus available to any broker-dealer for use in connection
with any such resale. See "Plan of Distribution."
<PAGE>
ANNEX B
Each broker-dealer that receives Exchange Notes for its own account
in exchange for 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. See "Plan of Distribution."
<PAGE>
ANNEX C
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 resales of Exchange Notes received in
exchange for Existing Notes where such Existing Notes were acquired as a result
of market-making activities or other trading activities. The Company, the
Guarantor and the Subordinated Guarantor have agreed that, for a period of 120
days after the Expiration Date, they will make this prospectus, as amended or
supplemented, available to any broker-dealer for use in connection with any such
resale. In addition, until ____________, 1997, all dealers effecting
transactions in the Exchange Notes may be required to deliver a prospectus.(1)
The Company, the Guarantor and the Subordinated Guarantor will not
receive any proceeds from any sale of Exchange Notes by broker-dealers. 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 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 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 commission 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.
For a period of 120 days after the Expiration Date the Company, the
Guarantor and the Subordinated Guarantor 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. The
Company, the
- --------
(1) In addition, the legend required by Item 502(e) of Regulation S-K will
appear on the back cover page of the Exchange Offer prospectus.
<PAGE>
2
Guarantor and the Subordinated Guarantor have agreed to pay all expenses
incident to the Exchange Offer other than commissions or concessions of any
brokers or dealers and will indemnify the Holders of the Securities (including
any broker-dealers) against certain liabilities, including liabilities under the
Securities Act.
<PAGE>
ANNEX D
____ CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10
ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS
OR SUPPLEMENTS THERETO.
Name:
Address:
If the undersigned is not a broker-dealer, the undersigned represents that it is
not engaged in, and does not intend to engage in, a distribution of Exchange
Notes. If the undersigned is a broker-dealer that will receive Exchange Notes
for its own account in exchange for Notes that were acquired as a result of
market-making activities or other trading activities, it acknowledges 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 undersigned
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act.
<PAGE>
Exhibit 4.3
WILLIAMS SCOTSMAN, INC.
REGISTRATION RIGHTS AGREEMENT
May 22, 1997
Oak Hill Securities Fund, L.P.
201 Main Street
Suite 2600
Fort Worth, Texas 76102
Dear Sirs and Mesdames:
Williams Scotsman, Inc., a Maryland corporation ("Company"), proposes to
issue and sell to Oak Hill Securities Fund, L.P. (the "Investor"), upon the
terms set forth in a purchase agreement of even date herewith (the "Purchase
Agreement"), $100 million principal amount of its 9 7/8% Senior Notes Due 2007
(the "Notes"). The Notes will be guaranteed (the "Guarantee") on a senior basis
by Mobile Field Office Company ("MFO") and guaranteed on a subordinated basis
(the "Subordinated Guarantee") by WillScot Equipment, LLC (collectively with
MFO, the "Guarantors"). The Notes will be issued pursuant to the provisions of
an Indenture, dated as of May 15, 1997 (the "Indenture"), between the Company,
as issuer, the Guarantors, and The Bank of New York, as Trustee (the "Trustee").
As an inducement to the Investor to enter into the Purchase Agreement and
in satisfaction of a condition to your obligations thereunder, the Company and
the Guarantors each agrees with the Investor, for the benefit of the registered
holders of the Notes (including, without limitation, the Investor), the Exchange
Notes (as defined below) and the Private Exchange Notes (as defined below)
(collectively, the "Holders"), as follows:
SECTION 1. REGISTRATION EXCHANGE OFFER. The Company and the Guarantors
shall use their respective best efforts to prepare and file within 45 days of
the original issue of the Notes with the Securities and Exchange Commission (the
"Commission") a registration statement (the "Exchange Offer Registration
Statement") on an appropriate form under the Securities Act of 1933, as amended
(the "Securities Act"), with respect to an offer (the "Registration Exchange
Offer") to the Holders of Transfer Restricted Notes (as defined in Section 6
hereof), who are not prohibited by any law or policy of the Commission from
participating in the Registration Exchange Offer, to issue and deliver to such
Holders, in exchange for the Notes, a like aggregate principal amount of debt
securities (the "Exchange Notes") of the Company issued under the Indenture and
identical in all material respects to the Notes (except for the transfer
restrictions relating to the Notes) that would be registered under the
Securities Act. The Company and the Guarantors shall use their respective best
efforts to cause such Exchange Offer Registration Statement to become effective
under
<PAGE>
2
the Securities Act within 150 days after the date of original issue of the Notes
and shall keep the Exchange Offer Registration Statement effective for not less
than 30 days (or longer, if required by applicable law) after the date notice of
the Registration Exchange Offer is mailed to the Holders (such period being
called the "Exchange Offer Registration Period"). It is understood and agreed
that the Exchange Offer Registration Statement and the Registration Exchange
Offer may include up to $300 million of additional Exchange Notes which shall be
offered to the holders of $300 million of Notes originally sold to BT Securities
Corporation, Alex. Brown & Sons Incorporated and Donaldson, Lufkin & Jenrette
Securities Corporation (the "Initial Purchasers") pursuant to a separate
purchase agreement (the "Additional Notes"); PROVIDED, HOWEVER, that if and to
the extent such inclusion of such additional Exchange Notes shall delay or
impede the filing or the declaration of the effectiveness of the Exchange Offer
Registration Statement or the registration of the Exchange Notes beyond 150 days
after the date of the original issue of the Notes then such additional Exchange
Notes shall not be so included or, if so included, such inclusion shall be
promptly withdrawn.
If the Company and the Guarantors effect the Registration Exchange Offer,
the Company and the Guarantors will be entitled to close the Registration
Exchange Offer 30 days after the commencement thereof provided that the Company
and the Guarantors have accepted all the Notes theretofore validly tendered in
accordance with the terms of the Registration Exchange Offer.
Following the declaration of the effectiveness of the Exchange Offer
Registration Statement, the Company and the Guarantors shall promptly commence
the Registration Exchange Offer, it being the objective of such Registration
Exchange Offer to enable each Holder of Transfer Restricted Notes (as defined
below) electing to exchange such Transfer Restricted Notes for Exchange Notes
(assuming that such Holder is not an affiliate of the Company within the meaning
of the Securities Act, acquires the Exchange Notes in the ordinary course of
such Holder's business and has no arrangements with any person to participate in
the distribution of the Exchange Notes and is not prohibited by any law or
policy of the Commission from participating in the Registration Exchange Offer)
to trade such Exchange Notes from and after their receipt without any
limitations or restrictions under the Securities Act and without material
restrictions under the securities laws of the several states of the United
States. In connection with such Registration Exchange Offer, the Company and
the Guarantors shall use their respective best efforts to consummate the
Registration Exchange Offer and shall comply in all material respects with the
applicable requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") and other applicable laws and regulations in connection with the
Registration Exchange Offer.
The Company and the Guarantors each acknowledges that, pursuant to current
interpretations by the Commission's staff of Section 5 of the Securities Act, in
the absence of an applicable exemption therefrom, each Holder which is a
<PAGE>
3
broker-dealer electing to exchange Notes, acquired for its own account as a
result of market-making activities or other trading activities, for Exchange
Notes (an "Exchanging Dealer"), is required to deliver a prospectus containing
the information set forth in Annex A hereto on the cover, in Annex B hereto in
the "Exchange Offer Procedures" section and the "Purpose of the Exchange Offer"
section, and in Annex C hereto in the "Plan of Distribution" section of such
prospectus in connection with a sale of any such Exchange Notes received by such
Exchanging Dealer pursuant to the Registration Exchange Offer.
The Company and the Guarantors shall include within the prospectus
contained in the Exchange Offer Registration Statement a section entitled "Plan
of Distribution" which shall contain a summary statement of the positions taken
or policies made by the staff of the Commission with respect to the potential
"underwriter" status of any broker-dealer that is the beneficial owner (as
defined in Rule 13d-3 under the Exchange Act) of Exchange Notes received by such
broker-dealer in the Registration Exchange Offer (a "Participating
Broker-Dealer"), whether such positions or policies have been publicly
disseminated by the staff of the Commission or such positions or policies,
represent the prevailing views of the staff of the Commission.
The Company and the Guarantors shall use their respective best efforts to
keep the Exchange Offer Registration Statement effective and to amend and
supplement the prospectus contained therein, in order to permit such prospectus
to be lawfully delivered by all Exchanging Dealers subject to the prospectus
delivery requirements of the Securities Act and shall make such prospectuses
available to such Exchanging Dealers for such period of time after the
consummation of the Registration Exchange Offer as such persons must comply with
such requirements in order to resell the Exchange Notes; PROVIDED, HOWEVER, that
such period shall not exceed 120 days (unless extended pursuant to Section 3(j)
below); and, PROVIDED FURTHER, that such persons shall not be authorized by the
Company or the Guarantors to deliver and shall not deliver any such prospectus
after the expiration of such period in connection with the resales contemplated
by this paragraph.
The Company and the Guarantors shall make available for a period of 90 days
after the consummation of the Registration Exchange Offer, a copy of the
prospectus, and any amendment or supplement thereto, forming part of the
Exchange Offer Registration Statement to any broker-dealer for use in connection
with any resale of any Exchange Notes.
If the Investor is not permitted to participate in the Registration
Exchange Offer for any reason, then the Company and the Guarantors,
simultaneously with the delivery of the Exchange Notes pursuant to the
Registration Exchange Offer (including the exchange offer relating to the
Additional Notes), shall issue and deliver to the Investor upon the written
request of the Investor, in exchange (the "Private Exchange") for the Notes held
by such Purchaser, a like principal amount of debt
<PAGE>
4
securities of the Company issued under the Indenture and guaranteed by the
Guarantors pursuant to the Guarantee and the Subordinated Guarantee and
identical in all material respects (including the existence of restrictions on
transfer under the Securities Act and the securities laws of the several states
of the United States) to the Notes (the "Private Exchange Notes"). The Notes,
the Exchange Notes and the Private Exchange Notes are herein collectively called
the "Securities".
In connection with the Registration Exchange Offer, the Company and the
Guarantors shall:
(a) mail to each Holder a copy of the prospectus forming part of
the Exchange Offer Registration Statement, together with an appropriate letter
of transmittal and related documents;
(b) keep the Registration Exchange Offer open for not less than
30 days (or longer, if required by applicable law) after the date notice thereof
is mailed to the Holders;
(c) utilize the services of a depositary for the Registration
Exchange Offer with an address in the Borough of Manhattan, The City of New
York, which may be the Trustee or an affiliate of the Trustee;
(d) permit Holders to withdraw tendered Notes at any time prior
to the close of business, New York time, on the last business day on which the
Registration Exchange Offer shall remain open; and
(e) otherwise comply in all material respects with all
applicable laws.
As soon as practicable after the close of the Registration Exchange Offer
or the Private Exchange, as the case may be, the Company and the Guarantors
shall:
(i) accept for exchange all the Notes validly tendered and not
withdrawn pursuant to the Registration Exchange Offer and the Private
Exchange;
(ii) deliver, or cause to be delivered, to the Trustee for
cancellation all the Notes so accepted for exchange; and
(iii) issue, and cause the Trustee to authenticate and deliver
promptly to each Holder of the Notes, Exchange Notes or Private Exchange
Notes, as the case may be, equal in principal amount to the Notes of such
Holder so accepted for exchange.
<PAGE>
4
The Indenture will provide that the Exchange Notes will not be subject to
the transfer restrictions set forth in the Indenture and that all the Securities
will vote and consent together on all matters as one class and that none of the
Securities will have the right to vote or consent as a class separate from one
another on any matter.
Interest on each Exchange Note and Private Exchange Note issued pursuant to
the Registration Exchange Offer and in the Private Exchange will accrue (i) from
the later of (a) the last interest payment date on which interest was paid on
the Notes surrendered in exchange therefor or (b) if the Note is 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 (ii) if no
interest has been paid on the Notes, from the date of original issue of the
Notes.
Each Holder participating in the Registration Exchange Offer shall be
required to represent to the Company and the Guarantors that at the time of the
consummation of the Registration Exchange Offer (i) any Exchange Notes received
by such Holder will be acquired in the ordinary course of business, (ii) such
Holder will have no arrangements or understanding with any person to participate
in the distribution of the Notes or the Exchange Notes within the meaning of the
Securities Act, (iii) such Holder is not an "affiliate," as defined in Rule 405
of the Securities Act, of the Company or any Guarantor or if it is an affiliate,
such Holder will comply with the registration and prospectus delivery
requirements of the Securities Act to the extent applicable, (iv) if such Holder
is not a broker-dealer, that it is not engaged in, and does not intend to engage
in, the distribution of the Exchange Notes and (v) if such Holder is a
broker-dealer, that it will receive Exchange Notes for its own account in
exchange for Notes that were acquired as a result of market-making activities or
other trading activities and that it will be required to acknowledge that it
will deliver a prospectus in connection with any resale of such Exchange Notes.
Notwithstanding any other provisions hereof, the Company and the Guarantors
will ensure that (i) any Exchange Offer Registration Statement and any amendment
thereto and any prospectus forming part thereof and any supplement thereto
complies in all material respects with the Securities Act and the rules and
regulations thereunder, (ii) any Exchange Offer Registration Statement and any
amendment thereto does not, when it becomes effective, contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading and (iii) any
prospectus forming part of any Exchange Offer Registration Statement, and any
supplement to such prospectus, at the time of issuance does not include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading.
<PAGE>
6
SECTION 2. SHELF REGISTRATION. If (i) the Company and the Guarantors
determine that a Registration Exchange Offer, as contemplated by Section 1
hereof, is not available or may not be consummated as soon as practicable after
the last date the Registration Exchange Offer is open because it would violate
applicable law or the applicable interpretations of the staff of the Commission,
(ii) the Registration Exchange Offer is not consummated within 180 days of the
date of original issue of the Notes, (iii) the Investor so requests with respect
to the Notes (or the Private Exchange Notes) not eligible to be exchanged for
Exchange Notes in the Registration Exchange Offer and held by it following
consummation of the Registration Exchange Offer or (iv) any Holder (other than
an Exchanging Dealer) is not eligible to participate in the Registration
Exchange Offer or, in the case of any Holder (other than an Exchanging Dealer)
that participates in the Registration Exchange Offer, such Holder does not
receive freely tradeable Exchange Notes on the date of the exchange for validly
tendered (and not withdrawn) Notes, the Company and the Guarantors shall take
the following actions:
(a) The Company and the Guarantors shall use all reasonable
efforts to prepare and file, as promptly as practicable, with the Commission and
thereafter to cause to be declared effective a registration statement (the
"Shelf Registration Statement" and, together with the Exchange Offer
Registration Statement, a "Registration Statement") on an appropriate form under
the Securities Act relating to the offer and sale of the Transfer Restricted
Notes, by the Holders thereof from time to time in accordance with the methods
of distribution set forth in the Shelf Registration Statement and Rule 415 under
the Securities Act (hereinafter, the "Shelf Registration"); PROVIDED, however,
that no Holder (other than the Investor) shall be entitled to have any
Securities held by it covered by such Shelf Registration Statement unless such
Holder agrees in writing to be bound by all the provisions of this Agreement
applicable to such Holder. It is agreed that the holders of the Additional
Notes are entitled to have the Additional Notes held by them included in the
Shelf Registration Statement and that the provisions of the registration rights
agreement dated as of the date hereof, among the Company, the Guarantors and the
Initial Purchasers shall be applicable to such holders; PROVIDED, HOWEVER, that
if and to the extent such inclusion of such Additional Notes shall delay or
impede the filing or the declaration of the effectiveness of the Shelf
Registration Statement or the registration of the Additional Notes beyond 180
days after the date of the original issue of the Notes, then such Additional
Notes shall not be so included or, if so included, such inclusion shall be
promptly withdrawn.
(b) The Company and the Guarantors shall use all reasonable
efforts to keep the Shelf Registration Statement continuously effective in order
to permit the prospectus included therein to be lawfully delivered by the
Holders of the relevant Securities, until the period referred to in Rule 144(k)
under the Securities Act after the original issue date of the Notes expires (or
for such longer period if extended pursuant to Section 3(j) below) or such
shorter period that will terminate when all the
<PAGE>
7
Securities covered by the Shelf Registration Statement have been sold pursuant
thereto.
(c) Notwithstanding any other provisions of this Agreement to
the contrary, the Company and the Guarantors shall cause the Shelf Registration
Statement and the related prospectus and any amendment or supplement thereto, as
of the effective date of the Shelf Registration Statement, amendment or
supplement, (i) to comply in all material respects with the applicable
requirements of the Securities Act and the rules and regulations of the
Commission and (ii) not to contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
SECTION 3. REGISTRATION PROCEDURES. In connection with any Shelf
Registration contemplated by Section 2 hereof and, to the extent applicable, any
Registration Exchange Offer contemplated by Section 1 hereof, the following
provisions shall apply:
(a) The Company and the Guarantors shall (i) furnish to the
Investor (if it is a Holder), prior to the filing thereof with the Commission, a
copy of the Registration Statement and each amendment thereof and each
supplement, if any, to the prospectus included therein and shall not file any
such Registration Statement or amendment thereto or any prospectus or any
supplement thereto (including such documents which, upon filing, would be
incorporated or deemed to be incorporated by reference therein and amendments to
such documents other than documents required to be filed pursuant to the
Exchange Act) to which the Investor (if it is a Holder) shall reasonably object,
except for any Registration Statement or amendment thereto or prospectus or
supplement thereto (a copy of which has been previously furnished to the
Investor (if it is a Holder) and its counsel (and, in the case of a Shelf
Registration Statement, the Holders and their counsel)) which counsel to the
Company and the Guarantors has advised the Company and the Guarantors in writing
is required to be filed in order to comply with applicable law; (ii) include
information substantially to the effect set forth (A) in Annex A hereto on the
cover of a prospectus forming part of the Exchange Offer Registration Statement,
(B) in Annex B hereto in the "Exchange Offer Procedures" section and the
"Purpose of the Exchange Offer" section, (C) in Annex C hereto in the "Plan of
Distribution" section of the prospectus forming a part of the Exchange Offer
Registration Statement and (D) include the information set forth in Annex D
hereto in the Letter of Transmittal delivered pursuant to the Registration
Exchange Offer; and (iii) to the extent required by law or interpretation of the
staff of the Commission, in the case of Shelf Registration Statement, include
the names of the Holders who propose to sell Securities pursuant to the Shelf
Registration Statement as selling securityholders.
(b) The Company and the Guarantors shall notify the Holders and
any Participating Broker-Dealer from whom the Company or any of the
<PAGE>
8
Guarantors has received prior written notice stating that it will be a
Participating Broker-Dealer in the Registration Exchange Offer (which notice
pursuant to clauses (ii) through (v) hereof shall be accompanied by an
instruction to suspend the use of the prospectus until the requisite changes
have been made) promptly, and, if requested by the Holders or any such
Participating Broker-Dealer, confirm such notice in writing:
(i) when the Registration Statement or any amendment
thereto has been filed with the Commission and when the Registration
Statement or any post-effective amendment thereto has become effective;
(ii) of any request by the Commission for amendments or
supplements to the Registration Statement or the prospectus included
therein or for additional information;
(iii) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose;
(iv) of the receipt by the Company or any of the Guarantors
or their legal counsel of any notification with respect to the suspension
of the qualification of the Securities for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose;
(v) of the happening of any event that requires the Company
or any of the Guarantors to make changes in the Registration Statement or
the prospectus in order that the Registration Statement or the prospectus
do not contain an untrue statement of a material fact nor omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading; and
(vi) of any determination by the Company or any of the
Guarantors that a post-effective amendment to a Registration Statement
would be appropriate.
(c) The Company and the Guarantors shall make every reasonable
effort to prevent the issuance, and if issued to obtain the withdrawal at the
earliest possible time, of any order suspending the effectiveness of the
Registration Statement and shall provide prompt written notice to each Holder of
the withdrawal of any such order.
(d) The Company and the Guarantors shall furnish to each Holder
of Securities included within the coverage of the Shelf Registration, without
<PAGE>
9
charge, at least one conformed copy of the Shelf Registration Statement and any
post-effective amendment thereto, including financial statements and schedules
(without documents incorporated therein by reference or exhibits thereto, unless
a Holder so requests in writing).
(e) The Company and the Guarantors shall deliver to any Holder
that so requests, without charge, at least one conformed copy of the Exchange
Offer Registration Statement and any post-effective amendment thereto, including
financial statements and schedules (without documents incorporated therein by
reference or exhibits thereto, unless any such Holder so requests in writing).
(f) The Company and the Guarantors shall deliver to each Holder
of Securities included within the coverage of the Shelf Registration, without
charge, as many copies of the prospectus (including each preliminary prospectus)
included in the Shelf Registration Statement and any amendment or supplement
thereto as such person may reasonably request. The Company and each Guarantor
consents, subject to the provisions of this Agreement, to the use of the
prospectus or any amendment or supplement thereto by each of the selling Holders
of the Securities in connection with the offering and sale of the Securities
covered by, and as contemplated by, the prospectus, or any amendment or
supplement thereto, included in the Shelf Registration Statement.
(g) The Company and the Guarantors shall deliver to any
Participating Broker-Dealer or any Exchanging Dealer, without charge, as many
copies of the final prospectus included in the Exchange Offer Registration
Statement and any amendment or supplement thereto as such person may reasonably
request, during the period not exceeding 120 days following the consummation of
the Registration Exchange Offer. The Company and each Guarantor consents,
subject to the provisions of this Agreement, to the use of the prospectus or any
amendment or supplement thereto by any Participating Broker-Dealer or Exchanging
Dealer and such other persons required to deliver a prospectus following the
Registration Exchange Offer in connection with the offering and sale of the
Exchange Notes covered by the prospectus, or any amendment or supplement
thereto, included in such Exchange Offer Registration Statement; PROVIDED,
HOWEVER, that such persons shall not be authorized by the Company or any
Guarantor to deliver and shall not deliver any such prospectus after the
expiration of the period referred to in the immediately preceding sentence, in
connection with the resales contemplated by this paragraph.
(h) Prior to any public offering of the Securities pursuant to
any Registration Statement, the Company and the Guarantors shall use their
respective best efforts to register or qualify or cooperate with the Holders of
the Securities included therein and their respective counsel in connection with
the registration or qualification of the Securities for offer and sale under the
securities or Blue Sky laws of such states of the United States as any Holder of
the Securities reasonably requests in writing and do any and all other acts or
things necessary or advisable to enable
<PAGE>
10
such Holder to offer and sell in such jurisdictions the Securities covered by
such Registration Statement owned by such Holder; PROVIDED, HOWEVER, that
neither the Company nor any Guarantor shall be required to (i) qualify generally
or as a foreign corporation to do business in any jurisdiction where it is not
then so qualified or (ii) take any action which would subject it to general
service of process or to taxation in any jurisdiction where it is not then so
subject.
(i) The Company and the Guarantors shall cooperate with the
Holders of the Securities to facilitate the timely preparation and delivery of
certificates representing the Securities to be sold pursuant to any Shelf
Registration Statement free of any restrictive legends and in such denominations
(consistent with the provisions of the Indenture) and registered in such names
as the Holders may request at least two business days prior to closing of any
sale of the Securities pursuant to such Shelf Registration Statement.
(j) If any event contemplated by paragraphs (ii) through (vi) of
Section 3(b) above occurs during the period for which the Company or any
Guarantor is required to maintain an effective Registration Statement, the
Company and the Guarantors shall promptly prepare and file a post-effective
amendment to the Registration Statement or a supplement to the related
prospectus and any other required document so that, as thereafter delivered to
Holders of the Notes or purchasers of Securities, the prospectus will not
contain an untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading. If
the Company or any Guarantor notifies the Holders of the Securities and any
known Participating Broker-Dealer in accordance with paragraphs (ii) through
(vi) of Section 3(b) above to suspend the use of the prospectus until the
requisite changes to the prospectus have been made, then the Holders of the
Securities and any such Participating Broker-Dealers shall suspend use of such
prospectus until the Company or such Guarantor has amended or supplemented the
prospectus to correct such misstatement or omission, and the period of
effectiveness of the Shelf Registration Statement provided for in Section 2(b)
above and the Exchange Offer Registration Statement provided for in Section 1
above shall each be extended by the number of days from and including the date
of the giving of such notice to and including the date when the Holders of the
Securities and any known Participating Broker-Dealer shall have received such
amended or supplemented prospectus pursuant to this Section 3(j); PROVIDED,
HOWEVER, that the minimum time period before the Company or any Guarantor shall
be entitled to close the Registration Exchange Offer shall be extended only to
the extent required by the Commission. Each Holder and any Participating
Broker-Dealers agree that upon receipt of any such notice from the Company it
will not distribute copies of the prospectus that are the subject of such notice
and will retain such copies in its files.
(k) Not later than the effective date of the applicable
Registration Statement, the Company and the Guarantors will obtain a CUSIP
number
<PAGE>
11
for the Transfer Restricted Notes, the Exchange Notes or the Private Exchange
Notes, as the case may be, and provide the Trustee with printed certificates for
the Notes, the Exchange Notes or the Private Exchange Notes, as the case may be,
in a form eligible for deposit with The Depository Trust Company.
(l) The Company and the Guarantors will comply in all material
respects with all rules and regulations of the Commission to the extent and so
long as they are applicable to the Registration Exchange Offer or the Shelf
Registration and will make generally available to its securities holders (or
otherwise provide in accordance with Section 11(a) of the Securities Act) an
earnings statement satisfying the provisions of Section 11(a) of the Securities
Act, no later than 45 days after the end of a 12-month period (or 90 days, if
such period is a fiscal year) beginning with the first month of the Company's
first fiscal quarter commencing after the effective date of the Registration
Statement, which statement shall cover such 12-month period.
(m) The Company and the Guarantors shall cause the Indenture to
be qualified under the Trust Indenture Act of 1939, as amended, in a timely
manner and containing such changes, if any, as shall be necessary for such
qualification. In the event that such qualification would require the
appointment of a new trustee under the Indenture, the Company shall appoint a
new trustee thereunder pursuant to the applicable provisions of the Indenture.
(n) The Company and the Guarantors may require each Holder of
Securities to be sold pursuant to the Shelf Registration Statement to furnish to
the Company and the Guarantors such information regarding the Holder and the
distribution of the Securities as the Company may from time to time reasonably
request for inclusion in the Shelf Registration Statement, and the Company and
the Guarantors may exclude from such registration the Securities of any Holder
that fails to furnish such information within a reasonable time after receiving
such request.
(o) In the case of any Shelf Registration, the Company and the
Guarantors shall enter into such customary agreements (including if requested an
underwriting agreement in customary form) and take all such other action, if
any, as the Holders of a majority of the Securities being sold shall reasonably
request in order to facilitate the disposition of the Securities pursuant to
such Shelf Registration.
(p) In the case of any Shelf Registration, the Company and the
Guarantors shall make available for inspection by a representative of the
Holders of Securities being sold, its counsel and an accountant retained by such
Holders, in a manner designed to permit underwriters to satisfy their due
diligence investigation under the Securities Act, all financial and other
records, pertinent corporate documents and properties of the Company and the
Guarantors customarily inspected by underwriters in primary underwritten
offerings and cause the officers, directors and employees of the Company and its
subsidiaries (including the Guarantors) to
<PAGE>
12
supply all information reasonably requested by, and customarily supplied in
connection with primary underwritten offerings to, any such representative,
attorney or accountant in connection with such registration; PROVIDED, HOWEVER,
that any records, information or documents that are designated by the Company or
any Guarantor as confidential at the time of delivery of such records,
information or documents shall be kept confidential by such persons, unless (i)
such records, information or documents are in the public domain or otherwise
publicly available, (ii) disclosure of such records, information or documents is
required by court or administrative order or (iii) disclosure of such records,
information or documents, in the written opinion of counsel to such person, is
otherwise required by law (including, without limitation, pursuant to the
requirements of the Securities Act).
(q) In the case of any Shelf Registration, the Company and the
Guarantors, if requested by any Holder of Securities covered thereby, shall each
(i) cause their counsel to deliver an opinion and updates thereof relating to
the Securities in customary form addressed to such Holders and the managing
underwriters, if any, and dated, in the case of the initial opinion, the
effective date of such Shelf Registration Statement covering matters customarily
covered in opinions requested in underwritten offerings, (ii) cause its officers
to execute and deliver such documents and certificates and updates thereof as
may be reasonably requested by any underwriters of the applicable Securities,
and which are customarily delivered in underwritten offerings, to evidence the
continued validity of the representations and warranties of the Company and the
Guarantors made pursuant to, and to evidence compliance with any customary
conditions contained in, an underwriting agreement and (iii) cause its
independent public accountants to provide to the selling Holders of the
applicable Securities and any underwriter therefor a comfort letter in customary
form and covering matters of the type customarily covered in comfort letters in
connection with primary underwritten offerings, subject to receipt of
appropriate documentation as contemplated, and only if permitted, by Statement
of Auditing Standards No. 72.
(r) If a Registration Exchange Offer or a Private Exchange is to
be consummated, upon delivery of the Notes by Holders to the Company and the
Guarantors (or to such other Person as directed by the Company or any Guarantor)
in exchange for the Exchange Notes or the Private Exchange Notes, as the case
may be, the Company shall mark, or cause to be marked, on the Notes so exchanged
that such Notes are being canceled in exchange for the Exchange Notes or the
Private Exchange Notes, as the case may be, and in no event shall the Notes be
marked as paid or otherwise satisfied.
(s) The Company and the Guarantors will use their respective
best efforts to cause the Securities covered by a Shelf Registration Statement
to be rated by two nationally recognized statistical rating organizations (as
such term is defined in Rule 436(g)(2) under the Securities Act) if so requested
by
<PAGE>
13
Holders of a majority in aggregate principal amount of Securities covered by
such Shelf Registration Statement, or by the managing underwriters, if any.
(t) In the event that any broker-dealer registered under the
Exchange Act shall underwrite any Securities or participate as a member of an
underwriting syndicate or selling group or "assist in the distribution" (within
the meaning of the Conduct Rules of the National Association of Securities
Dealers, Inc. ("NASD")) thereof, whether as a Holder of such Securities or as an
underwriter, a placement or sales agent or a broker or dealer in respect
thereof, or otherwise, the Company and the Guarantors shall assist such
broker-dealer in complying with the requirements of such Rules and By-Laws,
including by (i) if such Rules, including Rule 2720, shall so require, engaging
a "qualified independent underwriter" (as defined in such Rule) to participate
in the preparation of the Registration Statement relating to such Securities, to
exercise usual standards of due diligence in respect thereto and, if any portion
of the offering contemplated by such Registration Statement is an underwritten
offering or is made through a placement or sales agent, to recommend the yield
of such Securities, (ii) indemnifying any such qualified independent underwriter
to the extent of the indemnification of underwriters provided in Section 5
hereof and (iii) providing such information to such broker-dealer as may be
required in order for such broker-dealer to comply with the requirements of the
Conduct Rules of the NASD.
SECTION 4. REGISTRATION EXPENSES. The Company and the Guarantors shall
jointly and severally pay all fees and expenses incident to the performance of
or compliance with this Agreement by the Company and the Guarantors including,
without limitation, (i) all Commission, stock exchange or NASD registration and
filing fees, (ii) all fees and expenses incurred in connection with compliance
with state securities or Blue Sky laws (including reasonable fees and
disbursements of counsel for any underwriters or holders in connection with Blue
Sky qualification of any of the Securities), (iii) all expenses of any persons
in preparing or assisting in preparing, word processing, printing and
distributing any Registration Statement, any prospectus, any amendments or
supplements thereto, and all expenses of printing any underwriting agreements,
securities sales agreements and other documents relating to the performance of
and compliance with this Agreement, (iv) all rating agency fees, and (v) the
fees and disbursements of counsel for the Company and the Guarantors and in the
event of a Shelf Registration, the reasonable fees and disbursements of one firm
of counsel designated by the Holders of a majority in principal amount of the
Securities covered thereby and of the independent public accountants of the
Company, including the expense of any special audits or "cold comfort" letters
required by or incident to such performance and compliance, but excluding fees
and expenses of counsel to the underwriters and underwriting discounts and
commissions and transfer taxes, if any, relating to the sale or disposition of
Securities by a Holder.
<PAGE>
14
SECTION 5. INDEMNIFICATION. (a) The Company and each of the
Guarantors jointly and severally agree to indemnify and hold harmless each
Holder of the Securities, any Participating Broker-Dealer, and each person, if
any, who controls such Holder or such Participating Broker-Dealer within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act, or is under common control with, or is controlled by, such Holder or such
Participating Broker-Dealer, from and against any and all losses, claims,
damages and liabilities (including, without limitation, any legal or other
expenses reasonably incurred in connection with defending or investigating any
such action or claim) caused by any untrue statement or alleged untrue statement
of a material fact contained in a Registration Statement or prospectus (as
amended or supplemented if the Company or any Guarantor shall have furnished any
amendments or supplements thereto), or caused by any omission or alleged
omission to state therein a material fact required to be stated to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except insofar as such losses, claims, damages or liabilities
are caused by any such untrue statement or omission or alleged untrue statement
or omission based upon information relating to such Holder or Participating
Broker-Dealer furnished to the Company or any Guarantor in writing by such
Holder or Participating Broker-Dealer expressly for use therein; PROVIDED that
the foregoing indemnity with respect to any preliminary prospectus shall not
inure to the benefit of any Holder or Participating Broker-Dealer from whom the
person asserting any such losses, claims, damages or liabilities purchased
Securities, or any person controlling or affiliated with such Holder or
Participating Broker-Dealer, if a copy of the final prospectus (as then amended
or supplemented if the Company or any Guarantor shall have furnished any
amendments or supplements thereto) was not sent or given by or on behalf of such
Holder or Participating Broker-Dealer to such person, if required by law so to
have been delivered, at or prior to the written confirmation of the sale of the
Securities to such person, and if the final prospectus (as so amended or
supplemented) would have cured the defect giving rise to such loss, claim,
damage or liability.
(b) Each Holder of the Securities, severally and not jointly,
agrees to indemnify and hold harmless the Company, each of the Guarantors, other
selling Holders, directors of the Company, directors of the Guarantors, the
officers of the Company or any Guarantor who sign a Registration Statement and
each person, if any, who controls the Company or any Guarantor or any selling
Holders, within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act to the same extent as the foregoing indemnity
from the Company and the Guarantors to such Holder, but only with reference to
information relating to such Holder furnished to the Company in writing by such
Holder expressly for use in a Registration Statement, any preliminary
prospectus, prospectus or any amendments or supplements thereto.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to either paragraph (a) or (b) above, such
<PAGE>
15
person (the "indemnified party") shall promptly notify the person against whom
such indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the reasonable fees and expenses of such counsel related to such
proceeding. In any such proceeding, any indemnified party shall have the right
to retain its own counsel, but the fees and expenses of such counsel shall be at
the expense of such indemnified party unless (i) the indemnifying party and the
indemnified party shall have mutually agreed to the retention of such counsel or
(ii) the named parties to any such proceeding (including any impleaded parties)
include both the indemnifying party and the indemnified party and representation
of both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. It is understood that the
indemnifying party shall not, in respect of the legal expenses of any
indemnified party in connection with any proceeding or related proceedings in
the same jurisdiction, be liable for the reasonable fees and expenses of more
than one separate firm (in addition to any local counsel) for all such
indemnified parties and that all such reasonable fees and expenses shall be
reimbursed as they are incurred. If an indemnified party includes (x) the
Investor or such controlling persons of the Investor, such firm shall be
designated in writing by the Investor or (y) Holders of Securities (other than
the Investor) or controlling persons of such Holders, such firm shall be
designated in writing by Holders of a majority-in aggregate principal amount of
such Securities. In all other cases, such firm shall be designated by the
Company. The indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment. Notwithstanding the
foregoing sentence, if at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel as contemplated by the second and third sentences of this paragraph, the
indemnifying party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 90 days after receipt by such indemnifying party of the
aforesaid request and (ii) such indemnifying party shall not have reimbursed the
indemnified party in accordance with such request prior to the date of such
settlement. No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have been a
party and indemnity could have been sought hereunder by such indemnified party,
unless such settlement includes an unconditional release of such indemnified
party from all liability on claims that are the subject matter of such
proceeding and for which indemnity could have been sought hereunder.
(d) To the extent the indemnification provided for in paragraph
(a) or (b) of this Section 5 is unavailable to an indemnified party or
<PAGE>
16
insufficient in respect of any losses, claims, damages or liabilities referred
to therein, then each indemnifying party under such paragraph, in lieu of
indemnifying such indemnified party thereunder, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities (i) in such proportion as is appropriate to reflect the
relative benefits received by the indemnifying party or parties on the one hand
and the indemnified party or parties on the other hand or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the indemnifying party or
parties on the one hand and the indemnified party or parties on the other hand
in connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company and the
Guarantors on the one hand and any such Holder, Participating Broker-Dealer or
other party on the other hand shall be deemed to be in the same respective
proportions as the net proceeds from the offering of the Notes (before deducting
expenses) received by the Company and the Guarantors and the total discounts and
commissions received or realized by such Holder, Participating Broker-Dealer or
other party in respect thereof, in each case as set forth in the Final
Memorandum, bear to the aggregate offering price of such Securities. The
relative fault of the parties shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company and the Guarantors or by such Holder, Participating
Broker-Dealer or other party and the parties relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission.
The Holders respective obligations to contribute pursuant to this Section 5 are
several in proportion to the respective amount of Notes they have purchased, not
joint.
(e) The Company and the Guarantors and each Holder agree that it
would not be just or equitable if contribution pursuant to this Section 5 were
determined by pro rata allocation or by any other method of allocation that does
not take account of the equitable considerations referred to in paragraph (d) of
this Section 5. The amount paid or payable by an indemnified party as a result
of the losses, claims, damages and liabilities referred to in paragraph (d)
above shall be deemed to include, subject to the limitations set forth above,
any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 5, no Holder of Securities shall
be required to contribute any amount in excess of the amount by which the total
price at which the Securities were sold by such Holder pursuant to a
Registration Statement exceeds the amount of any damages that such Holders have
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
<PAGE>
17
(f) The indemnity and contribution provisions contained in this
Section 5 shall remain operative and in full force and effect regardless of (i)
any termination of this Agreement, (ii) any investigation made by or on behalf
of any Holder or Participating Broker-Dealer or any person controlling such
Holder or Participating Broker-Dealer or by or on behalf of the Company, its
officers or directors or any person controlling the Company and (iii) the sale
of the Securities. The remedies provided for in this Section 5 are not
exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.
SECTION 6. ADDITIONAL INTEREST UNDER CERTAIN CIRCUMSTANCES.
(a) Additional interest (the "Additional Interest") with respect to the
Securities shall be assessed as follows if any of the following events occur
(each such event in clauses (i) through (iii) below a "Failure to Register"):
(i) If by July 6, 1997, neither the Exchange Offer Registration
Statement nor a Shelf Registration Statement has been filed with the
Commission;
(ii) If by October 19, 1997, neither the Registration Exchange Offer
is consummated nor, if required in lieu thereof, the Shelf Registration
Statement is declared effective by the Commission; or
(iii) If, after November 18, 1997, and after either the Exchange
Offer Registration Statement or the Shelf Registration Statement is
declared effective, (A)_such Registration Statement thereafter ceases to be
effective prior to completion of the Exchange Offer or the sale of all the
Transferred Restricted Notes registered pursuant to the Shelf Registration
Statement, as the case may be (except upon termination of the period
specified in Section 2(j) hereof or as permitted in paragraph (b) of this
Section 6); or (B) such Registration Statement or the related prospectus
ceases to be usable in connection with resales of Transfer Restricted Notes
during the periods specified in this Agreement (except as permitted in
paragraph (b) of this Section 6) because either (1) any event occurs as a
result of which the related prospectus forming part of such Registration
Statement would include any untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein in the
light of the circumstances under which they were made not misleading or (2)
it shall be necessary to amend such Registration Statement, or supplement
the related prospectus, to comply with the Securities Act or the Exchange
Act or the respective rules thereunder.
Additional Interest shall accrue on the Notes over and above the interest
set forth in the title of the Notes from and including the date on which any
<PAGE>
18
such Failure to Register shall occur to but excluding the date on which all such
Failures to Register have been cured, at a rate of 0.50% per annum.
(b) A Failure to Register referred to in Section 6(a)(iii) shall be
deemed not to have occurred and be continuing in relation to a Registration
Statement or the related prospectus if (i) such Failure to Register has occurred
solely as a result of (x) the filing of a post-effective amendment to such
Registration Statement to incorporate annual audited financial information with
respect to the Company and the Guarantors where such post-effective amendment is
not yet effective and needs to be declared effective to permit Holders to use
the related prospectus or (y) the occurrence of other material events or
developments with respect to the Company or any Guarantor that would need to be
described in such Registration Statement or the related prospectus and (ii) in
the case of clause (y), the Company and the Guarantors are proceeding promptly
and in good faith to amend or supplement such Registration Statement and related
prospectus to describe such events or, in the case of material developments that
the Company and the Guarantors determine in good faith must remain confidential
for business reasons, the Company and the Guarantors are proceeding promptly and
in good faith to take such steps as are necessary so that such developments need
no longer remain confidential; PROVIDED, HOWEVER, that in any case, if such
Failure to Register occurs for a continuous period in excess of 45 days,
Additional Interest shall be payable in accordance with the above paragraph from
the day following such 45 day period until the date on which such Failure to
Register is cured.
(c) Any amounts of Additional Interest due pursuant to clause (a)(i),
(a)(ii) or (a)(iii) of Section 6 above will be payable in cash on the regular
interest payment dates with respect to the Notes. The amount of Additional
Interest will be determined by multiplying the applicable Additional Interest
rate by the principal amount of the Notes, multiplied by a fraction, the
numerator of which is the number of days such Additional Interest rate was
applicable during such period (determined on the basis of a 360-day year
comprised of twelve 30-day months), and the denominator of which is 360.
(d) "Transfer Restricted Notes" means each Security until (i) the
date on which such Transfer Restricted Note has been exchanged by a person other
than a broker-dealer for a freely transferable Exchange Note in the Registration
Exchange Offer, (ii) following the exchange by a broker-dealer in the
Registration Exchange Offer of a Transfer Restricted Note for an Exchange Note,
the date on which such Exchange Note is sold to a purchaser who receives from
such broker-dealer on or prior to the date of such sale a copy of the prospectus
contained in the Exchange Offer Registration Statement, (iii) the date on which
such Transfer Restricted Note has been effectively registered under the
Securities Act and disposed of in accordance with the Shelf Registration
Statement or (iv) the date on which such Transfer Restricted Note is distributed
to the public pursuant to Rule 144 under the Securities Act or is saleable
pursuant to Rule 144(k) under the Securities Act.
<PAGE>
19
SECTION 7. RULES 144 AND 144A. The Company and the Guarantors shall
use their respective best efforts to file the reports required to be filed by it
under the Securities Act and the Exchange Act in a timely manner (except to the
extent that any Guarantor is permitted to omit filing such reports in accordance
with the terms of any ruling or no-action letter issued by the Securities and
Exchange Commission) and, if at any time the Company or any Guarantor is not
required to file such reports, it will, upon the request of any Holder of
Transfer Restricted Notes, make publicly available other information so long as
necessary to permit sales of Securities pursuant to Rules 144 and 144A. The
Company and the Guarantors covenant that they will take such further action as
any Holder of Transfer Restricted Notes may reasonably request, all to the
extent required from time to time to enable such Holder to sell Transfer
Restricted Notes without registration under the Securities Act within the
limitation of the exemptions provided by Rules 144 and 144A (including the
requirements of Rule 144A(d)(4)). The Company and the Guarantors will provide a
copy of this Agreement to prospective purchasers of Notes identified to the
Company and the Guarantors by the Purchasers upon request. Upon the request of
any Holder of Transfer Restricted Notes, the Company and the Guarantors shall
deliver to such Holder a written statement as to whether it has complied with
such requirements. Notwithstanding the foregoing, nothing in this Section 7
shall be deemed to require the Company to register any of its securities
pursuant to the Exchange Act.
SECTION 8. UNDERWRITTEN REGISTRATIONS. If any of the Transfer
Restricted Notes covered by any Shelf Registration are to be sold in an
underwritten offering, the investment banker or investment bankers and manager
or managers that will administer the offering ("Managing Underwriters") will be
selected by the holders of a majority in aggregate principal amount of such
Transfer Restricted Notes and any Additional Notes included in such offering;
PROVIDED, HOWEVER, that the Managing Underwriters shall be reasonably
satisfactory to the Company and the Guarantors.
No person may participate in any underwritten registration hereunder unless
such person (i) agrees to sell such person's Transfer Restricted Notes on the
basis reasonably provided in any underwriting arrangements approved by the
persons entitled hereunder to approve such arrangements and (ii) completes and
executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other: documents reasonably required under the terms of such
underwriting arrangements.
SECTION 9. MISCELLANEOUS. (a) AMENDMENTS AND WAIVERS. The provisions
of this Agreement may not be amended, modified or supplemented, and waivers or
consents to departures from the provisions hereof may not be given, except by
the Company, each of the Guarantors and the written consent of the Holders of a
majority in principal amount of the Securities affected by such amendment,
modification, supplement, waiver or consent.
<PAGE>
20
(b) NOTICES. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand delivery, first-class
mail, facsimile transmission, or air courier which guarantees overnight
delivery:
(1) if to a Holder of the Securities, at the most current
address given by such Holder to the Company and the Guarantors in
accordance with the provisions of this Section 9(b), which address
initially is, with respect to the Investor:
Oak Hill Securities Fund, L.P.
201 Main Street
Suite 2600
Fort Worth, Texas 76102
Facsimile: (817) 390-8739
Attention: Chuck Irwin
with a copy to:
Oak Hill Advisors, Inc.
65 East 55th Street, 32nd Floor
New York, New York 10022
Facsimile: (212) 593-3596
Attention: Glenn R. August
(2) if to the Company or any Guarantor, at the following
address:
Williams Scotsman, Inc.
8211 Town Center Drive
Baltimore, Maryland 21236
Facsimile: (410) 931-6117
Attention: Mr. Gerard E. Holthaus
President and Chief Executive Officer
with a copy to:
The Cypress Group, L.L.C.
65 East 55th Street, 19th Floor
New York, New York 10022
Facsimile: (212) 705-0199
Attention: Mr. David P. Spalding,
Vice Chairman
<PAGE>
21
Scotsman Partners, L.P.
201 Main Street, 26th Floor
Fort Worth, Texas 76102
Facsimile: (817) 338-2047
Attention: Robert Cotham and Ray Pinson
- and -
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Facsimile: (212) 757-3990
Attention: Matthew Nimetz
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; three business
days after being deposited in the mail, postage prepaid, if mailed; when receipt
is acknowledged by recipient's facsimile machine operator, if sent by facsimile
transmission; and on the day delivered, if sent by overnight air courier
guaranteeing next day delivery.
(c) NO INCONSISTENT AGREEMENTS. Neither the Company nor any
Guarantor has, as of the date hereof, entered into, nor shall it, on or after
the date hereof, enter into, any agreement with respect to its Securities that
is inconsistent with the rights granted to the Holders herein or otherwise
conflicts with the provisions hereof.
(d) SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon the Company and the Guarantors and their respective successors and assigns.
(e) COUNTERPARTS. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(f) HEADINGS. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(g) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAW.
<PAGE>
22
(h) SEVERABILITY. If any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(i) SECURITIES HELD BY THE COMPANY. Whenever the consent or
approval of Holders of a specified percentage of principal amount of Securities
is required hereunder, Securities held by the Company or its affiliates
(including the Guarantors) (other than subsequent Holders of Securities if such
subsequent Holders are deemed to be affiliates solely by reason of their
holdings of such Securities) shall not be counted in determining whether such
consent or approval was given by the Holders of such required percentage.
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company and the Guarantors a counterpart hereof,
whereupon this instrument, along with all counterparts, will become a binding
agreement between the Investor and the Company and the Guarantors in accordance
with its terms.
Very truly yours,
WILLIAMS SCOTSMAN, INC.
By:/s/ John B. Ross
---------------------------------
Name: John B. Ross
Title: Vice President and Corporate
Counsel
MOBILE FIELD OFFICE COMPANY
By: /s/ John B. Ross
---------------------------------
Name: John B. Ross
Title: Secretary
WILLSCOT EQUIPMENT, LLC
By: Williams Scotsman, Inc.,
a member
By:/s/ John B. Ross
---------------------------------
Name: John B. Ross
<PAGE>
Title: Vice President and
Corporate Counsel of Member
Accepted as of the date hereof
OAK HILL SECURITIES FUND, L.P.
By: Oak Hill Securities GenPar, L.P.,
its general partner
By: Oak Hill Securities MGP, Inc.,
its general partner
By: /s/ William H. Bohnsack
----------------------------------
Name: William H. Bohnsack
Title: Vice President
<PAGE>
ANNEX A
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 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 Existing Notes where
such Existing Notes were acquired by such broker-dealer as a result of
market-making activities or other trading activities. The Company has agreed
that, for a period of 120 days after the Expiration Date (as definer herein), it
will make this Prospectus available to any broker-dealer for use in connection
with any such resale. See "Plan of Distribution".
<PAGE>
ANNEX B
Each broker-dealer that receives Exchange Notes for its own account in
exchange for 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. See "Plan of Distribution".
<PAGE>
ANNEX C
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 resales of Exchange Notes received in
exchange for Existing Notes where such Existing Notes were acquired as a result
of market-making activities or other trading activities. The Company, the
Guarantor and the Subordinated Guarantor have agreed that, for a period of 120
days after the Expiration Date, they will make this prospectus, as amended or
supplemented, available to any broker-dealer for use in connection with any such
resale. In addition, until ____________, 1997, all dealers effecting
transactions in the Exchange Notes may be required to deliver a prospectus.(1)
The Company, the Guarantor and the Subordinated Guarantor will not
receive any proceeds from any sale of Exchange Notes by broker-dealers.
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 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 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 commission 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.
For a period of 120 days after the Expiration Date the Company, the
Guarantor and the Subordinated Guarantor will promptly send additional copies of
this Prospectus and any amendment or supplement to this Prospectus to any
broker-dealer
- ------------------------------
(1) In addition, the legend required by Item 502(e) of Regulation S-K will
appear on the back cover page of the Exchange Offer prospectus.
<PAGE>
that requests such documents in the Letter of Transmittal. The Company, the
Guarantor and the Subordinated Guarantor have agreed to pay all expenses
incident to the Exchange Offer other than commissions or concessions of any
brokers or dealers and will indemnify the Holders of the Securities (including
any broker-dealers) against certain liabilities, including liabilities under the
Securities Act.
<PAGE>
ANNEX D
/ / CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10
ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR
SUPPLEMENTS THERETO.
Name:
Address:
If the undersigned is not a broker-dealer, the undersigned represents that it is
not engaged in, and does not intend to engage in, a distribution of Exchange
Notes. If the undersigned is a broker-dealer that will receive Exchange Notes
for its own account in exchange for Notes that were acquired as a result of
market-making activities or other trading activities, it acknowledges 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 undersigned
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act.
<PAGE>
Exhibit 4.6
WILLIAMS SCOTSMAN, INC.
MOBILE FIELD OFFICE COMPANY
WILLSCOT EQUIPMENT, LLC
September 25, 1997
Securities and Exchange Commission
450 Fifth Avenue
Washington, D.C. 20549
Williams Scotsman, Inc.
Mobile Field Office Company
Willscot Equipment, LLC
Registration Statement on Form S-4
(Registration No. 333-30753)
----------------------------------
Ladies and Gentlemen:
In accordance with Item 601(b)(4)(iii) of Regulation S-K, Williams
Scotsman, Inc., ("Scotsman") Mobile Field Office Company and Willscot
Equipment, LLC (the "Guarantors," and together with the Scotsman, the
"Registrants") have not filed herewith any instrument with respect to long
term debt not being registered where the total number of securities
authorized thereunder does not exceed ten percent (10%) of the total assets
of any of the Registrants and their respective subsidiaries on a consolidated
basis. The Registrants hereby agree to furnish a copy of any such agreement
to the Securities and Exchange Commission upon request.
Very truly yours,
WILLIAMS SCOTSMAN, INC.
By: /s/ Gerard E. Keefe
------------------------------
Gerard E. Keefe
Senior Vice President and Chief
Financial Officer
MOBILE FIELD OFFICE COMPANY
By: /s/ Gerard E. Keefe
------------------------------
Gerard E. Keefe
Chief Financial Officer
WILLSCOT EQUIPMENT, LLC
By: Gerard E. Keefe
------------------------------
Gerard E. Keefe
Senior Vice President and
Chief Financial Officer or Member
<PAGE>
EXHIBIT 5.1
September 25, 1997
Williams Scotsman, Inc.
8211 Town Center Drive
Baltimore, Maryland 21236
Mobile Field Office Company
8211 Town Center Drive
Baltimore, Maryland 21236
Willscot Equipment, LLC
8211 Town Center Drive
Baltimore, Maryland 21236
Registration Statement on Form S-4 (File No. 333-30753)
Ladies and Gentlemen:
In connection with the above-referenced Registration Statement on Form S-4
(the "Registration Statement") filed by Williams Scotsman, Inc., a Maryland
corporation (the "Company"), Mobile Field Office Company, a New Jersey
corporation (the "Guarantor"), and Willscot Equipment, LLC, a Delaware limited
liability company (the "Subordinated Guarantor" and together with the
"Guarantor," the "Subsidiary Guarantors"), with the Securities and Exchange
Commission (the "SEC") pursuant to the Securities Act of 1933, as amended (the
"Act"), and the rules and regulations promulgated thereunder, we have been
requested to render our opinion as to the legality of the securities being
registered thereunder. The Registration Statement relates to the registration
under the Act of the Company's 9 7/8% Senior Notes due 2007 (the "New Notes")
and the guarantees of the New Notes by the Subsidiary Guarantors (the
"Subsidiary Guarantees"). The New Notes are to be offered in exchange for the
Company's outstanding 9 7/8% Senior Notes due 2007 (the "Existing Notes"). The
New Notes will be issued by the Company pursuant to the terms of the Indenture
(the "Indenture"), dated as of May 15, 1997, among the Company, the Subsidiary
Guarantors and The Bank of New York, as trustee (the "Trustee"). Capitalized
terms used herein and not otherwise defined herein shall have the respective
meanings ascribed thereto in the Registration Statement.
In connection with this opinion, we have examined originals, conformed
copies or photocopies, certified or otherwise identified to our satisfaction, of
the following documents:
(i) the Registration Statement (including the exhibits thereto);
(ii) the Indenture included as Exhibit 4.1 to the Registration Statement
(including the Subsidiary Guarantees set forth therein); and
(iii) the proposed form of the New Notes included as Exhibit 4.5 to the
Registration Statement.
In addition, we have examined: (i) such limited liability company records of
the Subordinated Guarantor as we have considered appropriate, including its
operating agreement, dated as of May 22, 1997, certified as in effect on the
date hereof; and (ii) such other certificates, agreements and documents as we
deemed relevant and necessary as a basis for the opinions hereinafter expressed.
In our examination of the aforesaid documents and in rendering the opinions
set forth below, we have assumed, without independent investigation, (i) the
genuineness of all signatures, the authenticity of all documents submitted to us
as originals, the conformity to the original documents of all documents
<PAGE>
submitted to us as certified, photostatic, reproduced or conformed copies of
validly existing agreements or other documents, the authenticity of all such
latter documents and the legal capacity of all individuals who have executed any
of the documents which we examined, (ii) the New Notes will be issued as
described in the Registration Statement, (iii) the Indenture was duly
authorized, executed and delivered by the parties thereto (other than the
Subordinated Guarantor), (iv) the Indenture represents a valid and binding
obligation of the Trustee and (v) the New Notes will be duly authorized,
executed and delivered. With regard to assumptions (iii) and (v), we refer you
to the opinion of Piper & Marbury L.L.P., special counsel to the Company, filed
as Exhibit 5.2 to the Registration Statement. We have relied upon the factual
matters contained in the representations and warranties of the Company and the
Subsidiary Guarantors made in such documents and upon certificates of public
officials and officers of the Company and the Subsidiary Guarantors.
Based on the foregoing, and subject to the assumptions, exceptions and
qualifications set forth herein, we are of the opinion that:
1. The Indenture represents a valid and binding obligation of the
Company and each of the Subsidiary Guarantors enforceable against the
Company and each of the Subsidiary Guarantors in accordance with its terms.
2. When issued, authenticated and delivered in accordance with the
terms of the Indenture, the New Notes will be legal, valid and binding
obligations of the Company enforceable against the Company in accordance
with their terms.
3. When issued, authenticated and delivered in accordance with the
terms of the Indenture, the Subsidiary Guarantees to be endorsed on the New
Notes will be legal, valid and binding obligations of the Subsidiary
Guarantors enforceable against the Subsidiary Guarantors in accordance with
their terms.
The foregoing opinions are subject to the following assumptions and
qualifications: the enforceability of the Indenture, the New Notes and the
Subsidiary Guarantees may be (i) subject to bankruptcy, insolvency, fraudulent
conveyance or transfer, reorganization, moratorium and other similar laws
affecting creditors' rights generally and (ii) general principles of equity
(regardless of whether such enforcement is considered in a proceeding in equity
or at law).
Our opinions expressed above are limited to the laws of the State of New
York. Our opinions are rendered only with respect to the laws, and the rules,
regulations and orders thereunder, that are currently in effect.
We hereby consent to the use of our name in the Registration Statement and
in the prospectus therein as the same appears in the caption "Legal Matters" and
to the use of this opinion as an exhibit to the Registration Statement. In
giving this consent, we do not thereby admit that we come within the category of
persons whose consent is required by the Act or by the rules and regulations
promulgated thereunder.
Very truly yours,
PAUL, WEISS, RIFKIND, WHARTON & GARRISON
2
<PAGE>
EXHIBIT 5.2
Piper & Marbury
L.L.P.
Williams Scotsman, Inc.
Mobile Field Office Company
September 25, 1997
Page 1
PIPER & MARBURY
L.L.P.
CHARLES CENTER SOUTH
36 SOUTH CHARLES STREET
BALTIMORE, MARYLAND 21201-3018
410-539-2530
FAX: 410-539-0489
WASHINGTON
NEW YORK
PHILADELPHIA
EASTON
September 25, 1997
<PAGE>
Piper & Marbury
L.L.P.
Williams Scotsman, Inc.
Mobile Field Office Company
September 25, 1997
Page 2
Williams Scotsman, Inc.
Mobile Field Office Company
8211 Town Center Drive
Baltimore, Maryland 21236
Re: Registration Statement of Form S-4
Registration Number (333-30753)
Ladies and Gentlemen:
We have acted as special counsel to Williams Scotsman, Inc., a Maryland
corporation (the "Issuer") and Mobile Field Office Company, a New Jersey
corporation (the "Guarantor"), in connection with the above-captioned
Registration Statement on Form S-4 (the "Registration Statement") filed by the
Issuer with the United States Securities and Exchange Commission pursuant to the
Securities Act of 1933, as amended (the "Act"), and the rules and regulations
promulgated thereunder. The Registration Statement relates to the registration
under the Act of the Issuers 9 7/8% Senior Notes due 2007 (the "New Notes") and
the guarantees of the New Notes by the Guarantor and by Willscot Equipment
L.L.C., a Delaware limited liability company (the "Subordinated Guarantor"). The
New Notes are to be offered in exchange for the Issuer's outstanding 9 7/8%
Senior Notes due 2007 (the "Existing Notes"). The New Notes will be issued under
the Indenture dated as of May 15, 1997 (the "Indenture") among the Issuer, the
Guarantor, the Subordinated Guarantor and The Bank of New York, as Trustee. The
Issuer and the Guarantor are collectively referred to herein as the "Obligors";
and the New Notes, the Indenture and the guarantee (the "Guarantee") by the
Guarantor on a senior basis of the New Notes are collectively referred to herein
as the "Transaction Documents".
As counsel in the capacity indicated above, we have examined, among other
things, the following:
1. The Transaction Documents;
2. Records of the corporate proceedings of each of the Obligors,
relating to the Transaction Documents, as certified by the Secretary and
Corporate Counsel of Scotsman Holdings, Inc., a Delaware corporation
("Holdings"), which is the parent corporation of the Issuer, which, in turn,
is the parent corporation of the Guarantor; and
3. Such other documents, records and legal matters as we have deemed
necessary or relevant for purposes of the opinions hereinafter expressed.
In all such examinations, we have assumed the genuineness of all signatures,
the authenticity of documents submitted to us as originals, the conformity to
the originals of all documents submitted to us as certified, conformed, or
photostatic copies, the legal capacity of all individuals who have executed any
of the aforesaid documents. We have also assumed that (i) all of the parties to
the Transaction Documents are duly organized, validly existing and in good
standing in their respective jurisdictions of organization and have the power
and authority to execute, deliver and perform the Transaction Documents and (ii)
there are no oral or written modifications or amendments to the Transaction
Documents, and there has been no waiver of any of the provisions thereof, by
action or conduct of the parties or otherwise.
<PAGE>
Piper & Marbury
L.L.P.
Williams Scotsman, Inc.
MOBILE FIELD OFFICE COMPANY
September 25, 1997
Page 3
We have been furnished with and, with your consent, have relied upon, a
certificate of the Secretary and Corporate Counsel of Holdings, and upon the
representations and warranties of the Obligors, as set forth in the Transaction
Documents, with respect to certain factual matters.
In basing the opinions and other matters set forth herein on "our
knowledge," the words "our knowledge" signify that, in the course of our
representation as counsel, no information has come to our attention that would
give us actual knowledge or actual notice that any such opinions or other
matters are not accurate. The words "our knowledge" and similar language used
herein are intended to be limited to the knowledge of the lawyers within our
firm who have acted as counsel to any of the Obligors in connection with the
transaction being consummated pursuant to the Transaction Documents.
Based upon and subject to the foregoing, we are of the opinion that:
1. Each Obligor has duly and validly authorized each Transaction
Document to which it is a party and has duly executed and delivered the
Indenture.
2. Upon execution and delivery of the New Notes by any two duly
authorized officers of the Issuer, the New Notes will have been duly
executed and delivered by the Issuer. Upon execution and delivery of the
Guarantee by a duly authorized officer of the Guarantor, the Guarantee will
have been duly executed and delivered by the Guarantor.
The opinions set forth above are subject to the following further
limitations and qualifications:
A. Except as expressly provided herein, we express no opinion as to any
agreement, document, certificate, or instrument, other than the Transaction
Documents, that may be an exhibit to, or referred to in, any Transaction
Documents.
B. We are opining herein only with respect to the laws of the State of
Maryland and the New Jersey Business Corporation Act. We express no opinion
with respect to the laws of any other jurisdiction.
The opinions expressed herein are rendered to you as of the date hereof and
with respect to such laws in effect as of the date hereof, and we assume no
obligation to supplement this opinion in the event of any change in applicable
law or in the facts upon which any of the opinions herein are based. The
opinions expressed in this letter are limited to the matters set forth in this
letter, and no other opinions should be inferred beyond the matters expressly
stated.
We hereby consent to the use of our name in the Registration Statement and
in the related prospectus as the same appears under the caption "Legal Matters"
and to the use of this letter as an exhibit to the Registration Statement. In
giving this consent, we do not thereby admit that we come within the category of
persons whose consent is required by the Act of by the rules and regulations
promulgated thereunder.
Very truly yours,
Piper & Marbury
L.L.P.
<PAGE>
Exhibit 10.1
================================================================================
CREDIT AGREEMENT
among
SCOTSMAN HOLDINGS, INC.,
WILLIAMS SCOTSMAN, INC.,
VARIOUS FINANCIAL INSTITUTIONS,
BANKERS TRUST COMPANY,
as Issuing Bank,
and
BT COMMERCIAL CORPORATION,
as Agent
Dated as of May 22, 1997
$300,000,000
================================================================================
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE 1. Definitions.................................................. 1
1.1 General Definitions........................................... 1
1.2 Accounting Terms and Determinations........................... 37
1.3 Other Defined Terms........................................... 37
ARTICLE 2. Revolving Loans............................................. 37
2.1 Commitments................................................... 37
2.2 Determination of Borrowing Base............................... 38
2.3 Borrowing Mechanics........................................... 39
2.4 Settlements Among the Payments Administrator and the
Lenders.................................................. 41
2.5 Mandatory and Voluntary Payments: Mandatory and Voluntary
Reduction of Commitments................................. 44
2.6 Payments and Computations..................................... 47
2.7 Maintenance of Account........................................ 49
2.8 Statement of Account.......................................... 49
2.9 Taxes......................................................... 49
2.10 Sharing of Payments........................................... 51
ARTICLE 3. Letters of Credit........................................... 52
3.1 Issuance of Letters of Credit................................. 52
3.2 Terms of Letters of Credit.................................... 53
3.3 Lenders' Participation........................................ 53
3.4 Notice of Issuance............................................ 53
3.5 Payment of Amount Drawn Under Letters of Credit............... 54
3.6 Payment by Lenders............................................ 54
3.7 Nature of Issuing Bank's Duties............................... 55
3.8 Obligations Absolute.......................................... 56
ARTICLE 4. Interest, Fees and Expenses................................. 57
4.1 Interest on Eurodollar Rate Loans............................. 57
4.2 Interest on Base Rate Loans................................... 57
4.3 Notice of Continuation and Notice of Conversion............... 57
4.4 Interest After Default........................................ 59
4.5 Reimbursement of Expenses..................................... 60
<PAGE>
4.6 Unused Line Fee............................................... 60
4.7 Letter of Credit Fees......................................... 60
4.8 Other Fees and Expenses....................................... 61
4.9 Authorization to Charge Account............................... 61
4.10 Indemnification in Certain Events............................. 61
4.11 Calculations.................................................. 62
4.12 Change of Applicable Lending Office........................... 63
ARTICLE 5. Conditions Precedent........................................ 63
5.1 Conditions to Initial Loans and Letters of Credit............. 63
(a) Execution of Agreement; Notes............................ 63
(b) Officer's Certificate.................................... 63
(c) Opinions of Counsel...................................... 63
(d) Security Agreement....................................... 64
(e) Collateral Access Agreements............................. 65
(f) Collection Bank Agreements; Concentration Account
Agreement........................................... 65
(g) Borrowing Base Certificate............................... 65
(h) Equity Issuance.......................................... 65
(i) Issuance of Senior Unsecured Notes....................... 66
(j) Recapitalization; etc.................................... 67
(k) Approvals................................................ 70
(l) Material Adverse Change, etc............................. 70
(m) Litigation............................................... 70
(n) Corporate Proceedings.................................... 70
(o) Plans; Collective Bargaining Agreements; Existing
Indebtedness Agreements; Shareholders' Agreements;
Management Agreements; Employment Agreements; Tax
Sharing Agreements; Material Contracts.............. 71
(p) Solvency Certificate..................................... 72
(q) Projections; etc......................................... 73
(r) Insurance Policies....................................... 73
(s) Consent Letter........................................... 73
(t) Payment of Fees.......................................... 73
(u) Collateral Examination and Appraisal..................... 73
(v) Environmental Reports.................................... 73
(w) Management............................................... 74
(x) Subsidiaries Guaranty.................................... 74
(y) Pledge Agreement......................................... 74
(z) Mortgages; Title Insurance; Surveys; etc................. 74
(aa) Deposit Account Agreement................................ 75
(bb) Intercreditor Agreement.................................. 75
(ii)
<PAGE>
(cc) Bailee Agreement......................................... 75
(dd) Custodian Agreement...................................... 76
(ee) Creation of Unit Subsidiary; Transfer of Assets
Thereto; Master Lease; etc........................... 76
ARTICLE 6. Representations and Warranties.............................. 77
6.1 Corporate Status.............................................. 78
6.2 Corporate Power and Authority................................. 78
6.3 No Violation.................................................. 78
6.4 Litigation.................................................... 79
6.5 Use of Proceeds............................................... 79
6.6 Governmental Approvals........................................ 79
6.7 Investment Company Act........................................ 79
6.8 Public Utility Holding Company Act............................ 79
6.9 True and Complete Disclosure.................................. 80
6.10 Financial Condition; Financial Statements..................... 80
6.11 Locations of Offices, Records, Inventory and Rental
Equipment............................................ 81
6.12 Fictitious Business Names..................................... 81
6.13 Security Interests............................................ 81
6.14 Tax Returns and Payments...................................... 82
6.15 Compliance with ERISA......................................... 82
6.16 Subsidiaries.................................................. 83
6.17 Intellectual Property; etc.................................... 84
6.18 Compliance with Statutes, etc................................. 84
6.19 Properties.................................................... 85
6.20 Labor Relations; Collective Bargaining Agreements............. 85
6.21 Restrictions on Subsidiaries.................................. 86
6.22 Status of Accounts............................................ 86
6.23 Material Contracts............................................ 86
6.24 Existing Indebtedness and Operating Leases.................... 86
6.25 Representations and Warranties in Recapitalization
Agreement................................................ 86
6.26 Guarantee of Senior Secured Notes............................. 87
6.27 Custodians.................................................... 87
ARTICLE 7. Affirmative Covenants....................................... 87
7.1 Financial Information......................................... 87
7.2 Real Estate Appraisals........................................ 92
7.3 Corporate Franchises.......................................... 92
7.4 Compliance with Statutes, etc................................. 93
(iii)
<PAGE>
7.5 ERISA......................................................... 94
7.6 Good Repair................................................... 95
7.7 Books and Records............................................. 95
7.8 Collateral Records............................................ 96
7.9 Security Interests............................................ 96
7.10 Insurance; Casualty Loss...................................... 96
7.11 Taxes......................................................... 98
7.12 End of Fiscal Years; Fiscal Quarters.......................... 98
7.13 Further Assurances............................................ 98
7.14 Maintenance of Separateness................................... 99
7.15 Collateral Access Agreements.................................. 99
7.16 New Subsidiaries..............................................100
7.17 Permitted Acquisitions........................................100
7.18 Unit Subsidiary; Provisions Relating to Units; etc............101
ARTICLE 8. Negative Covenants..........................................102
8.1 Consolidation, Merger, Sale or Purchase of Assets, etc........102
8.2 Liens.........................................................104
8.3 Indebtedness..................................................107
8.4 Capital Expenditures..........................................109
8.5 Investments...................................................110
8.6 Dividends, etc................................................111
8.7 Transactions with Affiliates..................................113
8.8 Changes in Business...........................................114
8.9 Interest Coverage Ratio.......................................114
8.10 Utilization...................................................115
8.11 Creation of Subsidiaries......................................115
8.12 Limitation on Voluntary Payments and Modifications of
Indebtedness; Modifications of Governing Documents,
Preferred Stock and Certain Other Agreements; etc.........115
8.13 Issuance of Stock.............................................117
8.14 Limitation on Restrictions Affecting Subsidiaries.............117
8.15 No Additional Bank Accounts...................................118
8.16 No Excess Cash................................................118
8.17 Account Terms.................................................118
8.18 Permitted Preferred Stock.....................................118
8.19 Unit Subsidiary...............................................119
(iv)
<PAGE>
ARTICLE 9. Events of Default and Remedies..............................119
9.1 Events of Default.............................................119
(a) Payments.................................................119
(b) Representations, etc.....................................119
(c) Covenants................................................119
(d) Default Under Other Agreements...........................119
(e) Bankruptcy, etc..........................................120
(f) ERISA....................................................121
(g) Collateral Documents.....................................121
(h) Judgments................................................122
(i) Change of Control........................................122
(j) Guaranty.................................................122
ARTICLE 10. The Agent..................................................123
10.1 Appointment..................................................123
10.2 Nature of Duties of Agent....................................123
10.3 Lack of Reliance on Agent....................................124
10.4 Certain Rights of the Agent..................................124
10.5 Reliance by Agent............................................124
10.6 Indemnification of Agent.....................................125
10.7 The Agent in its Individual Capacity.........................125
10.8 Holders of Notes.............................................125
10.9 Successor Agent..............................................125
10.10 Collateral Matters...........................................126
10.11 Actions with Respect to Defaults.............................127
10.12 Delivery of Information......................................128
ARTICLE 11. Miscellaneous..............................................128
11.1 Submission to Jurisdiction; Waivers..........................128
11.2 Waiver of Jury Trial.........................................129
11.3 Governing Law................................................129
11.4 Delays: Partial Exercise of Remedies.........................129
11.5 Notices......................................................129
11.6 Benefit of Agreement.........................................130
11.7 Confidentiality..............................................133
11.8 Indemnification..............................................134
11.9 Entire Agreement; Successors and Assigns.....................135
11.10 Amendment or Waiver..........................................135
(v)
<PAGE>
11.11 Nonliability of Agent and Lenders............................136
11.12 Independent Nature of Lenders' Rights........................136
11.13 Counterparts.................................................136
11.14 Effectiveness................................................136
11.15 Headings Descriptive.........................................136
11.16 Maximum Rate.................................................136
11.17 Right of Setoff..............................................137
11.18 Other Credit Documents.......................................137
11.19 Certain Provisions Regarding Perfection of Security
Interests..............................................137
11.20 Post Closing Actions.........................................138
ARTICLE 12. Holdings Secured Guaranty..................................140
12.1 The Holdings Secured Guaranty................................140
12.2 Bankruptcy...................................................141
12.3 Nature of Liability..........................................141
12.4 Independent Obligation.......................................141
12.5 Authorization................................................142
12.6 Reliance.....................................................143
12.7 Subordination................................................143
12.8 Waiver.......................................................143
12.9 Limitation on Enforcement....................................144
SCHEDULE I (Preamble) Lenders
SCHEDULE II (Section 1.1) Extended Term Accounts
SCHEDULE III (Section 1.1) Existing Indebtedness and Operating Leases
SCHEDULE IV (Section 6.11) Chief Executive Offices, Records Locations
and Rental Equipment Locations
SCHEDULE V (Section 6.12) Fictitious Business Names
SCHEDULE VI (Section 6.14) Tax Matters
SCHEDULE VII (Section 6.15) ERISA Matters
SCHEDULE VIII (Section 6.16) Subsidiaries
SCHEDULE IX (Section 5.1(m)) Litigation
SCHEDULE X (Section 5.1(z)) Real Properties
SCHEDULE XI (Section 6.20) Collective Bargaining Agreements
SCHEDULE XII (Section 7.10) Insurance
SCHEDULE XIII (Section 8.2(d)) Existing Liens
SCHEDULE XIV (Section 8.5(f)) Existing Investments
SCHEDULE XV (Section 8.16) Bank Accounts
(vi)
<PAGE>
EXHIBIT A Form of Revolving Note
EXHIBIT B-1 Form of Notice of Borrowing
EXHIBIT B-2 Form of Letter of Credit Request
EXHIBIT B-3 Form of Notice of Continuation
EXHIBIT B-4 Form of Notice of Conversion
EXHIBIT C-1 Form of Collection Bank Agreement
EXHIBIT C-2 Form of Concentration Account Agreement
EXHIBIT D Form of Section 2.9(b)(ii) Certificate
EXHIBIT E-1 Form of Opinion of Paul, Weiss, Rifkind, Wharton & Garrison,
special counsel to Holdings and the Borrower
EXHIBIT E-2 Form of Opinion of White & Case
EXHIBIT F Form of Security Agreement
EXHIBIT G Form of Collateral Access Agreement
EXHIBIT H Form of Officer's Certificate
EXHIBIT I Form of Consent Letter
EXHIBIT J Form of Subsidiaries Guaranty
EXHIBIT K Form of Pledge Agreement
EXHIBIT L Form of Mortgage
EXHIBIT M Form of Deposit Account Agreement
EXHIBIT N Form of Intercreditor Agreement
EXHIBIT O Form of Bailee Agreement
EXHIBIT P Form of Custodian Agreement
EXHIBIT Q Form of Compliance Certificate
EXHIBIT R Form of Borrowing Base Certificate
EXHIBIT S-1 Form of Assignment and Assumption Agreement
EXHIBIT S-2 Form of Notice of Assignment
(vii)
<PAGE>
THIS CREDIT AGREEMENT is entered into as of May 22, 1997, among
Scotsman Holdings, Inc., a Delaware corporation ("Holdings"), Williams Scotsman,
Inc., a Maryland corporation (the "Borrower"), each of those financial
institutions listed from time to time on Schedule I hereto (each, a "Lender"
and, collectively, the "Lenders"), BANKERS TRUST COMPANY, as Issuing Bank, and
BT COMMERCIAL CORPORATION, acting as Agent in the manner and to the extent
described in Article 10 hereof. Capitalized terms used and not otherwise
defined herein have the respective meanings set forth in Section 1.1 hereof.
