THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR APPLICABLE STATE SECURITIES LAWS. THIS SECURITY MAY NOT
BE SOLD OR OTHERWISE TRANSFERRED WITHOUT REGISTRATION UNDER THE ACT AND SUCH
LAWS, OR PURSUANT TO AN AVAILABLE EXEMPTION THEREFROM. THIS LEGEND SHALL BE
ENDORSED UPON ANY NOTE ISSUED IN EXCHANGE FOR THIS NOTE.
MOBILE MINI, INC.
SENIOR SUBORDINATED PROMISSORY NOTE
$3,000,000 Phoenix, Arizona
July 31, 1997
FOR VALUE RECEIVED, the undersigned, MOBILE MINI, INC., a Delaware
corporation (the "Company"), hereby promises to pay to ARIZONA LAND INCOME
CORPORATION or its successors or assigns (the "Holder") the principal sum of
THREE MILLION DOLLARS ($3,000,000) (or so much thereof as shall not have been
prepaid) on the earlier of the closing of one or more Financing Transactions (as
defined in Section 1(b) below) the net proceeds of which shall equal at least
$3,000,000 in the aggregate or July 31, 2002 (the "Maturity Date"), with
interest (computed on the basis of a 360-day year of twelve 30-day months) on
the unpaid principal hereof at the rate of twelve percent (12%) per annum from
the date hereof, payable semi-annually in arrears on the first day of April and
November of each year, commencing November 1, 1997 until said principal shall
have been paid in full and to pay interest (so computed) at the rate of two
percent (2%) per month (the "Default Rate") on any unpaid principal and, to the
extent permitted by applicable law, on any overdue interest during the
continuation of an Event of Default, until the same shall be paid. Payments of
principal and interest shall be made in such coin or currency of the United
States of America as at the time of payment shall be legal tender for the
payment of public and private debts.
1. Prepayment.
----------
(a) The principal amount of this Note may be prepaid by the Company,
in whole or in part, without penalty, at any time.
(b) In the event, at any time, of the consummation by the Company of
the currently contemplated private placement or public offering of Senior
Subordinated Notes in which Peacock, Hislop, Staley & Given, Inc. is to act as
placement agent, the terms of which Senior Subordinated Notes are anticipated to
be substantially similar to the terms of this Note (a "Financing Transaction"),
the Company shall, contemporaneously with the consummation of the Financing
Transaction, prepay all or a portion of the outstanding principal amount of this
Note; provided, that any such prepayment arising as a result of a Financing
Transaction
shall be subject to the prior consent of the lenders under the Senior Credit
Agreement (such consent not to be unreasonably withheld so long as the terms of
such Financing Transaction are substantially the same as the terms of this
Note). Each such prepayment shall be in an amount not less than the net proceeds
received by the Company as a result of the applicable Financing Transaction (up
to the amount of principal and interest outstanding under this Note).
(c) In the event that a Change in Control Refinancing shall occur, or
the Company enters into a letter of intent with respect to a transaction or
series of transactions that could reasonably be expected to result in a Change
in Control Refinancing, or any written agreement is executed which, when fully
performed by the parties thereto, would result in a Change of Control
Refinancing, the Company will, within five (5) Business Days of the occurrence
of any such event (or, in the case of any such event the consummation or
finalization of which would involve any action of the Company, at least thirty
(30) days prior to such consummation), give written notice of such Change in
Control Refinancing to each holder of this Note by facsimile transmission and
overnight courier of national reputation. In the event of a Change in Control
Refinancing, such written notice shall contain, and such written notice shall
constitute, an irrevocable offer to prepay all, but not less than all, of the
principal amount of the Note, at one-hundred one percent (101%) of the
outstanding principal amount, together with interest accrued through the date of
prepayment and any other amounts due hereunder, on a date specified in such
notice (the "Control Prepayment Date") that is not less than thirty (30) days
and not more than sixty (60) days after the date of such notice. If the Control
Prepayment Date shall not be specified in such notice, the Control Prepayment
Date shall be the thirtieth (30th) day after the date of such holder's receipt
of such notice. In no event will the Company take any action to consummate or
finalize any transaction which gives rise to a Change in Control Refinancing
unless contemporaneously with such action the Company prepays the Note as
required by this Section 1(c). Notwithstanding the foregoing, in no event shall
the Company be obligated to make any prepayment pursuant to this Section 1(c)
unless and until the closing of the transactions contemplated which gives rise
to the Change in Control Refinancing to which such offered prepayment relates.
