UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 22, 1997
WILLIAMS SCOTSMAN, INC.
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(Exact name of registrant as specified in its charter)
State of Maryland 033-68444 52-0665775
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(State or other (Commission File Number) (I.R.S. Employer
jurisdiction of Identification No.)
incorporation)
8211 Town Center Drive, Baltimore, Maryland 21236
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(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code (410) 931-6000
Not applicable
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(Former name or former address, if changed since last report)
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Item 1. Changes in Control of Registrant.
--------------------------------
On May 22, 1997, an investor group (the "Investor Group"), which
includes Cypress Merchant Banking Partners L.P. and Cypress Offshore Partners
L.P. (collectively, the "Cypress Entities"), BT Investment Partners, Inc.
("BTIP") and Scotsman Partners, L.P. ("Scotsman Partners"), a limited
partnership whose direct and indirect partners include Keystone, Inc.
("Keystone") and FW Strategic Partners, L.P. ("Strategic Partners"), completed
the acquisition of approximately 90% of the common stock of Scotsman Holdings,
Inc. ("Holdings") as part of a recapitalization of Holdings and its wholly-owned
subsidiary, Williams Scotsman, Inc. (the "Company"). Following the
recapitalization, Cypress Merchant Banking Partners L.P., Cypress Offshore
Partners L.P., BTIP and Scotsman Partners own approximately 41.18%, 2.13%, 3.33%
and 43.32%, respectively, of the outstanding common stock of Holdings. As part
of the recapitalization, Odyssey Partners, L.P. ("Odyssey") reduced its
percentage ownership of Holdings' common stock from approximately 88.56% to
approximately 5.90%. Under a recapitalization agreement among an affiliate of
the Cypress Entities, Keystone, Strategic Partners, Odyssey and certain other
existing stockholders (including management), Holdings (i) repurchased 3,210,679
shares of outstanding common stock of Holdings from Odyssey and other existing
stockholders of Holdings and (ii) issued 1,475,410 shares of common stock of
Holdings to the Investor Group. Internal funds were used by the Cypress
Entities, Keystone and Strategic Partners in connection with the purchase of
Holdings' common stock.
Holdings, the Investor Group, Odyssey, Barry Gossett and certain
other stockholders of Holdings entered into an investor stockholders agreement.
Under the terms of the agreement, the board of directors of Holdings will
consist of eight directors: three persons nominated by the Cypress Entities,
three nominated by Scotsman Partners and the Chairman of the Board and the
President of Holdings, subject to certain requirements as set forth in the
agreement. Without the approval of a majority of the directors designated by the
Cypress Entities and Scotsman Partners, respectively, Holdings will not take
certain actions (including mergers, consolidation, sales of substantially all
assets, electing or removing the Chairman or President of Holdings, issuing
securities, incurring additional indebtedness, making certain acquisitions,
approving operating capital budgets and other major transactions).
Item 5. Other Events.
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The transactions described in Item 1 were part of an overall
recapitalization of Holdings and the Company. In addition to the transactions
described in Item 1, on May 22, 1997, (i) Holdings completed the tender offer
for its Series B 11% Senior Notes due 2004 at a price equal to 107.36% plus
accrued and unpaid interest and accepted for payment all its outstanding Series
B 11% Senior Notes (approximately $29.3 million prior to acceptance), (ii) the
Company completed the tender offer for its 9 1/2% Senior Secured Notes due 2000
at a price equal to
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104.83% plus accrued and unpaid interest and accepted for payment approximately
99.8% of its outstanding Senior Secured Notes (approximately $165 million prior
to acceptance), (iii) the Company entered into a new $300 million revolving bank
credit facility and borrowed $102.5 million thereunder to refinance its existing
bank credit facility and (iv) the Company completed the private placement of
$400 million aggregate principal amount of its 97/8% Senior Notes due 2007.
On May 22, 1997, the Company issued the press release attached
hereto as Exhibit 99.1 and incorporated herein by reference.
Item 7. Exhibits
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Exhibit Number
(Referenced to Item 601
of Regulation S-K) Description of Exhibit
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2 Recapitalization Agreement, dated as of April
11, 1997
99.1 Press Release, dated as of May 22, 1997.
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Signatures
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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.
Date: June 5, 1997
WILLIAMS SCOTSMAN, INC.
By: /s/ Gerard E. Holthaus
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Gerard E. Holthaus
President and Chief Executive Officer
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5
EXHIBIT INDEX
Sequentially
Exhibit Number Description of Exhibit Numbered Page
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2 Recapitalization Agreement, dated as of
April 11, 1997
99.1 Press Release, dated as of May 22, 1997
Exhibit 2
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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 HEREIN
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TABLE OF CONTENTS
Page
ARTICLE I
PURCHASE OF SECURITIES; REPURCHASE.....................................2
SECTION 1.1. Purchase and Sale of the Common Stock....................2
SECTION 1.2. Repurchase...............................................2
SECTION 1.3. Closing..................................................5
SECTION 1.4. Amendment to Existing Stockholders Agreement.............6
ARTICLE II
REPRESENTATIONS AND WARRANTIES.........................................6
SECTION 2.1. Representations and Warranties of the Company............6
SECTION 2.2. Representations and Warranties of the Investors.........21
SECTION 2.3. Representations and Warranties of Selling Securityholders
...............................................................24
ARTICLE III
COVENANTS RELATING TO CONDUCT OF BUSINESS
PENDING CLOSING.......................................................26
SECTION 3.1. Conduct of Business of the Company......................26
SECTION 3.2. Other Actions...........................................28
ARTICLE IV
ADDITIONAL AGREEMENTS.................................................28
SECTION 4.1. Access to Information; Confidentiality..................28
SECTION 4.2. Commercially Reasonable Efforts.........................29
SECTION 4.3. Benefit Plans and Employment Agreements.................29
SECTION 4.4. Public Announcements....................................30
SECTION 4.5. Acquisition Proposals...................................31
SECTION 4.6. Restriction on Selling Securityholders..................31
SECTION 4.7. Consents, Approvals and Filings.........................32
SECTION 4.8. Updating of Information.................................32
SECTION 4.9. Investors...............................................32
SECTION 4.10. Indemnification and Insurance...........................33
SECTION 4.11. Existing Stockholders Agreement.........................33
SECTION 4.12. New Stockholders Agreement..............................34
SECTION 4.13. Best Efforts............................................34
ARTICLE V
CONDITIONS PRECEDENT..................................................34
SECTION 5.1. Conditions to Obligations of Each of the Parties........34
SECTION 5.2. Conditions to Obligations of the Investors..............35
Section 5.3. Conditions to Obligations of the Company................36
Section 5.4. Conditions to Obligations of the Selling Securityholders
...............................................................37
ARTICLE VI
TERMINATION, AMENDMENT AND WAIVER.....................................37
i
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SECTION 6.1. Termination.............................................37
SECTION 6.2. Effect of Termination...................................38
SECTION 6.3. Amendment...............................................38
SECTION 6.4. Extension; Waiver.......................................39
SECTION 6.5. Procedure for Termination, Amendment, Extension or Waiver
...............................................................39
ARTICLE VII
GENERAL PROVISIONS....................................................39
SECTION 7.1. Nonsurvival of Representations and Warranties...........39
SECTION 7.2. Fees and Expenses.......................................40
SECTION 7.3. Selling Securityholders.................................40
SECTION 7.4. Definitions.............................................40
SECTION 7.5. Notices.................................................40
SECTION 7.6. Interpretation..........................................42
SECTION 7.7. Counterparts............................................42
SECTION 7.8. Entire Agreement; Third-Party Beneficiaries.............42
SECTION 7.9. Governing Law...........................................43
SECTION 7.10. Assignment.............................................43
SECTION 7.11. ENFORCEMENT............................................43
SCHEDULES
Schedule I Repurchase Shares
Schedule II Option Surrenders
Exhibit A Repurchase Note
Exhibit B Letter of Credit
Exhibit C Terms of New Stockholders Agreement
ii
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RECAPITALIZATION AGREEMENT
THIS RECAPITALIZATION AGREEMENT, dated as of April 11, 1997, by and
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"), Keystone, Inc., a Texas corporation ("Keystone"), and FW
Strategic Partnership, L.P., a Delaware limited partnership ("FW Strategic")
(each of Cypress Onshore, Cypress Offshore, Keystone and FW Strategic an
"Investor" and, collectively, the "Investors"), and each of the securityholders
of the Company listed on the signature pages hereto (the "Selling
Securityholders").
W I T N E S S E T H:
WHEREAS, the Company wishes to issue and sell to the Investors, upon
the terms and conditions provided herein, 1,475,410 shares of its Common Stock
(as herein defined) for a purchase price of $91.50 per share;
WHEREAS, the Company wishes to repurchase from the Selling
Securityholders certain shares of its Common Stock and/or certain options to
purchase shares of Common Stock (the "Options") owned by the Selling
Securityholders as of the date hereof, for the purchase price set forth herein
(such transaction being hereinafter referred to as the "Repurchase"); and
WHEREAS, the Investors have obtained a commitment letter dated April
7, 1997 (the Commitment Letter") from Bankers Trust Company (the "Lender"),
pursuant to which the Lender has agreed, upon the terms and subject to the
conditions set forth therein, to lend an aggregate of up to $425 million to the
Company to fund a portion of the amount required to pay the Repurchase Price of
the Shares, to refinance or defease existing indebtedness of the Company and to
provide for the Company's working capital needs;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, it is agreed as follows:
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ARTICLE I
PURCHASE OF SECURITIES; REPURCHASE
SECTION 1.1. PURCHASE AND SALE OF THE COMMON STOCK. At the Closing,
subject to the terms and conditions set forth in this Agreement, the Company
shall sell to the Investors, and the Investors shall purchase from the Company,
an aggregate of 1,475,410 shares of common stock of the Company, par value $.01
per share (the "Common Stock"), for a purchase price of $91.50 per share in cash
(the "Purchase Price"). The number of shares of Common Stock to be purchased by
each Investor shall be specified in writing to the Company not fewer than five
business days prior to the Closing Date (as herein defined).
SECTION 1.2. REPURCHASE. (a) At the Closing, subject to the terms
and conditions set forth in this Agreement, (i) the Company shall purchase from
each Selling Securityholder whose name appears on Schedule I hereto, and such
Selling Securityholder shall sell to the Company, the number of outstanding
shares of Common Stock owned by such Selling Securityholder set forth opposite
such Selling Securityholder's name on Schedule I hereto for a purchase price of
$91.50 per share in cash (the "Repurchase Price"), and (ii) such Selling
Securityholder shall surrender to the Company for cancellation the Options held
by such Selling Securityholder listed opposite such Selling Securityholder's
name on Schedule II hereto for consideration payable in cash in an amount equal
to the product of (x) the excess of the Repurchase Price over the exercise price
per share with respect to each such Option (for each share of Common Stock
subject to such Option, the "Option Consideration") and (y) the number of shares
of Common Stock for which such Option is exercisable. The surrender of an Option
for cancellation in exchange for the Option Consideration shall constitute a
release of any and all rights the holder had or may have had in the Option.
(b) At the Closing, subject to the terms and conditions set forth in
this Agreement, the Company shall repurchase from Odyssey Partners, L.P.
("Odyssey"), and Odyssey shall sell to the Company, 2,907,200 shares of Common
Stock, or such lesser number of shares of Common Stock (which in no event shall
be less than 2,886,101 shares of Common Stock) that will cause there to be
163,935 shares of Common Stock in the aggregate held by the Selling
Securityholders and Non-Original Stockholders (as defined in Section 1.2(c)
hereof) after giving effect to the purchases and sales of shares of Common Stock
pursuant to Section 1.2(a), the Additional Offers (as defined in Section 1.2(c)
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hereof) and the foregoing provisions of this Section 1.2(b), for a purchase
price per share in cash equal to the Repurchase Price; PROVIDED that the Company
shall provide Odyssey written notice prior to the Closing Date if Odyssey is
required to sell less than 2,907,234 shares of Common Stock.
(c) (i) Promptly following the date of this Agreement, the Company
shall prepare and deliver a notice (an "Offer Notice") to each stockholder of
the Company who is not an original party to this Agreement (a "Non-Original
Stockholder") informing such Non-Original Stockholder of the transactions
contemplated hereby and of the Company's offer (collectively, the "Additional
Offers") to repurchase any or all of such Non-Original Stockholder's shares of
Common Stock, subject to the terms and conditions set forth in this Agreement
and the Offer Notice, for a purchase price per share in cash equal to the
Repurchase Price and, to the extent applicable, to cancel such Non-Original
Stockholder's Options on the same terms as those provided in clause (ii) of
Section 1.2(a) hereof, and containing such additional financial and other
information as the Company shall determine to be appropriate so that such Offer
Notice, as of its date, shall not contain an untrue statement of a material fact
or omit to state any material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Prior to delivering the Offer Notice to any Non-Original
Stockholder, the Company shall furnish a copy thereof to the Investors, shall
provide the Investors a reasonable opportunity to review such Offer Notice and
shall give reasonable consideration to any comments the Investors may make with
respect thereto.