W I T N E S S E T H :
WHEREAS, the Borrower wishes to obtain a credit facility (i) to make
payments in connection with the Transaction, (ii) for the working capital needs
and general corporate purposes of the Borrower and its Subsidiaries (including
acquisitions consummated in accordance with the terms hereof), and (iii) for the
ongoing letter of credit requirements of the Borrower and its Subsidiaries; and
WHEREAS, upon the terms and subject to the conditions set forth
herein, the Lenders are willing to make available to the Borrower the credit
facility provided for herein;
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE 1.
DEFINITIONS
1.1 GENERAL DEFINITIONS. As used herein, the following terms shall
have the meanings herein specified (to be equally applicable to both the
singular and plural forms of the terms defined):
ACCOUNTS shall mean, with respect to any Person, all present and
future accounts, contract rights and other rights to payment for goods sold or
leased (whether or not delivered) or for services rendered which are not
evidenced by an instrument, whether or not they have been earned by performance,
and any letter of credit, guarantee, security interest or other security issued
or granted to secure payment by an account debtor
<PAGE>
including, without limitation, all rentals, lease payments and other monies
earned and to be earned, due and to become due under any Lease.
ADJUSTED CERTIFICATE OF DEPOSIT RATE shall mean on any day, the sum
(rounded to the nearest 1/100 of 1%) of (1) the rate obtained by dividing (x)
the most recent weekly average dealer offering rate for negotiable certificates
of deposit with a three-month maturity in the secondary market as published in
the most recent Federal Reserve System publication entitled "Select Interest
Rates", published weekly on Form H.15 as of the date hereof, or if such
publication or a substitute containing the foregoing rate information shall not
be published by the Federal Reserve System for any week, the weekly average
offering rate determined by BTCo on the basis of quotations for such
certificates received by it from three certificate of deposit dealers in New
York of recognized standing, by (y) a percentage equal to 100% minus the stated
maximum rate of all reserve requirements as specified in Regulation D applicable
on such day to a three-month certificate of deposit in excess of $100,000 issued
by a member bank of the Federal Reserve System with deposits in excess of five
billion dollars (including, without limitation, any marginal, emergency,
supplemental, special or other reserves), plus (2) the then daily net annual
assessment rate as estimated by BTCo for determining the current annual
assessment payable by BTCo to the Federal Deposit Insurance Corporation for
insuring three month certificates of deposit.
ADJUSTED EURODOLLAR RATE shall mean, with respect to each Interest
Period for any Eurodollar Rate Loan, the rate obtained by dividing (i) the
Eurodollar Rate for such Interest Period by (ii) a percentage equal to 100%
minus the stated maximum rate (stated as a decimal) of all reserves, if any,
required by the Board of Governors of the Federal Reserve System to be
maintained by a member bank of the Federal Reserve System in New York City with
deposits in excess of five billion dollars against "Eurocurrency liabilities" as
specified in Regulation D (or against any other category of liabilities which
includes deposits by reference to which the interest rate on Eurodollar Rate
Loans is determined or any category of extensions of credit or other assets
which includes loans by a non-United States office of any Lender to United
States residents).
AFFECTED LOANS shall have the meaning provided in Section 2.5(e).
AFFILIATE shall mean, with respect to any Person, any other Person
which directly or indirectly controls, is controlled by, or is under common
control with, such Person or any Subsidiary of such Person or any Person who is
a director or officer of such Person or any Subsidiary of such Person. For
purposes of this definition, "control" shall mean the possession, directly or
indirectly, of the power to (i) vote ten percent or more of the securities
having ordinary voting power for the election of directors of such Person or
(ii) direct or cause the direction of management and policies of that Person,
whether through the ownership of voting securities, by contract or otherwise and
either alone or in
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conjunction with others or any group. Neither any Lender nor any person
controlling any Lender or under common control with such Lender (including BTCo)
nor any of their respective Subsidiaries shall be treated as an Affiliate of the
Credit Parties or their respective Subsidiaries. Notwithstanding the foregoing,
for purposes of determining the Borrowing Base, no portfolio companies of any of
the Equity Investors or of their Affiliates (excluding Holdings and its
Subsidiaries) shall be deemed an Affiliate of the Borrower or any Subsidiary of
the Borrower.
AGENT shall mean BTCC in its capacity as Agent for the Lenders
hereunder, and shall include any successor thereof as Agent, appointed as such
pursuant to Section 10.9.
AGENT ADVANCE shall have the meaning provided in Section 2.3(c).
AGENT ADVANCE PERIOD shall have the meaning given to such term in
Section 2.3(c).
APPLICABLE LENDING OFFICE shall mean, with respect to each Lender,
such Lender's Eurodollar Lending Office in the case of a Eurodollar Rate Loan
and such Lender's Domestic Lending Office in the case of a Base Rate Loan.
APPLICABLE MARGIN shall mean the applicable percentage set forth below
based upon (i) until the first Start Date, Level IV, (ii) at any time when any
Default or Event of Default has occurred and is continuing, Level IV and (iii)
at any time other than those periods referred to in clauses (i) and (ii) above,
the Level for such Quarterly Period:
Eurodollar Base Unused
Level Rate Loan Rate Loan Line Fee
----- --------- --------- --------
Level I 1.50% 0.25% 0.125%
Level II 1.75% 0.50% 0.250%
Level III 2.00% 0.75% 0.375%
Level IV 2.25% 1.00% 0.500%
The Leverage Ratio shall be determined based on the delivery of a
certificate of the Borrower by the chief executive officer, chief financial
officer, treasurer or controller of the Borrower, together with the Financial
Statements delivered pursuant to Sections 7.1(a) and (b) for the fiscal quarter
ended immediately prior to the relevant Start Date, which certificate shall set
forth the calculation of the Leverage Ratio as of the last day of the fiscal
quarter ended immediately prior to the relevant Start Date. The Applicable
Margin so determined shall apply from the relevant Start Date to the End Date.
If no certificate and
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Financial Statements shall have been delivered to the Agent on or prior to the
relevant End Date, the Level shall be Level IV until such certificate and
Financial Statements are delivered.
ASSET SALE shall mean the sale, transfer or other disposition by
Holdings, the Borrower or any Subsidiary of Holdings or the Borrower to any
Person other than the Borrower or any Subsidiary Guarantor of any asset of
Holdings, the Borrower or such Subsidiary (other than sales, transfers or other
dispositions in the ordinary course of business of inventory (including Rental
Equipment) and/or obsolete or excess equipment); provided that all
sale-leaseback transactions shall be deemed to constitute Asset Sales.
AUDITORS shall mean a nationally-recognized firm of independent public
accountants selected by the Borrower and reasonably satisfactory to the Agent.
For purposes of this Credit Agreement, the Borrower's current firm of
independent public accountants, Ernst & Young LLP, shall be deemed to be
satisfactory to the Agent.
AVERAGE LEASE TERM shall mean, as of any date, an amount equal to (x)
the total number of months that all existing Leases have been in effect on such
date (including for this purpose the month in which the date recalculation
occurs) divided by (y) the number of all existing Leases as of such date.
AVERAGE RENTAL RATE shall mean, at any time, the average monthly
rental payment per unit of leased Rental Equipment.
B OF A shall mean Bank of America National Trust and Savings
Association.
BAILEE AGREEMENT shall have the meaning provided in Section 5.1(cc).
BANKRUPTCY CODE shall have the meaning provided in Section 9.1(e).
BASE RATE shall mean, at any time, the highest of (i) 1/2 of 1% in
excess of the Adjusted Certificate of Deposit Rate then in effect and (ii) the
Prime Lending Rate. If for any reason BTCo shall have determined (which
determination shall be final absent manifest error) that it is unable to
ascertain the Adjusted Certificate of Deposit Rate, the Base Rate shall be
determined without regard to clause (i), until the circumstance giving rise to
such inability shall no longer exist.
BASE RATE LOAN shall mean each Revolving Loan bearing interest as
provided in Section 4.2.
BLOCKED COMMITMENTS shall mean (i) on or prior to the Senior Secured
Notes Repayment Date an amount equal to 103.167% of the aggregate principal
amount of Senior
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Secured Notes then outstanding (but giving effect to any reduction in the
aggregate principal amount of Senior Secured Notes which will be outstanding, to
the extent the proceeds of the respective Revolving Loan being incurred
hereunder are to be used, within two Business Days after the date of the
incurrence of such loan, to repay outstanding Senior Secured Notes) and (ii)
thereafter, $0.
BOARD OF DIRECTORS shall mean the Board of Directors of Holdings.
BORROWER shall have the meaning provided in the preamble to this
Credit Agreement.
BORROWING shall mean an incurrence of Revolving Loans of the same Type
from all the Lenders on the same day (or resulting from Conversion or
Continuance on the same date), having, in the case of Eurodollar Rate Loans, the
same Interest Period.
BORROWING BASE shall have the meaning given to such term in Section
2.2.
BORROWING BASE CERTIFICATE shall have the meaning given to such term
in Section 7.1(e).
BORROWING BASE DEFICIENCY shall mean, at any time, the amount, if any,
by which the Outstandings at such time exceeds the Borrowing Base at such time.
BORROWING DATE shall have the meaning provided in Section 2.4.
BT ACCOUNT shall have the meaning given to such term in Section 2.6.
BT DELAWARE shall have the meaning provided in Section 2.3(b).
BTCC shall mean BT Commercial Corporation, in its individual capacity.
BTCO shall mean Bankers Trust Company.
BUSINESS DAY shall mean any day other than a Saturday, Sunday or legal
holiday on which commercial banks in New York, New York are authorized to close.
When used in connection with Eurodollar Rate Loans, this definition will also
exclude any day on which commercial banks are not open for dealing in U.S.
Dollar deposits in the New York interbank Eurodollar market.
CALCULATION PERIOD shall have the meaning provided in Section 7.17.
CAPEX ROLLOVER AMOUNT shall have the meaning provided in Section
8.4(b).
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CAPITAL EXPENDITURES shall mean, as applied to any Person for any
period, the aggregate of all expenditures of (whether paid in cash or accrued as
liabilities (including Capitalized Lease Obligations and the acquisition of
additional Rental Units)) such Person and its Subsidiaries during that period
that, in conformity with GAAP, are or are required to be included in the
property, plant or equipment or, with respect to Rental Equipment, lease
equipment reflected in the consolidated balance sheet of such Person; PROVIDED,
that Capital Expenditures shall not include the purchase price paid in
connection with the acquisition of the equity interest of any Person (including
through the purchase of all of the capital stock or other ownership interests of
such Person or through merger or consolidation) to the extent allocable to
property, plant and equipment or, with respect to Rental Equipment, lease
equipment reflected in the consolidated balance sheet of such person; PROVIDED
FURTHER, that for purposes of Section 8.4, the amount of Capital Expenditures
for any period shall be equal to the sum of (i) the change in gross book value
of property, plant and equipment as set forth in the Borrower's respective
consolidated balance sheets and (ii) an amount determined in a manner consistent
with the calculation of "net capital expenditures for rental equipment" in Item
7 of the Borrower's annual report on Form 10-K for the year ended December 31,
1996.
CAPITAL LEASE, as applied to any Person, shall mean any lease of any
property (whether real, personal or mixed) by that Person or any of its
Subsidiaries as lessee which, in conformity with GAAP, is accounted for as a
capital lease on the consolidated balance sheet of that Person.
CAPITALIZED LEASE OBLIGATIONS shall mean the obligations under Capital
Leases of the Borrower and its Subsidiaries in each case taken at the amount
thereof accounted for as liabilities in accordance with GAAP.
CASH EQUIVALENTS means (i) marketable direct obligations issued or
unconditionally guaranteed by the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition thereof; (ii)
marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having the highest rating obtainable
from Standard & Poor's Rating Group ("S&P") or Moody's Investors Service, Inc.
("Moody's"); (iii) commercial paper maturing not more than one year from the
date of creation thereof and, at the time of acquisition, having the highest
rating obtainable from either S&P's or Moody's; and (iv) certificates of deposit
or bankers' acceptances maturing within one year from the date of acquisition
thereof issued by any commercial bank organized under the laws of the United
States of America or any state thereof or the District of Columbia that (a) is
at least "adequately capitalized" (as defined in the regulations of its primary
Federal banking regulator) and (b) has Tier 1 capital (as defined in such
regulations) of not less than
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$500,000,000; (v) repurchase agreements with respect to, and which are fully
secured by a perfected security interest in, obligations of a type described in
clause (i) or clause (ii) above and are with any commercial bank described in
clause (iv) above; and (vi) shares of any money market mutual fund that (a) has
its assets invested continuously in the types of investments referred to in
clauses (i) through (v) above, (b) has net assets of not less than $500,000,000,
and (c) has the highest rating obtainable from either S&P or Moody's.
CASUALTY LOSS shall have the meaning given to such term in Section
7.10.
CERCLA shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Section 9601 ET
SEQ.
CERTIFICATE OF TITLE shall mean certificates of title, certificates of
ownership or other registration certificates issued or required to be issued
under the certificate of title or other similar laws of any State for any of the
Rental Equipment.
CERTIFICATED UNITS shall mean each Unit (as defined in the Security
Agreement) which is evidenced by a Certificate of Title issued under the motor
vehicle or other applicable statute of any State.
CHANGE OF CONTROL shall mean, at any time and for any reason
whatsoever, (a) Holdings shall cease to own directly 100% on a fully diluted
basis of the economic and voting interest in the Borrower's capital stock or (b)
the Borrower shall cease to own directly 100% on a fully diluted basis of the
economic and voting interests in the Unit Subsidiary's equity or (c) the Equity
Investors and/or their respective Affiliates and Permitted Transferees shall
cease to own on a fully diluted basis in the aggregate at least 51% of the
economic and voting interest in Holdings' capital stock or (d) the Board of
Directors of Holdings shall cease to consist of a majority of Continuing
Directors or (e) a "change of control" or similar event shall occur as provided
in any Permitted Preferred Stock (or the certificates of designation therefor)
or the Senior Unsecured Notes Documents.
CLOSING shall mean the occurrence of the Initial Credit Event and the
other transactions to occur on the Closing Date pursuant to the various
Documents (including without limitation the consummation of the Recapitalization
on such date).
CLOSING DATE shall mean the date on which the Initial Credit Event
occurs.
CODE shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the regulations promulgated and rulings issued thereunder.
Section references to the Code are to the Code, as in effect at the date of this
Credit Agreement and any
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subsequent provisions of the Code, amendatory thereof, supplemental thereto or
substituted therefor.
COLLATERAL shall mean all of the Collateral as defined in the
Collateral Documents.
COLLATERAL ACCESS AGREEMENTS shall have the meaning given to such term
in Section 5.1(e).
COLLATERAL AGENT shall mean BTCC acting as collateral agent pursuant
to the Collateral Documents.
COLLATERAL DOCUMENTS shall mean all contracts, instruments and other
documents now or hereafter executed and delivered in connection with this Credit
Agreement, pursuant to which liens and security interests are granted to the
Collateral Agent in the Collateral for the benefit of the Lenders, including,
without limitation, each Mortgage, the Security Agreement, the Pledge Agreement,
the Concentration Account Agreement, the Collection Bank Agreements, the Bailee
Agreement, the Custodian Agreement and the Intercreditor Agreement.
COLLECTION ACCOUNT shall mean the account established at a Collection
Bank pursuant to the Collection Bank Agreement, into which funds shall be
transferred pursuant to Section 2.6.
COLLECTION BANK shall have the meaning given to such term in Section
2.6(b)(i).
COLLECTION BANK AGREEMENT shall have the meaning given to such term in
Section 2.6(b)(i).
COLLECTIVE BARGAINING AGREEMENTS shall have the meaning given to such
term in Section 5.1(o)(ii).
COMMITMENT of any Lender shall mean the amount set forth opposite such
Lender's name on Schedule I, as such Schedule may be amended from time to time,
under the heading "Commitment", as such amount may be reduced from time to time
pursuant to the terms of this Credit Agreement.
COMMON STOCK FINANCING shall have the meaning provided in Section
5.1(h).
CONCENTRATION ACCOUNT shall have the meaning given to such term in
Section 2.6(c).
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CONCENTRATION ACCOUNT AGREEMENT shall have the meaning given to such
term in Section 2.6(c).
CONSOLIDATED DEBT shall mean, at any time, all Indebtedness of
Holdings, the Borrower and their respective Subsidiaries (i) for borrowed money
(including, without limitation all Revolving Loans) and (ii) with respect to
Capitalized Lease Obligations, in each case determined on a consolidated basis.
CONSOLIDATED NET INCOME shall mean for any period the consolidated net
income of Holdings, the Borrower and their respective Subsidiaries for such
period as determined in accordance with GAAP.
CONTINGENT OBLIGATIONS shall mean as to any Person, without
duplication, any obligation of such Person guaranteeing or intended to guarantee
any Indebtedness, leases, dividends or other obligations ("primary obligations")
of any other Person (the "primary obligor") in any manner, whether directly or
indirectly, including, without limitation, any obligation of such Person,
whether or not contingent, (a) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (b) to advance or
supply funds (i) for the purchase or payment of any such primary obligation or
(ii) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (c) to
purchase property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation or (d) otherwise to assure or hold
harmless the owner of such primary obligation against loss in respect thereof;
PROVIDED, HOWEVER, that the term Contingent Obligations shall not include (x)
endorsements of instruments for deposit or collection in the ordinary course of
business or (y) guarantees made by a Person (other than the Unit Subsidiary) of
the obligations of the Borrower or a Wholly-Owned Subsidiary of such Person
which do not constitute Indebtedness of the Borrower or such Wholly-Owned
Subsidiary and are incurred in the ordinary course of business of the Borrower
or such Wholly-Owned Subsidiary. The amount of any Contingent Obligation shall
be deemed to be an amount equal to the stated or determinable amount of the
primary obligation in respect of which such Contingent Obligation is made or, if
not stated or determinable, the maximum reasonably anticipated liability in
respect thereof (assuming such Person is required to perform thereunder) as
determined by such Person in good faith.
CONTINUATION AND CONTINUANCE each shall refer to a continuation of
Revolving Loans pursuant to Section 4.3, PROVIDED that neither term shall be
deemed to constitute the making of a Revolving Loan for purposes of this Credit
Agreement.
CONTINUING DIRECTORS shall mean the directors of Holdings on the
Closing Date (after giving effect to the Transaction) and each other director if
such director's
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election or nomination for the election to the Board of Directors is recommended
by a majority of the then Continuing Directors.
CONVERT, CONVERSION AND CONVERTED each shall refer to a conversion of
Revolving Loans of one Type into Revolving Loans of another Type pursuant to
Section 4.3, PROVIDED that each such term shall not constitute the making of a
Revolving Loan for purposes of this Credit Agreement.
CREDIT AGREEMENT shall mean this Credit Agreement, as the same may be
modified, amended, extended, restated, amended and restated or supplemented from
time to time.
CREDIT DOCUMENTS shall mean, collectively, this Credit Agreement, the
Revolving Notes, the Letters of Credit, each of the Collateral Documents and all
other documents and agreements now or hereafter executed and delivered in
connection herewith or therewith, as the same may be modified, amended,
extended, restated or supplemented from time to time.
CREDIT EVENT shall mean the making of a Revolving Loan or the issuance
of a Letter of Credit.
CREDIT PARTIES shall mean, collectively, Holdings, the Borrower and
the Subsidiary Guarantors.
CUSTODIAN AGREEMENT shall have the meaning provided in Section
5.1(dd).
CYPRESS GROUP shall mean the Cypress Group L.L.C., Cypress Merchant
Banking Partners L.P. and Cypress Offshore Partners L.P. or any new partnership
created to co-invest with Cypress Group L.L.C., Cypress Merchant Banking
Partners L.P. or Cypress Offshore Partners L.P. provided that Persons which had
a majority of the equity interests in or otherwise controlled Cypress Group
L.L.C., Cypress Merchant Banking Partners L.P. and/or Cypress Offshore Partners
L.P. on the Closing Date or any of their Permitted Transferees either (x) hold
all the equity interests of such new partnership or (y) control such new
partnership.
DEFAULT shall mean an event, condition or default which with the
giving of notice, the passage of time or both would be an Event of Default.
DEFAULTING LENDER shall have the meaning given to such term in Section
2.4(c).
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DEPOSIT ACCOUNT AGREEMENT shall have the meaning provided in Section
5.1(aa).
DISBURSEMENT ACCOUNT shall have the meaning given to such term in
Section 2.3(b).
DISCLOSED LITIGATION shall mean the litigation disclosed on Schedule
IX; PROVIDED that any such litigation shall cease to constitute Disclosed
Litigation (and at such time shall be subject to the general standard set forth
in Section 5.1(m)) at such time, if any, as there shall occur material adverse
developments (from the perspective of Holdings, the Borrower and their
respective Subsidiaries) after April 7, 1997.
DIVIDEND shall have the meaning given to such term in Section 8.6.
DOLLARS and the sign $ shall each mean freely transferable lawful
money of the United States.
DOMESTIC LENDING OFFICE shall mean, with respect to any Lender, the
office of such Lender specified as its "Domestic Lending Office" opposite its
name on Schedule I, as such annex may be amended from time to time.
EBITDA shall mean, in any fiscal period, Consolidated Net Income
(other than extraordinary items of Holdings, the Borrower and their respective
Subsidiaries for such period but including any Inventory or Rental Equipment
adjustments) for such period, (i) plus the amount of all Interest Expense,
federal, state and local income and franchise tax expense, depreciation and
amortization, including amortization of any goodwill or other intangibles for
such period, (ii) less gains and plus losses attributable to any fixed asset
sales (other than Rental Equipment), (iii) plus the amortization of debt
issuance costs, (iv) plus or minus (as the case may be) any other non-cash items
(other than any reserve established by Holdings against Accounts and/or
Inventory and/or Rental Equipment), in each case which have been subtracted or
added, as the case may be, in calculating Consolidated Net Income for such
period, all determined in accordance with GAAP, (v) plus or minus (as the case
may be) any increase or decrease in the amount of deferred taxes as shown on the
consolidated balance sheet as of the end of such period since the first day of
the same period (but without duplication of any taxes included in clause (i) of
this definition), (vi) plus or minus (as the case may be) any LIFO expense or
LIFO income, (vii) plus income attributable to discontinued operations directly
related to the Northeast Maryland manufacturing facility and (viii) plus all
customary non-recurring fees and expenses incurred or paid by Holdings, the
Borrower and their respective Subsidiaries in connection with the Transaction,
all of the foregoing (i) through (vi) and (viii) without duplication and only to
the extent added or deducted in calculating Consolidated Net Income.
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EFFECTIVE DATE shall have the meaning provided in Section 11.14.
ELIGIBLE ACCOUNTS RECEIVABLE shall mean as at any date, the aggregate
of all Accounts of the Borrower and its Wholly-Owned Subsidiaries then due and
payable in U.S. Dollars or Canadian Dollars and not deemed by the Agent in its
Permitted Discretion (after at least two Business Days' prior notice to Borrower
by Agent) to be ineligible for inclusion in the calculation of the Borrowing
Base. In determining the amount to be so included, the face amount of such
Accounts shall be reduced, without duplication, by the amount of all returns,
discounts, deferred revenue, claims, contras, credits, charges, chargebacks,
rebates or other allowances and amounts unearned and (but without duplication of
any of the foregoing) by the aggregate amount of all reserves, limits and
deductions provided for in this definition and elsewhere in this Credit
Agreement. Unless otherwise approved in writing by the Agent, no Account shall
be deemed to be an Eligible Account Receivable if:
(a) it arises out of a sale or Lease for which no invoice has been
provided to the account debtor; or
(b) it arises out of a sale or Lease made to an Affiliate; or
(c) the Account is unpaid on the date which is 90 days after the date
on which the original invoice provides that such payment is due; or
(d) the Account (other than Accounts listed on Part A of Schedule II
describing the account party and the payment terms, but including any such
Account if such Account is unpaid 30 days after the invoice provides for
such payment) provides for payment more than 91 days after the date of the
original invoice; or
(e) it is from the same account debtor (or any Subsidiary thereof)
and 50% or more, in face amount, of all Accounts from such account debtor
(or any Subsidiary thereof) are ineligible pursuant to (c) above; or
(f) the Account, when aggregated with all other Accounts of such
account debtor, exceeds 15% in face value of all Accounts of the Borrower
and its Subsidiaries whose Accounts are included in the Borrowing Base then
outstanding, to the extent of such excess; PROVIDED, HOWEVER, that Accounts
supported or secured by insurance acceptable to the Agent or by an
irrevocable letter of credit in form and substance satisfactory to the
Agent, issued by a financial institution satisfactory to the Agent, and
duly pledged to the Collateral Agent (together with sufficient
documentation to permit direct draws by the Collateral Agent) shall be
excluded from this clause (f); or
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(g) (i) the account debtor is also a creditor of the Borrower (other
than account debtors which have provided to the Agent a "no-offset" letter
in form and substance satisfactory to the Agent), (ii) the account debtor
has disputed its liability on, or the account debtor has made any claim
with respect to, such Account or any other Account due from such account
debtor to the Borrower, which has not been resolved or (iii) the Account
otherwise is or may become subject to any right of setoff by the account
debtor; or
(h) the account debtor has commenced a voluntary case under the
federal bankruptcy laws, as now constituted or hereafter amended, or made
an assignment for the benefit of creditors, or if a decree or order for
relief has been entered by a court having jurisdiction over the account
debtor in an involuntary case under the federal bankruptcy laws, as now
constituted or hereafter amended, or if any other petition or other
application for relief under the federal bankruptcy laws has been filed by
or against the account debtor, or if the account debtor has filed a
certificate of dissolution under applicable state law or shall be
liquidated, dissolved or wound up, or shall authorize or commence any
action or proceeding for dissolution, winding-up or liquidation, or if the
account debtor has failed, suspended business, declared itself to be
insolvent, is generally not paying its debts as they become due or has
consented to or suffered a receiver, trustee, liquidator or custodian to be
appointed for it or for all or a significant portion of its assets or
affairs, unless (i) the payment of Accounts from such account debtor is
secured in a manner satisfactory to the Agent, (ii) with respect to a
voluntary or involuntary bankruptcy or similar proceeding, the court
presiding over such proceeding has authorized such account debtor to pay
such Account to Borrower or (iii) if the Account from such account debtor
arises subsequent to a decree or order for relief with respect to such
account debtor under the federal bankruptcy laws, as now or hereafter in
effect, the Agent shall have determined that the timely payment and
collection of such Account will not be impaired; or
(i) the sale or Lease is to an account debtor outside of the United
States (except for receivables of account debtors who are located in Canada
not in excess of 20% of the Accounts and Accounts listed on Part B of
Schedule II), unless the account is supported by insurance acceptable to
the Agent or the account debtor thereon has supplied the Borrower with an
irrevocable letter of credit in form and substance satisfactory to the
Agent, issued by a financial institution satisfactory to the Agent and
which has been duly pledged to the Collateral Agent (together with
sufficient documentation to permit direct draws by the Collateral Agent);
or
(j) with respect to Accounts arising from a sale, the sale to the
account debtor is on a bill-and-hold, guaranteed sale, sale-and-return,
sale on approval or consignment basis or made pursuant to any other written
agreement providing for
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repurchase or return (other than pursuant to ordinary course of business
warranties); or
(k) the Agent determines in its Permitted Discretion that such
Account may not be paid by reason of the account debtor's financial
inability to pay; or
(l) the account debtor is the United States of America or any
department, agency or instrumentality thereof, unless the Borrower duly
assigns its rights to payment of such Account to the Collateral Agent
pursuant to the Assignment of Claims Act of 1940, as amended (31 U.S.C.
Section 3727 ET SEQ.); or
(m) the act of the Rental Equipment being Leased and put in service
giving rise to such Account has not occurred or the services giving rise to
such Account otherwise have not been performed by the Borrower and accepted
by the account debtor or, with respect to an Account arising from a sale,
the Account does not represent a final sale; or
(n) the Account does not comply in all material respects with all
applicable legal requirements; or
(o) the Collateral Agent does not have a valid and perfected first
priority security interest in or Lien on such Account, subject only to
Permitted Liens, or the Account does not otherwise conform in all material
respects to the representations and warranties contained in the Credit
Agreement or the other Credit Documents, except that the value of any
Account shall be reduced by the amount of any obligations secured by
Permitted Liens which are prior to the Lien in favor of the Collateral
Agent.
ELIGIBLE RENTAL EQUIPMENT shall mean all Rental Equipment of the
Borrower and its Wholly-Owned Subsidiaries held for sale or lease or leased by
the Borrower as lessor in the ordinary course of business and not deemed by the
Agent acting in its Permitted Discretion (after at least two Business Days'
prior notice to Borrower by Agent) to be ineligible for inclusion in the
calculation of the Borrowing Base. In any event, Eligible Rental Equipment
shall account for reserves for Rental Equipment that is unrentable. In
determining the amount to be so included, such Rental Equipment shall be valued
on a net book value basis consistent with the Borrower's consolidated month-end
balance sheet, LESS any reserves otherwise required by the Agent pursuant to
Section 2.2(b), and LESS any Rental Equipment that the Agent determines to be
ineligible pursuant to Section 2.2(b). Unless otherwise approved in writing by
the Agent, no Rental Equipment shall be deemed Eligible Rental Equipment if:
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(a) the Rental Equipment is not owned solely by the Borrower or a
Wholly-Owned Subsidiary of the Borrower and with respect to which the
Borrower or a Wholly-Owned Subsidiary of the Borrower does not have good,
valid and marketable title, or is held by a third party for sale on a
bill-and-hold, guaranteed sale, sale-and-return, sale on approval or
consignment basis; or
(b) the Rental Equipment (other than Rental Equipment being leased or
returned by a customer) is not stored on property that is either (i) owned
or leased by the Borrower or a Wholly-Owned Subsidiary of the Borrower or
(ii) owned or leased by a warehouseman that has contracted with the
Borrower or a Wholly-Owned Subsidiary of the Borrower to store Rental
Equipment on such warehouseman's property, provided that, except as
otherwise agreed to by the Collateral Agent for purposes of determining
Eligible Rental Equipment, after the 90th day following the Closing Date,
with respect to Rental Equipment stored on property leased by the Borrower
or a Wholly-Owned Subsidiary of the Borrower, the Borrower shall have
delivered in favor of the Collateral Agent a Collateral Access Agreement
executed by the lessor of such property, and, with respect to Rental
Equipment stored on property owned or leased by a warehouseman, the
Borrower shall have delivered to the Collateral Agent a Collateral Access
Agreement executed by such warehouseman; or
(c) the Rental Equipment is not subject to a perfected first priority
Lien in favor of the Collateral Agent except, (i) until the 90th day
following the Closing Date, with respect to Rental Equipment constituting
Certificated Units (excluding those evidenced by Certificates of Title
issued under the laws of the State of California), all of such Rental
Equipment, (ii) with respect to Rental Equipment constituting
Non-Certificated Units, all such Non-Certificated Units with respect to
which all applicable UCC filings have been made as required by the Credit
Documents, (iii) with respect to Eligible Rental Equipment stored at sites
described in clause (b) above, for Liens for normal and customary
warehouseman charges and (iv) to the extent subject only to Permitted
Liens, provided that the value of any Rental Equipment shall be reduced by
the amount of any obligations secured by Permitted Liens which are prior to
the Lien in favor of the Collateral Agent; or
(d) the Rental Equipment is not located in the United States or
Canada unless arrangements for the granting and perfection of a security
interest in such Rental Equipment have been made in a manner acceptable to
the Agent in its discretion; or
(e) the Rental Equipment does not conform in all material respects to
the representations and warranties contained in the Credit Agreement or the
other Credit Documents; or
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(f) whether or not located on property owned or leased by the
Borrower, it is not segregated or otherwise separately identifiable from
goods of others, if any, stored on the same premises as such Rental
Equipment; or
(g) the Rental Equipment is owned by the Borrower or any of its
Wholly-Owned Subsidiaries other than the Unit Subsidiary, in each case
unless the respective Rental Equipment constitutes (x) prior to the 90th
day following the Closing Date, Certificated Units and (y) from and after
the 90th day following the Closing Date, Qualified Certificated Units with
respect to which all actions required to be taken pursuant to Section 7.18
have in fact been taken; or
(h) the Rental Equipment is subject to Sales-Type Leases or leased by
the Borrower as lessor pursuant to a Lease which contains a bargain
purchase option; or
(i) the Rental Equipment has been or reasonably should be classified
by the Borrower or its Subsidiaries as type "D" or "E" consistent with the
manner in which the Borrower classifies Rental Equipment on the Closing
Date.
ELIGIBLE TRANSFEREE shall mean and include a commercial bank,
financial institution or other "accredited investor" (as defined in SEC
Regulation D) other than General Electric Capital Corporation and its
Affiliates.
EMPLOYMENT AGREEMENTS shall have the meaning provided in Section
5.1(o)(vi).
END DATE shall mean the date occurring on the third Business Day
following the date occurring 45 days (or in the case of the last fiscal quarter
of the Borrower, 90 days) after the end of the fiscal quarter in which the
previous Start Date occurred (or, if earlier, the date of the next Start Date).
ENVIRONMENTAL CLAIMS shall mean any and all administrative, regulatory
or judicial actions, suits, demands, demand letters, claims, liens, notices of
noncompliance or violation, investigations (other than internal reports prepared
by the Borrower or any of its Subsidiaries solely in the ordinary course of such
Person's business or as required in connection with a financing transaction and
not in response to any third party action or request of any kind) or proceedings
relating in any way to any Environmental Law or any permit issued, or any
approval given, under any such Environmental Law (hereafter, "Claims"),
including, without limitation, (a) any and all Claims by governmental or
regulatory authorities for enforcement, cleanup, removal, response, remedial or
other actions or damages pursuant to any applicable Environmental Law, and (b)
any and all Claims by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or
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injunctive relief resulting from Hazardous Materials arising from alleged injury
or threat of injury to health, safety or the environment.
ENVIRONMENTAL LAW shall mean any applicable Federal, state, foreign or
local statute, law, rule, regulation, ordinance, code, guide, policy and rule of
common law now or hereafter in effect and in each case as amended, and any
judicial or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, relating to the environment,
health, safety or Hazardous Materials, including, without limitation, CERCLA;
RCRA; the Federal Water Pollution Control Act, 33 U.S.C. Section 1251 ET SEQ.;
the Toxic Substances Control Act, 15 U.S.C. Section 2601 ET SEQ.; the Clean Air
Act, 42 U.S.C. Section 7401 ET SEQ.; the Safe Drinking Water Act, 42 U.S.C.
Section 300F ET SEQ.; the Oil Pollution Act of 1990, 33 U.S.C Section 2701 ET
SEQ. and any applicable state and local or foreign counterparts or equivalents.
EQUITY INVESTORS shall mean Cypress Group and K-S Investor Group.
EQUITY ISSUANCE shall have the meaning provided in Section 5.1(h).
EQUITY ISSUANCE DOCUMENTS shall have the meaning provided in Section
5.1(h).
EQUITY ROLLOVER shall have the meaning provided in Section 5.1(h).
ERISA shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the regulations promulgated and rulings issued
thereunder. Section references to ERISA are to ERISA, as in effect at the date
of this Credit Agreement and any subsequent provisions of ERISA, amendatory
thereof, supplemental thereto or substituted therefor.
ERISA AFFILIATE shall mean each person (as defined in Section 3(9) of
ERISA) which together with the Borrower or a Subsidiary of the Borrower would be
deemed to be a "single employer" (i) within the meaning of Section 414(b), (c),
(m) or (o) of the Code or (ii) as a result of the Borrower or a Subsidiary of
the Borrower being or having been a general partner of such person.
EURODOLLAR LENDING OFFICE shall mean, with respect to any Lender, the
office of such Lender specified as its "Eurodollar Lending Office" opposite its
name on Schedule I, as such annex may be amended from time to time (or, if no
such office is specified, its Domestic Lending Office), or such other office or
Affiliate of such Lender as such Lender may from time to time specify to the
Borrower and the Agent.
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EURODOLLAR RATE shall mean, with respect to an Interest Period for
each Eurodollar Rate Loan comprising part of the same Borrowing, an interest
rate per annum equal to the average (rounded upward to the nearest whole
multiple of one-sixteenth of one percent per annum, if such rate is not such a
multiple) of the offered quotation, if any, to first class banks in the New York
interbank Eurodollar market by BTCo for U.S. dollar deposits of amounts in
immediately available funds comparable to the principal amount of the Eurodollar
Rate Loan of BTCC for which the Eurodollar Rate is being determined with
maturities comparable to the Interest Period for which such Eurodollar Rate will
apply as of approximately 11:00 A.M. New York City time two Business Days prior
to the commencement of such Interest Period.
EURODOLLAR RATE LOAN shall mean a Revolving Loan bearing interest as
provided in Section 4.1.
EVENT OF DEFAULT shall have the meaning provided for in Section 9.1 of
this Credit Agreement.
EXCESS OTHER LIABILITY AMOUNT at any time shall mean the amount (if
any) by which the aggregate amount of Other Liabilities exceeds $55 million;
provided that to the extent the Borrower establishes to the satisfaction of the
Agent that an increase in Other Liabilities has occurred after the Closing Date
as a result of one or more Permitted Acquisitions, then the Agent may in its
sole discretion, but shall not be required to, increase the $55 million amount
provided above by an amount not to exceed the amount established to its
satisfaction as being an increase in such Other Liabilities as a result of such
Permitted Acquisition or Permitted Acquisitions.
EXISTING CREDIT AGREEMENT shall mean the Credit Agreement dated as of
December 16, 1993 among the Borrower and Congress Financial Corporation, as
amended, modified or supplemented to and including the Closing Date.
EXISTING INDEBTEDNESS shall mean Indebtedness of Holdings, the
Borrower and their respective Subsidiaries (other than the Senior Secured Notes
and the Holding Co. Notes) outstanding prior to, and to remain outstanding on
and after, the Closing Date, and set forth on Schedule III, without giving
effect to extensions or renewals thereto, except as expressly provided therein.
EXISTING INDEBTEDNESS AGREEMENTS shall have the meaning given to such
term in Section 5.1(o)(iii) hereof.
EXISTING LIENS shall have the meaning set forth in Section 8.2(d).
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EXPENSES shall mean all present and future expenses incurred by or on
behalf of the Agent in connection with this Credit Agreement, any other Credit
Document or otherwise in its capacity as the Agent under this Credit Agreement
(including without limitation, all costs related to the syndication efforts with
respect to this Credit Agreement), whether incurred heretofore or hereafter,
which expenses shall include, without being limited to, the cost of record
searches, the reasonable fees and expenses of attorneys and paralegals, all
costs and expenses incurred by the Agent in opening bank accounts, depositing
checks, electronically or otherwise receiving and transferring funds, and any
charges imposed on the Agent due to insufficient funds of deposited checks and
the standard fee of the Agent relating thereto, collateral examination fees and
expenses, reasonable fees and expenses of accountants, appraisers or other
consultants, experts or advisors employed or retained by the Agent, out of
pocket syndication fees and expenses, fees and taxes relative to the filing of
financing statements, costs of preparing and recording any other Collateral
Documents, all expenses, costs and fees set forth in Article 4 of this Credit
Agreement, all other fees and expenses required to be paid pursuant to the Fee
Letter and all fees and expenses incurred in connection with releasing
Collateral and the amendment or termination of any of the Credit Documents.
EXPIRATION DATE shall mean May 21, 2002.
FEDERAL FUNDS RATE shall mean, for any period, a fluctuating interest
rate per annum equal, for each day during such period, to the weighted average
of the rates on overnight Federal Funds transactions with members of the Federal
Reserve System arranged by Federal Funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day that is a Business Day, the average of the quotations for such day on such
transactions received by the Payments Administrator from three Federal Funds
brokers of recognized standing selected by it.
FEE LETTER shall mean that certain letter dated as of May 22, 1997
among BTCC and the Borrower providing for the payment of certain fees in
connection with this Credit Agreement.
FEES shall mean, collectively, the Unused Line Fee, the Letter of
Credit Fees, the Issuing Bank Fees and the other fees provided for in the Fee
Letter.
FINANCIAL STATEMENTS shall mean the consolidated balance sheets and
statements of operations and consolidated statements of cash flows and
statements of changes in shareholder's equity of each of Holdings and its
Subsidiaries and the Borrower and its Subsidiaries for the period specified
prepared in accordance with GAAP; provided that for purposes of Section 7.1(a),
the Financial Statements of Holdings shall include consolidating schedules.
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FINANCING TRANSACTIONS shall mean (i) the Equity Issuance, (ii) the
Equity Rollover, (iii) the Senior Unsecured Note Issuance, and (iv) the
occurrence of the Initial Credit Event on the Closing Date.
FOREIGN PENSION PLAN shall mean any plan, fund (including, without
limitation, any superannuation fund) or other similar program established or
maintained outside the United States by the Borrower or any one or more of its
Subsidiaries primarily for the benefit of employees of the Borrower or such
Subsidiaries residing outside the United States, which plan, fund or other
similar program provides, or results in, retirement income, a deferral of income
in contemplation of retirement or payments to be made upon termination of
employment, and which plan is not subject to ERISA or the Code.
FUNDING AFFILIATE shall have the meaning provided in Section 4.10.
GAAP shall mean generally accepted accounting principles in the United
States as in effect from time to time subject to Section 1.2.
GAIATECH shall mean GaiaTech Incorporated.
GOVERNING DOCUMENTS shall mean, as to any Person, the certificate or
articles of incorporation and by-laws or other organizational or governing
documents of such Person.
GOVERNMENTAL AUTHORITY shall mean any nation or government, any state
or other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
GROSS-UP PAYMENTS shall have the meaning provided in Section 2.9(b).
GUARANTORS shall mean Holdings and each Subsidiary Guarantor.
GUARANTY shall mean the Holdings Secured Guaranty and the Subsidiaries
Guaranty.
HAZARDOUS MATERIALS shall mean (a) any petroleum or petroleum
products, radioactive materials, asbestos in any form that is or could become
friable, urea formaldehyde foam insulation, transformers or other equipment that
contained dielectric fluid containing levels of polychlorinated biphenyls, and
radon gas; (b) any chemicals, materials or substances defined as or included in
the definition of "hazardous substances", "hazardous waste", "hazardous
materials", "extremely hazardous waste", "restricted hazardous waste", "toxic
substances", "toxic pollutants", "contaminants", or "pollutants", or words of
similar import, under any applicable Environmental Law; and (c) any other
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chemical, material or substance, exposure to which is prohibited, limited or
regulated by any governmental authority.
HIGHEST LAWFUL RATE shall mean, at any given time during which any
Obligations shall be outstanding hereunder, the maximum nonusurious interest
rate, if any, that at any time or from time to time may be contracted for,
taken, reserved, charged or received on the Obligations owing under this Credit
Agreement and any other Credit Document, under the laws of the State of New York
(or the law of any other jurisdiction whose laws may be mandatorily applicable
notwithstanding other provisions of this Credit Agreement and the other Credit
Documents), or under applicable federal laws which may presently or hereafter be
in effect and which allow a higher maximum nonusurious interest rate than under
New York (or such other jurisdiction's) law, in any case after taking into
account, to the extent permitted by applicable law, any and all relevant
payments or charges under this Credit Agreement and any other Credit Documents
executed in connection herewith, and any available exemptions, exceptions and
exclusions.
HOLDING CO. NOTES shall mean Holdings' Series B 11% Notes due 2004.
HOLDING CO. NOTES INDENTURE shall mean the Indenture, dated as of
March 2, 1994 between Holdings, as Issuer, and First Trust National Association,
as Trustee, pursuant to which the Holding Co. Notes were issued, as supplemented
from time to time.
HOLDING CO. NOTES INDENTURE SUPPLEMENT shall mean the Supplemental
Indenture to the Holding Co. Notes Indenture in form and substance satisfactory
to the Required Lenders and entered into by Holdings and the Trustee for the
Holding Co. Notes in connection with the Holding Co. Notes Tender Offer/Consent
Solicitation.
HOLDING CO. NOTES REPAYMENT DATE shall mean March 31, 1998.
HOLDING CO. NOTES TENDER OFFER/CONSENT SOLICITATION shall have the
meaning provided in Section 5.1(j)(iv).
HOLDING CO. NOTES TENDER OFFER REPURCHASES shall have the meaning
provided in Section 5.1(j)(iv).
HOLDINGS shall have the meaning provided in the preamble to this
Credit Agreement.
HOLDINGS COMMON STOCK shall mean the common stock of Holdings.
HOLDINGS SECURED GUARANTY shall mean the Guaranty of Holdings pursuant
to Article 12 of this Credit Agreement.
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INDEBTEDNESS of any Person shall mean without duplication (i) all
indebtedness of such Person for borrowed money, (ii) the deferred purchase price
of assets or services which in accordance with GAAP would be shown on the
liability side of the balance sheet of such Person, (iii) the face amount of all
letters of credit issued for the account of such Person and, without
duplication, all drafts drawn thereunder, (iv) all indebtedness of a second
Person secured by any Lien (in aggregate principal amount up to the amount of
such Liens) on any property owned by such first Person, whether or not such
indebtedness has been assumed, (v) all Capitalized Lease Obligations of such
Person, (vi) all obligations of such Person to pay a specified purchase price
for goods or services whether or not delivered or accepted, I.E., take-or-pay
and similar obligations, (vii) all net obligations of such Person under Interest
Rate Agreements, (viii) all reimbursement or other monetary obligations with
respect to surety, performance and bid bonds, and (ix) all Contingent
Obligations of such Person; PROVIDED, that Indebtedness shall not include trade
payables and accrued expenses, in each case arising in the ordinary course of
business.
INDEMNITEE shall have the meaning provided in Section 11.8.
INITIAL CREDIT EVENT shall mean the making of the initial Revolving
Loans or the issuance of the initial Letter of Credit hereunder.
INTERCREDITOR AGREEMENT shall have the meaning provided in Section
5.1(bb).
INTEREST COVERAGE RATIO shall mean for any period the ratio for such
period of (x) EBITDA to (y) Interest Expense.
INTEREST EXPENSE shall mean the aggregate consolidated interest
accrued and/or paid by Holdings, the Borrower and their respective Subsidiaries
in respect of Indebtedness determined on a consolidated basis in accordance with
GAAP, including, without limitation, amortization of original issue discount on
any Indebtedness and of all fees payable in connection with the incurrence of
such Indebtedness (to the extent included in interest expense), the interest
portion of any deferred payment obligation, the interest component of any
Capitalized Lease Obligations, net cash costs under any Interest Rate
Agreements, all capitalized interest and interest paid by Holdings, the Borrower
or their respective Subsidiaries on debt guaranteed by Holdings, the Borrower or
their respective Subsidiaries; PROVIDED that Interest Expense shall not include
amortization of debt issuance costs.
INTEREST PERIOD shall mean for any Eurodollar Rate Loan the period
commencing on the date of the Borrowing, Conversion or Continuance thereof and
ending on the last day of the period selected by the Borrower pursuant to the
provisions below. The duration of each such Interest Period shall be one, two,
three or six months or, to the extent approved by all the Lenders, nine or
twelve months, in each case as the Borrower may, in
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an appropriate Notice of Borrowing, Notice of Continuation or Notice of
Conversion, select; PROVIDED, HOWEVER, that the Borrower may not select any
Interest Period that ends after the Expiration Date. Whenever the last day of
any Interest Period would otherwise occur on a day other than a Business Day,
the last day of such Interest Period shall be extended to occur on the next
succeeding Business Day; PROVIDED, HOWEVER, that if such extension would cause
the last day of such Interest Period to occur in the next following calendar
month, the last day of such Interest Period shall occur on the next preceding
Business Day. Whenever any Interest Period begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding day
in the calendar month at the end of such Interest Period), such Interest Period
shall end on the last Business Day of the applicable calendar month.
INTEREST RATE AGREEMENT shall mean any interest rate protection
agreement, interest rate future, interest rate option, interest rate swap,
interest rate cap or other interest rate hedge or arrangement under which the
Borrower or any of its Subsidiaries is a party or beneficiary.
INVENTORY shall mean all of the Borrower's now owned and existing and
hereafter arising or acquired inventory, wherever located and whether in the
possession of the Borrower or any other person, including, without limitation,
(a) all raw materials, work in process, parts, components, assemblies, supplies
and materials used or consumed in the Borrower's business and (b) all goods,
wares and merchandise, finished or unfinished, held for sale or lease or
furnished or to be furnished under contracts of service, EXCLUDING THE RENTAL
EQUIPMENT.
INVESTMENT shall have the meaning given to such term in Section 8.5.
ISSUING BANK shall mean BTCo.
ISSUING BANK FEES shall have the meaning given to such term in Section
4.7.
K-S INVESTOR GROUP shall mean Keystone, Inc., FW Strategic Partners,
L.P. and Scotsman Partners, L.P. and any new partnership or entity created to
co-invest with Keystone, Inc., FW Strategic Partners, L.P., and Scotsman
Partners, L.P., provided that Persons which had a majority of the equity
interests in or otherwise controlled Keystone, Inc., FW Strategic Partners, L.P.
and/or Scotsman Partners, L.P. on the Closing Date or any of their Permitted
Transferees either (x) hold all the equity interests of such new partnership or
entity or (y) control such new partnership or entity.
LEASES shall mean, collectively, the written agreements between
Borrower or any Subsidiary and an account debtor (other than Holdings, the
Borrower, or their respective Subsidiaries) in the ordinary course of business
of Borrower or such Subsidiary
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for the lease or rental of Rental Equipment by Borrower or such Subsidiary to
such account debtor in which the account debtor agrees to pay to Borrower, such
Subsidiary or their respective assigns Rentals.
LENDER shall have the meaning given to such term in the preamble to
this Credit Agreement.
LETTER OF CREDIT FEES shall have the meaning given to such term in
4.7.
LETTER OF CREDIT OBLIGATIONS shall mean, at any time, the sum of (i)
the aggregate undrawn amount of all Letters of Credit outstanding at such time,
PLUS (ii) the aggregate amount of all drawings under Letters of Credit which
have not been reimbursed by the Borrower (including through the incurrence of
Revolving Loans).
LETTER OF CREDIT REQUEST shall have the meaning given to such term in
Section 3.4.
LETTERS OF CREDIT shall mean all letters of credit (whether
documentary or stand-by and whether for the purchase of Inventory, Rental
Equipment, equipment or otherwise) issued for the account of the Borrower
pursuant to Article 3 of this Credit Agreement and all amendments, renewals,
extensions or replacements thereof.
LEVEL shall mean and include Level I, Level II, Level III or Level IV,
whichever is then in effect.
LEVEL I shall be in effect at any time Leverage Ratio is less than 4.0
to 1.
LEVEL II shall be in effect at any time Leverage Ratio is equal to or
greater than 4.0 to 1 but less than 4.75 to 1.
LEVEL III shall be in effect at any time Leverage Ratio is equal to or
greater than 4.75 to 1 but less than 5.5 to 1.
LEVEL IV shall be in effect at any time Leverage Ratio is equal to or
greater than 5.5 to 1.
LEVERAGE RATIO shall mean, at any time, the ratio of Consolidated Debt
at such time to EBITDA on the last day of the Test Period; PROVIDED that for the
purposes of calculating the Leverage Ratio only, EBITDA shall be increased (or
decreased) on a PRO FORMA basis by EBITDA attributable to the acquisition (or
divestiture) in accordance with the terms hereof of a Subsidiary or business
unit, so long as the amount of any such increase is the actual EBITDA earned by
such Subsidiary or business unit and such actual
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EBITDA is set forth in reasonable detail and with reasonable supporting
documentation in a written certificate delivered by the Borrower and signed by
the chief executive officer, chief financial officer, treasurer or controller of
the Borrower, all to the satisfaction of the Agent.
LIEN(S) shall mean any lien, charge, pledge, security interest, deed
of trust, mortgage, other encumbrance or other arrangement having the practical
effect of the foregoing or other preferential arrangement of any other kind and
shall include the interest of a vendor or lessor under any conditional sale
agreement, capital lease or other title retention agreement.
MANAGEMENT AGREEMENTS shall have the meaning given to such term in
Section 5.1(o)(v).
MARGIN STOCK shall have the meaning provided in Regulation U.
MASTER LEASE AGREEMENT shall have the meaning provided in Section
5.1(ee).
MATERIAL ADVERSE EFFECT shall mean a material adverse effect on (i)
the business, operations, property, assets, liabilities or financial condition
of Holdings, the Borrower and their respective Subsidiaries taken as a whole,
(ii) the value of Collateral or the amount which the Agent and the Lenders would
be likely to receive (after giving consideration to delays in payment and costs
of enforcement) in the liquidation of such Collateral, or (iii) the rights and
remedies of BTCC, the Agent, the Issuing Bank or the Lenders under any Credit
Document.
MATERIAL CONTRACT shall mean any contract or other arrangement (other
than the Credit Documents), whether written or oral, to which Holdings, the
Borrower or any of their respective Subsidiaries is a party as to which the
breach, nonperformance, cancellation or failure to renew by any party thereto
may be reasonably expected to have a Material Adverse Effect.
MOBILE FIELD OFFICE shall mean Mobile Field Office Company, a New
Jersey corporation.
MOBILE FIELD OFFICE LIQUIDATION shall mean the dissolution of Mobile
Field Office and the distribution of all of the assets of Mobile Field Office to
the Borrower.
MOODY'S shall mean Moody's Investors Service, Inc.
MORTGAGE POLICIES shall have the meaning provided in Section 5.1(z).
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MORTGAGED PROPERTY shall have the meaning provided in Section 5.1(z).
MORTGAGES shall have the meaning provided in Section 5.1(z).
MULTIEMPLOYER PLAN shall mean a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA.
NET SALE PROCEEDS shall mean, with respect to any Asset Sale, the
gross cash proceeds (including any cash received by way of deferred payment
pursuant to a promissory note, receivable or otherwise, but only as and when
received) received by Holdings, the Borrower or any of their respective
Wholly-Owned Subsidiaries from such Asset Sale, net of (i) transaction costs
(including, without limitation, (w) any federal, state and local income or other
taxes paid or estimated to be payable as a result of such Asset Sale, (x) any
underwriting, brokerage or other customary selling commissions and (y)
reasonable legal fees, and (z) advisory, consulting, accountants', investment
banking and other fees and expenses, including title and recording expenses and
reasonable expenses incurred for preparing such assets for sale, associated
therewith) (ii) payments of unassumed liabilities relating to the assets sold at
the time of, or within 90 days after, the date of such sale, and (iii) the
amount of such gross cash proceeds required to be used to repay any Indebtedness
(other than Indebtedness to the Lenders pursuant to this Credit Agreement) which
is secured by the respective assets which were sold.
NON-CERTIFICATED UNITS shall mean all Units (as defined in the
Security Agreement) which are not Certificated Units.
NON-QUALIFIED UNITS shall at any time mean any Unit (as defined in the
Security Agreement) which is not a Qualified Certificated Unit at such time.
NOTICE OF BORROWING shall have the meaning given to such term in
Section 2.3(a)(i) and shall include any deemed Notice of Borrowing pursuant to
Section 3.5.
NOTICE OF CONTINUATION shall have the meaning given to such term in
Section 4.3(a).
NOTICE OF CONVERSION shall have the meaning given to such term in
Section 4.3(b).
OBLIGATIONS shall mean, without duplication, the unpaid principal of
and interest on (including interest accruing on or after the filing of any
petition in bankruptcy, or the commencement of any insolvency, reorganization or
like proceeding, relating to Holdings, the Borrower or any of their respective
Subsidiaries, whether or not a claim for post-filing or post-petition interest
is allowed in such proceeding) the Revolving Notes, any
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reimbursement obligation or indemnity of Holdings, the Borrower or any of their
respective Subsidiaries on account of Letters of Credit or any accommodation
extended with respect to applications for Letters of Credit, the Fees, the
Expenses and all other obligations and liabilities of Holdings, the Borrower or
any of their respective Subsidiaries to the Agent, the Issuing Bank or to the
Lenders, whether direct or indirect, absolute or contingent, due or to become
due, or now existing or hereafter incurred, which may arise under, out of, or in
connection with, this Credit Agreement, the Revolving Notes and any other Credit
Document.
OPERATING LEASE shall mean as applied to any Person, any lease of any
property (whether real, personal or mixed) by that Person other than a
Capitalized Lease Obligation.
OPERATING LEASE PAYMENT shall mean any payment made by Holdings, the
Borrower or any of their respective Subsidiaries under an Operating Lease.
OTHER LIABILITIES at any time shall mean the accounts payable and
accrued expenses of Holdings and its Subsidiaries on a consolidated basis at
such time set forth in the Borrower's consolidated balance sheet, but excluding
accrued interest to the extent otherwise reflected therein.
OUTSTANDINGS shall mean, at any time, the sum of (i) the principal
amount of Revolving Loans outstanding at such time PLUS (ii) the Letter of
Credit Obligations at such time.
PAYMENT OFFICE shall mean 14 Wall Street, New York, New York 10005 or
any other office within the continental United States designated by the Payments
Administrator to the Borrower from time to time as the office for payment of all
amounts required to be paid by the Borrower under this Credit Agreement.
PAYMENTS ADMINISTRATOR shall mean BTCC; PROVIDED, HOWEVER, that if
BTCC shall cease to be the Agent hereunder, the Lenders shall have the option to
appoint one of the remaining Lenders as the Payments Administrator by written
notice to the Borrower.
PBGC shall mean the Pension Benefit Guaranty Corporation established
pursuant to Section 4002 of ERISA, or any successor thereto.
PERMITTED ACQUISITION shall mean the acquisition by the Borrower of
100% of the capital stock or other equity interest of any Person, which Person
shall, as a result of such acquisition, become a Wholly-Owned Domestic
Subsidiary of the Borrower, PROVIDED that (A) the consideration paid by the
Borrower consists solely of cash (including proceeds of Revolving Loans), (B)
such Person shall own no capital stock of any other
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Person unless such Person owns 100% of the capital stock of such other Person,
(C) substantially all of the business, division or product line acquired
pursuant to the respective Permitted Acquisition, or the business of the Person
acquired pursuant to the respective Permitted Acquisition and its Subsidiaries
taken as a whole, is in the United States or Canada and (D) all applicable
requirements of Sections 7.16 and 7.17 applicable to Permitted Acquisitions are
satisfied.
PERMITTED DISCRETION shall mean the Agent's judgment exercised in good
faith based upon its consideration of any factor which the Agent believes in
good faith: (i) will or could reasonably be expected to adversely affect the
value of any of the Collateral, the enforceability or priority of the Agent's
liens thereon or the amount which the Agent, the Issuing Bank and the Lenders
would be likely to receive (after giving consideration to delays in payment and
costs of enforcement) in the liquidation of such Collateral; (ii) suggests that
any collateral report or financial information delivered to the Agent by any
Person on behalf of the Borrower is incomplete, inaccurate or misleading in any
material respect; (iii) materially increases the likelihood of a bankruptcy,
reorganization or other insolvency proceeding involving the Borrower or any of
its Subsidiaries or any of the Collateral; or (iv) creates or reasonably could
be expected to create a Default or an Event of Default. In exercising such
judgment, the Agent may consider such factors already included in or tested by
the definition of Eligible Accounts Receivable or Eligible Rental Equipment as
well as any of the following: (i) the financial and business climate of the
Borrower's or any Subsidiary's industry, (ii) changes in collection history and
dilution with respect to the Accounts, (iii) changes in any concentration of
risk with respect to Accounts and Rental Equipment, (iv) changes in operating
and turnover statistics with respect to Rental Equipment and/or Accounts,
including actual versus historical and projected, and (v) any other factors that
materially change the credit risk of lending to the Borrower on the security of
the Accounts and Rental Equipment. The burden of establishing lack of good
faith hereunder shall be on the Borrower.
PERMITTED ENCUMBRANCE shall mean, with respect to any Mortgaged
Property, such exceptions to title as are set forth in the Mortgage Policy
delivered with respect thereto, all of which exceptions must be acceptable to
the Collateral Agent in its reasonable discretion.
PERMITTED LIENS shall have the meaning given to such term in Section
8.2.
PERMITTED MATERIALS shall have the meaning given to such term in
Section 6.18(c).
PERMITTED PREFERRED STOCK shall mean any preferred stock of Holdings,
so long as the terms of any such preferred stock of Holdings (i) do not provide
any collateral security, (ii) do not provide any guaranty or other support by
the Borrower or any Subsidiary of the Borrower or any
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Subsidiary of Holdings, (iii) do not contain any mandatory put, redemption,
repayment, sinking fund or other similar provision occurring before the sixth
anniversary of the Initial Borrowing Date, (iv) do not require the cash payment
of dividends or interest before the first anniversary of the Expiration Date,
(v) do not grant the holders thereof any voting rights except for (i) voting
rights required to be granted to such holders under applicable law and (ii)
limited customary voting rights on fundamental matters such as mergers,
consolidations, sales of substantial assets, or liquidations involving Holdings
and (vi) are otherwise reasonably satisfactory to the Agent.
PERMITTED SALE-LEASEBACK TRANSACTIONS shall mean the sale and
leaseback by the Borrower of Rental Equipment so long as (1) such transaction or
transactions are consummated prior to December 31, 1998, (2) the structure,
terms and conditions and documentation of any such transaction are in form and
substance satisfactory to the Agent and the Required Lenders, (3) with respect
to all units of Rental Equipment sold in any such transaction, the Borrower
receives cash in an amount equal to not less than the net book value of such
units, (4) no unit of Rental Equipment sold pursuant to any such transaction was
acquired by the Borrower or any of its Subsidiaries after December 31, 1993 and
(5) the Borrower receives no more than $50,000,000 in cash proceeds in
connection with all such transactions.
PERMITTED TRANSFEREE shall mean with respect to any Person who is a
natural person, (i) such individual's spouse or children (natural or adopted),
any trust for such individual's benefit or the benefit of such individual's
spouse or children (natural or adopted), or any corporation or partnership in
which the direct and beneficial owner of all of the equity interest is such
Person or such individual's spouse or children (natural or adopted) or any trust
for the benefit of such persons; and (ii) the heirs, executors, administrators
or personal representatives upon the death of such Person or upon the
incompetency or disability of such Person for purposes of the protection and
management of such individual's assets.
PERSON shall mean any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, association, corporation,
institution, entity, party or government (including any division, agency or
department thereof), and, as applicable, the successors, heirs and assigns of
each.
PLAN shall mean any pension plan as defined in Section 3(2) of ERISA,
which is maintained or contributed to by (or to which there is an obligation to
contribute by) the Borrower or a Subsidiary of the Borrower or an ERISA
Affiliate which is organized under the laws of the United States and is subject
to Title I of ERISA, and each such plan for the five year period immediately
following the latest date on which the Borrower, or a Subsidiary of the Borrower
or an ERISA Affiliate maintained, contributed to or had an obligation to
contribute to such plan.
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PLEDGE AGREEMENT shall have the meaning provided in Section 5.1(y).
PREFERRED STOCK FINANCING shall have the meaning provided in Section
5.1(h).
PRIME LENDING RATE shall mean the rate which BTCo publicly announces
in New York City from time to time as its prime lending rate, as in effect from
time to time. The Prime Lending Rate is a reference rate and does not
necessarily represent the lowest or best rate actually charged to any customer.
BTCo may make commercial loans or other loans at rates of interest at, above or
below the Prime Lending Rate.
PROJECTIONS shall have the meaning provided in Section 5.1(q).
PROPORTIONATE SHARE shall mean, with respect to any Lender, a fraction
(expressed as a percentage), the numerator of which shall be the amount of such
Lender's Commitment and the denominator of which shall be the Total Commitments
or, if the Commitments are terminated, a fraction the numerator of which shall
be the amount of such Lender's Revolving Loans and the denominator of which
shall be the aggregate amount of then outstanding Revolving Loans of all the
Lenders.
QUALIFIED CERTIFICATED UNITS shall mean each Unit (as defined in the
Security Agreement), owned by the Borrower or any of its Subsidiaries, whether
owned on the Closing Date or acquired thereafter, which at the time in question
is a Certificated Unit with respect to which the requirements set forth in
Section 5.1(d)(C)(x) or (y) have been satisfied (with such satisfaction to be
determined on the date of any determination of whether the respective Unit is a
Qualified Certificated Unit).
QUARTERLY PERIOD shall mean that period commencing on the relevant
Start Date and ending on the relevant End Date.
RCRA shall mean the Resources Conservation and Recovery Act, as
amended, 42 U.S.C. Section 6901 ET SEQ.
REAL PROPERTY of any Person shall mean all of the right, title and
interest of such Person in and to land, improvements and fixtures, including
leaseholds.
RECAPITALIZATION shall mean (i) the Stock Repurchase, (ii) the
refinancing of the Existing Credit Agreement on the Closing Date, (iii) the
Senior Secured Notes Tender Offer Repurchases and the execution and delivery of
the Senior Secured Notes Indenture Supplement and the Senior Secured Notes
Collateral Documents Amendment in accordance with the requirements of Section
5.1(j)(iii) and (iv) the Holding Co. Notes Tender Offer
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Repurchases and the execution and delivery of the Holding Co. Notes Indenture
Supplement.
RECAPITALIZATION AGREEMENT shall mean the Recapitalization Agreement,
dated as of April 11, 1997, by and among Scotsman Holdings, Inc., Cypress
Merchant Banking Partners L.P., Cypress Offshore Partners L.P., Keystone, Inc.,
FW Strategic Partners L.P. and the securityholders of Scotsman Holdings, Inc.
named therein.
RECAPITALIZATION DOCUMENTS shall mean the documents entered into with
respect to the Recapitalization.
RECAPITALIZATION LETTERS OF CREDIT shall mean one or more Letters of
Credit issued in support of Recapitalization Notes as described in Section
1.2(e) of the Recapitalization Agreement; PROVIDED that (x) the aggregate stated
amount of all such Letters of Credit does not exceed $25,000,000 and (y) all
such Letters of Credit terminate on or prior to January 31, 1998.
RECAPITALIZATION NOTES shall mean the "Repurchase Notes" as such term
is defined in the Recapitalization Agreement.
REGISTER shall have the meaning provided in Section 11.6(A).
REGULATION D shall mean Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor thereto.
REGULATION T shall mean Regulation T of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to all
or portion thereto.
REGULATION U shall mean Regulation U of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor thereto.
REGULATION X shall mean Regulation X of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to all
or portion thereto.
RENTAL EQUIPMENT shall mean the mobile structures generally
constructed of steel or using a steel frame and undercarriage with an exterior
of wood or aluminum and similar products (but excluding Inventory) which are
sold or leased by Borrower or its Subsidiaries to third persons in the ordinary
course of business and used to provide office, classroom, storage, commercial or
other space, whether in single units or physically attached to such other units
(and including in such form, modular structures), which
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structures are capable of being transported to and assembled on remote sites,
and which may be equipped with air conditioning and heating, electrical outlets,
floors, partitions, plumbing, carpeting, moldings, wall coverings, lighting and
other accessories.
RENTALS shall mean all fixed rents or rents which are fixed except for
adjustments based upon the Consumer Price Index payable under the Leases in
respect of the use of any Rental Equipment by account debtors as lessees of such
Rental Equipment to Borrower or its Subsidiaries as the lessor of such Rental
Equipment exclusive of any amounts paid or payable to Borrower or its
Subsidiaries for the sale of Rental Equipment or other Inventory or on account
of the service, site preparation, installation and removal of Rental Equipment,
security deposits, insurance waivers, warranty service, late charges, delivery
fees, moving fees maintenance charges, taxes, insurance and similar charges.
REPLACED LENDER shall have the meaning provided in Section 11.6(d).
REPLACEMENT LENDER shall have the meaning provided in Section 11.6(d).
REPORTABLE EVENT shall mean an event described in Section 4043(c) of
ERISA with respect to a Plan that is subject to Title IV of ERISA other than
those events to the extent to which the 30-day notice period is waived under
subsection .22, .23, .25, .27 or .28 of PBGC Regulation Section 4043.
REQUIRED APPRAISAL shall have the meaning provided in Section 7.2.
REQUIRED LENDERS shall mean, at any time, those Lenders then owed or
holding in the aggregate more than 50% of the sum of the then existing aggregate
unpaid principal amount of the Revolving Loans and the then existing aggregate
undrawn amount of the Total Commitments.
REQUIREMENT OF LAW shall mean, as to any Person, the Governing
Documents of such Person, and any law, treaty, rule or regulation or
determination of an arbitrator or a court or other Governmental Authority, in
each case applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
REVOLVING LOANS shall have the meaning given to such term in Section
2.1.
REVOLVING NOTE shall mean a promissory note of the Borrower payable to
the order of a Lender, in the form of Exhibit A, evidencing the aggregate
Indebtedness of the Borrower to such Lender resulting from the Revolving Loans
made by such Lender or acquired by such Lender pursuant to Section 11.6.
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S&P shall mean Standard & Poor's Rating Services.
SALES-TYPE LEASES shall mean a Lease that should be treated as a
capital lease in accordance with Financial Accounting Standards Board Statement
No. 13, as amended, from time to time or if such statement is not then in
effect, such other statement of GAAP as may be applicable.
SECTION 2.9(B)(II) CERTIFICATE shall have the meaning provided in
Section 2.9(b)(ii).
SECURED CREDITORS shall have the meaning given such term in the
Security Agreement.
SECURITY AGREEMENT shall have the meaning provided in Section 5.1(d).
SENIOR SECURED NOTES shall mean the Borrower's existing 91/2% senior
secured notes due 2000.
SENIOR SECURED NOTES COLLATERAL DOCUMENTS shall mean the Intercreditor
Agreement and all documents securing, or creating Liens to secure, the Senior
Secured Notes from time to time outstanding.
SENIOR SECURED NOTES COLLATERAL DOCUMENTS AMENDMENT shall mean the
Amendments to the Senior Secured Notes Collateral Documents in form and
substance satisfactory to the Required Lenders and entered into by the parties
to the respective Senior Secured Notes Collateral Documents in connection with
the Senior Secured Notes Tender Offer/Consent Solicitation.
SENIOR SECURED NOTES INDENTURE SUPPLEMENT shall mean the Supplemental
Indenture to the Senior Secured Notes Indenture in form and substance
satisfactory to the Required Lenders and entered into by the Borrower and the
Trustee for the Senior Secured Notes in connection with the Senior Secured Notes
Tender Offer/Consent Solicitation.
SENIOR SECURED NOTES REPAYMENT DATE shall mean March 31, 1998.
SENIOR SECURED NOTES TENDER OFFER/CONSENT SOLICITATION shall have the
meaning provided in Section 5.1(j)(iii).
SENIOR SECURED NOTES TENDER OFFER REPURCHASES shall have the meaning
provided in Section 5.1(j)(iii).
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SENIOR UNSECURED NOTE DOCUMENTS shall have the meaning provided in
Section 5.1(i).
SENIOR UNSECURED NOTES shall mean the 9 7/8% Senior Unsecured Notes
due 2007 issued by the Borrower, and any substantially identical exchange notes
issued pursuant to the Senior Unsecured Note Indenture.
SENIOR UNSECURED NOTES INDENTURE shall mean the Indenture, dated as of
May 22, 1997, providing for the issuance of the Senior Unsecured Notes.
SENIOR UNSECURED NOTES ISSUANCE shall have the meaning provided in
Section 5.1(i).
SETTLEMENT DATE shall have the meaning given to such term in Section
2.4(b)(i).
SHAREHOLDERS' AGREEMENTS shall have the meaning given to such term in
Section 5.1(o)(iv).
START DATE shall mean the third Business Day following the earlier of
(x) each date occurring 45 days (or in the case of the last fiscal quarter of
the Borrower, 90 days), after the end of a fiscal quarter of the Borrower and
(y) the date on which Financial Statements for a fiscal quarter are delivered in
accordance with Section 7.1, together with the certificate required by the
second sentence of the definition of "Applicable Margin", with the first Start
Date to occur on the third Business Day following the earlier of (I) the date
which is 90 days after December 31, 1997 and (II) the date on which Financial
Statements for such fiscal quarter are delivered in accordance with Section 7.1
together with the certificate required by the second sentence of the definition
of "Applicable Margin".
STOCK REPURCHASE shall have the meaning provided in Section 5.1(j).
SUBSIDIARIES GUARANTY shall have the meaning provided in Section
5.1(x); PROVIDED, that from and after the date that any Wholly-Owned Subsidiary
of the Borrower executes and delivers a counterparty of the Subsidiaries
Guaranty pursuant to the requirements of Section 7.16, such Wholly-Owned
Subsidiary shall also be a Subsidiary Guarantor.
SUBSIDIARY shall mean as to any Person, a corporation, partnership or
other entity of which shares of stock or other ownership interests having
ordinary voting power (other than stock or such other ownership interests having
such power only by reason of the happening of a contingency) to elect a majority
of the board of directors or other
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managers of such corporation, partnership or other entity are at the time owned,
or the management of which is otherwise controlled, directly or indirectly
through one or more intermediaries, or both, by such Person. Unless otherwise
qualified, all references to a "Subsidiary" or to "Subsidiaries" in this Credit
Agreement shall refer to a Subsidiary or Subsidiaries of the Borrower.
SUBSIDIARY GUARANTOR shall have the meaning provided in Section
5.1(x).
SYNDICATION DATE shall mean the earlier of (x) the date which is 60
days after the Closing Date and (y) the date upon which the Agent determines in
its sole discretion (and notifies the Borrower) that the primary syndication
(and the resulting addition of institutions as Lenders pursuant to Section 11.6)
has been completed, notice of which shall be promptly given to the Borrower.
TAX SHARING AGREEMENTS shall have the meaning given to such term in
Section 5.1(o)(vii).
TAXES shall have the meaning given to such term in Section 2.9.
TEST PERIOD shall mean, at any time, the four consecutive fiscal
quarters of the Borrower then last ended (taken as a whole).
TOTAL COMMITMENTS at any time shall mean the aggregate of the
Commitments, as then in effect, of all the Lenders.
TOTAL AVAILABLE COMMITMENTS at any time shall mean the Total
Commitment at such time less the Blocked Commitments at such time.
TRANSACTION shall mean, collectively, (i) the Equity Issuance, (ii)
the Senior Unsecured Notes Issuance, (iii) the Recapitalization and (iv) the
entering into of the Credit Documents and the incurrence of Loans and issuance
of Letters of Credit hereunder on the Closing Date.
TRANSACTION DOCUMENTS shall mean the Equity Issuance Documents, the
Senior Unsecured Notes Documents and the Recapitalization Documents.
TYPE shall mean, with respect to any Revolving Loan, whether such
Revolving Loan is a Eurodollar Rate Loan or a Base Rate Loan.
UCC shall mean the Uniform Commercial Code.
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UNFUNDED CURRENT LIABILITY of any Plan shall mean the amount, if any,
by which the actuarial present value of the accumulated plan benefits under the
Plan as of the close of its most recent plan year, determined in accordance with
actuarial assumptions at such time consistent with Statement of Financial
Accounting Standards No. 87, exceeds the market value of the assets allocable
thereto.
UNIT CERTIFICATES shall mean certificates of title, certificates of
ownership or other registration certificates issued or required to be issued
under the laws of any State for any of the Rental Equipment owned or leased by
the Borrower or any Guarantor.
UNIT SUBSIDIARY means Willscot Equipment, LLC, a Delaware limited
liability company.
UNIT SUBSIDIARY MANAGEMENT AGREEMENT shall have the meaning provided
in Section 5.1(ee).
UNITED STATES and U.S. shall each mean the United States of America.
UNUSED LINE FEE shall have the meaning given to such term in Section
4.6.
UTILIZATION shall mean for any period the fraction expressed as a
percentage, (x) the numerator of which is the number of units of Rental
Equipment leased to customers at the end of such period and (y) the denominator
of which is the number of units of Rental Equipment owned or leased (as lessee)
by the Borrower at the end of such period.
WHOLLY-OWNED DOMESTIC SUBSIDIARY shall mean, as to any Person, any
Wholly-Owned Subsidiary of such Person that is incorporated under the laws of
the U.S., any State thereof, the United States Virgin Islands or Puerto Rico.
Unless otherwise qualified, all references to a "Wholly-Owned Domestic
Subsidiary" or to "Wholly-Owned Domestic Subsidiaries" in this Credit Agreement
shall refer to a Wholly-Owned Domestic Subsidiary or Wholly-Owned Domestic
Subsidiaries of the Borrower.
WHOLLY-OWNED SUBSIDIARY shall mean, as to any Person, (i) any
corporation 100% of whose capital stock (other than director's qualifying
shares) is at the time owned by such Person and/or one or more Wholly-Owned
Subsidiaries of such Person and (ii) any partnership, association, joint venture
or other entity in which such Person and/or one or more Wholly-Owned
Subsidiaries of such Person has a 100% equity interest at such time. Unless
otherwise qualified, all references to a "Wholly-Owned Subsidiary" or to
"Wholly-Owned Subsidiaries" in this Credit Agreement shall refer to a
Wholly-Owned Subsidiary or Wholly-Owned Subsidiaries of the Borrower.