For purposes hereof, "Change in Control Refinancing" shall mean the refinancing,
refunding or restructuring of the Company's credit facility which is the subject
of that certain Credit Agreement dated as of March 28, 1996 (as amended,
supplement or modified from time to time, and including any restatements,
renewals, refundings or refinancings thereof, the "Senior Credit Agreement") by
and among the Company, the financial institutions party thereto, and BT
Commercial Corporation, as agent, upon the occurrence of any of the following:
(i) Richard E. Bunger, persons directly or indirectly controlled by Richard E.
Bunger, and members of the Company's management shall cease to have record and
beneficial ownership of at least twenty percent (20%) of the Company's
outstanding capital stock entitled to vote on all matters submitted to the
stockholders of the Company; (ii) other than members of the Company's
management, any "person" (as such terms is used in subsections 13(d) and 14(d)
of the Securities and Exchange Act of 1934, as amended (the "Exchange Act")) on
and after the date hereof is or becomes a "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of securities of the
Company representing twenty percent (20%) or more of the combined voting power
of the Company's then-outstanding securities; or (iii) the existing directors
for any reason cease to constitute at least seventy-five percent (75%) of the
2
Company's board of directors. For purposes of clause (iii) of the preceding
sentence, "existing directors" means individuals constituting the Company's
board of directors on the date hereof, and any subsequent director whose
election to the Company's board of directors or nomination for election by the
Company's shareholders was approved by at least seventy-five percent (75%) of
the directors then in office which directors either were directors on the date
hereof or whose election or nomination for election was previously so approved.
2. Use of Proceeds; Reserve Account
--------------------------------
(a) The Company shall use a portion of the net proceeds of the
issuance of this Note to establish an interest reserve escrow account (the
"Reserve Account") and shall use the remaining net proceeds of the issuance of
this Note for one or more of the following purposes: capital expenditures by the
Company, working capital, and/or general corporate purposes.
(b) The Reserve Account shall be an escrow account established at a
bank or other financial institution reasonably acceptable to the Holder. The
Company shall, upon issuance of this Note, deposit into the Reserve Account, and
shall maintain in the Reserve Account at all times while this Note is
outstanding, an amount equal to six months' interest on this Note based on the
amount outstanding hereunder from time to time. Without limiting any other
legal, equitable or contractual remedies that may available to the holder of
this Note, if the Company shall fail to make any payment of interest to the
Holder as and when due under the terms of this Note, funds on deposit in the
Reserve Account shall be used to make such interest payment. In the event that
any funds are used to make any interest payment, or if the amount on deposit in
the Reserve Account shall at any time be less than six months' interest based on
the amount outstanding hereunder at such time, the Company shall immediately
deposit into the Reserve Account cash in such amount as shall be necessary to
increase the amount on deposit in the Reserve Account to an amount equal to six
months' interest on this Note; provided, that the Company shall not make any
deposits into the Reserve Account during any period in which the Company shall
be in default in the payment of any principal of, or interest on, any Senior
Debt after the same shall have become due and payable, whether at maturity, at a
date fixed for prepayment, by declaration of acceleration or otherwise, or
during any period in which a Blockage Notice under Section 12(d) shall be in
effect. The parties shall execute a security agreement (the "Reserve Account
Security Agreement"), which shall be in form and substance acceptable to the
Holder, pursuant to which all funds on deposit in the Reserve Account from time
to time will be pledged as security for all obligations of the Company under
this Note. The Company agrees to take all action and execute all documents and
instruments reasonably requested by the Holder from time to time in order to
perfect and maintain the Holder's security interest in the Reserve Account.
3. Representations and Warranties of the Company
---------------------------------------------
To induce the Holder to make the loan evidenced by this Note, the Company
hereby warrants and represents the accuracy of the following statements as of
the date of this Note:
3
(a) The Company previously has provided the Holder with true and
accurate copies of the Company's Annual Report on Form 10-K for the year ended
December 31, 1996 (the "Latest 10-K") and the Company's Quarterly Report on Form
10-Q for the quarterly period ended March 31, 1997 (the "Latest 10-Q"). Since
the date of the most recent financial statements set forth in the Latest 10-Q,
there has been no change in the business operations, profits, financial
condition, properties or business prospects of the Company, except changes that,
in the aggregate, could not reasonably be expected to have a material adverse
effect on the business, condition (financial or otherwise), prospects,
properties or results of operations of the Company and its subsidiaries taken as
a whole (a "Material Adverse Effect").