(ii) Each Non-Original Stockholder who elects in accordance with the
Offer Notice to have the Company repurchase such Non-Original Stockholder's
shares of Common Stock or cancel such Non-Original Stockholder's Options shall,
as a condition to such election, agree to be bound by all the provisions of this
Agreement applicable to a Selling Securityholder, and the provisions of Section
1.2(a) shall be deemed to be amended to include such electing Non-Original
Stockholder as a Selling Securityholder with respect to the shares and Options
specified by such Non-Original Stockholder in accordance with such Non-Original
Stockholder's election under the Offer Notice.
(d) The shares of Common Stock to be purchased from the Selling
Securityholders pursuant to this Section 1.2 are hereinafter referred to as the
"Repurchase Shares". The Options to be surrendered to the Company for
cancellation by the Selling Securityholders pursuant to this
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Section 1.2 are hereinafter referred to as the "Surrendered Options".
(e) (i) Notwithstanding the foregoing, a Selling Securityholder may,
by delivery of written notice to the Investors at the addresses provided in
Section 7.5 no later than 5 business days prior to the Closing Date, elect, in
accordance with the procedure set forth in Section 1.2(e)(ii) or (iii) below, to
receive, in lieu of cash, all or a portion of the Repurchase Price for the
Common Stock to be sold by such Selling Securityholder pursuant to this Section
1.2 in the form of the promissory note from the Company attached hereto as
Exhibit A (the "Repurchase Note"); PROVIDED, HOWEVER, that a Selling
Securityholder shall be entitled to elect to receive a Repurchase Note pursuant
to this Section 1.2(e) only if such Selling Securityholder is an "accredited
investor" (as defined in Regulation D under the Securities Act of 1933, as
amended (the "Securities Act")) and such Selling Securityholder has provided the
Company with a certification to such effect, in form and substance satisfactory
to the Company; PROVIDED FURTHER, HOWEVER, that the aggregate principal amount
of Repurchase Notes may not exceed $112.8 million except in accordance with this
Section 1.2(e). Each Repurchase Note shall (A) bear interest at the Applicable
Rate (as defined below), (B) mature on January 15, 1998, and (C) entitle the
holder thereof to the benefits of the Letter of Credit (as defined below).
Concurrently with the issuance of a Repurchase Note to a Selling Securityholder,
the Investors shall cause the Lender (or another financial institution, which
other financial institution shall be acceptable to Selling Securityholders
holding a majority of the outstanding Common Stock who or which elect to receive
a Repurchase Note in lieu of cash), to issue and deliver to such Selling
Securityholder an irrevocable standby letter of credit in the form attached
hereto as Exhibit B with a face amount equal to (x) the aggregate principal
amount of such Repurchase Note, PLUS (y) the amount of all interest to accrue
thereon from the Closing Date to the maturity date (the "Letter of Credit"). The
Selling Securityholder shall be entitled to draw on the Letter of Credit in the
event that any payment under the Repurchase Note is not paid when due. The
"Applicable Rate" shall mean a fixed rate provided by Lender based on forward
LIBOR and the time period from the Closing Date to January 15, 1998.
(ii) The Selling Securityholders (other than the Non-Original
Stockholders) shall provide written notification (a "Request Notice") to the
Company and the Investors no later than five business days after the date hereof
indicating whether the maximum aggregate principal amount of the Repurchase
Notes such Selling Securityholders
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5
desire to receive is greater or less than $112.8 million. If the maximum
aggregate principal amount of Repurchase Notes set forth in the Request Notice
exceeds $112.8 million, then the Investors shall notify such Selling
Securityholders in writing (the "Response Notice") within 10 business days
following the date hereof whether the aggregate principal amount of Repurchase
Notes to be issued to Odyssey and Barry Gossett may exceed $112.8 million (it
being agreed that the Investors shall use commercially reasonable efforts (but
neither the Investors nor the Company shall be obligated to expend funds other
than legal and documentation expenses in connection therewith) to be able to
issue Repurchase Notes in excess of $112.8 million, if so requested by the
Selling Securityholders (and to obtain the requisite Letters of Credit without
reducing the Company's available commitments under the credit facilities
contemplated by the Commitment Letter)). If the Investors notify the Selling
Securityholders that the aggregate principal amount of Repurchase Notes may
exceed $112.8 million, then the maximum aggregate principal amount of the
Repurchase Notes shall be increased to such larger amount as the Investors are
able to obtain.
(iii) A Non-Original Stockholder shall include in its election in
accordance with the Offer Notice whether it desires to receive a Repurchase Note
for all or a portion of the Repurchase Price payable to such Non-Original
Stockholder; PROVIDED that such Non-Original Stockholder shall satisfy the
condition contained in the first proviso to Section 1.2(e)(i).
SECTION 1.3. CLOSING. (a) Unless this Agreement shall have been
terminated and the transactions herein contemplated shall have been abandoned
pursuant to Section 6.1, and subject to the satisfaction or waiver of the
conditions set forth in Article V, the closing of the purchase by and sale to
the Investors of the Common Stock and the Repurchase (the "Closing") shall take
place at 10:00 A.M. on the later of June 10, 1997 and the second business day
following the date on which the last of the conditions to be fulfilled or waived
set forth in Article V shall be fulfilled or waived in accordance with this
Agreement (the "Closing Date"), at the offices of Weil, Gotshal & Manges LLP,
767 Fifth Avenue, New York, New York, unless another date, time or place is
agreed to in writing by the Company, the Investors and Selling Securityholders
owning a majority of the Common Stock outstanding on the date hereof.
(b) At the Closing, (i) the Company shall deliver to each Investor
stock certificates evidencing the number of shares of Common Stock to be
purchased by such Investor and specified in writing to the Company in accordance
with
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Section 1.1 registered in such Investor's name, all of which, upon issuance,
shall have been duly authorized, validly issued, fully paid and non assessable,
upon payment of the Purchase Price by wire transfer of immediately available
funds to an account specified by the Company not later than three business days
prior to the Closing Date and (ii) (A) the Company shall deliver to each Selling
Securityholder the Repurchase Price for the Repurchase Shares and the Option
Consideration payable upon cancellation of the Surrendered Options being
purchased from or surrendered by each Selling Securityholder and (B) the Selling
Securityholders shall deliver to the Company the certificates evidencing the
Repurchase Shares, duly endorsed in blank or accompanied by stock transfer
powers duly executed in blank, with all necessary stock transfer tax stamps
attached thereto and cancelled, if any, and the option agreements evidencing the
Surrendered Options upon payment of the Repurchase Price or Option Consideration
therefor, at the Company's election, either by (i) wire transfer of immediately
available funds to an account specified by such Selling Securityholder no later
than three business days prior to the Closing or (ii) certified or bank
cashier's check.
SECTION 1.4. AMENDMENT TO EXISTING STOCKHOLDERS AGREEMENT. Each of
the Company and the Selling Securityholders who or which are parties to the
Amended and Restated Management Stockholders' and Optionholders' Agreement dated
as of June 6, 1994 (the "Existing Stockholders Agreement") by and among the
Company and the stockholders and optionholders named therein hereby amend the
Existing Stockholders Agreement so that, subject to the terms and conditions set
forth in this Agreement, including Section 1.2(c) hereof, the provisions of the
Existing Stockholders Agreement will not be applicable to any of the
transactions contemplated by this Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
SECTION 2.1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The
Company represents and warrants to the Investors as follows:
(a) ORGANIZATION, STANDING AND CORPORATE POWER. The Company
and each Company Subsidiary (as hereinafter defined) is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is incorporated and has the requisite corporate power
and authority to carry on its
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business as now being conducted. Except as set forth in Section 2.1(b) of the
Disclosure Schedule attached hereto (the "Disclosure Schedule"), which shall be
deemed to include all documents and exhibits included in the Filed SEC Documents
(as hereinafter defined), the Company and each Company Subsidiary is duly
qualified or licensed to do business and is in good standing in each
jurisdiction in which the nature of its business or the ownership or leasing of
its properties makes such qualification or licensing necessary, other than in
such jurisdictions where the failure to be so qualified or licensed would not
have, and is not reasonably likely to have, individually or in the aggregate, a
material adverse effect on the assets, business, financial condition or results
of operations of the Company and the Company Subsidiaries taken as a whole
("Material Adverse Effect"). The Company has delivered to the Investors complete
and correct copies of its Certificate of Incorporation and By-laws, as amended
to the date of this Agreement. Except for the Company Subsidiaries, the Company
does not own any capital stock or other equity interest in any other
corporation, partnership, limited liability company or other organization
(except for portfolio investments in not more than 1% of the outstanding
securities of any class of equity securities registered under Section 12 of the
Securities Exchange Act of 1934, as amended). For purposes of this Agreement, a
"Company Subsidiary" means each of Williams Scotsman, Inc. (f/k/a The Scotsman
Group, Inc.), Mobile Field Office Company and Williams Mobile Offices, Inc., the
last of which is an inactive corporation with nominal assets.
(b) CAPITAL STRUCTURE. The authorized capital stock of the
Company consists of 10,000,000 shares of Common Stock. As of the date hereof:
(i) 3,375,314 shares of Common Stock are issued and outstanding (excluding
treasury shares), 258,580 shares of Common Stock were subject to issuance upon
exercise of outstanding Options and 97,654 shares of Common Stock were held by
the Company in its treasury. Except as set forth above, as of the date hereof,
no shares of capital stock or other equity securities of the Company are issued,
reserved for issuance or outstanding. The shares of Common Stock to be issued
and sold to the Investors pursuant to Section 1.1 have been duly authorized and,
when issued and sold to the Investors in accordance with the terms of this
Agreement, such shares will be validly issued, fully paid and nonassessable and
not subject to preemptive rights. All outstanding shares of capital stock of the
Company are, and all shares which may be issued pursuant to the Company's 1994
Employee Stock Option Plan will be, when issued, duly authorized, validly
issued, fully paid and nonassessable and not subject to preemptive rights. No
bonds, debentures, notes or other
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indebtedness of the Company or any Company Subsidiary having the right to vote
(or convertible into, or exchangeable for, securities having the right to vote)
on any matters on which the stockholders of the Company or any Company
Subsidiary may vote are issued or outstanding. All of the outstanding shares of
capital stock of each Company Subsidiary are owned, directly or indirectly, by
the Company. All the outstanding shares of capital stock of each Company
Subsidiary have been validly issued, are fully paid and nonassessable and,
except as set forth in Section 2.1(b) of the Disclosure Schedule, are free and
clear of all pledges, claims, liens, charges, encumbrances and security
interests of any kind or nature whatsoever (collectively, "Liens"). Except as
set forth in Section 2.1(b) of the Disclosure Schedule, neither the Company nor
any Company Subsidiary has any outstanding option, warrant, subscription or
other right, agreement or commitment which either (i) obligates the Company or
any Company Subsidiary to issue, sell or transfer, repurchase, redeem or
otherwise acquire or vote any shares of the capital stock of the Company or any
Company Subsidiary, (ii) obligates the Company or any Company Subsidiary to
issue, grant, extend or enter into any such option, warrant, subscription or
other right, agreement or commitment which requires the Company or any Company
Subsidiary to issue, sell or transfer, repurchase, redeem or otherwise acquire
or vote any shares of the capital stock of the Company or any Company
Subsidiary, or (iii) restricts the transfer of Common Stock.