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1.2 ACCOUNTING TERMS AND DETERMINATIONS. (a) Unless otherwise defined
or specified herein, all accounting terms used herein shall have the meanings
customarily given in accordance with GAAP, and all financial computations to be
made under this Credit Agreement shall, unless otherwise specifically provided
herein, be made in accordance with GAAP applied on a basis consistent in all
material respects with the Financial Statements referred to in Section 6.10(b).
All accounting determinations for purposes of determining compliance with
Sections 8.4, 8.9 and 8.10 and calculating the Borrowing Base as set forth in
Section 2.2 and the definitions of "Eligible Rental Equipment" and "Eligible
Accounts Receivable" shall be made in accordance with GAAP as in effect on the
Closing Date and applied on a basis consistent in all material respects with the
Financial Statements referred to in Section 6.10(b). The Financial Statements
required to be delivered hereunder from and after the Closing Date and all
financial records shall be maintained in accordance with GAAP as in effect as of
the date of the Financial Statements referred to in Section 6.10(b) or, if GAAP
shall change from the basis used in preparing the Financial Statements referred
to in Section 6.10(b), the certificates required to be delivered pursuant to
Section 7.1 demonstrating compliance with the covenants contained herein shall
include calculations setting forth the adjustments necessary to demonstrate how
the Borrower is in compliance with the financial covenants based upon GAAP as
utilized in the Section 6.10(b) Financial Statements.
1.3 OTHER DEFINED TERMS. Terms not otherwise defined herein which are
defined in the UCC as in effect on the date hereof in the State of New York
shall have the meanings given them in such UCC. The words "hereof", "herein"
and "hereunder" and words of similar import when used in this Credit Agreement
shall refer to this Credit Agreement as a whole and not to any particular
provision of this Credit Agreement, and references to Article, Section,
Schedule, Exhibit and like references are references to this Credit Agreement
unless otherwise specified. An Event of Default shall "continue" or be
"continuing" until such Event of Default has been cured or waived in accordance
with Section 11.10 hereof.
ARTICLE 2.
REVOLVING LOANS
2.1 COMMITMENTS. Subject to the terms and conditions set forth in
this Credit Agreement, on and after the Closing Date and to and excluding the
Expiration Date, each of the Lenders severally agrees to make loans and advances
to the Borrower hereunder (the "Revolving Loans"). Subject to the provisions of
this Agreement, the Borrower may borrow, repay (without penalty, except for
breakage costs under Section 4.5(b)) and re-borrow, all in accordance with the
terms and conditions hereof. The Borrower hereby
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agrees to execute and deliver to each Lender a Revolving Note in the form of
Exhibit A to evidence the Revolving Loans made by such Lender.
2.2 DETERMINATION OF BORROWING BASE. (a) Subject to Section 2.2(b)
and Section 2.3(c), Revolving Loans shall not in aggregate principal amount at
any time outstanding exceed the lesser of:
(i) the Total Available Commitments then in effect MINUS the Letter
of Credit Obligations; and
(ii) the amount then equal to:
(A) Up to Eighty-five percent (85%) of the Eligible Accounts
Receivable, PLUS
(B) Up to Sixty percent (60%) of the Eligible Rental Equipment,
MINUS
(C) The Letter of Credit Obligations, MINUS
(D) The Excess Other Liability Amount at such time, MINUS
(E) The Borrower's exposure (as determined by the Agent) under
any Interest Rate Agreements entered into in accordance with Section
8.3(g), MINUS
(F) (x) On or prior to the Senior Secured Notes Repayment Date,
an amount equal to the Blocked Commitments and (y) thereafter, the
amount (if any) by which the Total Commitments were reduced pursuant
to Section 2.5(j).
The amount calculated in accordance with clause (ii) above is hereinafter
referred to as the "Borrowing Base".
(b) The Agent shall in the exercise of its Permitted Discretion (x) at
any time be entitled to (i) establish and increase or decrease reserves against
Eligible Accounts Receivable and Eligible Rental Equipment, and (ii) impose
additional restrictions (or eliminate the same) to the standards of "Eligible
Accounts Receivable" and "Eligible Rental Equipment" and (y) at any time after
the Closing Date be entitled to reduce the advance rates under Section
2.2(a)(ii)(A) or (B) or restore such advance rates to any level equal to or
below the advance rates stated in Section 2.2(a)(ii)(A) or (B). The Agent may,
but shall not be required to, rely on each Borrowing Base Certificate and any
other schedules or
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reports delivered to it in connection herewith in determining the then
eligibility of Accounts and Rental Equipment. Reliance thereon by the Agent
from time to time shall not be deemed to limit the right of the Agent to revise
advance rates or standards of eligibility as provided in this Section 2.2(b).
(c) The Borrowing Base will be computed monthly and a Borrowing Base
Certificate presenting its computation will be delivered promptly to the Agent
as set forth in Section 7.1(e). Notwithstanding anything to the contrary
contained herein, the Agent shall be satisfied that (based on the final
collateral examination report delivered in satisfaction of Section 5.1(u)
below), on the Closing Date and after giving effect to the consummation of the
Transaction, (x) the Borrower shall be able to incur additional Outstandings,
after giving effect to all Credit Events on the Closing Date, of $40,000,000 or
more in compliance with the Borrowing Base restrictions and (y) Outstandings on
the Closing Date (and after giving effect to all Credit Events on such date)
shall not exceed $135,000,000.
2.3 BORROWING MECHANICS. (a) Except as provided in Section 2.3(b) or
(c), Borrowings shall be made on notice from the Borrower to the Payments
Administrator, given not later than 1:00 P.M. New York City time on the date on
which the proposed Borrowing consisting of Base Rate Loans is requested to be
made and on the third Business Day prior to the date on which any proposed
Borrowing consisting of Eurodollar Rate Loans is requested to be made.
(i) Each Notice of Borrowing shall be given by either telephone,
telecopy, telex, facsimile or cable, and, if by telephone, confirmed in
writing, substantially in the form of Exhibit B-1 (the "Notice of
Borrowing"). Each Notice of Borrowing shall be irrevocable by and binding
on the Borrower.
(ii) The Borrower shall notify the Payments Administrator in writing
of the names of the officers authorized to request Revolving Loans on
behalf of Borrower, and shall provide the Payments Administrator with a
specimen signature of each such officer. The Payments Administrator shall
be entitled to rely conclusively on such officers' authority to request
Revolving Loans on behalf of the Borrower until the Payments Administrator
receives written notice to the contrary. The Payments Administrator shall
have no duty to verify the authenticity of the signature appearing on any
Notice of Borrowing or other writing delivered pursuant to this Section
2.3(a) and, with respect to an oral request for Revolving Loans, the
Payments Administrator shall have no duty to verify the identity of any
individual representing himself as one of the officers authorized to make
such request on behalf of the Borrower. Neither the Payments Administrator
nor any of the Lenders shall incur any liability to the Borrower as a
result of acting upon any telephonic notice referred to in this Section
2.3(a) which notice the Payments
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Administrator believes in good faith to have been given by a duly
authorized officer or other individual authorized to request Revolving
Loans on behalf of the Borrower or for otherwise acting reasonably and in
good faith under this Section 2.3(a) and, upon the funding of Revolving
Loans by the Lenders in accordance with this Credit Agreement, pursuant to
any such telephonic notice, the Borrower shall be deemed to have made a
Borrowing of Revolving Loans hereunder.
(iii) In a Notice of Borrowing, the Borrower may request one or
more Borrowings on a single day. Each such Borrowing shall, unless
otherwise specifically provided herein, consist entirely of Revolving Loans
of the same Type and shall be in an aggregate amount for all Lenders of not
less than $1,000,000 in the case of Eurodollar Rate Loans. Unless
otherwise requested in the applicable Notice of Borrowing, all Revolving
Loans shall be Base Rate Loans. The right of the Borrower to choose
Eurodollar Rate Loans is subject to the provisions of Section 2.3(a)(iv)
and 4.3(c).
(iv) Notwithstanding the foregoing, the Borrower may not incur
Eurodollar Rate Loans prior to the Syndication Date.
(b) The Borrower has informed the Agent that it has a checking account
(the "Disbursement Account") with B of A for general corporate purposes,
including the purpose of paying trade payables and other operating expenses.
The Lenders hereby authorize the Payments Administrator, and so long as the
conditions for Borrowing in Article 5 remain satisfied, the Payments
Administrator on behalf of the Lenders may but shall not be obligated to make
Revolving Loans to cover the amount of checks presented for payment and other
disbursements from the Disbursement Account. Such Borrowings shall be of Base
Rate Loans only and will at no time exceed the amount available for the
Borrowing of Revolving Loans under Section 2.2 (as determined in good faith by
the Agent). In the event that the Borrower provides the Agent with written
notice that it has opened a checking account with Bankers Trust (Delaware) ("BT
Delaware") and intends this account to replace the then existing Disbursement
Account, then from and after the date set forth in such notice therefore the
Disbursement Account shall be such account with BT Delaware and advice from BT
Delaware of amounts required to cover amounts set forth in the second sentence
of this clause (b) will be deemed a sufficient Notice of Borrowing.
(c) In the event the Borrower is unable to comply with (i) the
Borrowing Base limitations set forth in Section 2.2(a) or (ii) the conditions
precedent to the making of a Revolving Loan or the issuance of a Letter of
Credit set forth in Section 5.2, the Lenders authorize the Payments
Administrator, for the account of the Lenders, to make Revolving Loans (the
"Agent Advances") to the Borrower for a period commencing on the date the
Payments Administrator first receives a Notice of Borrowing requesting an Agent
Advance until the earlier of (i) the fifteenth Business Day after such date,
(ii) the date the Borrower
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is again able to comply with the Borrowing Base limitations and the conditions
precedent to the making of Revolving Loans and issuance of Letters of Credit, or
obtains an amendment or waiver with respect thereto, or (iii) the date the
Required Lenders instruct the Payments Administrator to cease making Agent
Advances (in each case, the "Agent Advance Period"). The Payments Administrator
shall not make any Agent Advance to the extent that at such time the amount of
such Agent Advance when added to the aggregate outstanding amount of other Agent
Advances would exceed the lesser of (A) the remainder of (i) the Total Available
Commitments at such time LESS (ii) the Outstandings at such time and (B) the
lesser of (x) $20,000,000 or (y) 10% of the Outstandings at such time. Agent
Advances will be subject to periodic settlement with the Lenders under Section
2.4.
2.4 SETTLEMENTS AMONG THE PAYMENTS ADMINISTRATOR AND THE LENDERS. (a)
Except as provided in Section 2.4(b), the Payments Administrator shall give to
each Lender prompt notice of each Notice of Borrowing by telecopy, telex,
facsimile or cable. No later than 12:00 Noon New York City time on the date of
each Borrowing representing the incurrence of Revolving Loans (each a "Borrowing
Date") (unless the Closing Date is the date of such incurrence, in which case no
later than 11:00 A.M. New York City time on the Closing Date), each Lender will
make available for the account of its Applicable Lending Office, to the Payments
Administrator at its Payment Office, in immediately available funds, for the
account of the Borrower, its Proportionate Share of such Borrowing. To the
extent the Lenders have made such amounts available to the Payments
Administrator as provided above, the Payments Administrator will make the
aggregate of such amounts available to the Borrower by 1:00 p.m., New York time,
on the respective Borrowing Date in accordance with this Section 2.4 and in like
funds received by the Payments Administrator. Unless the Payments Administrator
shall have been notified by any Lender prior to the date of such Borrowing that
such Lender does not intend to make available to the Payments Administrator its
portion of such Borrowing to be made on such date, the Payments Administrator
may assume that such Lender will make such amount available to the Payments
Administrator at its Payment Office on such date of Borrowing, or, if
applicable, the Settlement Date and the Payments Administrator, in reliance upon
such assumption, may but shall not be obligated to make available the amount of
the Borrowing to be provided by such Lender. Except as provided in Section
2.4(b) and subject to Section 2.4(e), promptly after its receipt of payments
from or on behalf of the Borrower (other than amounts payable to the Agent to
reimburse the Agent and the Issuing Bank for fees and expenses payable solely to
them), the Payments Administrator will cause such payments to be distributed
ratably to the Lenders. The Lenders will apply such payments in accordance with
Section 2.6(d).
(b) Unless the Required Lenders have instructed the Payments
Administrator to the contrary, the Payments Administrator on behalf of the
Lenders may but shall not be obligated to make Base Rate Loans under Section 2.3
without prior notice of the proposed Borrowing to the Lenders, as follows:
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(i) The amount of each Lender's Proportionate Share of Revolving
Loans shall be computed weekly (or more frequently in the Payment
Administrator's discretion) and shall be adjusted upward or downward on the
basis of the amount of outstanding Revolving Loans as of 5:00 P.M. New York
City time on the last Business Day of the period specified by the Payments
Administrator (such date, the "Settlement Date"). The Payments
Administrator shall deliver to each of the Lenders promptly after the
Settlement Date a summary statement of the amount of outstanding Revolving
Loans for such period. The Lenders shall transfer to the Payments
Administrator, or, subject to Section 2.4(e), the Payments Administrator
shall transfer to the Lenders, such amounts as are necessary so that (after
giving effect to all such transfers) the amount of Revolving Loans made by
each Lender shall be equal to such Lender's Proportionate Share of the
aggregate amount of Revolving Loans outstanding as of such Settlement Date.
If the summary statement is received by the Lenders prior to 12:00 Noon New
York City time on any Business Day, each Lender shall make the transfers
described above in immediately available funds no later than 3:00 P.M. New
York City time on the day such summary statement was received; and if such
summary statement is received by the Lenders after 12:00 Noon New York City
time on such day, each Lender shall make such transfers no later than 3:00
P.M. New York City time on the next succeeding Business Day. The
obligation of each of the Lenders to transfer such funds shall be
irrevocable and unconditional and without recourse to or warranty by the
Payments Administrator. Each of the Payments Administrator and the Lenders
agree to mark their respective books and records on the Settlement Date to
show at all times the dollar amount of their respective Proportionate
Shares of the outstanding Revolving Loans.
(ii) To the extent that the settlement described above shall not yet
have occurred, upon any repayment of Revolving Loans by the Borrower, the
Payments Administrator may apply such amounts repaid directly to the
amounts made available by the Payments Administrator pursuant to this
Section 2.4(b).
(iii) Because the Payments Administrator on behalf of the Lenders
may be advancing and/or may be repaid Revolving Loans prior to the time
when the Lenders will actually advance and/or be repaid Revolving Loans,
interest with respect to Revolving Loans shall be allocated by the Payments
Administrator to each Lender and the Payments Administrator in accordance
with the amount of Revolving Loans actually advanced by and repaid to each
Lender and the Payments Administrator and shall accrue from and including
the date such Revolving Loans are so advanced to but excluding the date
such Revolving Loans are either repaid by the Borrower in accordance with
Section 2.5 or actually settled by the applicable Lender as described in
this Section 2.4(b).
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(c) If any amount described in this Section 2.4 is not made available
to the Payments Administrator by a Lender (such Lender being hereinafter
referred to as a "Defaulting Lender") and the Payments Administrator has made
such amount available to the Borrower, the Payments Administrator shall be
entitled to recover such amount on demand from such Defaulting Lender. If such
Defaulting Lender does not pay such amount forthwith upon the Payments
Administrator's demand therefor, the Payments Administrator shall promptly
notify the Borrower and the Borrower shall promptly (but in any event no later
than five Business Days after such demand) pay such amount (to the extent not
paid by the Defaulting Lender) to the Payments Administrator. The Payments
Administrator shall also be entitled to recover from such Defaulting Lender or
the Borrower, as the case may be, (x) interest on such amount in respect of each
day from the date such corresponding amount was made available by the Payments
Administrator to the Borrower to the date such amount is recovered by the
Payments Administrator, at a rate PER ANNUM equal to either (i) if paid by such
Defaulting Lender, the overnight Federal Funds Rate or (ii) if paid by the
Borrower, the then applicable rate of interest, calculated in accordance with
Section 4.1 or Section 4.2 hereof, plus (y) in each case, an amount equal to any
costs (including reasonable legal expenses) and losses incurred as a result of
the failure of such Defaulting Lender to provide such amount as provided in this
Credit Agreement; PROVIDED, HOWEVER, that the Payments Administrator shall not
be entitled to demand payment by the Borrower of any amount under clause (y)
above unless demand therefor has been made of the Defaulting Lender and not paid
within five Business Days of such demand. Nothing herein shall be deemed to
relieve any Lender from its duty to fulfill its obligations hereunder or to
prejudice any rights which the Borrower may have against any Lender as a result
of any default by such Lender hereunder, including, without limitation, the
right of the Borrower to seek reimbursement from any Defaulting Lender for any
amounts paid by the Borrower under clause (y) above on account of such
Defaulting Lender's default.
(d) The failure of any Lender to make the Revolving Loan to be made by
it as part of any Borrowing shall not relieve any other Lender of its
obligation, if any, hereunder to make its Revolving Loan on the date of such
Borrowing, or relieve the Lender who failed to make such amount available to
subsequently repay such amount, or relieve any Lender (including the Lender that
failed to make such amount available) of its obligation hereunder to make its
ratable portion of any Borrowing available as part of any subsequent Revolving
Loans, but no Lender shall be responsible for the failure of any other Lender to
make the Revolving Loan to be made by such other Lender on the date of any
Borrowing.
(e) Notwithstanding anything contained herein to the contrary, so long
as any Lender is a Defaulting Lender or has rejected or repudiated its
Commitment, the Payments Administrator shall not be obligated to transfer to
such Lender any payments made by the Borrower to the Payments Administrator for
the benefit of such Lender; and, such Lender shall not be entitled to the
sharing of any payments pursuant to Section 2.10.
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Amounts which would have been payable to such Lender in the absence of the
immediately preceding sentence shall instead be paid to the Payments
Administrator. The Payments Administrator may hold and, in its discretion,
re-lend to the Borrower the amount of all such payments received by it for such
Lender. For purposes of voting or consenting to matters with respect to the
Credit Documents and determining Proportionate Share, such Defaulting Lender
shall be deemed not to be a "Lender" and such Lender's Commitment shall be
deemed to be zero. This Section 2.4(e) shall remain effective with respect to
such Defaulting Lender until (x) the Obligations under this Credit Agreement
shall have been paid in full to the Payments Administrator and/or the Lenders
other than the Defaulting Lender or (y) the Required Lenders, the Payments
Administrator and the Borrower shall have waived such Defaulting Lender's
default in writing. No Commitment of any Lender shall be increased or otherwise
affected, and performance by the Borrower shall not be excused, by the operation
of this Section 2.4(e).
2.5 MANDATORY AND VOLUNTARY PAYMENTS: MANDATORY AND VOLUNTARY
REDUCTION OF COMMITMENTS. (a) Revolving Loans shall be due and payable without
any demand at any time that the aggregate balance of Revolving Loans and all
Letter of Credit Obligations outstanding at such time exceeds the lesser of the
Borrowing Base then in effect or the Total Available Commitments then in effect,
in the amount of such excess, PROVIDED, that (i) no such payment shall be
required pursuant to the foregoing clause as a result of a Borrowing Base
Deficiency during an Agent Advance Period and (ii) if the then aggregate
outstanding principal amount of Revolving Loans is less than such excess (after
giving effect to the foregoing clause (i)), Letters of Credit will be required
to be cash collateralized (to the satisfaction of the Collateral Agent) in the
amount of such difference.
(b) On the Expiration Date, the Total Commitments (and the Commitment
of each Lender) shall automatically reduce to zero and all outstanding Revolving
Loans shall be repaid in full.
(c) The Total Commitments (and the Commitment of each Lender) shall
terminate on May 31, 1997, unless the Closing Date shall have occurred on or
before such date.
(d) In addition to the transfers and distributions of funds required
pursuant to Section 2.6, the Borrower shall have the right to prepay the
Revolving Loans, without premium or penalty, in whole or in part at any time and
from time to time on the following terms and conditions: (i) the Borrower shall
give the Agent prior to 12:00 Noon (New York City time) (x) at least one
Business Day's prior written notice (or telephonic notice promptly confirmed in
writing) of its intent to prepay Base Rate Loans and (y) at least three Business
Days' prior written notice (or telephonic notice promptly confirmed in writing)
of its intent to prepay Eurodollar Rate Loans, the amount of such prepayment and
the Types of Loans to be prepaid and, in the case of Eurodollar Rate Loans, the
specific Bor-
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rowing or Borrowings pursuant to which made, which notice the Agent shall
promptly transmit to each of the Lenders; and (ii) prepayments of Eurodollar
Rate Loans made on a day other than the last day of an Interest Period
applicable thereto shall be accompanied by any amounts owing pursuant to Section
4.5(b).
(e) With respect to each repayment of Revolving Loans pursuant to this
Section 2.5, the Borrower may designate the Types of Loans which are to be
repaid and the specific Borrowing(s) pursuant to which made; PROVIDED, that (i)
if Eurodollar Rate Loans are designated for repayment as a result of Section
2.5(a) and such Eurodollar Rate Loans are repaid on a day that is other than the
last day of an Interest Period applicable thereto, such repayment shall be
accompanied by any amounts owing pursuant to Section 4.5(b); (ii) if any partial
prepayment of Eurodollar Rate Loans made pursuant to any Borrowing shall reduce
the outstanding Eurodollar Rate Loans made pursuant to such Borrowing to an
amount less than $1,000,000, then such Borrowing may not be continued as a
Borrowing of Eurodollar Rate Loans and any election of an Interest Period with
respect thereto given by the Borrower shall have no force or effect; and (iii)
each repayment of any Revolving Loans made pursuant to a Borrowing shall, except
as provided in Section 2.4(e), be applied PRO RATA among the Lenders which made
such Revolving Loans. If the Borrower is required to repay any Eurodollar Rate
Loans as a result of the application of Section 2.5(g) or (h) and such
prepayment will result in the relevant Borrower being required to pay breakage
costs under Section 4.5(b) (any such Eurodollar Rate Loans, "Affected Loans"),
the Borrower may elect, by written notice to the Agent, to have the provisions
of the following sentence be applicable. At the time any Affected Loans are
otherwise required to be prepaid the Borrower may elect to deposit 100% (or such
lesser percentage elected by the Borrower as not being immediately repaid) of
the principal amounts that otherwise would have been paid in respect of the
Affected Loans with the Agent to be held as security for the obligations of the
Borrower hereunder for a period not to exceed 60 days pursuant to a cash
collateral agreement to be entered into in form and substance satisfactory to
the Agent, with such cash collateral to be released from such cash collateral
account (and applied to repay the principal amount of such Eurodollar Rate
Loans) upon each occurrence thereafter of the last day of an Interest Period
applicable to Eurodollar Rate Loans (or such earlier date or dates as shall be
requested by the Borrower), with the amount to be so released and applied on the
last day of each Interest Period to be the amount of such Eurodollar Rate Loans
to which such Interest Period applies (or, if less, the amount remaining in such
cash collateral account); PROVIDED that on the 90th day after the deposit
thereof, any amount remaining from the respective deposit pursuant to the cash
collateral account shall be applied to repay outstanding Revolving Loans. In
the absence of a designation by the Borrower as described in the first sentence
of this clause (e), each repayment of Revolving Loans pursuant to Section 2.5
shall be applied first to the payment of Base Rate Loans and second to the
payment of Eurodollar Rate Loans in the order of the soonest to mature. If
there is more than one Eurodollar Rate Loan maturing on any one date, then, in
the absence of contrary instructions from the Borrower, (i) if such Eurodollar
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Rate Loans bear interest at different rates, payment shall be applied to the
Eurodollar Rate Loans bearing the higher rate of interest and (ii) if such
Eurodollar Rate Loans bear interest at the same interest rate, payment shall be
applied to whichever Eurodollar Rate Loan the Agent shall select in its sole
discretion.
(f) The Borrower may reduce or terminate the unutilized Total
Commitments at any time and from time to time in whole or in part upon at least
three Business Days' prior written notice to the Agent; PROVIDED, HOWEVER, that
each such reduction must be in an amount not less than $250,000 (and in
increments of $100,000 thereafter); and PROVIDED FURTHER, that (i) if the
Borrower seeks to reduce the Total Commitments to an amount less than
$10,000,000, then the Total Commitments shall be reduced to zero and the Credit
Agreement shall be terminated and (ii) once reduced, the amount of any such
reductions in the Total Commitments may not be reinstated.
(g) In addition to any other mandatory repayments or commitment
reductions pursuant to this Section 2.5, on the date of the receipt thereof by
Holdings, the Borrower or any of their respective Subsidiaries, an amount equal
to 100% of the cash proceeds (net of all investment banking fees, legal fees,
consulting fees, underwriting discounts and commissions and other reasonable
costs associated therewith) of the incurrence of Indebtedness by Holdings, the
Borrower or any of their respective direct or indirect Subsidiaries (other than
(i) Indebtedness incurred pursuant to the Financing Transactions or (ii)
Indebtedness permitted to be incurred by Section 8.3 as in effect on the
Effective Date) shall be applied as a mandatory reduction to the Total
Commitments.
(h) In addition to any other mandatory repayments or commitment
reductions pursuant to this Section 2.5, on each date after the Closing Date
upon which Holdings, the Borrower or any of their respective Subsidiaries
receives Net Sale Proceeds from any Asset Sale (including capital stock and
securities held thereby and all assets sold as part of Permitted Sale-Leaseback
Transactions (other than as explicitly set forth in clause (iv) below), but
excluding (i) an aggregate of $1,000,000 of the Net Sale Proceeds from Asset
Sales, (ii) sales of Rental Equipment in the ordinary course of business and
consistent with past practices, (iii) sales or other dispositions of assets
which do not constitute Collateral and (iv) sales of assets as part of Permitted
Sale-Leaseback Transactions consummated after the 60th day following the Closing
Date, in each case to the extent that the Borrower has delivered a certificate
to the Agent on or prior to such date stating that it intends to reinvest the
Net Sale Proceeds therefrom in Inventory, replacement equipment, Rental
Equipment, or property, plant and equipment as the case may be, within 180 days
after the respective date of sale or disposition or, in lieu thereof, commit to
so invest such Net Sale Proceeds within 180 days after such date of sale and
actually expend the funds pursuant to such commitment within 365 days after such
date of sale or disposition, an amount equal to 100% of the Net Sale Proceeds
therefrom shall be applied as a mandatory reduction of the Total Commitments);
PROVIDED, HOWEVER, that to the extent any Net Sale
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Proceeds are not required to be applied pursuant to this Section 2.5(h) as a
result of clause (iv) contained in the parenthetical above, then (x) on the
180th day after the date of the respective sale or disposition, the Net Sale
Proceeds of the respective sale or disposition shall be applied as otherwise
required by this Section 2.5(h) to the extent not actually used or committed to
be used as contemplated by said clause (iv) by such 180th day and (y) on the
365th day after the date of the respective sale or disposition, any Net Sale
Proceeds of the respective sale or disposition shall be applied as otherwise
required by this Section 2.5(h) to the extent same were committed to be used
within 180 days after the respective date of sale or other disposition but were
not in fact used by such 365th day as contemplated by said clause (iv).
(i) Upon the date occurring 15 days after any occurrence of a Change
of Control, unless the Required Lenders otherwise consent in writing, the Total
Commitments shall automatically be reduced to zero.
(j) In addition to any mandatory repayments or commitment reductions
pursuant to this Section 2.5, on the Senior Secured Notes Repayment Date, the
Total Commitments shall be reduced by an amount equal to the Senior Secured
Notes Blocked Commitment as then in effect.
(k) In addition to any mandatory repayments or commitment reductions
pursuant to this Section 2.5, on the Holding Co. Notes Repayment Date, the Total
Commitments shall be reduced by an amount equal to the aggregate principal
amount of Holding Co. Notes then outstanding.
(l) Any reduction to the Total Commitments pursuant to this Section
2.5 shall reduce the Commitment of each of the Lenders PRO RATA (based on the
relative sizes of the Commitments of the various Lenders).
2.6 PAYMENTS AND COMPUTATIONS. (a) The Borrower shall make each
payment hereunder and under the Revolving Notes not later than 1:00 P.M. New
York City time on the day when due in Dollars to the Payments Administrator at
its Payment Office in immediately available funds. The Borrower's obligations
to the Lenders with respect to such payments shall be discharged by making such
payments to the Payments Administrator pursuant to this Section 2.6 or, if such
payments are not received prior to the foregoing deadline, by the Payments
Administrator's adding such payments to the principal amount of the Revolving
Loans outstanding by charging such payments to the Borrower's Revolving Loan
account (which charge shall constitute an incurrence of Revolving Loans (that
are Base Rate Loans) in an aggregate principal amount equal to the amount so
charged).
(b)(i) The Borrower and each of its Subsidiaries shall each, along
with the Collateral Agent and financial institutions selected by the Borrower
and acceptable to the
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Agent (the "Collection Banks"), enter into an agreement substantially in the
form of Exhibit C-1 (as modified, amended or supplemented from time to time in
accordance with the terms hereof and thereof the "Collection Bank Agreement").
The Borrower and each of its Subsidiaries shall instruct all account debtors on
the Accounts of the Borrower or such Subsidiary, as the case may be, to remit
all payments to the applicable "P.O. Boxes" or "Lockbox Addresses" (as defined
in the applicable Collection Bank Agreement) which remittances shall be
collected by the applicable Collection Bank and deposited in the applicable
Collection Account. All amounts received by the Borrower and each of its
Subsidiaries from any account debtor, in addition to all other cash received
from any other source, shall, subject to the requirements of Sections 8.15 and
8.16, upon receipt be deposited into a Collection Account.
(ii) The Borrower and its Subsidiaries may close Collection Accounts
and/or open new Collection Accounts with the prior written consent of the
Collateral Agent and subject to prior execution and delivery to the Collateral
Agent of Collection Bank Agreements consistent with the provisions of this
Section 2.6 and in form and substance satisfactory to the Agent.
(c) Upon the terms and subject to the conditions set forth in the
Collection Bank Agreements, all available amounts held in the Collection
Accounts shall be wired each Business Day into an account (the "Concentration
Account") established pursuant to a concentration account agreement entered into
among the Borrower, the Collateral Agent and BTCo substantially in the form of
Exhibit C-2 (the "Concentration Account Agreement"). Subject to the terms and
conditions of the Concentration Account Agreement, all available funds in the
Concentration Account shall be transferred on every Business Day to an account
(the "BT Account") maintained by the Collateral Agent at BTCo.
(d) All available amounts held in the BT Account shall be distributed
and applied on a daily basis in the following order: FIRST, to the payment of
any Fees, Expenses or other Obligations due and payable to the Agent under any
of the Credit Documents, including amounts advanced by the Payments
Administrator on behalf of the Lenders pursuant to Section 2.3(b), 2.3(c) or
2.4(b); SECOND, to the payment of any Fees, Expenses or other Obligations due
and payable to the Issuing Bank under any of the Credit Documents; THIRD, to the
ratable payment of any Fees, Expenses or other Obligations due and payable to
the Lenders under any of the Credit Documents other than those Obligations
specifically referred to in this Section 2.6(d); FOURTH, to the ratable payment
of interest due on the Revolving Loans; FIFTH, to the ratable payment of
principal on the Revolving Loans; and SIXTH, to the ratable payment of any then
due and owing Obligations arising under any Interest Rate Agreement entered into
by the Borrower in accordance with Section 8.3(g). Any payment received
hereunder as a distribution in any proceeding referred to in Section 9.1(e)
shall, unless paid with respect to amounts specifically owing to the Agent or
the Issuing Bank, be distributed and applied by the Collateral Agent to the
payment of the
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amounts due hereunder and under the Revolving Notes ratably in accordance with
such amounts (or, if a court of competent jurisdiction shall otherwise specify,
as specified by such court).
2.7 MAINTENANCE OF ACCOUNT. The Payments Administrator shall maintain
an account on its books in the name of the Borrower in which the Borrower will
be charged with all loans and advances made by the Lenders to the Borrower or
for the Borrower's account, including the Revolving Loans, the Letter of Credit
Obligations, the Fees, the Expenses and any other Obligations. The Borrower
will be credited, in accordance with Section 2.6 above, with all amounts
received by the Lenders from the Borrower or from others for the Borrower's
account, including, as set forth above, all amounts received by the Payments
Administrator in payment of Accounts and applied to the Obligations. In no
event shall prior recourse to any Accounts or other Collateral be a prerequisite
to the Payments Administrator's right to demand payment of any Obligation upon
its maturity. Further, the Payments Administrator shall have no obligation
whatsoever to perform in any respect any of the Borrower's contracts or
obligations relating to the Accounts.
2.8 STATEMENT OF ACCOUNT. After the end of each month the Payments
Administrator shall send the Borrower a statement accounting for the charges,
loans, advances and other transactions occurring among and between the Agent,
the Lenders, the Issuing Bank and the Borrower during that month. The monthly
statements shall, absent manifest error, be an account stated, which is final,
conclusive and binding on the Borrower.
2.9 TAXES. (a) All payments made by the Borrower hereunder, under
any Revolving Note, or under any other Credit Document will be made without
setoff, counterclaim or other defense. Except as provided in Section 2.9(b),
all such payments will be made free and clear of, and without deduction or
withholding for, any present or future taxes, levies, imposts, duties, fees,
assessments or other charges of whatever nature now or hereafter imposed by any
jurisdiction or by any political subdivision or taxing authority thereof or
therein with respect to such payments (but excluding, except as provided in the
second succeeding sentence, any tax imposed on or measured by the net income or
net profits of the Agent or a Lender pursuant to the laws of the jurisdiction in
which the Agent or such Lender, as the case may be, is organized or the
jurisdiction in which the principal office of the Lender or Agent or Applicable
Lending Office of such Lender is located or any subdivision or taxing authority
thereof or therein) and all interest, penalties or similar liabilities with
respect thereto (all such non-excluded taxes, levies, imposts, duties, fees,
deductions, withholdings, charges, assessments or other liabilities being
referred to collectively as "Taxes"). If any Taxes are so levied or imposed,
the Borrower agrees to pay the full amount of such Taxes, and such additional
amounts as may be necessary so that every payment of all amounts due hereunder,
under any Revolving Note, or under any other Credit Document, after withholding
or deduction for or on account of any Taxes, will
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not be less than the amount provided for herein or in such Revolving Note or
such other Credit Document. If any amounts are payable in respect of Taxes
pursuant to the preceding sentence, the Borrower agrees to reimburse each
Lender, upon the written request of such Lender, for taxes imposed on or
measured by the net income or net profits of such Lender pursuant to the laws of
the jurisdiction in which such Lender is organized or incorporated or in which
the principal office or Applicable Lending Office of such Lender is located or
of any political subdivision or taxing authority thereof or therein and for any
withholding of income or similar taxes as such Lender shall determine are
payable by, or withheld from, such Lender in respect of such amounts so paid to
or on behalf of such Lender pursuant to this or the preceding sentence. The
Borrower will furnish to the Payments Administrator within 45 days after the
date the payment of any Taxes, or any withholding or deduction on account
thereof, is due pursuant to applicable law certified copies of tax receipts
evidencing such payment by the Borrower. The Borrower will indemnify and hold
harmless the Agent and each Lender, and reimburse the Agent or such Lender upon
its written request, for the amount of any Taxes so levied or imposed and paid
or withheld by such Lender.
(b) Each Lender that is not a United States person (as such term is
defined in Section 7701(a)(30) of the Code) for U.S. Federal income tax purposes
agrees to deliver to the Borrower and the Agent on or prior to the Closing Date,
or in the case of a Lender that is an assignee or transferee of an interest
under this Credit Agreement pursuant to Section 11.6 (unless the respective
Lender was already a Lender hereunder immediately prior to such assignment or
transfer), on the date of such assignment or transfer to such Lender, (i)(x) two
accurate and complete original signed copies of Internal Revenue Service Form
4224 or 1001 (or successor forms) certifying to such Lender's entitlement to a
complete exemption from United States withholding tax with respect to payments
to be made under this Credit Agreement and under any Revolving Note and (y)
Internal Revenue Service Form W-9, or (ii) if the Lender is not a "bank" within
the meaning of Section 881(c)(3)(A) of the Code and cannot deliver either
Internal Revenue Service Form 1001 or 4224 pursuant to clause (i) above, (x) a
certificate substantially in the form of Exhibit D (any such certificate, a
"Section 2.9(b)(ii) Certificate") and (y) two accurate and complete original
signed copies of Internal Revenue Service Form W-8 (or successor form)
certifying to such Lender's entitlement to a complete exemption from United
States withholding tax with respect to payments of interest to be made under
this Credit Agreement and under any Revolving Note. In addition, each Lender
agrees that from time to time after the Closing Date, when a lapse in time or
change in circumstances renders the previous certification obsolete or
inaccurate in any material respect, it will deliver to the Borrower and the
Agent two new accurate and complete original signed copies of Internal Revenue
Service Form 4224 or 1001, or Form W-8 and a Section 2.9(b)(ii) Certificate, as
the case may be, and such other forms as may be required in order to confirm or
establish the entitlement of such Lender to a continued exemption from or
reduction in United States withholding tax with respect to payments under this
Credit Agreement and any Revolving Note, or it shall
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immediately notify the Borrower and the Agent of its inability to deliver any
such Form or Certificate, in which case such Lender shall not be required to
deliver any such Form or Certificate pursuant to this Section 2.9(b).
Notwithstanding anything to the contrary contained in Section 2.9(a), but
subject to Section 11.6 and the immediately succeeding sentence, (x) the
Borrower shall be entitled, to the extent it is required to do so by law, to
deduct or withhold income or similar taxes imposed by the United States (or any
political subdivision or taxing authority thereof or therein) from interest,
fees or other amounts payable hereunder for the account of any Lender which is
not a United States person (as such term is defined in Section 7701(a)(30) of
the Code) for U.S. Federal income tax purposes to the extent that such Lender
has not provided to the Borrower U.S. Internal Revenue Service Forms that
establish a complete exemption from such deduction or withholding and (y) the
Borrower shall not be obligated pursuant to Section 2.9(a) to make any
additional payments to a Lender pursuant to the third and fourth sentences of
Section 2.9(a) (the "Gross-Up Payments") (I) if such Lender has not provided to
the Borrower the Internal Revenue Service Forms required to be provided to the
Borrower pursuant to this Section 2.9(b) or (II) in the case of a payment, other
than interest, to a Lender described in clause (ii) above, to the extent that
such Forms do not establish a complete exemption from withholding of such taxes.
Notwithstanding anything to the contrary contained in the preceding sentence or
elsewhere in this Section 2.9 and except as set forth in Section 11.6, the
Borrower agrees to pay additional amounts and to indemnify each Lender in the
manner set forth in Section 2.9(a) (without regard to the identity of the
jurisdiction requiring the deduction or withholding) in respect of any Taxes
deducted or withheld by it as described in the immediately preceding sentence as
a result of any changes after the Closing Date in any applicable law, treaty,
governmental rule, regulation, guideline or order, or in the interpretation
thereof, relating to the deducting or withholding of such Taxes.
(c) If the Borrower pays any additional amount under this Section 2.9
to a Lender and such Lender determines in its sole discretion that it has
actually received or realized in connection therewith any refund or any
reduction of, or credit against, its Tax liabilities in or with respect to the
taxable year in which the additional amount is paid, such Lender shall pay to
the Borrower an amount that the Lender shall, in its sole discretion, determine
is equal to the net benefit, after tax, which was obtained by the Lender in such
year as a consequence of such refund, reduction or credit.
2.10 SHARING OF PAYMENTS. If any Lender shall obtain any payment
(whether voluntary, involuntary, through the exercise of any right of set-off or
otherwise) on account of the Revolving Loans made by it or its participation in
Letters of Credit in excess of its Proportionate Share of payments on account of
the Revolving Loans or Letters of Credit obtained by all the Lenders (other than
any Lender that has waived its Proportionate Share in writing), such Lender
shall forthwith purchase from the other Lenders such participation in the
Revolving Loans made by them or in their participation in Letters of Credit as
shall be necessary to cause such purchasing Lender to share the excess payment
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ratably with each of them; PROVIDED, HOWEVER, that if all or any portion of such
excess payment is thereafter recovered from such purchasing Lender, such
purchase from each Lender shall be rescinded and each such Lender shall repay to
the purchasing Lender the purchase price to the extent of such recovery together
with an amount equal to such Lender's ratable share (according to the proportion
of (i) the amount of such Lender's required repayment to (ii) the total amount
so recovered from the purchasing Lender) of any interest or other amount paid or
payable by the purchasing Lender in respect to the total amount so recovered.
The Borrower agrees that any Lender so purchasing a participation from another
Lender pursuant to this Section 2.10 may, to the fullest extent permitted by
law, exercise all of its rights of payment (including the right of set-off) with
respect to such participation as fully as if such Lender were the direct
creditor of the Borrower in the amount of such participation.
ARTICLE 3.
LETTERS OF CREDIT
3.1 ISSUANCE OF LETTERS OF CREDIT. Subject to the terms and
conditions of this Credit Agreement and in reliance upon the representations and
warranties of the Borrower set forth herein, upon the request of the Borrower
pursuant to Section 3.4, the Issuing Bank shall issue Letters of Credit
(including Recapitalization Letters of Credit) hereunder and for the Borrower's
account, as more specifically described below. The Issuing Bank shall not be
obligated to issue any Letter of Credit for the account of the Borrower if at
the time of such requested issuance:
(a) The face amount of such requested Letter of Credit when added to
the Letter of Credit Obligations then outstanding, would (i) cause the
Letter of Credit Obligations (excluding Letter of Credit Obligations
resulting from Recapitalization Letters of Credit) to exceed $10,000,000 or
(ii) when added to the aggregate amount of Revolving Loans then outstanding
would exceed (x) the lesser of (A) the Total Available Commitments then in
effect and (B) the Borrowing Base then in effect;
(b) Any order, judgment or decree of any Governmental Authority or
arbitrator shall purport by its terms to enjoin or restrain the Issuing
Bank from issuing such Letter of Credit or any Requirement of Law
applicable to the Issuing Bank or any request or directive (whether or not
having the force of law) from any Governmental Authority with jurisdiction
over the Issuing Bank shall prohibit, or request the Issuing Bank to
refrain from, the issuance of letters of credit generally or such Letter of
Credit in particular or shall impose upon the Issuing Bank with respect to
such Letter of Credit any restriction or reserve or capital requirement
(for
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which the Issuing Bank is not otherwise compensated) not in effect as of the
Closing Date, or any unreimbursed loss, cost or expense which was not
applicable, in effect or known to the Issuing Bank as of the Closing Date and
which the Issuing Bank deems in good faith to be material to it; or
(c) A default of any Lender's obligations to fund under Section 3.6
exists, or such Lender is a Defaulting Lender under Section 2.4(c), or any
Lender has rejected or repudiated its obligations in respect of Letters of
Credit, unless the Agent and the Issuing Bank have entered into
satisfactory arrangements with the Borrower to eliminate the Issuing Bank's
risk with respect to such Lender, including cash collateralization of such
Lender's Proportionate Share of the Letter of Credit Obligations.
3.2 TERMS OF LETTERS OF CREDIT. The Letters of Credit shall be in a
form customarily issued by the Issuing Bank or in such other form as has been
approved by the Issuing Bank. Each Letter of Credit shall be denominated in
Dollars. At the time of issuance, the amount and the terms and conditions of
each Letter of Credit, and the form of any drafts or acceptances thereunder,
shall be subject to approval by the Agent and the Borrower. In no event may the
term of any standby Letter of Credit issued hereunder exceed 12 months (except
that such Letters of Credit may provide for annual renewal) nor the term of any
documentary Letter of Credit exceed 180 days, and all Letters of Credit issued
hereunder shall expire no later than the date that is five Business Days prior
to the Expiration Date. Any Letter of Credit containing an automatic renewal
provision shall also contain a provision pursuant to which, notwithstanding any
other provisions thereof, it shall expire no later than the date that is five
Business Days prior to the Expiration Date.
3.3 LENDERS' PARTICIPATION. Immediately upon the issuance or
amendment by the Issuing Bank of any Letter of Credit in accordance with the
procedures set forth in Section 3.1, each Lender shall be deemed to have
irrevocably and unconditionally purchased and received from the Issuing Bank,
without recourse or warranty, an undivided interest and participation to the
extent of such Lender's Proportionate Share (based upon its Commitment) of the
liability with respect to such Letter of Credit (including, without limitation,
all obligations of the Borrower with respect thereto, other than amounts owing
to the Issuing Bank consisting of Issuing Bank Fees) and any security therefor
or guaranty pertaining thereto.
3.4 NOTICE OF ISSUANCE. Whenever the Borrower desires the issuance of
a Letter of Credit, the Borrower shall deliver to the Payments Administrator and
the Issuing Bank a written notice no later than 1:00 P.M. New York City time at
least three Business Days (or such shorter period as may be agreed to by the
Issuing Bank) in advance of the proposed date of issuance of a letter of credit
request in substantially the form attached as Exhibit B-2 (a "Letter of Credit
Request"). The Payments Administrator shall promptly
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transmit copies of each Letter of Credit Request to each Lender. The
transmittal by the Borrower of each Letter of Credit Request shall be deemed to
be a representation and warranty by the Borrower that the Letter of Credit may
be issued in accordance with and will not violate any of the requirements of
Section 3.1 or 5.2. A Letter of Credit Request may be given in writing or
electronically with prompt confirmation in writing.
3.5 PAYMENT OF AMOUNT DRAWN UNDER LETTERS OF CREDIT. In the event of
any request for drawing under any Letter of Credit by the beneficiary thereof,
the Issuing Bank shall notify the Payments Administrator, which shall notify the
Borrower of such request, to the extent reasonably practicable not later than
11:00 A.M. on the Business Day immediately prior to the date on which the
Issuing Bank intends to honor such drawing. The Borrower shall give notice to
be received by the Payments Administrator and the Issuing Bank not later than
1:00 P.M. on the Business Day immediately prior to the date of the respective
drawing if it intends to reimburse the Issuing Bank for the amount of such
drawing with funds other than the proceeds of Revolving Loans. Such notice from
the Borrower shall be irrevocable and, if given, the Borrower shall reimburse
the Issuing Bank not later than the close of business New York City time on the
day on which such drawing is honored in an amount in same day funds equal to the
amount of such drawing. If the Payments Administrator shall not have timely
received such notice (i) the Borrower shall be deemed to have timely given a
Notice of Borrowing to the Payments Administrator to incur Revolving Loans,
which shall be made as Base Rate Loans, on the date on which such drawing is
honored in an amount equal to the amount of such drawing and (ii) subject to
satisfaction or waiver of the conditions specified in Section 5.2 hereof and the
other terms and conditions of Borrowings contained herein, the Lenders shall, on
the date of such drawing, make Revolving Loans in the amount of such drawing,
the proceeds of which shall be applied directly by the Payments Administrator to
reimburse the Issuing Bank for the amount of such drawing or payment.
Borrowings pursuant to this Section 3.5 shall not be subject to the minimum
amount requirement of Section 2.3(a)(iii). If for any reason, proceeds of
Revolving Loans are not received by the Issuing Bank on such date in an amount
equal to the amount of such drawing, the Borrower shall be obligated to and
shall reimburse the Issuing Bank, on the Business Day immediately following the
date of such drawing, in an amount in same day funds equal to the excess of the
amount of such drawing over the amount of such Revolving Loans, if any, which
are so received, plus accrued interest on such amount at the rate set forth in
Section 4.2; PROVIDED, HOWEVER, that any such payments shall not prejudice any
rights that the Borrower may have against any Lender as a result of any default
by such Lender in funding such Revolving Loans, as provided in the final
sentence of Section 2.4(c).
3.6 PAYMENT BY LENDERS. (a) In the event that the Borrower does not
reimburse the Issuing Bank for the amount of any drawing pursuant to Section 3.5
and the proceeds of Revolving Loans incurred for such purpose are insufficient
for such purpose, the Payments Administrator shall promptly notify each Lender
of the unreimbursed amount
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and of such Lender's respective participation therein. Each Lender shall make
available to the Issuing Bank an amount equal to its respective participation in
same day funds, at the office of such Issuing Bank specified in such notice, not
later than 1:00 P.M. New York City time on the Business Day after the date
notified by the Payments Administrator. In the event that any Lender fails to
make available to the Issuing Bank the amount of such Lender's participation in
such Letter of Credit as provided in this Section 3.6, the Issuing Bank shall be
entitled to recover such amount on demand from such Lender, together with
interest at the Federal Funds Rate.
(b) The Payments Administrator or the Issuing Bank, as the case may
be, shall distribute to each Lender which has paid all amounts payable by it
under this Section 3.6 with respect to any Letter of Credit, such Lender's
Proportionate Share of all payments subsequently received by the Payments
Administrator or the Issuing Bank, as the case may be, from the Borrower in
reimbursement of drawings honored under such Letter of Credit when such payments
are received.
3.7 NATURE OF ISSUING BANK'S DUTIES. In determining whether to pay
under any Letter of Credit, the Issuing Bank shall be responsible only to
determine that the documents and certificates required to be delivered under
that Letter of Credit have been delivered and that they substantially comply on
their face with the requirements of that Letter of Credit. As between the
Borrower, the Issuing Bank and each other Lender, the Borrower assumes all risks
of the acts and omissions of, or misuse of the Letter of Credit issued by the
Issuing Bank by, the respective beneficiaries of such Letter of Credit;
provided, however, that nothing in this sentence shall relieve the Issuing Bank
of liability for its gross negligence or wilful misconduct. In furtherance and
not in limitation of the foregoing, neither the Issuing Bank nor any of the
other Lenders shall be responsible (i) for the form, validity, sufficiency,
accuracy, genuineness or legal effects of any document submitted by any party in
connection with the application for and issuance of or any drawing honored under
such Letter of Credit even if it should in fact prove to be in any or all
respects invalid, insufficient, inaccurate, fraudulent or forged, (ii) for the
validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign such Letter of Credit, or the rights or
benefits thereunder or proceeds thereof, in whole or in part, which may prove to
be invalid or ineffective for any reason, (iii) for failure of the beneficiary
of such Letter of Credit to comply fully with conditions required in order to
draw upon such Letter of Credit, (iv) for errors, omissions, interruptions or
delays in transmission or delivery of any messages, by mail, cable, telegraph,
telex, telecopy, facsimile or otherwise, whether or not they be in cipher, (v)
for errors in interpretation of technical terms, (vi) for any loss or delay in
the transmission or otherwise of any document required in order to make a
drawing under any such Letter of Credit, or of the proceeds thereof, (vii) for
the misapplication by the beneficiary of such Letter of Credit of the proceeds
of any drawing honored under such Letter of Credit, or (viii) for any
consequences arising from actions or omissions taken or omitted in good faith or
from causes
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beyond the control of the Issuing Bank or the other Lenders; PROVIDED, HOWEVER,
that nothing in this sentence shall relieve the Issuing Bank of liability for
its own gross negligence or willful misconduct.
3.8 OBLIGATIONS ABSOLUTE. The obligations of the Borrower to
reimburse the Issuing Bank for drawings honored under a Letter of Credit issued
by it and the obligations of the Lenders under Section 3.6 shall be
unconditional and irrevocable and shall be paid strictly in accordance with the
terms of this Credit Agreement under all circumstances including, without
limitation, the following circumstances:
(a) any lack of validity or enforceability of any Letter of Credit;
(b) the existence of any claim, set-off, defense or other right which
the Borrower or any Affiliate of the Borrower may have at any time against
a beneficiary or any transferee of any Letter of Credit (or any Persons or
entities for whom any such beneficiary or transferee may be acting), the
Issuing Bank, any Lender or any other Person, whether in connection with
this Credit Agreement, the transactions contemplated herein or any
unrelated transaction (other than the defense that the amount owed has
already been paid in accordance with the terms of this Credit Agreement);
PROVIDED, HOWEVER, that nothing contained herein shall preclude the
Borrower from asserting any such claim, defense or counterclaim in a
separate judicial proceeding or by compulsory counterclaim;
(c) any draft, demand, certificate or any other documents presented
under any Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(d) the surrender or impairment of any security for the performance or
observance of any of the terms of any of the Credit Documents;
(e) payment by the Issuing Bank under any Letter of Credit against
presentation of a demand, draft or certificate or other document which
does not comply with the terms of such Letter of Credit;
(f) failure of any drawing under a Letter of Credit or any
non-application or misapplication by the beneficiary of the proceeds of any
drawing; or
(g) the fact that a Default or Event of Default shall have occurred
and be continuing;
PROVIDED, HOWEVER, that the Borrower shall have no obligation to reimburse the
Issuing Bank and the Lenders shall have no obligation under Section 3.6 in the
event of the Issuing
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Bank's willful misconduct or gross negligence in determining whether documents
presented under the Letter of Credit comply with the terms of such Letter of
Credit or with respect to any other express obligation the Issuing Bank may have
under this Credit Agreement in making any payment pursuant to any Letter of
Credit.
ARTICLE 4.
INTEREST, FEES AND EXPENSES
4.1 INTEREST ON EURODOLLAR RATE LOANS. Subject to the provisions of
Section 4.4 hereof, interest on Eurodollar Rate Loans shall be payable in
arrears (i) on the last day of each Interest Period with respect to such
Eurodollar Rate Loans (and, in the case of any Interest Period in excess of
three months, on each date which occurs at three month intervals after the first
day of the respective Interest Period), (ii) at the date of any Conversion
thereof (or portion thereof) to a Base Rate Loan, (iii) upon any prepayment,
except pursuant to Section 2.6(d), (on the amount prepaid) and (iv) at maturity,
in each case at an interest rate per annum equal during each Interest Period for
such Eurodollar Rate Loan to the Adjusted Eurodollar Rate in effect for such
Interest Period in effect for such Eurodollar Rate Loan plus the relevant
Applicable Margin. The Payments Administrator upon determining the Adjusted
Eurodollar Rate for any Interest Period shall promptly notify the Borrower and
the Lenders thereof. Each determination by the Payments Administrator of an
interest rate hereunder shall be conclusive and binding for all purposes, absent
manifest error.
4.2 INTEREST ON BASE RATE LOANS. Subject to the provisions of Section
4.4 hereof, interest on Base Rate Loans shall be payable quarterly in arrears
(i) on the last Business Day of each calendar quarter, (ii) upon any prepayment,
except pursuant to Section 2.6(d), (on the amount prepaid) and (iii) at
maturity, in each case at an interest rate per annum equal to the Base Rate plus
the relevant Applicable Margin. Each determination by the Payments
Administrator of an interest rate hereunder shall be conclusive and binding for
all purposes, absent manifest error.
4.3 NOTICE OF CONTINUATION AND NOTICE OF CONVERSION. (a) With respect
to any Borrowing consisting of Eurodollar Rate Loans, the Borrower may, subject
to the provisions of Section 4.3(c) and the condition that no Default or Event
of Default then exists, elect to maintain such Borrowing or any portion thereof
equal to at least $1,000,000 as Eurodollar Rate Loans by selecting a new
Interest Period for such Borrowing (or portion thereof), which new Interest
Period shall commence on the last day of the immediately preceding Interest
Period. Each selection of a new Interest Period (a "Continuation") shall be
made by notice given not later than 12:00 Noon New York City time on the third
Business Day prior to the date of any such Continuation, by the Borrower to the
Payments Adminis-
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trator. Such notice (a "Notice of Continuation") shall be by telephone,
telecopy, telex, facsimile or cable, confirmed immediately in writing if by
telephone, in substantially the form of Exhibit B-3, which shall be completed in
such manner as is necessary to comply with all limitations on Revolving Loans
outstanding hereunder. If the Borrower shall fail to, or does not have the
right to, select a new Interest Period for any Borrowing consisting of
Eurodollar Rate Loans in accordance with this Section 4.3(a), such Loans will
automatically, on the last day of the then existing Interest Period therefor,
Convert into Base Rate Loans.
(b) The Borrower may on any Business Day occurring on or after the
Syndication Date (PROVIDED that no Default or Event of Default has occurred and
is continuing), upon notice (each such notice, a "Notice of Conversion") given
to the Payments Administrator, and subject to the provisions of Section 4.3(c),
Convert the entire amount of or a portion of Revolving Loans of one Type into a
Borrowing of Revolving Loans of the other Type; PROVIDED, HOWEVER, that any
Conversion of any Eurodollar Rate Loans into Base Rate Loans shall be made on,
and only on, the last day of an Interest Period for such Eurodollar Rate Loans.
Each such Notice of Conversion shall be given not later than 12:00 Noon New York
City time on the Business Day prior to the date of any proposed Conversion into
Base Rate Loans and on the third Business Day prior to the date of any proposed
Conversion into Eurodollar Rate Loans. Subject to the restrictions specified
above, each Notice of Conversion shall be by telephone, telecopy, telex,
facsimile or cable, confirmed immediately in writing if by telephone, in
substantially the form of Exhibit B-4. Each Conversion shall be in an aggregate
amount for the Revolving Loans of all Lenders of not less than $250,000.
(c) Notwithstanding anything contained in Section 2.3 or Sections
4.3(a) and (b) above to the contrary,
(i) if, on or prior to the first day of any Interest Period, the
Payments Administrator is unable to determine the Adjusted Eurodollar Rate
for Eurodollar Rate Loans comprising any requested Borrowing, Continuation
or Conversion, the right of the Borrower to select or maintain Eurodollar
Rate Loans for such Borrowing or any subsequent Borrowing shall be
suspended until the Payments Administrator shall notify the Borrower and
the Lenders that the circumstances causing such suspension no longer exist,
and each Revolving Loan comprising such Borrowing shall be made as, or
Converted into, a Base Rate Loan; provided that, promptly after the
Payments Administrator reasonably determines that the circumstances giving
rise to such suspension no longer exist, the Payments Administrator shall
notify the Borrower and the Lenders, and the obligation of the Lenders to
make, convert and continue Eurodollar Rate Loans shall be reinstated;
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(ii) if the Required Lenders shall, at least one Business Day before
the date of any requested Borrowing, Continuation or Conversion, notify the
Payments Administrator that the Adjusted Eurodollar Rate for Revolving
Loans comprising such Borrowing will not adequately reflect the cost to
such Lenders of making or funding their respective Revolving Loans for such
Borrowing, the right of the Borrower to select Eurodollar Rate Loans for
such Borrowing shall be suspended until the Payments Administrator shall
notify the Borrower and the Lenders that the circumstances causing such
suspension no longer exist, and each Revolving Loan comprising such
Borrowing shall be made as, or Converted into, a Base Rate Loan; and;
provided that, promptly after the Payments Administrator and the Required
Lenders reasonably determine that the circumstances giving rise to such
suspension no longer exist, the Payments Administrator shall notify the
Borrower and the Lenders, and the obligation of the Lenders to make,
convert and continue Eurodollar Rate Loans shall be reinstated; and
(iii) there shall not be at any one time more than eight Interest
Periods in effect with respect to Eurodollar Rate Loans.
(d) Each Notice of Continuation and Notice of Conversion shall be
irrevocable by and binding on the Borrower. In the case of any Borrowing,
Continuation or Conversion that the related Notice of Borrowing, Notice of
Continuation or Notice of Conversion specifies is to be comprised of Eurodollar
Rate Loans, the Borrower shall indemnify each Lender against any loss, cost or
expense incurred by such Lender as a result of any failure to fulfill, on or
before the date for such Borrowing, Continuation or Conversion specified in such
Notice of Borrowing, Notice of Continuation or Notice of Conversion, the
applicable conditions set forth in Article 5, including, without limitation, any
loss (excluding loss of anticipated profits), cost or expense incurred by reason
of the liquidation or re-employment of deposits or other funds acquired by such
Lender to fund the Eurodollar Rate Loan to be made by such Lender as part of
such Borrowing, Continuation or Conversion.
4.4 INTEREST AFTER DEFAULT. Interest on any amount of matured
principal of the Revolving Loans, and interest on the amount of principal of the
Revolving Loans outstanding as of the date a Default an Event of Default occurs,
and at all times thereafter until the earlier of the date upon which (i) all
Obligations have been paid and satisfied in full or (ii) such Default or Event
of Default shall have been cured or waived, shall be payable on demand at a rate
equal to the rate at which the Revolving Loans are bearing interest pursuant to
Sections 4.1 or 4.2 above plus 2%, or, if higher, the Base Rate in effect from
time to time plus the sum of (x) the Applicable Margin for Base Rate Loans then
in effect and (y) 2%.
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4.5 REIMBURSEMENT OF EXPENSES. (a) From and after the Closing Date,
the Borrower shall promptly reimburse the Agent for all Expenses of the Agent as
the same are incurred by the Agent and upon receipt of invoices therefor and, if
requested by the Borrower, such reasonable backup materials and information
(other than backup materials and information relating to the calculation of
breakage costs) as the Borrower shall reasonably request.
(b) If any payment of principal of, or any Conversion of, any
Eurodollar Rate Loan is made other than on the last day of an Interest Period
applicable thereto for any reason, the Borrower shall, upon demand by any Lender
(with a copy of such demand to the Payments Administrator), pay to the Payments
Administrator for the account of such Lender any amounts required to compensate
such Lender for any additional losses, costs or expenses which it may reasonably
incur as a result of such payment, including, without limitation, any loss
(excluding loss of anticipated profits), cost or expense incurred by reason of
the liquidation or reemployment of deposits or other funds acquired by any
Lender to fund or maintain such Eurodollar Rate Loan.
4.6 UNUSED LINE FEE. The Borrower shall pay to the Payments
Administrator for the benefit of each of the Lenders (other than a Defaulting
Lender for so long as such Lender is a Defaulting Lender) a non-refundable fee
(the "Unused Line Fee") equal to the Applicable Margin then in effect for Unused
Line Fees, per annum on the unused portion of such Lender's Commitment, which
Unused Line Fee shall (i) accrue from the Closing Date until the Expiration Date
or any earlier date on which the Total Commitment is terminated and (ii) be due
and payable quarterly in arrears on the last Business Day of March, June,
September and December, and on the Expiration Date or any earlier date on which
the Total Commitment is terminated.
4.7 LETTER OF CREDIT FEES. (a) The Payments Administrator shall be
entitled to charge to the account of the Borrower (i) for the ratable benefit of
the Lenders, a fee (the "Letter of Credit Fee"), in an amount equal to the
Applicable Margin then in effect for Eurodollar Rate Loans per annum of the
daily weighted average amount of outstanding Letter of Credit Obligations during
the immediately preceding quarter, due and payable quarterly in arrears on the
last Business Day of March, June, September and December, and on the Expiration
Date or any earlier date on which all Letters of Credit have been terminated and
(ii) as and when incurred by the Payments Administrator or any Lender, any
administrative charges, fees, costs and expenses charged to the Payments
Administrator or any Lender for the Borrower's account by the Issuing Bank
(other than any fees charged to the Payments Administrator or any Lender which
would be duplicative of the Letter of Credit Fee paid to the Payments
Administrator for the benefit of the Lenders) (the "Issuing Bank Fees") in
connection with the issuance of any Letters of Credit by the Issuing Bank. Each
determination by the Payments Administrator of Letter of Credit Fees hereunder
shall be conclusive and binding for all purposes, absent manifest error. In
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addition, the Borrower shall pay to the Issuing Bank, for its own benefit, the
Letter of Credit facing fees outlined in the Fee Letter.
(b) Letter of Credit Fees payable in respect of Letter of Credit
Obligations outstanding as of the date a Default or an Event of Default occurs,
and at all times thereafter until the earlier of the date upon which (i) all
Obligations have been paid and satisfied in full or (ii) such Default or Event
of Default shall have been cured or waived, shall be payable on demand at a rate
equal to the rate at which the Letter of Credit Fees are charged pursuant to
Section 4.7(a) above, plus 2% per annum.
4.8 OTHER FEES AND EXPENSES. The Borrower agrees to pay (without
duplication) fees to BTCC in the amounts and at the times set forth in the Fee
Letter.
4.9 AUTHORIZATION TO CHARGE ACCOUNT. The Borrower hereby authorizes
the Payments Administrator, subject to prior notice to the Borrower, to charge
the Borrower's Revolving Loan account with the amount of all Fees, Expenses and
other payments to be paid hereunder, under the Fee Letter and under the other
Credit Documents as and when such payments become due. The Borrower confirms
that any charges which the Payments Administrator may so make to the Borrower's
Revolving Loan account as herein provided will be made as an accommodation to
the Borrower and solely at the Payments Administrator's discretion.
4.10 INDEMNIFICATION IN CERTAIN EVENTS. (a) If after the Closing
Date, either (i) any change in or in the interpretation of any law or regulation
is introduced, including, without limitation, with respect to reserve
requirements, applicable to the Agent, the Issuing Bank or any of the Lenders
(or, in the case of a Lender which is not a banking institution, any Affiliate
of such Lender funding such Lender ("Funding Affiliate")), or (ii) the Agent,
the Issuing Bank, or any of the Lenders (or, in the case of a Lender which is
not a banking institution, any Funding Affiliate) complies with any future
guideline or request from any central bank or other Governmental Authority or
(iii) the Agent, the Issuing Bank, or any of the Lenders (or, in the case of a
Lender which is not a banking institution, any Funding Affiliate) reasonably
determines that the adoption of any applicable law, rule or regulation regarding
capital adequacy, or any change therein, or any change in the interpretation or
administration thereof by any Governmental Authority, central bank or comparable
agency charged with the interpretation or administration thereof has or would
have the effect described below, or the Agent, the Issuing Bank, or any of the
Lenders (or, in the case of a Lender which is not a banking institution, any
Funding Affiliate) complies with any future request or directive regarding
capital adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency, and in the case of any event set forth in
this clause (iii), such adoption, change or compliance has or would have the
direct or indirect effect of reducing the rate of return on any of such Person's
(or any Funding Affiliate's) capital as a consequence of its obligations
hereunder to a level
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below that which such Person could have achieved but for such adoption, change
or compliance (taking into consideration such Person's (or any Funding
Affiliate's) policies with respect to capital adequacy) by an amount deemed by
such Person to be material, and any of the foregoing events described in clauses
(i), (ii) or (iii) increases the cost or reduces the rate of return to the
Agent, the Issuing Bank or any of the Lenders of (A) (I) with respect to an
event described in clauses (i) and (ii), making or maintaining its Eurodollar
Rate Loans, and (II) with respect to an event described in clause (iii), funding
or maintaining its Commitment or (B) issuing, making or maintaining any Letter
of Credit or of purchasing or maintaining any participation therein, or reduces
the amount receivable in respect thereof by the Agent, the Issuing Bank or any
Lender, then the Borrower shall within 15 days after demand by the Agent, pay to
the Payments Administrator, for the account of each applicable Lender or the
Issuing Bank, as the case may be, additional amounts sufficient to indemnify the
Agent, the Lenders or the Issuing Bank against such increase in cost or
reduction in amount receivable allocable to the Agent's, such Lenders' or the
Issuing Bank's, as the case may be, funding or maintaining its Commitment or
issuing, making or maintaining any Letter of Credit or purchasing or maintaining
any participation therein. A certificate as to the amount of such increased
cost and setting forth in reasonable detail the calculation thereof shall be
submitted to the Borrower by the Agent, or the applicable Lender or the Issuing
Bank, as the case may be, and shall be conclusive absent manifest error.
(b) Each Lender, the Issuing Bank or the Agent will notify the
Borrower and the Payments Administrator of any event occurring after the Closing
Date which will entitle such Lender, the Issuing Bank or Agent to payment
pursuant to Section 4.10(a) as promptly as practicable after it obtains
knowledge thereof, specifying the event giving rise to such claim and setting
out in reasonable detail an estimate of the basis and computation of such claim.
Upon receipt of such notice, the Borrower shall compensate such Lender, the
Issuing Bank or Agent in accordance with Section 4.10(a) from the date such
costs are incurred (including, without limitation, where such costs are
retroactively applied); PROVIDED, HOWEVER, that the Borrower shall not be
required to compensate a Lender, the Issuing Bank or Agent for costs incurred
earlier than 90 days prior to the date of the notice required to be delivered to
the Borrower pursuant to this Section 4.10(b).
4.11 CALCULATIONS. All calculations of (i) interest hereunder and
(ii) Fees, including, without limitation, Unused Line Fees and Letter of Credit
Fees shall be made by the Payments Administrator, on the basis of a year of 360
days, or, if such computation would cause the interest and Fees chargeable
hereunder to exceed the Highest Lawful Rate, 365/366 days, in each case for the
actual number of days elapsed (including the first day but excluding the last
day) occurring in the period for which such interest or Fees are payable. Each
determination by the Payments Administrator of an interest rate or payment
hereunder shall be conclusive and binding for all purposes, absent manifest
error.
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4.12 CHANGE OF APPLICABLE LENDING OFFICE. Each Lender agrees that on
the occurrence of any event giving rise to the operation of Sections 2.9, 4.3(c)
or 4.10 with respect to such Lender, it will, if requested by the Borrower, use
reasonable efforts (subject to overall policy considerations of such Lender) to
designate another lending office for any Revolving Loans or Letters of Credit
affected by such event, PROVIDED that such designation is made on such terms
that such Lender and its lending office suffer no economic, legal or regulatory
disadvantage, with the object of avoiding the consequence of the event giving
rise to the operation of such Sections. Nothing in this Section 4.12 shall
affect or postpone any of the obligations of the Borrower or the right of any
Lender provided in Sections 2.9, 4.3 or 4.10.
ARTICLE 5.
CONDITIONS PRECEDENT
5.1 CONDITIONS TO INITIAL LOANS AND LETTERS OF CREDIT. Except as
provided in Section 11.20, the obligation of each Lender to make Revolving Loans
hereunder and the obligation of the Issuing Bank to issue Letters of Credit, in
each case constituting the Initial Credit Event, is subject to the satisfaction
of, or waiver of, immediately prior to or concurrently with the making of such
Revolving Loans or the issuance of such Letters of Credit on the Closing Date,
the following conditions precedent:
(a) EXECUTION OF AGREEMENT; NOTES. On or prior to the Closing Date,
this Credit Agreement shall have become effective as provided in Section
11.14 and there shall have been delivered to the Payments Administrator for
the account of each Lender the appropriate Revolving Note in the amount,
maturity and as otherwise provided herein.
(b) OFFICER'S CERTIFICATE. On the Closing Date, the Agent shall have
received a certificate from the Borrower dated such date signed by an
appropriate officer of the Borrower stating that all of the applicable
conditions set forth in Sections 5.1(d)(C), (e), (h), (i), (j), (k), (l),
(m) and (ee) and 5.2(a), (b), (c) and (d) exist as of such date, provided
the certificate shall not be required to certify as to the acceptability of
any items to the Agent and/or the Required Lenders or as to whether the
Agent and/or the Required Lenders are satisfied with any of the matters
described in said Sections.
(c) OPINIONS OF COUNSEL. On the Closing Date, the Agent shall have
received opinions, addressed to the Agent, the Collateral Agent and each of
the Lenders and dated the Closing Date, (i) from Paul, Weiss, Rifkind,
Wharton & Garrison, special counsel to Holdings and the Borrower, which
opinion shall cover
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the matters contained in Exhibit E-1 and such other matters incident to the
transactions contemplated herein as the Agent may reasonably request, (ii)
from White & Case, special counsel to the Lender, which opinion shall cover
the matters contained in Exhibit E-2 and (iii) from local counsel
reasonably satisfactory to the Agent, opinions each of which shall be in
form and substance reasonably satisfactory to the Agent and shall cover the
perfection of the security interest granted pursuant to the Security
Agreement and the Mortgages and such other matters incident to the
transaction contemplated herein as the Agent may reasonably request.
(d) SECURITY AGREEMENT. On the Closing Date, the Borrower and each of
the Guarantors shall have duly authorized, executed and delivered a
Security Agreement in the form of Exhibit F (as modified, amended or
supplemented from time to time in accordance with the terms thereof and
hereof, the "Security Agreement") together with:
(A) executed copies of Financing Statements (Form UCC-1) in
appropriate form for filing under the UCC of each jurisdiction as may
be necessary to perfect the security interests purported to be created
by the Security Agreement;
(B) certified copies of Requests for Information or Copies (Form
UCC-11), or equivalent reports, each of recent date listing all
effective financing statements that name Holdings, the Borrower or any
of their respective Subsidiaries as debtor and that are filed in the
jurisdictions referred to in clause (A), together with copies of such
financing statements (none of which shall cover the Collateral except
(x) those with respect to which appropriate termination statements
executed by the secured lender thereunder have been delivered to the
Agent and (y) to the extent evidencing Permitted Liens);
(C) subject to Section 11.20, evidence that, with respect to all
Certificated Units of the Borrower and its Subsidiaries on the Closing
Date, either (x) a notation of the security interest of the Collateral
Agent has been made on the certificate of title with respect thereto
(or application for such notation has been, or will substantially
concurrently with the Closing be, made) which notation shall, under
applicable state law, perfect the Collateral Agent's security interest
therein or (y) an opinion of counsel satisfactory to the Agent to the
effect that such notation of a security interest on the relevant
certificate of title under applicable state law is not required to
perfect the security interests therein created pursuant to the
Security Agreement;
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(D) subject to Section 11.19, evidence that all other filings
of, or with respect to, the Security Agreement as may be necessary or,
in the opinion of the Collateral Agent, desirable to perfect the
security interests intended to be created by the Security Agreement
have been completed or will be completed substantially concurrently
with the Closing; and
(E) subject to Section 11.19, evidence that all other actions
necessary or, in the reasonable opinion of the Collateral Agent,
desirable to perfect and protect the security interests purported to
be created by the Security Agreement have been taken.
(e) COLLATERAL ACCESS AGREEMENTS. On the Closing Date, the Agent
shall have received Collateral Access Agreements substantially in the form
of Exhibit G (as modified, amended, or supplemented from time to time in
accordance with the terms hereof and thereof, the "Collateral Access
Agreements") with respect to Rental Equipment locations as may be requested
by the Agent, which Collateral Access Agreements shall be in full force and
effect; PROVIDED that, notwithstanding the foregoing, (i) the Borrower, in
obtaining the Collateral Access Agreements required under this Section
5.1(e), shall not be obligated to make significant payments to landlords or
alter the respective lease terms with respect to any Rental Equipment
locations in any way which is materially adverse to the Borrower, and (ii)
so long as the Borrower has used its reasonable good faith efforts
(exercised in a timely fashion) to obtain the Collateral Access Agreements
described above, this Section 5.1(e) shall be deemed satisfied on the
Closing Date notwithstanding the fact that all of said Collateral Access
Agreements may not have been obtained.
(f) COLLECTION BANK AGREEMENTS; CONCENTRATION ACCOUNT AGREEMENT. On
the Closing Date, the Agent shall have received fully executed copies of
the Collection Bank Agreements and the Concentration Account Agreements,
each of which shall be in full force and effect.
(g) BORROWING BASE CERTIFICATE. On the Closing Date, the Borrower
shall have delivered to the Agent a Borrowing Base Certificate meeting the
requirements of Section 7.1(e) and which Borrowing Base Certificate shall
indicate (in a manner satisfactory to the Agent) that on such date and
after giving effect to the consummation of the Transaction and all Credit
Events on such date, the Borrower shall be able to incur additional
Outstandings, after giving effect to the Outstandings on the Closing Date,
of $40,000,000 or more in compliance with the Borrowing Base restrictions.
(h) EQUITY ISSUANCE. On or prior to the Closing Date, (a) Holdings
shall have received gross cash proceeds of (i) at least $130 million in
connection with the
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issuance to the Equity Investors and (ii) at least $5 million in connection
with the issuance to Persons satisfactory to the Agent, in each case by
Holdings of Holdings Common Stock (the "Common Stock Financing"), (b)
existing shareholders and members of management of Holdings reasonably
satisfactory to the Agent shall have retained at least $24 million of
existing common stock and options to purchase existing common stock (valued
on the same basis as the common stock, but subtracting any unpaid exercise
price) of Holdings after giving effect to the Transaction (the "Equity
Rollover", and together with the Common Stock Financing, the "Equity
Issuance"), (c) the Agent shall have received true and correct copies of
all agreements or documents governing, or related to, the Equity Issuance
(the "Equity Issuance Documents") and (d) all the terms and conditions of
the Equity Issuance Documents shall be in form and substance reasonably
satisfactory to the Agent. All conditions precedent to the consummation of
the Equity Issuance as set forth in the Equity Issuance Documents shall
have been satisfied, and not waived in any material respect unless
consented to by the Agent, to the reasonable satisfaction of the Agent.
Holdings shall have used all cash proceeds received from the Equity
Issuance to make payments owing in connection with the Transaction prior to
or concurrently with the Borrower's utilization of the Revolving Loans for
such purpose. The Equity Issuance shall have occurred in accordance with
the terms and conditions of the Equity Issuance Documents and all
applicable law.