(c) AUTHORITY; NONCONTRAVENTION. The Company has all requisite
corporate power and authority to enter into this Agreement and to consummate the
transactions contemplated by this Agreement. The execution and delivery of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of the Company. This Agreement has been duly executed and delivered
by the Company and, assuming this Agreement constitutes the valid and binding
agreement of each of the Investors, constitutes a valid and binding obligation
of the Company, enforceable against the Company 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 and
remedies generally. The execution and delivery of this Agreement do not, and the
consummation of the transactions contemplated by this Agreement and compliance
with the provisions hereof will not, (i) conflict with any of the provisions of
the Certificate of Incorporation or By-laws of the Company or the comparable
documents of any Company Subsidiary, (ii) except as set forth in Section 2.1(c)
of the Disclosure Schedule and subject to the governmental
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9
filings and other matters referred to in the following sentence, conflict with,
result in a breach of or default (with or without notice or lapse of time, or
both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or loss of a material benefit under, require the
consent of any Person under, or result in the creation of a lien or other
encumbrance on any property or asset of the Company or any Company Subsidiary
pursuant to, any indenture or other agreement, permit, concession, franchise,
license or similar instrument or undertaking to which the Company or any of the
Company Subsidiaries is a party or by which the Company or any of the Company
Subsidiaries or any of their assets is bound or affected, or (iii) subject to
the governmental filings and other matters referred to in the following
sentence, contravene any law, rule or regulation of any state or of the United
States or any political subdivision thereof or therein, or any order, writ,
judgment, injunction, decree, determination or award currently in effect, the
conflict, breach, default or contravention of which, in the case of clauses (ii)
and (iii) above, individually or in the aggregate, would have, or is reasonably
likely to have, a Material Adverse Effect. No consent, approval or authorization
of, or declaration or filing with, or notice to, any governmental agency or regu
latory authority (a "Governmental Entity"), which has not been received or made
as of the date hereof, is required by or with respect to the Company or any of
the Company Subsidiaries in connection with the execution and delivery of this
Agreement by the Company or the consummation by the Company of the transactions
contemplated hereby, except for (A) the filing of premerger notification and
report forms under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), (B) the filing with the Securities and Exchange
Commission (the "SEC") of such reports under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), as may be required in connection with
this Agreement and the transactions contemplated by this Agreement, (C) such
filings as may be required in connection with any state or local tax which is
attributable to the transfer of beneficial ownership of real property, if any,
by the Company or any of its Subsidiaries, (D) such other consents, approvals,
authorizations, filings or notices as are set forth in Section 2.1(c)(i) of the
Disclosure Schedule and (E) any applicable filings under state anti-takeover
laws, or filings, authorizations, consents or approvals the failure to make or
obtain which, individually or in the aggregate, would not have, and is not
reasonably likely to have, a Material Adverse Effect.
(d) SEC DOCUMENTS. (i) Each of the Company and Williams
Scotsman, Inc. has filed with the SEC all reports, schedules, forms, statements
and other documents
<PAGE>
10
required to be filed by such Persons (such reports, schedules, forms, statements
and other documents are hereinafter referred to as the "SEC Documents"); and
(ii) as of their respective dates, (A) the SEC Documents complied in all
material respects with the requirements of the Securities Act of 1933, as
amended (the "Securities Act"), or the Exchange Act, as the case may be, and the
rules and regulations of the SEC promulgated thereunder applicable to such SEC
Documents and (B) none of the SEC Documents contained any untrue statement of a
material fact or omitted to state any 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. None of the SEC
Documents as revised or superseded by a later Filed SEC Document (as defined in
Section 2.1(f)) contains any untrue statement of a material fact or omits to
state any 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.
(e) FINANCIAL STATEMENTS. The audited consolidated balance
sheets of the Company and its consolidated Subsidiaries and of Williams
Scotsman, Inc. and its consolidated Subsidiaries as of December 31, 1996 and
December 31, 1995 and the audited statements of income, stockholders' equity and
cash flows of the Company and its consolidated Subsidiaries and of Williams
Scotsman, Inc. and its consolidates Subsidiaries for the years ended December
31, 1996 and December 31, 1995, together with the notes related thereto, comply
as to form in all material respects with applicable accounting requirements,
have been prepared in accordance with generally accepted accounting principles
applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto) and fairly present the consolidated financial
position of the Company and its consolidated Subsidiaries and of Williams
Scotsman, Inc. and its consolidated Subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended. Complete copies of such audited financial statements have been delivered
to the Investors.
(f) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed
in the SEC Documents filed and publicly available prior to the date of this
Agreement (the "Filed SEC Documents") or in Section 2.1(f) of the Disclosure
Schedule, since December 31, 1996, the Company and its Subsidiaries have
conducted their business only in the ordinary course (other than the due
diligence activities with respect to the process established by the Company
leading to this Agreement), and there has not been (i) any
<PAGE>
11
declaration, setting aside or payment of any dividend or other distribution
(whether in cash, stock or property) with respect to any of the Company's
outstanding capital stock, or any redemption, purchase or other acquisition of
any of its capital stock, (ii) any split, combination or reclassification of any
of the Company's outstanding capital stock or any issuance or the authorization
of any issuance of any other securities in respect of, in lieu of or in
substitution for shares of the Company's outstanding capital stock, (iii) (A)
any granting by the Company or any of its Subsidiaries to any executive officer
or other employee of the Company or any of its Subsidiaries of any increase in
compensation (including bonuses), except in the ordinary course of business
consistent with prior practice, (B) any granting by the Company or any of the
Company Subsidiaries to any such executive officer of any increase in severance
or termination pay, except in the ordinary course of business consistent with
prior practice or (C) any entry by the Company or any of the Company
Subsidiaries into any employment, severance or termination agreement, or any
modification of any such existing agreement with any such executive officer,
except in the ordinary course of business consistent with prior practice (it
being understood that, as used in this clause (iii), "prior practice" shall mean
the practice of the Company and the Company Subsidiaries as of January 1, 1996),
(iv) any change in accounting methods, principles or practices by the Company or
any of the Company Subsidiaries, except insofar as may have been required by a
change in generally accepted accounting principles, (v) any material write-off
or write-down of, or any determination to write off or write down, any asset of
the Company or any of the Company Subsidiaries or any portion thereof, (vi) any
amendment, termination, waiver, disposal, or lapse of, or other failure to
preserve, any license, permit, or other form of authorization of the Company or
any of the Company Subsidiaries, the result of which, individually or in the
aggregate, would have, or is reasonably likely to have, a Material Adverse
Effect, or (vii) any agreements by the Company to take any of the actions
described in the pre ceding clauses (i) through (vi), other than as expressly
contemplated or provided for herein. Except as disclosed in the Filed SEC
Documents or in Section 2.1(f) of the Disclosure Schedule, since December 31,
1996, no event or events have occurred that, individually or in the aggregate,
have had, or are reasonably likely to have, a Material Adverse Effect.
(g) ABSENCE OF CHANGES IN BENEFIT PLANS. Except as disclosed
in Section 2.1(g) of the Disclosure Schedule, since December 31, 1996, neither
the Company nor any of the Company Subsidiaries has adopted or amended in any
material respect or agreed to adopt or amend in any
<PAGE>
12
material respect any collective bargaining agreement or any Benefit Plan (as
defined in Section 2.1(h)), except as required by applicable law.
(h) EMPLOYEE BENEFIT PLANS. With respect to all the employee
benefit plans (as that phrase is defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) and any other
benefit or compensation plan, program or arrangement including, but not limited
to, stock purchase, stock option, severance, employment, change-in-control,
fringe benefit, collective bargaining, bonus, incentive, deferred compensation
and all other employee benefit plans, agreements, programs, policies or other
arrangements, whether or not subject to ERISA (including any funding mechanism
therefor now in effect or required in the future as a result of the transactions
contemplated by this Agreement or otherwise), whether formal or informal, oral
or written, under which any employee or former employee of the Company or the
Company Subsidiaries has any present or future right to benefits or under which
the Company or the Company Subsidiaries has any present or future liability (the
"Benefit Plans"), except as disclosed in Section 2.1(h) of the Disclosure
Schedule:
(i) none of the Benefit Plans is a "multiemployer plan"
within the meaning of ERISA and neither the Company nor any Company Subsidiary
ever contributed to a multiemployer plan;
(ii) none of the Benefit Plans promises or provides
retiree medical or life insurance benefits to any person;
(iii) none of the Benefit Plans provides for payment of
a benefit, the increase of a benefit amount, the payment of a contingent
benefit, or the acceleration of the payment or vesting of a benefit by reason of
the execution of this Agreement or the consummation of the transactions
contemplated by this Agreement;
(iv) each Benefit Plan intended to be qualified under
Section 401(a) of the Internal Revenue Code of 1986, as amended (the "Code"),
has received a favorable determination letter from the Internal Revenue Service
("IRS") that it is so qualified, such Benefit Plan is so qualified and nothing
has occurred since the date of such letter that could reasonably be expected to
affect the qualified status of such Benefit Plan;
(v) each Benefit Plan has been operated in all material
respects in accordance with its terms and
<PAGE>
13
the requirements of all applicable law including, but not limited to ERISA and
the Code;
(vi) neither the Company nor any of its Subsidiaries has
incurred any direct or indirect liability under, arising out of or by operation
of Title IV of ERISA in connection with the termination of, or withdrawal from,
any Benefit Plan or other retirement plan or arrangement, and no fact or event
exists that could reasonably be expected to give rise to any such liability;
(vii) the Company has delivered or made available to the
Investors a current, accurate and complete copy (or, to the extent no such copy
exists, an accurate description) thereof and, to the extent applicable: (A) any
related trust agreement or other funding instrument; (B) the most recent
determination letter from the IRS; (C) any summary plan description and other
material written communications (or a description of any oral communications) by
the Company or the Company Subsidiaries to their employees concerning the extent
of the benefits provided under a Benefit Plan; and (D) for the three most recent
years (I) the Form 5500 and attached schedules, (II) audited financial
statements, (III) actuarial valuation reports and (IV) attorney's responses to
an auditor's request for information;
(viii) (A) no event has occurred and no condition exists
that would subject the Company or the Company Subsidiaries, either directly or
by reason of their affiliation with any member of their "Controlled Group"
(defined as any organization which is a member of a controlled group of
organizations within the meaning of Code sections 414(b), (c), (m) or (o)), to
any tax, fine, lien or penalty imposed by ERISA, the Code or other applicable
laws, rules and regulations; (B) for each Benefit Plan with respect to which a
Form 5500 has been filed, no material change has occurred with respect to the
matters covered by the most recent Form since the date thereof; and (C) no
"reportable event" (as such term is defined in ERISA section 4043), "prohibited
transaction" (as such term is defined in ERISA section 406 and Code section
4975) or "accumulated funding deficiency" (as such term is defined in ERISA
section 302 and Code section 412 (whether or not waived)) has occurred; and
(ix) (A) no actions, suits or claims (other than routine
claims for benefits in the ordinary course) are pending or threatened, and (B)
no facts or circumstances exist that could reasonably be expected to give rise
to any such actions, suits or claims.
<PAGE>
14
(i) TAXES. (i) Since December 16, 1993, and to the knowledge
of the Company prior thereto, each of the Company and the Company Subsidiaries,
and any affiliated, combined or unitary group of which any such corporation is a
member, has timely filed all tax returns and reports required to be filed by it
or requests for extensions to file such returns or reports have been timely
filed, granted and have not expired, except to the extent that such failures to
file or to have extensions granted that remain in effect, individually or in the
aggregate, would not have, and are not reasonably likely to have, a Material
Adverse Effect. The Company and each of the Company Subsidiaries has timely paid
(or the Company has paid on such Company Subsidiary's behalf) all taxes shown as
due on such returns, and the most recent financial statements contained in the
Filed SEC Documents reflect an adequate reserve, determined in accordance with
generally accepted accounting principles, for all taxes payable by the Company
and the Company Subsidiaries for all taxable periods and portions thereof
accrued through the date of such financial statements, except to the extent such
failure to pay, individually or in the aggregate, would not have, and is not
reasonably likely to have, a Material Adverse Effect.
(ii) No claim for material unpaid taxes has become a
lien against the property of the Company or the Company Subsidiaries except to
the extent such taxes are being contested in good faith by appropriate
proceedings.
(iii) No deficiencies for any taxes have been proposed,
asserted or assessed against the Company or any of the Company Subsidiaries that
are not adequately reserved for, as determined in accordance with generally
accepted accounting principles, in the most recent financial statements
contained in the Filed SEC Documents, except for deficiencies that, individually
or in the aggregate, would not have, and are not reasonably likely to have, a
Material Adverse Effect, and, except as set forth in Section 2.1(i) of the
Disclosure Schedule, no requests for waivers of the time to assess any such
taxes have been granted or are pending. Except as set forth in Section 2.1(i) of
the Disclosure Schedule, since January 1, 1994 through the date hereof, none of
the Federal, state, local or foreign tax returns of the Company or the Company
Subsidiaries have been examined by the IRS or any other appropriate taxing
authority.
(iv) Except as set forth in Section 2.1(i) of the
Disclosure Schedule, at the date hereof, no tax audits of, or other
administrative proceedings or court proceedings with respect to, the Company or
any of the Company Subsidiaries are pending with regard to any federal,
<PAGE>
15
state, or local or foreign taxes. The Company has made available to the
Investors all revenue agent's reports or proposed adjustments received in
writing by the Company since December 16, 1993.
(v) Neither the Company nor the Company Subsidiaries is
a party to, is bound by, or has any obligation under any tax sharing agreement
or similar contract, or is otherwise obligated with respect to the material
taxes of any other Person.
(vi) As used in this Agreement, "taxes" shall include
all Federal, state, local and foreign income, property, sales, excise,
employment, payroll, withholding and other taxes, tariffs or governmental
charges of any nature whatsoever, together with any interest and any penalties
or additions to tax imposed by any taxing authority.