(i) ISSUANCE OF SENIOR UNSECURED NOTES. On or prior to the Closing
Date, the Borrower shall have received gross cash proceeds (without giving
effect to any discounts or commissions to initial purchasers) of not less
than $400 million from the issuance of a like principal amount of Senior
Unsecured Notes (the issuance of the Senior Unsecured Notes, the "Senior
Unsecured Notes Issuance"). The Agent shall have received true and correct
copies of all agreements or documents governing, or related to, the Senior
Unsecured Notes Issuance (the "Senior Unsecured Notes Documents") and all
terms and conditions of the Senior Unsecured Note Documents and the Senior
Unsecured Notes shall be in form and substance reasonably satisfactory to
the Agent and, in any event, the Senior Unsecured Notes shall not be
secured by any asset of Holdings, the Borrower or any of their respective
Subsidiaries. The Borrower shall have used all net cash proceeds received
from the Senior Unsecured Notes Issuance to make payments owing in
connection with the Transaction prior to or concurrently with the
utilization of Revolving Loans for such purpose. The Senior Unsecured
Notes Issuance shall have occurred in accordance with the terms and
conditions of the Senior Unsecured Note Documents and all applicable law.
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(j) RECAPITALIZATION; ETC. (i) On the Closing Date, Holdings shall
have repurchased all of its outstanding capital stock other than that being
reinvested or issued pursuant to the Equity Rollover (the "Stock
Repurchase").
(ii) On the Closing Date and concurrently with the Credit Events then
occurring (1) the total commitments under the Existing Credit Agreement
shall have been terminated, and all loans thereunder shall have been repaid
in full, together with interest thereon, (2) all other amounts owing
pursuant to the Existing Credit Agreement shall have been repaid in full,
(3) the Existing Credit Agreement shall have been terminated and (4) the
Agent shall have received evidence in form, scope and substance
satisfactory to it that the matters set forth in this Clause (j)(ii) have
been satisfied on such date. On the Closing Date and concurrently with the
Credit Events then occurring, the creditors under the Existing Credit
Agreement shall have terminated and released all security interests and
Liens on the capital stock of the Borrower or any of its respective
Subsidiaries, or any other assets owned by Holdings, the Borrower or any of
their respective Subsidiaries granted in connection with the Existing
Credit Agreement. In connection with the preceding sentence, the Agent
shall have received such releases of security interests in and Liens on the
capital stock of Holdings, the Borrower or any of their respective
Subsidiaries, or any other assets owned by the Borrower and its respective
Subsidiaries, as may have been requested by the Agent, which releases shall
be in form and substance satisfactory to the Agent. Without limiting the
foregoing, there shall have been delivered (w) proper termination
statements (Form UCC-3 or the appropriate equivalent) for filing under the
UCC of each jurisdiction where a financing statement (Form UCC-1 or the
appropriate equivalent) was filed with respect to Holdings, the Borrower or
any of their respective Subsidiaries in connection with the security
interests created with respect to the Existing Credit Agreement and the
documentation related thereto, (x) termination or reassignment of any
security interest in, or Lien on, any patents, trademarks, copyrights, or
similar interests of Holdings, the Borrower or any of their respective
Subsidiaries on which filings have been made, (y) terminations of all
mortgages, leasehold mortgages and deeds of trust created with respect to
property of Holdings, the Borrower or any of their respective Subsidiaries,
in each case, to secure the obligations under the Existing Credit
Agreement, all of which shall be in form and substance satisfactory to the
Agent, and (z) all collateral owned by Holdings, the Borrower or any of
their respective Subsidiaries in the possession of Congress Financial
Corporation, in its capacity as agent under the Existing Credit Agreement
or collateral agent under any related security document or any other agent,
collateral agent or trustee for the creditors under the Existing Credit
Agreement.
(iii) On or prior to the Closing Date and concurrently with the
Credit Events then occurring, the Borrower shall have consummated a tender
offer/consent
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solicitation with respect to the outstanding Senior Secured Notes (the
"Senior Secured Notes Tender Offer/Consent Solicitation"), pursuant to
which (1) the Borrower shall offer, subject to the terms and conditions
contained in the Senior Secured Notes Tender Offer/Consent Solicitation, to
purchase all of the outstanding Senior Secured Notes at the cash price set
forth in the Senior Secured Notes Tender Offer/Consent Solicitation and (2)
consents shall be solicited to a proposed amendment to the Senior Secured
Notes Indenture and other Senior Secured Notes Collateral Documents, on
terms and conditions satisfactory to the Agent, which amendment shall
provide for the substantial elimination of the financial and certain
operating covenants contained in the Senior Secured Notes Indenture
(including, without limitation, limitations on the incurrence of liens,
restricted payments, transactions with affiliates and indebtedness) and the
amendment or elimination of certain other provisions in the Senior Secured
Notes Collateral Documents. All terms and conditions of the Senior Secured
Notes Tender Offer/Consent Solicitation shall be satisfactory to the Agent,
and the period for tendering Senior Secured Notes pursuant thereto shall
terminate on or prior to the Closing Date. On or prior to the Closing
Date, (x) the Borrower shall have received sufficient consents to authorize
the execution and delivery of the Senior Secured Notes Indenture
Supplement, (y) the Borrower and the trustee under the Senior Secured Notes
Indenture shall have duly executed and delivered the Senior Secured Notes
Indenture Supplement and (z) the Senior Secured Notes Collateral Documents
Amendments shall have been duly executed and delivered. On the Closing
Date and concurrently with the Credit Events then occurring, the Borrower
shall have repurchased the Senior Secured Notes tendered, and not
theretofore withdrawn, pursuant to the Senior Secured Notes Tender
Offer/Consent Solicitation (the "Senior Secured Notes Tender Offer
Repurchases").
(iv) On or prior to the Closing Date and concurrently with the Credit
Events then occurring, Holdings shall have consummated a tender
offer/consent solicitation with respect to the outstanding Holding Co.
Notes (the "Holding Co. Notes Tender Offer/Consent Solicitation"), pursuant
to which (1) Holdings shall offer, subject to the terms and conditions
contained in the Holding Co. Notes Tender Offer/Consent Solicitation, to
purchase all of the outstanding Holding Co. Notes at the cash price set
forth in the Holding Co. Notes Tender Offer/Consent Solicitation and (2)
consents shall be solicited to a proposed amendment to the Holding Co.
Notes Indenture, on terms and conditions satisfactory to the Agent, which
amendment shall provide for the substantial elimination of the financial
and certain operating covenants contained in the Holding Co. Notes
Indenture (including, without limitation, limitations on the incurrence of
liens, restricted payments, transactions with affiliates and indebtedness).
All terms and conditions of the Holding Co. Notes Tender Offer/Consent
Solicitation shall be satisfactory to the Agent, and the period for
tendering Holding Co. Notes pursuant thereto shall
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terminate on or prior to the Closing Date. On or prior to the Closing
Date, (x) Holdings shall have received sufficient consents to authorize the
execution and delivery of the Holding Co. Notes Indenture Supplement and
(y) Holdings and the trustee under the Holding Co. Notes Indenture shall
have duly executed and delivered the Holding Co. Notes Indenture
Supplement. On the Closing Date and concurrently with the Credit Events
then occurring, Holdings shall have repurchased the Holding Co. Notes
tendered, and not theretofore withdrawn, pursuant to the Holding Co. Notes
Tender Offer/Consent Solicitation (the "Holding Co. Notes Tender Offer
Repurchases").
(v) On the Closing Date and after giving effect to the Transaction
and the Revolving Loans incurred on the Closing Date, neither Holdings, the
Borrower nor any of their respective Subsidiaries shall have any
Indebtedness outstanding except for (i) Indebtedness created under this
Credit Agreement and the other Credit Documents, (ii) the Senior Unsecured
Notes, (iii) those Senior Secured Notes not purchased pursuant to the
Senior Secured Notes Tender Offer Repurchases (which in no event shall have
an aggregate principal amount in excess of $82,499,999 million), (iv) those
Holding Co. Notes not purchased pursuant to the Holding Co. Notes Tender
Offer Repurchases (which in no event shall have an aggregate principal
amount in excess of $14,645,499), (v) the Existing Indebtedness and (vi)
such other Indebtedness, if any, as shall be permitted to remain
outstanding by the Agent. On and as of the Closing Date, all Existing
Indebtedness (excluding any issue of Existing Indebtedness with an
aggregate principal amount then outstanding of less than $1,000,000, so
long as the aggregate principal amount of all outstanding Existing
Indebtedness excluded pursuant to this parenthetical does not exceed
$4,000,000) and any Senior Secured Notes and Holding Co. Notes which are
not accepted for purchase pursuant to the tender offers described above,
shall remain outstanding after giving effect to the Transaction and the
other transactions contemplated hereby without any default or events of
default existing thereunder or arising as a result of the Transaction and
the other transactions contemplated hereby (except to the extent amended or
waived by the parties thereto on terms and conditions satisfactory to the
Agent), and there shall not be any amendments or modifications to the
Existing Indebtedness Agreements other than as requested or approved by the
Agent. On and as of the Closing Date, the Agent shall be satisfied with
the amount of and the terms and conditions of all Existing Indebtedness.
(vi) On or prior to the Closing Date, the Agent shall have received
true and correct copies of the Recapitalization Documents, certified as
such by an appropriate officer of Holdings, each of which shall have been
duly authorized, executed and delivered by the parties thereto and shall be
in full force and effect and in form and substance (including all terms and
conditions thereof) reasonably satisfactory to the Agent. On or prior to
the Closing Date, all conditions set forth
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in the Recapitalization Documents shall have been satisfied in all material
respects and not waived (unless waived with the consent of the Agent, which
shall not be unreasonably withheld) and the Recapitalization shall have
been consummated in all material respects in accordance with the
Recapitalization Documents and all applicable laws.
(k) APPROVALS. All necessary material governmental (domestic and
foreign) and third party approvals and/or consents in connection with the
Transaction, the transactions contemplated by the Transaction Documents and
otherwise referred to herein or therein shall have been obtained and remain
in full force and effect, and all applicable waiting periods shall have
expired without any action being taken by any competent authority which
restrains, prevents, or imposes materially adverse conditions upon, the
consummation of the Transaction, the making of any Revolving Loans or the
issuance of any Letters of Credit or the other transactions contemplated
hereby. There shall not have been any statute, rule regulation, injunction
or order applicable to the Transaction, or the financing thereof,
promulgated, enacted, entered or enforced by any state or federal
government or governmental or regulatory authority or agency or by any
federal or state court or tribunal, nor shall there be pending any action
or proceeding by or before any such authority, court or tribunal, involving
a substantial likelihood of an order, that would prohibit, restrict, delay
or otherwise materially adversely affect the Transaction or the financing
thereof.
(l) MATERIAL ADVERSE CHANGE, ETC. Since April 7, 1997, nothing shall
have occurred (and neither the Agent nor the Lenders shall have become
aware of any facts or conditions not previously known) which the Agent
shall reasonably determine could have a materially adverse effect on the
Transaction or a Material Adverse Effect.
(m) LITIGATION. On the Closing Date, with the exception of the
Disclosed Litigation, there shall be no actions, suits, investigations or
proceedings pending or threatened (a) with respect to this Credit
Agreement, any other Credit Document, the Transaction or any document
executed in connection therewith, or (b) which BTCC shall determine is
reasonably likely to have a materially adverse effect on the Transaction or
a Material Adverse Effect.
(n) CORPORATE PROCEEDINGS. (i) On the Closing Date, the Agent shall
have received a certificate from each Credit Party, dated the Closing Date,
signed by the secretary or any assistant secretary of such Credit Party in
the form of Exhibit H with appropriate insertions, together with copies of
the Certificate of Incorporation and By-Laws, or other organizational
documents, of such Credit Party and the resolutions of such Credit Party
referred to in such certificate and all of the fore-
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going (including each such Certificate of Incorporation and By-Laws) shall
be reasonably satisfactory to the Agent.
(ii) On the Closing Date, all corporate and legal proceedings and all
instruments and agreements in connection with the transactions contemplated
by this Credit Agreement and the other Transaction Documents shall be
reasonably satisfactory in form and substance to the Agent, and the Agent
shall have received all information and copies of all certificates,
documents and papers, including good standing certificates and any other
records of corporate proceedings and governmental approvals, if any, which
the Agent reasonably may have requested in connection therewith, such
documents and papers, where appropriate, to be certified by proper
corporate or governmental authorities.
(o) PLANS; COLLECTIVE BARGAINING AGREEMENTS; EXISTING INDEBTEDNESS
AGREEMENTS; SHAREHOLDERS' AGREEMENTS; MANAGEMENT AGREEMENTS; EMPLOYMENT
AGREEMENTS; TAX SHARING AGREEMENTS; MATERIAL CONTRACTS. On or prior to the
Closing Date, there shall have been delivered or made available to the
Agent true and correct copies, of:
(i) all Plans (and for each Plan that is required to file an
annual report on Internal Revenue Service Form 5500-series, a copy of
the most recent such report (including, to the extent required, the
related financial and actuarial statements and opinions and other
supporting statements, certifications, schedules and information), and
for each Plan that is a "single-employer plan", as defined in Section
4001(a)(15) of ERISA, the most recently prepared actuarial valuation
therefor) and any other "employee benefit plans", as defined in
Section 3(3) of ERISA, and any other material agreements, plans or
arrangements, with or for the benefit of current or former employees
of Holdings, the Borrower or any of their respective Subsidiaries or
any ERISA Affiliate (provided that the foregoing shall apply in the
case of any "multiemployer plan", as defined in 4001(a)(3) of ERISA,
only to the extent that any document described therein is in the
possession of Holdings, the Borrower or any of their respective
Subsidiaries or any ERISA Affiliate or reasonably available thereto
from the sponsor or trustee of any such plan), and any recent
actuarial analysis prepared in connection with any of the foregoing;
(ii) all collective bargaining agreements or any other similar
agreement or arrangements covering the employees of Holdings, the
Borrower or any of their respective Subsidiaries (collectively, the
"Collective Bargaining Agreements");
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(iii) all agreements evidencing or relating to any Existing
Indebtedness in an aggregate amount in excess of $1,000,000
(collectively, the "Existing Indebtedness Agreements");
(iv) all agreements entered into by Holdings, the Borrower or any
of their respective Subsidiaries (x) governing the terms and relative
rights of such entity's capital stock or (y) with any shareholders
relating to such entity with respect to their capital stock
(collectively, the "Shareholders' Agreements");
(v) any material agreements (or the forms thereof) with members
of, or with respect to, the management of Holdings, the Borrower or
any of their respective Subsidiaries (collectively the "Management
Agreements");
(vi) any employment agreements (or the forms thereof together
with a list of employees who are parties to such agreements) entered
into by Holdings, the Borrower or any of their respective Subsidiaries
(collectively, the "Employment Agreements");
(vii) any tax sharing, tax allocation and other similar
agreement entered into by Holdings, the Borrower or any of their
respective Subsidiaries (collectively, as amended from time to time in
accordance with the requirements of this Agreement, the "Tax Sharing
Agreements"); and
(viii) any other Material Contracts;
all of which documents relating to the Plans, Collective Bargaining
Agreements, Existing Indebtedness Agreements, Shareholders' Agreements,
Management Agreements, Employment Agreements, Tax Sharing Agreements and
Material Contracts shall be in the form and substance reasonably
satisfactory to the Agent and shall, except as contemplated by the Credit
Documents or the Transaction Documents, be in full force and effect on the
Closing Date.
(p) SOLVENCY CERTIFICATE. On or prior to the Closing Date, the
Lenders shall have received a solvency certificate from the chief financial
officer of Holdings in form and substance reasonably acceptable to the
Agent stating the conclusions that, after giving effect to the Transaction
and the incurrence of all the financing contemplated thereby, the Borrower
and the Borrower and its Subsidiaries taken as a whole are not insolvent
and will not be rendered insolvent by the indebtedness incurred in
connection therewith, and will not be left with
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unreasonably small capital with which to engage in its or their businesses
and will not have incurred debts beyond its or their ability to pay such
debts as they mature.
(q) PROJECTIONS; ETC. On or prior to the Closing Date, the Lenders
shall have received detailed annual five-year financial projections
(monthly for the first year and annually thereafter) (including details as
to rental rates, utilization rates, fleet capital expenditures and cost per
unit assumptions and corresponding balance sheets, statements of operations
and cash flow and changes in shareholders' equity) of Holdings and its
Subsidiaries after giving effect to the Transaction in form and substance
reasonably satisfactory to the Agent (together with those projections
heretofore provided to the Lenders, the "Projections").
(r) INSURANCE POLICIES. On or prior to the Closing Date, the Agent
shall have received (i) evidence of insurance coverage (including, without
limitation, certificates of insurance) for the business and properties of
Holdings, the Borrower and their respective Subsidiaries showing compliance
with the requirements of Section 7.10 and (ii) endorsements, (x) naming the
Agent as loss payee with respect to all casualty coverages and containing
other customary loss payable provisions and (y) naming the Agent as
additional insured for all general liability coverages, all in form and
substance reasonably satisfactory to the Agent.
(s) CONSENT LETTER. On or prior to the Closing Date, the Agent shall
have received a letter from CT Corporation System, substantially in the
form of Exhibit I hereto, indicating its consent to its appointment by
Holdings, the Borrower, and each other Credit Party as its agent to receive
service of process as specified in Section 11.1 of this Credit Agreement.
(t) PAYMENT OF FEES. On the Closing Date, all costs, fees and
expenses, and all other compensation contemplated by this Credit Agreement
due to the Agent or the Lenders (including, without limitation, reasonable
legal fees and expenses) shall have been paid to the extent due.
(u) COLLATERAL EXAMINATION AND APPRAISAL. On or prior to the Closing
Date, the Lenders shall have received and be satisfied with the results of
(i) a collateral examination report concerning all accounts receivable of
the Borrower and its Subsidiaries and the Rental Equipment, all in form and
substance reasonably satisfactory to the Agent and (ii) a current complete
appraisal analysis (not on a desktop, but on a physical inspection basis)
by a third party and on a valuation basis acceptable to the Agent with
respect to the Rental Equipment.
(v) ENVIRONMENTAL REPORTS. On or prior to the Closing Date, the
Lenders shall have received and be satisfied with the results of a written
environmental and
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hazardous substance report by GaiaTech relating to Holdings, the Borrower
and their respective Subsidiaries (it being understood that a written
report of substantially the same scope and containing substantially the
same information as the report previously provided to the Agent orally by
GaiaTech shall be satisfactory to the Agent).
(w) MANAGEMENT. On the Closing Date, the identity of the Board of
Directors of Holdings and the management of Holdings and the Borrower shall
have been disclosed to the Lenders and they shall be satisfied therewith.
(x) SUBSIDIARIES GUARANTY. On the Closing Date, each of the
Wholly-Owned Domestic Subsidiaries of the Borrower (each a "Subsidiary
Guarantor" and collectively, the "Subsidiary Guarantors") shall have duly
authorized, executed and delivered a Subsidiary Guaranty in the form of
Exhibit J (as modified, amended or supplemented from time to time in
accordance with the terms thereof and hereof, the "Subsidiaries Guaranty")
and the Subsidiaries Guaranty shall be in full force and effect.
(y) PLEDGE AGREEMENT. On the Closing Date, Holdings, the Borrower and
each Subsidiary Guarantor shall have duly authorized, executed and
delivered a Pledge Agreement in the form of Exhibit K (as modified, amended
or supplemented from time to time, the "Pledge Agreement") and shall have
delivered all pledged securities (endorsed in blank in the case of
promissory notes or accompanied by executed and undated stock powers in the
case of capital stock) purported to be pledged thereunder to BTCC, as
pledgee thereunder for the benefit of the secured creditors described
therein.
(z) MORTGAGES; TITLE INSURANCE; SURVEYS; ETC. On the Closing Date,
the Collateral Agent shall have received:
(i) duly authorized, executed, acknowledged, and delivered
mortgages substantially in the form of Exhibit L (as modified,
supplemented or amended from time to time, the "Mortgages"), which
Mortgages shall cover such of the Real Property owned by Holdings, the
Borrower and/or their respective Subsidiaries as shall be designated
as such on Schedule X as a mortgaged property thereunder (each, a
"Mortgaged Property" and, collectively, the "Mortgaged Properties"),
together with evidence that counterparts of the Mortgages have been
delivered to the title insurance company insuring the Lien of the
Mortgages for recording in all places to the extent necessary or, in
the reasonable opinion of the Collateral Agent, desirable to
effectively create a valid and enforceable first priority Lien on each
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gaged Property in favor of the Collateral Agent (or such other trustee as
may be required or desired under local law) for the benefit of the Lenders;
(ii) an ALTA Lender's extended coverage policy of mortgage title
insurance covering the Mortgaged Properties, together with all
endorsements reasonably requested by the Collateral Agent relating
thereto issued by First American Title Insurance Company or such other
title insurers reasonably satisfactory to the Collateral Agent (the
"Mortgage Policies") in an amount satisfactory to the Agent and the
Required Lenders assuring the Collateral Agent that each of the
Mortgages on the Mortgaged Properties is a valid and enforceable first
priority mortgage lien on the respective Mortgaged Properties, free
and clear of all defects and encumbrances except Permitted
Encumbrances and such Mortgage Policies shall otherwise be in form and
substance reasonably satisfactory to the Agent and the Required
Lenders and shall include, as appropriate, an endorsement for future
advances under this Credit Agreement and the Notes and for any other
matter that the Collateral Agent in its discretion may reasonably
request, shall not include an exception for mechanics' liens, and
shall provide for affirmative insurance and such reinsurance as the
Collateral Agent in its discretion may reasonably request; and
(iii) a survey, in form and substance (and as of a date)
satisfactory to the Collateral Agent, of each of the Mortgaged
Properties, certified by a licensed professional surveyor reasonably
satisfactory to the Collateral Agent.
(aa) DEPOSIT ACCOUNT AGREEMENT. On the Closing Date, First Trust
National Association on behalf of the holders of Senior Secured Notes,
Mobile Field Office Company, the Unit Subsidiary, the Borrower and B of A,
as the Depositary, shall have entered into one or more Deposit Account
Agreements in the form of Exhibit M (as modified, amended or supplemented
from time to time in accordance with the terms thereof and hereof (the
"Deposit Account Agreement").
(bb) INTERCREDITOR AGREEMENT. On the Closing Date, the Agent on
behalf of the Lenders, First Trust National Association on behalf of the
holders of Senior Secured Notes and the Borrower shall have entered into an
Intercreditor Agreement in the form of Exhibit N (as modified, amended or
supplemented from time to time in accordance with the terms thereof and
hereof, the "Intercreditor Agreement"), which shall be in full force and
effect.
(cc) BAILEE AGREEMENT. On the Closing Date, the Agent on behalf of
the Lenders, First Trust National Association on behalf of the holders of
Senior Secured
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Notes, the Borrower and First Trust National Association, as Bailee, shall
have entered into a Bailee Agreement in the form of Exhibit O (as modified,
amended or supplemented from time to time in accordance with the terms
thereof and hereof, the "Bailee Agreement"), which shall be in full force
and effect.
(dd) CUSTODIAN AGREEMENT. On the Closing Date, the Agent on behalf
of the Lenders, First Trust National Association on behalf of the holders
of Senior Secured Notes, Mobile Field Office Company, the Borrower and
Maynard Becker and Paul Wohkittel, as the Custodians shall have entered
into a Custodian Agreement in the form of Exhibit P (as modified, amended
or supplemented from time to time in accordance with the terms thereof and
hereof, the "Custodian Agreement"), which shall be in full force and
effect.
(ee) CREATION OF UNIT SUBSIDIARY; TRANSFER OF ASSETS THERETO; MASTER
LEASE; ETC. On or prior to the Closing Date, the Borrower shall have
established the Unit Subsidiary as a direct Wholly-Owned Subsidiary of the
Borrower (all of the equity interests in which shall have been pledged, and
delivered for pledge, pursuant to the Pledge Agreement). The Governing
Documents of the Unit Subsidiary shall have been delivered to the Agent and
shall be satisfactory in all respects to the Agent and the Required
Lenders. On or prior to the Closing Date, the Borrower and its other
Subsidiaries shall have transferred all Non-Qualified Units then owned by
the Borrower and its other Subsidiaries to the Unit Subsidiary as a capital
contribution thereto. The Agent and the Lenders shall have received true
and correct copies of all documentation executed in connection with the
transfer of the Non-Qualified Units as required above. On the Closing
Date, the Borrower and the Unit Subsidiary shall have entered into a master
lease agreement (the "Master Lease Agreement"), pursuant to which the
Non-Qualified Units from time to time held by the Unit Subsidiary shall be
leased to the Borrower, all terms and conditions of which Master Lease
shall be satisfactory to the Agent and the Required Lenders. The Unit
Subsidiary may also, on or prior to the Closing Date, enter into a
management agreement with the Borrower (the "Unit Subsidiary Management
Agreement"), so long as all terms and conditions thereof are acceptable to
the Agent and the Required Lenders.
5.2 CONDITIONS TO EACH REVOLVING LOAN AND LETTER OF CREDIT. On the
date of the making of any Revolving Loan or the issuance of any Letter of
Credit, both at the time of making thereof and after giving effect thereto and
to the application of the proceeds therefrom, the following statements shall be
true to the satisfaction of the Agent (and each delivery or deemed delivery of
each Notice of Borrowing and a Letter of Credit Request, and the acceptance by
the Borrower of the proceeds of such Revolving Loans or issuance of such Letter
of Credit, shall constitute a representation and warranty by the Borrower that
on the date of such Revolving Loans or issuance of such Letter of Credit at the
time of
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making thereof and after giving effect thereto and to the application of the
proceeds therefrom, such statements are true):
(a) The representations and warranties contained in this Credit
Agreement and in each other Credit Document are true and correct in all
material respects on and as of the date of such Revolving Loans or issuance
of such Letter of Credit as though made on and as of such date, except to
the extent that such representations and warranties expressly relate to an
earlier date (in which case such representations and warranties shall have
been true and accurate on and as of such earlier date);
(b) No event has occurred and is continuing, or would result from such
Revolving Loans or the issuance of any Letter of Credit or the application
of the proceeds thereof, which would constitute a Default or an Event of
Default; and
(c) With respect to the issuance of any Letter of Credit, none of the
events set forth in Section 3.1 hereof has occurred and is continuing or
would result from the issuance of such Letter of Credit.
The acceptance of the benefits of each Credit Event shall constitute a
representation and warranty by each Credit Party to each of the Lenders that all
of the applicable conditions specified above exist as of the date of such Credit
Event. All of the certificates, legal opinions and other documents and papers
referred to in this Section 5, unless otherwise specified, shall be delivered to
the Agent at the location where the closing occurs for the account of each of
the Lenders and, except for the Revolving Notes, in sufficient counterparts or
copies for each of the Lenders and shall be in form and substance as specified
herein or otherwise satisfactory to the Agent.
ARTICLE 6.
REPRESENTATIONS AND WARRANTIES
To induce the Lenders to enter into this Credit Agreement and to make
Revolving Loans and issue and/or participate in the Letters of Credit provided
for herein, each of Holdings and the Borrower makes the following
representations, warranties and agreements, as to itself and as to each of its
respective Subsidiaries, all of which shall survive the execution and delivery
of this Credit Agreement, the making of the Revolving Loans and the issuance of
the Letters of Credit (with the occurrence of each Credit Event being deemed to
constitute a representation and warranty that the matters specified in this
Article 6 are true and correct in all material respects on and as of the date of
each such Credit Event, unless stated to relate to a specific earlier date, in
which case they will be true and correct as of such earlier date):
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6.1 CORPORATE STATUS. Each Credit Party (i) is a duly organized and
validly existing corporation or limited liability company in good standing under
the laws of the jurisdiction of its organization and has the corporate or
limited liability company power and authority to own its property and assets and
to transact the business in which it is engaged and presently proposes to engage
and (ii) has duly qualified and is authorized to do business and is in good
standing in all jurisdictions where it is required to be so qualified and where
the failure to be so qualified would be reasonably likely to have a Material
Adverse Effect.
6.2 CORPORATE POWER AND AUTHORITY. Each Credit Party has the
corporate power and authority to execute, deliver and carry out the terms and
provisions of the Credit Documents to which it is a party and has taken all
necessary corporate action to authorize the execution, delivery and performance
of the Credit Documents to which it is a party. Each Credit Party has duly
executed and delivered each Credit Document to which it is a party and each such
Credit Document constitutes the legal, valid and binding obligation of such
Credit Party enforceable in accordance with its terms, except that such
enforceability may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws of general application relating to
or affecting the rights and remedies of creditors and general equitable
principles (regardless of whether enforcement is sought in equity or at law) and
(ii) federal securities or other laws or regulations or public policy insofar as
they may restrict the enforceability of rights to indemnification.
6.3 NO VIOLATION. Neither the execution, delivery and performance by
any Credit Party of the Credit Documents to which it is a party nor compliance
with the terms and provisions thereof, nor the consummation of the transactions
contemplated therein (i) will contravene any applicable provision of any law,
statute, rule, regulation, order, writ, injunction or decree of any court or
governmental instrumentality, (ii) will conflict or be inconsistent with or
violate or result in any breach of any of the terms, covenants, conditions or
provisions of, or constitute a default under, or (other than pursuant to the
Collateral Documents) result in the creation or imposition of (or the obligation
to create or impose) any Lien upon any of the property or assets of such Credit
Party or any of its Subsidiaries pursuant to the terms of any indenture,
mortgage, deed of trust, agreement or other instrument to which such Credit
Party or any of its Subsidiaries is a party or by which it or any of its
property or assets are bound or to which it may be subject or (iii) will violate
any provision of any Governing Document of Holdings, the Borrower or any of
their respective Subsidiaries, except, in the case of clauses (i) and (ii), any
contraventions, conflicts, inconsistencies, breaches and defaults which are not
reasonably likely to adversely affect any Lender or to have a Material Adverse
Effect. In no event shall any Credit Event hereunder conflict or be
inconsistent with or violate or result in any breach of any of the terms,
covenants, conditions or provisions of, or constitute a default under, the
Senior Unsecured Notes Indenture.
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6.4 LITIGATION. Except for the Disclosed Litigation, there are no
actions, suits or proceedings pending or threatened with respect to (i) any
Credit Document or (ii) Holdings, the Borrower or any of their respective
Subsidiaries that, after giving effect to expected insurance proceeds and
indemnity payments, are reasonably likely to have a Material Adverse Effect.
6.5 USE OF PROCEEDS. (a) The proceeds of all Revolving Loans shall be
utilized to (i) effect the Transaction, (ii) to pay certain fees and expenses
relating thereto and (iii) for general corporate and working capital purposes of
the Borrower and its Subsidiaries, including acquisitions permitted hereunder;
PROVIDED that Outstandings on the Closing Date (and after giving effect to the
consummation of the Transaction and all Credit Events on such date) shall not
exceed the lesser of (x) $135 million and (y) the Borrowing Base on the Closing
Date minus $40 million.
(b) No part of the proceeds of any Revolving Loan will be used to
purchase or carry any Margin Stock or to extend credit for the purpose of
purchasing or carrying any Margin Stock. Neither the making of any Revolving
Loan nor the use of the proceeds thereof nor the occurrence of any other Credit
Event will violate or be inconsistent with the provisions of Regulations G, T,
U, or X of the Board of Governors of the Federal Reserve System.
6.6 GOVERNMENTAL APPROVALS. Except for the filing of the Mortgages
and the filing of the financing statements and continuation statements and for
any other filings, registrations or recordings required under the Collateral
Documents or to terminate the security interests and Liens of the Congress
Financial Corporation, as Agent, and the lenders under the Existing Credit
Agreement (all of which have been made or will be made as required), no order,
consent, approval, license, authorization, or validation of, or filing,
recording or registration with, or exemption by, any foreign or domestic
governmental or public body or authority, or any subdivision thereof, is
required to authorize or is required in connection with (i) the execution,
delivery and performance by the Credit Parties of the Credit Documents or (ii)
the legality, validity, binding effect or enforceability of any Credit Document
as against each Credit Party thereto.
6.7 INVESTMENT COMPANY ACT. None of Holdings, the Borrower or any of
their respective Subsidiaries is registered, or required to register, as an
"investment company" or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended.
6.8 PUBLIC UTILITY HOLDING COMPANY ACT. None of Holdings, the
Borrower or any of their respective Subsidiaries is a "holding company", or a
"subsidiary company" of a "holding company", or an "affiliate" of a "holding
company" or of a "subsidiary
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company" of a "holding company", within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
6.9 TRUE AND COMPLETE DISCLOSURE. All factual information (taken as a
whole) heretofore or contemporaneously furnished by or on behalf of Holdings or
the Borrower in writing to the Agent or any Lender for purposes of or in
connection with this Credit Agreement or any other Credit Document or any
transaction contemplated herein or therein does not, and all other such factual
information (taken as a whole) hereafter furnished by or on behalf of Holdings
or the Borrower in writing to the Agent or any Lender will not, as of the date
as of which such information is dated or certified, contain any untrue statement
of a material fact or omit to state any material fact necessary to make such
information (taken as a whole) not misleading as of such time, in each case in
light of the circumstances under which such information was provided, it being
understood and agreed that for purposes of this Section 6.9, such factual
information shall not include the Projections and PRO FORMA financial
information.
6.10 FINANCIAL CONDITION; FINANCIAL STATEMENTS. (a) On and as of the
Closing Date on a PRO FORMA basis after giving effect to the Transaction and all
Indebtedness incurred, and to be incurred, and Liens created and to be created,
by each Credit Party in connection with this Credit Agreement and by the
Borrower in connection with the Senior Unsecured Notes, (x) the sum of the
assets, at a fair valuation, of the Borrower and its Subsidiaries, taken as a
whole, will exceed their debts, (y) the Borrower and its Subsidiaries, taken as
a whole, will not have incurred nor intend to, or believe that they will, incur
debts beyond their ability to pay such debts as such debts mature and (z) the
Borrower does not have unreasonably small capital with which to conduct its
businesses. For purposes of this Section 6.10(a), "debt" means any reasonably
expected liability on a claim, and "claim" means (i) right to payment whether or
not such a right is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured
or unsecured; or (ii) right to an equitable remedy for breach of performance if
such breach gives rise to a payment, whether or not such right to an equitable
remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed,
undisputed, secured or unsecured.
(b) The Borrower has furnished to the Lenders the following financial
statements, which have been prepared in accordance with GAAP (except for the
valuation of goodwill and, in the case of the unaudited financial statements
referred to below, for the omission of footnotes and ordinary year end
adjustments) consistently applied throughout the periods involved: (i)
Holdings' consolidated balance sheet as of, and statements of operations,
shareholder's equity and cash flows and consolidating schedules for the fiscal
years ended December 31, 1996, December 31, 1995 and December 31, 1994 audited
by independent certified public accountants, and accompanied by an unqualified
opinion thereof and (ii) unaudited consolidated balance sheets of Holdings and
the Borrower as of, and
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unaudited statements of operations, shareholder's equity and cash flows the
three months ended March 31, 1997 or such other later interim period as may be
available prior to the Closing Date. The PRO FORMA consolidated balance sheet
of the Borrower as of March 31, 1997, a copy of which has heretofore been
furnished to each Lender, presents a good faith estimate of the consolidated PRO
FORMA financial condition of Holdings and its Subsidiaries and the Borrower and
its Subsidiaries (after giving effect to the Transaction and the related
financing thereof) as at the date thereof). Since December 31, 1996, nothing
has occurred which has had or would be reasonably likely to result in a Material
Adverse Effect.
6.11 LOCATIONS OF OFFICES, RECORDS, INVENTORY AND RENTAL EQUIPMENT.
The address of the principal place of business and chief executive office of
each Credit Party as of the date hereof and as of the Closing Date is set forth
on Schedule IV. The books and records of each Credit Party, and all its chattel
paper and records of Accounts and Unit Certificates, are, as of the Closing
Date, maintained exclusively at the respective locations listed on Schedule IV.
As of the Closing Date, there is no jurisdiction (or, with respect to the Rental
Equipment, State) in which any Credit Party has any chattel paper, records of
Account, Rental Equipment (except for Rental Equipment in transit) or Unit
Certificates other than those jurisdictions (or States) identified on Schedule
IV. Schedule IV also contains a complete list of the legal names and addresses
of each facility or warehouse at which Rental Equipment is stored as of the date
hereof and as of the Closing Date. None of the receipts received by the
Borrower from any warehouseman states that the goods covered thereby are to be
delivered to bearer or to the order of a named person other than the Borrower or
to a named person and such named person's assigns.
6.12 FICTITIOUS BUSINESS NAMES. Except as set forth in Schedule V,
none of Holdings, the Borrower or any of their respective Subsidiaries has used
any corporate or fictitious name since May 1, 1992, other than the corporate
name shown on its respective Governing Documents.
6.13 SECURITY INTERESTS. Subject to Sections 11.19 and 11.20, on and
after the Closing Date, each of the Collateral Documents create, as security for
the Obligations, a valid and enforceable perfected security interest in and Lien
on all of the Collateral, superior to and prior to the rights of all third
persons and subject to no other Liens other than Liens (i) securing the Senior
Secured Notes which are subordinate to all Liens created by or pursuant to the
Credit Documents, other than as otherwise permitted under the Collateral
Documents and (ii) permitted by Section 8.2. At all times on or after the
Closing Date, the respective grantor under each Collateral Document shall have
good and marketable title to all the Collateral subject thereto free and clear
of all Liens other than Liens permitted under Section 8.2. No filings or
recordings are required in order to perfect the security interests created under
any Collateral Document except for filings or recordings required pursuant to
the terms of any such Collateral Document.
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6.14 TAX RETURNS AND PAYMENTS. Each of Holdings, the Borrower and
each of their respective Subsidiaries has timely filed or caused to be timely
filed with the appropriate taxing authority, all federal returns and all other
material returns, statements, forms and reports for taxes required to be filed
by or with respect to the income, properties or operations of Holdings, the
Borrower and/or any of their respective Subsidiaries. Such returns accurately
reflect all liability for taxes of Holdings, the Borrower and their respective
Subsidiaries for the periods covered thereby. Each of Holdings, the Borrower
and each of their respective Subsidiaries has paid all material taxes payable by
it other than taxes which are not due, and other than those contested in good
faith and for which adequate reserves have been established in accordance with
GAAP. Except as set forth on Schedule VI, there is no material action, suit,
proceeding, investigation, audit or claim now pending or, to the knowledge of
Holdings or the Borrower, threatened by any authority regarding any taxes
relating to Holdings, the Borrower or any of their respective Subsidiaries. As
of the Closing Date, none of Holdings, the Borrower or any of their respective
Subsidiaries has entered into an agreement or waiver or been requested to enter
into an agreement or waiver extending any statute of limitations relating to the
payment or collection of material taxes of Holdings, the Borrower or any of
their respective Subsidiaries, or is aware of any circumstances that would cause
the taxable years or other taxable periods of Holdings, the Borrower or any of
their respective Subsidiaries not to be subject to the normally applicable
statute of limitations with respect to any material taxes.
6.15 COMPLIANCE WITH ERISA. (i) Schedule VII identifies each Plan;
each Plan (and each related trust, insurance contract or fund) is in substantial
compliance with its terms and with all applicable laws, including, without
limitation, ERISA and the Code; each Plan (and each related trust, if any) which
is intended to be qualified under Section 401(a) of the Code has received a
determination letter from the Internal Revenue Service to the effect that it
meets the requirements of Sections 401(a) and 501(a) of the Code; no Reportable
Event has occurred; no Plan which is a Multiemployer Plan is insolvent or in
reorganization; no Plan subject to Title IV of ERISA has an Unfunded Current
Liability which, when added to the aggregate amount of Unfunded Current
Liabilities with respect to all other Plans subject to Title IV of ERISA,
exceeds $1,000,000; no Plan which is subject to Section 412 of the Code or
Section 302 of ERISA has an accumulated funding deficiency, within the meaning
of such sections of the Code or ERISA, or has applied for or received a waiver
of an accumulated funding deficiency or an extension of any amortization period,
within the meaning of Section 412 of the Code or Section 303 or 304 of ERISA;
all contributions required to be made with respect to a Plan have been timely
made; neither the Borrower nor any Subsidiary of the Borrower nor any ERISA
Affiliate has incurred any material liability (including any indirect,
contingent or secondary liability) to or on account of a Plan pursuant to
Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of
ERISA or Section 401(a)(29), 4971 or 4975 of the Code or expects to incur any
such liability under any of the foregoing sections with respect to any Plan; no
condition exists which presents a material risk to the Borrower or any
Subsidiary
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of the Borrower or any ERISA Affiliate of incurring a liability to or on account
of a Plan pursuant to the foregoing provisions of ERISA and the Code; no
proceedings have been instituted to terminate or appoint a trustee to administer
any Plan which is subject to Title IV of ERISA; no action, suit, proceeding,
hearing, audit or investigation with respect to the administration, operation or
the investment of assets of any Plan (other than routine claims for benefits) is
pending, expected or, to the best knowledge of the Borrower, any Subsidiary of
the Borrower or any ERISA Affiliate, threatened; using actuarial assumptions and
computation methods consistent with Part 1 of subtitle E of Title IV of ERISA,
the aggregate liabilities of the Borrower and its Subsidiaries and its ERISA
Affiliates to all Plans which are multiemployer plans (as defined in Section
4001(a)(3) of ERISA) in the event of a complete withdrawal therefrom, as of the
close of the most recent fiscal year of each such Plan ended prior to the date
of the most recent Credit Event, would not exceed $1,000,000; each group health
plan (as defined in Section 607(1) of ERISA or Section 4980B(g)(2) of the Code)
which covers or has covered employees or former employees of the Borrower, any
Subsidiary of the Borrower, or any ERISA Affiliate has at all times been
operated in compliance with the provisions of Part 6 of subtitle B of Title I of
ERISA and Section 4980B of the Code; no lien imposed under the Code or ERISA on
the assets of the Borrower or any Subsidiary of the Borrower or any ERISA
Affiliate exists or is likely to arise on account of any Plan and the Borrower
and its Subsidiaries do not maintain or contribute to any employee welfare
benefit plan (as defined in Section 3(1) of ERISA) which provides benefits to
retired employees or other former employees (other than as required by Section
601 of ERISA or any other applicable continuation of coverage laws or
regulations) or any Plan the obligations with respect to which could reasonably
be expected to have a Material Adverse Effect on the ability of the Borrower to
perform its obligations under this Agreement.
(ii) Each Foreign Pension Plan has been maintained in substantial
compliance with its terms and with the requirements of any and all applicable
laws, statutes, rules, regulations and orders and has been maintained, where
required, in good standing with applicable regulatory authorities. All
contributions required to be made with respect to a Foreign Pension Plan have
been timely made. Neither the Borrower nor any of its Subsidiaries has incurred
any obligation in connection with the termination of or withdrawal from any
Foreign Pension Plan. The present value of the accrued benefit liabilities
(whether or not vested) under each Foreign Pension Plan, determined as of the
end of the Borrower's most recently ended fiscal year on the basis of actuarial
assumptions, each of which is reasonable, did not exceed the current value of
the assets of such Foreign Pension Plan allocable to such benefit liabilities.
6.16 SUBSIDIARIES. Schedule VIII hereto lists each Subsidiary of the
Borrower, and the direct and indirect ownership interest of the Borrower
therein, in each case existing on the Closing Date. Holdings is the record and
beneficial owner
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of 100% of the capital stock of the Borrower, and the Borrower is the record and
beneficial owner of 100% of the capital stock of the Unit Subsidiary. On the
Closing Date, Holdings has no significant assets or liabilities other than the
Holding Co. Notes and its ownership of the capital stock of the Borrower and any
liabilities directly related thereto, and on such date Holdings owns no other
capital stock of any other Person.
6.17 INTELLECTUAL PROPERTY; ETC. Holdings, the Borrower and each of
their respective Subsidiaries have obtained all material patents, trademarks,
servicemarks, trade names, copyrights, licenses and other rights, free from
burdensome restrictions, that are necessary for the operation of their
respective businesses as presently conducted and as proposed to be conducted.
6.18 COMPLIANCE WITH STATUTES, ETC. (a) Each of Holdings, the
Borrower and their respective Subsidiaries is in compliance with all applicable
statutes, regulations and orders of, and all applicable restrictions imposed by,
all governmental bodies, domestic or foreign, in respect of the conduct of its
business and the ownership of its property, except such instances of
noncompliance as are not reasonably likely to, in the aggregate, have a Material
Adverse Effect.
(b) Each of Holdings, the Borrower and their respective Subsidiaries
is in compliance with all applicable Environmental Laws governing its business
for which failure to comply is likely to have a Material Adverse Effect and none
of Holdings, the Borrower or any of their respective Subsidiaries is liable for
any material penalties, fines or forfeitures for failure to comply with such
Environmental Laws in the manner set forth above. All licenses, permits,
registrations or approvals required for the business of Holdings, the Borrower
and each of their respective Subsidiaries, as conducted as of the Closing Date,
under any Environmental Law have been secured and each of Holdings, the Borrower
and their respective Subsidiaries is in substantial compliance therewith, except
such licenses, permits, registrations or approvals, the failure to secure or to
comply therewith is not reasonably likely to have a Material Adverse Effect.
None of Holdings, the Borrower or any of their respective Subsidiaries is in any
material respect in noncompliance with, breach of or default under any
applicable writ, order, judgment, injunction, or decree to which Holdings, the
Borrower or any such Subsidiary is a party and which would materially and
adversely affect the ability of Holdings, the Borrower or any such Subsidiary to
operate its business or other Real Property and no event has occurred and is
continuing which, with the passage of time or the giving of notice or both,
would constitute material noncompliance, breach of or default thereunder, except
in each such case, such noncompliance, breaches or defaults as are not
reasonably likely to, in the aggregate, have a Material Adverse Effect. There
are as of the Closing Date no Environmental Claims pending or, to the best
knowledge of the Borrower, threatened, which question the validity, term or
entitlement of Holdings, the Borrower or any of their respective Subsidiaries
for any permit, license, order or registration required for the operation of any
facility which Holdings, the Borrower or any of their respective Subsidiaries
currently operates. There
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are no facts, circumstances, conditions or occurrences concerning the business
or operations of Holdings, the Borrower or any of their respective Subsidiaries,
or any Real Property at any time owned or operated by Holdings, the Borrower or
any of their respective Subsidiaries, or, to the best of their knowledge, on any
property adjoining or adjacent to any such Real Property, that are reasonably
expected (i) to form the basis of a material Environmental Claim against
Holdings, the Borrower or any of their respective Subsidiaries or any currently
owned Real Property of Holdings, the Borrower or any of their respective
Subsidiaries, or (ii) to cause such currently owned Real Property to be subject
to any material restrictions on the ownership, occupancy, use or transferability
of such Real Property under any Environmental Law, except in each such case,
such environmental claims or restrictions that individually, or in the
aggregate, are not reasonably likely to have a Material Adverse Effect.
(c) Hazardous Materials have not at any time been (i) generated, used,
treated or stored on, or transported to or from, by Holdings, the Borrower or
any of their respective Subsidiaries, any Real Property of Holdings, the
Borrower or any of their respective Subsidiaries or (ii) released or disposed of
on any such Real Property, except Hazardous Materials generated, used, treated
or stored on, or transported to or from, any Real Property of Holdings, the
Borrower or any of their respective Subsidiaries in the ordinary course of
business and in material compliance with Environmental Laws ("Permitted
Materials").
6.19 PROPERTIES. Each of Holdings, the Borrower and their respective
Subsidiaries has good title to all material properties (excluding intellectual
property which is covered in Section 6.17) owned by it free and clear of all
Liens, other than as permitted by Section 8.2. Schedule X contains a true and
complete list of each Real Property owned and leased by Holdings, the Borrower
or their respective Subsidiaries on the Closing Date and the type of interest
therein held by Holdings, the Borrower or such Subsidiary.
6.20 LABOR RELATIONS; COLLECTIVE BARGAINING AGREEMENTS. (a) Set forth
on Schedule XI hereto is a list (including dates of termination) of all
Collective Bargaining Agreements in effect on the Closing Date.
(b) None of Holdings, the Borrower nor any of their respective
Subsidiaries is engaged in any unfair labor practice that is likely to have a
Material Adverse Effect. There is (i) no significant unfair labor practice
complaint pending against Holdings, the Borrower or any of their respective
Subsidiaries or, to the best knowledge of the Borrower, threatened against any
of them, before the National Labor Relations Board, and no significant grievance
or significant arbitration proceeding arising out of or under any collective
bargaining agreement is pending on the Closing Date against Holdings, the
Borrower or any of their respective Subsidiaries or, to the best knowledge of
the Borrower, threatened against any of them, (ii) no significant strike, labor
dispute, slowdown or
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stoppage is pending against Holdings, the Borrower or any of their respective
Subsidiaries or, to the best knowledge of the Borrower, threatened against
Holdings, the Borrower or any of their respective Subsidiaries, except (with
respect to any matter specified in clause (i) and (ii) above, either
individually or in the aggregate) such as is not reasonably likely to have a
Material Adverse Effect.
6.21 RESTRICTIONS ON SUBSIDIARIES. Except for restrictions contained
in the Credit Documents, the Senior Secured Notes Indenture, the Holding Co.
Notes Indenture, the Senior Unsecured Note Documents and in agreements with
respect to the Existing Indebtedness, as of the Closing Date there are no
contractual or consensual restrictions on the Borrower or any of its
Subsidiaries which prohibit or otherwise restrict (i) the transfer of cash or
other assets (x) between the Borrower and any of its Subsidiaries or (y) between
any Subsidiaries of the Borrower or (ii) the ability of the Borrower or any of
its Subsidiaries to grant security interests to the Lenders in the Collateral.
6.22 STATUS OF ACCOUNTS. Each Account is based on an actual and bona
fide lease or sale and delivery of goods (including Rental Equipment) or
rendition of services to customers, made by the Borrower and its Subsidiaries in
the ordinary course of its business; the goods, Inventory and Rental Equipment
being sold or leased and the Accounts created are its property and are not and
shall not be subject to any Lien, consignment arrangement, encumbrance, security
interest or financing statement whatsoever other than the Liens created pursuant
to the Collateral Documents and Permitted Liens, and, except as otherwise
reported or reserved against on the Borrower's or its Subsidiaries books and
records or to the extent excluded from the Borrowing Base, the Borrower's and
its Subsidiaries' customers have accepted the goods or services, owe and are
obligated to pay the full amounts stated in the invoices according to their
terms, without any dispute, offset, defense, or counterclaim.
6.23 MATERIAL CONTRACTS. Neither Holdings, the Borrower, nor any of
their respective Subsidiaries is in breach of or in default under any Material
Contract.
6.24 EXISTING INDEBTEDNESS AND OPERATING LEASES. Schedule III sets
forth a true and complete list of all Existing Indebtedness (excluding any
existing Indebtedness with an aggregate principal amount then outstanding of
less than $1,000,000, so long as the aggregate principal amount of outstanding
Existing Indebtedness excluded pursuant to this parenthetical does not exceed
$4,000,000) and Operating Leases of Holdings, the Borrower and their respective
Subsidiaries as of the Closing Date, in each case showing the aggregate
principal amount thereof and the name of the respective borrower and any other
entity which directly or indirectly guaranteed such debt.
6.25 REPRESENTATIONS AND WARRANTIES IN RECAPITALIZATION AGREEMENT.
All representations and warranties by Holdings, the Borrower and their
respective Subsidiaries
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set forth in the Recapitalization Agreement were true and correct in all
material respects at the time as of which such representations and warranties
were made (or deemed made) and shall be true and correct in all material
respects as of the Closing Date as if such representations or warranties were
made on and as of such date, unless stated to relate to a specific earlier date,
in which case such representations or warranties shall be true and correct in
all material respects as of such earlier date.
6.26 GUARANTEE OF SENIOR SECURED NOTES. No Subsidiary of the Borrower
has guaranteed, or furnished security for, the Senior Secured Notes other than
the Subsidiary Guarantors.
6.27 CUSTODIANS. Each of the Custodians under the Custodian Agreement
is an employee of the Borrower in good standing.
ARTICLE 7.
AFFIRMATIVE COVENANTS
Subject to Sections 11.19 and 11.20, each of Holdings and the Borrower
hereby covenants and agrees that on the Closing Date and thereafter, for so long
as this Credit Agreement is in effect and until the Total Commitments have
terminated, no Letters of Credit or Revolving Notes are outstanding and the
Revolving Loans and Letter of Credit Obligations, together with interest, Fees,
Expenses and all other Obligations then due and payable, are paid in full:
7.1 FINANCIAL INFORMATION. The Borrower shall furnish to the Lenders
the following information within the following time periods:
(a) as soon as available and in any event within 90 days (or 120 days
in the case of the item described in clause (B) below only) after the end
of each fiscal year of Holdings or the Borrower, as applicable, (i) audited
Financial Statements as of the close of such fiscal year and for such
fiscal year, together with a comparison to the Financial Statements for the
prior year, in each case accompanied by (A) a report thereon of the
Auditors thereof unqualified as to scope, which report shall state that
such consolidated financial statements fairly present the consolidated
financial position of Holdings and its consolidated Subsidiaries and the
Borrower and its consolidated Subsidiaries, as applicable, as at the date
indicated and the results of their operations and cash flows for the
periods indicated in conformity with GAAP (except as otherwise stated
therein) and that the examination by such Auditors has been made in
accordance with generally accepted auditing standards, (B) such Auditors'
management letter to Holdings or the Borrower, as the case may
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be, (C) a written statement signed by the Auditors stating that in the
course of the annual audit of the business of Holdings and its consolidated
Subsidiaries or the Borrower and its consolidated Subsidiaries, as
applicable, which audit was conducted by the Auditors in accordance with
generally accepted auditing standards, such Auditors (x) have not obtained
any knowledge of the existence of any Default or Event of Default under any
provision of Sections 8.4, 8.9, 8.10, 8.11, and 8.18 of this Credit
Agreement, or, if such Auditors shall have obtained from such examination
any such knowledge, they shall disclose in such written statement the
existence of the Default or Event of Default and the nature thereof, it
being understood that such Auditors shall not be required hereunder to
perform any special audit procedures and shall have no liability, directly
or indirectly, to anyone for failure to obtain knowledge of any such
Default or Event of Default and (ii) in the case of the Financial
Statements of Holdings, a compliance certificate signed by its chief
executive officer, chief financial officer, treasurer or controller
substantially in the form of Exhibit Q along with a schedule in form
satisfactory to the Agent of the calculations used in determining, as of
the end of such fiscal year, whether the Borrower was in compliance with
the covenants set forth in Articles 7 and 8 of this Credit Agreement for
such year. To the extent that Holdings' or the Borrower's, as the case may
be, annual report on Form 10-K contains any of the foregoing items, the
Lenders will accept Holdings' or the Borrower's, as the case may be, report
on Form 10-K in lieu of such items;
(b) as soon as available and in any event within 45 days after the end
of each fiscal quarter of Holdings or the Borrower, as applicable, (except
the last fiscal quarter of any fiscal year) (i) Financial Statements as at
the end of such period and for the fiscal year to date, together with a
comparison to the Financial Statements for the same periods in the prior
year, all in reasonable detail and duly certified by the chief executive
officer, chief financial officer, treasurer or controller of Holdings or
the Borrower, as applicable, as having been prepared substantially in
accordance with GAAP (subject to the absence of footnotes and audit and
normal year-end adjustments) and (ii) in the case of the Financial
Statements of Holdings, a compliance certificate signed by its chief
executive officer, chief financial officer, treasurer or controller
substantially in the form of Exhibit Q along with a schedule in form
satisfactory to the Agent of the calculations used in determining, as of
the end of such fiscal quarter, whether the Borrower was in compliance with
the covenants set forth in Articles 7 and 8 of this Credit Agreement for
such quarter. To the extent that Holdings' or the Borrower's, as the case
may be, quarterly report on Form 10-Q contains any of the foregoing items,
the Lenders will accept Holdings' or the Borrower's, as the case may be,
report on Form 10-Q in lieu of such items;
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(c) as soon as available and in any event within 30 days after the end
of each month (except the last month of any fiscal quarter, with respect to
which such reports shall be delivered within 45 days after the end of the
month (other than the last quarter of the fiscal year, with respect to
which such reports shall be delivered within 90 days after the end of the
month)), a consolidated balance sheet for the Borrower and its consolidated
Subsidiaries as at the end of such month and consolidated statements of
operations and cash flows for such month and for the fiscal year to date,
together with a comparison to the consolidated balance sheet, statement of
operations and statement of cash flows for the same periods in the prior
year, all in reasonable detail and duly certified (subject to the addition
of footnotes and audit and normal year-end adjustments) by the chief
executive officer, chief financial officer, treasurer or controller of the
Borrower as having been prepared substantially in accordance with GAAP;
(d) not later than 60 days after the commencement of each fiscal year
commencing with the fiscal year ending December 31, 1997, monthly
consolidated projections (in substantially the same form as the
Projections) for the Borrower and its Subsidiaries for the following fiscal
year and annual projections for each subsequent fiscal year through and
including the fiscal year in which the Expiration Date occurs;
(e) upon request by the Agent at any time if a Default or Event of
Default shall exist and in any event not later than 12:00 Noon New York
time within 35 days after the last Business Day of each month (or more
frequently if requested by the Agent in the exercise of its Permitted
Discretion), a Borrowing Base certificate (the "Borrowing Base
Certificate") in substantially the form of Exhibit R, duly completed, as of
the last day of such month (or such other date as the Agent may specify in
such request) and certified by the Borrower's chief executive officer,
chief financial officer, treasurer or controller and subject only to
adjustment upon completion of the normal year-end audit. In addition, each
Borrowing Base Certificate shall have attached to it such additional
schedules and/or other information, including monthly aging reports, as the
Agent may reasonably request;
(f) as soon as possible after the end of each calendar month, but in
any event not later than 30 days after the end of such month (or more
frequently as the Agent may reasonably request), (A) a certificate setting
forth the Average Rental Rate (excluding Sales-Type Leases), (B) a
certificate setting forth the Average Lease Term and the detail of the
calculation thereof as of the last day of the immediately preceding fiscal
month, (C) a listing of each Lease which has been terminated or as to which
a notice of termination has been received from or sent to the account
debtor and each new Lease entered into by Borrower or any of its
Subsidiaries during the immediately preceding month setting forth on such
listing the name of
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each such account debtor, the date of each such Lease, the amount of the
contractual monthly rental and the fixed minimum term thereof, (D) a
listing of the units of Rental Equipment at the branch office locations of
Borrower and each of its Subsidiaries, indicating the units of Rental
Equipment at each branch office location as of the end of the immediately
preceding month, (E) the Utilization as of the end of the immediately
preceding month and the average Utilization for the 13 months then last
ended (calculated by taking the average of the Utilization for each of such
13 months then last ended), and (F) the average age of all Rental Equipment
not constituting storage units (taken as a whole) and the average age of
all Rental Equipment constituting storage units (taken as a whole), in each
case as of the end of the immediately preceding month;
(g) as soon as possible after the end of the second and fourth fiscal
quarters of the Borrower, but in any event not later than the 30th day
following the end of the second and fourth fiscal quarters of the Borrower,
a listing of each Lease (by account debtor name, the number of units of
Rental Equipment and location) in effect as of the last day of the
preceding fiscal quarter indicating the number of units of Rental Equipment
subject to such Lease and the location of such Rental Equipment;
(h) promptly and in any event within five Business Days after becoming
aware of the occurrence of a Default or Event of Default, a certificate of
the chief executive officer or chief financial officer of the Borrower
specifying the nature thereof and the Borrower's proposed response thereto,
each in reasonable detail;
(i) within 30 days after the end of each month (except the last month
of any fiscal quarter, with respect to which such reports shall be
delivered within 45 days after the end of the month (other than the last
quarter of the fiscal year with respect to which such reports shall be
delivered within 90 days after the end of the month)), a comparison of
consolidated actual results of operations, cash flow and Capital
Expenditures for the Borrower and their respective Subsidiaries for such
month and for the period from the beginning of the current fiscal year
through the end of such month (i) with amounts projected for such month and
for the period from the beginning of the current fiscal year through the
end of such month pursuant to the projections delivered pursuant to Section
5.1(q) or, in the case of any fiscal year commencing after the delivery of
projections pursuant to Section 7.1(d) above, the most recent projections
delivered pursuant to Section 7.1(d);
(j) promptly upon the earlier of the mailing or filing thereof, copies
of all 10-Ks, 10-Qs, 8-Ks, proxy statements, annual reports, quarterly
reports, registration statements and any other filings or other
communications made by either of Holdings or the Borrower to holders of its
publicly traded securities or the
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Securities Exchange Commission from time to time pursuant to the Securities
Exchange Act of 1934, as amended, or the Securities Act of 1933, as
amended;
(k) promptly and in any event after becoming aware of the occurrence
of any of the following events the Borrower will provide the Agent with
notice of such event (and copies of relevant documents if requested):
(i) any Material Contract of Holdings, the Borrower or any of
their respective Subsidiaries is terminated or amended or any new
Material Contract is entered into which is reasonably likely to have
an adverse effect on the Lenders (in which event the Borrower shall
provide the Agent with a copy of such Material Contract); or
(ii) any of the material terms (other than price) upon which
material suppliers of the Borrower or any of its Subsidiaries do
business with the Borrower or such Subsidiary are changed or amended
the results of which are reasonably likely to have an adverse effect
on the Lenders; or
(iii) any order, judgment or decree in excess of $1,000,000
(after reasonably expected insurance and indemnity recovery) shall
have been entered against Holdings, the Borrower or any of their
respective Subsidiaries or any of their respective properties or
assets; or
(iv) any notification of violation of any Requirement of Law
shall have been received by Holdings, the Borrower or any of their
respective Subsidiaries from any Governmental Authority the results of
which are likely to have a Material Adverse Effect;
(l) within 60 days after the end of each fiscal year of Holdings an
update on a desk top basis of the appraisal delivered pursuant to Section
5.1(u)(ii) by a third party and on a valuation basis acceptable to the
Agent, PROVIDED that, (I) if a Default or an Event of Default has occurred
and is continuing, or (II) (x) in the event that the gross book value of
Rental Equipment constituting storage units is less than 10% of the gross
book value of all Rental Equipment at the time the certificate required by
clause (f) above is required to be delivered, (A) the average age of all
Rental Equipment not constituting storage units (taken as a whole) shall,
at such time, have increased, or (B) the Average Rental Rate for all Rental
Equipment not constituting storage units shall, at such time, have
decreased and (y) in the event that the gross book value of Rental
Equipment constituting storage units is greater than or equal to 10% of the
gross book value of all Rental Equipment at such time, (i) the average age
of (1) all Rental Equipment constituting storage units (taken as a whole)
or (2) all Rental Equipment not constituting storage units (taken
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as a whole), shall, at such time, have increased or (ii) the Average Rental
Rate of (1) all Rental Equipment constituting storage units or (2) all
Rental Equipment not constituting storage equipment shall, at such time,
have decreased, in the case of any of clauses (x) or (y), more than 20%
from levels reported in or as of the last appraisal, the Agent shall be
permitted to request an update on a physical inspection basis at any time;
(m) at the request of the Agent (but, so long as no Default or Event
of Default has occurred and is continuing, in no event more frequently than
semi-annually), an update of the collateral examination report delivered to
the Lenders pursuant to Section 5.1(u)(i) in form and substance reasonably
satisfactory to the Agent; and
(n) from time to time, such further information, including customer
address list, regarding the Collateral, business affairs and financial
condition of Holdings, the Borrower and/or each of their respective
Subsidiaries as the Agent may reasonably request.
7.2 REAL ESTATE APPRAISALS. In the event that the Agent or the
Required Lenders at any time after the Effective Date determine in its or their
good faith discretion (as a result of events or circumstances affecting the
Agent or the Required Lenders after the Effective Date) that real estate
appraisals satisfying the requirements set forth in 12 C.F.R., Part 34-Subpart
C, or any successor or similar statute, rule, regulation, guideline or order
(any such appraisal a "Required Appraisal") are or were required to be obtained,
or should be obtained, in connection with any Mortgaged Property or Mortgaged
Properties, then, within 120 days after receiving written notice thereof from
the Agent or the Required Lenders, as the case may be, such Required Appraisals
shall be delivered, at the expense of the Borrower, to the Agent, which Required
Appraisals, and the respective appraiser, shall be satisfactory to the Agent.
7.3 CORPORATE FRANCHISES. Holdings and the Borrower will, and will
cause each of their respective Subsidiaries to, do or cause to be done, all
things necessary to preserve and keep in full force and effect its existence,
material rights and authority to do business, provided that (i) the Mobile Field
Office Liquidation and (ii) any other transaction permitted by Section 8.1 will
not constitute a breach of this Section 7.3, and provided further that Holdings
shall not be required to preserve, with respect to itself, any material right or
authority to do business and with respect to the Borrower, any of the Borrower's
Subsidiaries, or any of Holdings' Subsidiaries, any such existence, material
right or authority to do business if Holdings shall reasonably determine that
such preservation is no longer desirable in the ordinary course of business, and
the loss thereof shall not be reasonably likely to have a Material Adverse
Effect.
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7.4 COMPLIANCE WITH STATUTES, ETC. (a) Holdings and the Borrower will,
and will cause each of their respective Subsidiaries to, comply with all
applicable statutes, regulations and orders of, and all applicable restrictions
imposed by, all governmental bodies, domestic or foreign, in respect of the
conduct of its business and the ownership of its property (including applicable
Environmental Laws) except to the extent non-compliance (individually or in the
aggregate) would not reasonably be expected to have a Material Adverse Effect.
None of Holdings, the Borrower or any of their respective Subsidiaries will
generate, use, treat, store, release or dispose of, or permit the generation,
use, treatment, storage, release or disposal of Hazardous Materials on any of
its Real Property, or transport or permit the transportation of Hazardous
Materials to or from any such Real Property, except to the extent the failure to
comply with the foregoing requirements, either individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect. If required
to do so under any applicable Environmental Law, Holdings and the Borrower agree
to undertake, and agree to cause each of their respective Subsidiaries to
undertake, any cleanup, removal, remedial or other action necessary to remove
and clean up any Hazardous Materials from any Real Property in accordance with,
in all material respects, the requirements of all such applicable Environmental
Laws and in accordance with, in all material respects, all applicable orders and
directives of all governmental authorities; PROVIDED that none of Holdings, the
Borrower or any of their respective Subsidiaries shall be required to take any
such action where same is being contested by appropriate legal proceedings in
good faith by Holdings, the Borrower or such Subsidiary.
(b) At the request of the Agent or the Required Lenders at any time
and from time to time when an Event of Default has occurred and is continuing,
but in any event no more frequently than once a year, the Borrower will provide,
at the Borrower's sole cost and expense, an environmental site assessment report
or update concerning any Real Property of Holdings, the Borrower or any of their
respective Subsidiaries, prepared by an environmental consulting firm reasonably
acceptable to the Agent, indicating the presence or release of Hazardous
Materials and the potential cost of any removal or remedial action in connection
with any Hazardous Materials on such Real Property; PROVIDED, HOWEVER, no such
request may be made unless the Agent or the Required Lenders reasonably believe
that (i) Holdings, the Borrower or any of their respective Subsidiaries is in
material noncompliance with any Environmental Law with respect to such Real
Property and such noncompliance is reasonably likely to result in a liability of
the Borrower in excess of $1,000,000 (after expected insurance and indemnity
recovery) in the aggregate or (ii) an Event of Default is in existence. If the
Borrower fails to provide the same after 60 days' written notice, the Agent may
order the same, and Holdings and/or the Borrower shall grant and hereby grants
to the Agent and the Lenders and their agents access to such Real Property at
all reasonable times and without unreasonably interfering with the Borrower's
operations and specifically grants the Agent and the Lenders an irrevocable
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nonexclusive license, subject to the rights of tenants, to undertake such an
assessment all at the Borrower's sole expense.
7.5 ERISA. As soon as possible and, in any event, within twenty days
after Holdings, the Borrower, any of their respective Subsidiaries or any ERISA
Affiliate knows or has reason to know of the occurrence of any of the following,
the Borrower will deliver to the Agent a certificate of the chief financial
officer of the Borrower setting forth the full details as to such occurrence and
the action, if any, that Holdings, the Borrower, such Subsidiary or such ERISA
Affiliate is required or proposes to take, together with any notices required or
proposed to be given to or filed with or by Holdings, the Borrower, the
Subsidiary, the ERISA Affiliate, the PBGC, a Plan participant or the Plan
administrator with respect thereto: that a Reportable Event has occurred
(except to the extent that the Borrower has previously delivered to the Lenders
a certificate and notices (if any) concerning such event pursuant to the next
clause hereof); that a contributing sponsor (as defined in Section 4001(a)(13)
of ERISA) of a Plan subject to Title IV of ERISA is subject to the advance
reporting requirement of PBGC Regulation Section 4043.61 (without regard to
subparagraph (b)(1) thereof), and an event described in subsection .62, .63,
.64, .65, .66, .67 or .68 of PBGC Regulation Section 4043 is reasonably expected
to occur with respect to such Plan within the following thirty days; that an
accumulated funding deficiency, within the meaning of Section 412 of the Code or
Section 302 of ERISA, has been incurred or an application may be or has been
made for a waiver or modification of the minimum funding standard (including any
required installment payments) or an extension of any amortization period under
Section 412 of the Code or Section 303 or 304 of ERISA with respect to a Plan;
that any contribution required to be made with respect to a Plan or Foreign
Pension Plan has not been timely made; that a Plan has been or may be reasonably
expected to be terminated, reorganized, partitioned or declared insolvent under
Title IV of ERISA; that a Plan subject to Title IV of ERISA has an Unfunded
Current Liability which, when added to the aggregate amount of Unfunded Current
Liabilities with respect to all other Plans subject to Title IV of ERISA,
exceeds the aggregate amount of such Unfunded Current Liabilities that existed
on the Closing Date by $250,000; that proceedings may be or have been instituted
to terminate a Plan or appoint a trustee to administer a Plan which is subject
to Title IV of ERISA; that a proceeding has been instituted pursuant to Section
515 of ERISA to collect a delinquent contribution to a Plan; that Holdings, the
Borrower, any of their respective Subsidiaries or any ERISA Affiliate will or
may be reasonably expected to incur any material liability (including any
indirect, contingent, or secondary liability) to or on account of the
termination of or withdrawal from a Plan under Section 4062, 4063, 4064, 4069,
4201, 4204 or 4212 of ERISA or with respect to a Plan under Section 401(a)(29),
4971, 4975 or 4980 of the Code or Section 409 or 502(i) or 502(l) of ERISA or
with respect to a group health plan (as defined in Section 607(1) of ERISA or
Section 4980B(g)(2) of the Code) under Section 4980B of the Code; or that
Holdings, the Borrower or any of their respective Subsidiaries may be reasonably
expected to incur any material liability pursuant to any employee welfare
benefit plan (as
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defined in Section 3(1) of ERISA) that provides benefits to retired employees or
other former employees (other than as required by Section 601 of ERISA or any
other applicable continuation of coverage laws or regulations) or any Plan or
any Foreign Pension Plan in addition to the liability that existed on the
Effective Date to any such plan or plans. The Borrower will deliver to each of
the Lenders (i) a complete copy of the annual report (on Internal Revenue
Service Form 5500-series) of each Plan (including, to the extent required, the
related financial and actuarial statements and opinions and other supporting
statements, certifications, schedules and information) required to be filed with
the Internal Revenue Service and (ii) copies of any material records, documents
or other information that must be furnished to the PBGC with respect to any Plan
pursuant to Section 4010 of ERISA. In addition to any certificates or notices
delivered to the Lenders pursuant to the first sentence hereof, copies of annual
reports and any records, documents or other information required to be furnished
to the PBGC, and any material notices received by Holdings, the Borrower, any of
their respective Subsidiaries or any ERISA Affiliate with respect to any Plan or
Foreign Pension Plan shall be delivered to the Lenders no later than ten days
after the date such annual report has been filed with the Internal Revenue
Service or such records, documents and/or information has been furnished to the
PBGC or such notice has been received by Holdings, the Borrower, such Subsidiary
or the ERISA Affiliate, as applicable.
7.6 GOOD REPAIR. Each of Holdings and the Borrower will, and will
cause each of their respective Subsidiaries to, use its best efforts to provide
that its material properties and equipment used or useful in its business
(including Rental Equipment) in whomsoever's possession they may be, are kept in
good repair, working order and condition, normal wear and tear excepted and,
subject to Section 8.4, that from time to time there are made in such properties
and equipment all needful and proper repairs, renewals, replacements,
extensions, additions, betterments and improvements thereto.
7.7 BOOKS AND RECORDS. Each of Holdings and the Borrower agree to
maintain, and to cause each of their respective Subsidiaries to maintain, books
and records pertaining to the Collateral in such detail, form and scope as is
consistent with good business practice, and agrees that such books and records
will reflect the Lenders' interest in its Accounts. Holdings and the Borrower
agree that the Collateral Agent or its agents may enter upon the premises of
Holdings, the Borrower or any of their respective Subsidiaries at any time and
from time to time, during normal business hours and upon reasonable notice under
the circumstances, and at any time at all during the continuance of an Event of
Default, for the purposes of (i) inspecting the Collateral, (ii) inspecting
and/or copying (at the Borrower's expense) any and all records pertaining
thereto, (iii) discussing the affairs, finances and business of Holdings or the
Borrower with any officers, employees and directors of Holdings or the Borrower
or with Auditors (it being understood that Holdings or the Borrower shall be
entitled to have a representative present at any such discussions) and (iv)
verifying Eligible Accounts Receivable and/or Eligible Rental
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Equipment. The Borrower shall give the Collateral Agent fifteen days prior
written notice of any change in the location of any facility owned or leased by
Holdings or the Borrower or any of their respective Subsidiaries where
Collateral is located or in the location of its chief executive office or place
of business from the locations specified in Schedule IV, and to execute in
advance of such change, cause to be filed and/or delivered to the Collateral
Agent any financing statements, Collateral Access Agreements or other documents
required by the Agent, all in form and substance reasonably satisfactory to the
Agent. The Borrower agrees to advise the Agent promptly, in sufficient detail,
of any substantial change relating to the type, quantity or quality of more than
10% (measured by net book value) of the Collateral, or any event (other than a
change in price) which could have a material adverse effect on the value of more
than 10% (measured by net book value) of the Collateral or on the security
interests granted to the Collateral Agent, on behalf of the Lenders therein.
7.8 COLLATERAL RECORDS. Each of Holdings and the Borrower agree to
execute and deliver, and to cause each of their respective Subsidiaries to
execute and deliver, to the Collateral Agent, from time to time, solely for the
Agent's convenience in maintaining a record of the Collateral, such written
statements and schedules as the Collateral Agent may reasonably require,
including, without limitation, those described in Section 7.1 of this Credit
Agreement, designating, identifying or describing the Collateral pledged or
granted to the Lenders under the Collateral Documents. The failure by Holdings,
the Borrower or any of their respective Subsidiaries, however, to promptly give
the Agent such statements or schedules shall not affect, diminish, modify or
otherwise limit the Lenders' security interests in the Collateral.
7.9 SECURITY INTERESTS. Each of Holdings and the Borrower shall, and
shall cause each of their respective Subsidiaries to, defend the Collateral
against all claims and demands of all Persons at any time claiming the same or
any interest therein other than claims or demands pursuant to the Credit
Documents and subject to the terms of Intercreditor Agreement, the Bailee
Agreement, the Custodian Agreement and the Senior Secured Notes Collateral
Documents. Subject to Sections 11.19 and 11.20, Holdings and the Borrower shall
comply, and shall cause each of their respective Subsidiaries to comply, with
the requirements of all state and federal laws in order to grant to the Lenders
valid and perfected first priority security interests in the Collateral, subject
to Existing Liens and to any other Permitted Liens which pursuant to operation
of law are prior to the perfected security interests created hereunder. The
Collateral Agent is hereby authorized by Holdings and the Borrower to file any
UCC financing statements covering the Collateral whether or not the signatures
of Holdings or the Borrower appears thereon.
7.10 INSURANCE; CASUALTY LOSS. Schedule XII hereto sets forth a true
and complete listing of all insurance maintained by Holdings, the Borrower and
each of their respective Subsidiaries as of the Closing Date. Holdings and the
Borrower agree to maintain, and to cause each of their respective Subsidiaries
to maintain, public liability
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insurance, third party property damage insurance and replacement value (or such
higher coverage as Holdings may obtain) insurance on the Collateral under such
policies of insurance, with such insurance companies, in such amounts and
covering such risks in at least such amounts and against at least such risks as
are described on Schedule XII or, with respect to any lesser coverages (whether
as to the amount or scope of coverage), as are at all times satisfactory to the
Agent in its commercially reasonable judgment. All policies covering the
Collateral are to name the Collateral Agent as an additional insured and the
Collateral Agent as loss payee in case of loss, as its interests may appear, and
are to contain such other provisions as the Agent may reasonably require to
fully protect the Lenders' interest in the Collateral and to any payments to be
made under such policies. The Borrower shall provide written notice to the
Agent of the occurrence of any of the following events within ten Business Days
after the occurrence of such event: any Collateral is (i) damaged or destroyed,
or suffers any other loss, or (ii) condemned, confiscated or otherwise taken, in
whole or in part, or the use thereof is otherwise diminished so as to render
impracticable or unreasonable the use of such Collateral or to materially
diminish its marketability, and in either case either (x) a Default or an Event
of Default has occurred and is continuing or (y) the amount of the damage,
destruction, loss or diminution in value is in excess of $2,000,000
(collectively, a "Casualty Loss"); provided that no notice shall be required in
the event that (x) no Default or Event of Default has occurred and is continuing
and (y) the amount of the damage, destruction, loss or diminution in value is
less than or equal to $2 million in which case, the Borrower may, in its sole
discretion, either apply such amounts (x) to the payment of the outstanding
Revolving Loans or (y) to purchase other assets of the same or similar type as
those for which the Borrower received such insurance proceeds. Holdings, the
Borrower and/or the respective Subsidiary shall diligently file and prosecute
their claim or claims for any award or payment in connection with a Casualty
Loss. In the event of a Casualty Loss, Holdings shall pay to the Collateral
Agent, promptly upon receipt thereof, any and all net insurance proceeds and
payments received by Holdings, the Borrower or any of their respective
Subsidiaries on account of damage, destruction, loss, condemnation or eminent
domain proceedings, whereupon the Collateral Agent shall, at the election of the
Borrower (unless a Default or Event of Default shall have occurred and be
continuing in which case such election shall be made by the Required Lenders, in
their sole discretion), either (a) apply the proceeds realized from Casualty
Losses to payment of accrued and unpaid interest or outstanding principal under
the Revolving Loans or (b) pay such proceeds to Holdings or the Borrower to be
used to repair or replace the Collateral that was the subject of the Casualty
Loss. After the occurrence and during the continuance of an Event of Default,
(i) no settlement on account of any such Casualty Loss shall be made without the
consent of the Collateral Agent and (ii) the Collateral Agent may participate in
any such proceedings and the Borrower shall deliver to the Collateral Agent such
documents as may be requested by the Collateral Agent to permit such
participation and shall consult with the Collateral Agent, its attorneys and
agents in the making and prosecution of such claim or claims. Each of Holdings
and the Borrower hereby irrevocably authorizes and appoints the
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Collateral Agent its attorney-in-fact, after the occurrence and during the
continuance of an Event of Default, to collect and receive for any such award or
payment and to file and prosecute such claim or claims, which power of attorney
shall be irrevocable and shall be deemed to be coupled with an interest, and
each of Holdings and the Borrower shall, upon demand of the Collateral Agent,
make, execute and deliver any and all assignments and other instruments
sufficient for the purpose of assigning any such award or payment to the
Collateral Agent for the benefit of the Lenders, free and clear of any
encumbrances of any kind or nature whatsoever, other than the right of Holdings
or the Borrower to any insurance proceeds remaining after application thereof by
the Collateral Agent as provided in this Section 7.10.
7.11 TAXES. Holdings and the Borrower will, and will cause each of
their respective Subsidiaries to, pay and discharge all federal income and other
material taxes, assessments and governmental charges or levies imposed upon it
or upon its income or profits, or upon any properties belonging to it, or
payable by it pursuant to the Tax Sharing Agreements, in each case on a timely
basis, and all lawful claims which, if unpaid, might become a Lien or charge
upon any properties of Holdings, the Borrower or of any of their respective
Subsidiaries; PROVIDED, that neither Holdings, the Borrower nor any of their
respective Subsidiaries shall be required to pay any such tax, assessment,
charge, levy or claim which is being contested in good faith and by proper
proceedings if it has maintained adequate reserves (in the good faith judgment
of the management of such Person) with respect thereto in accordance with GAAP.
7.12 END OF FISCAL YEARS; FISCAL QUARTERS. Each of Holdings and the
Borrower will, for financial reporting purposes, cause (i) each of their, and
each of their respective Subsidiaries', fiscal years to end on December 31 of
each year and (ii) each of their and each of their respective Subsidiaries',
fiscal quarters to end on dates consistent therewith.
7.13 FURTHER ASSURANCES. Holdings and the Borrower shall take, and
shall cause each of their respective Subsidiaries to take, all such further
actions and execute all such further documents and instruments as the Collateral
Agent may at any time reasonably determine to be necessary or desirable to
further carry out and consummate the transactions contemplated by the Credit
Documents, to cause the execution, delivery and performance of the Credit
Documents to be duly authorized and to perfect or protect the Liens (and the
priority status thereof) of the Collateral Agent on the Collateral including,
without limitation, (i) filing notices of liens, UCC financing statements and
amendments, renewals and continuations thereof, (ii) obtaining, providing or
making notations of security interests upon Unit Certificates, (iii) cooperating
with the Collateral Agent's representatives, keeping stock records, obtaining
waivers from landlords and from warehousemen and their landlords, (iv) paying
claims which might, if unpaid, become a Lien on the Collateral other than a
Permitted Lien and (v) stamping all Certificates (as defined in the Custodian
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Agreement) relating to the Non-Qualified Units (x) with a legend as required by
the Custodian Agreement and (y) to indicate the transfer of the ownership
thereof to the Unit Subsidiary. Furthermore, Holdings and the Borrower shall
cause to be delivered to the Collateral Agent such opinions of counsel, title
insurance and other related documents as may be reasonably requested by the
Collateral Agent to assure itself that this Section 7.13 has been complied with.
Notwithstanding anything to the contrary contained in this Section 7.13, the
Collateral Agent shall not (except in the circumstances described in the second
and third sentences of Section 11.19) request that the Borrower obtain or
provide any Unit Certificates with respect to any Non-Qualified Units unless an
Event of Default has occurred and is continuing; provided that if any Unit
Certificates are obtained, a notation of the Collateral Agent's security
interest shall be made thereon as required by Section 7.18(b). All actions
required to be taken pursuant to this Section 7.13, as well as pursuant to
Sections 11.19 and 11.20, shall be at the cost and expense of the Borrower.
7.14 MAINTENANCE OF SEPARATENESS. Each Credit Party will, and will
cause each of its Subsidiaries to, satisfy customary corporate and
organizational formalities, including the holding of regular board of directors'
and shareholders' meetings or action by directors or shareholders without a
meeting and the maintenance of corporate offices and records. Not later than
the 90th day following the Closing Date, the Credit Parties shall take all
actions as may be required (x) to establish and maintain an executive committee
for the Unit Subsidiary and (y) so that at least one member of the executive
committee is not and, during the one-year period immediately preceding the time
of initial appointment, was not an employee, officer, director, shareholder, or
partner of the Borrower or any of its Affiliates. In dealing with their
respective creditors, none of Holdings, the Borrower or any of their respective
Subsidiaries shall act in a manner which would cause its creditors to believe
that any such Person was not a separate corporate entity from the other such
Persons. Without limiting the foregoing, the consolidated financial statements
of each of Holdings and the Borrower shall, through appropriate footnote
disclosure, indicate the assets from time to time held by the Unit Subsidiary,
as opposed to Holdings or the Borrower, as the case may be, and its other
Subsidiaries. Finally, from and after the Closing Date no Credit Party nor any
of its Subsidiaries shall take any action, or conduct its affairs in a manner,
which would be reasonably likely to result in the separate existence of the Unit
Subsidiary being ignored, or in the assets and liabilities of the Unit
Subsidiary being substantively consolidated with those of any of Holdings, the
Borrower or any of their respective Subsidiaries (other than the Unit
Subsidiary) in a bankruptcy, reorganization or other insolvency proceeding.
7.15 COLLATERAL ACCESS AGREEMENTS. If, on the Closing Date, the
Borrower shall fail to provide the Agent with Collateral Access Agreements with
respect to all of the Rental Equipment locations as required under Section
5.1(e) (without giving effect to clause (ii) of the proviso thereof), the
Borrower shall exercise reasonable good faith efforts to obtain and deliver to
the Agent, within 90 days of the Closing Date, those Collateral Access
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Agreements with respect to the Rental Equipment locations for which no
Collateral Access Agreement was delivered to the Agent on the Closing Date.
7.16 NEW SUBSIDIARIES. To the extent the Borrower creates or acquires
any Wholly-Owned Subsidiary after the Closing Date in accordance with the other
provisions of this Credit Agreement, each such Wholly-Owned Subsidiary (and any
Subsidiary which guarantees any obligation under the Senior Secured Notes) shall
be required to become a party to the Subsidiaries Guaranty by executing a
counterpart thereof or enter into an amendment thereto satisfactory to the Agent
and, if requested by the Agent or the Required Lenders, shall be required to
enter into the Collateral Documents entered into by the entities which were
Subsidiary Guarantors on the Closing Date, in each case by entering into
counterparts thereof or amendments thereto, in form and substance reasonably
satisfactory to the Agent and the Collateral Agent. In connection with the
foregoing, to the extent requested by the Agent and the Collateral Agent, the
Borrower shall be required to cause to be delivered such relevant documentation
(including opinions of counsel) of the type described in Section 5.1 as the
respective Subsidiary would have delivered if it were a Credit Party on the
Closing Date.
7.17 PERMITTED ACQUISITIONS. (a) Subject to the provisions of this
Section 7.17 and the requirements contained in the definition of Permitted
Acquisition, the Borrower and its Subsidiaries (other than the Unit Subsidiary)
may from time to time after the Closing Date effect Permitted Acquisitions, so
long as (in each case except to the extent the Required Lenders otherwise
specifically agree in writing in the case of a specific Permitted Acquisition):
(i) no Default or Event of Default shall be in existence at the time of the
consummation of the proposed Permitted Acquisition or immediately after giving
effect thereto; (ii) the Borrower shall have given the Agent at least 10
Business Days' prior written notice of any Permitted Acquisition; (iii)
calculations are made by the Borrower of compliance with the covenants contained
in Sections 8.9 and 8.10 for the period of four consecutive fiscal quarters
(taken as one accounting period) most recently ended prior to the date of such
Permitted Acquisition (each, a "Calculation Period"), on a PRO FORMA basis as if
the respective Permitted Acquisition (as well as all other Permitted
Acquisitions theretofore consummated after the first day of such Calculation
Period) had occurred on the first day of such Calculation Period, and such
recalculations shall show that such financial covenants would have been complied
with if the Permitted Acquisition had occurred on the first day of such
Calculation Period (for this purpose, if the first day of the respective
Calculation Period occurs prior to the Initial Borrowing Date, calculated as if
the covenants contained in said Sections 8.9 and 8.10 had been applicable from
the first day of the Calculation Period); (iv) the Borrower shall certify, and
the Agent shall have been satisfied in its reasonable discretion that, to the
best of the Borrower's knowledge, the proposed Permitted Acquisition could not
reasonably be expected to result in materially increased tax, ERISA,
environmental or other contingent liabilities with respect to Holdings, the
Borrower or any of their respective Subsidiaries; (v) all representations and
warranties contained
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herein and in the other Credit Documents shall be true and correct in all
material respects with the same effect as though such representations and
warranties had been made on and as of the date of such Permitted Acquisition
(both before and after giving effect thereto), unless stated to relate to a
specific earlier date, in which case such representations and warranties shall
be true and correct in all material respects as of such earlier date; (vi) the
Borrower provides to the Agent and the Lenders as soon as available but not
later than five Business Days after the execution thereof, a copy of any
executed purchase agreement or similar agreement with respect to such Permitted
Acquisition; (vii) the aggregate amount invested in all such Permitted
Acquisitions occurring on or after the Closing Date shall not exceed
$25,000,000; and (viii) the Borrower shall have delivered to the Agent an
officer's certificate executed by the chief executive officer or chief financial
officer of the Borrower, certifying to the best of his knowledge, compliance
with the requirements of preceding clauses (i) through (v), inclusive and (vii)
containing the calculations required by the preceding clauses (iii) and (vii).
(b) At the time of each Permitted Acquisition (x) involving the
creation or acquisition of a Subsidiary, or the acquisition of capital stock or
other equity interest of any Person, all capital stock or other equity interests
thereof created or acquired in connection with such Permitted Acquisition shall
be pledged for the benefit of the Secured Creditors pursuant to the Pledge
Agreement and/or (y) involving the acquisition of any Units (as defined in the
Security Agreement), whether directly or by the acquisition of a Subsidiary
which owns such Units, the provisions of Section 7.18 shall be complied with at
the time of the consummation of the respective Permitted Acquisition.
(c) The Borrower shall cause each Subsidiary which is formed to
effect, or is acquired pursuant to, a Permitted Acquisition to comply with, and
to execute and deliver, all of the documentation required by, Section 7.16, to
the satisfaction of the Agent.
7.18 UNIT SUBSIDIARY; PROVISIONS RELATING TO UNITS; ETC. (a) Holdings
and the Borrower shall at all times cause the Unit Subsidiary to be a direct
Wholly-Owned Subsidiary of the Borrower. Each of Holdings and the Borrower
shall take all action so that all Non-Qualified Units at any time owned or
acquired by Holdings, the Borrower or any of their respective Subsidiaries
(other than the Unit Subsidiary) are on the Closing Date (or, if acquired
thereafter, within five Business Days after the end of the month in which such
Acquisition occurred) contributed as a capital contribution to the equity of the
Unit Subsidiary. As a result of the requirements of the immediately preceding
sentence, all Non-Qualified Units at any time held by Holdings or the Borrower
and their respective Subsidiaries shall be transferred to the Unit Subsidiary,
which shall be the exclusive owner thereof.
(b) With respect to all Certificated Units at any time held by
Holdings, the Borrower or any of their Subsidiaries (other than any Certificated
Units with respect to
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which the opinions, satisfactory to the Agent, required by Section 5.1(d)(C)(y)
have been provided), Holdings and the Borrower shall take, or cause to be taken,
all action as is necessary so that, in any event within 30 days after the
Closing Date (or within 30 days after any subsequent acquisition of Certificated
Units) the security interest of the Collateral Agent therein is noted on the
certificate of title issued with respect to the respective Unit (as defined in
the Security Agreement).
ARTICLE 8.
NEGATIVE COVENANTS
Subject to Sections 11.19 and 11.20, each of Holdings and the Borrower
hereby covenants and agrees that as of the Closing Date, and thereafter, for so
long as this Credit Agreement is in effect and until the Total Commitments have
terminated, no Letter of Credit or Revolving Notes are outstanding and the
Revolving Loans and Letter of Credit Obligations, together with interest, Fees,
Expenses and all other Obligations then due and payable are paid in full:
8.1 CONSOLIDATION, MERGER, SALE OR PURCHASE OF ASSETS, ETC. Holdings
and the Borrower will not, and will not permit any of their respective
Subsidiaries to, wind up, liquidate or dissolve its affairs, or enter into any
transaction of merger or consolidation, sell or otherwise dispose of all or any
part of its property or assets or purchase, lease or otherwise acquire (in one
transaction or a series of related transactions) all or any part of the property
or assets of any Person or agree to do any of the foregoing at any future time,
except that the following shall also be permitted:
(a) Capital Expenditures (including the purchase of assets in the form
of additional Rental Equipment) to the extent within the limitations set
forth in Section 8.4;
(b) the investments, acquisitions and transfers or dispositions of
properties permitted pursuant to Section 8.5;
(c) any Subsidiary of the Borrower (excluding the Unit Subsidiary) may
be merged or consolidated with or into, or be liquidated into, the Borrower
or any other Wholly-Owned Subsidiary of the Borrower (so long as the
Borrower or any other Wholly-Owned Subsidiary of the Borrower is the
surviving corporation), or all or any part of the business, properties and
assets of any Subsidiary (excluding the Unit Subsidiary) may be conveyed,
leased, sold or transferred to the Borrower or any other Wholly-Owned
Subsidiary of the Borrower;
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(d) the Permitted Sale-Leaseback Transactions shall be permitted so
long as (i) no Default or Event of Default is then in existence or would
result thereby, (ii) the Net Cash Proceeds therefrom are applied as
provided in Section 2.5(h) and (iii) the lease obligations created thereby
are otherwise permitted under this Agreement;
(e) the sale, lease or disposal in the ordinary course of business of
Inventory and Rental Equipment and the purchase, lease or other acquisition
of equipment, Inventory and Rental Equipment in the ordinary course of
business;
(f) the sale or other disposition of obsolete or excess equipment in
the ordinary course of business and the purchase of equipment in the
ordinary course of business;
(g) operating leases of property entered into or terminated in the
ordinary course of business;
(h) the Mobile Field Office Liquidation shall be permitted;
(i) the Master Lease Agreement may be entered into pursuant to Section
5.1(ee);
(j) the sale or return of automobiles and trucks which the Borrower
and its Subsidiaries customarily replace periodically with substitute
automobiles and trucks in the ordinary course of business;
(k) the Borrower or any Subsidiary may, in the ordinary course of
business, enter into licensing agreements with Persons for the use of
intellectual property or other intangible assets, and settlements,
permissions, consents to use, and similar arrangements concerning
intellectual property or other intangible assets, so long as the Borrower
or such Subsidiary uses reasonable commercial efforts to procure that each
such license or other agreements is permitted to be assigned pursuant to
the Security Agreement and does not otherwise prohibit the granting of Lien
therein by any Credit Party pursuant to the Security Agreement;
(l) the abandonment or other disposition of intellectual property and
other property that is, in the reasonable judgment of the Person owning
such intellectual property and other property, no longer economically
practicable to maintain or useful in the conduct of the business of such
Person; and
(m) the sale of (i) approximately 6.6 acres located at 1827 Commerce
Road, Richmond, Virginia, (ii) approximately 7 acres located at Jackson
Road east
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of Route 73, Berlin, New Jersey, (iii) approximately 6.2 acres located at
525 Hurricane Schoals Road, Lawrenceville, Georgia and (iv) approximately
10 acres located at lot 277, Alcovy Road, Lawrenceville, Georgia for
aggregate cash proceeds of not less than $1,000,000;
(n) in connection with the sale of any Rental Equipment to a third
party as permitted by clause (e) above, the sale of Leases and conditional
sales contracts relating to such Rental Equipment, in each case, in the
ordinary course of business for fair market value to third parties;
PROVIDED, that in no event is any such sale with any recourse to the Seller
except for usual and customary warranties in connection with the sale of
the respective Rental Equipment;
(o) sales or other dispositions of assets, in addition to the sales or
dispositions permitted by the foregoing clauses (a) through (n), for fair
market value not to exceed $2,000,000 per fiscal year but not more than
$10,000,000 in the aggregate since the Closing Date; PROVIDED, HOWEVER,
that the Net Sale Proceeds therefrom are applied to the repayment of the
Revolving Loans as specified in Section 2.5(h).
Notwithstanding anything to the contrary contained above, (x) in no event shall
Holdings or the Borrower sell or otherwise dispose of any of their interests in
any Subsidiary except as expressly permitted pursuant to preceding Sections
8.1(c) and (h), (y) in no event shall the Unit Subsidiary be merged with or into
or consolidated with or into any other Person or be liquidated and (z) in no
event shall the Unit Subsidiary transfer any Non-Qualified Units or any interest
therein (except for the lease thereof pursuant to the Master Lease Agreement) to
Holdings, the Borrower or any other Subsidiary of the Borrower. To the extent
the Required Lenders waive the provisions of this Section 8.1 with respect to
the sale of any Collateral, or any Collateral is sold as permitted by this
Section 8.1, such Collateral in each case (so long as (x) the Collateral is not
being transferred to Holdings, the Borrower or any of their respective
Subsidiaries and (y) if any Senior Secured Notes remain outstanding, their Liens
on the respective Collateral being sold are also released) shall be sold free
and clear of the Liens in favor of the Collateral Agent and the Lenders created
by the Collateral Documents and the Collateral Agent shall take such actions as
it deems appropriate in connection therewith or may be reasonably requested by
the Borrower to evidence such Lien release, in each case at the Borrower's
expense.
8.2 LIENS. Holdings and the Borrower will not, and will not permit
any of their respective Subsidiaries to, create, incur, assume or suffer to
exist any Lien upon or with respect to (i) the capital stock of the Borrower
or (ii) any property or assets of any kind (real or personal, tangible or
intangible) of Holdings, the Borrower or any of their respective
Subsidiaries, whether now owned or hereafter acquired, or sell any such
property or assets subject to an understanding or agreement, contingent or
otherwise, to repurchase
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such property or assets (including sales of accounts receivable or notes with
recourse to Holdings, the Borrower or any of their respective Subsidiaries) or
assign any right to receive income, or file or permit the filing of any
financing statement under the UCC or any other similar notice of Lien under any
similar recording or notice statute (other than precautionary filings covering
leases of equipment), except Liens, sales and assignments described below
(herein referred to as "Permitted Liens"):
(a) Liens for taxes, assessments or other governmental charges or
statutory obligations that are not delinquent or remain payable without
penalty or that are not yet due and payable or Liens for taxes being
contested in good faith and by appropriate proceedings for which adequate
reserves (in the good faith judgment of the management of the Borrower)
have been established;
(b) Liens in respect of property or assets of the Borrower or any of
its Subsidiaries imposed by law or which were incurred in the ordinary
course of business, such as carriers', warehousemen's and mechanics' Liens,
statutory landlord's Liens, Liens in favor of customs and revenue
authorities to secure payment of customs duties in connection with the
importation of goods, and other similar Liens arising in the ordinary
course of business, and (x) which, if any such property or asset is
material, do not in the aggregate materially detract from the value of such
property or assets or materially impair the use thereof in the operation of
the business of the Borrower or such Subsidiary or (y) which are being
contested in good faith by appropriate proceedings, which proceedings have
the effect of preventing the forfeiture or sale of the property or asset
subject to such Lien;
(c) Liens created by or pursuant to this Credit Agreement or the other
Credit Documents;
(d)Liens existing on the Closing Date and listed on Schedule XIII
hereto and renewals and extensions thereof so long as the principal amount
of the Indebtedness secured thereby is not increased and no additional
assets are encumbered thereby ("Existing Liens");
(e) Liens (other than any Lien imposed by ERISA) incurred or deposits
made in the ordinary course of business (x) in connection with liability
insurance, workers' compensation, unemployment insurance and other types of
social security, or (y) to secure the performance of tenders, statutory
obligations, surety and appeal bonds, bids, leases, government contracts,
performance and return-of-money bonds and other similar obligations
incurred in the ordinary course of business, in an aggregate amount (in the
case of this clause (y)) not to exceed $2,500,000 (exclusive of obligations
(i) in respect of borrowed money or (ii) in respect of which a Letter of
Credit has been issued);
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(f) leases or subleases granted to third Persons not interfering with
the ordinary course of business of the Borrower or any of its Subsidiaries;
(g) Capital Leases to the extent permitted under Section 8.3(b);
(h) Liens (x) arising pursuant to purchase money mortgages securing
Indebtedness representing the purchase price (or financing of the purchase
price within 180 days after the respective purchase) of property or other
assets acquired by the Borrower or any Subsidiary, and any extensions,
renewals or replacements of such Liens, PROVIDED that (i) any such Liens
attach only to the assets so purchased, (ii) the Indebtedness secured by
any such Lien does not exceed 100% of the purchase price of the assets
being purchased and (iii) the Indebtedness secured thereby or any
refinancing thereof is permitted by Section 8.3(b); or (y) existing on
specific tangible assets at the time acquired by the Borrower or any
Subsidiary or on assets of a Person at the time such Person first becomes a
Subsidiary or was merged into the Borrower or any Subsidiary; PROVIDED,
that (i) any such Liens were not created at the time of or in contemplation
of the acquisition of such assets or Person by the Borrower or such
Subsidiary, (ii) in the case of any such acquisition of a Person, any such
Lien attaches only to specific tangible assets of such Person and not
assets of such Person generally and (iii) the Indebtedness secured thereby
or any refinancing thereof is permitted by Section 8.3(b);
(i) easements, rights-of-way, restrictions and other similar charges
or encumbrances not interfering in any material respect with the business
of the Borrower and its Subsidiaries;
(j) Liens created under ERISA and under Environmental Laws that are
being contested in good faith and as to which adequate reserves have been
established to the extent required by GAAP and secure obligations not in
excess of $2,500,000 in the aggregate;
(k) Permitted Encumbrances;
(l) Liens securing Indebtedness permitted under Section 8.3(h);
PROVIDED that such liens are subordinate to all Liens created by or
pursuant to the Credit Documents pursuant to documentation in form and
substance satisfactory to the Agent;
(m) Liens other than those described in the preceding clauses (a)
through (l) so long as neither (x) the aggregate amount of obligations at
any time secured thereby, nor (y) the aggregate fair market value of the
assets subject thereto, exceeds $2,500,000 at any time;
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(n) Permitted Sale-Lease Back transactions so long as such
transactions comply with Section 8.1(d);
(o) any attachment or judgment Lien securing assets with a value less
than $1,000,000 not constituting an Event of Default under Section 9.1(h)
that is being contested in good faith by appropriate proceedings and for
which adequate reserves have been established in accordance with GAAP;
(p) the leasehold interests of customers in Rental Equipment, in each
case to the extent the respective lease is entered into by the Borrower or
its respective Subsidiary in the ordinary course of its business and is not
pursuant to a sale-leaseback or similar financing transaction; and
(q) the Borrower may enter into the Deposit Account Agreement in the
form of Exhibit M and additional Deposit Account Agreements in
substantially the same form with respect to any additional Collection
Account or Concentration Account entered into in accordance with the terms
of this Credit Agreement.
Notwithstanding anything to the contrary above, in no event shall
there be any "Additional First Lien Debt" (as such term is defined in the
Intercreditor Agreement) without the express consent of the Required Lenders.
8.3 INDEBTEDNESS. Holdings and the Borrower will not, and will not
permit any of their respective Subsidiaries to, contract, create, incur, assume
or suffer to exist any Indebtedness, except:
(a) Indebtedness incurred pursuant to this Credit Agreement and the
other Credit Documents;
(b) Capitalized Lease Obligations and Indebtedness of the Borrower
secured by Liens permitted by Section 8.2(h) in an aggregate amount not to
exceed $5,000,000 in any fiscal year;
(c) Existing Indebtedness;
(d) Indebtedness of the Borrower evidenced by the Senior Unsecured
Notes in aggregate principal amount not to exceed $400,000,000 (less the
amount of principal repayments thereof effected after the Closing Date),
and guarantees thereof by the Subsidiary Guarantors, so long as the
guarantee of the Unit Subsidiary is subordinated on the terms as provided
in the Senior Unsecured Notes Indenture as in effect on the date hereof;
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(e) Indebtedness of the Borrower or any of its Wholly-Owned
Subsidiaries owing to the Borrower or any of its Wholly-Owned Subsidiaries,
in each case to the extent making such loan was permitted in Section 8.5;
(f) Indebtedness of the Borrower or any of the Borrower's Subsidiaries
(other than the Unit Subsidiary) evidenced by guarantees, performance bonds
and surety bonds incurred in the ordinary course of business for purposes
of insuring the performance of the Borrower or such Subsidiary in an
aggregate principal amount not to exceed $1,000,000 at any time
outstanding;
(g) Indebtedness under Interest Rate Agreements determined in good
faith by the Borrower to be related to outstanding floating rate
Indebtedness permitted to remain outstanding pursuant to this Section 8.3
and which the Borrower in good faith determines are non-speculative in
nature, PROVIDED THAT the outstanding exposure in connection therewith
shall at no time exceed $15,000,000;
(h) Indebtedness of the Borrower evidenced by the Senior Secured
Notes, if any, not purchased pursuant to the Senior Secured Notes Tender
Offer/Consent Solicitation (which in no event shall exceed $82,499,999)
less the amount of principal repayments thereof after the Closing Date, and
guarantees thereof by Holdings and the Subsidiary Guarantors;
(i) Indebtedness of Holdings evidenced by the Holding Co. Notes, if
any, not purchased pursuant to the Holding Co. Notes Tender Offer/Consent
Solicitation (which in no event shall exceed $14,649,999) less the amount
of principal repayments thereof after the Closing Date;
(j) on or prior to January 31, 1998, Indebtedness in the form of
Recapitalization Notes in an aggregate principal amount not to exceed
$25,000,000;
(k) Indebtedness of the Borrower or any of the Borrower's Subsidiaries
(other than the Unit Subsidiary), in addition to other Indebtedness
permitted under clauses (a) through (j) above, in an aggregate principal
amount not to exceed $10,000,000 at any time outstanding; and
(l) Indebtedness of the Borrower or any of the Borrower's Subsidiaries
(other than the Unit Subsidiary) incurred to refinance any Indebtedness
described in Section 8.3(b) and (c), in each case so long as the principal
amount of outstanding Indebtedness is not increased as a result of any such
refinancing, the weighted average maturity thereof is not decreased and no
greater Liens or security interests are granted, and no additional
guarantees provided, in connection therewith.
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8.4 CAPITAL EXPENDITURES. (a) Holdings and the Borrower will not, and
will not permit any of their respective Subsidiaries to, make any Capital
Expenditures, except that during any fiscal year set forth below, Holdings, the
Borrower and their respective Subsidiaries may make Capital Expenditures, so
long as the aggregate amount of such Capital Expenditures does not exceed in any
fiscal year set forth below the amount set forth below opposite such fiscal
year:
FISCAL YEAR ENDING AMOUNT
------------------ ------
December 31, 1997 $ 84,700,000
December 31, 1998 $ 97,400,000
December 31, 1999 $106,100,000
December 31, 2000 $104,900,000
December 31, 2001 $103,100,000
December 31, 2002 $107,200,000
(b) Notwithstanding the foregoing, in the event that the amount of
Capital Expenditures permitted to be made by Holdings, the Borrower and their
respective Subsidiaries pursuant to clause (a) above in any fiscal year (before
giving effect to any increase in such permitted expenditure amount pursuant to
this clause (b) and after giving effect to any reduction in such permitted
expenditure amount pursuant to clause (c) below) is greater than the amount of
such Capital Expenditures made by Holdings, the Borrower and their respective
Subsidiaries during such fiscal year, such excess (the "CapEx Rollover Amount")
may be carried forward and utilized to make Capital Expenditures in the
immediately succeeding fiscal year.
(c) In addition to any amounts set forth in clause (a) or (b) above,
in any fiscal year Holdings, the Borrower and their respective Subsidiaries may
make Capital Expenditures in an amount equal to 15% of the amount set forth in
clause (a) above for such fiscal year; PROVIDED, that (i) no Capital
Expenditures were made pursuant to this clause (c) during the prior fiscal year
and (ii) if Capital Expenditures are made during a fiscal year pursuant to this
clause (c), then the amount of Capital Expenditures permitted for the subsequent
fiscal year pursuant to clause (a) above shall be reduced by the amount of such
Capital Expenditures made during such fiscal year pursuant to this clause (c).
(d) Notwithstanding the foregoing, Holdings, the Borrower and their
respective Subsidiaries may make Capital Expenditures (which Capital
Expenditures will not be included in any determination under the foregoing
clause (a), (b) or (c)) with the insurance proceeds received by Holdings, the
Borrower or any of their respective Subsidiaries from any Casualty Loss so long
as such Capital Expenditures are to replace or restore any properties or assets
in respect of which such proceeds were paid in accordance with Section 7.10.
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(e) To the extent any Capital Expenditures made pursuant to clauses
(a), (b) or (c) above involve the purchase or lease of real property, such
Capital Expenditures may not be made unless, to the best of the Borrower's
knowledge, such purchase or lease will not result in any material increase in
the contingent liabilities (including environmental liabilities) of the Borrower
or any of its Subsidiaries.
8.5 INVESTMENTS. Holdings and the Borrower will not, and will not
permit any of their respective Subsidiaries to, lend money or credit or make
advances to any Person, or purchase or acquire any stock, obligations or
securities issued by, or any other interest in, or make any capital contribution
to (collectively, "Investments") any other Person, except:
(a) Holdings, the Borrower or any of their respective Subsidiaries may
acquire and hold accounts receivables owing to it, if created or acquired
in the ordinary course of business and payable or dischargeable in
accordance with the customary trade terms of the Borrower or its applicable
Subsidiary, as the case may be;
(b) loans and advances to employees, officers and directors in the
ordinary course of business in an aggregate principal amount not to exceed
$1,000,000 at any time outstanding shall be permitted;
(c) subject to continued compliance with Section 7.18 and the last
paragraph of Section 8.1 in the case of any Investments being made by the
Unit Subsidiary, any Investment by any Subsidiary of the Borrower in the
Borrower (so long as any loan made by a Subsidiary of the Borrower, other
than the Unit Subsidiary) to the Borrower is subordinated to the
Obligations on terms satisfactory to the Agent) or in another Wholly-Owned
Subsidiary of the Borrower;
(d) subject to Section 8.16, Investments in Cash Equivalents shall be
permitted;
(e) Investments by Holdings, the Borrower and their respective
Subsidiaries permitted under Section 8.1 and Capital Expenditures permitted
under Section 8.4 shall be permitted;
(f) Investments existing on the Closing Date and listed on Schedule
XIV hereto, without giving effect to any additions thereto or replacements
thereof, shall be permitted;
(g) Investments which may be deemed to exist as a result of the
entering into of Interest Rate Agreements to the extent permitted by
Section 8.3(g); and
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(h) Holdings may make capital contributions to the Borrower;
(i) the Borrower and its Wholly-Owned Domestic Subsidiaries may make
intercompany loans and advances to each other, so long as each such
intercompany loan is evidenced by a promissory note pledged pursuant to the
Pledge Agreement;
(j) the Borrower and any Wholly-Owned Subsidiary (other than the Unit
Subsidiary) may make Permitted Acquisitions in accordance with the terms of
this Credit Agreement;
(k) so long as no Default or Event of Default is then in existence or
would result thereby, the Borrower and its Wholly-Owned Subsidiaries may
make intercompany loans and advances to pay Dividends to the extent
permitted by Section 8.6; and
(l) the Borrower and each Subsidiary Guarantor may acquire and own
investments (including debt obligations) received in connection with the
bankruptcy or reorganization of suppliers and customers and in settlement
of delinquent obligations of, and other disputes with, customers and
suppliers arising the ordinary course of business;
(m) the Borrower may make capital contributions (but not of Eligible
Accounts Receivable) to its Wholly-Owned Subsidiaries so long as such
capital contributions are made in compliance with Section 7.18 (if
applicable); and
(n) any Investments in addition to those contemplated by the foregoing
clauses (a) through (m), PROVIDED that all Investments made pursuant to
this clause (n) shall be permitted by the Senior Unsecured Note Documents
and shall not exceed $10,000,000 at any time outstanding.
8.6 DIVIDENDS, ETC. Holdings and the Borrower will not, and will not
permit any of their respective Subsidiaries to, declare or pay any dividends
(other than dividends payable solely in common stock of the Person paying such
dividend) or return any capital to, its stockholders or authorize or make any
other distribution, payment or delivery of property or cash to its stockholders
as such, or redeem, retire, purchase or otherwise acquire, directly or
indirectly, for a consideration (other than consideration in the form of common
stock of the Person paying such dividend), any shares of any class of its
capital stock now or hereafter outstanding (or any warrants for or options or
stock appreciation rights in respect of any of such shares), or set aside any
funds for any of the foregoing purposes and Holdings and the Borrower will not
permit any of their respective Subsidiaries to purchase or otherwise acquire for
consideration any shares of any class of the capital stock of Holdings, the
Borrower or any of their respective Subsidiaries now or
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hereafter outstanding (or any warrants for or options or stock appreciation
rights issued by such Person in respect of any such shares) (all of the
foregoing "Dividends"), except that:
(a) any Subsidiary of the Borrower may pay Dividends to the Borrower
or any Wholly-Owned Subsidiary of the Borrower which owns equity interest
therein;
(b) Holdings may pay regularly scheduled Dividends on the Permitted
Preferred Stock pursuant to the terms thereof solely through the issuance
of additional preferred shares of such Permitted Preferred Stock;
(c) the Borrower may pay Dividends or make loans to Holdings to
enable Holdings to (i) pay reasonable and customary corporate and
administrative expenses not to exceed in the aggregate $250,000 per year in
the ordinary course, (ii) pay principal and interest on the
Recapitalization Notes, (iii) pay fees, expenses and other payments
required in connection with the Transaction and (iv) make payments
expressly permitted pursuant to Section 8.7;
(d) the Borrower may pay Dividends or make loans to Holdings, so long
as Holdings immediately uses all proceeds thereof to (x) make payments
owing by it in respect of the Recapitalization Notes and/or (y) to
repurchase, redeem or retire the Recapitalization Notes, as long as no
premium is paid in connection therewith;
(e) so long as the payments relate to a period for which the Borrower
is a member of the same consolidated group as Holdings for federal income
tax purposes, the Borrower may make payments required pursuant to the Tax
Sharing Agreement as in effect on the Closing Date and delivered to the
Agent pursuant to Section 5.1(o);
(f) during the 60-day period following the Closing Date, the Borrower
may pay cash Dividends or make loans to Holdings, which in turn shall
(within one Business Day thereafter) utilize the full amount of such cash
Dividends to fund the transactions contemplated by the Recapitalization
(including fees and expenses in connection with the Transaction) so long as
no Default or Event of Default then exists or would exist after giving
effect thereto;
(g) Holdings may repurchase Holdings Common Stock or options to
purchase Holdings Common Stock held by current or former directors,
executives, officers, members of management or employees of Holdings, the
Borrower or any of their respective Subsidiaries (or their spouses or
estates), PROVIDED that (1) no Default or Event of Default then exists or
would result therefrom and (2) the
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aggregate amount of cash expended by Holdings pursuant to this clause (g)
during any fiscal year of Holdings shall not exceed $1,500,000 in the
aggregate;
(h) the Borrower may pay cash Dividends or make loans to Holdings for
the purpose of enabling Holdings to pay the purchases referred to in clause
(g) above, so long as all proceeds thereof are promptly used by Holdings to
make such purchases and/or pay such Dividends;
(i) the Borrower may pay Dividends or make loans to Holdings to
enable Holdings to fund interest on, and redeem, repurchase, defease or pay
upon maturity, the Holding Co. Notes (including any accrued interest,
principal and premium thereon); and
(j) repurchases of capital stock of Holdings which may be deemed to
occur upon exercise of stock options if such capital stock represents a
portion of the exercise price of such options.
8.7 TRANSACTIONS WITH AFFILIATES. Holdings and the Borrower will not,
and will not permit any of their respective Subsidiaries to, enter into any
transaction or series of transactions after the Closing Date whether or not in
the ordinary course of business, with any Affiliate other than on terms and
conditions substantially as favorable to Holdings, the Borrower or such
Subsidiary as would be obtainable by Holdings, the Borrower or such Subsidiary
at the time in a comparable arm's-length transaction with a Person other than an
Affiliate, PROVIDED that the foregoing restrictions shall not apply to (i) the
payment by Holdings or the Borrower of fees, expenses and other amounts to the
Equity Investors and their respective Affiliates in connection with the
Transaction and payments by Holdings, the Borrower and any of their respective
Subsidiaries to the Equity Investors and their respective Affiliates made
pursuant to any financial advisory, financing, underwriting or placement
agreement, or in respect of other investment banking activities, in each case as
determined by the board of directors of such Person in good faith, so long as
the amount of any such fees, expenses, or other amounts paid for any such
service provided shall not exceed the usual and customary fees for similar
services rendered by or obtainable from Persons other than the Equity Investors
and their Affiliates to such Credit Party, (ii) employment arrangements entered
into in the ordinary course of business with officers, directors or similar
executives of Holdings, the Borrower, and their respective Subsidiaries, (iii)
customary fees paid to members of the Board of Directors of Holdings, the
Borrower, and their respective Subsidiaries, (iv) subject to, in the case of the
Unit Subsidiary, continued compliance with the requirements of Section 7.18 and
the last paragraph of Section 8.1, transactions between the Borrower and any of
its Wholly-Owned Subsidiaries or among Wholly-Owned Subsidiaries of the
Borrower; (v) transactions expressly permitted pursuant to Section 8.6; (vi) any
issuance of securities, or other payments, benefits, awards or grants in cash,
securities or otherwise, pursuant to, or the funding of, employment
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arrangements, stock option and stock ownership plans or deferred compensation
plans approved by the Board of Directors of Holdings, the Borrower or the
respective Subsidiary (other than the Unit Subsidiary); (vii) loans or advances
to employees in the ordinary course of business in accordance with past
practices of Holdings, the Borrower or its Subsidiaries (other than the Unit
Subsidiary), but in any event not to exceed $1,000,000 in aggregate amount at
any time outstanding (calculated without regard to any write-downs or write-offs
thereof); (viii) payments pursuant to the Tax Sharing Agreement as originally in
effect; (ix) indemnification agreements with, and the payment of fees and
indemnity to, directors, officers and employees of Holdings, the Borrower or any
Subsidiary of the Borrower (other than the Unit Subsidiary) in each case in the
ordinary course of business; (x) any severance, noncompetition or
confidentiality agreement entered into by Holdings, the Borrower or any
Subsidiary (other than the Unit Subsidiary) with its employees in the ordinary
course of business; and (xi) Holdings' entrance into and, subject to continued
compliance with the terms and conditions set forth herein, Holdings' performance
of its obligations under (a) the Investor Stockholders Agreement dated as of May
22, 1997 among Holdings, Cypress Merchant Banking Partners L.P., Cypress
Offshore Partners L.P., Scotsman Partners L.P., Odyssey Partners, L.P. and BT
Investment Partners, Inc., (b) the Second Amended and Restated Management
Stockholders' and Optionholders' Agreement dated as of May 22, 1997 among
Holdings, Cypress Merchant Banking Partners L.P., Cypress Offshore Partners
L.P., Scotsman Partners, L.P., the Management Stockholders (as defined therein)
and the Permitted Transferees (as defined therein) of the Management
Stockholders who become parties thereto pursuant to the terms and provisions
contained therein and (c) the Amending Agreement dated as of May 22, 1997 among
Holdings, Odyssey Partners, L.P. and Barry P. Gossett.
Notwithstanding the foregoing, Holdings and the Borrower shall not,
and shall not permit their respective Subsidiaries to, enter into any agreements
with any Affiliates thereof (or any officers or management of such Affiliates),
or any other person providing for management services (other than the Unit
Subsidiary Management Agreement and any other Management Agreements whereby one
or more Subsidiaries of the Borrower pay fees for management services solely to
the Borrower).
8.8 CHANGES IN BUSINESS. (a) Holdings and the Borrower will not, and
will not permit their respective Subsidiaries to, engage in any business except
(i) all or any part of the business of selling and leasing storage containers,
mobile offices and modular structures and related equipment or any other
equipment sold or leased to a similar customer base and (ii) any business or
services related, ancillary or complementary to such businesses.
(b) Holdings shall not engage in any business other than relating to
its ownership of the capital stock of the Borrower, the issuance of the Holding
Co. Notes and Recapitalization Notes, its guaranty of the Borrower's obligations
under the Credit
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Agreement and any other activity expressly contemplated by this Agreement, the
other Credit Documents and the Recapitalization Agreement. Holdings shall have
no significant assets other than its ownership interests as described in the
immediately preceding sentence and shall act as a holding company which shall
not directly engage in any business.
8.9 INTEREST COVERAGE RATIO. The Borrower will not permit the
Interest Coverage Ratio for any period of four consecutive fiscal quarters (or,
if shorter, the period beginning on July 1, 1997 and ending on the last day of a
fiscal quarter of the Borrower ended during a period specified below), in each
case taken as one accounting period, ended on a date during a period set forth
below to be less than the ratio set forth opposite such period:
Period Ratio
------ -----
July 1, 1997 through and 1.45
including June 30, 1998
July 1, 1998 through and 1.50
including September 30, 1998
October 1, 1998 through and 1.55
including March 31, 1999
April 1, 1999 through and 1.60
including June 30, 1999
July 1, 1999 through and 1.65
including September 30, 1999
October 1, 1999 through and 1.75
including December 31, 1999
January 1, 2000 through and 1.80
including March 31, 2000
April 1, 2000 through and 1.85
including June 30, 2000
July 1, 2000 through and 1.90
including September 30, 2000
October 1, 2000 through and 1.95
including December 31, 2000
Thereafter 2.00
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8.10 UTILIZATION. The Borrower will not permit the Utilization for
any period of 13 consecutive fiscal months ended on the last day of any fiscal
quarter (calculated by taking the average of the Utilization for each of the 13
months in such period) to be less than 75%.
8.11 CREATION OF SUBSIDIARIES. Holdings and the Borrower will not, and
will not permit any of their respective Subsidiaries to, create or acquire any
Subsidiaries other than as permitted in Section 7.17 without the consent of the
Required Lenders.
8.12 LIMITATION ON VOLUNTARY PAYMENTS AND MODIFICATIONS OF
INDEBTEDNESS; MODIFICATIONS OF GOVERNING DOCUMENTS, PREFERRED STOCK AND CERTAIN
OTHER AGREEMENTS; ETC. (a) Holdings and the Borrower will not, and will not
permit any of their respective Subsidiaries to:
(i) make (or give any notice in respect of) any voluntary or optional
payment or prepayment on or redemption or acquisition for value of
(including, without limitation, by way of depositing with the trustee with
respect thereto or any other Person money or securities before due for the
purpose of paying when due) exchange or purchase, redeem or acquire for
value (whether as a result of a Change of Control, the consummation of
asset sales or otherwise) any Recapitalization Note, Holding Co. Note,
Senior Secured Note or Senior Unsecured Note;
(ii) amend or modify, or permit the amendment or modification of, any
provision of any Recapitalization Note, Senior Secured Notes Indenture,
Holding Co. Notes Indenture, Senior Secured Note Collateral Document or any
Senior Unsecured Note Document, except (x) any amendment or modification
which is not adverse to the Lenders in any respect (it being understood and
agreed that, with respect to the Senior Unsecured Note Documents, in no
event shall any amendment be permitted which relates to the Unit
Subsidiary's guaranty of the Senior Unsecured Notes or the subordination
provisions applicable thereto) and (y) in the case of the Holding Co. Notes
Documents, the Senior Secured Notes Indenture and the Senior Secured Notes
Collateral Documents, amendments, restatements and supplements thereto
executed on or prior to the Closing Date as contemplated by the Transaction
Documents;
(iii) amend, modify or change in any way adverse to the interests
of the Lenders, any Tax Sharing Agreement, the Equity Issuance Documents
(other than the Permitted Preferred Stock), any Management Agreement, the
Master Lease Agreement, the Unit Subsidiary Management Agreement, any
Recapitalization Document, its Certificate of Incorporation (including,
without limitation, by the filing or modification of any certificate of
designation), By-Laws or Limited Liability Company Agreement, or any
agreement entered into by it, with respect to
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its capital stock (including any Shareholders' Agreement, except as
contemplated by the Recapitalization Agreement), or enter into any new Tax
Sharing Agreement, Management Agreement or agreement with respect to its
capital stock which could in any way be adverse to the interests of the
Lenders in their capacity as such; and
(iv) amend, modify or change in any way adverse to the Lenders any
preferred stock (or any Certificates of Designation relating thereto).
(b) Notwithstanding anything to the contrary contained in clause (a)
above, (i) the transactions described in Sections 5.1(j) shall be permitted in
accordance with the provisions of said section and the component definitions as
used therein, (ii) Holdings shall be permitted to repurchase, redeem, acquire
for value and/or retire Recapitalization Notes for a price not to exceed the
outstanding principal amount thereof plus the amount of any accrued and unpaid
interest thereon, in accordance with the terms thereof, (iii) so long as no
Default or Event of Default then exists or would result thereby, prior to the
Senior Secured Notes Repayment Date, the Borrower shall be permitted to
repurchase, redeem, acquire for value and/or retire Senior Secured Notes from
time to time for a price not to exceed 104.83% of the face amount of any Senior
Secured Notes repurchased, redeemed, or acquired for value or retired, plus any
accrued and unpaid interest thereon, and (iv) so long as no Default or Event of
Default then exists or it would result thereby, prior to the Holding Co. Notes
Repayment Date, Holdings shall be permitted to repurchase, redeem, acquire for
value and/or retire Holding Co. Notes from time to time for a price not to
exceed 107.36% of the face amount of any Holding Co. Notes repurchased,
redeemed, acquired for value or retired, plus any accrued and unpaid interest
thereon; PROVIDED that any Notes repurchased, redeemed, acquired for value
and/or retired pursuant to clauses (ii), (iii) or (iv) above shall be
permanently retired.
8.13 ISSUANCE OF STOCK. (a) Holdings shall not issue any shares of
capital stock after the Closing Date, other than (i) shares of Holdings Common
Stock to the extent not resulting in a Change of Control, (ii) shares of
Permitted Preferred Stock on terms and conditions, and pursuant to
documentation, in form and substance satisfactory to the Agent and the Required
Lenders, and (iii) shares of Permitted Preferred Stock paid as pay-in-kind
Dividends on the Permitted Preferred Stock and (b) the Borrower will not permit
any of its Subsidiaries directly or indirectly to issue, sell, assign, pledge or
otherwise encumber or dispose of any shares of its capital stock or other equity
securities (or warrants, rights or options to acquire shares or other equity
securities) of such Subsidiary to any Person other than Holdings or another
Wholly-Owned Subsidiary, except, (x) to the extent permitted by Sections 7.3,
7.17, 8.1(c), 8.2 and 8.5 and (y) for the issuance of directors' qualifying
shares to the extent required by applicable law.
8.14 LIMITATION ON RESTRICTIONS AFFECTING SUBSIDIARIES. Each of
Holdings and the Borrower will not, and will not permit any of their respective
Subsidiaries to,
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directly or indirectly, create or otherwise cause or suffer to exist any
encumbrance or restriction which prohibits or limits the ability of the Borrower
or any Subsidiary of Holdings or the Borrower to (a) pay dividends or make other
distributions or pay any Indebtedness owed to Holdings, the Borrower or any of
their respective Subsidiaries, (b) make loans or advances to Holdings, the
Borrower or any of their respective Subsidiaries, (c) transfer any of its
properties or assets to Holdings, the Borrower or any of their respective
Subsidiaries or (d) create, incur, assume or suffer to exist any lien upon any
of its property, assets or revenues, whether now owned or hereafter acquired,
other than encumbrances and restrictions arising under (i) applicable law, (ii)
this Credit Agreement, the other Credit Documents and the Transaction Documents,
(iii) Indebtedness permitted pursuant to Sections 8.3(c), (d), (h) and (i), (iv)
customary provisions restricting subletting or assignment of any lease governing
a leasehold interest of Holdings, the Borrower or any of their respective
Subsidiaries, (v) customary restrictions on dispositions of real property
interests found in reciprocal easement agreements of Holdings, the Borrower or
any of their respective Subsidiaries, (vi) any agreement relating to
Indebtedness incurred by a Subsidiary of the Borrower prior to the date on which
such Subsidiary was acquired by the Borrower and outstanding on such acquisition
date, (vii) the extension or continuation of contractual obligations in
existence on the date hereof, PROVIDED that any such encumbrances or
restrictions contained in such continuation are no less favorable to the Lenders
than those encumbrances and restrictions under or pursuant to the contractual
obligations continued hereby, and (viii) restrictions imposed under the
agreements relating to Indebtedness permitted under Section 8.3(b), PROVIDED
that such restrictions apply only to the property securing such Indebtedness as
permitted hereunder.
8.15 NO ADDITIONAL BANK ACCOUNTS. Holdings and the Borrower will not,
and will not permit any of their respective Subsidiaries to, directly or
indirectly, open, maintain or otherwise have any checking, savings or other
deposit accounts at any bank or other financial institution where money is or
may be deposited or maintained with any Person, other than (i) the Concentration
Account, the Collection Accounts, the Disbursement Account, any cash Collateral
Account established pursuant to Section 2.5(e) and the accounts set forth on
Schedule XV and (ii) local accounts in the ordinary course of business and in
compliance with Section 8.16 and as set forth on Schedule XV, it being
understood that in no event shall Holdings, the Borrower or any of their
respective Subsidiaries be permitted to direct any payments on behalf of any
Accounts or Leases or any other Collateral to such local accounts.
8.16 NO EXCESS CASH. Holdings and the Borrower will not, and will not
permit any of their respective Subsidiaries to, directly or indirectly, maintain
in the aggregate in all of the checking, savings or other accounts (other than
the Disbursement Accounts, the Collection Accounts, the Concentration Account,
the payroll accounts and the Deferred Compensation Program Investment Account
set forth on Schedule XV) of Holdings, the Borrower and their respective
Subsidiaries total cash balances and investments
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(including Investments in Cash Equivalents) in excess of $500,000 (or, on the
Closing Date and during the immediately following six Business Days, in the case
of amounts representing proceeds of Revolving Loans or other funds received on
the Closing Date in connection with the Transaction, $2,500,000) at any time
during which any Revolving Loans are outstanding hereunder.
8.17 ACCOUNT TERMS. The Borrower shall, and shall cause each of its
Subsidiaries to, promptly pay when due, or in conformity with customary trade
terms consistent with past practices, all of their trade accounts payable,
except for late payment in the ordinary course of business, the lateness of
which payment, singly or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect.
8.18 PERMITTED PREFERRED STOCK. At all times prior to the Expiration
Date and thereafter until the payment in full in cash of all Obligations then
due and payable hereunder, the Borrower shall pay Dividends on the Permitted
Preferred Stock only in additional shares of Permitted Preferred Stock.
8.19 UNIT SUBSIDIARY. Notwithstanding anything to the contrary
contained elsewhere in this Credit Agreement, in no event will (i) the Unit
Subsidiary be liquidated and/or dissolved, (ii) the Unit Subsidiary be merged or
consolidated with or into Holdings, the Borrower or any of their respective
other Subsidiaries or any other Person, (iii) the Unit Subsidiary become a
"Guarantor" as opposed to a "Subordinated Guarantor" under the Senior Unsecured
Notes Indenture, (iv) the Borrower permit the "Subordinated Guaranty" of the
Unit Subsidiary contained in the Senior Unsecured Notes Indenture to be released
or (v) the Unit Subsidiary have any Indebtedness other than Indebtedness
expressly permitted under Section 8.3.
ARTICLE 9.
EVENTS OF DEFAULT AND REMEDIES
9.1 EVENTS OF DEFAULT. Upon the occurrence of any of the following
specified events (each an "Event of Default"):
(a) PAYMENTS. The Borrower shall (i) default in the payment when due
of any principal of the Revolving Loans or (ii) default, and such default
shall continue for five or more days, in the payment when due of, any
interest on the Revolving Loans or any drawings under Letters of Credit
which have not been reimbursed by the Borrower (including through the
incurrence of Revolving Loans), or (iii) default, and such default shall
continue for five or more days after written demand therefor by the Agent,
in the payment when due of any Fees, Expense or any other amounts owing
hereunder or under any other Credit Document; or
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(b) REPRESENTATIONS, ETC. Any representation or warranty made by any
Credit Party herein or in any other Credit Document or in any statement or
certificate delivered or required to be delivered pursuant hereto or
thereto shall prove to be untrue in any material respect on the date as of
which made or deemed made; or
(c) COVENANTS. Holdings or the Borrower shall (i) default in the due
performance or observance by it of any term, covenant or agreement
contained in Sections 7.1(e), 7.1(h), 7.8, 7.12, 7.17 or 7.18 or Article 8,
or (ii) default in the due performance or observance by it of any term,
covenant or agreement (other than those referred to in Section 9.1(a),
9.1(b) or clause (i) of this Section 9.1(c)) contained in this Credit
Agreement or the other Credit Documents and such default shall continue
unremedied for a period of at least 30 days after notice to the defaulting
party by the Agent or the Required Lenders; or
(d) DEFAULT UNDER OTHER AGREEMENTS. (i) Holdings, the Borrower or any
of their respective Subsidiaries shall (x) default in any payment with
respect to any Indebtedness (other than the Obligations) beyond the period
of grace, if any, applicable thereto or (y) default in the observance or
performance of any agreement or condition relating to any such Indebtedness
or contained in any instrument or agreement evidencing, securing or
relating thereto, or any other event shall occur or condition exist, the
effect of which default or other event or condition is to cause, or to
permit the holder or holders of such Indebtedness (or a trustee or agent on
behalf of such holder or holders) to cause any such Indebtedness to become
due prior to its stated maturity; or (ii) any such Indebtedness of
Holdings, the Borrower or any of their respective Subsidiaries shall be
declared by the holders thereof or a representative therefor to be due and
payable prior to the stated maturity thereof; PROVIDED that it shall not
constitute an Event of Default pursuant to this Section 9.1 unless the
principal amount of any one issue of Indebtedness referred to in clauses
(i) or (ii) above exceeds $2,000,000 or the aggregate amount of all
Indebtedness referred to in clauses (i) and (ii) above exceeds $3,000,000
at any one time; or
(e) BANKRUPTCY, ETC. Holdings, the Borrower or any of their
respective Subsidiaries, shall commence a voluntary case concerning itself
under Title 11 of the United States Code entitled "Bankruptcy", as now or
hereafter in effect, or any successor thereto (the "Bankruptcy Code"); or
an involuntary case is commenced against Holdings, the Borrower or any of
their respective Subsidiaries, and the petition is not controverted within
30 days, or is not dismissed within 60 days, after commencement of the
case; or a custodian (as defined in the Bankruptcy Code) is appointed for,
or takes charge of, all or substantially all of the property of Holdings,
the Borrower or any of its Subsidiaries; or Holdings, the Borrower or any
of their respective Subsidiaries commences any other proceeding under any
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reorganization, arrangement, adjustment of debt, relief of debtors,
dissolution, insolvency or liquidation or similar law of any jurisdiction
whether now or hereafter in effect relating to Holdings, the Borrower or
such Subsidiary; or there is commenced against Holdings, the Borrower or
any of their respective Subsidiaries, any such proceeding which remains
undismissed for a period of 60 days; or Holdings, the Borrower or any of
their respective Subsidiaries is adjudicated insolvent or bankrupt; or any
order of relief or other order approving any such case or proceeding is
entered; or Holdings, the Borrower or any of their respective Subsidiaries
suffers any appointment of any custodian or the like for it or any
substantial part of its property to continue undischarged or unstayed for a
period of 60 days; or Holdings, the Borrower or any of their respective
Subsidiaries makes a general assignment for the benefit of creditors; or
any corporate action is taken by Holdings, the Borrower or any of their
respective Subsidiaries for the purpose of effecting any of the foregoing,
PROVIDED that the Mobile Field Office Liquidation shall not constitute a
Default or an Event of Default hereunder; or
(f) ERISA. (i) Any Plan shall fail to satisfy the minimum funding
standard required for any plan year or part thereof after the Closing Date
under Section 412 of the Code or Section 302 of ERISA or a waiver of such
standard or extension of any amortization period is sought or granted under
Section 412 of the Code or Section 303 or 304 of ERISA, a Reportable Event
shall have occurred, a contributing sponsor (as defined in Section
4001(a)(13) of ERISA) of a Plan subject to Title IV of ERISA shall be
subject to the advance reporting requirement of PBGC Regulation Section
4043.61 (without regard to subparagraph (b)(1) thereof) and an event
described in subsection .62, .63, .64, .65, .66, .67 or .68 of PBGC
Regulation Section 4043 shall be reasonably expected to occur with respect
to such Plan within the following 30 days, any Plan which is subject to
Title IV of ERISA shall have had or is likely to have a trustee appointed
to administer such Plan, any Plan which is subject to Title IV of ERISA is,
shall have been or is likely to be terminated or to be the subject of
termination proceedings under ERISA, any Plan subject to Title IV of ERISA
shall have an Unfunded Current Liability, a contribution required to be
made with respect to a Plan or a Foreign Pension Plan has not been timely
made, the Borrower or any Subsidiary of the Borrower or any ERISA Affiliate
has incurred or is likely to incur any liability to or on account of a Plan
under Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204
or 4212 of ERISA or Section 401(a)(29), 4971 or 4975 of the Code or on
account of a group health plan (as defined in Section 607(1) of ERISA or
Section 4980B(g)(2) of the Code) under Section 4980B of the Code, or the
Borrower or any Subsidiary of the Borrower has incurred or is likely to
incur liabilities pursuant to one or more employee welfare benefit plans
(as defined in Section 3(1) of ERISA) that provide benefits to retired
employees or other former employees (other than as required by Section 601
of ERISA or any other applicable continuation of coverage
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laws) or Plans or Foreign Pension Plans; (ii) there shall result from any
such event or events the imposition of a Lien, the granting of a security
interest, or a liability or a material risk of incurring a liability; and
(iii) such Lien, security interest or liability, individually, and/or in
the aggregate, has had, or could reasonably be expected to have, a Material
Adverse Effect; or
(g) COLLATERAL DOCUMENTS. Any Collateral Document shall cease to be
in full force and effect (except in accordance with the terms thereof), or
shall cease to give the Collateral Agent on behalf of the Lenders the
Liens, rights, powers and privileges purported to be created thereby in
favor of the Collateral Agent, any Credit Party shall default in any
material respect in the due performance or observance of any term, covenant
or agreement on its part to be performed or observed pursuant to any such
Collateral Document and such default shall continue unremedied for a period
of at least 30 days after notice to the Borrower by the Agent or the
Required Lenders; or
(h) JUDGMENTS. One or more judgments or decrees shall be entered
against Holdings, the Borrower or any of their respective Subsidiaries
involving a liability of $1,000,000 or more in the case of any one such
judgment or decree (to the extent not paid or covered by insurance provided
by a carrier that has acknowledged coverage) and all such judgments or
decrees shall not have been vacated, discharged or stayed pending appeal
within 60 days from the entry thereof; or
(i) CHANGE OF CONTROL. A Change of Control shall occur; or
(j) GUARANTY. Any Guaranty shall cease to be in full force and effect
(except in accordance with the terms thereof), or any Guarantor shall
default in any material respect in the due performance or observance of any
term, covenant or agreement on its part to be performed or observed
pursuant thereto or any Guarantor shall deny or disaffirm any of its
obligations thereunder and such default, denial or disaffirmation shall
continue unremedied for a period of at least 30 days after notice to the
Borrower by the Agent or the Required Lenders;
then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Agent shall, upon the written request of the
Required Lenders, by written notice to the Borrower, take any or all of the
following actions, without prejudice to the rights of the Agent or any Lender to
enforce its claims against the Borrower, except as otherwise specifically
provided for in this Credit Agreement (PROVIDED that, if an Event of Default
specified in Section 9.1(e) shall occur with respect to the Borrower or the Unit
Subsidiary, the result which would occur upon the giving of written notice by
the Agent as specified in clauses (i) and (ii) below shall occur automatically
without the giving of any such notice): (i) declare the Total Commitments
terminated, whereupon the Commitment
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of each Lender shall forthwith terminate immediately and any Unused Line Fee
accrued and unpaid shall forthwith become due and payable without any other
notice of any kind; (ii) declare the principal of and any accrued interest in
respect of all Revolving Loans and all Obligations owing hereunder to be,
whereupon the same shall become, forthwith due and payable without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
the Borrower; (iii) direct the Collateral Agent to enforce any or all of the
Liens and security interests created pursuant to the Collateral Documents; (iv)
terminate any Letter of Credit which may be terminated in accordance with its
terms; and/or (v) direct the Borrower to pay (and the Borrower hereby agrees
upon receipt of such notice, or upon the occurrence of any Event of Default
specified in Section 9.1(e) in respect of the Borrower, it will pay) to the
Payments Administrator at its Payment Office such additional amounts of cash, to
be held as security for the Borrower's reimbursement obligations in respect of
Letter of Credit then outstanding equal to the aggregate of all Letters of
Credit Obligations.
ARTICLE 10.
THE AGENT
10.1 APPOINTMENT. (a) Each Lender hereby designates BTCC as Agent
(for purposes of this Section 10, the term "Agent" shall include BTCC as
Payments Administrator and as Collateral Agent under the Collateral Documents),
to act as herein specified. Each Lender hereby irrevocably authorizes, and each
holder of any Revolving Note or participation in any Letter of Credit by the
acceptance of a Revolving Note or participation shall be deemed irrevocably to
authorize, the Agent to take such action on its behalf under the provisions of
this Credit Agreement and the Revolving Notes and any other instruments and
agreements referred to herein and to exercise such powers and to perform such
duties hereunder and thereunder as are specifically delegated to or required of
the Agent by the terms hereof and thereof and such other powers as are
reasonably incidental thereto. Subject to the Intercreditor Agreement, the
Collateral Agent shall hold all Collateral and the Payments Administrator shall
hold all payments of principal, interest, Fees, charges and Expenses received
pursuant to this Credit Agreement or any other Credit Document for the benefit
of the Lenders to be distributed as provided herein. The Agent may perform any
of its duties hereunder by or through its agents or employees.
(b) The provisions of this Article 10 are solely for the benefit of
the Agent and the Lenders, and neither Holdings, the Borrower nor any of their
respective Subsidiaries shall have any rights as a third party beneficiary of
any of the provisions hereof (other than Sections 10.9 and 10.10(c)). In
performing its functions and duties under this Credit Agreement, the Agent shall
act solely as agent of the Lenders and does not assume and shall not be deemed
to have assumed any obligation toward or relationship
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of agency or trust with or for Holdings, the Borrower or any of their respective
Subsidiaries.
10.2 NATURE OF DUTIES OF AGENT. The Agent shall not have duties or
responsibilities except those expressly set forth in this Credit Agreement and
the other Credit Documents. Neither the Agent nor any of its officers,
directors, employees or agents shall be liable for any action taken or omitted
by it as such hereunder or in connection herewith, unless caused by its or their
gross negligence or willful misconduct. The duties of the Agent shall be
mechanical and administrative in nature; the Agent shall not have by reason of
this Credit Agreement or the other Credit Documents a fiduciary relationship in
respect of any Lender; and nothing in this Credit Agreement or the other Credit
Documents, expressed or implied, is intended to or shall be so construed as to
impose upon the Agent any obligations in respect of this Credit Agreement or the
other Credit Documents except as expressly set forth herein or therein.
10.3 LACK OF RELIANCE ON AGENT. (a) Independently and without
reliance upon the Agent, each Lender, to the extent it deems appropriate, has
made and shall continue to make (i) its own independent investigation of the
financial or other condition and affairs of Holdings, the Borrower and their
respective Subsidiaries in connection with the taking or not taking of any
action in connection herewith and (ii) its own appraisal of the creditworthiness
of Holdings, the Borrower and their respective Subsidiaries, and, except as
expressly provided in this Credit Agreement, the Agent shall not have any duty
or responsibility, either initially or on a continuing basis, to provide any
Lender with any credit or other information with respect thereto, whether coming
into its possession before the making of the Revolving Loans or at any time or
times thereafter.
(b) The Agent shall not be responsible to any Lender for any
recitals, statements, information, representations or warranties herein or in
any document, certificate or other writing delivered in connection herewith or
for the execution, effectiveness, genuineness, validity, enforceability,
collectibility, priority or sufficiency of this Credit Agreement or the other
Credit Documents or the financial or other condition of Holdings, the Borrower
or any of their respective Subsidiaries. The Agent shall not be required to
make any inquiry concerning either the performance or observance of any of the
terms, provisions or conditions of this Credit Agreement or the other Credit
Documents, or the financial condition of Holdings, the Borrower or any of their
respective Subsidiaries, or the existence or possible existence of any Default
or Event of Default, unless specifically requested to do so in writing by any
Lender.
10.4 CERTAIN RIGHTS OF THE AGENT. The Agent shall have the right to
request instructions from the Required Lenders at any time. If the Agent shall
request instructions from the Required Lenders with respect to any act or action
(including the failure to act) in connection with this Credit Agreement or the
other Credit Documents, the Agent shall
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be entitled to refrain from such act or taking such action unless and until the
Agent shall have received instructions from the Required Lenders, and the Agent
shall not incur liability to any Person by reason of so refraining. Without
limiting the foregoing, no Lender shall have any right of action whatsoever
against the Agent as a result of the Agent acting or refraining from acting
hereunder in accordance with the instructions of the Required Lenders.
10.5 RELIANCE BY AGENT. The Agent shall be entitled to rely, and
shall be fully protected in relying, upon any note, writing, resolution, notice,
statement, certificate, telex, teletype or telecopier message, cablegram,
radiogram, order or other documentary, teletransmission or telephone message
believed by it to be genuine and correct and to have been signed, sent or made
by the proper person. The Agent may consult with legal counsel (including
counsel for Holdings and the Borrower with respect to matters concerning
Holdings, the Borrower and their respective Subsidiaries), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken by it in good faith in accordance with the
advice of such counsel, accountants or experts.
10.6 INDEMNIFICATION OF AGENT. To the extent the Agent is not
reimbursed and indemnified by Holdings or the Borrower, each Lender will
reimburse and indemnify the Agent, in proportion to its respective Commitment,
for and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses (including counsel fees
and disbursements) or disbursements of any kind or nature whatsoever (including
all Expenses) which may be imposed on, incurred by or asserted against the Agent
in performing its duties hereunder, in any way relating to or arising out of
this Credit Agreement; PROVIDED, that no Lender shall be liable for any portion
of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the Agent's
gross negligence or willful misconduct. The agreements contained in this
Section shall survive any termination of this Credit Agreement and the other
Credit Documents and the payment in full of the Obligations.
10.7 THE AGENT IN ITS INDIVIDUAL CAPACITY. With respect to its
obligation to lend under this Credit Agreement, the Loans made by it and the
Revolving Notes issued to it, and its participation in Letters of Credit issued
hereunder, the Agent shall have the same rights and powers hereunder as any
other Lender or holder of a Revolving Note or participation interests and may
exercise the same as though it was not performing the duties specified herein;
and the terms "Lenders", "Required Lenders", "holders of Revolving Notes", or
any similar terms shall, unless the context clearly otherwise indicates, include
the Agent in its individual capacity. The Agent may accept deposits from, lend
money to, acquire equity interests in, and generally engage in any kind of
banking, trust, financial advisory or other business with Holdings or Borrower
or any Affiliate thereof as if it were not performing the duties specified
herein, and may accept fees and other consideration
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from Borrower for services in connection with this Credit Agreement and
otherwise without having to account for the same to the Lenders.
10.8 HOLDERS OF NOTES. The Agent may deem and treat the payee of any
Revolving Note as the owner thereof for all purposes hereof unless and until a
written notice of the assignment or transfer thereof shall have been filed with
the Agent. Any request, authority or consent of any Person who, at the time of
making such request or giving such authority or consent, is the holder of any
Revolving Note, shall be conclusive and binding on any subsequent holder,
transferee or assignee of such Revolving Note or of any Revolving Note or
Revolving Notes issued in exchange therefor.
10.9 SUCCESSOR AGENT. (a) The Agent may, upon five Business Days'
notice to the Lenders and the Borrower, resign at any time (effective upon the
appointment of a successor Agent pursuant to the provisions of this Section
10.9) by giving written notice thereof to the Lenders and the Borrower. Such
resignation of the Agent shall also operate as a resignation as Payments
Administrator. Upon any such resignation, the Required Lenders shall have the
right, upon five days' notice and written approval by the Borrower (which
approval shall not be unreasonably withheld), to appoint a successor Agent. If
no successor Agent (i) shall have been so appointed by the Required Lenders, and
(ii) shall have accepted such appointment, within thirty days after the retiring
Agent's giving of notice of resignation, then, upon five days' notice, the
retiring Agent may, on behalf of the Lenders, appoint a successor Agent. In the
event that no successor Agent is appointed pursuant to the foregoing provisions,
the Agent's resignation shall become effective on the date which is forty-five
days after the retiring Agent's giving of notice of resignation, and the
Required Lenders shall perform the duties of the Agent hereunder.
(b) Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations under
this Credit Agreement. After any retiring Agent's resignation hereunder as
Agent, the provisions of this Article 10 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this Credit
Agreement.
10.10 COLLATERAL MATTERS. (a) Each Lender authorizes and directs the
Collateral Agent to enter into the Collateral Documents for the benefit of the
Lenders. Each Lender hereby agrees, and each holder of any Revolving Note or
participant in Letters of Credit by the acceptance thereof will be deemed to
agree, that, except as otherwise set forth herein, any action taken by the
Required Lenders in accordance with the provisions of this Credit Agreement or
the Collateral Documents, and the exercise by the Required Lenders of the powers
set forth herein or therein, together with such other powers as are reasonably
incidental thereto, shall be authorized and binding upon all of the Lenders.
The
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Collateral Agent is hereby authorized on behalf of all of the Lenders, without
the necessity of any notice to or further consent from any Lender, from time to
time prior to an Event of Default, to take any action with respect to any
Collateral or Collateral Documents which may be necessary to perfect and
maintain perfected the security interest in and liens upon the Collateral
granted pursuant to the Collateral Documents.
(b) The Lenders hereby authorize the Collateral Agent, at its option
and in its discretion, upon the direction of the Agent to release any Lien
granted to or held by the Collateral Agent upon any Collateral (i) upon
termination of the Commitments and payment and satisfaction of all of the
Obligations at any time arising under or in respect of this Credit Agreement or
the Credit Documents or the transactions contemplated hereby or thereby, (ii)
constituting property being sold or disposed of upon receipt of the proceeds of
such sale by the Collateral Agent in compliance with Section 8.1 hereof or (iii)
if approved, authorized or ratified in writing by the Required Lenders, unless
such release is required to be approved by all of the Lenders hereunder. Upon
request by the Agent at any time, the Lenders will confirm in writing the
Collateral Agent's authority to release particular types or items of Collateral
pursuant to this Section 10.10.
(c) Upon any sale and transfer of Collateral which is expressly
permitted pursuant to the terms of this Credit Agreement, or consented to in
writing by the Required Lenders or all of the Lenders, as applicable, and upon
at least five (5) Business Days' (or such shorter period as is acceptable to the
Collateral Agent) prior written request by the Borrower, the Collateral Agent
shall (and is hereby irrevocably authorized by the Lenders to) execute such
documents as may be necessary to evidence the release of the Liens granted to
the Collateral Agent for the benefit of the Lenders herein or pursuant hereto
upon the Collateral that was sold or transferred; PROVIDED, that (i) the
Collateral Agent shall not be required to execute any such document on terms
which, in the Collateral Agent's opinion, would expose the Collateral Agent to
liability or create any obligation or entail any consequence other than the
release of such Liens without recourse, representation or warranty and (ii) such
release shall not in any manner discharge, affect or impair the Obligations or
any Liens upon (or obligations of Holdings, the Borrower or any of their
respective Subsidiaries in respect of) all interests retained by Holdings, the
Borrower or any of their respective Subsidiaries, including, without limitation,
the proceeds of the sale, all of which shall continue to constitute part of the
Collateral. In the event of any foreclosure or similar enforcement action with
respect to any of the Collateral, the Collateral Agent shall be authorized to
deduct all of the Expenses reasonably incurred by the Collateral Agent from the
proceeds of any such sale, transfer or foreclosure.
(d) The Collateral Agent shall have no obligation whatsoever to the
Lenders or to any other Person to assure that the Collateral exists or is owned
by Holdings, the Borrower or any of their respective Subsidiaries or is cared
for, protected or insured or that the Liens granted to the Collateral Agent
herein or pursuant hereto have been properly or
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sufficiently or lawfully created, perfected, protected or enforced or are
entitled to any particular priority, or to exercise or to continue exercising at
all or in any manner or under any duty of care, disclosure or fidelity any of
the rights, authorities and powers granted or available to the Collateral Agent
in this Section 10.10 or in any of the Collateral Documents, it being understood
and agreed that in respect of the Collateral, or any act, omission or event
related thereto, the Collateral Agent may act in any manner it may deem
appropriate, in its sole discretion, given the Collateral Agent's own interest
in the Collateral as one of the Lenders and that the Collateral Agent shall have
no duty or liability whatsoever to the Lenders, except for its gross negligence
or willful misconduct.
10.11 ACTIONS WITH RESPECT TO DEFAULTS. In addition to the Agent's
right to take actions on its own accord as permitted under this Credit
Agreement, the Agent shall take such action with respect to an Event of Default
as shall be directed by the Required Lenders; PROVIDED, that until the Agent
shall have received such directions, the Agent may (but shall not be obligated
to) take such action, or refrain from taking such action, with respect to such
Event of Default as it shall deem advisable and in the best interests of the
Lenders.