(j) COMPLIANCE WITH APPLICABLE LAWS. Each of the Company and
the Company Subsidiaries has in effect all Federal, state, local and foreign
governmental approvals, authorizations, certificates, filings, franchises,
licenses, notices, permits and rights ("Permits," including, without limitation,
Permits required under Environmental Laws) necessary for it to own, lease or
operate its properties and assets and to carry on its business as now conducted,
and since December 16, 1993, and to the knowledge of the Company, prior thereto,
there has occurred no default under any such Permit, except for the lack of
Permits and for defaults under Permits which lack or defaults, individually or
in the aggregate, would not have, and are not reasonably likely to have, a
Material Adverse Effect. Except as disclosed in the Filed SEC Documents or as
set forth in Section 2.1(j) of the Disclosure Schedule, the Company and the
Company Subsidiaries are in compliance with all applicable statutes, laws,
ordinances, rules, orders and regulations of any Governmental Entity, except for
possible noncompliance which, individually or in the aggregate, would not have,
and is not reasonably likely to have, a Material Adverse Effect.
(k) BROKERS. No broker, investment banker, financial advisor
or other Person, other than Goldman, Sachs & Co., the fees and expenses of which
will be paid by the Company and shall not exceed in the aggregate $6,500,000, is
entitled to receive from the Company any broker's, finder's, financial advisor's
or other similar fee or commission in connection with the transactions
contemplated by this Agreement.
<PAGE>
16
(l) LITIGATION, ETC. As of the date hereof, except as
disclosed in Section 2.1(l) of the Disclosure Schedule, there is no suit, claim,
action or proceeding (at law or in equity) pending or, to the knowledge of the
Company, threatened against the Company or any of its Subsidiaries before any
court or governmental or regulatory authority or body which has had, or is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect. As of the date hereof there are no such suits, actions, claims,
proceedings or investigations pending or, to the knowledge of the Company,
threatened, seeking to prevent or challenging the transactions contemplated by
this Agreement. Neither the Company nor any Company Subsidiary is subject to any
outstanding order, writ, injunction or decree that, individually or in the
aggregate , would have, or is reasonably likely to have, a Material Adverse
Effect.
(m) INTELLECTUAL PROPERTY. Section 2.1(m) of the Disclosure
Schedule lists as of the date hereof (i) all United States patents, trademark
and service mark registrations, copyright registrations and applications for the
Company or any of the Company Subsidiaries owned by or licensed to the Company
or any of the Company Subsidiaries which are material to the conduct of the
business of the Company and the Company Subsidiaries taken as a whole; (ii) all
licenses granted to or by the Company or any of the Company Subsidiaries
pursuant to written agreements pertaining to patents, patent applications,
proprietary technology, inventions, trademarks, service marks, trade names and
copyrights (collectively, "Intellectual Property") which are material to the
conduct of the business of the Company and the Company Subsidiaries taken as a
whole; (iii) all written development and settlement agreements pertaining to
Intellectual Property which are material to the conduct of the business of the
Company or any of the Company Subsidiaries; and (iv) all suits, actions,
proceedings (including, without limitation, infringement, misappropriation,
interference, opposition, revocation, cancellation and conflict proceedings) and
written claims presently pending or, to the knowledge of the Company,
threatened, and all final orders, injunctions, judgments, writs, edicts, awards
and decrees presently outstanding, pertaining to any Intellectual Property that
is either (A) described in this Section 2.1(m), or (B) owned by any third party
and asserted (or, to the knowledge of the Company, threatened in writing to be
asserted) against the Company or any of the Company Subsidiaries.
(n) ENVIRONMENTAL LAWS. Except as set forth in Section 2.1(n)
of the Disclosure Schedule:
<PAGE>
17
(i) The operations of the Company and its Subsidiaries,
since December 16, 1993, are, and to the knowledge of the Company prior thereto
have been, in compliance with all Environmental Laws, other than for such
non-compliance that would not have, and is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect. The Company and the
Company Subsidiaries have obtained and are, and within all applicable
limitations periods have been, in compliance with all Permits required under
Environmental Laws, other than such Permits the absence of which or the
non-compliance with which, individually or in the aggregate, would not have, and
is not reasonably likely to have, a Material Adverse Effect.
(ii) The Company and the Company Subsidiaries have no
contingent liabilities with respect to any release since December 16, 1993, and
to the knowledge of the Company prior thereto, of Hazardous Materials at any
currently or previously owned or operated property or in connection with the
off-site shipment of such Hazardous Materials which, individually or in the
aggregate, would have, or is reasonably likely to have, a Material Adverse
Effect.
(iii) The Company and the Company Subsidiaries have
provided to the Investors all environmentally related audits, studies, reports,
analyses and results of investigations that have been performed since December
16, 1993, and to the knowledge of the Company prior thereto, with respect to
currently or previously owned, leased or operated properties.
(iv) Except as set forth in Section 2.1(n) of the
Disclosure Schedule or to the extent any such matter would not, individually or
in the aggregate, result, and is not reasonably likely to result, in a Material
Adverse Effect and to the knowledge of the Company, (A) neither the Company nor
any of the Company Subsidiaries has disposed of or placed any Hazardous
Materials on, under or at, and there are no Hazardous Materials on, under or at
any property owned, operated or leased by the Company or the Company
Subsidiaries; (B) there are no polychlorinated biphenyls (PCBs), no Hazardous
Materials, no friable asbestos containing materials, and no underground storage
tanks at any property owned operated, or leased by the Company or the Company
Subsidiaries; and (C) there are no Liens arising under or pursuant to any
applicable Environmental Laws on property owned or operated by the Company or
any of the Company Subsidiaries.
For purposes of this Agreement, "Hazardous Materi als" means any
substance, material or waste which is regu-
<PAGE>
18
lated by any local, state or Federal governmental body in the jurisdiction in
which the Company or any of its Subsidiaries conducts business, or the United
States, including, without limitation, any material or substance which is
defined as a "hazardous waste," "hazardous material," "hazardous substance,"
"extremely hazardous waste" or "restricted hazardous waste," "subject waste,"
"contaminant," "toxic waste" or "toxic substance" under any provision of
Environmental Law, including, but not limited to, petroleum products, asbestos
and polychlorinated biphenyls; and "Environmental Law" means any foreign,
Federal, state or local statute, regulation, ordinance, or rule of common law in
any way relating to human health and safety or the environment including,
without limitation, the Comprehensive Environmental Response, Compensation and
Liability Act (42 U.S.C. ss. 9601 ET SEQ.), the Hazardous Materials
Transportation Act (49 U.S.C. App. ss. 1801 ET SEQ.), the Resource Conservation
and Recovery Act (42 U.S.C. ss. 6901 ET SEQ.), the Clean Water Act (33 U.S.C.
ss. 1251 ET SEQ.), the Clean Air Act (42 U.S.C. ss. 7401 ET SEQ.), the Toxic
Substances Control Act (15 U.S.C. ss. 2601 ET SEQ.), the Federal Insecticide,
Fungicide, and Rodenticide Act (7 U.S.C. ss. 136 ET SEQ.), and the Occupational
Safety and Health Act (29 U.S.C. ss. 651 ET SEQ.), the regulations promulgated
pursuant thereto, and any Permits required thereunder.
(o) TITLE TO PROPERTIES; ENCUMBRANCES. Except as set forth in
Section 2.1(o) of the Disclosure Schedule, each of the Company and the Company
Subsidiaries has good and valid (and, with respect to real property, marketable)
title to (i) all material tangible properties and assets (real and personal)
owned by the Company and the Company Subsidiaries, respectively, including,
without limitation, all the properties and assets reflected in the consolidated
balance sheet of the Company and its consolidated Subsidiaries as of December
31, 1996, except as indicated in the notes thereto and except for properties and
assets reflected in the consolidated balance sheet of the Company and its
consolidated Subsidiaries as of December 31, 1996 which have been sold or
otherwise disposed of in the ordinary course of business, and (ii) all the
material tangible properties and assets purchased by the Company and any of the
Company Subsidiaries since December 31, 1996, except for such properties and
assets which have been sold or otherwise disposed of in the ordinary course of
business, in each case subject to no Lien, except for (A) Liens reflected in the
Company's audited consolidated financial statements for the year ended December
31, 1996 or incurred in the ordinary course of business since December 31, 1996,
(B) Liens consisting of zoning or planning restrictions, easements, permits and
other restrictions or limitations on
<PAGE>
19
the use of real property or irregularities in title thereto which do not
materially detract from the value of, or impair the use of, such property by the
Company or any of the Company Subsidiaries in the operation of its respective
business and (C) Liens for current taxes, assessments or governmental charges or
levies on property not yet due and payable or being contested in good faith by
appropriate proceedings which Liens would not have, and are not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect.
(p) REAL PROPERTY; LEASES OF REAL PROPERTY. Section 2.1(p) of
the Disclosure Schedule contains a complete and correct list of the real
property owned by or leased to the Company and/or any of the Company
Subsidiaries, and with respect to such leased property, all material lease
agreements relating thereto. Except as set forth in Section 2.1(p) of the
Disclosure Schedule or as would not have, and is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect, all of such leases
are in full force and effect. Complete and correct copies of each such lease
have been furnished or made available to the Investors. Assuming such leases
constitute the valid and binding agreement of the third parties party thereto,
except as set forth in Section 2.1(p) of the Disclosure Schedule or as would not
have, and is not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect, all such leases are valid and binding obligations of
the Company and the Company Subsidiaries, as the case may be, have not been
amended or modified, and upon consummation of the transactions contem plated
hereby, will continue to entitle the Company or the Company Subsidiary (as the
case may be) to the use and possession of the real property specified in such
leases and for the purposes for which such real property is now being used by
the Company or the Company Subsidiary (as the case may be). Except as set forth
in Section 2.1(p) of the Disclosure Schedule or as would not have, and is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect, neither the Company nor any Company Subsidiary is in default or, since
December 16, 1993 and, to the knowledge of the Company prior thereto, has
received written notice of default under any such lease, and to the Company's
knowledge, there has been no default thereunder by any third party.
(q) INSURANCE. Section 2.1(q) of the Disclosure Schedule
contains a complete and correct list of all policies of insurance of any kind or
nature covering the Company and/or its Subsidiaries, including, without
limitation, policies of life, fire, theft, employee fidelity and other casualty
and liability insurance indicating the
<PAGE>
20
type of coverage, name of insured, the insurer, the premium, the expiration date
of each policy and the amount of coverage, and such policies are in full force
and effect. Complete and correct copies of each such policy and loss histories
with respect thereto have been furnished or made available to the Investors.
(r) MATERIAL CONTRACTS. Except as listed in Section 2.1(r) of
the Disclosure Schedule, any other Section of the Disclosure Schedule or as
permitted by Section 3.1 hereof, neither the Company nor any of the Company
Subsidiaries is a party to any (i) material contract not made in the ordinary
course of business; (ii) contract for the employment of any officer or employee
or agreement with any labor union or labor association; (iii) contract for the
future purchase of materials, supplies, merchandise or equipment; (iv) agreement
for the sale or lease of any of the assets of the Company and/or the Company
Subsidiaries other than in the ordinary course of business; (v) contract or
commitment for capital expenditures in excess of $100,000; (vi) mortgage,
pledge, conditional sales contract, security agreement, factoring agreement, or
other similar agreement with respect to any material real or personal property
of the Company and/or the Company Subsidiaries; (vii) loan agreement, promissory
note issued by it to a Person other than a Subsidiary of the Company, guarantee,
subordination or similar type of agreement; (viii) stock option, retirement,
severance, pension, bonus, profit sharing, group insurance, medical or other
fringe benefit plan or program providing employee benefits; (ix) agreement
providing for the indemnification of any officer, director or employee; (x)
consulting agreement providing for annual payments thereunder in excess of
$50,000; or (xi) non-compete or similar agreement which materially restricts, or
may hereafter restrict, the operational or geographic scope of the Company's
business or the ability of the Company to enter into new lines of business.
Complete and correct copies of each such agreement have been furnished or made
available to the Investors. Except as set forth in Section 2.1(r) of the
Disclosure Schedule or as would not have, and is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect, the Company and
each Company Subsidiary party thereto have performed all of the obligations
required to be performed by them to date, and neither the Company nor a Company
Subsidiary is in default under any of the agreements, leases, contracts or other
documents identified in Section 2.1(r) of the Disclosure Schedule to which they
are a party, and to the Company's knowledge, there have been no defaults
thereunder by any third party.
<PAGE>
21
(s) LABOR DISPUTES. There are no strikes or other labor
disputes against the Company or any Company Subsidiary pending or, to the
knowledge of the Company, threatened, which would have, or is reasonably likely
to have, individually or in the aggregate, a Material Adverse Effect.