10.12 DELIVERY OF INFORMATION. The Agent shall not be required to
deliver to any Lender originals or copies of any documents, instruments,
notices, communications or other information received by the Agent from
Holdings, the Borrower, any Subsidiary, the Required Lenders, any Lender or any
other Person under or in connection with this Credit Agreement or any other
Credit Document except (i) as specifically provided in this Credit Agreement or
any other Credit Document and (ii) as specifically requested from time to time
in writing by any Lender with respect to a specific document, instrument, notice
or other written communication received by and in the possession of the Agent at
the time of receipt of such request and then only in accordance with such
specific request.
ARTICLE 11.
MISCELLANEOUS
11.1 SUBMISSION TO JURISDICTION; WAIVERS. Each of Holdings and the
Borrower hereby irrevocably and unconditionally:
(a) Submits for itself and its property in any legal action or
proceeding relating to this Credit Agreement and the other Credit Documents
to which it is a party, or for recognition and enforcement of any judgment
in respect thereof, to the non-exclusive general jurisdiction of the courts
of the State of New York located in New York City, the Courts of the United
States of America for the Southern District of New York and appellate
courts from any thereof;
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(b) Consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the
venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;
(c) Designates, appoints and empowers CT Corporation as its designee,
appointee and agent to receive, accept and acknowledge for and on its
behalf, and in respect of its property, service of any and all legal
process, summons, notices and documents which may be served in any such
action or proceeding. If for any reason such designee, appointee and agent
shall cease to be available to act as such, the Borrower agrees to
designate a new designee, appointee and agent in New York City on the terms
and for the purposes of this provision satisfactory to the Agent under this
Credit Agreement and the other Credit Documents.
(d) Agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, to Holdings
or the Borrower, as applicable, at its address set forth in Section 11.5 or
at such other address of which the Agent shall have been notified pursuant
thereto;
(e) Agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction;
(f) To the extent permitted by law, waives the right to assert any
setoff, counterclaim or cross-claim in respect of, and all statutes of
limitations which may be relevant to, such action or proceeding (other than
compulsory counterclaims), PROVIDED that nothing in this clause (f) shall
preclude a separate action asserting any such claims; and
(g) Waives due diligence, demand, presentment and protest and any
notices thereof as well as notice of nonpayment.
11.2 WAIVER OF JURY TRIAL. HOLDINGS, THE BORROWER, THE AGENT, THE
ISSUING BANK AND THE LENDERS EACH HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY IN
ANY ACTION OR PROCEEDING ARISING OUT OF THIS CREDIT AGREEMENT, THE CREDIT
DOCUMENTS OR ANY OTHER AGREEMENTS OR TRANSACTIONS RELATED HERETO OR THERETO.
11.3 GOVERNING LAW. The validity, interpretation and enforcement of
this Credit Agreement shall be governed by the laws of the State of New York.
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11.4 DELAYS: PARTIAL EXERCISE OF REMEDIES. No delay or omission of
the Agent, the Issuing Bank or the Lenders to exercise any right or remedy
hereunder, whether before or after the happening of any Event of Default, shall
impair any such right or shall operate as a waiver thereof or as a waiver of any
such Event of Default. No single or partial exercise by the Agent, the Issuing
Bank or the Lenders of any right or remedy shall preclude any other or further
exercise thereof, or preclude any other right or remedy.
11.5 NOTICES. Except as otherwise provided herein, all notices and
correspondences hereunder shall be in writing and sent by certified or
registered mail, return receipt requested, or by overnight delivery service,
with all charges prepaid, if to the Agent, or any of the Lenders, then to BTCC,
14 Wall Street, New York, New York 10005, Attention: Basil Palmeri, if to
Holdings or the Borrower, 8211 Town Center Drive, Baltimore, Maryland 21236,
Attention: President with a second copy to General Counsel at the same address,
or by facsimile transmission, promptly confirmed in writing sent by first class
mail, if to the Agent, or any of the Lenders, at (212) 618-2640, if to Holdings
or the Borrower at (410) 931-6117. All such notices and correspondence shall be
deemed given when received by the party to whom sent.
11.6 BENEFIT OF AGREEMENT. (a) This Credit Agreement shall be binding
upon and inure to the benefit of and be enforceable by the respective successors
and assigns of the parties hereto, PROVIDED that the Borrower may not assign or
transfer any of its interests hereunder, without the prior written consent of
the Lenders and PROVIDED FURTHER that the rights of each Lender to transfer,
assign or grant participations in its rights and/or obligations hereunder shall
be limited as set forth below in this Section 11.6, PROVIDED that nothing in
this Section 11.6 shall prevent or prohibit any Lender from pledging its rights
under this Credit Agreement and/or its Revolving Loans and/or Revolving Notes
hereunder to a Federal Reserve Bank in support of borrowings made by such Lender
from such Federal Reserve Bank.
(b) Each Lender shall have the right to transfer, assign or grant
participations in all or any part of its remaining rights and obligations
hereunder on the basis set forth below in this clause (b).
(A) ASSIGNMENTS. Each Lender may assign pursuant to an Assignment and
Assumption Agreement substantially in the form of Exhibit S-1 hereto all or
a portion of its rights and obligations hereunder pursuant to this clause
(b)(A) to (x) one or more Lenders or (y) one or more other Eligible
Transferees, PROVIDED that any such assignment pursuant to clause (y) above
shall be in the aggregate amount of at least $5,000,000, and shall require
the consents of the Agent, the Issuing Bank and the Borrower, which
consents shall not be unreasonably withheld. Any assignment to another
Lender pursuant to this clause (b)(A) will become effective upon the
payment to the Payments Administrator by either the assigning or the
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assignee Lender of a nonrefundable assignment fee of $5,000 and the
recording by the Payments Administrator of such assignment, and the
resultant effects thereof on the Revolving Loans and Commitments of the
assigning Lender and the assignee Lender, in a register maintained by the
Payments Administrator as agent of the Borrower for this purpose (the
"Register"), the Payments Administrator hereby agreeing to effect such
recordation no later than five Business Days after its receipt of a written
notification by the assigning Lender and the assignee Lender of the
proposed assignment. Assignments pursuant to clause (b)(A) (y) will only
be effective if the Payments Administrator shall have received a written
notice in the form of Exhibit S-2 hereto from the assigning Lender and the
assignee and payment of a nonrefundable assignment fee of $5,000 to the
Payments Administrator by either the assigning Lender or the assignee. No
later than five Business Days after its receipt of such written notice, the
Payments Administrator will record such assignment, and the resultant
effects thereof on the Revolving Loans and Commitment of the assigning
Lender, in the Register, at which time such assignment shall become
effective. Notwithstanding the foregoing, the Payments Administrator shall
not be required to, and shall not, record any assignment in the Register on
or after the date on which any proposed amendment, modification or
supplement in respect of this Credit Agreement has been circulated to the
Lenders for approval until the earlier of (x) the effectiveness of such
amendment, modification or supplement in accordance with Section 11.10 or
(y) 30 days following the date on which such proposed amendment,
modification or supplement was circulated to the Lenders. Upon the
effectiveness of any assignment pursuant to clause (b)(A)(y), (x) the
assignee will become a "Lender" for all purposes of this Credit Agreement
and the other Credit Documents with Revolving Loans and a Commitment as so
recorded by the Payments Administrator in the Register, and to the extent
of such assignment, the assigning Lender shall be relieved of its
obligations hereunder with respect to the portion of its Commitment being
assigned and (y) if such assignment occurs after the Closing Date, the
Borrower shall issue new Revolving Notes (in exchange for the Revolving
Note or Revolving Notes of the assigning Lender) to the assigning Lender
(to the extent such Lender's Commitment is not reduced to zero as a result
of such assignment) and to the assignee Lender, in each case to the extent
requested by the assigning Lender or assignee Lender, as the case may be,
to the extent needed to reflect the revised Commitments of such Lenders.
The Payments Administrator will (x) notify the Issuing Bank with respect to
outstanding Letters of Credit within 5 Business Days of the effectiveness
of any assignment hereunder and (y) prepare on the last Business Day of
each calendar quarter during which an assignment has become effective
pursuant to this clause (b)(A) a new Schedule I giving effect to all such
assignments effected during such quarter and will promptly provide same to
the Borrower and each of the Lenders. To the extent that an assignment of
all or any portion of a Lender's rights and obligations hereunder would, at
the time of such
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assignment, result in increased payment obligations under Section 2.9, 4.5
or 4.10 from those being charged by the respective assigning Lender prior
to such assignment, then the Borrower shall not be obligated to pay such
increased amounts (although the Borrower shall be obligated to pay any
other increased amounts of the type described above resulting from changes
after the date of the respective assignment). The Borrower agrees to
indemnify the Payment Administrator from and against any and all losses,
claims, damages and liabilities of whatsoever nature which may be imposed
on, asserted against or incurred by the Agent in performing its duties
under this Section 11.6 other than those resulting from the Agent's willful
misconduct or gross negligence.
(B) PARTICIPATIONS. Each Lender may transfer, grant or assign
participations in all or any part of such Lender's interests and
obligations hereunder pursuant to this clause (b)(B) to any Eligible
Transferee, PROVIDED that (i) such Lender shall remain a "Lender" for all
purposes of this Credit Agreement and the transferee of such participation
shall not constitute a Lender hereunder, (ii) no participant under any such
participation shall have rights to approve any amendment to or waiver of
this Credit Agreement or any other Credit Document except to the extent
such amendment or waiver would (x) extend the final scheduled maturity of
any of the Revolving Loans or the Commitment in which such participant is
participating (it being understood that a waiver of a mandatory reduction
in the Total Commitments or the waiver of the application of any prepayment
to the Revolving Loans shall not constitute the extension of the final
scheduled maturity of any Revolving Loan or Commitment), (y) reduce the
interest rate (other than as a result of waiving the applicability of any
post-default increases in interest rates) or Fees applicable to any of the
Revolving Loans, Commitments or Letters of Credit or postpone the payment
or reduce the amount thereof or (z) release all or substantially all of the
Collateral (except as expressly provided in the Credit Documents) and (iii)
the Borrower, the Agent and the other Lenders shall continue to deal solely
and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement. In the case of any such participation,
the participant shall not have any rights under this Credit Agreement or
any of the other Credit Documents (the participant's rights against the
granting Lender in respect of such participation to be those set forth in
the agreement with such Lender creating such participation) and all amounts
payable by the Borrower hereunder shall be determined as if such Lender had
not sold such participation, PROVIDED that such participant shall be
entitled to receive additional amounts under Sections 2.9, 2.10, 4.5 and
4.10 on the same basis as if it were a Lender to the extent that the Lender
granting such participation would be entitled to such benefits if the
participation had not been made. In addition, each agreement creating any
participation must include an agreement by the participant to be bound by
the provisions of Section 11.7 of this Credit Agreement.
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(c) Notwithstanding any other provisions of this Section 11.6, no
transfer or assignment of the interests or obligations of any Lender hereunder
or any grant of participations therein shall be permitted if such transfer,
assignment or grant would require the Borrower to file a registration statement
with the SEC or to qualify the Loans under the "Blue Sky" laws of any State.
(d) If any Lender becomes a Defaulting Lender, or upon the occurrence
of any event giving rise to the operation of Section 2.9, 4.3(c)(ii) or 4.10
with respect to such Lender (and not other Lenders generally), the Borrower
shall have the right, with the consents of the Agent and the Issuing Bank (which
consents shall not be unreasonably withheld) if no Default or Event of Default
then exists, to replace such Lender (the "Replaced Lender") with one or more
Eligible Transferees (collectively, the "Replacement Lender"), PROVIDED that (i)
at the time of any replacement pursuant to this Section 11.6(d), the Replacement
Lender shall enter into one or more Assignment and Assumption Agreements
pursuant to Section 11.6(b)(A) (and with all fees payable pursuant to said
Section 11.6(b)(A) to be paid by the Replacement Lender) pursuant to which the
Replacement Lender shall acquire all of the Commitments and outstanding
Revolving Loans of, and participations in Letters of Credit by, the Replaced
Lender and, in connection therewith, shall pay to (x) the Replaced Lender in
respect thereof an amount equal to the sum of (A) an amount equal to the
principal of, and all accrued interest on, all outstanding Revolving Loans of
the Replaced Lender, (B) an amount equal to all drawings under Letters of Credit
that have been funded by (and not reimbursed to) such Replaced Lender, together
with all then unpaid interest with respect thereto at such time, (C) an amount
equal to the increased costs incurred by the Borrower and owing to the Replaced
Lender pursuant to Sections 2.9 and 4.10 and (D) an amount equal to all accrued,
but theretofore unpaid, Fees owing to the Replaced Lender pursuant to Article 4
and (y) the Issuing Bank the amount of all unreimbursed drawings under Letters
of Credit attributable to such Replaced Lender and (ii) all obligations of the
Borrower owing to the Replaced Lender (other than those specifically described
in clause (i) above in respect of which the assignment purchase price has been,
or is concurrently being, paid) shall be paid in full by the Borrower to such
Replaced Lender concurrently with such replacement. Upon the execution of the
respective Assignment and Assumption Agreements the payment of amounts referred
to in clauses (i) and (ii) above the Replacement Lender shall become a Lender
hereunder and the Replaced Lender shall cease to constitute a Lender hereunder,
except with respect to indemnification provisions under this Credit Agreement,
which shall survive as to such Replaced Lender.
(e) Each Lender initially party to this Credit Agreement hereby
represents, and each Person that becomes a Lender pursuant to an assignment
permitted by the preceding clause (b)(A) will upon its becoming party to this
Credit Agreement represent, that it is an Eligible Transferee which makes or
acquires loans in the ordinary course of its business and that it will make or
acquire Revolving Loans for its own account in the ordinary course of such
business, PROVIDED that subject to the preceding clauses (a) through
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(d), the disposition of any promissory notes or other evidences of or interests
in Indebtedness held by such Lender shall at all times be within its exclusive
control.
11.7 CONFIDENTIALITY. Subject to Section 11.6, the Lenders shall hold
all non-public information obtained pursuant to the requirements of this
Agreement which has been identified as such by Holdings or the Borrower in
accordance with such Lenders' customary procedure for handling confidential
information of this nature and in accordance with safe and sound banking
practices and in any event may make disclosure to its Affiliates, employees,
auditors, advisors, or counsel or as reasonably required by any BONA FIDE actual
or potential transferee or participant in connection with the contemplated
transfer of any Revolving Loans or participation therein (so long as such
transferee or participant agrees to be bound by the provisions of this Section
11.7) or as required or requested by any governmental agency or representative
thereof or pursuant to legal process, PROVIDED that, unless specifically
prohibited by applicable law or court order, each Lender shall notify Holdings
or the Borrower of any request by any governmental agency or representative
thereof (other than any such request in connection with an examination of the
financial condition of such Lender by such governmental agency) for disclosure
of any such non-public information prior to disclosure of such information, and
provided further that in no event shall any Lender be obligated or required to
return any materials furnished by Holdings, the Borrower or any Subsidiaries.
11.8 INDEMNIFICATION. (a) Each of Holdings and the Borrower shall,
jointly and severally, and hereby agrees to jointly and severally, indemnify,
defend and hold harmless the Agent, each Issuing Bank and each of the Lenders
and their respective directors, officers, agents and employees (the
"Indemnitee") from and against (x) any and all losses, claims, damages,
liabilities or expenses incurred by any of them (except to the extent that it is
finally judicially determined to have resulted from the gross negligence or
willful misconduct of the respective Indemnitee) arising out of or by reason of
any litigations, investigations, claims or proceedings which arise out of or are
in any way related to (i) this Credit Agreement, the other Credit Documents or
the transactions contemplated thereby, (ii) the issuance of the Letters of
Credit, (iii) any actual or proposed use by the Borrower of the proceeds of the
Revolving Loans or (iv) the Agent's or the Lenders' entering into this Credit
Agreement, the other Credit Documents or any other agreements and documents
relating hereto, including, without limitation, amounts paid in any settlement
agreed to by Holdings or the Borrower, court costs and the reasonable fees and
disbursements of counsel incurred in connection with any such litigation,
investigation, claim or proceeding or any advice rendered in connection with any
of the foregoing (whether or not such lender is a party thereto) and (y) any
such losses, claims (including Environmental Claims), damages, liabilities,
deficiencies, judgments, fees and disbursements (including reasonable attorneys'
and consultants' fees and disbursements) or expenses incurred in connection with
any removal, remedial or other action taken by Borrower or any of the Lenders
(except to the extent resulting from the gross negligence
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or willful misconduct of the respective Indemnitee) in connection with
compliance by Holdings, the Borrower or any of their respective Subsidiaries, or
any of their respective properties, with any Environmental Laws or the actual or
alleged presence of Hazardous Materials on any property of the Borrower.
(b) If and to the extent that the Obligations of either Holdings or
the Borrower under this Section 11.8 are unenforceable for any reason, each of
Holdings and the Borrower hereby agrees to make the maximum contribution to the
payment and satisfaction of such Obligations which is permissible under
applicable law. Each of Holdings' and the Borrower's Obligations hereunder
shall survive any termination of this Credit Agreement and the other Credit
Documents and the payment in full of the Obligations, and are in addition to,
and not in substitution of, any other of their Obligations set forth in this
Credit Agreement.
(c) In addition, each of Holdings and the Borrower shall, upon demand,
pay to the Agent and any Lender all costs and expenses (including the reasonable
fees and disbursements of counsel and other professionals) paid or incurred by
the Agent or such Lender in (i) enforcing or defending its rights under or in
respect of this Credit Agreement, the other Credit Documents or any other
document or instrument now or hereafter executed and delivered in connection
herewith, (ii) in collecting the Revolving Loans, (iii) in foreclosing or
otherwise collecting upon the Collateral or any part thereof and (iv) obtaining
any legal, accounting or other advice in connection with any of the foregoing.
11.9 ENTIRE AGREEMENT; SUCCESSORS AND ASSIGNS. This Credit Agreement
and the other Credit Documents constitute the entire agreement among Holdings,
the Borrower, the Agent and the Lenders, supersedes any prior agreements among
them, and shall bind and benefit Holdings, the Borrower, the Agent and the
Lenders and their respective successors and permitted assigns.
11.10 AMENDMENT OR WAIVER. Neither this Credit Agreement nor any
other Credit Document nor any terms hereof or thereof may be changed, waived,
discharged or terminated unless such change, waiver, discharge or termination is
in writing signed by the respective Credit Parties thereto and the Required
Lenders, PROVIDED that no such change, waiver, discharge or termination shall,
without the consent of each Lender (other than a Defaulting Lender) affected
thereby, (i) extend the final scheduled maturity of any Revolving Loan or
Revolving Note (it being understood that any waiver of the application of any
prepayment or the method of application of any prepayment to the Revolving Loans
or any mandatory reduction to the Total Commitments shall not constitute an
extension of the final maturity date of such Revolving Loans), or reduce the
rate (other than as a result of waiving the applicability of any post-default
increases in interest rates) or extend the time of payment of interest or Fees
thereon, or reduce the amount thereof, or increase the Commitment of any Lender
over the amount thereof then in effect (it being understood that
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waivers or modifications of conditions precedent, covenants, Defaults or Events
of Default or of a mandatory reduction in the Total Commitment shall not
constitute an increase in the available portion of any Commitment of any Lender,
and that an increase in the available portion of any Commitment of any Lender
shall not constitute an increase in the Commitment of such Lender), (ii) release
all or substantially all of the Collateral (except as expressly provided in the
Credit Documents), (iii) amend, modify or waive any provision of this Section
11.10, (iv) reduce the percentage specified in the definition of Required
Lenders or change the percentage of holders of Commitments or the aggregate
unpaid principal amount of the Revolving Loans which shall be required for the
Lenders for any of them to take action under this Credit Agreement or (v)
consent to the assignment or transfer by the Borrower of any of its rights and
obligations under any Credit Document. No provision of Article 3 or 10 may be
amended without the consent of each Issuing Bank or the Agent, respectively.
11.11 NONLIABILITY OF AGENT AND LENDERS. The relationship between
Holdings, the Borrower and their respective Subsidiaries, on the one hand, and
the Lenders and the Agent, on the other hand, shall be solely that of debtors
and creditors. None of the Agent or any Lender shall have any fiduciary
responsibilities to Holdings, the Borrower, or any of their respective
Subsidiaries. None of the Agent or any Lender undertakes any responsibility to
Holdings, the Borrower, or any of their respective Subsidiaries to review or
inform Holdings, the Borrower, or any of their respective Subsidiaries of any
matter in connection with any phase of the business or operations of Holdings,
the Borrower, or any of their respective Subsidiaries.
11.12 INDEPENDENT NATURE OF LENDERS' RIGHTS. The amounts payable at
any time hereunder to each Lender under such Lender's Revolving Note or Notes
shall be a separate and independent debt.
11.13 COUNTERPARTS. This Credit Agreement may be executed in any
number of counterparts and by the different parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall together constitute one and the same instrument.
11.14 EFFECTIVENESS. This Credit Agreement shall become effective on
the date (the "Effective Date") on which all of the parties hereto shall have
signed a copy hereof (whether the same or different copies) and shall have
delivered the same to the Agent pursuant to Section 11.5 or, in the case of the
Lenders, shall have given to the Agent written, telecopied or telex notice
(actually received) at such office that the same has been signed and mailed to
it.
11.15 HEADINGS DESCRIPTIVE. The headings of the several sections and
subsections of this Credit Agreement, and the Table of Contents, are inserted
for
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convenience only and shall not in any way affect the meaning or construction of
any provision of this Credit Agreement.
11.16 MAXIMUM RATE. Notwithstanding anything to the contrary
contained elsewhere in this Credit Agreement or in any other Credit Document,
the Borrower, the Agent and the Lenders hereby agree that all agreements among
them under this Credit Agreement and the other Credit Documents, whether now
existing or hereafter arising and whether written or oral, are expressly limited
so that in no contingency or event whatsoever shall the amount paid, or agreed
to be paid, to the Agent or any Lender for the use, forbearance, or detention of
the money loaned to the Borrower and evidenced hereby or thereby or for the
performance or payment of any covenant or obligation contained herein or
therein, exceed the Highest Lawful Rate. If due to any circumstance whatsoever,
fulfillment of any provisions of this Credit Agreement or any of the other
Credit Documents at the time performance of such provision shall be due shall
exceed the Highest Lawful Rate, then, automatically, the obligation to be
fulfilled shall be modified or reduced to the extent necessary to limit such
interest to the Highest Lawful Rate, and if from any such circumstance and
Lender should ever receive anything of value deemed interest by applicable law
which would exceed the Highest Lawful Rate, such excessive interest shall be
applied to the reduction of the principal amount then outstanding hereunder or
on account of any other then outstanding Obligations and not to the payment of
interest, or if such excessive interest exceeds the principal unpaid balance
then outstanding hereunder and such other then outstanding Obligations, such
excess shall be refunded to the Borrower. All sums paid or agreed to be paid to
the Agent or any Lender for the use, forbearance, or detention of the
Obligations and other Indebtedness of the Borrower to the Agent or any Lender
shall, to the extent permitted by applicable law, be amortized, prorated,
allocated and spread throughout the full term of such Indebtedness until payment
in full so that the actual rate of interest on account of all such Indebtedness
does not exceed the Highest Lawful Rate throughout the entire term of such
Indebtedness. The terms and provisions of this Section 11.16 shall control
every other provision of this Credit Agreement and all agreements among the
Borrower, the Agent and the Lenders.
11.17 RIGHT OF SETOFF. In addition to and not in limitation of all
rights of offset that any Lender or the Issuing Bank may have under applicable
law, each Lender and the Issuing Bank shall, upon the occurrence of any Event of
Default and whether or not such Lender or such Issuing Bank has made any demand
or the Obligations of any Credit Party are matured, have the right, upon prior
notice to Holdings or the Borrower, to appropriate and apply to the payment of
the Obligations of Holdings or the Borrower or any of their respective
Subsidiaries all deposits (general or special, time or demand, provisional or
final) then or thereafter held by and other Indebtedness or property then or
thereafter owing by such Lender or such Issuing Bank, including, without
limitation, any and all amounts in the BT Account, the Concentration Account or
the Disbursement Account. Each Lender or the Issuing Bank exercising such
rights shall notify the Agent thereof and
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any amount received as a result of the exercise of such rights shall be
reallocated among the Lenders and the Issuing Bank as set forth in Section 2.10
hereof provided, however, that failure of the Borrower to receive such notice
shall not impair any Lender's or the Issuing Bank's rights hereunder.
11.18 OTHER CREDIT DOCUMENTS. The Lenders hereby authorize the Agent
and the Collateral Agent to enter into the various Credit Documents attached as
exhibits to the Agreement on their behalf, and acknowledge and agree that they
are subject to the terms of the Intercreditor Agreement.
11.19 CERTAIN PROVISIONS REGARDING PERFECTION OF SECURITY INTERESTS.
Notwithstanding anything to the contrary contained in this Credit Agreement or
any of the other Credit Documents, the Lenders acknowledge and agree that,
except to the extent that further actions are required to be taken in accordance
with the terms of Section 7.13 of this Credit Agreement, (i) with respect to
Non-Certificated Units from time to time held by the Unit Subsidiary,
certificates of title have not been issued with respect thereto and,
accordingly, no notation of a security interest has been made under the titling
statutes of any State in connection therewith and (ii) with respect to Units (as
defined in the Security Agreement) from time to time leased to customers,
"fixture filings" will not be made under the provisions of the Uniform
Commercial Code as in effect in the relevant State, both because of the
administrative difficulty of ascertaining whether any such Unit is or becomes a
fixture and the inability of the Borrower and its Subsidiaries to provide the
relevant information which would be required to make such filings.
Notwithstanding the last sentence of Section 7.13, if the Borrower or any of its
Subsidiaries becomes aware that a Certificate of Title is required to be issued
with respect to any Non-Certificated Unit under applicable state law, the
Borrower shall take all steps as may be necessary so that a certificate of title
is issued with respect thereto, on which the security interest of the Collateral
Agent is noted. Furthermore, in the event the Agent or the Required Lenders
reasonably believes that Certificates of Title may be required to be issued in
connection with Non-Certificated Units located in any State, the Borrower shall
promptly (and in any event within 30 days after its receipt of the respective
request) following a request by the Agent or the Required Lenders, cause special
counsel or special counsels designated by it (who shall be reasonably acceptable
to the Agent or the Required Lenders) to issue, with respect to the laws of a
requested State or States, an opinion in form reasonably satisfactory to the
Agent and the Required Lenders as to whether Certificates of Title are required
to be issued with respect to any Non-Certificated Units under the laws of such
State or States and, whether based thereon or upon the advice of their own
counsel, if at any time the Agent or the Required Lenders inform the Borrower
that they in good faith believe that Certificates of Title are required to be
issued with respect to any Non-Certificated Unit under applicable state law and
further request that the actions described in this sentence be taken, then the
Borrower shall take all steps as may be necessary so that, within 90 days from
the date of the respective request, a certificate of title is issued with
respect thereto,
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on which the security interest of the Collateral Agent is noted; PROVIDED that
unless an Event of Default has occurred and is continuing, the Agent or the
Required Lenders shall not, in any event, request an opinion with respect to any
one State more than once in a calendar year. So long as Sections 7.18(a) and
8.11 of this Credit Agreement are complied with, the provisions of this Credit
Agreement and the other Credit Documents shall be deemed modified to the extent
necessary to permit the foregoing (and so that no violation of this Credit
Agreement or the other Credit Documents exists or shall exist as a result of the
actions permitted to be taken (or not taken) in accordance with the provisions
of preceding clauses (i) and (ii) of the first sentence of this Section 11.19
unless and until (and then to the extent) required to be taken in accordance
with the two preceding sentences) (including, without limitation, all conditions
precedent, representations, warranties, covenants and other agreements herein
and therein).
11.20 POST CLOSING ACTIONS. Notwithstanding anything to the contrary
contained in this Credit Agreement or the other Credit Documents, the parties
hereto acknowledge and agree that:
(a) MORTGAGES; TITLE INSURANCE; SURVEYS; ETC. The Borrower was
not required to satisfy the conditions precedent set forth in Section 5.1(z) on
the Closing Date. Such conditions precedent shall be satisfied in full not
later than the 90th day after the Closing Date. By such date, the Borrower
shall have (i) executed, acknowledged and delivered to the Agent Mortgages for
those Mortgaged Properties for which Mortgages were not executed, acknowledged
and delivered by the Borrower on the Closing Date and taken all other actions
required by Section 5.1(z)(i) related to such Mortgages, (ii) delivered, or
caused to be delivered, to the Collateral Agent Mortgage Policies in form and
substance satisfactory to the Collateral Agent, which Mortgage Policies shall
comply with the requirements of Section 5.1(z)(ii), and (iii) delivered, or
caused to be delivered, to the Collateral Agent surveys in form and substance
satisfactory to the Collateral Agent in connection with the Mortgaged
Properties, which surveys shall comply with the requirements of Section
5.1(z)(iii).
(b) UNIT CERTIFICATES. The Borrower and its Subsidiaries were
not required to satisfy the condition precedent set forth in Section 5.1(d)(C)
on the Closing Date. Such condition precedent shall be satisfied in full not
later than the 90th day after the Closing Date. By such date, the Borrower
shall have provided evidence that, with respect to all Certificated Units of the
Borrower and its Subsidiaries, either (x) a notation of the security interest of
the Collateral Agent has been made on the certificate of title with respect
thereto which notation shall, under applicable state law, perfect the Collateral
Agent's security interest therein or (y) an unqualified opinion of counsel
satisfactory to the Agent to the effect that such notation of a security
interest on the relevant certificate of title
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under applicable state law is not required to perfect the security interests
therein created pursuant to the Security Agreement.
(c) AUTOMOBILES AND TRUCKS. The Borrower was not required to
take steps necessary to perfect the security interests purported to be created
by the Security Agreement in automobiles and trucks. The Collateral Agent or
the Required Lenders at any time may, but shall not be required to, request that
the Borrower and/or any of its Subsidiaries take any and all actions with
respect to such automobiles and/or trucks necessary to create a first priority
perfected lien of the Collateral Agent on any automobiles or trucks pledged
pursuant to the Security Agreement.
(d) UCC FILINGS AND FILINGS WITH RESPECT TO INTELLECTUAL
PROPERTY. Holdings, the Borrower and their respective Subsidiaries were not
required to have filed (or cause to have filed) Financing Statements (Form
UCC-1) or any filings with the United States Patent and Trademark Office or the
United States Copyright Office necessary to perfect the security interest
purported to be created by the Security Agreement. Not later then the tenth day
after the Closing Date, Holdings, the Borrower and their respective Subsidiaries
shall have filed (or cause to have filed) all of such Financing Statements (Form
UCC-1) and any filings with the United States Patent and Trademark Office or the
United States Copyright Office necessary to perfect the security interest
purported to be created by the Security Agreement.
(e) The Borrower was not required to satisfy the conditions
precedent set forth in Section 5.1(aa) on the Closing Date. Such conditions
precedent shall be satisfied in full not later than the 10th day after the
Closing Date. By such date, First Trust National Association on behalf of the
holders of Senior Secured Notes, Mobile Field Office Company, the Unit
Subsidiary, the Borrower and B of A, as the Depositary, shall have entered into
one or more Deposit Account Agreements.
All provisions of this Credit Agreement and the other Credit Documents
(including, without limitation, all conditions precedent, representations,
warranties, covenants and other agreements herein and therein) shall be deemed
modified to the extent necessary to effect the foregoing (and to permit the
taking of the actions described above within the time periods, or in the case of
preceding clause (c) to the extent, required above, rather than as otherwise
provided in the Credit Documents); PROVIDED, that (x) to the extent any
representation and warranty would not be true because the foregoing actions were
not taken on the Closing Date, the respective representation and warranty shall
be required to be true and correct in all material respects at the time the
respective action is taken (or was required to be taken) in accordance with the
foregoing provisions of Section 11.20 and (y) all representations and warranties
relating to the Collateral Documents shall be required to be true immediately
after the actions required to be taken by Section 11.20 have been taken (or were
required to be taken). The acceptance of the benefits of each Credit Event
shall
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constitute a representation, warranty and covenant by the Borrowers to each of
the Lenders that the actions required pursuant to this Section 11.20 will be, or
have been, taken within the relevant time periods referred to in this Section
11.20 and that, at such time, all representations and warranties contained in
this Credit Agreement and the other Credit Documents shall then be true and
correct without any modification pursuant to this Section 11.20, the parties
hereto acknowledge and agree that the failure to take any of the actions
required above, within the relevant time periods required above, shall give rise
to an immediate Event of Default pursuant to this Credit Agreement.
ARTICLE 12.
HOLDINGS SECURED GUARANTY
12.1 THE HOLDINGS SECURED GUARANTY. In order to induce the Agent, the
Issuing Bank and the Lenders to enter into this Credit Agreement and to extend
credit hereunder and in recognition of the direct benefits to be received by
Holdings from the proceeds of the Revolving Loans and the issuance of the
Letters of Credit, Holdings hereby agrees with the Agent, the Issuing Bank and
the Lenders as follows: Holdings hereby unconditionally and irrevocably
guarantees the full and prompt payment when due, whether upon maturity, by
acceleration or otherwise, of any and all Obligations of the Borrower to the
Agent, the Issuing Bank and the Lenders hereunder. If any or all of the
Obligations of the Borrower to the Agent, the Issuing Bank and the Lenders
becomes due and payable hereunder, Holdings unconditionally promises to pay such
Obligations to the Agent, the Issuing Bank and the Lenders, or order, on demand,
together with any and all reasonable expenses which may be incurred by the
Agent, the Issuing Bank or the Lenders in collecting any of the Obligations.
This guaranty constitutes a guaranty of payment and not of collection, and
applies to all Obligations of the Borrower arising in connection with this
Credit Agreement and the other Credit Documents, in each case, heretofore, now,
or hereafter made, incurred or created, whether voluntarily or involuntarily,
absolute or contingent, liquidated or unliquidated, determined or undetermined,
whether or not such Obligations are from time to time reduced, or extinguished
and thereafter increased or incurred, whether the Borrower may be liable
individually or jointly with others, whether or not recovery upon such
Obligations may be or hereafter become barred by any statute of limitations, and
whether or not such Obligations may be or hereafter become otherwise
unenforceable.
12.2 BANKRUPTCY. Additionally, Holdings unconditionally and
irrevocably guarantees the payment of any and all Obligations of the Borrower to
the Agent, the Issuing Bank and the Lenders whether or not due or payable by the
Borrower upon the occurrence in respect of the Borrower of any of the events
specified in Section 9.1(e), and uncondi-
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tionally and irrevocably promises to pay all such Obligations to the Agent, the
Issuing Bank and the Lenders, or order, on demand, in lawful money of the United
States.
12.3 NATURE OF LIABILITY. The liability of Holdings hereunder is
exclusive and independent of any security for or other guaranty of the
Obligations of the Borrower whether executed by Holdings, any other guarantor or
by any other party, and the liability of Holdings hereunder shall not be
affected or impaired by (a) any direction as to application of payment by the
Borrower or by any other party, or (b) any other continuing or other guaranty,
undertaking or maximum liability of a guarantor or of any other party as to the
Obligations of the Borrower, or (c) any payment on or in reduction of any such
other guaranty or undertaking, or (d) any dissolution, termination or increase,
decrease or change in personnel by the Borrower, or (e) any payment made to the
Agent, the Issuing Bank or the Lenders on the Obligations which such Agent, the
Issuing Bank or such Lender repay the Borrower pursuant to court order in any
bankruptcy, reorganization, arrangement, moratorium or other debtor relief
proceeding, and Holdings waives any right to the deferral or modification of its
obligations hereunder by reason of any such proceeding.
12.4 INDEPENDENT OBLIGATION. The obligations of Holdings hereunder
are independent of the obligations of any other guarantor or the Borrower, and a
separate action or actions may be brought and prosecuted against Holdings
whether or not action is brought against any other guarantor or the Borrower and
whether or not any other guarantor or the Borrower be joined in any such action
or actions. Holdings waives, to the fullest extent permitted by law, the
benefit of any statute of limitations affecting its liability hereunder or the
enforcement thereof. Any payment by the Borrower or other circumstance which
operates to toll any statute of limitations as to the Borrower shall, to the
fullest extent permitted by law, operate to toll the statute of limitations as
to Holdings.
12.5 AUTHORIZATION. Holdings authorizes the Agent, the Issuing Bank
and the Lenders without notice or demand (except as shall be required by
applicable statute and cannot be waived), and without affecting or impairing its
liability hereunder, from time to time to:
(a) subject to the prior agreement of the Borrower (to the extent
required by the Credit Agreement), change the manner, place or terms of
payment of, and/or change or extend the time of payment of, renew,
increase, accelerate or alter, any of the Obligations (including any
increase or decrease in the rate of interest thereon), any security
therefor, or any liability incurred directly or indirectly in respect
thereof, and the Holdings Secured Guaranty herein made shall apply to the
Obligations as so changed, extended, renewed or altered;
(b) take and hold security for the payment of the Obligations and
sell, exchange, release, surrender, realize upon or otherwise deal with in
any manner and
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in any order any property by whomsoever at any time pledged or mortgaged to
secure, or howsoever securing, the Obligations or any liabilities
(including any of those hereunder) incurred directly or indirectly in
respect thereof or hereof, and/or any offset thereagainst;
(c) exercise or refrain from exercising any rights against the
Borrower or others or otherwise act or refrain from acting;
(d) release or substitute any one or more endorsers, guarantors, the
Borrower or other obligors;
(e) settle or compromise any of the Obligations, any security therefor
or any liability (including any of those hereunder) incurred directly or
indirectly in respect thereof or hereof, and may subordinate the payment of
all or any part thereof to the payment of any liability (whether due or
not) of the Borrower to its creditors other than the Agent, the Issuing
Bank and the Lenders;
(f) apply any sums by whomsoever paid or howsoever realized to any
liability or liabilities of the Borrower to the Agent, the Issuing Bank and
the Lenders regardless of what liability or liabilities of Holdings or the
Borrower remain unpaid; and/or
(g) consent to or waive any breach of, or any act, omission or default
under, this Credit Agreement or any of the instruments or agreements
referred to herein, or otherwise, with the agreement of the Borrower,
amend, modify or supplement this Credit Agreement or any of such other
instruments or agreements.
12.6 RELIANCE. It is not necessary for the Agent, the Issuing Bank or
the Lenders to inquire into the capacity or powers of the Borrower or its
Subsidiaries or the officers, directors, partners or agent acting or purporting
to act on its behalf, and any Obligations made or created in reliance upon the
professed exercise of such powers shall be guaranteed hereunder.
12.7 SUBORDINATION. Any Obligations of the Borrower now or hereafter
owing to Holdings is hereby subordinated in right of payment to the Obligations
of the Borrower owing to the Agent, the Issuing Bank and the Lenders; PROVIDED
that payment may be made by the Borrower on any such Obligations owing to
Holdings so long as the same is not prohibited by this Credit Agreement; and
PROVIDED FURTHER, that if the Agent so requests at a time when an Event of
Default exists, all such Obligations of the Borrower to Holdings shall be
collected, enforced and received by Holdings as trustee for the Agent, the
Issuing Bank and the Lenders and be paid over to the Agent, the Issuing Bank and
the Lenders on account of the Obligations of the Borrower to the Agent, the
Issuing Bank and
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the Lenders, but without affecting or impairing in any manner the liability of
Holdings under the other provisions of this Holdings Secured Guaranty. Prior to
the transfer by Holdings of any note or negotiable instrument evidencing any
Obligations of the Borrower to Holdings, Holdings shall mark such note or
negotiable instrument with a legend that the same is subject to this
subordination.
12.8 WAIVER. (a) Holdings waives any right (except as shall be
required by applicable statute and cannot be waived) to require the Agent, the
Issuing Bank or the Lenders to (i) proceed against the Borrower, any other
guarantor or any other party, (ii) proceed against or exhaust any security held
from the Borrower, any other guarantor or any other party or (iii) pursue any
other remedy in the Agent's, the Issuing Bank's or the Lenders' power
whatsoever. Holdings waives any defense based on or arising out of any defense
of the Borrower, any other guarantor or any other party other than payment in
full of the Obligations, including, without limitation, any defense based on or
arising out of the disability of the Borrower, any other guarantor or any other
party, or the unenforceability of the Obligations or any part thereof from any
cause, or the cessation from any cause of the liability of the Borrower other
than payment in full of the Obligations. The Agent, the Issuing Bank and the
Lenders may, at their election, foreclose on any security held by the Agent, the
Issuing Bank, the Collateral Agent or the Lenders by one or more judicial or
nonjudicial sales, whether or not every aspect of any such sale is commercially
reasonable (to the extent such sale is permitted by applicable law), or exercise
any other right or remedy the Agent, the Issuing Bank and the Lenders may have
against the Borrower or any other party, or any security, without affecting or
impairing in any way the liability of Holdings hereunder except to the extent
the Obligations has been paid. Holdings waives, to the fullest extent permitted
by law, any defense arising out of any such election by the Agent, the Issuing
Bank and the Lenders, even though such election operates to impair or extinguish
any right of reimbursement or subrogation or other right or remedy of Holdings
against any Borrower or any other party or any security.
(b) Holdings waives all presentments, demands for performance,
protests and notices, including without limitation notices of nonperformance,
notices of protest, notices of dishonor, notices of acceptance of this Holdings
Secured Guaranty, and notices of the existence, creation or incurring of new or
additional Obligations. Holdings assumes all responsibility for being and
keeping itself informed of the Borrower's financial condition and assets, and of
all other circumstances bearing upon the risk of nonpayment of the Obligations
and the nature, scope and extent of the risks which Holdings assumes and incurs
hereunder, and agrees that the Agent, the Issuing Bank and the Lenders shall
have no duty to advise Holdings of information known to them regarding such
circumstances or risks.
12.9 LIMITATION ON ENFORCEMENT. The Agent, the Issuing Bank and the
Lenders agree that this Holdings Secured Guaranty may be enforced only by the
action of
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the Agent, in each case acting upon the instructions of the Required Lenders and
that the Issuing Bank and each Lender shall not have any right individually to
seek to enforce or to enforce this Holdings Secured Guaranty, it being
understood and agreed that such rights and remedies may be exercised by the
Agent for the benefit of the Agent, the Issuing Bank and the Lenders upon the
terms of this Credit Agreement. The Agent, the Issuing Bank and the Lenders
further agree that this Holdings Secured Guaranty may not be enforced against
any Affiliate, director, officer, employee or stockholder of Holdings.
* * *
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IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Credit Agreement as of the date
first above written.
SCOTSMAN HOLDINGS, INC.
By /s/ Gerard E. Holthaus
-------------------------------
Title: President
WILLIAMS SCOTSMAN, INC.
By /s/ Gerard E. Holthaus
-------------------------------
Title: President
BT COMMERCIAL CORPORATION,
Individually and as Agent
By /s/ Joseph F. Romano
-------------------------------
Title: Vice President
BANKERS TRUST COMPANY,
as Issuing Bank
By /s/ Joseph F. Romano
-------------------------------
Title: Vice President
<PAGE>
Exhibit 10.3
INVESTOR STOCKHOLDERS AGREEMENT
INVESTOR STOCKHOLDERS AGREEMENT dated as of May 22, 1997 (this
"Agreement") among SCOTSMAN HOLDINGS, INC., a Delaware corporation (the
"Company"), CYPRESS MERCHANT BANKING PARTNERS L.P., a Delaware limited
partnership ("Cypress Onshore"), CYPRESS OFFSHORE PARTNERS L.P., a Cayman
Islands limited partnership ("Cypress Offshore" and, together with Cypress
Onshore, the "Cypress Group"), SCOTSMAN PARTNERS, L.P., a Texas limited
partnership ("Scotsman Partners" and, together with the Cypress Group, the
"Investor Group Stockholders"), ODYSSEY PARTNERS, L.P., a Delaware limited
partnership ("Odyssey"), BARRY P. GOSSETT, an individual ("BPG" and, together
with Odyssey, the "Existing Stockholders"), and BT INVESTMENT PARTNERS, INC.
("BTIP" and, together with the Investor Group Stockholders and the Existing
Stockholders, the "Stockholders").
WHEREAS, the Company, the Investor Group Stockholders and/or certain
of their Affiliates (as defined below), Odyssey, BPG and certain other persons
are parties to a Recapitalization Agreement dated as of April 11, 1997, as
amended, supplemented or otherwise modified (the "Recapitalization Agreement"),
which provides for a recapitalization of the Company pursuant to which the
Investor Group Stockholders will own shares of Common Stock (as defined below)
of the Company as described below;
WHEREAS, a condition to the consummation of the transactions
contemplated by the Recapitalization Agreement is the execution and delivery by
the Company, the Investor Group Stockholders and Odyssey of this Agreement; and
WHEREAS, as of the date hereof, as a result of the consummation of
the transactions contemplated by the Recapitalization Agreement: (i) Cypress
Onshore owns 675,401 shares of Common Stock (as defined below); (ii) Cypress
Offshore owns 34,982 shares of Common Stock; (iii) Scotsman Partners owns
710,383 shares of Common Stock; (iv) Odyssey owns 96,741 shares of Common Stock;
(v) BPG owns 41,469 shares of Common Stock; and (vi) BTIP owns 54,644 shares of
Common Stock;
NOW, THEREFORE, in consideration of the mutual promises and
agreements set forth herein, the adequacy of which is hereby acknowledged, the
parties hereto agree as follows:
<PAGE>
ARTICLE I
DEFINED TERMS
1.1 Definitions. As used in this Agreement, the following terms
shall have the meanings set forth below:
"Affiliate" of any Person means any other Person directly or
indirectly controlling, controlled by or under common control with such Person.
The term "control" means, with respect to any Person, the power to direct or
cause the direction of the management or policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Amended Existing Stockholders Agreement" means the Second Amended
and Restated Stockholders' and Optionholders' Agreement dated as of the date
hereof to which the Company, the Investor Group Stockholders and certain other
stockholders of the Company are parties as of the date hereof, as the same may
be amended, supplemented or otherwise modified from time to time.
"Board of Directors" means the Board of Directors of the Company.
"Business Day" means any day other than a Saturday, Sunday or day on
which the Company's principal offices are not open generally for business.
"Charter Documents" means the Certificate of Incorporation and the
Bylaws of the Company as amended through the date hereof.
"Common Stock" means the common stock, par value $.01 per share, of
the Company or any other capital stock of the Company into which such stock is
reclassified or reconstituted.
"Convertible Security" means any security of the Company which is
convertible into or exercisable or exchangeable for Common Stock, whether or not
the conversion, exercisability or exchangeability of such security is subject to
the passage of time or any event or contingency.
"Fully Diluted Shares" means, with respect to any Stockholder at any
time, a number of shares of Common Stock equal to the sum of (i) the number of
such Stockholder's Shares plus (ii) the number of shares of Common Stock that
such Stockholder would acquire upon the conversion, exercise or exchange of all
Convertible Securities then owned by such Stockholder.
"Individual Permitted Transferee" means, with respect to a
Stockholder who is an individual, a Person to whom any of the following
Transfers is made:
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(i) Transfer upon the death of such Stockholder to such
Stockholder's spouse or descendants (including adopted children and
stepchildren, if any), or to such Stockholder's executor, administrator or
testamentary or inter vivos trustee;
(ii) a Transfer to such Stockholder's spouse or descendants
(including adopted children and stepchildren, if any), or a trust, the
sole income beneficiaries of which, or a corporation, partnership or
limited liability company, the sole stockholders, limited and/or general
partners or members, as the case may be, of which, include only such
Stockholder, such Stock holder's spouse and/or such Stockholder's
descendants (including adopted children and stepchildren, if any);
(iii) a Transfer to the legal guardian of such Stockholder, if
such Stockholder shall be or become disabled; or
(iv) a Transfer not covered by clause (i), (ii) or (iii) above
that is approved by each of the Cypress Group and Scotsman Partners, in
its sole discretion, prior to the consummation thereof;
provided that, in the event of death or disability of any Person to whom a
Transfer is made pursuant to clause (i), (ii), (iii) or (iv) above, the term
"Individual Permitted Transferee" shall include:
(x) in the case of such Person's death, such Person's spouse
or descendants (including adopted children and stepchildren, if any), or
such Person's executor, administrator or testamentary or inter vivos
trustee; and
(y) in the case of such Person's disability, such
Person's legal guardian.
"Initial Public Offering" means the Company's initial Public
Offering of shares of Common Stock.
"IPO Effectiveness Date" means the date upon which the SEC declares
effective the Registration Statement relating to the Initial Public Offering.
"Line of Business" means the leasing, sale, delivery and
installation of mobile office units, storage units, modular buildings, portable
buildings and other services and business operations complementary or incidental
thereto.
"Other Agreement" means each agreement (other than this Agreement)
to which the Company and one or more of its stockholders is a party containing
terms regarding the matters in Article II and/or Article V hereof with respect
to the shares
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of Common Stock owned or acquired by such stockholders, including without
limitation the Amended Existing Stockholders Agreement.
"Outstanding Fully Diluted Shares" means, at any time, a number of
shares of Common Stock equal to the sum of (i) the number of shares of Common
Stock then outstanding plus (ii) the number of shares of Common Stock that would
be outstanding immediately after giving effect to the conversion, exercise or
exchange of all Convertible Securities then outstanding.
"Permitted Transferee" means, with respect to any Stockholder, a
Person to whom or to which such Stockholder is permitted to Transfer Shares
pursuant to Section 2.2(a), and includes, with respect to any Stockholder who is
an individual, an Individual Permitted Transferee of such Stockholder, except
that, for purposes of Sections 2.3 and 2.4, a Permitted Transferee shall not
include a Person to whom or to which such Stockholder is permitted to Transfer
Shares pursuant to clause (v) of Section 2.2(a).
"Person" means any individual, firm, corporation, partnership,
limited liability company, trust, incorporated or unincorporated association,
joint venture, joint stock company, governmental body or other entity of any
kind.
"Public Offering" means any offer for sale of Common Stock pursuant
to an effective Registration Statement filed under the Securities Act.
"Registration Statement" means a registration statement filed
pursuant to the Securities Act.
"Rule 144" means Rule 144 under the Securities Act, or any successor
rule.
"SEC" means the Securities and Exchange Commission or any similar
agency then having jurisdiction to enforce the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations of the SEC thereunder.
"Shares" means, with respect to any Stockholder, all outstanding
shares, whether now owned or hereafter acquired, of Common Stock owned by such
Stockholder.
"Transfer Restriction Period" means the period beginning on the date
hereof and ending on (and including) the date which is the fifth anniversary of
the date hereof.
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ARTICLE II
LIMITATIONS ON TRANSFER
2.1 General Restrictions on Transfer. (a) Each Stockholder agrees
that such Stockholder shall not, either directly or indirectly, offer, sell,
transfer, assign, mortgage, hypothecate, pledge, create a security interest in
or lien upon, encumber, donate, contribute, place in trust, or otherwise
voluntarily or involuntarily dispose of (any of the foregoing actions, to
"Transfer" and, any offer, sale, transfer, assignment, mortgage, hypothecation,
pledge, security interest or lien, encumbrance, donation, contribution, placing
in trust or other disposition, a "Transfer") any Shares, or any interest
therein, except in a transaction that is specifically permitted by this
Agreement.
(b) Any attempt to Transfer any Shares, or any interest
therein, which is not in compliance with this Agreement shall be null and void
ab initio, and neither the Company nor any transfer agent shall give any effect
in the Company's stock records to such attempted Transfer.
(c) Notwithstanding any other provision of this Agreement, no
Transfer may be made pursuant to this Agreement unless:
(i) such Transfer complies in all respects with the appli
cable provisions of this Agreement and applicable federal and state
securities laws, including, without limitation, the Securities Act;
(ii) except in the case of a Transfer pursuant to a Public
Offering or Rule 144, the Transferee agrees in writing with the Company
and the other Stockholders to be bound by the terms and conditions of this
Agreement with respect to the Shares Transferred to such Transferee to the
same extent as the Stockholder who originally held such Shares is or was
bound hereby (whereupon such Transferee shall be entitled to the same
rights as such Stockholder who originally held such Shares had with
respect to such Shares and shall be deemed to be a Stockholder (including,
if applicable, an Investor Group Stockholder) for all purposes hereunder
with respect to such Shares);
(iii) if requested by the Company, in its sole discretion,
an opinion of counsel to such transferring Stockholder shall be supplied
to the Company, at such transferring Stockholder's expense, to the effect
that such Transfer complies with applicable federal and state securities
laws; and
(iv) each of the Cypress Group and Scotsman Partners either
(A) reasonably determines that such Transfer will not result in (1) a
default or event of default with respect to any indebtedness of the
Company or
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any of its subsidiaries, (2) any other event requiring or permitting any
indebtedness of the Company or any of its subsidiaries to become due and
payable prior to its stated date of maturity or (3) any other event
requiring the Company or any of its subsidiaries to make an offer to
purchase or to redeem any indebtedness of the Company or any of its
subsidiaries or permitting any holder of any such indebtedness to sell to
the Company or to cause the Company to redeem any such indebtedness, in
each case prior to its stated maturity, or (B) each of the Cypress Group
and Scotsman Partners waives in its sole discretion its right to make a
determination under clause (A) above.
2.2 Certain Permitted Transfers. (a) Subject to Sections 2.1(c) and
2.2(b), each Stockholder may Transfer Shares:
(i) in the case of Scotsman Partners, to any of the
following partners of Scotsman Partners: FW Scotsman Investors, L.P.,
Arbor Scotsman, L.P., FW Strategic Partners, L.P. or Group 31, Inc. (each
a "Designated Partner"; Scotsman Partners, together with each Designated
Partner that owns, from time to time, Shares, are referred to herein,
collectively, as the "SP Group");
(ii) to a bank or other financial institution in a bona
fide pledge transaction to secure indebtedness of such Stockholder to such
bank or other financial institution; provided, however, that no more than
70% of such Stockholder's Shares at any time may be subject to such pledge
transactions; and, provided, further, that any further Transfer of the
Shares subject to such pledge transactions to or at the direction of the
pledgee thereof, other than to the Stockholder who pledged such Shares or
a Permitted Transferee of such Stockholder, shall be subject to the
provisions of Section 2.3;
(iii) if such Stockholder is an Investor Group Stockholder
only, to (A) another Investor Group Stockholder or (B) a Person to whom or
to which such other Investor Group Stockholder may Transfer Shares under
clause (i), (ii), (iv) or (v) of this Section 2.2(a) (with respect to each
Investor Group Stockholder, the Permitted Transferees under this clause
(iii) are referred to as its "Clause (iii) Permitted Transferees");
(iv) if such Stockholder is an individual, to an Individual
Permitted Transferee; or
(v) with the prior written consent of each of the Cypress
Group and Scotsman Partners.
(b) In the event that any Stockholder wishes to Transfer
Shares in a transaction permitted by Section 2.2(a), such Stockholder shall give
written notice to the Company and the other Stockholders of its intention to
make
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such Transfer not less than 10 days prior to effecting such Transfer, which
notice shall state the name and address of each Permitted Transferee to whom
such Transfer is proposed and the number of Shares proposed to be Transferred to
such Permitted Transferee.
2.3 Right of First Offer. (a) After the Transfer Restriction Period,
if any Stockholder or Stockholders (each a "Selling Stockholder" and,
collectively, the "Selling Stockholders") shall desire to sell Shares to any
Person other than a Permitted Transferee of such Selling Stockholders (a "Third
Party Purchaser"), then such Selling Stockholders shall first offer the Investor
Group Stockholders which are not Selling Stockholders (the "Offeree
Stockholders") the right to purchase such Shares (the "Offered Shares") by
sending written notice (the "Offering Notice") to the Company and the Offeree
Stockholders, which notice shall (i) state the number of Offered Shares, (ii)
state the proposed purchase price per Share (the "Offer Price") and all other
material terms and conditions of such sale and (iii) if applicable, be
accompanied by any written offer from the Third Party Purchaser; provided,
however, that the Selling Stockholders shall not be obligated to make such offer
to the Offeree Stockholders if the Transfer (if consummated) is made pursuant to
Section 2.5. Upon delivery of the Offering Notice, the offer made therein to the
Offeree Stockholders shall be irrevocable unless and until the first offer
rights provided for therein shall have been waived or shall have expired in
accordance with this Agreement.
(b) Subject to Section 2.3(d), each Offeree Stockholder shall
have the right, but not the obligation, to purchase at the Offer Price (and
otherwise upon the same terms and conditions as those set forth in the Offering
Notice) all but not less than all of its pro rata portion of the Offered Shares,
in the proportion that the number of Shares owned by such Offeree Stockholder
bears to the total number of Shares owned by all Offeree Stockholders. Such
right of each Offeree Stockholder shall be exercisable by written notice to the
Selling Stockholders with copies to the Company given within 30 days after
receipt of the Offering Notice (the "Notice Period"). Failure by an Offeree
Stockholder to respond within the Notice Period shall be regarded as a rejection
of the offer made pursuant to the Offering Notice. Each Offeree Stockholder that
elects to purchase its full pro rata portion of the Offered Shares is referred
to in this Section 2.3 as a "Section 2.3 Participating Stockholder."
(c) The Selling Stockholders shall, promptly after the end of
the Notice Period, notify (the "Last-Chance Notice") all Section 2.3
Participating Stockholders whether the Offered Shares have been fully subscribed
for, and, if not, the number of Offered Shares not subscribed for (the
"Remaining Offered Shares"). Subject to the further provisions of this Section
2.3(c), each Section 2.3 Participating Stockholder shall have the right to
purchase all, but not less than all, of the Remaining Offered Shares. The right
of each Section 2.3 Participating Stockholder to purchase the Remaining Offered
Shares shall be exercisable by written notice delivered to the Selling
Stockholders, with a copy to the Company, given within 10
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days after receipt of the Last-Chance Notice. If more than one Section 2.3
Participating Stockholder timely elects to exercise its right to purchase the
Remaining Offered Shares, the right to purchase the Remaining Offered Shares
shall (unless the Section 2.3 Participating Stockholders shall otherwise agree)
be allocated pro rata among the Section 2.3 Participating Stockholders electing
to purchase the Remaining Offered Shares, in the proportion that the number of
Shares owned by each such Section 2.3 Participating Stockholder bears to the
total number of Shares owned by all Section 2.3 Participating Stockholders that
elect to purchase the Remaining Offered Shares. A failure of any Section 2.3
Participating Stockholder to exercise such right within such 10-day period shall
be regarded as a waiver of its right to purchase the Remaining Offered Shares as
provided herein.
(d) Notwithstanding anything in this Section 2.3 to the
contrary, the right of the Offeree Stockholders and/or the Section 2.3
Participating Stockholders to purchase the Offered Shares pursuant to this
Section 2.3 shall be exercisable only if the Offeree Stockholders and/or the
Section 2.3 Participating Stockholders collectively agree to purchase all, but
not less than all, of the Offered Shares.
(e) The closing of the purchase of Offered Shares by the
Section 2.3 Participating Stockholders herein shall be held at the principal
office of the Company at 11:00 a.m., local time, on the 20th day after the
giving of the LastChance Notice (or, if each of the Offeree Stockholders is a
Section 2.3 Participating Stockholder, then on the 40th day following the date
of the Offering Notice), or at such other time and place as the parties to the
transaction may agree. The sale of the Offered Shares to the Section 2.3
Participating Stockholders hereunder shall otherwise be on customary terms and
conditions (but in any event in accordance with the terms of the Offering
Notice).
(f) Unless the Section 2.3 Participating Stockholders elect to
purchase all of the Offered Shares pursuant to this Section 2.3, the Selling
Stock holders may sell all but not less than all, of the Offered Shares at a
price per Share equal to or greater than the Offer Price and otherwise on terms
and conditions that are in the aggregate not materially more favorable to the
Third Party Purchaser than the terms and conditions set forth in the Offering
Notice and the written offer, if any, delivered therewith pursuant to Section
2.3(a). Any such sale shall be bona fide and made within 100 days of the date of
the Offering Notice (or, if none of the Offeree Stockholders is a Section 2.3
Participating Stockholder, then within 70 days of the Offering Notice). In the
event that such sale is not consummated within such applicable period for any
reason, then the restrictions provided for herein shall again become effective,
and no Transfer of such Offered Shares may be made thereafter by the Selling
Stockholders without again offering the same to the Offeree Stockholders in
accordance with this Section 2.3.
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(g) Notwithstanding anything to the contrary in this
Agreement, the provisions of this Section 2.3 shall not be applicable to any
Transfer proposed to be made by a Selling Stockholder pursuant to a Public
Offering or pursuant to Rule 144.
(h) Any Offeree Stockholder may, with respect to any Offering
Notice, with the prior written consent of each of the Investor Group
Stockholders in each instance, at any time assign any or all of its rights under
this Section 2.3 to the Company with respect to such Offering Notice, in which
event the Company shall have the right, but not the obligation, to purchase the
Offered Shares on the same terms and subject to the same conditions as such
Offeree Stockholder may do so under this Section 2.3. No such assignment shall
be binding upon any Selling Stockholder unless and until notice thereof shall
have been provided to such Selling Stockholder, whereupon, without further
action by any Person, unless otherwise set forth in the instrument of assignment
and reflected in such notice to such Selling Stockholder, such Offeree
Stockholder shall be relieved of all obligations it may have under this Section
2.3 to such Selling Stockholder with respect to the Offered Shares subject to
such assignment. Any such Assignment shall not extend any of the time periods
set forth in this Section 2.3.
2.4 Tag-Along Right. (a) After the Transfer Restriction Period, if
any Selling Stockholders shall desire to sell Shares to any Third Party
Purchaser (a "Proposed Sale"), then, in addition to making the offer required by
Section 2.3, such Selling Stockholders shall offer the other Stockholders which
are not Selling Stockholders (the "Tag-Along Stockholders") the right to
participate in the Proposed Sale with respect to a number of Shares determined
as provided in this Section 2.4 by sending written notice (the "Tag-Along
Notice") to the Company and the Tag-Along Stockholders, which notice shall (i)
state the number of Shares proposed to be sold in such Proposed Sale by such
Selling Stockholders (the "Proposed Sale Shares"), (ii) state the proposed
purchase price per Proposed Sale Share (the "Tag-Along Price") and all other
material terms and conditions of such Proposed Sale and (iii) if applicable, be
accompanied by any written offer from the Third Party Purchaser; provided,
however, that the Selling Stockholders shall not be obligated to deliver a
Tag-Along Notice if the Transfer (if consummated) is made pursuant to Section
2.5.
(b) Each Tag-Along Stockholder shall have the right to require
the Selling Stockholder to cause the Third Party Purchaser to purchase from such
Tag-Along Stockholder at the Tag-Along Price (and otherwise upon the same terms
and conditions as those set forth in the Tag-Along Notice) a number of Shares
owned by such Tag-Along Stockholder (such Tag-Along Stockholder's "Tag-Along
Shares") not in excess of the product of (i) the total number of Proposed Sale
Shares, times (ii) a fraction, the numerator of which is the total number of
Shares owned by such Tag-Along Stockholder and the denominator of which is equal
to the sum of (x) the total number of Shares owned by the Selling Stockholders
and the Tag-Along Stockholders, plus (y) the total number of shares of Common
Stock, if any, owned by
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stockholders of the Company (other than the Stockholders) who or which have
tagalong rights to participate in the Proposed Sale pursuant to any Other
Agreement approved by the Board of Directors in accordance with Section 4.5.
Such right of each Tag-Along Stockholder shall be exercisable by written notice
to the Selling Stockholders with copies to the Company given within 10 Business
Days after receipt of the Tag-Along Notice (the "Tag-Along Notice Period"),
which notice shall state the number of Tag-Along Shares that such Tag-Along
Stockholder elects to sell in the Proposed Sale, if less than the maximum number
of such Tag-Along Stockholder's Tag-Along Shares; provided that, if such notice
shall not state a number of Tag-Along Shares, then such Tag-Along Stockholder
will be deemed to have elected to sell the maximum number of such Tag-Along
Stockholder's Tag-Along Shares. Failure by a Tag-Along Stockholder to respond
within the Tag-Along Notice Period shall be regarded as a rejection of the offer
made pursuant to the Tag-Along Notice. Each Tag-Along Stockholder that elects to
sell any or all of such Tag-Along Shareholder's Tag-Along Shares is referred to
in this Section 2.4 as a "Participating Tag-Along Stockholder" and the number of
Tag-Along Shares elected, or deemed to be elected, by such Tag-Along Stockholder
to be sold as provided above is referred to in this Section 2.4 as such
Tag-Along Stockholder's "Participating Tag-Along Shares". The number of Shares
to be sold by the Selling Stockholders in the Proposed Sale shall be reduced by
the aggregate number of Participating Tag-Along Shares to be sold pursuant to
this Section 2.4 by all Participating Tag-Along Stockholders.
(c) At the request of the Selling Stockholders made not less
than two Business Days prior to the proposed Transfer, a Participating Tag-Along
Stockholder shall deliver to the Selling Stockholders certificates representing
such Participating Tag-Along Stockholder's Participating Tag-Along Shares, duly
endorsed, in proper form for Transfer, together with a limited power-of-attorney
authorizing the Selling Stockholders to transfer such Participating Tag-Along
Shares to the Tag-Along Purchaser and to execute all other documents required to
be executed in connection with such transaction.
(d) If no Transfer of the Tag-Along Shares in accordance with
the provisions of this Section 2.4 shall have been completed within the
applicable period contemplated by Section 2.3(e) or 2.3(f), then the Selling
Stockholders shall promptly return to the Participating Tag-Along Stockholder,
in proper form, all certificates representing such Participating Tag-Along
Stockholder's Participating TagAlong Shares and the limited power-of-attorney
previously delivered by such Participating Tag-Along Stockholder to the Selling
Stockholders.
(e) The closing of the sale of the Participating Tag-Along
Shares by the Participating Tag-Along Stockholders shall be held at the same
place and time as the closing of the sale by the Selling Stockholders in the
Proposed Sale. Promptly after the consummation of the Transfer of the
Participating Tag-Along Shares pursuant to this Section 2.4, each Participating
Tag-Along Stockholder shall receive (i) the consideration with respect to the
Participating Tag-Along Shares so
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Transferred and (ii) such other evidence of the completion of such Transfer and
the terms and conditions (if any) thereof as may reasonably be requested by such
Participating Tag-Along Stockholder.
(f) The provisions of this Section 2.4 shall remain in effect,
notwithstanding any return to any Participating Tag-Along Stockholder of
Participating Tag-Along Shares as provided in Section 2.4(d).
(g) Notwithstanding anything to the contrary in this
Agreement, the provisions of this Section 2.4 shall not be applicable to any
Transfer proposed to be made by a Selling Stockholder pursuant to a Public
Offering or pursuant to Rule 144.
(h) If the Offeree Stockholders elect to purchase Offered
Shares pursuant to Section 2.3, then the number of Offered Shares originally
proposed to be Transferred by a Selling Stockholder pursuant to such Section 2.3
shall be reduced by the aggregate number of Participating Tag-Along Shares to be
sold pursuant this Section 2.4 by all Participating Tag-Along Stockholders. In
such event, such Participating Tag-Along Shares shall be deemed to be Offered
Shares and the Participating Tag-Along Stockholders shall be deemed to be
Selling Stockholders for purposes of Section 2.3, without any requirement of
such Participating Tag-Along Stockholders to deliver an Offering Notice pursuant
to Section 2.3(a).
2.5 Bring-Along Right. (a) In the event that one or more Selling
Stockholders owning at least 60% of the number of outstanding shares of Common
Stock receives a bona fide offer from a Third Party Purchaser to purchase
(including a purchase by merger) at least 90% of the Outstanding Fully Diluted
Shares, the Selling Stockholders may send written notice (a "Buyout Notice") to
the Company and the other Stockholders notifying the other Stockholders that
they will be required to sell the same percentage (which percentage shall be
specified in such Buyout Notice) (the "Designated Percentage") of their Fully
Diluted Shares in such sale.
(b) Upon receipt of a Buyout Notice, each Stockholder
receiving such notice shall be obligated:
(i) to sell the Designated Percentage of such
Stockholder's Shares in the transaction (including a sale or merger)
contemplated by the Buyout Notice on the same terms and conditions as the
Selling Stockholders;
(ii) to sell the Designated Percentage of such
Stockholder's Convertible Securities (which shall be calculated based on
the number of shares of Common Stock issuable upon conversion, exercise or
exchange of such Convertible Securities) in the transaction (including a
sale or merger) contemplated by the Buyout Notice on the same terms and
conditions as
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Selling Stockholders, subject to appropriate adjustment to reflect terms
of such Convertible Security with respect to conversion, exercise or
exchange thereof into shares of Common Stock;
(iii) to provide for the payment by such Stockholder of such
Stockholder's pro rata portion of all costs associated with such
transaction, in the proportion that the number of Fully Diluted Shares
owned by such Stockholder bears to the number of Outstanding Fully Diluted
Shares; and
(iv) otherwise to take all necessary action to cause the
consummation of such transaction, including voting its Shares in favor of
such transaction and not exercising any appraisal rights in connection
therewith.
(c) Each Stockholder further agrees to (i) take all actions
(including executing documents) in connection with the consummation of the
proposed transaction as may reasonably be requested of it by the Selling
Stockholders and (ii) appoint the Selling Stockholders as its attorneys-in-fact
to do the same on its behalf.
(d) In the event a contract with respect to the transaction
contemplated by the Buyout Notice has not been entered into within the 90 days
after the date of delivery of the Buyout Notice, the obligations of the
Stockholders under this Section 2.5 with respect to such Buyout Notice shall
terminate, subject, however, to the right of the Selling Stockholders to deliver
a further Buyout Notice.
ARTICLE III
RIGHT TO PARTICIPATE IN CERTAIN ISSUANCES OF CAPITAL STOCK
3.1 Right to Participate in New Issuance. If the Company determines
to issue any capital stock or any security convertible into or exercisable or
exchangeable for capital stock, including without limitation any Convertible
Security, to any stockholder of the Company (including a Stockholder) (other
than capital stock to be issued (i) in connection with an employee stock option
plan or other bona fide employment compensation arrangement that is approved by
the Company's Board of Directors, (ii) pursuant to a stock split or stock
dividend, (iii) pursuant to the exercise of any option, warrant or convertible
security (including without limitation any Convertible Security) theretofore
issued, (iv) as consideration in connection with a bona fide acquisition by the
Company or any of its subsidiaries or (v) pursuant to the Initial Public
Offering) (each such issuance not excluded by the immediately preceding
parenthetical being herein referred to as a "New Issuance"), then the Company
shall notify the Stockholders of the proposed New Issuance. Such notice shall
specify the number and class of securities to be issued, the rights, terms and
privileges thereof and the estimated price at which such securities will be
issued.
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3.2 Exercise of Right. By written notice to the Company given within
15 days of being notified of such New Issuance, each Stockholder shall be
entitled to purchase that percentage of the New Issuance determined by dividing
(a) the total number of Shares owned by such Stockholder by (b) the total number
of Shares then owned by all Stockholders. If any such Stockholder does not fully
subscribe for the number or amount of shares of capital stock or securities
convertible into or exercisable or exchangeable for capital stock that it is
entitled to purchase pursuant to this Article III, the Company shall notify the
Stockholders of the same and each Stockholder participating in such purchase to
the full extent provided for in the preceding sentence shall have the right to
purchase that percentage of the New Issuance not so subscribed for, based on a
fraction, the numerator of which is the total number of Shares then owned by
such fully participating Stockholder and the denominator of which is the total
number of Shares then owned by all fully participating Stockholders who elect to
purchase such un-subscribed securities. Such right shall be exercisable within
15 days following the receipt of the notice delivered pursuant to the previous
sentence. To the extent the Stockholders do not elect to purchase all of the
securities proposed to be offered and sold in the New Issuance, the Company may
issue those securities not so subscribed for, provided that such sales are
consummated within 120 days after the Stockholders' rights hereunder have
expired or been waived.
3.3 Closing. The closing of the New Issuance shall be held at such
time as the Company shall designate in writing to the Stockholders that elect to
purchase securities in the New Issuance pursuant to this Article III not fewer
than five Business Days prior to the date of such closing, at the Company's
principal offices, or at another place designated by the Company in writing to
such Stockholders in such notice.
ARTICLE IV
CORPORATE GOVERNANCE AND CERTAIN OTHER ACTIONS
4.1 General. Each Stockholder shall vote its Shares at any regular
or special meeting of stockholders of the Company, or in any written consent
executed in lieu of such a meeting of stockholders, and shall take all other
actions necessary, to give effect to the provisions of this Agreement
(including, without limitation, Sections 4.2 and 4.5 hereof), and to ensure that
the Charter Documents do not, at any time hereafter, conflict in any respect
with the provisions of this Agreement.
4.2 Election of Directors. (a) Each Investor Group Stockholder
agrees that, except as the Investor Group Stockholders may otherwise agree in
writing, the number of directors constituting the entire Board of Directors
shall be
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eight (or seven, if the Chairman of the Board of Directors and the President of
the Company shall be the same individual), comprised of the following
individuals:
(i) three individuals designated by the Cypress Group;
(ii) three individuals designated by the SP Group;
(iii) the individual then serving as the Chairman of the
Board of Directors of the Company; and
(iv) the individual then serving as the President of the
Company.
(b) If as a result of Section 4.4, either the Cypress Group or
the SP Group is entitled to designate a lesser number of directors than it is
entitled on the date hereof to designate pursuant to Section 4.2(a), then each
Investor Group Stockholder shall vote its Shares to cause the number of
directors constituting the entire Board of Directors to be reduced by the number
of directors that the Cypress Group or the SP Group is no longer entitled to
designate.
4.3 Removal and Replacement. Each of the Cypress Group and the SP
Group shall be entitled at any time and for any reason (or for no reason) to
designate any or all of its designees on the Board of Directors for removal, and
the Cypress Group and the SP Group, acting in accordance with clause (l) of
Section 4.5, shall be entitled at any time and for any reason (or for no reason)
to designate any of the directors designated under Section 4.2(a)(iii) or
4.2(a)(iv) for removal. Subject to Section 4.4, if at any time a vacancy is
created on the Board of Directors by reason of the death, removal or resignation
of any director, then:
(i) in the case of a director designated pursuant to
Section 4.2(a)(i) or (ii), the Cypress Group or the SP Group shall, as
soon as practicable thereafter, designate a replacement director and, as
soon as practicable thereafter, each of the Investor Group Stockholders
shall take action, including, if necessary, the voting of its Shares, to
elect or cause the election by the Board of Directors of such replacement
director in accordance with Section 4.2(a)(i) or (ii), as the case may be;
and
(ii) in the case of a director designated pursuant to
Section 4.2(a)(iii) or (iv), the Board of Directors shall, as soon as
practicable thereafter (and subject to clause (l) of Section 4.5), except
as the Investor Group Stockholders may otherwise agree in writing,
designate a new Chairman of the Board or President, as the case may be, of
the Company and, as soon as practicable thereafter, each of the Investor
Group Stockholders shall take action, including, if necessary, the voting
of its Shares, to elect such new
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Chairman of the Board or President, as the case may be, as a director in
accordance with Section 4.2(a)(iii) or (iv), as the case may be.
Subject to Section 4.4, if at any time a vacancy is created on the Board of
Directors by reason of the death, removal or resignation of any director
designated pursuant to Section 4.2(a)(i) or (ii), then the Board of Directors
shall not conduct any business (other than business incident to the designation
and election of a replacement director in accordance with this Section 4.3)
until a replacement director has been designated by the Cypress Group or the SP
Group, as the case may be; provided that the foregoing restriction on the
transaction of business shall terminate five days after the creation of such
vacancy if no such replacement director has been designated.
4.4 Reduction in Number of Directors. Notwithstanding anything
herein to the contrary:
(i) (A) from and after the date that the Cypress Group and its
Permitted Transferees (other than its Clause (iii) Permitted Transferees)
own in the aggregate Shares representing 5% or more but less than 20% of
the outstanding Common Stock, the Cypress Group shall be entitled to
designate one director for election or removal pursuant to Section 4.2(a)
or 4.3, and (B) from and after the date that the Cypress Group and such
Permitted Transferees own in the aggregate Shares representing less than
5% of the outstanding Common Stock, the Cypress Group shall no longer be
entitled to designate any directors for election or removal pursuant to
Section 4.2(a) or 4.3; and
(ii) (A) from and after the date that Scotsman Partners and
its Permitted Transferees (other than its Clause (iii) Permitted
Transferees) own in the aggregate Shares representing 5% or more but less
than 20% of the outstanding Common Stock, the SP Group shall be entitled
to designate one director for election or removal pursuant to Section
4.2(a) or 4.3, and (B) from and after the date that Scotsman Partners and
such Permitted Transferees own in the aggregate Shares representing less
than 5% of the outstanding Common Stock, the SP Group shall no longer be
entitled to designate any directors for election or removal pursuant to
Section 4.2(a) or 4.3.
4.5 Super-Majority Approvals. Notwithstanding anything to the
contrary contained in this Agreement, until such time as either the Cypress
Group or the SP Group no longer has the right to designate three directors
pursuant to Section 4.2(a), each of the following actions (the "Super-Majority
Actions") shall require the approval of at least two directors designated by the
Cypress Group and at least two directors designated by the SP Group:
(a) any amendment or modification of any of the Charter
Documents;
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(b) any merger, consolidation, amalgamation, recapitalization
or other form of business combination (other than any acquisition that would be
permitted under clause (d) below) involving the Company or any subsidiary of the
Company;
(c) any sale, conveyance, lease, transfer or other disposition
of all or substantially all of the assets of the Company;
(d) any single acquisition or series of related acquisitions
of assets, including stock (whether by purchase, merger or otherwise), involving
gross consideration in excess of $5 million;
(e) any change in the Company's Line of Business, whether by
acquisition of assets or otherwise;
(f) any issuance of or agreement to issue, or any repurchase,
redemption or other acquisition or agreement to repurchase, redeem or otherwise
acquire, any shares of capital stock of the Company or any of its subsidiaries
or rights of any kind convertible into or exercisable or exchangeable for, any
shares of capital stock of the Company or any of its subsidiaries, or any
option, warrant or other subscription or purchase right with respect to shares
of capital stock;
(g) (i) any filing by the Company of a Registration Statement
to register Common Stock or Convertible Securities, other than any filing upon
the demand or request of a security holder of the Company in accordance with
this Agreement or any Other Agreement approved by the Board of the Directors
pursuant to clause (ii) below, and (ii) the entering into or amendment of any
Other Agreement (it being agreed that the Amended Existing Stockholders
Agreement as in effect on the date of this Agreement has been approved for
purposes hereof);
(h) any declaration or making of any dividend or other payment
or distribution on account of any shares of capital stock of the Company
(whether in cash or property), other than regular dividends on preferred stock
of the Company issued in accordance with clause (f) above;
(i) any incurrence or guarantee of indebtedness by the Company
or any of its subsidiaries, other than indebtedness outstanding under the 9-
7/8% Senior Notes due 2007 of Williams Scotsman, Inc. or incurred pursuant to
the Credit Agreement dated as of May 22, 1997 among William Scotsman, Inc., the
Company, the several lenders from time to time parties thereto and BT Commercial
Corporation, as agent for the lenders thereunder, or any refinancing or
replacement of any thereof; provided that, in the case of any refinancing or
replacement thereof, the aggregate amount of indebtedness or (without
duplication) guarantees of indebtedness outstanding or that may be borrowed
thereunder is not thereby increased;
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(j) the creation, incurrence or assumption of any security
interests, liens or other encumbrances upon any properties or assets of the
Company or its subsidiaries, other than liens securing or permitted by the
indebtedness referred to in clause (i) above;
(k) the adoption after the date hereof of the Company's annual
operating budget and capital budget, or the amendment of either thereof;
provided that, if, for any fiscal year of the Company, management of the Company
shall have presented its proposed annual operating budget or capital budget (the
"Management Operating Budget" and the "Management Capital Budget," respectively)
to the Board of Directors for approval and the Board of Directors shall not have
taken action to approve or disapprove an annual operating budget or capital
budget within 30 days following such presentation (or such longer period as the
Board of Directors, acting in accordance with this Section 4.5, shall
determine), then the Management Operating Budget or the Management Capital
Budget, as the case may be, shall be deemed to be the Company's annual operating
budget or capital budget, as the case may be, for such fiscal year; provided,
further, that, notwithstanding the approval or adoption (pursuant to the
immediately preceding proviso) of an annual operating budget or capital budget
pursuant to this clause (k) that contains or refers to one or more other
Super-Majority Actions under this Section 4.5, each such Super-Majority Action
shall require separate approval, in each specific instance, under this Section
4.5;
(l) the election or other designation or the removal of (i)
the Chairman of the Board of Directors or (ii) the President of the Company;
(m) except to the extent required under applicable law, the
adoption or entering into of any new (or the amendment or other increase, or
acceleration of payment or vesting of the amounts payable or to become payable
under any existing) bonus, incentive compensation, deferred compensation,
severance, profit sharing, stock option, stock purchase, insurance, pension,
retirement or other employee benefit plan, agreement or arrangement; provided
that approval under this clause (m) shall not be required if such action is
approved by a majority of the members of a duly authorized Committee of the
Board of Directors constituted in accordance with Section 4.6;
(n) the entering into of any transaction, or the amendment or
modification of any existing transaction, between the Company or any of its
subsidiaries and any Affiliate of the Company (including any Investor Group
Stockholder) other than transactions pursuant to an employee stock option plan
or other bona fide employment compensation arrangement that is approved by the
Board of Directors in accordance with clause (m) above or is in effect on the
date hereof;
(o) any change in the Company's certified public accountants
from Ernst & Young LLP, or any successor of Ernst & Young LLP;
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(p) the settlement of any litigation to which the Company or
any of its subsidiaries is a party involving the payment by the Company or its
subsidiaries of an aggregate amount greater than $5 million or involving the
consent to any injunctive or similar relief; and
(q) the commencement by the Company or any of its subsidiaries
of proceedings under any existing or future law of any jurisdiction, domestic or
foreign, relating to bankruptcy, insolvency, reorganization or relief of
debtors, seeking to have an order for relief entered with respect to it, or
seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution, composition or
other relief with respect to it or its debts, or seeking appointment of a
receiver, trustee, custodian, conservator or other similar official for it or
for all or any substantial part of its assets, or the making by the Company or
any of its subsidiaries of a general assignment for the benefit of its
creditors.
4.6 Committees of the Board of Directors. Subject to applicable law,
the Board of Directors may establish such committees of the Board of Directors
as the Board of Directors shall determine to be appropriate or convenient;
provided that, unless the Investor Group Stockholders otherwise agree in
writing, no such committee shall be established unless it is comprised solely of
an equal number of directors designated by each of the Cypress Group and
Scotsman Partners; and, provided, further, that no such committee may approve
any Super-Majority Action, other than the Super-Majority Action referred to in
Section 4.5(m).
4.7 Certain Other Actions. The Cypress Group and Scotsman Partners
hereby agree that, with respect to any notice, consent, authorization or other
action pursuant to the Amended Existing Stockholders Agreement or pursuant to
the Recapitalization Agreement to be made, given or taken by the Investor Group
Stockholders or their Affiliates, acting jointly, the Cypress Group and Scotsman
Partners shall not make, give or take any such notice, consent, authorization or
other action unless each of the Cypress Group and Scotsman Partners, or their
respective Affiliates agrees with the other in writing to do so. In the event
the Cypress Group and Scotsman Partners, or their respective Affiliates, are
unable to agree thereon, then no such notice, consent, authorization or other
action shall be made, given or taken by the Investor Group Stockholders.
4.8 Fees to Certain Affiliates. The Company shall not, and shall not
permit any of its subsidiaries to, enter into any agreement providing for the
payment of any management, consulting, advisory or other similar fees or other
amounts to, or pay any such management, consulting, advisory or similar fees or
other amounts to, any Investor Group Stockholder or any Affiliate of any
Investor Group Stockholder unless such agreement or payment is on terms not
materially less favorable to the Company or its subsidiary (taking into account
all the facts and circumstances of the transaction) than the terms that the
Company or its subsidiary
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would be able to obtain in a similar, bona fide transaction with a third party;
provided that the foregoing shall not be applicable to any payment to a security
holder of the Company in such capacity or to any payment contemplated by the
Recapitalization Agreement.
ARTICLE V
REGISTRATION RIGHTS
5.1 Certain Defined Terms. As used in this Article V, the
following terms shall have the meanings set forth below:
"Demand Holder" means:
(i) the Cypress Group, so long as they own, in the
aggregate, at least 20% of the number of Shares owned by them on the date
hereof;
(ii) the SP Group, so long as they own, in the aggregate,
at least 20% of the number of Shares owned by them on the date hereof;
(iii) any Person to whom or to which a Demand Holder under
clause (i) or (ii) above shall transfer the right to request one or more
registrations under Section 5.2(a), so long as such transferee owns
Registrable Securities representing more than 10% of the outstanding
shares of Common Stock; provided that (A) the acquisition of the
Registrable Securities by such Person has been effected in accordance with
all applicable provisions of this Agreement; (B) the transferring Demand
Holder shall give the Company written notice at or prior to the time of
such transfer stating the name and address of the transferee and
identifying the securities with respect to which the rights under this
Agreement are being transferred; (C) such transferee shall agree in
writing, in form and substance reasonably satisfactory to the Company, to
be bound hereby; and (D) immediately following such transfer, the further
disposition of such securities by such transferee is limited or restricted
under Rule 144; provided, further, that, prior to the consummation of the
Initial Public Offering, no Person shall become a Demand Holder under this
clause (iii) unless such Person shall have become the Holder of all
Registrable Securities formerly owned by the transferring Demand Holder;
and
(iv) the Existing Stockholders, acting through the holders
of a majority of the Shares held by Existing Stockholders, provided that
all the Existing Stockholders' Registrable Securities are not, at the time
a request for registration pursuant to Section 5.2(a) is given by them,
eligible for sale by
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them under Rule 144(k); and provided, further, that the Existing
Stockholders shall not be Demand Holders until 180 days after the IPO
Effectiveness Date.
"Holder" means any holder of Registrable Securities.
"Register," "registered" and "registration" shall refer to a
registration effected by preparing and filing a Registration Statement or
similar document in compliance with the Securities Act and the declaration or
ordering of effectiveness of such Registration Statement or document.
"Registrable Security" means, at any time, (i) any shares of Common
Stock held by a Stockholder or any other stockholder of the Company who has
registration rights with respect to such shares at such time pursuant to an
Other Agreement, (ii) any Convertible Security held by a Stockholder or any
other stockholder of the Company who has registration rights with respect to a
Convertible Security at such time pursuant to an Other Agreement and (iii) any
shares of Common Stock issuable upon conversion, exercise or exchange of any
such Convertible Security. For purposes of this Agreement, any Registrable
Securities shall cease to be Registrable Securities when (A) a Registration
Statement covering such Registrable Securities has been declared effective and
such Registrable Securities have been disposed of pursuant to such effective
Registration Statement, (B) such Registrable Securities shall have been disposed
of pursuant to Rule 144, (C) such Registrable Securities are sold by a Person in
a transaction in which the rights under the provisions of this Agreement are not
assigned, or (D) such Registrable Securities shall cease to be outstanding.
"Registration Expenses" means the expenses described in Section 5.7.
5.2 Demand Registration. (a) At any time and from time to time after
the earlier to occur of (i) the expiration of the Transfer Restriction Period
and (ii) the consummation by the Company of the Initial Public Offering, any
Demand Holder may request (the "Requesting Demand Holder"), subject to this
Article V, in a written notice to the Company that the Company file a
Registration Statement (or a similar document pursuant to any other statute then
in effect corresponding to the Securities Act) covering the registration of all
or a portion of such Requesting Demand Holder's and its Permitted Transferees'
Registrable Securities in the manner specified in such notice.
(b) Following receipt of any notice under Section 5.2(a), the
Company shall within ten days notify all other Holders of such request in
writing (together with any other information required by an Other Agreement) and
thereafter, as expeditiously as possible, use its reasonable efforts to cause to
be filed for registration under the Securities Act all Registrable Securities
that the Requesting Demand Holders and such other Holders have, within 15
Business Days after their receipt of such notice, requested to be registered in
accordance with the manner of
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disposition specified in such notice by the Requesting Demand Holders; provided
that the Company shall not be required to register Registrable Securities
pursuant to:
(A) more than three Registration Statements in response
to requests pursuant to Section 5.2(a) by the Cypress Group and its
transferees that become Demand Holders under clause (iii) of the
definition thereof;
(B) more than three Registration Statements in response
to requests pursuant to Section 5.2(a) by Scotsman Partners, the
Designated Partners and the transferees thereof that become Demand Holders
under clause (iii) of the definition thereof; or
(C) more than one Registration Statement in response to
a request pursuant to Section 5.2(a) by the Existing Stockholders, acting
through the holders of a majority of the Shares held by Existing
Stockholders.
(c) if the Requesting Demand Holder intends to have the
Registrable Securities distributed by means of an underwritten offering, the
Company shall include such information in the written notice referred to in
Section 5.2(b). In such event, the right of any Holder to include its
Registrable Securities in such registration shall be conditioned upon such
Holder's participation in such underwritten offering and the inclusion of such
Holder's Registrable Securities in the underwritten offering to the extent
provided below. All Holders proposing to distribute Registrable Securities
through such underwritten offering shall enter into an underwriting agreement in
customary form with the underwriter or underwriters. The managing underwriter or
underwriters shall be selected by the Company, with the consent of the
Requesting Demand Holder, which consent shall not be unreasonably withheld. No
Holder shall be required to make any representations or warranties to or
agreements with the Company or the underwriters other than representations,
warranties or agreements regarding such Holder, the statements contained in the
Registration Statement that were supplied by such Holder in writing expressly
for inclusion therein, the Registrable Securities of such Holder and such
Holder's intended method of distribution and any other representations required
by law or reasonably required by the underwriters. If any Holder of Registrable
Securities disapproves of the terms of the underwriting, such Holder may elect
to withdraw all its Registrable Securities by written notice to the Company, the
managing underwriter and the Requesting Demand Holders. The securities so
withdrawn also shall be withdrawn from registration.
(d) Notwithstanding any provision of this Agreement to the
contrary, the Company shall not be required to effect a registration pursuant to
this Section 5.2 during the period starting with the date of filing by the
Company of, and ending on the date 180 days following the effective date of, (i)
any other Registration Statement requested under this Section 5.2 or (ii) any
other Registration Statement pertaining to a Public Offering of securities for
the account of the Company or on
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behalf of Stockholders or stockholders under any Other Agreement, in each case
which the Demand Holders have been entitled to join pursuant to Section 5.3.
(e) A registration requested pursuant to this Section 5.2
shall not be deemed to have been effected for purposes of the proviso to Section
5.2(b) unless (i) the Registration Statement with respect thereto has been
declared effective by the SEC, (ii) such Registration Statement has remained
effective for the period set forth in Section 5.5(b), and (iii) the offering of
Registrable Securities pursuant to such registration is not subject to any stop
order, injunction or other similar order or requirement of the SEC; provided
that, if, with respect to any request for registration pursuant to this Section
5.2, the Requesting Demand Holder shall have withdrawn such request prior to the
Registration Statement with respect thereto being declared effective by the SEC,
then, notwithstanding clause (i) above, except if the withdrawal is due to
material adverse information relating specifically to the Company which the
Requesting Demand Holder did not know and reasonably should not have known,
unless and until such Requesting Demand Holder shall have paid or provided for
the payment of all Registration Expenses, such registration shall be deemed to
have been effected for purposes of the proviso to Section 5.2(b); provided,
further, that, if (A) with respect to any request for registration pursuant to
this Section 5.2, the Requesting Demand Holder shall have withdrawn such request
prior to the Registration Statement with respect thereto being declared
effective by the SEC and (B) with respect to any two previous requests for
registration pursuant to this Section 5.2, such Requesting Demand Holder shall
have withdrawn such requests prior to the Registration Statements with respect
thereto being declared effective by the SEC, then, notwithstanding clause (i)
above, whether or not such Requesting Demand Holder shall have paid or provided
for the payment of the Registration Expenses with respect to such request or any
previous requests, such registration shall be deemed to have been effected for
purposes of the proviso to Section 5.2(b).
(f) Notwithstanding any provision of this Section 5.2, if the
registration of which the Company gives notice pursuant to Section 5.2(b) is for
an underwritten offering and the managing underwriter or underwriters determine
in good faith that the total amount of Registrable Securities proposed to be
included in such offering is such as to adversely affect the success of such
offering, then the Company shall include in such registration the amount of
Registrable Securities which the Company is so advised can be sold in such
offering and the number of Registrable Securities of each Holder (including the
Demand Holders) seeking to have Registrable Securities registered in such
offering shall be reduced or limited pro rata among all such Holders (including
the Demand Holders) in the proportion that the number of Registrable Securities
sought to be registered by each such Holder bears to the total number of
Registrable Securities sought to be registered by all such Holders; provided
that, if the Requesting Demand Holder is not able to sell at least 50% of the
Registrable Securities it requested to be registered pursuant to this Section
5.2 because of the foregoing provisions of this Section 5.2(f) and such
Requesting Demand Holder has no other rights to request registration pursuant to
Section 5.2(a), such Requesting
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Demand Holder (so long as it remains a Demand Holder) shall continue to have the
right to request one more registration statement to be filed on its behalf
pursuant to Section 5.2(a).
5.3 Incidental "Piggyback" Registration. (a) Subject to Section 5.8,
if at any time the Company determines that it shall file a Registration
Statement under the Securities Act (other than a Registration Statement on a
Form S-4 or S-8 or any successor or similar forms) with respect to its Common
Stock or any Convertible Security, the Company shall each such time promptly
give each Holder written notice of such determination setting forth the date on
which the Company proposes to file such Registration Statement and advising each
Holder of its right to have Registrable Securities included in such registration
and of any other information required by an Other Agreement applicable to such
Registrable Securities. Upon the written request of any Holder received by the
Company no later than 15 Business Days after receipt of the Company's notice,
the Company shall use its reasonable efforts to cause to be included for
registration under the Securities Act all of the Registrable Securities that
such Holder has so requested to be registered; provided that if, at any time
after giving written notice of its intention to register securities for sale by
the Company and prior to the effective date of the Registration Statement filed
in connection with such registration, the Company shall determine for any reason
not to proceed with the proposed registration of such securities, then the
Company may, at its election, give written notice of such determination to each
Holder of Registrable Securities and, thereupon, shall be relieved of its
obligation to register any Registrable Securities in connection with such
registration (but not from its obligation to pay the Registration Expenses in
connection therewith), without prejudice, however, to the rights of any Demand
Holder to request such registration to be effected as a registration under
Section 5.2.
(b) Notwithstanding the provisions of Section 5.3(a), if the
registration of which the Company gives notice pursuant to Section 5.3(a) is for
an underwritten offering and the managing underwriter or underwriters determine
in good faith that the total amount of Registrable Securities and other
securities of the Company proposed to be included in such offering is such as to
adversely affect the success of such offering, then the Company shall include in
such registration the amount of securities which the Company is so advised can
be sold in such offering as follows:
(i) if such registration includes a registration of shares
of Common Stock or Convertible Securities to be offered for sale by the
Company, the Company shall include in such registration, first, all such
shares of Common Stock and Convertible Securities that the Company
proposed to be included in such registration, and, second, the Registrable
Securities requested to be included in such registration, pro rata among
the Holders in the proportion that the number of Registrable Securities
sought to be registered by
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each Holder bears to the total number of Registrable Securities sought to
be registered by all Holders; and
(ii) if such registration is exclusively a registration of
Registrable Securities to be offered for sale by Holders and not by the
Company, then the number of Registrable Securities to be included in such
registration shall be reduced or limited in the same manner as provided in
Section 5.2(f) so that only those Registrable Securities which the Company
is so advised can be sold in such offering are included in such
registration.
(c) Notwithstanding the provisions of Section 5.3(a), if the
Registration Statement the Company determines to file is for its Initial Public
Offering, no Holder shall be permitted to include its Registrable Securities in
such Registration Statement, and the Company shall not be required to comply
with the provisions of Sections 5.3(a) and (b), unless the Company, in its sole
discretion, determines to permit Registrable Securities to be registered
pursuant to such Registration Statement (in which case the Holders will have the
right to participate in such Registration Statement in accordance with this
Section 5.3), without prejudice, however, to the rights of any Demand Holder to
request registration under Section 5.2.
5.4 No "Shelf" Registration Under Rule 415. Notwithstanding any
provision of this Agreement to the contrary, the Company shall not be required
to effect any registration of Registrable Securities pursuant to this Agreement
for sale on a delayed or continuous basis in reliance on Rule 415 of the
Securities Act, or any successor rule, unless the Company, in its sole
discretion, determines to permit such a registration.
5.5 Obligations of the Company. (a) Whenever required under Section
5.2 or Section 5.3 to use its reasonable efforts to effect the registration of
any Registrable Securities, the Company shall, as expeditiously as practicable:
(i) prepare and file with the SEC a Registration Statement
with respect to such Registrable Securities and use its reasonable efforts
to cause such Registration Statement to become and remain effective for
the period of the distribution contemplated thereby determined as provided
in Section 5.5(b);
(ii) prepare and file with the SEC such amendments and
supplements to such Registration Statement and the prospectus used in
connection therewith as may be necessary to comply with the provisions of
the Securities Act with respect to the disposition of all Registrable
Securities covered by such Registration Statement, and furnish to the
Holders of such Registrable Securities copies of any such amendments and
supplements prior to their being used or filed with the SEC;
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(iii) furnish to the Holders of such Registrable Securities
such numbers of copies of the Registration Statement and the prospectus
included therein (including each preliminary prospectus and any amendments
or supplements thereto in conformity with the requirements of the
Securities Act) and such other documents and information as they may
reasonably request and make available for inspection by the parties
referred to in Section 5.5(a)(iv) below such financial and other
information and books and records of the Company, and cause the officers,
directors, employees, counsel and independent certified public accountants
of the Company to respond to such inquiries, as shall be reasonably
necessary, in the judgment of the respective counsel referred to in such
Section, to conduct a reasonable investigation within the meaning of
Section 11 of the Securities Act;
(iv) provide (A) the Holders of the Registrable Securities to
be included in such Registration Statement, (B) the underwriters (which
term, for purposes of this Agreement, shall include a person deemed to be
an underwriter within the meaning of Section 2(11) of the Securities Act),
if any, thereof, (C) the sales or placement agent, if any, therefor, (D)
counsel for such underwriters or agent, and (E) not more than one counsel
for all the Holders of such Registrable Securities, the opportunity to
participate in the preparation of such Registration Statement, each
prospectus included therein or filed with the SEC, and each amendment or
supplement thereto;
(v) use its reasonable efforts to register or qualify the
Registrable Securities covered by such Registration Statement under such
securities or blue sky laws of such jurisdictions within the United States
and Puerto Rico as shall be reasonably appropriate for the distribution of
such Registrable Securities; provided, however, that the Company shall not
be required in connection therewith or as a condition thereto to register
or qualify to do business in, or to file a general consent to service of
process in any jurisdiction wherein it would not but for the requirements
of this Section 5.5(a)(v) be obligated to do so, or to take any action
that would subject it to taxation in an amount greater than it would be
subject but for the requirements of this paragraph; and provided, further,
that the Company shall not be required to qualify such Registrable
Securities in any jurisdiction in which the securities regulatory
authority requires that any Holder submit its Registrable Securities to
the terms, provisions and restrictions of any escrow, lockup or similar
agreement(s) for consent to sell Registrable Securities in such
jurisdiction unless such Holder agrees to do so;
(vi) promptly notify the selling Holders of Registrable
Securities, the sales or placement agent, if any, therefor and the
managing underwriter or underwriters, if any, thereof and confirm such
advice in writing, (A) when such Registration Statement or the prospectus
included therein or any prospectus amendment or supplement or
post-effective
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amendment has been filed, and, with respect to such Registration Statement
or any post-effective amendment, when the same has become effective, (B)
of any comments by the SEC or by any Blue Sky or securities commissioner
or regulator of any state with respect thereto or any request by the SEC
for amendments or supplements to such Registration Statement or prospectus
or for additional information, (C) of the issuance by the SEC of any stop
order suspending the effectiveness of such Registration Statement or the
initiation or threatening of any proceedings for that purpose, (D) if at
any time the representations and warranties of the Company contained in
any underwriting agreement or other customary agreement cease to be true
and correct in all material respects or (E) of the receipt by the Company
of any notification with respect to the suspension of the qualification of
the Registrable Securities for sale in any jurisdiction or the initiation
or threatening of any proceeding for such purpose;
(vii) use its reasonable efforts to obtain the withdrawal of
any order suspending the effectiveness of such Registration Statement or
any post-effective amendment thereto at the earliest practicable date;
(viii) promptly notify each selling Holder of Registrable
Securities, at any time when a prospectus relating to such Registrable
Securities is required to be delivered under the Securities Act, of the
happening of any event as a result of which the prospectus included or
incorporated by reference in such Registration Statement, as then in
effect, includes an untrue statement of a material fact or omits to state
any material fact required to be stated therein or necessary to make, in
light of the circumstances under which they were made, the statements
therein not misleading, and at the request of any such Holder promptly
prepare and furnish to such Holder a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be necessary so
that, as thereafter delivered to the purchasers of such securities, such
prospectus shall not include an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary
to make, in light of the circumstances under which they were made, the
statements therein not misleading;
(ix) furnish, at the request of any Holder requesting
registration of Registrable Securities pursuant to Section 5.2 or Section
5.3, if the method of distribution is by means of an underwriting, on the
date that the Registrable Securities are delivered to the underwriters for
sale pursuant to such registration, or if such Registrable Securities are
not being sold through underwriters, on the date that the Registration
Statement with respect to such Registrable Securities becomes effective,
(A) a signed opinion, dated such date, of the independent legal counsel
representing the Company for the purpose of such registration, addressed
to the underwriters, if any, and if such Registrable Securities are not
being sold through underwriters, then to the
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Holders making such request, as to such matters as such underwriters or
the Holders holding a majority of the Registrable Securities included in
such registration, as the case may be, may reasonably request and as would
be customary in such a transaction; and (B) letters, dated such date and
the date the offering is priced, from the independent certified public
accountants of the Company, addressed to the underwriters, if any, and if
such Registrable Securities are not being sold through underwriters, then
to the Holders making such request and, if such accountants refuse to
deliver such letters to such Holders, then to the Company (x) stating that
they are independent certified public accountants within the meaning of
the Securities Act and that, in the opinion of such accountants, the
financial statements and other financial data of the Company included or
incorporated by reference in the Registration Statement or the prospectus,
or any amendment or supplement thereto, comply as to form in all material
respects with the applicable accounting requirements of the Securities Act
and (y) covering such other financial matters (including information as to
the period ending not more than five (5) business days prior to the date
of such letters) with respect to the registration in respect of which such
letter is being given as such underwriters or the Holders holding a
majority of the Registrable Securities included in such registration, as
the case may be, may reasonably request and as would be customary in such
a transaction;
(x) enter into customary agreements (including if the
method of distribution is by means of an underwriting, an underwriting
agreement in customary form, including, without limitation, customary
indemnification provisions substantially consistent with Section 5.10 and,
to the extent required by the underwriters, customary lockup provisions
substantially consistent with Section 5.11) and take such other actions as
are reasonably required in order to expedite or facilitate the disposition
of the Registrable Securities to be so included in the Registration
Statement;
(xi) use its reasonable efforts to obtain the consent or
approval of each governmental agency or authority, whether federal, state
or local, which may be required to effect registration or the offering or
sale in connection therewith or to enable the selling Holder or Holders to
offer, or to consummate the disposition of, their Registrable Securities;
(xii) cooperate with the Holders of the Registrable
Securities and the managing underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing Registrable
Securities to be sold, which certificates shall conform to the
requirements of the principal securities exchange or market on which the
Registrable Securities are then listed or admitted to trading and shall
not bear any restrictive legends; and, in the case of an underwritten
offering, enable such Registrable Securities to be in such denominations
and registered in such names as the managing underwriters may
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request at least two business days prior to any sale of the Registrable
Securities;
(xiii) otherwise comply with all applicable rules and
regulations of the SEC, and make available to its security holders, as
soon as reasonably practicable, but not later than eighteen months after
the effective date of the Registration Statement, an earnings statement
covering the period of at least twelve months beginning with the first
full month after the effective date of such Registration Statement, which
earnings statement shall satisfy the provisions of Section 11(a) of the
Securities Act;
(xiv) use its reasonable efforts to list the Registrable
Securities covered by such Registration Statement with any securities
exchange or quotation system on which the Common Stock is then listed or
quoted; and
(xv) use its reasonable efforts to make available the
executive officers of the Company to participate with the Holders of
Registrable Securities and any underwriters in any "road shows" or other
selling efforts that may be reasonably requested by the Holders in
connection with the methods of distribution for the Registrable
Securities.
(b) For purposes of Section 5.5(a), and with respect to
registration required pursuant to Section 5.2, (i) the period of distribution of
Registrable Securities in a firm commitment underwritten public offering shall
be deemed to extend until each underwriter has completed the distribution of all
securities purchased by it and (ii) the period of distribution of Registrable
Securities in any other registration shall be deemed to extend until the earlier
of the sale of all Registrable Securities covered thereby and 180 days (or such
shorter period as may be required in the underwriting agreement) after the
effective date thereof.
(c) Each Holder of Registrable Securities agrees that, upon
receipt of any notice from the Company of the happening of any event of the kind
described in Section 5.5(a)(viii), such Holder will forthwith discontinue
disposition of Registrable Securities pursuant to the Registration Statement
covering such Registrable Securities until such Holder's receipt of the copies
of the supplemented or amended prospectus contemplated by Section 5.5(a)(viii)
and, if so directed by the Company, such Holder will deliver to the Company (at
the Company's expense) all copies, other than permanent file copies then in such
Holder's possession, of the prospectus covering such Registrable Securities
current at the time of receipt of such notice; provided, however, that any
period of time during which a Holder must discontinue disposition of Registrable
Securities shall not be included in the determination of a period of
distribution for purposes of Section 5.5(b).
5.6 Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Agreement that
the
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Holders participating in a registration shall furnish to the Company such
information regarding themselves, the Registrable Securities held by them, and
the intended method of disposition of such securities as the Company shall
reasonably request and as shall be required in connection with the action to be
taken by the Company.
5.7 Expenses of Registration. Except as otherwise provided in
Section 5.2, all fees, costs and expenses incurred in connection with each
registration or attempted registration pursuant to Section 5.2 or 5.3, excluding
underwriters' discounts and commissions, but including without limitation all
registration, filing and qualification fees, word processing, duplicating,
printers' and accounting costs and fees (including the expenses of any special
audits or "cold comfort" letters required by or incident to the Company's
performance of its obligations under Section 5.5), fees of the National
Association of Securities Dealers, Inc. (the "NASD"), listing fees, fees and
expenses of complying with state securities or blue sky laws, fees and
disbursements of counsel for the Company, fees and disbursements of underwriters
customarily paid by the issuers or sellers of securities and fees and expenses
of the Holders participating therein (including counsel to the Holders), shall
be paid by the Company; provided that the Company shall not be required to pay
the fees and expenses of more than one counsel for all Holders participating
therein.
5.8 Underwriting Requirements. In connection with any underwritten
offering, the Company shall not be required under Section 5.3 to include
Registrable Securities in such underwritten offering unless the Holders of such
Registrable Securities accept the terms of the underwriting of such offering
that have been reasonably agreed upon between the Company, the Requesting Demand
Holder and the underwriters selected in accordance with this Agreement.
5.9 Rule 144 Information. With a view to making available the
benefits of certain rules and regulations of the SEC which may permit the sale
of the Registrable Securities to the public without registration, the Company
agrees that, after such time as the Company shall have consummated the Initial
Public Offering:
(a) it will make and keep public information available, as
those terms are understood and defined in Rule 144 under the Securities Act;
(b) use its reasonable efforts to file with the SEC in a
timely manner all reports and other documents required to be filed by the
Company under the Securities Act and the Exchange Act;
(c) furnish to each Holder of Registrable Securities forthwith
upon written request (i) a written statement by the Company as to its compliance
with the reporting requirements of Rule 144, the Securities Act and the Exchange
Act, (ii) a copy of the most recent annual or quarterly report of the Company,
and (iii) such other reports and documents so filed by the Company as such
Holder may reasonably request in availing itself of Rule 144; and
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(d) it will, upon the reasonable request of a Stockholder that
would be a Demand Holder but for the ability of such Stockholder to dispose of
Registrable Securities under Rule 144(k), provide reasonable cooperation in
connection with the marketing of a "block" transfer of Registrable Securities by
such Person pursuant to Rule 144; provided that the Company shall not be
required to expend an unreasonable amount of time or effort in connection
therewith and shall be reimbursed for its out-of-pocket expenses, if any,
incurred in connection therewith (it being agreed that the Company shall not be
required to participate in any "road show" in connection with any such block
transfer).
5.10 Indemnification. In the event any Registrable Securities are
included in a Registration Statement under this Agreement:
(a) The Company shall indemnify and hold harmless each Holder,
such Holder's directors and officers, and each person, if any, who controls such
Holder within the meaning of either Section 15 of the Securities Act or Section
20 of the Exchange Act, from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred in connection with defending or investigating any such
action or claim) to which they may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
proceedings in respect thereof) arise out of or are based on any untrue or
alleged untrue statement of a material fact contained in such Registration
Statement, preliminary prospectus, final prospectus or amendments or supplements
thereto or arise out of or are based upon any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading; provided, however, that the Company shall
not be liable to any Holder, or such Holder's directors or officers or
controlling persons, in any such case for any such loss, claim, damage,
liability or action to the extent that it arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in connection with such Registration Statement, preliminary prospectus,
final prospectus or amendments or supplements thereto, in conformity with
written information relating to such Holder furnished to the Company by such
Holder expressly for inclusion therein in connection with such registration;
and, provided, further, that as to any preliminary prospectus or any final
prospectus this indemnity agreement shall not inure to the benefit of any
Holder, or such Holder's directors or officers or controlling persons, on
account of any losses, claims, damages or liability arising from the sale of
Registrable Securities to any person by such Holder if such Holder or its
representatives failed to send or give a copy of the final prospectus or a
prospectus supplement, as the case may be (excluding documents incorporated by
reference therein), as the same may be amended or supplemented, to that person
within the time required by the Securities Act, and the untrue statement or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact in such preliminary prospectus or final prospectus was
corrected in the final prospectus or such prospectus supplement, as the case may
be (excluding documents incorporated by reference therein), unless
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such failure resulted from non-compliance by the Company with Section 5.5(c).
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of any such Holder, or such Holder's
directors or officers or controlling persons, and shall survive the transfer of
such securities by such Holder.
(b) Each Holder requesting or joining in a registration,
severally and not jointly, shall indemnify and hold harmless the Company, each
of its directors and officers and each person, if any, who controls the Company
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act to the same extent as the foregoing indemnity from the Company
to the Holders but only with reference to written information relating to such
Holder furnished to the Company by such Holder expressly for inclusion in
connection with such registration; provided, however, that the liability of each
Holder hereunder shall not exceed the net proceeds received by such Holder from
the sale of Registrable Securities covered by such registration.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to either Section 5.10(a) or (b), such person
(the "indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the reasonable fees and disbursements of such counsel related to such
proceeding. In any such proceeding, any indemnified party shall have the right
to retain its own counsel, but the fees and expenses of such counsel shall be at
the expense of such indemnified party unless (i) the indemnifying party and the
indemnified party shall have mutually agreed to the retention of such counsel or
(ii) the named parties to any such proceeding (including any impleaded parties)
include both the indemnifying party and the indemnified party and representation
of both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. It is understood that the
indemnifying party shall not, in respect of the legal expenses of any
indemnified party in connection with any proceeding or related proceedings in
the same jurisdiction, be liable for the fees and expenses of more than one
separate firm (in addition to any local counsel) for all such indemnified
parties and that all such fees and expenses shall be reimbursed as they are
incurred. Such firm shall be designated in writing by the Holders, in the case
of parties indemnified pursuant to Section 5.10(a), and by the Company, in the
case of parties indemnified pursuant to Section 5.10(b). The indemnifying party
shall not be liable for any settlement of any proceeding effected without its
written consent, but if settled with such consent or if there shall be a final
judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and
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expenses of counsel as contemplated by the second and third sentences of this
Section 5.10(c), the indemnifying party agrees that it shall be liable for any
settlement of any proceeding effected without its written consent if (i) such
settlement is entered into more than 30 days after receipt by such indemnifying
party of the aforesaid request and (ii) such indemnifying party shall not have
reimbursed the indemnified party in accordance with such request prior to the
date of such settlement. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened proceeding in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter of
such proceeding.
(d) If the indemnification provided for in Section 5.10(a) or
(b) shall for any reason be unavailable to or insufficient to hold harmless an
indemnified party under Section 5.10(a) or 5.10(b) in respect of any loss,
claim, damage, liability or action referred to therein, then each indemnifying
party shall, in lieu of indemnifying such indemnified party, contribute to the
amount paid or payable by such indemnified party as a result of such loss,
claim, damage, liability or action, in such proportion as shall be appropriate
to reflect the relative fault of the Company on the one hand and such Holders on
the other with respect to the statements or omissions which resulted in such
loss, claim, damage, liability or action, as well as any other relevant
equitable considerations. The relative fault shall be determined by reference to
whether the untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information supplied by the
Company or such Holders, the intent of the parties and their relative knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The Company and the Holders agree that it would not be just and
equitable if contributions pursuant to this Section 5.10(d) were to be
determined by pro rata allocation (even if the Holders were treated as one
entity for such purpose) or by any other method of allocation which does not
take into account the equitable considerations referred to herein. The amount
paid or payable by an indemnified party as a result of the loss, claim, damage,
liability or action, referred to above in this Section 5.10(d) shall be deemed
to include, for purposes of this Section 5.10(d), any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 5.10(d), no Holder shall be required to contribute any amount in excess
of the amount of the net proceeds received by such Holder from the sale of
Registrable Securities covered by such Registration Statement. No person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
5.11 Lockup. (a) Each Holder (other than an Existing
Stockholder) shall, in connection with any registration of the Company's
securities,
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upon the request of the Company or the underwriters managing any underwritten
offering of such securities, agree in writing not to effect any sale,
disposition or distribution of any Registrable Securities (other than those
included in the registration) without the prior written consent of the Company
or the underwriter for such period of time (not to exceed 180 days) from the
effective date of such registration as the Company or the underwriters may
specify.
(b) Each Existing Stockholder shall, in connection with the
first three registrations of the Company's securities (including the Initial
Public Offering) after the date hereof, upon the request of the Company or the
underwriters managing any underwritten offering of such securities, agree in
writing not to effect any sale, disposition or distribution of any Registrable
Securities (other than those included in the registration) without the prior
written consent of the Company or the underwriter for such period of time (not
to exceed (i) in the case of the Initial Public Offering, 180 days or (ii) in
the case of each of the first two registrations of the Company's securities
effected after the Initial Public Offering, 90 days, or, in either case referred
to in clause (i) or (ii) above, such shorter period of time as the Investor
Group Stockholders shall agree not to effect any sale, disposition or
distribution of any Registrable Securities (other than those included in the
registration)) from the effective date of such registration as the Company or
the underwriters may specify.
(c) The provisions of Sections 5.11(a) and (b) shall not be
applicable to any Holder, including any Existing Stockholder, that owns less
than 2% of the outstanding shares of Common Stock.
5.12 Transfer of Certain Registration Rights. The registration
rights (other than the right of a Demand Holder to request registration under
Section 5.2, which shall be transferable only in accordance with the definition
thereof) of any Holder under this Agreement with respect to the Registrable
Securities of such Holder may be transferred to any Person who acquires any
Registrable Securities of such Holder; provided that (i) the transfer of the
Registrable Securities to such Person is made in accordance with all applicable
provisions of this Agreement; (ii) the transferring Holder shall give the
Company written notice at or prior to the time of such transfer stating the name
and address of the transferee and identifying the securities with respect to
which the rights under this Agreement are being transferred; (iii) such
transferee shall agree in writing, in form and substance reasonably satisfactory
to the Company, to be bound as a Holder by the provisions of this Article V; and
(iv) immediately following such transfer, the further disposition of such
securities by such transferee is restricted under the Securities Act.
5.13 Selection of Counsel. In connection with any registration of
Registrable Securities pursuant to Sections 5.2 or 5.3, the Holders of a
majority of the Registrable Securities covered by any such registration may
select one counsel to represent all Holders of Registrable Securities covered by
such registration.
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ARTICLE VI
AFTER-ACQUIRED SECURITIES
Except as otherwise provided in Section 8.9(b), all of the
provisions of this Agreement shall apply to all of the Shares now owned or that
may be issued or transferred hereafter to a Stockholder in consequence of any
additional issuance, purchase, exchange or reclassification of any of the Shares
(including without limitation, upon the exercise of any option or warrant),
corporate reorganization, or any other form of recapitalization, consolidation,
merger, share split or share dividend, or that are acquired by a Stockholder in
any other manner, and, in the case of any such event, appropriate adjustment
shall be made to any number of Shares or Registrable Securities hereunder to
take account of such event.
ARTICLE VII
STOCK CERTIFICATE LEGEND
7.1 Share Certificates. (a) The Shareholders agree that each
certificate representing the Shares now or hereafter held by a Stockholder shall
be endorsed with a legend in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
A CERTAIN INVESTOR STOCKHOLDERS AGREEMENT DATED AS OF MAY 22, 1997, AS THE
SAME MAY BE AMENDED, SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO TIME
IN ACCORDANCE WITH ITS TERMS, WHICH PROVIDES, AMONG OTHER THINGS, FOR
CERTAIN RESTRICTIONS ON THE (I) VOTING AND (II) SALE, TRANSFER, PLEDGE,
HYPOTHECATION, OR OTHER DISPOSITION OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE. A COPY OF SUCH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICES
OF THE COMPANY AND WILL BE FURNISHED UPON REQUEST TO THE PURCHASER OR
PROSPECTIVE PURCHASER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE."
ARTICLE VIII
MISCELLANEOUS
8.1 Notices. All notices or other communications required or
permitted hereunder shall be in writing and shall be delivered personally,
telecopied or sent by certified, registered or express mail, postage prepaid.
Any such notice
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shall be deemed given when so delivered personally, telecopied or sent by
certified, registered or express mail or, if mailed, five days after the date of
deposit in the United States mail, as follows:
If to the Company:
Scotsman Holdings, Inc.
8211 Town Center Drive
Baltimore, MD 21236
Attn: President
If to the Cypress Group:
Cypress Merchant Banking Partners L.P.
Cypress Offshore Partners L.P.
c/o The Cypress Group L.L.C.
65 East 55th Street, 19th Floor
New York, NY 10022
Attn: David P. Spalding
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Attn: Richard A. Garvey, Esq.
If to Scotsman Partners:
Scotsman Partners, L.P.
201 Main Street, 26th Floor
Fort Worth, TX 76102
Attn: Robert Cotham and Ray Pinson
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Attn: Richard A. Garvey, Esq.
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If to Odyssey:
Odyssey Partners, L.P.
31 West 53rd Street
New York, NY 10019
Attn: Muzzi Mirza
with a copy to:
Weil, Gotshal & Manges
767 Fifth Avenue
New York, NY 10153
Attn: Simeon Gold, Esq.
If to BPG:
Mr. Barry P. Gossett
c/o Scotsman Holdings, Inc.
8211 Town Center Drive
Baltimore, MD 21236
with a copy to:
Piper & Marbury
Charles Center South
36 South Charles Street
Baltimore, MD 21201
Attn: Earl S. Wellschlager, Esq.
If to BTIP:
BT Investment Partners, Inc.
1 Bankers Trust Plaza
130 Liberty Street
34th Floor
New York, New York 10006
Attn: Michael Batal
with a copy to:
Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
Attn: Gerard M. Meistrell, Esq.
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Any party may, by notice given in accordance with this Section 8.1, designate
another address or person for receipt of notices hereunder.
8.2 Financial Information. The Company will promptly furnish to each
of the Holders copies of the monthly "Presidents Report" containing unaudited
financial information or comparable monthly financial information, in any case
to the extent provided to the Company's Board of Directors in the ordinary
course of business, it being understood and agreed that (a) the Holders shall
hold such information in strict confidence and (b) the Holders shall execute and
deliver to the Company such supplemental confidentiality undertakings with
respect to such information as the Company may reasonably request at any time
and from time to time.
8.3 Authority and Effect of Agreement. Each of the Company and each
Stockholder represents and warrants to the other parties as follows: (a) such
party has all requisite power, authority and legal capacity to enter into this
Agreement and perform such party's obligations hereunder; (b) if such party is a
corporation or partnership, the execution and delivery of this Agreement by such
party and the performance of such party's obligations hereunder have been duly
authorized by all necessary corporate or partnership action, as the case may be,
on the part of such party; and (c) this Agreement has been duly executed and
delivered by and (assuming this Agreement constitutes a valid and binding
agreement of the other parties) constitutes a valid and binding obligation of
such party, enforceable against such party in accordance with its terms, except
to the extent enforceability may be limited by bankruptcy, insolvency,
moratorium or other similar laws relating to or affecting creditors' rights
generally.
8.4 Amendment and Waiver. (a) Any amendment, supplement or
modification of or to any provision of this Agreement, any waiver of any
provision of this Agreement, and any consent to any departure by any party from
the terms of any provision of this Agreement, shall be effective:
(i) only if it is made or given in writing and signed by (A)
Investor Group Stockholders holding at least 75% of the Shares owned
by all Stockholders and (B) each of the Cypress Group and Scotsman
Partners, so long as it holds at least 50% of the Shares owned by it
on the date hereof; and
(ii) only in the specific instance and for the specific
purpose for which made or given;
provided that no such amendment, supplement or modification of or to any
provision of this Agreement, waiver of any provision of this Agreement, or
consent to any departure by any party from the terms of any provision of this
Agreement, shall be effective as to any Stockholder which shall not have
consented thereto in writing if the rights of such Stockholder under (x) Article
I, II, III, V or VI, (y) Section 4.8 or (z)
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this proviso to Section 8.4(a) shall have been adversely affected thereby in any
material respect; and, provided, further, that the provisions of Article IV
(other than Sections 4.1 and 4.8) may be amended by the unanimous written
consent of the Investor Group Stockholders.
(b) No failure or delay on the part of any party hereto in
exercising any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy. The remedies provided for herein are cumulative
and are not exclusive of any remedies that may be available to the parties
hereto at law, in equity or otherwise.
8.5 Specific Performance. The parties hereto intend that each of the
parties has the right to seek damages or specific performance in the event that
any other party hereto fails to perform such party's obligations hereunder.
Therefore, if any party shall institute any action or proceeding to enforce the
provisions hereof, any party against whom such action or proceeding is brought
hereby waives any claim or defense therein that the plaintiff party has an
adequate remedy at law.
8.6 Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
8.7 Severability. If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired, unless the provisions held
invalid, illegal or unenforceable shall substantially impair the benefits of the
remaining provisions hereof.
8.8 Entire Agreement. This Agreement supersedes any other agreement,
whether written or oral, that may have been made or entered into between the
parties hereto, and constitutes the entire agreement by the parties hereto,
related to the matters specified herein.
8.9 Term of Agreement. (a) This Agreement shall become
effective upon the execution hereof and shall terminate upon the earlier of:
(i) the consummation by the Company of the Initial Public
Offering; and
(ii) ten years from the date hereof or such earlier date as
the Stockholders shall unanimously agree in writing to terminate this
Agreement;
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provided, however, that the provisions of Article V shall survive any such
termination until such time as there shall no longer be any Registrable
Securities owned by any Demand Holder.
(b) Notwithstanding Section 8.9(a), this Agreement shall
terminate permanently as to any Stockholder at such time as such Stockholder no
longer owns any Shares; provided that any Permitted Transferee or other Person
that holds any Shares previously held by a Stockholder and has agreed to be
bound hereby in accordance with the terms hereof in connection with the Transfer
to such Permitted Transferee or other Person shall continue to be bound hereby
as a Stockholder with respect to such Shares.
8.10 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO AGREEMENTS
MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE.
8.11 Consent to Jurisdiction and Service of Process. Any claim
arising out of or relating to this Agreement may be instituted in Federal or
State court in the State of Delaware (unless personal or subject matter
jurisdiction cannot be obtained therein), and each party agrees not to assert,
by way of motion, as a defense or otherwise, in any such claim, that it is not
subject personally to the jurisdiction of such court, that the claim is brought
in an inconvenient forum, that the venue of the claim is improper or that this
Agreement or the subject matter hereof may not be enforced in or by such court.
Each party further irrevocably submits to the jurisdiction of such courts in any
such claim. Any and all service of process and any other notice in any such
claim shall be effective against any party if given personally or by registered
or certified mail, return receipt requested, or by any other means of mail that
requires a signed receipt, postage prepaid, mailed to such party as herein
provided. Nothing herein contained shall be deemed to affect the right of any
party to serve process in any manner permitted by law or to commence legal
proceedings or otherwise against any other party in any other jurisdiction.
8.12 Further Assurances. Each of the parties shall, and shall cause
their respective Affiliates to, execute such instruments and take such action as
may be reasonably required or desirable to carry out the provisions hereof and
the trans actions contemplated hereby.
8.13 Successors and Assigns; Power of Certain Representatives. (a)
This Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and permitted assigns; provided that the provisions
of Article IV, other than Section 4.1, shall inure to the benefit of the
Investor Group Stockholders and their Permitted Transferees only. This Agreement
is not assignable except in connection with a Transfer of Shares in accordance
with this Agreement,
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except that Scotsman Partners may assign its rights hereunder to Group 31, Inc.,
its general partner.
(b) With respect to the Cypress Group and the SP Group, each
party hereunder shall be entitled to rely on any notice, consent, waiver,
approval or action given or taken by Stockholders within the Cypress Group or
the SP Group, as the case may be, which represent that they then own a majority
of the Shares owned by the Cypress Group or the SP Group, as the case may be,
and any such notice, consent, waiver, approval or action so given or made shall
be binding upon the Cypress Group or the SP Group, as the case may be.
8.14 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which taken
together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have signed and delivered
this Agreement as of the date first above written.
SCOTSMAN HOLDINGS, INC.
By: /s/ Gerard E. Holthaus
---------------------------------------
Name: Gerard E. Holthaus
Title: President
CYPRESS MERCHANT BANKING PARTNERS
L.P.
By: Cypress Associates L.P.,
its general partner
By: Cypress Merchant Banking Partners L.L.C.,
its general partner
By: /s/ David P. Spalding
---------------------------------------
Name: David P. Spalding
Title: Member
CYPRESS OFFSHORE PARTNERS L.P.
By: Cypress Associates L.P.,
its general partner
By: Cypress Merchant Banking Partners L.L.C.,
its general partner
By: /s/ David P. Spalding
---------------------------------------
Name: David P. Spalding
Title: Member
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SCOTSMAN PARTNERS, L.P.
By: Group 31, Inc., its general partner
By: /s/ James N. Alexander
---------------------------------------
Name: James N. Alexander
Title: Vice President
ODYSSEY PARTNERS, L.P.
By: /s/ Stephen Berger
---------------------------------------
Name: Stephen Berger
Title: General Partner
/s/ Barry P. Gossett
---------------------------------------
BARRY P. GOSSETT
BT INVESTMENT PARTNERS, INC.
By: /s/ Michael J. Batal, III
---------------------------------------
Name: Michael J. Batal, III
Title: Managing Director
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Exhibit 10.4
SECOND AMENDED AND RESTATED MANAGEMENT
STOCKHOLDERS' AND OPTIONHOLDERS' AGREEMENT
SECOND AMENDED AND RESTATED MANAGEMENT STOCKHOLDERS' AND
OPTIONHOLDERS' AGREEMENT dated as of May 22, 1997 among SCOTSMAN HOLDINGS, INC.,
a Delaware corporation (the "Company"), CYPRESS MERCHANT BANKING PARTNERS L.P.,
a Delaware limited partnership ("Cypress Onshore"), CYPRESS OFFSHORE PARTNERS
L.P., a Cayman Islands limited partnership ("Cypress Offshore"), SCOTSMAN
PARTNERS, L.P., a Texas limited partnership ("Scotsman Partners" and, together
with Cypress Onshore and Cypress Offshore, the "Investor Group"), the parties
identified as the Management Stockholders on Schedule I to this Agreement or on
the signature pages of this Agreement, each of whom at the time he or she
becomes a party hereto is an officer and/or key employee of the Company or one
or more of its subsidiaries (individually, a "Management Stockholder" and,
collectively, the "Man agement Stockholders") and the Permitted Transferees (as
defined herein) of the Management Stockholders who become parties to this
Agreement pursuant to the terms and provisions contained herein.
Any Affiliate (as defined herein) of a Stockholder in the Investor
Group which is or becomes a stockholder is referred to herein as an "Investor
Group Affiliate" and, together with the Investor Group, as "Investor Group
Holders"; and the Management Stockholders, together with the Investor Group
Holders, are referred to herein, collectively, as the "Stockholders".
WHEREAS, the Company acquired all the outstanding capital stock of
The Scotsman Group, Inc. (now known as Williams Scotsman, Inc.), a Maryland
corporation ("Scotsman"), pursuant to a Stock Purchase Agreement among First
Interstate Bank of California, as Successor Trustee to the Trkja Family Trust,
Barry P. Gossett, Scotsman and the Company dated as of November 8, 1993 (the
"Purchase Agreement") and an Exchange Agreement between the Company and Barry P.
Gossett dated November 8, 1993 (the "Exchange Agreement");
WHEREAS, this Agreement constitutes an amended and restated version
of the Amended and Restated Management Stockholders' and Optionholders'
Agreement dated as of June 6, 1994 (as in effect on the date hereof, the
"Original Agreement"), to which, among other parties, the Company and each
Management Stockholder that is an original party hereto is a party, and is being
entered into in connection with a Recapitalization Agreement dated as of April
11, 1997 (as amended, supplemented or otherwise modified, the "Recapitalization
Agreement") among the Company, the Investor Group and/or certain of their
Affiliates, Odyssey Partners, L.P. and certain other stockholders of the
Company;
<PAGE>
WHEREAS, the Company desires to give certain officers and key
employees of the Company the opportunity to participate directly in the equity
of the Company and to create in key employees an increased interest in and a
greater concern for the welfare of the Company through the continued ownership
of shares of common stock of the Company, par value $.01 per share (the
"Shares");
WHEREAS, in furtherance of the above purpose, the Company has
adopted an Employee Stock Option Plan (the "Plan") providing for the granting to
employees of the Company and its subsidiaries of options ("Options") which may
be exercised to purchase Shares, upon the condition that prior to the grant or
exercise of any Option such employee shall have executed and delivered or
otherwise be a party to this Agreement; and
WHEREAS, the parties hereto deem it in their best interests to enter
into this Agreement to set forth their respective obligations in connection with
their investments in the Shares of the Company;
NOW, THEREFORE, in consideration of the agreements and mutual
covenants contained herein, the parties, intending to be legally bound hereby,
agree as follows:
ARTICLE I
LIMITATIONS ON TRANSFER
SECTION 1.1 General Restrictions on Transfer. (a) Each Management
Stockholder agrees that he or she shall not during the term of this Agreement
either directly or indirectly offer, sell, transfer, assign, mortgage,
hypothecate, pledge, create a security interest in or lien upon, encumber,
donate, contribute, place in trust, or otherwise voluntarily or involuntarily
dispose of (collectively, "Transfer") any Shares, or any interest therein,
except in a transaction which (i) is specifically permitted by this Agreement
and (ii) complies with the Securities Act (as defined in Article VII hereof).
(b) Any attempt to Transfer any Shares or any interest therein
which is not in compliance with this Agreement shall be null and void, and
neither the Company nor any transfer agent shall give any effect in the
Company's stock records to such attempted Transfer.
SECTION 1.2 Permitted Transfers. (a) Subject to Section 1.2(b), each
Management Stockholder may Transfer Shares to a Permitted Transferee (as defined
in Article VII hereof) at any time more than six (6) months after the date of
acquisition of such Shares.
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(b) Not less than 15 Business Days prior to any proposed
Transfer of any Shares or any interest therein by a Management Stockholder to
any Permitted Transferee (other than a transfer upon death of a Shareholder),
the holder of such Shares shall give written notice to the Company of such
holder's intention to effect such Transfer, setting forth the manner and
circumstances of the proposed transfer in reasonable detail. Any Transfer to a
Permitted Transferee may be effected only if the Company shall have received,
together with the notice referred to above, if any: (i) if requested by the
Company, an opinion of counsel reasonably satisfactory to the Company addressed
to the Company to the effect that the proposed Transfer of Shares or such
interest therein may be effected without registration under the Securities Act,
(ii) if requested by the Company, representation letters that contain
representations in form and substance reasonably satisfactory to the Company to
ensure compliance with the provisions of the Securities Act, and (iii) such
letters and other documentation in form and substance reasonably satisfactory to
the Company from each such Permitted Transferee stating such Permitted
Transferee's agreement to be bound by the terms of this Agreement. Each
certificate evidencing Shares or interests therein transferred as provided in
this Section 1.2 shall bear the legend set forth in Section 8.1 of this
Agreement.
(c) In addition, any Management Stockholder may Transfer
Shares (i) pursuant to an effective registration statement under the Securities
Act, or (ii) in compliance with Rule 144 ("Rule 144") promulgated under the
Securities Act, provided that no such sales may occur until after the
consummation of the initial public offering of the equity of the Company (an
"IPO"). Notwithstanding any other provision contained in this Agreement, a
Management Stockholder may not Transfer any Shares (other than pursuant to
Section 2.1 hereof or to a Permitted Transferee pursuant to Section 1.2(a)
hereof) until the earlier to occur of (i) 15 months after an IPO, or (ii) the
day after the date on which the Investor Group Holders shall have disposed of
Shares constituting more than 33-1/3% of the Original Shares (as defined in
Article VII) and, thereafter, the aggregate number of Shares which a Management
Stockholder may Transfer (other than pursuant to Section 2.1 hereof or to a
Permitted Transferee pursuant to Section 1.2(a) hereof) in any calendar year
shall not exceed 25% of the sum of the number of Shares (if any) acquired by
such Management Stockholder pursuant to the Subscription Agreement between the
Company and such Management Stockholder plus the total number of Shares (if any)
acquired by such Management Stockholder pursuant to the exercise of Options.
SECTION 1.3 Right of First Refusal. (a) After the expiration of the
Transfer Restriction Period (as defined in Article VII hereof) and subject to
Section 1.2(c) hereof, in respect of a Share, a Management Stockholder (the
"Selling Holder") may Transfer such Share to any Third Party (as defined in
Article VII hereof), pursuant to a bona fide offer for consideration consisting
of cash, securities, or a combination thereof (an "Offer"), provided that such
Management Stockholder shall first give a right of first refusal to purchase
such Share (the "Right of First Refusal") to the Investor Group and, if and to
the extent that the Investor Group fails to
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<PAGE>
exercise such right, the Management Stockholder shall thereupon give the Right
of First Refusal to the Company.
(b) In connection with any Offer, the Selling Holder shall be
deemed to have offered his or her Shares, first to the Investor Group and second
to the Company, at the same price and otherwise substantially upon the same
terms as such Offer. If the consideration proposed to be paid pursuant to such
Offer consists in whole or in part of securities, the cash equivalent value of
such securities shall be determined by the Board of Directors in good faith,
which determination shall be final. The Board of Directors shall deliver a
notice to the Selling Holder and the Investor Group setting forth such
determination within 15 days after the Company shall have received the Offer
Notice defined in Section 1.3(c).
(c) The Selling Holder shall deliver a written notice (the
"Offer Notice") to the Investor Group and the Company (i) setting forth the
terms of any Offer, (ii) offering to the Investor Group the right to purchase
the Shares proposed to be sold pursuant to such Offer, and (iii) offering the
Company the right to purchase such Shares if and to the extent that the Investor
Group declines to exercise such right. Prior to the expiration of the 20-day
period commencing on the date of the Selling Holder's notice, the Investor Group
shall deliver a notice advising the Selling Holder and the Company whether or
not and to what extent the Investor Group is exercising its Right of First
Refusal. If the Investor Group fails to timely exercise the Right of First
Refusal, the Company shall, prior to the expiration of the 30-day period
commencing on the date of the Offer Notice, deliver a written notice advising
the Selling Holder and the Investor Group whether or not the Company is
exercising its Right of First Refusal. Notwithstanding anything to the contrary
herein, the Investor Group may exercise the Right of First Refusal for a portion
and not all of the Shares proposed to be sold pursuant to the Offer, provided
that the Company exercises the Right of First Refusal as to the balance of such
Shares. If both the Investor Group and the Company fail to timely exercise their
respective Rights of First Refusal for a number of Shares which, in the
aggregate, is equal to the total number of Shares proposed to be sold pursuant
to the Offer, the Selling Holder may thereafter Transfer such Shares to the
Third Party, but only pursuant to terms not less favorable to the Selling Holder
than the terms of the Offer as set forth in the Offer Notice.
(d) The closing of the purchases of the Shares by the Investor
Group or the Company pursuant to this Section 1.3 shall take place at the
principal executive offices of the Company prior to the expiration of the 90-day
period commencing on the date of the Offer Notice. At such closing, the
purchaser shall deliver a certified check or checks in the appropriate amount to
the Selling Holder against delivery of certificates representing the Shares so
purchased, duly endorsed in blank by the person or persons in whose name the
stock certificate is registered or accompanied by a duly executed stock
assignment separate from the certificate with the signature(s) thereon
guaranteed by a commercial bank or trust company or a
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<PAGE>
member of a national securities exchange or of the National Association of
Securities Dealers, Inc.
(e) At the Investor Group's election, the Investor Group's
Right of First Refusal may be exercised by the Investor Group Holders in such
proportion as the Investor Group shall direct; provided, however, that, if the
Investor Group shall not so direct in its exercise notice, then the Investor
Group's Right of First Refusal shall be deemed to have been exercised such that
each Investor Group Holder will acquire from the Selling Holder a number of
Shares equal to (i) the number of Shares subject to the Investor Group's Right
of First Refusal multiplied by (ii) a fraction, the numerator of which is the
number of Shares owned by such Investor Group Holder and the denominator of
which is the total number of Shares owned by all Investor Group Holders.
ARTICLE II
TAKE-ALONG SALE
SECTION 2.1 Take-Along Right. If the Investor Group Holders intend
to privately Transfer to any Third Party (the "Purchaser") 100% of the Shares
held by them, then each Management Stockholder, including any Permitted
Transferee of a Management Stockholder (collectively with the Management
Stockholders, the "Take-Along Holders") shall be required, at the election of
the Investor Group, to Transfer (a "Take-Along Sale") all Shares then held by
such Management Stockholder or Permitted Transferee ("Take-Along Shares") to
such Third Party, for the same consideration, and on the same terms and
conditions, if any, upon which the Investor Group Holders propose to dispose of
their Shares. In the event of a Take-Along Sale, Options which are not
theretofore exercisable shall become exercisable by reason of such transaction
only to the extent provided in the instrument evidencing the grant of such
Options.
SECTION 2.2 Notice. The Investor Group Holders shall deliver to each
Take-Along Holder written notice (the "Take-Along Notice") of any sale to be
made pursuant to Section 2.1 above, which notice shall set forth the
consideration to be paid by the Purchaser for each Share and the other terms and
conditions, if any, of such transaction. Within 15 Business Days after the date
of the Take-Along Notice, each such Take-Along Holder shall promptly deliver to
the Investor Group certificates representing its Take-Along Shares, duly
endorsed, in proper form for transfer, together with a limited power-of-attorney
authorizing the Investor Group to dispose of such Take-Along Shares to the
Purchaser and to execute all other documents required to be executed in
connection with such transaction. Pending consummation of the Take-Along Sale,
the Investor Group shall promptly notify the Take-Along Holders of any changes
in the proposed timing for the Take-Along Sale and any other material
developments in connection therewith.
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<PAGE>
SECTION 2.3 Transfer. (a) If, within 180 Business Days after the
date of the Take-Along Notice, no transfer of the Take-Along Shares in
accordance with the provisions of Section 2.1 shall have been completed, the
Investor Group shall promptly return to the Take-Along Holder, in proper form,
all certificates representing the Take-Along Shares and the limited
powers-of-attorney previously delivered by the Take-Along Holder to the Investor
Group.
(b) Promptly after the consummation of the transfer of Take-
Along Shares pursuant to Section 2.1, the Investor Group shall remit or cause to
be remitted to the Take-Along Holders their respective consideration with
respect to the Take-Along Shares and shall furnish such other evidence of the
completion and time of completion of such transfer and the terms and conditions,
if any, thereof as may reasonably be requested by the Take-Along Holder.
(c) The provisions of this Article II shall remain in effect,
notwithstanding any return to a Take-Along Holder of any Take-Along Shares as
provided in Section 2.3(a).
ARTICLE III
TAG-ALONG PARTICIPATION
SECTION 3.1 Tag-Along Rights. (a) If the Investor Group Holders
intend to privately Transfer to any Third Party (the "Tag-Along Purchaser"), in
one transaction or a series of transactions, Shares constituting in the
aggregate more than 33-1/3% of the total number of Original Shares, then the
Investor Group shall permit each Management Stockholder, at its option, to
Transfer, for the same consideration, and on the same terms and conditions, if
any, upon which the Investor Group Holders intend to Transfer such Shares, a
number of Shares then owned by such Management Stockholder determined in
accordance with Section 3.1(b) (the "Tag-Along Shares").
(b) (i) Except as provided in Section 3.1(b)(ii), each
Management Stockholder shall have the right, pursuant to Section 3.1(a),
to sell pursuant to the offer by the Tag-Along Purchaser, a number of
Shares equal to the product of (A) the excess of (1) the total number of
Shares to be purchased by the Tag-Along Purchaser from the Investor Group
Holders (after giving effect to the tag-along rights of any stockholder in
the Company other than a Management Stockholder) over (2) the number of
Shares which constitutes, in the aggregate, 33-1/3% of the total number of
Original Shares (the "Threshold Amount"), and (B) a fraction, the
numerator of which shall be the total number of Shares owned by such
Management Stockholder and the denominator of which shall be the excess of
(x) the total number of Shares owned by the Investor Group Holders and all
the Management Stockholders in the aggregate over (y) the Threshold
Amount.
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(ii) If, in the transaction described in Section 3.1(a),
the Investor Group Holders would sell Shares which represent 51% or more
of the outstanding voting power of all outstanding shares of capital stock
of the Company, each Management Stockholder shall have the right, pursuant
to Section 3.1(a), to sell pursuant to the offer by the Tag-Along
Purchaser, a number of Shares equal to the product of (A) the total number
of Shares to be purchased by the Tag-Along Purchaser from the Investor
Group Holders (after giving effect to the tag-along rights of any
stockholder in the Company other than a Management Stockholder) and (B) a
fraction, the numerator of which shall be the total number of Shares owned
by such Management Stockholder and the denominator of which shall be the
total number of Shares owned by the Investor Group Holders and all the
Management Stockholders in the aggregate.
SECTION 3.2 Notice. Not less than 15 Business Days prior to any
proposed Transfer pursuant to Section 3.1, the Investor Group, on behalf of the
Investor Group Holders, shall deliver to each Management Stockholder written
notice thereof (the "Tag-Along Notice"), which notice shall set forth the
consideration to be paid by the Tag-Along Purchaser and the other terms and
conditions, if any, of such transaction. If any Management Stockholder elects to
Transfer some or all of the Tag-Along Shares pursuant to Section 3.1, then such
Management Stockholder shall so notify the Investor Group within 10 Business
Days after the date of the Tag-Along Notice, and, at the Investor Group's
request not less than two Business Days prior to the proposed Transfer, the
Management Stockholder shall deliver to the Investor Group certificates
representing such Tag-Along Shares, duly endorsed, in proper form for Transfer,
together with a limited power-of-attorney authorizing the Investor Group to
transfer the Tag-Along Shares to the Tag-Along Purchaser and to execute all
other documents required to be executed in connection with such transaction.
SECTION 3.3 Transfer. (a) If, within 90 Business Days after delivery
by the Tag-Along Shareholder to the Investor Group of the certificates and
related documents described in Section 3.2, no transfer of the Shares held by
the Investor Group Holders and Tag-Along Shares in accordance with the
provisions of this Article III shall have been completed, then the Investor
Group shall promptly return to the Management Stockholder, in proper form, all
certificates representing the Tag-Along Shares and the limited power-of-attorney
previously delivered by the Management Stockholders to the Investor Group.
(b) Promptly after the consummation of the transfer of the
Tag-Along Shares pursuant to Section 3.1, the Investor Group shall remit or
cause to be remitted to each Management Stockholder the consideration with
respect to the Tag-Along Shares so transferred and shall furnish such other
evidence of the completion of such transfer and the terms and conditions (if
any) thereof as may reasonably be requested by the Management Stockholder.
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(c) The provisions of this Article III shall remain in effect,
notwithstanding any return to any Management Stockholder of Tag-Along Shares as
provided in Section 3.3(a).
ARTICLE IV
CERTAIN SALES UPON TERMINATION OF EMPLOYMENT
SECTION 4.1 Surrender of Shares and Options to the Company. (a) Upon
the occurrence during the term of this Agreement of any of the events set forth
in clause (i), (ii), (iii) or (iv) below (each, a "Termination Event"), the
Company may elect, by delivering the notice required under Section 4.1(e), to
require each Management Stockholder and such Management Stockholder's Permitted
Transferees (A) to sell to the Company all or a portion of the Shares owned by
such Management Stockholder and such Management Stockholder's Permitted
Transferees, in accordance with Section 4.2, and (B) to surrender to the Company
for cancellation all or a portion of the Options held by such Management
Stockholder and such Management Stockholder's Permitted Transferees, in
accordance with Section 4.2:
(i) the termination of such Management Stockholder's
employment due to the death or Disability of such Management Stockholder;
(ii) the voluntary termination by such Management
Stockholder of his or her employment with the Company (and any subsidiary
or affiliate of the Company);
(iii) the termination by the Company of such Management
Stockholder's employment with the Company (and any subsidiary or affiliate
of the Company) for Cause; or
(iv) the termination by the Company of such Man agement
Stockholder's employment with the Company (and any subsidiary or affiliate
of the Company) without Cause.
(b) The Repurchase Price for each Share purchased in
connection with the occurrence of an event specified in Sections 4.1(a)(i) or
(iv) shall be equal to Fair Market Value; provided that, until the first
anniversary of the date hereof, such Repurchase Price shall be $91.50.
(c) The Repurchase Price for each Share purchased in
connection with the occurrence of an event specified in Sections 4.1(a)(ii) or
(iii) shall be equal to the lower of (x) $91.50 or (y) Fair Market Value;
provided, however, that from and after the fifth anniversary of the date of
purchase of such Share by the Management Stockholder, such Repurchase Price
shall be equal to Fair Market Value;
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provided, further, that, until the first anniversary of the date hereof, such
Repurchase Price shall be $91.50.
(d) The amount payable to a Management Stockholder or his or
her Permitted Transferee in respect of each Option which is surrendered and
cancelled pursuant to Section 4.1 in connection with a Termination Event (the
"Option Cancellation Price") shall be the product of (i) the excess of (A) the
Repurchase Price per Share that would have been payable for the Shares subject
to such Option were such Option to have been exercised on the date of such
Termination Event over (B) the exercise price per Share payable pursuant to such
Option and (ii) the number of Shares for which such Option was exercisable at
the date of the Termination Event.
(e) Upon the occurrence of any Termination Event with respect
to any Management Stockholder, the Company shall deliver written notice (the
"Repurchase Notice") to such Management Stockholder and such Management
Stockholder's Permitted Transferees within 60 days after such occurrence,
specifying whether the Company elects to exercise its right to require such
Management Stockholder and such Management Stockholder's Permitted Transferees
to sell their Shares to the Company pursuant to this Section 4.1 and to
surrender to the Company for cancellation their Options (which right need not be
exercised for all such Options). If the Company elects to exercise its right to
require such sale or surrender, as the case may be, the Company shall specify
the Repurchase Price for each such Share and the Option Cancellation Price for
each such Option in the Repurchase Notice and consummate such transactions in
accordance with Section 4.2.
(f) For purposes of this Agreement, the Fair Market Value of a
Share shall be determined in accordance with Section 4.3.
SECTION 4.2 Method of Repurchase. (a) If the Company elects to
exercise its right to require any Management Stockholder and such Management
Stockholder's Permitted Transferees to sell Shares and surrender Options
pursuant to Section 4.1, the Shares subject to repurchase (collectively, the
"Surrendered Shares") shall be repurchased and the Options subject to surrender
and cancellation (collec tively, the "Surrendered Options") shall be surrendered
and cancelled on a date (the "Repurchase Date") no later than 60 days after the
date of the Repurchase Notice. On the Repurchase Date, the Management
Stockholder and such Management Stockholder's Permitted Transferees selling such
Surrendered Shares or delivering such Surrendered Options (collectively, the
"Sellers") shall deliver to the Company the certificate or certificates
representing the Shares owned by such Sellers on such date and any documentation
requested by the Company to evidence the surrender and cancellation of the
Surrendered Options, against delivery by the Company to such Sellers of the
Repurchase Price and the Option Cancellation Price in cash; provided, however,
that if the Company in good faith determines that its ability to pay all or any
portion of the Repurchase Price or the Option Cancellation Price in cash may be
restricted or limited under debt or other agreements to which the Company or any
of
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its affiliates is a party, the Company shall issue and deliver a promissory note
(a "Payment Note") with the terms set forth in Section 4.2(b). All certificates
for Surrendered Shares shall be duly endorsed in favor of the Company by the
Seller in whose name such certificate or certificates is registered or
accompanied by a duly executed stock or security assignment in favor of the
Company with the signature(s) thereon guaranteed by a commercial bank or trust
company or a member of a national securities exchange or the National
Association of Securities Dealers, Inc. If any Seller shall fail to deliver such
certificate or certificates to the Company within the time required, the Company
shall cause its books and records to show that the Surrendered Shares are bound
by the provisions of this Section 4.2 and that the Surrendered Shares, until
transferred to the Company, shall not be entitled to any proxy, dividend or
other rights from the date by which such certificate or certificates should have
been delivered to the Company.
(b) Each Payment Note shall (i) be payable to the order of the
Seller, (ii) be issued and dated as of the Repurchase Date applicable to the
transfer of the Surrendered Shares or the Surrendered Options by such Seller,
(iii) be in a principal amount equal to that portion of the Repurchase Price of
such Surrendered Shares or the Option Cancellation Price for the Surrendered
Options that the Company has determined it is unable to pay in cash pursuant to
Section 4.2(a), (iv) mature on the first anniversary of the latest date of final
maturity of any debt securities issued by the Company in connection with the
Permanent Financing (as defined in Article VII hereof) or, if earlier, upon the
first to occur of a sale of all or substantially all of the assets of the
Company, a merger, consolidation, exchange or similar combination of the Company
with another entity (unless the Company is the surviving entity) or the
dissolution, liquidation, bankruptcy or insolvency of the Company, (v) be
secured by a pledge of the repurchased Shares and (vi) provide for the
acceleration of payment thereof, to the extent permitted by applicable debt and
other agreements, so as to provide level amortization over a five year period.
Each Payment Note shall bear interest in respect of the unpaid principal amount
of such Payment Note from the Repurchase Date to the maturity date thereof at
the rate of interest publicly announced by Bankers Trust (or the bank which is
then acting as the agent bank for the Company or Scotsman) in New York City from
time to time as its Prime Rate, compounded semi-annually. Interest shall be
payable semi-annually in cash, to the extent permitted under debt or other
agreements to which the Company or any of its Affiliates is a party, but
otherwise shall accrue and be payable at maturity or shall be payable
semi-annually in additional Payment Notes. Each Payment Note shall be expressly
subordinated to all debt of the Company. Payments on the Payment Notes shall be
made in equal proportion among all the holders of Payment Notes.
SECTION 4.3 Determination of Fair Market Value. (a) After the
Closing Date and prior to the first anniversary thereof, the Fair Market Value
per Share shall be $11.76, as such amount shall be adjusted to reflect any
subsequent subdivision, combination or reclassification of the Shares.
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(b) Except as provided in Section 4.3(d), from and after the
first anniversary of the Closing Date, if any Management Stockholder and such
Management Stockholder's Permitted Transferees are entitled to receive the Fair
Market Value for the Shares held by such Management Stockholder and such
Management Stockholder's Permitted Transferees in connection with a Termination
Event (or are entitled to receive the Option Cancellation Price based on the
Fair Market Value of the Shares subject to the Option), the Board shall
determine in good faith in the manner described in Section 4.3(c) the fair
market value of each Share and the fair market value as so determined shall be
the "Fair Market Value" for each Share for purposes of Section 4.1.