(t) RELATED PARTY TRANSACTIONS AND INTERESTS. Except with
respect to transactions between the Company and the Company Subsidiaries in the
ordinary course of business or as set forth in Section 2.1(t) of the Disclosure
Schedule, neither the Company nor any executive officer or Affiliate of the
Company, or any Company Subsidiary (i) has borrowed any monies from, or has
outstanding any indebtedness or other similar obligations to, the Company, any
Affiliate of the Company or any of the Company Subsidiaries, which borrowing or
indebtedness, as of the date of this Agreement, remains outstanding and exceeds
$60,000 in principal amount in the aggregate, or (ii) owns any direct or
indirect interest of any kind in, or controls or is a director, officer,
employee or partner of, or consultant to, or lender to or borrower from or has
the right to participate in the profits of, any Person which is (A) a
competitor, supplier, customer, landlord, tenant, creditor or debtor of the
Company or any of the Company Subsidiaries, (B) engaged in a business related to
the business of the Company, and the Company Subsidiaries, or (C) participated
in any transaction to which the Company, any Affiliate of the Company or any
Company Subsidiary is a party. Notwithstanding anything in the foregoing to the
contrary, the Company or any executive officer or Affiliate of the Company, or
any Company Subsidiary may make invest ments in a company or companies whose
stock is listed on a national securities exchange or actively traded in the
over-the-counter market, which investment does not give the Company or such
executive officer or Affiliate the right to control or influence the policy
decisions of any such company.
SECTION 2.2. REPRESENTATIONS AND WARRANTIES OF THE INVESTORS. Each
Investor represents and warrants to the Company as follows:
(a) ORGANIZATION, STANDING AND POWER. Each Investor is duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized and has the requisite corporate or
partnership, power and authority, as the case may be, to carry on its business
as now being conducted. Each Investor is duly qualified or licensed to do
business and is in good standing in each jurisdiction in which the nature of its
business or the ownership or leasing of its properties makes such
<PAGE>
22
qualification or licensing necessary, other than in such jurisdictions where the
failure to be so qualified or licensed (individually or in the aggregate) would
not have, and is not reasonably likely to have, individually or in the
aggregate, a material adverse effect on the ability of the Investors to
consummate the transactions hereby.
(b) AUTHORITY; NONCONTRAVENTION. Each Investor has all
requisite corporate or partnership power and authority, as the case may be, to
enter into this Agreement and to consummate the transactions contemplated by
this Agreement. The execution and delivery of this Agreement by each Investor
and the consummation by each Investor of the transactions contemplated by this
Agreement have been duly authorized by all necessary corporate or partnership
action, as the case may be, on the part of such Investors. This Agreement has
been duly executed and delivered by each Investor and, assuming this Agreement
constitutes the valid and binding agreement of the Company and the Selling
Securityholders, constitutes a valid and binding obligation of each Investor,
enforceable against each Investor 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 and remedies
generally. The execution and delivery of this Agreement do not, and the
consummation of the transactions contemplated by this Agreement and compliance
with the provisions of this Agreement will not, (i) conflict with any of the
provisions of the Articles of Incorporation or By-laws of Keystone, (ii)
conflict with any provisions of certificate of limited partnership or
partnership agreement of Cypress Onshore, Cypress Offshore or FW Strategic,
(iii) subject to the governmental filings and other matters referred to in the
following sentence, conflict with, result in a breach of or default (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or loss of a
material benefit under, or require the consent of any Person under, any
indenture, or other agreement, permit, concession, franchise, license or similar
instrument or undertaking to which any of the Investors or any of their
Subsidiaries is a party or by which any of the Investors or any of their
Subsidiaries or any of their assets is bound or affected, or (iv) subject to the
governmental filings and other matters referred to in the following sentence,
contravene any law, rule or regulation of any state or of the United Sates or
any political subdivision thereof or therein, or any order, writ, judgment,
injunction, decree, determination or award currently in effect, which, in the
case of clauses (iii) and (iv) above would have, or is reasonably likely to
have, individually or in the aggregate, a material adverse effect
<PAGE>
23
on the ability of any of the Investors to consummate the transactions
contemplated hereby. No consent, approval or authorization of, or declaration or
filing with, or notice to, any Governmental Entity which has not been received
or made is required by or with respect to any of Investors in connection with
the execution and delivery of this Agreement by or the consummation by any of
Investors of any of the transactions contemplated by this Agreement, except for
(A) the filing of premerger notification and report forms under the HSR Act, (B)
the filing with the SEC of such reports under the Exchange Act as may be
required in connection with this Agreement and the transactions contemplated
hereby, (C) such filings as may be required in connection with any state or
local tax which is attributable to the transfer of beneficial ownership of real
property, if any, by the Company or any of the Company Subsidiaries, (D) such
other consents, approvals, authorizations, filings or notices as are set forth
in Section 2.2(b)(i) of the Disclosure Schedule and (E) any applicable filings
under state anti-takeover laws, or filings, authorizations, consents or
approvals the failure to make or obtain which would not have, and is not
reasonably likely to have, individually or in the aggregate, a material adverse
effect on the ability of the Investors to consummate the transactions
contemplated hereby.
(c) BROKERS. No broker, investment banker, financial advisor
or other Person, other than those set forth in Section 2.2(c) of the Investors'
Disclosure Schedule, the fees (which shall not exceed in the aggregate
$4,750,000) and expenses of which will be paid by the Investors, is entitled to
any broker's, finder's, financial advisor's or other similar fee or commission
in connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of any of the Investors.
(d) INVESTMENT INTENTION. Each of the Investors is acquiring
the Common Stock for its own account, for investment purposes only and not with
a view to the distribution thereof (as such term is used in Section 2(11) of the
Securities Act). Each of the Investors, by reason of its business and financial
experience in business, has such knowledge, sophistication and experience in
business and financial matters as to be capable of evaluating the merits and
risks of the prospective investment, is able to bear the economic risk of such
investment and is able to afford a complete loss of such investment. Each of the
Investors understands that the Common Stock has not been registered under the
Securities Act and cannot be sold unless subse quently registered under the
Securities Act or an exemption from such registration is available.
<PAGE>
24
(e) SOURCES OF INFORMATION. Each of the Investors acknowledges
that it has conducted its own investigation of the business and affairs of the
Company and its Subsidiaries. Each of the Investors has been afforded the
opportunity: (i) to ask such questions as it has deemed necessary of, and to
receive answers from, representatives of the Company concerning the Company; and
(ii) to obtain such additional information that the Company possesses or can
acquire without unreasonable effort or expense that is necessary to verify the
accuracy and completeness of the information previously furnished to it by the
Company. Nothing in this Section 2.2(e) shall be deemed to limit the
representations and warranties in Sections 2.1 and 2.3.
(f) FINANCIAL CAPABILITY. Each of the Investors has or will at
the Closing have available to it sufficient funds to perform its obligations
hereunder and consummate the transactions contemplated hereby.
SECTION 2.3. REPRESENTATIONS AND WARRANTIES OF SELLING
SECURITYHOLDERS. Each Selling Securityholder hereby, severally and not jointly,
represents and warrants with respect to such Selling Securityholder to the
Company and the Investors as follows:
(a) OWNERSHIP OF REPURCHASE SHARES. Such Selling
Securityholder owns on the date hereof, of record and beneficially, (i) the
Repurchase Shares set forth opposite such Selling Securityholder's name on
Schedule I hereto and (ii) the Options set forth opposite such Selling
Securityholder's name on Schedule II hereto, in each case free and clear of any
Liens. Upon transfer of the Repurchase Shares to the Company in accordance with
this Agreement, the Company will receive good title to the Repurchase Shares,
free and clear of all Liens.
(b) AUTHORITY; NONCONTRAVENTION. Such Selling Securityholder
has all requisite power, authority and legal capacity to enter into this
Agreement and to consummate the transactions contemplated by this Agreement. To
the extent such Selling Securityholder is a corporation or partnership, the
execution and delivery of this Agreement by such Selling Securityholder and the
consummation by such Selling Securityholder of the transactions contemplated by
this Agreement have been duly authorized by all necessary corporate or
partnership action, as the case may be, on the part of such Selling
Securityholder. This Agreement has been duly executed and delivered by and,
assuming this Agreement constitutes the valid and binding agreement of the
Company and each of the Investors, constitutes a valid and binding obligation of
such Selling Securityholder, enforceable against such party in accordance with
its terms,
<PAGE>
25
except to the extent enforceability may be limited by bankruptcy, insolvency,
moratorium or other similar laws relating to or affecting creditors' rights and
remedies generally. The execution and delivery of this Agreement do not, and the
consummation of the transactions contemplated by this Agreement and compliance
with the provisions of this Agreement will not (i) to the extent such Selling
Securityholder is a corporation or other juridical entity, conflict with any of
the provisions of the Charter or Bylaws or comparable organizational document of
such Selling Securityholder, (ii) subject to the governmental filings and other
matters referred to in the following sentence, conflict with, result in a breach
of or default (with or without notice or lapse of time, or both) under, give
rise to a right of termination, cancellation or acceleration of any obligation
or loss of a material benefit under, require the consent of any Person under, or
result in the creation of a lien or other encumbrance on any property or asset
of the Selling Securityholder pursuant to, any indenture, or other agreement,
permit, concession, franchise, license or similar instrument or undertaking to
which such Selling Securityholder is a party or by which such Selling
Securityholder or any of its assets is bound or affected, or (iii) subject to
the governmental filings and other matters referred to in the following
sentence, contravene any law, rule or regulation of any state or of the United
States or any political subdivision thereof or therein, or any order, writ,
judgment, injunction, decree, determination or award currently in effect, which,
in the case of clauses (ii) and (iii) above, singly or in the aggregate, would
have a material adverse effect on the ability of such Selling Securityholder to
consummate the transactions contemplated by this Agreement. No consent, approval
or authorization of, or declaration or filing with, or notice to, any
Governmental Entity which has not been received or made is required by or with
respect to such Selling Securityholder in connection with the execution and
delivery of this Agreement by such Selling Securityholder or the consummation by
such Selling Securityholder of any of the transactions contemplated by this
Agreement, except for such consents, approvals, authorizations, filings or
notices as are set forth in Section 2.3(b)(i) of the Disclosure Schedule.
(c) BROKERS. No broker, investment banker, financial advisor
or other Person is entitled to any broker's, finder's, financial advisor's or
other similar fee or commission in connection with the transactions contemplated
by this Agreement based upon arrangements made by or on behalf of any Selling
Securityholder.
<PAGE>
26
ARTICLE III
COVENANTS RELATING TO CONDUCT OF BUSINESS
PENDING CLOSING
SECTION 3.1. CONDUCT OF BUSINESS OF THE COMPANY. Except as
contemplated by this Agreement, during the period from the date of this
Agreement to the Closing, the Company shall, and shall cause its Subsidiaries
to, act and carry on their respective businesses in the ordinary course of
business and, to the extent consistent therewith, use reasonable efforts to
preserve intact their current business organizations, keep available the
services of their current key officers and employees and preserve the goodwill
of those engaged in material business relationships with them. Except as set
forth in Section 3.1 of the Disclosure Schedule, without limiting the generality
of the foregoing, during the period from the date of this Agreement to the
Closing, the Company shall not, and shall cause its Subsidiaries not to, without
the prior consent of the Investors:
(i) (A) declare, set aside or pay any dividends on, or
make any other distributions (whether in cash, stock or property) in respect of,
any of the Company's outstanding capital stock, (B) split, combine or reclassify
any of the Company's outstanding capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of the Company's outstanding capital stock, or (C) purchase, redeem
or otherwise acquire any shares of outstanding capital stock or any rights,
warrants or options to acquire any such shares except, in the case of this
clause (C), for (1) the acquisition of shares of Common Stock from holders of
options in full or partial payment of the exercise price payable by such holder
upon exercise of Options outstanding on the date of this Agreement and (2) the
purchase of shares of Common Stock from a holder thereof in connection with the
termination of such holder's employment with the Company or a Subsidiary of the
Company;
(ii) issue, sell, grant, pledge or otherwise encumber
any shares of its capital stock, any other voting securities or any securities
convertible into, or any rights, warrants or options to acquire, any such
shares, voting securities or convertible securities other than upon the exercise
of Options outstanding on the date of this Agreement;
(iii) amend its certificate of incorporation, By-laws or
other comparable charter or organizational documents;
<PAGE>
27
(iv) acquire any business or any corporation,
partnership, joint venture, association or other business organization or
division thereof for a purchase price in excess of $1 million;
(v) sell, mortgage or otherwise encumber or subject to
any Lien or otherwise dispose of any of its properties or assets that are
material to the Company and its Subsidiaries taken as a whole, except in the
ordinary course of business or in connection with a transaction permitted by
Section 3.1(iv);
(vi) (A) except with respect to indebtedness incurred in
the ordinary course of business or incurred in connection with a transaction
permitted by Section 3.1(iv) hereof, incur any indebtedness for borrowed money
or guarantee any such indebtedness of another Person, other than indebtedness
owing to, or guarantees of indebtedness owing to, the Company or any direct or
indirect wholly-owned Subsidiary of the Company or (B) make any loans or
advances to any other Person, other than to the Company or to any direct or
indirect wholly-owned Subsidiary of the Company and other than routine advances
to employees;
(vii) pay, discharge, settle or satisfy any claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or satisfaction, in
the ordinary course of business consistent with past practice or in accordance
with their terms, of liabilities reflected or reserved against in, or discussed
in, the most recent consolidated financial statements (or the notes thereto) of
the Company or incurred since the date of such financial statements in the
ordinary course of business consistent with past practice;
(viii) except in the ordinary course of business or in
connection with a transaction permitted by Section 3.1(iv), enter into, modify,
amend or terminate any material agreement, permit, concession, franchise,
license or similar instrument to which the Company or any Subsidiary is a party
or waive, release or assign any material rights or claims thereunder;
(ix) (A) increase the compensation or fringe benefits of
any present or former director, officer or employee of the Company or its
Subsidiaries (except for increases in salary or wages in the ordinary course of
business consistent with past practice), (B) grant any severance or termination
pay to any present or former director, officer or employee of the Company or its
Subsidiaries, or (C) establish, adopt, enter into, amend or
<PAGE>
28
terminate any Benefit Plan or any plan, agreement, program, policy, trust, fund
or other arrangement that would be a Benefit Plan if it were in existence as of
the date of this Agreement;
(x) modify any existing insurance coverage protecting
the business, assets or employees of the Company or any of its Subsidiaries
except in the ordinary course of business consistent with past practice;
(xi) except as required by law or GAAP, change any
material accounting principle used by the Company or any of its Subsidiaries; or
(xii) authorize any of, or commit or agree to take any
of, the foregoing actions.
SECTION 3.2. OTHER ACTIONS. The Company, the Investors and the
Selling Securityholders shall not, and shall not permit any of their respective
Subsidiaries to, take any action that would, or that could reasonably be
expected to, result in (i) any of the representations and warranties of such
party set forth in this Agreement becoming untrue in any material respect or
(ii) any of the conditions of the other parties to the consummation of the
transactions contemplated by this Agreement and set forth in Article V not being
satisfied.
ARTICLE IV
ADDITIONAL AGREEMENTS
SECTION 4.1. ACCESS TO INFORMATION; CONFIDENTIALITY. During the
period prior to the Closing Date, the Company shall, and shall cause each of its
Subsidiaries to (a) afford to the Investors and to the officers, employees,
counsel, financial advisors and other representatives of the Investors
reasonable access, during normal business hours, to all its properties, books,
contracts, commitments, personnel and records, and (b) furnish as promptly as
practicable to the Investors such information concerning its business,
properties, financial condition, operations and personnel as the Investors may
from time to time reasonably request. Each of the Investors will hold, and will
cause its respective directors, officers, partners, employees, accountants,
counsel, financial advisors and other representatives and affiliates to hold in
confidence, in accordance with the provisions of the agreements dated January
14, 1997, January 30, 1997 and January 30, 1997, respectively, between or among
the Investors (or Affiliates thereof) and the Company, any
<PAGE>
29
information obtained from or with respect to the Company or any of its
Subsidiaries.
SECTION 4.2. COMMERCIALLY REASONABLE EFFORTS. Upon the terms and
subject to the conditions and other agreements set forth in this Agreement, each
of the parties agrees to use its commercially reasonable efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, and to assist
and cooperate with the other parties in doing, all things necessary, proper or
advisable to consum mate and make effective, in the most expeditious manner
practicable, the transactions contemplated by this Agree ment, including the
satisfaction of the respective conditions set forth in Article V.
SECTION 4.3. BENEFIT PLANS AND EMPLOYMENT AGREEMENTS. (a) The
Investors shall cause the Company and each of its Subsidiaries to maintain, for
a period of two (2) years following the Closing Date, employee benefit plans,
arrangements or policies which provide benefits to Continuing Employees (as
defined below) that are comparable in the aggregate to those currently provided
by the Benefit Plans listed on Section 4.3(a) of the Disclosure Schedule
(excluding any incentive compensation arrangements).
(b) Notwithstanding the provisions of Section 4.3(a):
(i) With respect to those employee benefit plans,
arrangements or policies of the Investors or any of their Subsidiaries made
available to Continuing Employees after the Closing, each such plan, arrangement
or policy shall be offered to such Continuing Employees (and, if applicable,
their dependents) without any waiting period and the Company and, if applicable,
the Investors shall cause any restrictions and limitations for pre-existing
conditions or insurability to be waived (other than any waiting period,
pre-existing conditions of lack of insurability that constituted a restriction
or limitation with respect the benefits available to a Continuing Employee
immediately prior to the Closing).
(ii) With respect to those employee benefit plans,
arrangements or policies of the Investors or any of their Subsidiaries made
available to Continuing Employees after the Closing, each such Continuing
Employee shall be given full credit for his or her pre-Closing service with the
Company or any of its Subsidiaries (and, to the extent such service is
recognized under any Benefit Plan of the Company or any of its Subsidiaries as
of the Closing, service with any predecessor employer) for purposes of waiting
periods, eligibility and vesting under any benefit
<PAGE>
30
plan offered to Continuing Employees on or after the Closing.
(iii) The Investors shall cause the Company and each of
its Subsidiaries or affiliates, as appropriate, to contribute to each of such
Benefit Plans (or to pay or credit, as the case may be) (x) all matching and
salary based contributions for 1997 currently provided for in such Benefit Plan
not made prior to the Closing and (y) all discretionary contributions for 1997
provided for in such Benefit Plans, in each case to the extent set forth in
Section 4.3(b) of the Disclosure Schedule and in accordance with standard
practice.
(iv) The Investors shall cause the Company and each of
its Subsidiaries or affiliates, as appropriate, to pay all bonuses to each
eligible individual who is an Eligible Employee subject to the achievement of
the performance goals of the bonus plans or programs set forth in Section 4.3(b)
of the Disclosure Schedule.
(v) The Investors shall cause the Company and each of
its Subsidiaries and affiliates to maintain severance benefits after the Closing
for each Continuing Employee that are no less favorable to such Continuing
Employee than those provided under the severance plans or employment agreements
included in Section 4.3(b) of the Disclosure Schedule, until the second
anniversary of the Closing Date.
(c) As used in Sections 4.3(a) and 4.3(b):
(i) "Continuing Employees" means all employees of the
Company or a Subsidiary of the Company as of the Closing.
(ii) "Eligible Employees" at any date means all
Continuing Employees other than employees who have resigned voluntarily prior to
such date or whose employment has been terminated for "Cause" prior to such
date.
(iii) "Cause" means (x) breach of, neglect of or refusal
to perform the duties associated with a Continuing Employee's employment or (y)
commission of a felony, or a misdemeanor involving dishonesty, fraud, theft,
larceny or embezzlement.
SECTION 4.4. PUBLIC ANNOUNCEMENTS. The Investors, on the one hand,
and the Company, on the other hand, will consult with each other before issuing,
and provide each other the opportunity to review and comment upon, any press
release or other public statements with
<PAGE>
31
respect to the transactions contemplated by this Agreement, and shall not issue
any such press release or make any such public statement prior to such
consultation, except as may be required by applicable law, court process or by
obligations pursuant to any listing agreement with any national securities
exchange.
SECTION 4.5. ACQUISITION PROPOSALS. The Company shall not, nor shall
it permit any of its Subsidiaries to, nor shall it authorize or permit any
officer, director or employee of, or any investment banker, attorney or other
advisor or representative of, the Company or any of its Subsidiaries to,
directly or indirectly, (i) solicit, initiate or encourage the submission of any
Acquisition Proposal (as hereinafter defined) or (ii) participate in any
discussions or negotiations regarding, or furnish to any person any information
with respect to, or take any other action to facilitate any inquiries or the
making of any proposal that constitutes, or may reasonably be expected to lead
to, any Acquisition Proposal. For purposes of this Agreement, "Acquisition
Proposal" means any proposal with respect to a merger, consolidation, share
exchange or similar transaction involving the acquisition of the Company or any
Subsidiary of the Company, or any purchase of all or any significant portion of
the assets of the Company or any Subsidiary of the Company, or any equity
interest in the Company or any Subsidiary of the Company, other than the
transactions contemplated hereby.
SECTION 4.6. RESTRICTION ON SELLING SECURITYHOLDERS. (a) Each
Selling Securityholder hereby covenants and agrees that, prior to the Closing,
he, she or it shall not sell, transfer or otherwise dispose of all or any part
of the Repurchase Shares.
(b) Each Selling Securityholder hereby covenants and agrees that
such Selling Securityholder shall not, nor shall such Selling Securityholder
authorize or permit any officer, director or employee of, or any investment
banker, attorney or other advisor or representative of, the Selling
Securityholder to, directly or indirectly, (i) solicit initiate or encourage the
submission of any Acquisition Proposal, (ii) participate in any discussions or
negotiations regarding, or furnish to any person any information with respect
to, or take any other action to facilitate any inquiries or the making of any
proposal that constitutes, or may reasonably be expected to lead to, any
Acquisition Proposal, or (iii) enter into, authorize or participate in any
manner whatsoever in any agreement, commitment or understanding of any nature
whatsoever with respect to any Acquisition Proposal or any other transaction
<PAGE>
32
or proposed transaction inconsistent with the provisions of this Agreement or
the transactions contemplated hereby.
SECTION 4.7. CONSENTS, APPROVALS AND FILINGS. (a) The Company, the
Investors and the Selling Securityholders will make and cause any Subsidiaries
to make all necessary filings, as soon as practicable, including, without
limitation, those required under the HSR Act, the Securities Act and the
Exchange Act in order to facilitate prompt consummation of the transactions
contemplated by this Agreement. In addition, the Company, the Investors and the
Selling Securityholders will each use their commercially reasonable efforts, and
will cooperate fully with each other (i) to comply as promptly as practicable
with all governmental requirements applicable to the transactions contemplated
by this Agreement and (ii) to obtain as promptly as practicable all necessary
permits, orders or other consents of Governmental Entities and consents of all
third parties necessary for the consummation of the transactions contemplated by
this Agreement. Each of the Company, the Investors and the Selling
Securityholders shall use commercially reasonable efforts to provide such
information and communications to Governmental Entities as such Governmental
Entities may reasonably request.
(b) Each of the parties shall provide to the other party
copies of all applications in advance of filing or submission of such
applications to Governmental Entities in connection with this Agreement.
SECTION 4.8. UPDATING OF INFORMATION. The Company shall, and shall
cause each of its Subsidiaries to, promptly deliver to the Investors any
information concerning material events subsequent to the date of this Agreement
which is necessary to supplement the information contained in or made a part of
the representations and warranties contained herein, including the Disclosure
Schedule, or delivered by the Company or any of its Subsidiaries, pursuant to
any of the covenants or agreements contained herein, in order that the
information contained herein or so delivered be complete and accurate in all
material respects, it being understood and agreed that the delivery of such
information shall not in any manner constitute a waiver by any of the parties of
any of the conditions precedent to the Closing hereunder or cure any breach of
any provision hereof.
SECTION 4.9. INVESTORS. The Investors shall, on the Closing Date,
designate six or more individuals to become members of the Board of Directors of
the Company, and cause such designees, upon their election or appointment as
directors, effective as of the Closing Date, to confirm and
<PAGE>
33
ratify the authorization of the Company to purchase the Repurchase Shares and
Surrendered Options and issue the Common Stock in accordance with the terms and
conditions set forth in this Agreement.
SECTION 4.10. INDEMNIFICATION AND INSURANCE. The Company and the
Investors agree that all rights to indemnification and exculpation from
liability for acts or omissions occurring prior to the Closing Date now existing
in favor of the current or former directors, officers or employees of the
Company and its Subsidiaries as provided in their respective certificates of
incorporation or by-laws shall survive the Closing and shall continue in full
force and effect in accordance with their terms for a period of not less than
six years from the Closing Date. The Investors shall cause to be maintained for
a period of not less than six years from the Closing Date the Company's current
directors' and officers' insurance and indemnification policy to the extent that
it provides coverage for events occurring prior to the Closing (the "D&O
Insurance") for all persons who are directors, officers or employees of the
Company or any Company Subsidiary on the date of this Agreement, so long as the
annual premium therefor would not be in excess of 200% of the last annual
premium paid prior to the date of this Agreement, which was $80,000 (200% of
such premium, the "Maximum Premium"); PROVIDED, HOWEVER, that the Investors may,
in lieu of maintaining such existing D&O Insurance as provided above, cause
comparable coverage to be provided under any policy maintained for the benefit
of the directors and officers of Investors or any of its Subsidiaries, so long
as (i) the issuer thereof has at least an equal claims-paying rating and (ii)
the material terms thereof are no less advantageous than the existing D&O
Insurance to the extent commercially available. If the existing D&O Insurance
expires, is terminated or cancelled during such six-year period, Investors will
use all reasonable efforts to cause to be obtained as much D&O Insurance as can
be obtained for the remainder of such period, on terms and conditions no less
advantageous than the existent D&O Insurance to the extent commercially
available.