(c) If the Shares are not listed on a national securities
exchange in the United States on any date on which the Fair Market Value per
Share is to be determined, and a public market does not otherwise exist for the
Shares on such date, the Fair Market Value per Share shall be equal the amount
determined by dividing (i) the excess of (A) 6.5 times the consolidated net
income of the Company and its subsidiaries, determined in accordance with
generally accepted accounting principles, consistently applied, and determined
before reduction for interest, amortization of goodwill and intangibles,
depreciation and taxes, for the last four reported fiscal quarters of the
Company immediately preceding the fiscal quarter in which the termination of
employment occurred, over (B) the amount of all outstanding Indebtedness of the
Company and its subsidiaries at the end of the reported fiscal quarter of the
Company immediately preceding the date of such termination of employment by (ii)
the total number of Shares outstanding at the date of such determination, on a
fully diluted basis after giving effect to the exercise in full of all
outstanding options and the conversion or exercise of all Convertible
Securities; provided, however, that the determination of the Fair Market Value
per Share shall be subject to adjustment by the Board of Directors in its sole
discretion to take into account extraordinary transactions and other factors. If
the Shares are listed on a national securities exchange in the United States on
any date on which the Fair Market Value per Share is to be determined, the Fair
Market Value per Share shall be deemed to be the average of the last sales price
for Shares for the thirty (30) trading days immediately preceding the date of
the Termination Event. If a public market exists for the Shares on any date on
which the Fair Market Value per Share is to be determined, but the Shares are
not listed on a national securities exchange in the United States on such date,
the Fair Market Value per Share shall be deemed to be the average of the mean
between the closing bid and asked quotations in the over-the-counter market for
the thirty (30) trading days immediately preceding the date of the Termination
Event.
11
<PAGE>
ARTICLE V
PROXY
Each Management Stockholder hereby irrevocably constitutes and
appoints the Investor Group as his or her proxy coupled with an interest to
attend all the meetings of the stockholders of the Company or any continuation
or adjournment thereof to be held during the term of this Agreement and to
execute written consents of stockholders, with full power to vote and act in his
or her name, place and stead, in the same manner, to the same extent and with
the same effect that such Management Stockholder might if personally present
thereat, giving the Investor Group full power of substitution.
ARTICLE VI
PIGGYBACK REGISTRATION RIGHTS
(a) Once the Investor Group Holders shall have disposed of
Shares constituting more than 33-1/3% of the total number of Original Shares, if
the Company at any time proposes to register Common Stock on behalf of the
Investor Group, the Company shall give written notice each such time to each
Management Stockholder who is then employed by the Company or whose employment
theretofore shall have been terminated for any reason, other than termination by
the Company for Cause or voluntary termination by such Management Stockholder
(and the Permitted Transferees of such Management Stockholders) of its intention
to do so. Upon the written request of any such Management Stockholder or
Permitted Transferee (a "Participating Management Stockholder") given within 15
Business Days after receipt of any such notice by such Management Stockholder or
Permitted Transferee (stating the amount of Common Stock to be disposed of by
the Participating Management Stockholder), the Company shall include the Common
Stock intended to be disposed of in a registration statement under the
Securities Act so as to permit the disposition by the Participating Management
Stockholder of the Common Stock so registered; provided, however, that the
number of Shares which may be sold by a Participating Management Stockholder
pursuant to any such registration statement may not exceed the product of (A)
the total number of Shares then owned by such Participating Management
Stockholder and (B) a fraction, the numerator of which shall be the total number
of Shares intended to be disposed of by the Investor Group Holders pursuant to
such registration statement and the denominator of which shall be the total
number of Shares then owned by the Investor Group Holders.
(b) Notwithstanding any provision of this Article VI to the
contrary, if the registration of which the Company gives notice pursuant to
Article VI(a) is for an underwritten offering and the managing underwriter or
underwriters determine in good faith that the total amount of Common Stock
proposed to be included in such offering is such as to adversely affect the
success of such offering,
12
<PAGE>
then the Company shall include in such registration the amount of Common Stock
which the Company is so advised can be sold in such offering as follows: (i) if
such registration includes a primary registration, (A) first, Common Stock the
Company proposed to be included in such registration, and (B) second, Common
Stock requested to be included in such registration, pro rata among the holders
of such Common Stock in proportion to the number of shares of Common Stock
sought to be registered by each holder (which, in the case of a Participating
Management Stockholder, shall have been limited to the amount permitted by
paragraph (a) of this Article VI), or (ii) if such registration is exclusively a
secondary registration, then the number of shares of Common Stock shall be
reduced or limited pro rata among the Participating Management Stockholder and
the other holders of Common Stock in proportion to the number of shares of
Common Stock sought to be registered by each holder (which, in the case of a
Participating Management Stockholder, shall have been limited to the amount
permitted by paragraph (a) of this Article VI), to the extent necessary to
reduce the total amount of Common Stock to be included in such offering to the
amount recommended by such managing underwriter or underwriters.
ARTICLE VII
DEFINITIONS
Capitalized terms used herein and not otherwise defined herein shall
have the following meanings:
"Affiliate" means, with respect to any Person, any other person
which, directly or indirectly, controls, is controlled by or is under common
control with such person. For purposes of the preceding sentence, "control"
shall include the power to vote or direct the voting of more than fifty percent
(50%) of the voting shares, general partnership interests or other voting equity
interests of a person. Any partner ship or limited liability company in which a
Stockholder in the Investor Group or an Investor Group Affiliate is a general
partner or member, as the case may be, shall be an Affiliate of the Investor
Group.
"Board" or "Board of Directors" means the Board of Directors of the
Company.
"Business Day" means any day except a Saturday, Sunday orother day
on which commercial banks in the City of New York or the State of Maryland are
authorized by law to close.
"Cause," when used in connection with any Management Stockholder,
shall mean (i) with respect to a Management Stockholder who is a party to a
written employment agreement with the Company, which agreement contains a
definition of "for cause" or "cause" (or words of like import) for purposes of
termination of employment thereunder by the Company, "for cause" or "cause" as
defined in the
13
<PAGE>
most recent of such agreements, or (ii) in all other cases, that one or more of
the following has occurred: (A) any intentional or willful failure by such
Management Stockholder to substantially perform his or her employment duties
which shall not have been corrected within thirty days following written notice
of the duties which such Management Stockholder has failed to substantially
perform, (B) any engaging by such Management Stockholder in misconduct which is
significantly injurious to the Company or any of its subsidiaries or affiliates,
(C) any breach by such Management Stockholder of any representation, warranty or
covenant contained in the Subscription Agreement executed by such Management
Stockholder or the representations, warranties or covenants contained in the
instrument pursuant to which an Option is granted to such Management Stockholder
under the Plan or (D) such Management Stockholder's conviction of or entry of a
plea of nolo contendere in respect of any felony, or of a misdemeanor which
results in or is reasonably expected to result in economic or reputational
injury to the Company or any of its subsidiaries or affiliates.
"Closing" has the meaning ascribed to it in the Purchase Agreement.
"Closing Date" shall mean the date on which the acquisition of
Scotsman by the Company was consummated.
"Convertible Security" shall mean any security that is convertible
into the common stock of the Company and any security that represents an option,
warrant or other right to purchase shares of common stock of the Company.
"Disability," when used in connection with any Management
Stockholder, means the inability (as determined by the Board in its sole
discretion) of such Management Stockholder, as a result of incapacity due to
physical or mental illness or disability, to perform his duties with the Company
for six consecutive months or shorter periods aggregating six months during any
twelve-month period.
"Fair Market Value" means, at any time, the fair market value of a
Share as determined in accordance with the provisions set forth in Section 4.3.
"Indebtedness" means any indebtedness of the Company or its
subsidiaries, whether or not contingent, in respect of borrowed money or
evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimburse ment agreements in respect thereof) or representing the
balance deferred and unpaid of the purchase price of any property (including
capital lease obligations) or represent ing any obligations of the Company or
its subsidiaries under interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements and other agreements or
arrangements designed to protect the Company or its subsidiaries against
fluctuations in interest rates, except any such balance that constitutes an
accrued expense or trade payable, and also includes, to the extent not otherwise
included, the guarantee of items which would be included within this definition
and any reserves for extraordinary items or liabilities.
14
<PAGE>
"Original Shares" means the maximum aggregate number of Shares
acquired by the Investor Group and their Affiliates during the 90-day period
commencing on the date hereof (or the corresponding number of Shares resulting
from any anti-dilutive adjustment thereto), without giving effect to the
conversion or exercise of any Convertible Security then held by the Investor
Group or any of its Affiliates and excluding any equity security of the Company
which may be acquired by reason of (i) the conversion or exercise of a
Convertible Security or (ii) the exchange or contribution by the Investor Group
or any of its Affiliates of indebtedness previously issued by the Company.
"Permanent Financing" means the 9 1/2% Senior Secured Notes due 2000
or such other permanent financing as is issued by Scotsman or any of its
affiliates to refinance the previously outstanding 11.31% Notes of Scotsman
(including without limitation the debt securities issued by the Company and/or
Scotsman in connection with the transactions contemplated by the
Recapitalization Agreement).
"Permitted Transferee" means, with respect to any Management
Stockholder, a Person to whom any of the following transfers are made:
(i) a transfer upon the death of such Management
Stockholder to such Management Stockholder's spouse or descendants
(including adopted children and stepchildren, if any), or to his executor,
administrator or testamentary or inter vivos trustee;
(ii) a transfer in compliance with applicable federal
and state securities laws to a Management Stockholder's spouse or
descendants (including adopted children and stepchildren, if any), or a
trust, the sole income beneficiaries of which, or a corporation or a
partnership, the sole stockholders or limited or general partners of
which, include only such Management Stockholder, such Management
Stockholder's spouse and/or such Management Stockholder's descendants
(including adopted children and stepchildren, if any);
(iii) a transfer to the legal guardian of a disabled
Management Stockholder; or
(iv) a transfer (including a hypothecation) not covered
by clause (i), (ii) or (iii) above that the Board of Directors, in its
sole discretion, approves prior to the consummation thereof, provided that
such transfer is in compliance with applicable federal and state
securities laws;
provided that, in the event of death or disability of any Person to whom a
transfer is made pursuant to clause (i), (ii), (iii) or (iv) above, the term
"Permitted Transferee" shall include:
15
<PAGE>
(x) in the case of such Person's death, such Person's spouse
or descendants (including adopted children and stepchildren, if any), or
such Person's executor, administrator or testamentary or inter vivos
trustee; or
(y) in the case of such Person's disability, such Person's
legal guardian.
"Person" means any individual, corporation, partnership, trust,
unincorporated organization or government or political department or agency
thereof or other entity.
"Repurchase Price" means, with respect to any Surrendered Shares,
the applicable price at which such Shares are to be repurchased pursuant to
Section 4.1.
"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
"Third Party" means a prospective purchaser of Shares in an arm's-
length transaction from a Shareholder where such purchaser is not an Affiliate
of such Shareholder.
"Transfer Restriction Period" in respect of a Share owned by a
Management Stockholder (or his or her Permitted Transferee) means the period
commencing on the date of purchase of such Share by such Management Stockholder
and ending on the fifth anniversary of such date.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 Share Certificates. (a) The Shareholders agree that each
certificate representing the Shares now or hereafter held by a Management
Stockholder shall be endorsed with a legend in substantially the following form:
"The securities represented by this certificate are subject to a
certain Agreement, dated as of November 9, 1993, which provides, among
other things, for certain restrictions on the (i) voting and (ii) sale,
transfer, pledge, hypothecation, or other disposition of the securities
represented by this certificate. A copy of such Agreement is on file at
the principal offices of the Company and will be furnished upon request to
the purchaser or prospective purchaser of the securities represented by
this certificate."
16
<PAGE>
(b) Notwithstanding Section 8.1(a), if, after the date hereof,
a new certificate or certificates representing Shares held by a Management
Stockholder shall be issued by the Company, then each such new certificate shall
be endorsed with a legend substantially in the following form in lieu of the
legend referred to in Section 8.1(a):
"The securities represented by this certificate are subject to a
certain Second Amended and Restated Management Stockholders' and
Optionholders' Agreement dated as of May 22, 1997, as the same may be
further amended, supplemented or otherwise modified from time to time in
accordance with its terms, which provides, among other things, for certain
restrictions on the (i) voting and (ii) sale, transfer, pledge,
hypothecation, or other disposition of the securities represented by this
certificate. A copy of such Agreement is on file at the principal offices
of the Company and will be furnished upon request to the purchaser or
prospective purchaser of the securities represented by this certificate."
SECTION 8.2 After-Acquired Shares. The provisions of this Agreement
shall apply to all Shares and Options now owned or hereafter issued or
transferred to, or acquired by, a Management Stockholder or any of its
Affiliates in any fashion, including but not limited to any Shares received by
way of a dividend, additional issuance, purchase, exchange, split-up,
recapitalization, reclassification, or conversion of Shares, any corporate
reorganization, or any other transaction, including the exercise of an Option
granted under the Plan.
SECTION 8.3 Equitable Relief. It is hereby acknowledged that
irreparable harm would occur in the event that any of the provisions of this
Agreement were not performed fully by the undersigned in accordance with the
terms specified herein, and that monetary damages are an inadequate remedy for
breach of this Agreement because of the difficulty of ascertaining and
quantifying the amount of damage that will be suffered by the parties relying
hereon in the event that the undertakings and provisions contained in this
Agreement were breached or violated. Accordingly, each party hereto shall be
entitled to an injunction or injunctions to restrain, enjoin, and prevent
breaches of the undertakings and provisions hereof and to enforce specifically
the undertakings and provisions hereof in any court of the United States or any
state having jurisdiction over the matter, it being understood that such
remedies shall be in addition to, and not in lieu of, any other rights and
remedies available at law or in equity.
SECTION 8.4 Notices. Any and all notices, designations, consents,
offers, acceptances, or any other communication provided for herein shall be
made in writing by hand-delivery, first-class mail (registered or certified,
with return receipt requested), telecopier, or overnight air courier
guaranteeing next day delivery in the case of any Shareholder, effective upon
receipt, to the address of the party appearing
17
<PAGE>
under its name below (or to such other address as may be designated in writing
by such party):
If to the Company:
Scotsman Holdings, Inc.
8211 Town Center Drive
Baltimore, MD 21236
Attn: President
If to the Investor Group:
Cypress Merchant Banking Partners L.P.
Cypress Offshore Partners L.P.
c/o The Cypress Group L.L.C.
65 East 55th Street, 19th Floor
New York, NY 10022
Attn: David P. Spalding
-and-
Scotsman Partners, L.P.
201 Main Street, 26th Floor
Fort Worth, TX 76102
Attn: Robert Cotham and Ray Pinson
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Attn: Richard A. Garvey, Esq.
If to a Management Stockholder:
To the address of such
Management Stockholder
shown in the stock transfer
records of the Company.
SECTION 8.5 Amendment. Any provision of this Agreement may be
amended or waived if, but only if, such amendment or waiver is in writing and is
signed by the Company, the Investor Group and the Management Stockholders (or
their Permitted Transferees) holding collectively at the time of such amendment
or waiver at least 51% of the aggregate Shares held by all Management
Stockholders
18
<PAGE>
(and their Permitted Transferees). Notwithstanding the foregoing, any Management
Stockholder may be released from all of his or her obligations hereunder, and
thereupon shall cease to be a party hereto for any purpose, with the written
agreement of the Company and the Investor Group; provided that such Management
Stockholder shall have executed and delivered to the Company and the Investor
Group a stockholders' and optionholders' agreement in form and substance
satisfactory to such Management Stockholder, the Company and the Investor Group.
SECTION 8.6 Termination. This Agreement may be terminated at any
time by an instrument in writing signed by the parties hereto. Notwithstanding
the previous sentence, this Agreement shall terminate on the first to occur of
(i) December 16, 2003, or (ii) such time as the Investor Group or other Investor
Group Holders shall cease to own, in the aggregate, at least 5% of the number of
Shares owned by the Investor Group on the date hereof.
SECTION 8.7 Waiver. No failure or delay on the part of any or all of
the parties hereto in exercising any right, power, or privilege hereunder, and
no course of dealing between the parties, shall operate as a waiver thereof nor
shall any single or partial exercise of any right, power, or privilege hereunder
preclude the simultaneous or later exercise of any other right, power, or
privilege. The rights and remedies herein expressly provided are cumulative and
not exclusive of any rights and remedies which any or all of the parties would
otherwise have.
SECTION 8.8 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
SECTION 8.9 Governing Law. This Agreement shall be governed and
construed in accordance with the law of the State of Delaware without giving
effect to the conflict of laws provisions thereof.
SECTION 8.10 Benefit and Binding Effect. This Agreement shall be
binding upon and shall inure to the benefit of each of the parties and their
respective successors and permitted assigns.
SECTION 8.11 Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
SECTION 8.12 Convertible Securities. (a) In determining, for
purposes of this Agreement (including, without limitation, Section 1.2(c),
Article III and Article VI), the percentage of the Original Shares which the
Investor Group Holders shall have sold or otherwise disposed of in a transaction
or series of related
19
<PAGE>
transactions, there shall not be taken into account (i) the sale by one or more
of the Investor Group Holders of any Convertible Security, (ii) the redemption
of any Convertible Security held by one or more of the Investor Group Holders,
or (iii) the sale or redemption of any equity security of the Company which one
or more of the Investor Group Holders may have acquired by reason of (A) the
conversion or exercise of a Convertible Security or (B) the exchange or
contribution by any Investor Group Holders of indebtedness previously issued by
the Company.
(b) The Management Stockholders acknowledge and agree that the
Investor Group Holders may cause the Company to (i) issue new equity or
indebtedness, which may constitute a Convertible Security, having terms which
are sufficient to produce net proceeds to the Company sufficient to permit the
repurchase or redemption in full of any Convertible Securities which the
Investor Group Holders may have acquired incident to the recapitalization of the
Company occurring as of the date hereof and (ii) use the proceeds of any such
issuance to effect the redemption or repurchase described in clause (i) of this
paragraph.
Section 8.13 Entire Agreement. This agreement supersedes any other
agreement, whether written or oral, that may have been made or entered into
between the parties hereto and constitutes the entire agreement by the parties
related to the matters specified herein.
20
<PAGE>
THIS PAGE LEFT INTENTIONALLY BLANK
21
<PAGE>
Section 8.14 Actions by Investor Group. With respect to any notice,
consent, authorization or other action pursuant to this Agreement to be made,
given or taken by the Investor Group, the Company and each Management
Stockholder shall be entitled to rely upon any such notice, consent,
authorization or action made, given or taken by any Stockholder in the Investor
Group, and any such notice, consent, authorization or other action shall
thereafter be binding upon each Stockholder in the Investor Group.
IN WITNESS WHEREOF, the parties hereto have signed and delivered
this Agreement as of the date first above written.
SCOTSMAN HOLDINGS, INC.
By: /s/ Gerard E. Holthaus
-----------------------------
Name: Gerard Holthaus
Title: President
CYPRESS MERCHANT BANKING PARTNERS
L.P.
By: Cypress Associates L.P., its
general partner
By: Cypress Merchant Banking Partners
L.L.C., its general partner
By: /s/ David P. Spalding
--------------------------------
Name: David P. Spalding
Title: Member
CYPRESS OFFSHORE PARTNERS L.P.
By: Cypress Associates L.P., its
general partner
By: Cypress Merchant Banking Partners
L.L.C., its general partner
By: /s/ David P. Spalding
--------------------------------
Name: David P. Spalding
Title: Member
22
<PAGE>
SCOTSMAN PARTNERS, L.P.
By: Group 31, Inc. its
general partner
By: /s/ James N. Alexander
--------------------------------
Name: James N. Alexander
Title: Vice President
23
<PAGE>
SIGNATURE PAGE TO SECOND AMENDED AND RESTATED
MANAGEMENT STOCKHOLDERS' AND OPTIONHOLDERS' AGREEMENT
The undersigned has read this Second Amended and Restated Management
Stockholders' and Optionholders' Agreement, dated as of May 22, 1997, and hereby
agrees to be bound by the terms thereof applicable to a Management Stockholder
(as defined therein).
IN WITNESS WHEREOF, the undersigned has signed and delivered this
Agreement as of __________, ____.
------------------------------
24
<PAGE>
SCHEDULE I
MANAGEMENT STOCKHOLDERS
<PAGE>
Exhibit 12.1
Williams Scotsman, Inc.
Computation of Ratio of Earnings to Fixed Charges
(Dollars in thousands)
<TABLE>
<CAPTION>
Six months ended
Fiscal Years Ended June 30,
------------------------------------------------------------------- ----------------------
1992 1993 1994 1995 1996 1996 1997
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings:
Earnings from continuing
operations before income
taxes and extraordinary
item (918) (6,377) 1,772 7,422 15,175 4,187 1,918
Fixed charges from below 22,400 22,322 19,468 23,353 26,755 12,949 16,920
-------- -------- --------- --------- --------- -------- --------
Total earnings 21,482 15,945 21,240 30,775 41,930 17,136 18,838
-------- -------- --------- --------- --------- -------- -------
Fixed Charges:
Interest 21,330 21,530 18,705 22,485 25,797 12,498 16,360
Interest component of rent
expense:
Total rent expense 3,210 2,375 2,288 2,605 2,875 1,353 1,681
Portion considered interest
expense 33% 33% 33% 33% 33% 33% 33%
-------- -------- --------- --------- --------- -------- -------
Interest component 1,070 792 763 868 958 451 560
-------- -------- --------- --------- --------- -------- -------
Total fixed charges 22,400 22,322 19,468 23,353 26,755 12,949 16,920
-------- -------- --------- --------- --------- -------- -------
Earnings to Fixed Charges 1.0x 0.7x 1.1x 1.3x 1.6x 1.3x 1.1x
======= ======= ======== ======== ======== ======= =======
Excess Fixed Charges 918 6,377 0.00 0.00 0.00 0.00 0.00
======= ======= ======== ======== ======== ======= =======
</TABLE>
<PAGE>
Exhibit 21.1
Subsidiaries of Registrant
Mobile Field Office Company
Willscot Equipment, LLC
<PAGE>
EXHIBIT 23.3
CONSENT OF ERNST & YOUNG LLP
We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated January 24, 1997 in Williams Scotsman, Inc.'s Annual
Report on Form 10-K for the year ended December 31, 1996 attached to the
Registration Statement (Form S-4) and related Prospectus as Annex A thereto.
ERNST & YOUNG LLP
Baltimore, Maryland
September 18, 1997
<PAGE>
EXHIBIT 23.4
CONSENT OF KPMG PEAT MARWICK LLP
The Board of Directors
Williams Scotsman, Inc.
(formerly The Scotsman Group, Inc.):
We consent to the reference to our firm under the heading "Experts" and to the
use of our report dated March 10, 1995 included in Williams Scotsman, Inc.'s
Annual Report on Form 10-K for the year ended December 31, 1996 attached to the
Registration Statement (Form S-4) and related Prospectus as Annex A thereto.
KPMG PEAT MARWICK LLP
Baltimore, Maryland
September 18, 1997
<PAGE>
Exhibit 25.1
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
----------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
----------------------
WILLIAMS SCOTSMAN, INC.
(Exact name of obligor as specified in its charter)
Maryland 52-0665775
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
8211 Town Center Drive
Baltimore, Maryland 21236
(Address of principal executive offices) (Zip code)
----------------------
MOBILE FIELD OFFICE COMPANY
(Exact name of obligor as specified in its charter)
New Jersey 13-3933856
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
8211 Town Center Drive
Baltimore, Maryland 21236
(Address of principal executive offices) (Zip code)
----------------------
WILLSCOT EQUIPMENT, LLC
(Exact name of obligor as specified in its charter)
Delaware 52-2037040
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
8211 Town Center Drive
Baltimore, Maryland 21236
(Address of principal executive offices) (Zip code)
----------------------
9 7/8% Senior Notes due 2007
(Title of the indenture securities)
================================================================================
<PAGE>
CONFORMED COPY
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
----------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
----------------------
WILLIAMS SCOTSMAN, INC.
(Exact name of obligor as specified in its charter)
Maryland 52-0665775
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
8211 Town Center Drive
Baltimore, Maryland 21236
(Address of principal executive offices) (Zip code)
----------------------
MOBILE FIELD OFFICE COMPANY
(Exact name of obligor as specified in its charter)
New Jersey 13-3933856
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
8211 Town Center Drive
Baltimore, Maryland 21236
(Address of principal executive offices) (Zip code)
----------------------
WILLSCOT EQUIPMENT, LLC
(Exact name of obligor as specified in its charter)
Delaware 52-2037040
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
8211 Town Center Drive
Baltimore, Maryland 21236
(Address of principal executive offices) (Zip code)
----------------------
9 7/8% Senior Notes due 2007
(Title of the indenture securities)
================================================================================
<PAGE>
THIS CONFORMING PAPER FORMAT DOCUMENT IS BEING SUBMITTED
PURSUANT TO RULE 901(d) OF REGULATION S-T
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
----------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
----------------------
WILLIAMS SCOTSMAN, INC.
(Exact name of obligor as specified in its charter)
Maryland 52-0665775
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
8211 Town Center Drive
Baltimore, Maryland 21236
(Address of principal executive offices) (Zip code)
----------------------
MOBILE FIELD OFFICE COMPANY
(Exact name of obligor as specified in its charter)
New Jersey 13-3933856
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
8211 Town Center Drive
Baltimore, Maryland 21236
(Address of principal executive offices) (Zip code)
----------------------
WILLSCOT EQUIPMENT, LLC
(Exact name of obligor as specified in its charter)
Delaware 52-2037040
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
8211 Town Center Drive
Baltimore, Maryland 21236
(Address of principal executive offices) (Zip code)
----------------------
9 7/8% Senior Notes due 2007
(Title of the indenture securities)
================================================================================
<PAGE>
1. General information. Furnish the following information as to the Trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y.
12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
16. List of Exhibits.
Exhibits identified in parentheses below, on file with the Commission, are
incorporated herein by reference as an exhibit hereto, pursuant to Rule
7a-29 under the Trust Indenture Act of 1939 (the "Act") and 17 C.F.R.
229.10(d).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1
to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
-2-
<PAGE>
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No.
33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or
examining authority.
-3-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, a corporation organized and existing under the laws of the State of New
York, has duly caused this statement of eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in The City of New York, and
State of New York, on the 30th day of June, 1997.
THE BANK OF NEW YORK
By: /s/ Vivian Georges
-----------------------------
Name: Vivian Georges
Title: Assistant Vice President
-4-
<PAGE>
Exhibit 7
- --------------------------------------------------------------------------------
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business December 31,
1996, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts
ASSETS in Thousands
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin ....................................... $ 6,024,605
Interest-bearing balances ................................. 808,821
Securities:
Held-to-maturity securities ............................... 1,071,747
Available-for-sale securities ............................. 3,105,207
Federal funds sold in domestic offices
of the bank: ................................................ 4,250,941
Loans and lease financing
receivables:
Loans and leases, net of unearned
income .......................................31,962,915
LESS: Allowance for loan and
lease losses ....................................635,084
LESS: Allocated transfer risk
reserve .............................................429
Loans and leases, net of unearned
income, allowance, and reserve ........................ 31,327,402
Assets held in trading accounts ............................. 1,539,612
Premises and fixed assets (including
capitalized leases) ....................................... 692,317
Other real estate owned ..................................... 22,123
Investments in unconsolidated
subsidiaries and associated
companies ................................................. 213,512
Customers' liability to this bank on
acceptances outstanding ................................... 985,297
Intangible assets ........................................... 590,973
Other assets ................................................ 1,487,903
------------
Total assets ................................................ $ 52,120,460
============
LIABILITIES
Deposits:
In domestic offices ....................................... $ 25,929,642
Noninterest-bearing .............................11,245,050
Interest-bearing ................................14,684,592
In foreign offices, Edge and
Agreement subsidiaries, and IBFs .......................... 12,852,809
Noninterest-bearing ................................552,203
Interest-bearing ................................12,300,606
Federal funds purchased and securities
sold under agreements to repurchase in
domestic offices of the bank and of its
Edge and Agreement subsidiaries, and in IBFs:
Federal funds purchased ................................... 1,360,877
Securities sold under agreements
to repurchase ............................................. 226,158
Demand notes issued to the U.S.
Treasury .................................................. 204,987
Trading liabilities ......................................... 1,437,445
Other borrowed money:
With original maturity of one year
or less ................................................. 2,312,556
With original maturity of more than
one year ................................................ 20,766
Bank's liability on acceptances exe-
cuted and outstanding ..................................... 1,014,717
Subordinated notes and debentures ........................... 1,014,400
Other liabilities ........................................... 1,721,291
------------
Total liabilities ........................................... 48,095,648
------------
EQUITY CAPITAL
Common stock ................................................ 942,284
Surplus ..................................................... 731,319
Undivided profits and capital
reserves .................................................. 2,354,095
Net unrealized holding gains
(losses) on available-for-sale
securities ................................................ 7,030
Cumulative foreign currency transla-
tion adjustments .......................................... (9,916)
------------
Total equity capital ........................................ 4,024,812
------------
Total liabilities and equity
capital ................................................... $ 52,120,460
============
I, Robert E. Keilman, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
-
J. Carter Bacot |
Thomas A. Renyi |- Directors
Alan R. Griffith |
-
- --------------------------------------------------------------------------------
<PAGE>
LETTER OF TRANSMITTAL
WILLIAMS SCOTSMAN, INC.
OFFER TO EXCHANGE ITS
9 7/8% SENIOR NOTES DUE 2007
(THE "NEW NOTES")
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
FOR ANY AND ALL OF ITS OUTSTANDING
9 7/8% SENIOR NOTES DUE 2007
(THE "EXISTING NOTES")
PURSUANT TO THE PROSPECTUS, DATED SEPTEMBER 25, 1997
THIS EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M. NEW YORK CITY TIME ON OCTOBER
27, 1997 UNLESS EXTENDED (THE "EXPIRATION DATE"). TENDERS MAY BE WITHDRAWN PRIOR
TO THE EXPIRATION DATE.
TO: THE BANK OF NEW YORK, EXCHANGE AGENT
<TABLE>
<S> <C> <C>
BY MAIL: BY HAND: BY OVERNIGHT MAIL OR COURIER:
The Bank of New York The Bank of New York The Bank of New York
101 Barclay Street--7E 101 Barclay Street 101 Barclay Street--7E
New York, NY 10286 Corporate Trust and Agency New York, NY 10286
Attn: Reorganization Department Services Window Attn: Reorganization Department
Shilpa Privedi Ground Level Shilpa Privedi
New York, NY 10286
Attn: Shilpa Privedi
</TABLE>
For information call:
(212) 815-5789
Fax: (212) 815-6339
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH
ABOVE DOES NOT CONSTITUTE A VALID DELIVERY.
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING ANY BOX BELOW.
------------------------
List below the Existing Notes to which this Letter of Transmittal relates.
If the space provided below is inadequate, the certificate numbers and principal
amount of Existing Notes should be listed on a separate signed schedule affixed
hereto.
<TABLE>
<CAPTION>
DESCRIPTION OF EXISTING NOTES (1) (2) (3)
PRINCIPAL
AMOUNT OF
PRINCIPAL EXISTING NOTES
AMOUNT OF TENDERED
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) CERTIFICATE EXISTING (IF LESS THAN
(PLEASE FILL IN, IF BLANK) NUMBER(S)* NOTES ALL)**
<S> <C> <C> <C>
</TABLE>
* Need not be completed by book-entry holders
** Unless otherwise indicated, the holder will be deemed to have tendered the
full aggregate principal amount represented by such Existing Notes. Existing
Notes must be tendered in denominations of $1,000 and any integral multiple
thereof.
<PAGE>
The undersigned acknowledges that he or she has received and reviewed the
Prospectus, dated September 25, 1997 (the "Prospectus"), of Williams Scotsman,
Inc., a Maryland corporation (the "Company"), and this Letter of Transmittal
(the "Letter"), which together constitute the Company's offer (the "Exchange
Offer") to exchange up to $400,000,000 aggregate principal amount of its 9 7/8%
Senior Notes due 2007 (the "New Notes"), for a like principal amount of the
Company's issued and outstanding 9 7/8% Senior Notes due 2007 (collectively, the
"Existing Notes").
The undersigned has completed the appropriate boxes above and below and
signed this Letter to indicate the action the undersigned desires to take with
respect to the Exchange Offer.
This Letter is to be used by the Holder either if certificates of Existing
Notes are to be forwarded herewith or if delivery of Existing Notes is to be
made by book-entry transfer to an account maintained by the Exchange Agent at
The Depository Trust Company, pursuant to the procedures set forth in "The
Exchange Offer--Procedures for Tendering Existing Notes" in the Prospectus.
Delivery of this Letter and any other required documents should be made to the
Exchange Agent. Delivery of documents to a book-entry transfer facility does not
constitute delivery to the Exchange Agent.
Holders whose Existing Notes are not immediately available or who cannot
deliver their Existing Notes and all other documents required hereby to the
Exchange Agent on or prior to the Expiration Date must tender their Existing
Notes according to the guaranteed delivery procedure set forth in the Prospectus
under the caption "The Exchange Offer--Procedures for Tendering Existing Notes."
See Instruction 1.
/ / CHECK HERE IF EXISTING NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO AN ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE BOOK-ENTRY
TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution____________ / / The Depository Trust Company
Account Number_____________________________________________________________
Transaction Code Number ___________________________________________________
/ / CHECK HERE IF EXISTING NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY AND COMPLETE THE FOLLOWING:
Name of Registered Holder(s)_______________________________________________
Name of Eligible Institution that Guaranteed Delivery______________________
If delivered by book-entry transfer:
Account Number___________________ Transaction Code Number__________________
Date of execution of Notice of Guaranteed Delivery_________________________
/ / CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name:______________________________________________________________________
Address:___________________________________________________________________
If the undersigned is not a broker-dealer, the undersigned represents that
it is not engaged in, and does not intend to engage in, a distribution of New
Notes. If the undersigned is a broker-dealer that will receive New Notes for its
own account in exchange for Existing Notes that were acquired as a result of
market-making activities or other trading activities, it acknowledges that it
will deliver a prospectus meeting the requirements of the Securities Act of
1933, as amended (the "Securities Act") in connection with any resale of such
New Notes; however, by so acknowledging and by delivering a prospectus, the
undersigned will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. The Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of New Notes received in exchange for Existing Notes where such
Existing Notes were acquired as a result of market-making activities or other
trading activities. The Company has agreed that, for a period of 120 days after
the Expiration Date, it will make the Prospectus, as amended or supplemented,
available to any broker-dealer for use in connection with any such resale.
2
<PAGE>
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the aggregate principal amount of
Existing Notes indicated above. Subject to, and effective upon, the acceptance
for exchange of the Existing Notes tendered hereby, the undersigned hereby
sells, assigns and transfers to, or upon the order of, the Company all right,
title and interest in and to such Existing Notes as are being tendered hereby.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Existing Notes
tendered hereby and that the Company will acquire good and unencumbered title
thereto, free and clear of all liens, restrictions, charges and encumbrances and
not subject to any adverse claim when the same are accepted by the Company. The
undersigned will, upon request, execute and deliver any additional documents
deemed by the Company or the Exchange Agent to be necessary or desirable to
complete the sale, assignment and transfer of the Existing Notes tendered
hereby.
The undersigned also acknowledges that this Exchange Offer is being made in
reliance on the Company's belief, based on interpretations by the staff of the
Securities and Exchange Commission (the "SEC") to third parties in unrelated
transactions, that the New Notes issued in exchange for the Existing Notes
pursuant to the Exchange Offer may be offered for resale, resold and otherwise
transferred by holders thereof (other than (i) any such holder that is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act of 1933, as amended (the "Securities Act") or (ii) any broker-dealer that
purchase Notes from the Company to resell pursuant to Rule 144A under the
Securities Act ("Rule 144A") or any other available exemption) without
compliance with the registration and prospectus delivery provisions of the
Securities Act provided that such New 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 New Notes and are not
participating in, and do not intend to participate in, the distribution of such
New Notes. The undersigned acknowledges that any holder of Existing Notes using
the Exchange Offer to participate in a distribution of the New Notes (i) cannot
rely on the position of the staff of the SEC enunciated in its interpretive
letter with respect to Exxon Capital Holdings Corporation (available April 13,
1989) or similar letters and (ii) must comply with the registration and
prospectus requirements of the Securities Act in connection with a secondary
resale transaction.
The undersigned represents that (i) the New Notes acquired pursuant to the
Exchange Offer are being obtained in the ordinary course of such holder's
business, (ii) such holder has no arrangement or understanding with any person
to participate in the distribution of such New Notes and is not participating
in, and do not intend to participate in, the distribution of such New Notes, and
(iii) such holder is not an "affiliate," as defined in Rule 405 under the
Securities Act, of the Company or, if such holder is an affiliate, that such
holder will comply with the registration and prospectus delivery requirements of
the Securities Act to the extent applicable.
If the undersigned is not a broker-dealer, the undersigned represents that
it is not engaged in, and does not intend to engage in, a distribution of New
Notes. If the undersigned is a broker-dealer that will receive New Notes for its
own account in exchange for Existing Notes that were acquired as a result of
market--making activities or other trading as a result of market-making
activities or other trading activities, it acknowledges that it will deliver a
prospectus in connection with any resale of such New Notes; however, by so
acknowledging and by delivering a prospectus, the undersigned will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
The Prospectus, as it may be amended or supplemented from time to time, may be
used by a broker-dealer in connection with resales of New Notes received in
exchange for Existing Notes where such Existing Notes were acquired as a result
of market--making activities or other trading activities. The Company has agreed
that, for a period of 120
3
<PAGE>
days after the Expiration Date, it will make the Prospectus, as amended or
supplemented, available to any broker-dealer for use in connection with any such
resale.
The undersigned, if a California resident, hereby further represents and
warrants that the undersigned (or the beneficial owner of the Existing Notes
tendered hereby, if not the undersigned) (i) is a bank, savings and loan
association, trust company, insurance company, investment company registered
under the Investment Company Act of 1940, pension or profit-sharing trust (other
than a pension or profit-sharing trust of the Company, a self-employed
individual retirement plan, or individual retirement account), or a corporation
which has a net worth on a consolidated basis according to its most recent
audited financial statement of not less than $14,000,000, and (ii) is acquiring
the New Notes for its own account for investment purposes (or for the account of
the beneficial owner of such New Notes for investment purposes).
All authority conferred or agreed to be conferred in this Letter and every
obligation of the undersigned hereunder shall be binding upon the successors,
assigns, heirs, executors, administrators, trustees in bankruptcy and legal
representatives of the undersigned and shall not be affected by, and shall
survive, the death or incapacity of the undersigned. This tender may be
withdrawn only in accordance with the procedures set forth in the instructions
contained in this Letter.
The undersigned understands that tenders of the Existing Notes pursuant to
any one of the procedures described under "The Exchange Offer--Procedures for
Tendering Existing Notes" in the Prospectus and in the instructions hereto will
constitute a binding agreement between the undersigned and the Company in
accordance with the terms and subject to the conditions of the Exchange Offer.
The undersigned recognizes that, under certain circumstances set forth in
the Prospectus under "The Exchange Offer--Certain Conditions to the Exchange
Offer," the Company may not be required to accept for exchange any of the
Existing Notes tendered. Existing Notes not accepted for exchange or withdrawn
will be returned to the undersigned at the address set forth below unless
otherwise indicated under "Special Delivery Instructions" below.
Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions" below, please issue the New Notes (and, if applicable, substitute
certificates representing Existing Notes for any Existing Notes not exchanged)
in the name of the undersigned. Similarly, unless otherwise indicated under the
box entitled "Special Delivery Instructions" below, please deliver the New Notes
(and, if applicable, substitute certificates representing Existing Notes for any
Existing Notes not exchanged) to the undersigned at the address shown above in
the box entitled "Description of Existing Notes."
THE BOOK-ENTRY TRANSFER FACILITY, AS THE HOLDER OF RECORD OF CERTAIN
EXISTING NOTES, HAS GRANTED AUTHORITY TO BOOK-ENTRY TRANSFER FACILITY
PARTICIPANTS WHOSE NAMES APPEAR ON A SECURITY POSITION LISTING WITH RESPECT TO
SUCH EXISTING NOTES AS OF THE DATE OF TENDER OF SUCH EXISTING NOTES TO EXECUTE
AND DELIVER THE LETTER OF TRANSMITTAL AS IF THEY WERE THE HOLDERS OF RECORD.
ACCORDINGLY, FOR PURPOSES OF THIS LETTER OF TRANSMITTAL, THE TERM "HOLDER" SHALL
BE DEEMED TO INCLUDE SUCH BOOK-ENTRY TRANSFER FACILITY PARTICIPANTS.
THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF EXISTING
NOTES" ABOVE AND SIGNING THIS LETTER AND DELIVERING SUCH NOTES AND THIS LETTER
TO THE EXCHANGE AGENT, WILL BE DEEMED TO HAVE TENDERED THE EXISTING NOTES AS SET
FORTH IN SUCH BOX ABOVE.
4
<PAGE>
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS)
(COMPLETE ACCOMPANYING SUBSTITUTE FORM W-9)
Dated: _________________________________________________________________________
X _____________________________________ _____________________________________
X _____________________________________ _____________________________________
Signature(s) of Owner(s)/or Authorized Signatory Date
Area Code and Telephone Number _________________________________________________
If a holder is tendering any Existing Notes, this Letter must be signed by the
registered holder(s) as the name(s) appear(s) on the certificate(s) for the
Existing Notes or by any person(s) authorized to become registered holder(s) by
endorsements and documents transmitted herewith. If signature is by a trustee,
executor, administrator, guardian, officer or other person acting in a fiduciary
or representative capacity, please set forth full title. See Instruction 3.
Name(s) ________________________________________________________________________
(Please Type or Print)
________________________________________
Capacity: ______________________________________________________________________
Address ________________________________________________________________________
________________________________________________________________________________
(Include Zip Code)
SIGNATURE GUARANTEE
(IF REQUIRED BY INSTRUCTION 3)
Signature(s) Guaranteed by
an Eligible Institution: _______________________________________________________
(Authorized Signature)
________________________________________________________________________________
(Title)
________________________________________________________________________________
(Name of Firm)
Dated: _________________________________________________________________________
5
<PAGE>
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 3 AND 4)
To be completed ONLY if certificates for New Notes are to be issued in the
name of and sent to someone other than the person or persons whose signature(s)
appear on this Letter above.
Issue: New Notes to:
Name(s): _______________________________________________________________________
(Please Type or Print)
_______________________________________
(Please Type or Print)
Address: _______________________________________________________________________
_______________________________________
(Zip Code)
Social Security Number: ________________________________________________________
(Complete Substitute Form W-9)
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 3 AND 4)
To be completed ONLY if certificates for New Notes are to be sent to someone
other than the person or persons whose signature(s) appear(s) on this Letter
above or to such person or persons at an address other than shown in the box
entitled "Description of Existing Notes" on this Letter above.
Mail: New Notes to:
Name(s): _______________________________________________________________________
(Please Type or Print)
_______________________________________
(Please Type or Print)
Address: _______________________________________________________________________
_______________________________________
(Zip Code)
IMPORTANT: UNLESS GUARANTEED DELIVERY PROCEDURES ARE COMPLIED WITH, THIS
LETTER OR A FACSIMILE HEREOF (TOGETHER WITH THE CERTIFICATE(S) FOR EXISTING
NOTES OR A CONFIRMATION OF BOOK-ENTRY TRANSFER OF SUCH EXISTING NOTES AND ALL
OTHER REQUIRED DOCUMENTS) MUST BE RECEIVED BY THE EXCHANGE AGENT PRIOR TO THE
EXPIRATION DATE.
6
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER AND EXISTING NOTES; GUARANTEED DELIVERY PROCEDURE.
This Letter is to be used to forward, and must accompany, all certificates
representing Existing Notes tendered pursuant to the Exchange Offer.
Certificates representing the Existing Notes in proper form for transfer (or a
confirmation of book-entry transfer of such Existing Notes into the Exchange
Agent's account at the book-entry transfer facility) must be received by the
Exchange Agent at its address set forth herein on or before the Expiration Date.
THE METHOD OF DELIVERY OF THIS LETTER, THE EXISTING NOTES AND ALL OTHER
REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE TENDERING HOLDERS, BUT THE
DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED OR CONFIRMED BY THE
EXCHANGE AGENT. IF SUCH DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED
MAIL PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED, BE USED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO PERMIT TIMELY DELIVERY.
If a holder desires to tender Existing Notes and time will not permit such
holder's Letter of Transmittal, Existing Notes (or a confirmation of book-entry
transfer of Existing Notes into the Exchange Agent's account at the book-entry
transfer facility) or other required documents to reach the Exchange Agent on or
before the Expiration Date, such holder's tender may be effected if:
(a) such tender is made by or through an Eligible Institution (as
defined below);
(b) on or prior to the Expiration Date, the Exchange Agent has received
from such Eligible Institution a properly completed and duly executed Notice
of Guaranteed Delivery (or facsimile thereof) setting forth the name and
address of the holder of such Existing Notes tendered, the names in which
the Existing Notes are registered, and if possible, the certificate numbers
of the Existing Notes to be tendered and stating that the tender is being
made thereby and guaranteeing that, within three business days after the
Expiration Date, a duly executed Letter of Transmittal, or facsimile
thereof, together with the Existing Notes in proper form for transfer (or a
confirmation of book entry transfer of such Existing Notes into the Exchange
Agent's account at the book--entry transfer facility), and any other
documents required by this Letter and the instructions hereto, will be
deposited by such Eligible Institution with the Exchange Agent; and
(c) this Letter, or a facsimile hereof, and Existing Notes in proper
form for transfer (or a confirmation of book-entry transfer of such Existing
Notes into the Exchange Agent's account at the book-entry transfer facility)
and all other required documents are received by the Exchange Agent within
three business days after the Expiration Date.
Unless Existing Notes being tendered by the above-described method are
deposited within the time period set forth above (accompanied or preceded by a
properly completed Letter of Transmittal and any other required documentation),
the Company may, at its option, reject the tender. Copies of a Notice of
Guaranteed Delivery which may be used by Eligible Institutions for the purposes
described above are available from the Exchange Agent.
See "The Exchange Offer--Procedures for Tendering Existing Notes" in the
Prospectus.
2. PARTIAL TENDERS AND WITHDRAWALS.
Tenders of Existing Notes will be accepted only in denominations of $1,000
and any integral multiple thereof. If less than all the Existing Notes evidenced
by any Certificate submitted are to be tendered, fill in the principal amount of
the Existing Notes which are to be tendered in the box entitled "Principal
Amount of Existing Notes Tendered (if less than all)." All Existing Notes
represented by Certificates delivered to the Exchange Agent will be deemed to
have been tendered unless otherwise indicated.
7
<PAGE>
Any holder who has tendered Existing Notes may withdraw the tender by
delivering written notice of withdrawal (which may be sent by telegram,
facsimile (receipt confirmed by telephone and an original delivered by
guaranteed overnight courier)) to the Exchange Agent prior to the Expiration
Date. For a withdrawal to be effective, a written notice of withdrawal must be
received by the Exchange Agent at its address set forth herein. Any such notice
of withdrawal must (i) specify the name of the person having tendered the
Existing Notes to be withdrawn (the "Depositor"), (ii) identify the Existing
Notes to be withdrawn (including the certificate number or numbers and principal
amount of such Existing Notes), (iii) be timely received and signed by the
holder in the same manner as the original signature on the Letter by which such
Existing Notes were tendered or as otherwise set forth in Instruction 3 below
(including any required signature guarantees), or be accompanied by documents of
transfer sufficient to have the Trustee (as defined in the Prospectus) register
the transfer of such Existing Notes pursuant to the terms of the Indenture into
the name of the person withdrawing the tender and (iv) specify the name in which
any such Existing Notes are to be registered, if different from that of the
Depositor. If Existing Notes have been tendered pursuant to the procedure for
book-entry transfer, any notice of withdrawal must specify the name and number
of the account at the book-entry transfer facility to be credited with the
withdrawn Existing Notes or otherwise comply with the book-entry transfer
facility's procedures. See "The Exchange Offer--Withdrawal Rights" in the
Prospectus.
3. SIGNATURES ON THIS LETTER; BOND POWERS AND ENDORSEMENTS; GUARANTEE OF
SIGNATURES.
If this Letter is signed by the registered holder of the Existing Notes
tendered hereby, the signature must correspond exactly with the name as written
on the face of the certificates without any change whatsoever.
If any tendered Existing Notes are owned of record by two or more joint
owners, all such owners must sign this Letter.
If any tendered Existing Notes are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
copies of this Letter as there are different registrations of certificates.
If this Letter of Transmittal or any Certificates or bond powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity, such
person should so indicate when signing and must submit proper evidence
satisfactory to the Trustee of such person's authority so to act.
The signatures on this Letter or a notice of withdrawal, as the case may be,
must be guaranteed unless the Existing Notes surrendered for exchange pursuant
thereto are tendered (i) by a registered holder of the Existing Notes who has
not completed the box entitled "Special Issuance Instructions" or "Special
Delivery Instructions" in this Letter or (ii) for the account of an Eligible
Institution. In the event that the signatures in this Letter or a notice of
withdrawal, as the case may be, are required to be guaranteed, such guarantees
must be by a firm which is a member of a registered national securities exchange
or a member of the National Association of Securities Dealers, Inc., a clearing
agency, an insured credit union, a savings association or by a commercial bank
or trust company having an office or correspondent in the United States
(collectively, "Eligible Institutions"). If Existing Notes are registered in the
name of a person other than the signer of this Letter, the Existing Notes
surrendered for exchange must be endorsed by, or be accompanied by a written
instrument or instruments of transfer or exchange, in satisfactory form as
determined by the Company in its sole discretion, duly executed by the
registered holder with the signature thereon guaranteed by an Eligible
Institution.
4. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS.
Tendering holders of Existing Notes should indicate in the applicable box
the name and address to which New Notes issued pursuant to the Exchange Offer
are to be issued or sent, if different from the
8
<PAGE>
name or address of the person signing this Letter. In the case of issuance in a
different name, the employer identification or social security number of the
person named must also be indicated. If no such instructions are given, any New
Notes will be issued in the name of, and delivered to, the name or address of
the person signing this Letter and any Existing Notes not accepted for exchange
will be returned to the name or address of the person signing this Letter.
5. BACKUP FEDERAL INCOME TAX WITHHOLDING AND SUBSTITUTE FORM W-9.
Under the federal income tax laws, payments that may be made by the Company
on account of New Notes issued pursuant to the Exchange Offer may be subject to
backup withholding at the rate of 31%. In order to avoid such backup
withholding, each tendering holder should complete and sign the Substitute Form
W-9 included in this Letter and either (a) provide the correct taxpayer
identification number ("TIN") and certify, under penalties of perjury, that the
TIN provided is correct and that (i) the holder has not been notified by the
Internal Revenue Service (the "IRS") that the holder is subject to backup
withholding as a result of failure to report all interest or dividends or (ii)
the IRS has notified the holder that the holder is no longer subject to backup
withholding; or (b) provide an adequate basis for exemption. If the tendering
holder has not been issued a TIN and has applied for one, or intends to apply
for one in the near future, such holder should write "Applied For" in the space
provided for the TIN in Part I of the Substitute Form W-9, sign and date the
Substitute Form W-9 and sign the Certificate of Payee Awaiting Taxpayer
Identification Number. If "Applied For" is written in Part I, the Company (or
the Paying Agent under the Indenture governing the New Notes) shall retain 31%
of payments made to the tendering holder during the sixty (60) day period
following the date of the Substitute Form W-9. If the holder furnishes the
Exchange Agent or the Company with his or her TIN within sixty (60) days after
the date of the Substitute Form W-9, the Company (or the Paying Agent) shall
remit such amounts retained during the sixty (60) day period to the holder and
no further amounts shall be retained or withheld from payments made to the
holder thereafter. If, however, the holder has not provided the Exchange Agent
or the Company with his or her TIN within such sixty (60) day period, the
Company (or the Paying Agent) shall remit such previously retained amounts to
the IRS as backup withholding. In general, if a holder is an individual, the
taxpayer identification number is the Social Security number of such individual.
If the Exchange Agent or the Company is not provided with the correct taxpayer
identification number, the holder may be subject to a $50 penalty imposed by the
IRS. Certain holders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, such holder must submit a statement (generally, IRS Form W-8), signed
under penalties of perjury, attesting to that individual's exempt status. Such
statements can be obtained from the Exchange Agent. For further information
concerning backup withholding and instructions for completing the Substitute
Form W-9 (including how to obtain a taxpayer identification number if you do not
have one and how to complete the Substitute Form W-9 if Existing Notes are
registered in more than one name), consult the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9.
Failure to complete the Substitute Form W-9 will not, by itself, cause
Existing Notes to be deemed invalidly tendered, but may require the Company (or
the Paying Agent) to withhold 31% of the amount of any payments made on account
of the New Notes. Backup withholding is not an additional federal income tax.
Rather, the federal income tax liability of a person subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained.
6. TRANSFER TAXES.
The Company will pay all transfer taxes, if any, applicable to the transfer
of Existing Notes to it or its order pursuant to the Exchange Offer. If,
however, New Notes and/or substitute Existing Notes not exchanged are to be
delivered to, or are to be registered or issued in the name of, any person other
than the registered holder of the Existing Notes tendered hereby, or if tendered
Existing Notes are registered in
9
<PAGE>
the name of any person other than the person signing this Letter, or if a
transfer tax is imposed for any reason other than the transfer of Existing Notes
to the Company or its order pursuant to the Exchange Offer, 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 herewith, the
amount of such transfer taxes will be billed directly to such tendering holder.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the Existing Notes specified in this
Letter.
7. WAIVER OF CONDITIONS.
The Company reserves the absolute right to waive satisfaction of any or all
conditions enumerated in the Prospectus.
8. NO CONDITIONAL TENDERS.
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering holders of Existing Notes, by execution of this Letter,
shall waive any right to receive notice of the acceptance of their Existing
Notes for exchange.
Neither the Company nor any other person is obligated to give notice of
defects or irregularities in any tender, nor shall any of them incur any
liability for failure to give any such notice.
9. INADEQUATE SPACE.
If the space provided herein is inadequate, the aggregate principal amount
of Existing Notes being tendered and the certificate number or numbers (if
available) should be listed on a separate schedule attached hereto and
separately signed by all parties required to sign this Letter.
10. MUTILATED, LOST, STOLEN OR DESTROYED EXISTING NOTES.
If any certificate has been lost, mutilated, destroyed or stolen, the holder
should promptly notify The Bank of New York, Telephone (212) 815-5789. The
holder will then be instructed as to the steps that must be taken to replace the
certificates(s). This Letter of Transmittal and related documents cannot be
processed until the Existing Notes have been replaced.
11. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES.
Questions relating to the procedure for tendering, as well as requests for
additional copies of the Prospectus and this Letter, may be directed to the
Exchange Agent at the address and telephone number indicated above.
10
<PAGE>
TO BE COMPLETED BY ALL TENDERING HOLDERS
(SEE INSTRUCTION 5)
<TABLE>
<S> <C> <C>
PAYER'S NAME: WILLIAMS SCOTSMAN, INC.
SUBSTITUTE PART 1--Taxpayer Identification ------------------------------
FORM W-9 Number Social Security Number
DEPARTMENT OF THE TREASURY Enter your taxpayer identification OR
INTERNAL REVENUE SERVICE number in the appropriate box. For ------------------------------
PAYER'S REQUEST FOR most individuals, this is your Employer Identification Number
TAXPAYER IDENTIFICATION social security number. If you do
NUMBER ("TIN") not have a number, see how to
AND CERTIFICATION obtain a "TIN" in the enclosed
Guidelines.
NOTE: If the account is in more
than one name, see the chart on
page 2 of the enclosed Guidelines
to determine what number to give.
PART II--For Payees Exempt From Backup Withholding (see enclosed
Guidelines)
CERTIFICATION--UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT:
(1) the number shown on this form is my correct Taxpayer Identification
Number (or I am waiting for a number to be issued to me), and
(2) 1 am not subject to backup withholding either because I have not
been notified by the Internal Revenue Service (the "IRS") that I am
subject to backup withholding as a result of a failure to report
all interest or dividends or the IRS has notified me that I am no
longer subject to backup withholding.
SIGNATURE --------------------------------------------- DATE
------------
CERTIFICATION GUIDELINES--You must cross out item (2) of the above certification if you have been
notified by the IRS that you are subject to backup withholding because of underreporting of interest
or dividends on your tax return. However, if after being notified by the IRS that you were subject to
backup withholding you received another notification from the IRS that you are no longer subject to
backup withholding, do not cross out item (2).
</TABLE>
CERTIFICATION OF PAYEE AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify, under penalties of perjury, that a Taxpayer Identification Number
has not been issued to me, and that I mailed or delivered an application to
receive a Taxpayer Identification Number to the appropriate Internal Revenue
Service Center or Social Security Administration Office (or I intend to mail or
deliver an application in the near future). I understand that if I do not
provide a Taxpayer Identification Number to the payer, 31 percent of all
payments made to me on account of the New Notes shall be retained until I
provide a Taxpayer Identification Number to the payer and that, if I do not
provide my Taxpayer Identification Number within sixty (60) days, such retained
amounts shall be remitted to the Internal Revenue Service as backup withholding
and 31 percent of all reportable payments made to me thereafter will be withheld
and remitted to the Internal Revenue Service until I provide a Taxpayer
Identification Number.
SIGNATURE
- --------------------------------------------- DATE
- ------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU ON ACCOUNT OF THE NEW NOTES. PLEASE
REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
11
<PAGE>
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF ALL OUTSTANDING
9 7/8% SENIOR NOTES DUE 2007
IN EXCHANGE FOR NEW
9 7/8% SENIOR NOTES DUE 2007
REGISTERED UNDER THE SECURITIES ACT OF 1993, AS AMENDED
OF
WILLIAMS SCOTSMAN, INC.
Registered holders of outstanding 9 7/8% Senior Notes due 2007 (the
"Existing Notes") who wish to tender their Existing Notes in exchange for a like
principal amount of new 9 7/8% Senior Notes due 2007 (the "New Notes") and whose
Existing Notes are not immediately available or who cannot deliver their
Existing Notes and Letter of Transmittal (and any other documents required by
the Letter of Transmittal) to The Bank of New York (the "Exchange Agent") prior
to the Expiration Date, may use this Notice of Guaranteed Delivery. This Notice
of Guaranteed Delivery may be delivered by hand or sent by facsimile
transmission (receipt confirmed by telephone and an original delivered by
guaranteed overnight courier) or letter to the Exchange Agent. See "The Exchange
Offer--Procedures for Tendering Existing Notes" in this Prospectus.
THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:
<TABLE>
<S> <C> <C>
BY MAIL: BY HAND: BY OVERNIGHT MAIL OR COURIER:
The Bank of New York The Bank of New York The Bank of New York
101 Barclay Street--7E 101 Barclay Street 101 Barclay Street--7E
New York, NY 10286 Corporate Trust and New York, NY 10286
Agency
Attn: Reorganization Department Services Window Attn: Reorganization Department
Shilpa Privedi Ground Level Shilpa Privedi
New York, NY 10286
Attn: Shilpa Privedi
</TABLE>
For Information, call:
(212) 815-5789
Fax: (212) 815-6339
Delivery of this Note of Guaranteed Delivery to an address other than as set
forth above or transmission of instructions via a facsimile transmission to a
number other than as set forth above will not constitute a valid delivery.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on a Letter of Transmittal is required to be
guaranteed by an Eligible Institution (as defined in the Prospectus), such
signature guarantee must appear in the applicable space provided on the Letter
of Transmittal for Guarantee of Signatures.
<PAGE>
Ladies and Gentleman:
The undersigned hereby tenders the principal amount of Existing Notes
indicated below, upon the terms and subject to the conditions contained in the
Prospectus dated September 25, 1997 of Williams Scotsman, Inc. (the
"Prospectus"), receipt of which is hereby acknowledged.
DESCRIPTION OF SECURITIES TENDERED
<TABLE>
<CAPTION>
NAME AND ADDRESS OF REGISTERED HOLDER CERTIFICATE
AS IT NUMBER(S) OF PRINCIPAL AMOUNT
APPEARS ON THE 9 7/8% SENIOR NOTES DUE EXISTING AGGREGATE PRINCIPAL OF EXISTING
2007 ("EXISTING NOTES") NOTES AMOUNT REPRESENTED NOTES
(PLEASE PRINT) TENDERED BY EXISTING NOTES* TENDERED
- ------------------------------------- ------------ ------------------ ---------------
<S> <C> <C> <C>
- ------------------------------------- ------------ ------------------ ---------------
- ------------------------------------- ------------ ------------------ ---------------
- ------------------------------------- ------------ ------------------ ---------------
</TABLE>
If Existing Notes will be delivered by book-entry transfer to The Depositary
Trust Company, provide account number.
Account Number __________
THE FOLLOWING GUARANTEE MUST BE COMPLETED
GUARANTEE OF DELIVERY
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm that is a member of a registered national securities
exchange or a member of the National Association of Securities Dealers, Inc. or
a commercial bank or trust company having an office, branch, agency or
correspondent in the United States, hereby guarantees to deliver to the Exchange
Agent at one of its addresses set forth above, the certificates representing the
Existing Notes, together with a properly completed and duly executed Letter of
Transmittal (or facsimile thereof), with any required signature guarantees, and
any other documents required by the Letter of Transmittal within three New York
Stock Exchange, Inc. trading days after the date of execution of this Notice of
Guaranteed Delivery.
<TABLE>
<S> <C>
Name of Firm:
(Authorized Signature)
Address: Title:
Name:
(Zip Code) (Please type or print)
Area Code and Telephone Number: Date:
</TABLE>
NOTE: DO NOT SEND EXISTING NOTES WITH THIS NOTICE OF GUARANTEED DELIVERY.
EXISTING NOTES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
* Must be in denominations of $1,000 and any integral multiple thereof.
2
<PAGE>
- --------------------------------------------------------------------------------
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned and every obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives, successors
and assigns of the undersigned.
- --------------------------------------------------------------------------------
PLEASE SIGN HERE
<TABLE>
<S> <C>
X
- ------------------------------------------ --------------
- ------------------------------------------ --------------
Signature(s) of Owner(s) Date
or Authorized Signatory
</TABLE>
Area Code and Telephone Number:
- ------------------------
Must be signed by the holder(s) of Existing Notes as their name(s) appear(s)
on certificates for Existing Notes or on a security position listing, or by
person(s) authorized to become registered holder(s) by endorsement and documents
transmitted with this Notice of Guaranteed Delivery. If signature is by a
trustee, executor, administrator, guardian, attorney-in-fact, officer or other
person acting in a fiduciary or representative capacity, such person must set
forth his or her full title below:
PLEASE PRINT NAME(S) AND ADDRESS(ES)
Name(s):
- -------------------------------------------------------------------------------
----------------------------------------------------------------------
Capacity:
- -------------------------------------------------------------------------------
----------------------------------------------------------------------
Address(es):
- -------------------------------------------------------------------------------
---------------------------------------------------------------------
---------------------------------------------------------------------
3
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER. -- Social Security numbers have nine digits separated by two hyphens:
I.E., 000-00-0000. Employer identification numbers have nine digits separated by
only one hyphen: I.E., 00-0000000. The table below will help determine the
number to give the payer.
<TABLE>
<CAPTION>
- -------------------------------------------------------
GIVE THE
SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF --
- -------------------------------------------------------
<S> <C> <C>
1. An individual's The individual
account
2. Two or more The actual owner of
individuals (joint the account or, if
account) combined funds, the
first individual on
the account(1)
3. Husband and wife The actual owner of
(joint account) the account or, if
joint funds, either
person(1)
4. Custodian account of The minor(2)
a minor (Uniform Gift
to Minors Act)
5. Adult and minor The adult or, if the
(joint account) minor is the only
contributor, the
minor(1)
6. Account in the name The ward, minor, or
of the guardian or incompetent person(3)
committee for a
designated ward,
minor, or incompetent
person
7. a. The usual The
revocable savings grantor-trustee(1)
trust account
(grantor is also
trustee)
b. So-called trust
account that is The actual owner(1)
not a legal or
valid trust under
State law
8. Sole proprietorship The owner(4)
account
- -------------------------------------------------------
<CAPTION>
GIVE THE
EMPLOYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF --
<S> <C> <C>
- -------------------------------------------------------
9. A valid trust, The legal entity (Do
estate, or pension not furnish the
trust identifying number of
the personal
representative or
trustee unless the
legal entity itself
is not designated in
the account
title).(5)
10. Corporate account The corporation
11. Religious, The organization
charitable, or
educational
organization account
12. Partnership account The partnership
held in the name of
the business
13. Association, club, or The organization
other tax-exempt
organization
14. A broker or The broker or nominee
registered nominee
15. Account with the The public entity
Department of
Agriculture in the
name of a public
entity (such as a
State or local
government, school
district, or prison)
that receives
agricultural program
payments
</TABLE>
- ---------------------------------------------
- ---------------------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's, or incompetent person's name and furnish such
person's social security number.
(4) Show your individual name. You may also enter your business name. You may
use either your Social Security number or your Employer Identification
number.
(5) List first and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card (for
individuals), or Form SS-4, Application for Employer Identification Number, at
the local office of the Social Security Administration or the Internal Revenue
Service (the "IRS") and apply for a number.
PAYEE EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments including
the following:
- - A corporation
- - A financial institution.
- - An organization exempt from tax under Section 501(a) of the Internal Revenue
Code of 1986, as amended (the "Code"), or an individual retirement plan or a
custodial account under Section 403(b)(7) of the Code.
- - The United States or any agency or instrumentality thereof.
- - A State, the District of Columbia, a possession of the United States, or any
subdivision or instrumentality thereof.
- - A foreign government, a political subdivision of a foreign government, or any
agency or instrumentality thereof.
- - An international organization or any agency or instrumentality thereof.
- - A registered dealer in securities or commodities registered in the U.S. or a
possession of the U.S.
- - A real estate investment trust.
- - A common trust fund operated by a bank under Section 584(a) of the Code.
- - An exempt charitable remainder trust, or a non-exempt trust described in
Section 4947(a)(1) of the Code.
- - An entity registered at all times during the tax year under the Investment
Company Act of 1940.
- - A foreign central bank of issue.
Payment of dividends and patronage dividends not generally subject to backup
withholding include the following:
- - Payments to nonresident aliens subject to withholding under Section 1441 of
the Code.
- - Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
- - Payments of patronage dividends where the amount received is not paid in
money.
- - Payments made by certain foreign organizations.
Payments of interest not generally subject to backup withholding include the
following:
- - Payment of interest on obligations issued by individuals.
NOTE: You may be subject to backup withholding if this interest is $600 or
more and is paid in the course of the payer's trade or business and you have
not provided your correct taxpayer identification number to the payer.
- - Payment of tax-exempt interest (including exempt interest dividends under
Section 852 of the Code).
- - Payment described in Section 6049(b)(5) to nonresident aliens.
- - Payments on tax-free covenant bonds under Section 1451 of the Code.
- - Payments made by certain foreign organizations.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, SIGN AND DATE THE
FORM AND RETURN IT TO THE PAYER. IF YOU ARE A NONRESIDENT ALIEN OR A FOREIGN
ENTITY NOT SUBJECT TO BACKUP WITHHOLDING, FILE WITH THE PAYER A COMPLETED
INTERNAL REVENUE FORM W-8 (CERTIFICATE OF FOREIGN STATUS).
Certain payments other than interest, dividends, and patronage dividends,
that are not subject to information reporting are also not subject to backup
withholding. For details, see Sections 6041, 6041A(a), 6042, 6044, 6045, 6049,
and 6050A and 6050N of the Code and the regulations promulgated thereunder.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividends,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to the IRS. The IRS uses the numbers for
identification purposes. Payers must be given the numbers whether or not
recipients are required to file tax returns. Payers must generally withhold 31%
of taxable interest, dividends, and certain other payments to a payee who does
not furnish a taxpayer identification number to a payer. Certain penalties may
also apply.
PENALTIES.
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.-- Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/ or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
<PAGE>
WILLIAMS SCOTSMAN, INC.
OFFER TO EXCHANGE
$1,000 IN PRINCIPAL AMOUNT OF
9 7/8% SENIOR NOTES DUE 2007
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED FOR
EACH $1,000 IN PRINCIPAL AMOUNT OF
OUTSTANDING 9 7/8% SENIOR NOTES DUE 2007 THAT
WERE ISSUED AND SOLD IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT
To Securities Dealers, Commercial Banks,
Trust Companies and Other Nominees:
Enclosed for your consideration is a Prospectus dated September 25, 1997 (as
the same may be amended or supplemented from time to time, the "Prospectus") and
a form of Letter of Transmittal (the "Letter of Transmittal") relating to the
offer (the "Exchange Offer") by Williams Scostman, Inc. (the "Issuer") to
exchange up to $400,000,000 in aggregate principal amount of its 9 7/8% Senior
Notes due 2007 (the "Exchange Notes") for up to $400,000,000 in aggregate
principal amount of its outstanding 9 7/8% Senior Notes due 2007 that were
issued and sold in a transaction exempt from registration under the Securities
Act of 1933, as amended (the "Existing Notes").
We are asking you to contact your clients for whom you hold Existing Notes
registered in your name or in the name of your nominee, in addition, we ask you
to contact your clients who, to your knowledge, hold Existing Notes registered
in their old name. The Issuer will not pay any fees or commissions to any
broker, dealer or other person in connection with the solicitation of tenders
pursuant to the Exchange Offer. You will, however, be reimbursed by the Issuer
for customary mailing and handling expenses incurred by you to forwarding any of
the enclosed materials to your clients. The Issuer will pay all transfer taxes,
if any, applicable to the tender of Existing Notes to it or its order, except as
otherwise provided in the Prospectus and the Letter of Transmittal.
Enclosed are copies of the following documents:
1. the Prospectus;
2. a Letter of Transmittal for your use in connection with the exchange
of Existing Notes and for the information of your clients (facsimile copies
of the Letter of Transmittal may be used to exchange Existing Notes);
3. a form of letter that may be sent to your clients for whose accounts
you hold Existing Notes registered in your name or the name of your nominee,
with space provided for obtaining the clients' instructions with regard to
the Exchange Offer;
4. a Notice of Guaranteed Delivery;
5. guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9; and
6. a return envelope addressed to The Bank of New York, the Exchange
Agent.
YOUR PROMPT ACTION IS REQUESTED. THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M.
NEW YORK CITY TIME ON OCTOBER 27, 1997, UNLESS EXTENDED (THE "EXPIRATION DATE").
EXISTING NOTES TENDERED PURSUANT TO THE EXCHANGE OFFER MAY BE WITHDRAWN, SUBJECT
TO THE PROCEDURES DESCRIBED IN THE PROSPECTUS, AT ANY TIME PRIOR TO THE
EXPIRATION DATE.
<PAGE>
To tender Existing Notes, certificates for Existing Notes or a Book-Entry
Confirmation (as defined in the Prospectus), a duly executed and properly
completed Letter of Transmittal or a facsimile thereof, and any other required
documents, must be received by the Exchange Agent as provided in the Prospectus
and the Letter of Transmittal.
If a holder desires to accept the Exchange Offer and time will not permit a
Letter of Transmittal or Existing Note to reach the Exchange Agent before the
Expiration Date or the procedure for book-entry transfer cannot be completed on
a timely basis, a tender may be effected by delivery of a Notice of Guaranteed
Delivery by an Eligible Institution.
Any inquiries you may have with respect to the Exchange Offer or requests
for additional copies of the enclosed material may be directed to the Exchange
Agent at its address or telephone number set forth in the Prospectus.
Very truly yours,
WILLIAMS SCOTSMAN, INC.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR
ANY PERSON AS AN AGENT OF THE ISSUER OR THE EXCHANGE AGENT, OR ANY AFFILIATE
THEREOF, OR AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENTS OR USE ANY
DOCUMENT ON BEHALF OF ANY OF THEM WITH RESPECT TO THE EXCHANGE OFFER, EXCEPT FOR
THE ENCLOSED DOCUMENTS AND THE STATEMENTS EXPRESSLY MADE IN THE PROSPECTUS AND
THE LETTER OF TRANSMITTAL.
<PAGE>
WILLIAMS SCOTSMAN, INC.
OFFER TO EXCHANGE
$1,000 IN PRINCIPAL AMOUNT OF
9 7/8% SENIOR NOTES DUE 2007
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED FOR
EACH $1,000 IN PRINCIPAL AMOUNT OF
OUTSTANDING 9 7/8% SENIOR NOTES DUE 2007
THAT WERE ISSUED AND SOLD IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT
To Our Clients:
Enclosed for your consideration is a Prospectus dated September 25, 1997 (as
the same may be amended or supplemented from time to time, the "Prospectus") and
a form of Letter of Transmittal (the "Letter of Transmittal") relating to the
offer (the "Exchange Offer") by Williams Scotsman, Inc. (the "Issuer") to
exchange up to $400,000,000 in aggregate principal amount of its 9 7/8% Senior
Notes due 2007 (the "Exchange Notes") for up to $400,000,000 in aggregate
principal amount of its outstanding 9 7/8% Senior Notes due 2007 that were
issued and sold in a transaction exempt from registration under the Securities
Act of 1933, as amended (the "Existing Notes").
The material is being forwarded to you as the beneficial owner of Existing
Notes carried by us for your account or benefit but not registered in your name.
A tender of any Existing Notes may be made only by us as the registered holder
and pursuant to your instructions. Therefore, the Issuer urges beneficial owners
of Existing Notes registered in the name of a broker, dealer, commercial bank,
trust company or other nominee to contact such registered holder promptly if
they wish to tender Existing Notes in the Exchange Offer.
Accordingly, we request instructions as to whether you wish us to tender any
or all of the Existing Notes held by us for your account, pursuant to the terms
and conditions set forth in the Prospectus and Letter of Transmittal. We urge
you to read carefully the Prospectus and Letter of Transmittal before
instructing us to tender your Existing Notes.
Your instructions to us should be forwarded as promptly as possible in order
to permit us to tender Existing Notes on your behalf in accordance with the
provisions of the Exchange Offer. THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON OCTOBER 27, 1997, UNLESS EXTENDED (THE "EXPIRATION
DATE"). Existing Notes tendered pursuant to the Exchange Offer may be withdrawn,
subject to the procedures described in the Prospectus, at any time prior to the
Expiration Date.
Your attention is directed to the following:
l. The Exchange Offer is for the exchange of $1,000 principal amount at
maturity of the Exchange Notes for each $1,000 principal amount at maturity
of the Existing Notes, of which $400,000,000 aggregate principal amount of
the Existing Notes was outstanding as of September 25, 1997. The terms of
the Exchange Notes are substantially identical (including principal amount,
interest rate, maturity, security and ranking) to the terms of the Existing
Notes, except that the Exchange Notes (i) are freely transferable by holders
thereof (except as provided in the Prospectus) and (ii) are not entitled to
certain registration rights and certain additional interest provisions which
are applicable to the Existing Notes under two separate registration rights
agreements (the "Registration Rights Agreements") among (x) the Company,
Mobile Field Office Company, as guarantor (the "Guarantor"), Willscot
Equipment, LLC, as subordinated guarantor (the "Subordinated Guarantor") and
BT Securities Corporation, Alex. Brown & Sons Incorporated and Donaldson,
Lufkin & Jenrette Secutities Corporation., as initial purchasers (the
"Initial Purchasers") and (y) the Company, the Guarantor, the Subordinated
Guarantor and Oak Hill Securities Fund, L.P., as direct purchaser.
<PAGE>
2. THE EXCHANGE OFFER IS SUBJECT TO CERTAIN CONDITIONS, SEE "THE
EXCHANGE OFFER--CONDITIONS TO THE EXCHANGE OFFER" IN THE PROSPECTUS.
3. The Exchange Offer and withdrawal rights will expire at 5:00 p.m.,
New York City time, on October 27, 1997, unless extended.
4. The Issuer has agreed to pay the expenses of the Exchange Offer
except as provided in the Prospectus and the Letter of Transmittal.
5. Any transfer taxes incident to the transfer of Existing Notes from
the tendering Holder to the Issuer will be paid by the Issuer, except as
provided in the Prospectus and the Letter of Transmittal.
The Exchange Offer is not being made to nor will exchange be accepted from
or on behalf of holders of Existing Notes in any jurisdiction in which the
making of the Exchange Offer or the acceptance thereof would not be in
compliance with the laws of such jurisdiction.
If you wish to have us tender any or all of your Existing Notes held by us
for your account or benefit, please so instruct us by completing, executing and
returning to us the instruction form that appears below. THE ACCOMPANYING LETTER
OF TRANSMITTAL IS FURNISHED TO YOU FOR INFORMATIONAL PURPOSES ONLY AND MAY NOT
BE USED BY YOU TO TENDER EXISTING NOTES HELD BY US AND REGISTERED IN OUR NAME
FOR YOUR ACCOUNT OR BENEFIT.
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