SECTION 4.11. EXISTING STOCKHOLDERS AGREEMENT. The Company, Odyssey
and the Investors hereby covenant and agree to execute and deliver an amendment
to the Existing Stockholders Agreement, to be effective immediately prior to the
Closing (subject to the execution and delivery by Management Stockholders (as
defined in the Existing Stockholders Agreement) holding collectively at the time
of such amendment at least 51% of the aggregate Shares (as defined in the
Existing Stockholders Agreement) held by all Management Stockholders and their
Permitted Transferees (as
<PAGE>
34
defined in the Existing Stockholders Agreement)) to (i) substitute the Investors
(collectively) as the successor to all rights and all obligations of Odyssey
thereunder and (ii) terminate all rights and obligations of Barry Gossett under
the Existing Stockholders Agreement (contingent on his becoming a party to the
New Stockholders Agreement (as hereinafter defined)). In connection with such
amendment, the Investors agree to release, discharge and indemnify Odyssey for
any liability or obligation arising after the Closing under the Existing
Stockholder Agreement.
SECTION 4.12. NEW STOCKHOLDERS AGREEMENT. Simultaneously with the
Closing, the Company, Odyssey and the Investors shall enter into a stockholders
agreement (the "New Stockholders Agreement") reflecting the terms set forth on
Exhibit C hereto.
SECTION 4.13. BEST EFFORTS. The Investors shall use their best
efforts to have sufficient funds available to perform its obligations hereunder
and to consummate the transactions contemplated hereby on or prior to May 27,
1997.
ARTICLE V
CONDITIONS PRECEDENT
SECTION 5.1. CONDITIONS TO OBLIGATIONS OF EACH OF THE PARTIES. The
respective obligation of each party to consummate the transactions contemplated
by this Agreement is subject to the satisfaction or waiver on or prior to the
Closing Date of the following conditions:
(a) GOVERNMENTAL AND REGULATORY CONSENTS. All filings required
to be made prior to the Closing Date with, and all consents, approvals, permits
and authorizations required to be obtained prior to the Closing Date from,
Governmental Entities, including, without limitation, those set forth in Section
2.1(c)(i) of the Disclosure Schedule, in connection with the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby by the Company, the Investors and the Selling Securityholders shall have
been made or obtained (as the case may be).
(b) HSR ACT, ETC. The waiting period (and any extension
thereof) applicable to the transactions contemplated by this Agreement under the
HSR Act shall have been terminated or shall have otherwise expired.
(c) NO INJUNCTIONS OR RESTRAINTS. No temporary restraining
order, preliminary or permanent
<PAGE>
35
injunction or other order issued by any court of competent jurisdiction or other
legal restraint or prohibition preventing the consummation of the transactions
contemplated by this Agreement shall be in effect; PROVIDED, HOWEVER, that the
party invoking this condition shall use its commercially reasonable efforts to
have any such order or injunction vacated.
SECTION 5.2. CONDITIONS TO OBLIGATIONS OF THE INVESTORS. The
obligations of the Investors to effect the transactions contemplated by this
Agreement are further subject to the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company set forth in Section 2.1 and the representations and
warranties of the Selling Securityholders set forth in Section 2.3 shall be true
and correct, in the case of any representation or warranty that is qualified as
to materiality or "Material Adverse Effect", in all respects and, in the case of
any representation or warranty that is not so qualified, in all material
respects, in each case as of the date of this Agreement and as of the Closing
Date as though made on and as of the Closing Date, except to the extent such
representations and warranties speak as of an earlier date, and the Investor
shall have received a certificate signed on behalf of the Company by the chief
executive officer and the chief financial officer of the Company to the effect
set forth in this paragraph.
(b) PERFORMANCE OF OBLIGATIONS OF THE COMPANY AND THE SELLING
SECURITYHOLDERS. The Company and the Selling Securityholders shall have
performed in all material respects all obligations required to be performed by
them under this Agreement at or prior to the Closing Date, and the Investor
shall have received a certificate signed on behalf of the Company by the chief
executive officer and the chief financial officer of the Company to such effect.
(c) DELIVERY OF REPURCHASE SHARES. The Selling Securityholders
shall have delivered to the Company certificates evidencing a number of
Repurchase Shares, duly endorsed in blank or accompanied by stock transfer
powers duly executed in blank, if any, with all necessary stock transfer tax
stamps attached thereto, if any, and cancelled, such that, after giving effect
to the Repurchase of such Repurchase Shares and the purchase by the Investors of
shares of Common Stock pursuant to Section 1.1, the Investors shall beneficially
own 90% or less of the then outstanding shares of Common Stock.
<PAGE>
36
(d) After giving effect to the Repurchase of the Repurchase
Shares and the purchase by the Investors of shares of Common Stock pursuant to
Section 1.1, Odyssey shall beneficially own not less than 5% of the then
outstanding shares of Common Stock.
(e) MANAGEMENT AGREEMENT. Odyssey Investors, Inc. shall have
terminated the Management Agreement, dated December 16, 1993, effective as of
the Closing Date, without liability to the Company other than fees and expenses
accrued as of the Closing Date.
(f) NEW STOCKHOLDERS AGREEMENT. The New Stockholders Agreement
shall have been executed by Odyssey.
Section 5.3. CONDITIONS TO OBLIGATIONS OF THE COMPANY. (a) The
obligation of the Company to consummate the transactions contemplated by this
Agreement is further subject to the following conditions:
(i) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Investors set forth in Section 2.2 and the representations and
warranties of Selling Securityholders set forth in Section 2.3 shall be true and
correct in all material respects, in each case as of the date of this Agreement
and as of the Closing Date as though made on and as of the Closing Date, except
to the extent such representations and warranties speak as of an earlier date,
and the Company shall have received a certificate signed on behalf of each
Investor by an authorized representative thereof to the effect set forth in this
paragraph.
(ii) PERFORMANCE OF OBLIGATIONS OF THE INVESTOR. The Investors
shall have performed in all material respects all obligations required to be
performed by them under this Agreement at or prior to the Closing Date, and the
Company shall have received a certificate signed on behalf of each of the
Investors by an authorized representative thereof to such effect.
(b) The obligation of the Company to repurchase Repurchase
Shares of each Selling Securityholder individually is further subject to the
following conditions:
(i) DELIVERY OF REPURCHASE SHARES. Such Selling Securityholder
shall have delivered its Repurchase Shares, duly endorsed in blank or
accompanied by stock transfer powers duly executed in blank, with all necessary
stock transfer tax stamp attached thereto and cancelled, to the Company.
<PAGE>
37
(ii) FIRPTA. Such Selling Securityholder shall have provided
to the Company a certificate under Section 1445 of the Code and the regulations
promulgated thereunder certifying that such Selling Securityholder is not a
foreign person.
Section 5.4. CONDITIONS TO OBLIGATIONS OF THE SELLING
SECURITYHOLDERS. The obligation of each Selling Securityholder to consummate the
transactions contemplated by this Agreement is further subject to the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Investors set forth in Section 2.2 shall be true and correct
in all material respects as of the date of this Agreement and as of the Closing
Date, except to the extent such representations and warranties speak as of an
earlier date, and the Selling Securityholder shall have received a certificate
signed on behalf of the Investors as authorized representatives thereof to the
effect set forth in this paragraph.
(b) PERFORMANCE OF OBLIGATIONS OF THE INVESTOR. The Investors
shall have performed in all material respects all obligations required to be
performed by them under this Agreement at or prior to the Closing Date, and the
Selling Securityholders shall have received a certificate signed on behalf of
the Investors by an authorized representative thereof to such effect.
(c) CONSUMMATION OF PURCHASE OF THE COMMON STOCK. The Investor
shall have consummated the purchase of the Common Stock pursuant to the terms of
this Agreement.
(d) STOCKHOLDERS AGREEMENT. The New Stockholders Agreement
shall have been executed by each of the Investors.
(e) EMPLOYEE INCENTIVE PAYMENTS. All amounts due under the
incentive compensation plans of the Company and its Subsidiaries set forth in
Section 5.4(e) of the Disclosure Schedule shall have been paid.
ARTICLE VI
TERMINATION, AMENDMENT AND WAIVER
SECTION 6.1. TERMINATION. This Agreement may be terminated and
abandoned at any time prior to the Closing:
(a) by mutual written consent of the Investor, the Company and
Selling Securityholders owning a
<PAGE>
38
majority of the Common Stock outstanding on the date hereof; or
(b) by the Company if the Closing shall not have been
consummated on or before June 10, 1997, unless the failure to consummate the
transactions contemplated by this Agreement is the result of a breach of this
Agreement by the Company; or
(c) by the Investors if the Closing shall not have been
consummated on or before June 10, 1997, unless (i) the failure to consummate the
transactions contemplated by this Agreement is the result of a breach of this
Agreement by the Investors; or
(d) by Selling Securityholders owning a majority of the Common
Stock outstanding on the date hereof, if the Closing shall not have been
consummated on or before June 10, 1997, unless the failure to consummate the
transactions contemplated by this Agreement is the result of a breach of this
Agreement by the Selling Securityholder; or
(e) by any of the Investors, the Company or Selling
Securityholders owning a majority of the Common Stock outstanding on the date
hereof, if any Government Entity shall have issued an order, decree or ruling or
taken any other action permanently enjoining, restraining or otherwise
prohibiting the transaction contemplated by this Agreement and such order,
decree, ruling or other action shall have become final and nonappealable.
SECTION 6.2. EFFECT OF TERMINATION. In the event of termination of
this Agreement by either the Company, the Investors or the Selling
Securityholders as provided in Section 6.1, this Agreement, other than the last
sentence of Section 4.1 and Sections 2.1(k), 2.2(c), 2.3(c), 6.2, 6.3, 6.4,
7.2., 7.7, 7.8, 7.9 and 7.11 shall forthwith become void and have no effect,
without any liability or obligation on the part of the Investors, the Company or
the Selling Securityholders. Nothing contained in this Section 6.2 shall relieve
any party from any liability resulting from any breach of the representations,
warranties, covenants or agreements set forth in this Agreement prior to such
termination.
SECTION 6.3. AMENDMENT. Subject to the applicable provisions of the
Delaware General Corporation Law, at any time prior to the Closing, the parties
hereto may modify or amend this Agreement only by written agreement executed and
delivered by duly authorized officers of the Company, each of the Investors and
Selling Securityholders
<PAGE>
39
owning a majority of the Common Stock outstanding on the date hereof.
SECTION 6.4. EXTENSION; WAIVER. At any time prior to the Closing,
the Company, all of the Investors or Selling Securityholders owning a majority
of the Common Stock outstanding on the date hereof may (a) extend the time for
the performance of any of the obligations or other acts of the other parties,
(b) waive any inaccuracies in the representations and warranties of the other
parties contained in this Agreement or in any document delivered pursuant to
this Agreement or, (c) subject to the applicable provisions of the Delaware
General Corporation Law, waive compliance with any of the agreements or
conditions of the other parties contained in this Agreement. Any agreement on
the part of a party to any such extension or waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such party (which, in the
case of the Selling Securityholders, shall be evidenced by a writing signed by
Selling Securityholders owning a majority of the Common Stock on the date
hereof). The failure of any party to this Agreement to assert any of its rights
under this Agreement or otherwise shall not constitute a waiver of such rights.
SECTION 6.5. PROCEDURE FOR TERMINATION, AMENDMENT, EXTENSION OR
WAIVER. A termination of this Agreement pursuant to Section 6.1, an amendment of
this Agreement pursuant to Section 6.3 or an extension or waiver pursuant to
Section 6.4 shall, in order to be effective, require in the case of any of the
Investors that is a corporation or the Company, action by its Board of Directors
or the duly authorized designee of its Board of Directors, or in the case of any
of the Investors that is a partnership, its general partner.
ARTICLE VII
GENERAL PROVISIONS
SECTION 7.1. NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. (a)
Except as set forth in Section 7.1(b), none of the representations and
warranties in this Agreement or in any instrument delivered pursuant to this
Agreement shall survive the Closing. This Section 7.1 shall not limit any
covenant or agreement of the parties which by its terms contemplates performance
after the Closing.
(b) The representations and warranties of the Company contained in
the first sentence of Section 2.1(a) and Section 2.1(b) shall survive the
Closing without limitation as to time. The representations and warranties
<PAGE>
40
of the Selling Securityholders contained in Sections 2.3(a) and 2.3(c) shall
survive the Closing without limitation as to time.
SECTION 7.2. FEES AND EXPENSES. Whether or not the transactions
contemplated by this Agreement shall be consummated, each party hereto shall pay
its own expenses incident to preparing for, entering into and carrying out this
Agreement and the consummation of the transactions contemplated hereby (other
than filing fees, if any, relating to the HSR Act, which shall be paid by the
Investors).
SECTION 7.3. SELLING SECURITYHOLDERS. Each Selling Securityholder
agrees to be bound, to the fullest extent provided herein, by all decisions with
respect to this Agreement made by Selling Securityholders owning a majority of
the Common Stock outstanding on the date hereof.
SECTION 7.4. DEFINITIONS. For purposes of this Agreement:
(a) an "affiliate" of any Person means, any other Person
(other than a Subsidiary) which, directly or indirectly, is in control of, is
controlled by, or is under common control with, such Person. For purposes of
this definition, "control" of a Person means the power, directly or indirectly,
either to (a) vote 10% or more of the securities having ordinary voting power
for the election of directors of such Person or (b) direct or cause the
direction of the management and policies of such Person, whether by contract or
otherwise;
(b) "Person" means an individual, corporation, partnership,
joint venture, association, trust, unincorporated organization or other entity;
and
(c) a "Subsidiary" of any Person means any person of which
such first Person owns, directly or indirectly, 50% or more of the equity
securities the holders of which are generally entitled to vote for the election
of the board of directors or similar governing body of such Person.
SECTION 7.5. NOTICES. All notices, requests, claims, demands and
other communications under this Agreement shall be in writing and shall be
deemed given if delivered personally or sent by overnight courier (providing
proof of delivery) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
<PAGE>
41
(a) if to the Investors, to
c/o The Cypress Group L.L.C.
65 East 55th Street, 19th Floor
New York, NY 10022
Attn: David P. Spalding
-and-
c/o Keystone, Inc.
65 East 55th Street, 32nd Floor
New York, NY 10022
Attn: Daniel L. Doctoroff
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Attn: Richard A. Garvey, Esq.
(b) if to the Company, to:
Scotsman Holdings, Inc.
8211 Town Center Drive
Baltimore, MD 21236
Attn: President
with copies to:
Scotsman Holdings, Inc.
8211 Town Center Drive
Baltimore, MD 21236
Attn: General Counsel
-and-
Barry P. Gossett
c/o Scotsman Holdings, Inc.
8211 Town Center Drive
Baltimore, MD 21236
-and-
Odyssey Partners, L.P.
31 West 52nd Street
New York, New York 10019
Attn: Stephen Berger
-and-
<PAGE>
42
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
Attn: Simeon Gold, Esq.
(c) If to any Selling Securityholder (other than Odyssey), at
the address specified for such Selling Securityholder on Schedule I hereto. If
to Odyssey, to:
Odyssey Partners, L.P.
31 West 52nd Street
New York, New York 10019
Attn: Stephen Berger
with a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
Attn: Simeon Gold, Esq.
SECTION 7.6. INTERPRETATION. When a reference is made in this
Agreement to a Section or Schedule, such reference shall be to a Section of, or
a Schedule to, this Agreement unless otherwise indicated. The table of contents
and headings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement.
Whenever the words "include", "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation".
SECTION 7.7. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties.
SECTION 7.8. ENTIRE AGREEMENT; THIRD-PARTY BENEFICIARIES. This
Agreement and the Confidentiality Agreements referred to in Section 4.1
constitute the entire agreement, and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter of this Agreement. This Agreement is not intended to confer upon
any person, other than the parties hereto and the third party beneficiaries
referred to in the following sentence, any rights or remedies. The parties
hereto expressly intend the provisions of Section 4.10 (solely in respect of
officers and directors of the Company and its Subsidiaries) to confer a benefit
upon and be enforceable by, as third party
<PAGE>
43
beneficiaries of this Agreement, the third persons referred to in, or intended
to be benefitted by, such provisions.
SECTION 7.9. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
SECTION 7.10. ASSIGNMENT. Neither this Agreement nor any of the
rights, interests or obligations under this Agreement shall be assigned, in
whole or in part, by operation of law or otherwise by any of the parties without
the prior written consent of the other parties, and any such assignment that is
not consented to shall be null and void. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of, and be enforceable by,
the parties and their respective successors and assigns.
SECTION 7.11. ENFORCEMENT. THE PARTIES AGREE THAT IRREPARABLE DAMAGE
WOULD OCCUR IN THE EVENT THAT ANY OF THE PROVISIONS OF THIS AGREEMENT WERE NOT
PERFORMED IN ACCORDANCE WITH THEIR SPECIFIC TERMS OR WERE OTHERWISE BREACHED. IT
IS ACCORDINGLY AGREED THAT THE PARTIES SHALL BE ENTITLED TO AN INJUNCTION OR
INJUNCTIONS TO PREVENT BREACHES OF THIS AGREEMENT AND TO ENFORCE SPECIFICALLY
THE TERMS AND PROVISIONS OF THIS AGREEMENT IN ANY FEDERAL OR STATE COURT LOCATED
IN THE STATE OF DELAWARE, THIS BEING IN ADDITION TO ANY OTHER REMEDY TO WHICH
THEY ARE ENTITLED AT LAW OR IN EQUITY. IN ADDITION, EACH OF THE PARTIES HERETO
(A) CONSENTS TO SUBMIT ITSELF TO THE PERSONAL JURISDICTION OF ANY FEDERAL OR
STATE COURT LOCATED IN THE STATE OF DELAWARE IN THE EVENT ANY DISPUTE ARISES OUT
OF THIS AGREEMENT OR ANY OF THE TRANSACTION CONTEMPLATED BY THIS AGREEMENT, (B)
AGREES THAT IT WILL NOT ATTEMPT TO DENY OR DEFEAT SUCH PERSONAL JURISDICTION OR
VENUE BY MOTION OR OTHER REQUEST FOR LEAVE FROM ANY SUCH COURT AND (C) AGREES
THAT IT WILL NOT BRING ANY ACTION RELATING TO THIS AGREEMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT IN ANY COURT OTHER THAN A FEDERAL OR
STATE COURT SITTING IN THE STATE OF DELAWARE.
<PAGE>
44
IN WITNESS WHEREOF, the Investors, the Company and the Selling
Securityholders have caused this Agreement to be signed by their respective
officers thereunto duly authorized, all as of the date first written above.
INVESTORS:
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
--------------------------------------
David P. Spalding
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
--------------------------------------
David P. Spalding
Member
KEYSTONE, INC.
By: /S/ DANIEL L. DOCTOROFF
--------------------------------------
Daniel L. Doctoroff
Vice President
FW STRATEGIC PARTNERS, L.P.
By: FW Strategic Asset Management, L.P.,
its general partner
By: Strategic Genpar, Inc.,
<PAGE>
45
its general partner
By: /S/ JAMES N. ALEXANDER
--------------------------------------
James N. Alexander
Vice President
SCOTSMAN HOLDINGS, INC.
By: /S/ BARRY P. GOSSETT
--------------------------------------
Barry P. Gossett
Chairman and C.E.O.
SELLING SECURITYHOLDERS:
ODYSSEY PARTNERS, L.P.
By: /S/ JACK NASH
--------------------------------------
Jack Nash
General Partner
/S/ BARRY GOSSETT
--------------------------------------
Barry Gossett
/S/ GERARD HOLTHAUS
--------------------------------------
Gerard Holthaus
/S/ COLLIER BEALL
--------------------------------------
Collier Beall
/S/ JOE DONEGAN
--------------------------------------
Joe Donegan
/S/ GERARD KEEFE
--------------------------------------
Gerard Keefe
/S/ BILL LEBUHN
--------------------------------------
Bill LeBuhn
/S/ JOHN ROSS
--------------------------------------
John Ross
<PAGE>
46
/S/ ROBERT HANSEN
--------------------------------------
Robert Hansen
<PAGE>
SCHEDULE I
REPURCHASE SHARES
Shares To Be
Selling Securityholder Shares Owned Repurchased
- ---------------------- ------------ -----------
Barry Gossett 259,469 218,000
c/o Williams Scotsman, Inc.
8211 Town Center Drive
Baltimore, MD 21236
Gerard Holthaus 12,700 -0-
c/o Williams Scotsman, Inc.
8211 Town Center Drive
Baltimore, MD 21236
Collier Beall 1,500 -0-
c/o Williams Scotsman, Inc.
8211 Town Center Drive
Baltimore, MD 21236
Joe Donegan 1,200 -0-
c/o Williams Scotsman, Inc.
8211 Town Center Drive
Baltimore, MD 21236
Gerard Keefe 500 -0-
c/o Williams Scotsman, Inc.
8211 Town Center Drive
Baltimore, MD 21236
Bill LeBuhn 1,000 -0-
c/o Williams Scotsman, Inc.
8211 Town Center Drive
Baltimore, MD 21236
John Ross 500 -0-
c/o Williams Scotsman, Inc.
8211 Town Center Drive
Baltimore, MD 21236
Robert Hansen 2,050 -0-
c/o Williams Scotsman, Inc.
8211 Town Center Drive
Baltimore, MD 21236
<PAGE>
SCHEDULE II
OPTION SURRENDERS
Selling 1994 To Be 1995 To Be 1996 To Be Total
Security- Option sur- Option- Sur- Option Sur- Option
holder Shares rendered Shares rendered Shares Rendered Shares
@$13.78 @$28.80 @55.18 To Be
Sur-
rendered
Gerard 7,800 -0- 27,000 -0- 26,530 -0- -0-
Holthaus
Collier 2,300 -0- 10,000 -0- 10,000 -0- -0-
Beall
Joe 1,950 -0- 10,000 -0- 10,000 -0- -0-
Donegan
Gerard 300 -0- 9,000 -0- 10,000 -0- -0-
Keefe
Bill 3,500 -0- 10,000 -0- 7,500 -0- -0-
LeBuhn
John Ross 300 -0- 7,500 -0- 7,500 -0- -0-
Robert 1,950 -0- 5,000 -0- 5,000 -0- -0-
Hansen
Exhibit 99.1
FOR IMMEDIATE RELEASE
Contacts: Owen Blicksilver
Principal Communications
For Cypress, Keystone
212-303-7603
CYPRESS AND KEYSTONE ACQUIRE
SCOTSMAN HOLDINGS FOR $675 MILLION
BALTIMORE, MD., May 22, 1997 -- The Cypress Group and Keystone, Inc. announced
today they had completed their acquisition of approximately 90% of the common
stock of Scotsman Holdings, Inc., the parent of Williams Scotsman, Inc., as part
of a recapitalization of the company. The transaction is valued at approximately
$675 million, including the assumption of debt and certain other liabilities and
expenses. Williams Scotsman's management participated as equity investors in the
transaction and will continue to run the company.
In the recapitalization, Williams Scotsman refinanced its existing credit
facility with a new $300 million revolving credit facility and issued $400
million of 9-7/8% Senior Notes due 2007. Williams Scotsman also successfully
completed the previously announced tender offer for its 9 1/2% Senior Secured
Notes due 2000 and accepted for payment approximately 99.8% of its outstanding
Senior Secured Notes (approximately $165 million prior to acceptance). Scotsman
Holdings successfully completed the previously announced tender offer for its
Series B 11% Senior Notes due 2004 and has accepted for payment all of its
outstanding Series B 11% Senior Notes (approximately $29.3 million prior to
acceptance).
Williams Scotsman, headquartered in Baltimore, is the second largest operating
lessor of mobile office units in the United States with revenues of
approximately $205 million. The Company's products provide flexible, relocatable
and cost-effective space solutions for commercial, construction and educational
customers among others. The Company began operations in 1946.
Williams Scotsman operates a fleet of over 42,500 mobile units which are leased
through a network of 60 branch offices in 33 states. The Company has over 12,500
customers in approximately 450 separate industries. In addition to its core
leasing business, Williams Scotsman also provides delivery, installation and
other services to its leasing customers and sells new and used mobile office
products.
The Cypress Group manages a private equity fund with more than $1 billion in
commitments. Cypress invests in privately negotiated transactions, targeting
established operating companies and investing with management to foster
continued growth. Since its fund's closing in February 1996, Cypress has added
two other companies to its investment portfolio: Cinemark USA, Inc., the fourth
largest theater operator in the country, and AMTROL Inc., a leading water flow
and control
<PAGE>
2
company. The Cypress Group, based in New York City, is headed by its four
partners, James A. Stern, Jeffrey P. Hughes, James L. Singleton and David P.
Spalding.
Keystone, Inc., formerly the Robert M. Bass Group, is the principal investment
arm for Robert Bass and his associates. Formed in 1983, Keystone has made
investments in a wide variety of industries and has taken control positions in
both public and private companies.
# # #