(b) The Company has good title to all of the property reflected in the
most recent balance sheet set forth in the Latest 10-Q and to all of the
property purported to have been acquired by the Company after said date (except
as sold or otherwise disposed of in the ordinary course of business), except for
such failures to have good title as are immaterial to such balance sheet and
that, in the aggregate for all such failures, could not reasonably be expected
to have a Material Adverse Effect.
(c) All leases necessary for the conduct of the business of the
Company are valid and subsisting and are in full force and effect, except for
such failures to be valid and subsisting that, in the aggregate for all such
failures, could not reasonably be expected to have a Material Adverse Effect.
(d) The Company owns, possesses or has the right to use all of the
licenses, permits, franchises, patents, copyrights, trademarks, service marks
and trade names necessary for the present and currently planned future conduct
of its business, without any known conflict with the rights of others, except
for such failures to own, possess, or have the right to use, that, in the
aggregate for all such failures, could not reasonably be expected to have a
Material Adverse Effect.
(e) All tax returns required to be filed by or on behalf of the
Company or any other person with which the Company files or has filed a
consolidated return in any jurisdiction have been filed on a timely basis, and
all taxes, assessments, fees and other governmental charges upon the Company or
upon any of its properties, income or franchises, that are due and payable have
been paid, except for such tax returns and such tax payments that, in the
aggregate for all such tax returns and payments, could not reasonably be
expected to have a Material Adverse Effect. The provision for taxes shown on the
unaudited balance sheet of the Company as of March 31, 1997 is adequate for all
open years and for the Company's current fiscal period.
(f) Except as described in the Latest 10-K or the Latest 10-Q:
(i) there are no proceedings, actions or investigations pending
or, to the knowledge of the Company, threatened against or affecting the
Company in any court or before any governmental authority or arbitration
board or tribunal that, in the
4
aggregate for all such proceedings, actions and investigations, could
reasonably be expected to have a Material Adverse Effect; and
(ii) the Company is not in default with respect to any judgment,
order, writ, injunction or decree of any court, governmental
authority, arbitration board or tribunal that, in the aggregate for
all such defaults, could reasonably be expected to have a Material
Adverse Effect.
(g) Neither the Latest 10-K, nor the Latest 10-Q, nor any statement
furnished by or on behalf of the Company to the Holder in connection with the
negotiation or the closing of the issuance of this Note contains any untrue
statement of a material fact or omits a material fact necessary to make the
statements contained therein or herein not misleading. There is no fact known to
the Company (other than matters of a general economic nature) that has had or
could at present reasonably be expected to have a Material Adverse Effect and
that has not been disclosed in such Latest 10-K, Latest 10-Q or other written
statements furnished to the Holder in connection with the negotiation or the
closing of the issuance of this Note.
(h) The Company:
(i) is a corporation duly incorporated, validly existing and in
good standing under the laws of its jurisdiction of incorporation,
(ii) has all corporate power and authority necessary to own and
operate its properties and to carry on its business as now conducted and as
presently proposed to be conducted,
(iii) has all licenses, certificates, permits, franchises and
other governmental authorizations necessary to own and operate its
properties and to carry on its business as now conducted and as presently
proposed to be conducted, except where the failure to have such licenses,
certificates, permits, franchises and other governmental authorizations, in
the aggregate for all such failures, could not reasonably be expected to
have a Material Adverse Effect, and
(iv) has duly qualified or has been duly licensed, and is
authorized to do business and is in good standing, as a foreign
corporation, in each state in the United States of America and in each
other jurisdiction where the failure to be so qualified or licensed and
authorized and in good standing, in the aggregate for all such failures,
could reasonably be expected to have a Material Adverse Effect.
(i) The Company is not in violation in any respect of any term of any
charter instrument or bylaw. The Company is not in violation in any respect of
any term in any agreement or other instrument to which it is a party or by which
it or any of its property may be bound except for such violations that, in the
aggregate for all such violations, could not reasonably be expected to have a
Material Adverse Effect.
5
(j) The Company:
(i) is not a party to any contract or agreement, or subject to
any charter or other corporate restriction that, in the aggregate for
all such contracts, agreements, charters and corporate restrictions,
is reasonably likely to have a Material Adverse Effect; and
(ii) is not a party to any contract or agreement that prohibits
the issuance and sale of this Note or the performance of the Company
of its obligations under this Note or the Warrant to Purchase Common
Stock dated the date hereof and issued to the Holder (the "Warrant").
(k) The Company is not in violation of any law, ordinance,
governmental rule or regulation to which it is subject, except for such
violations that, in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.
(l) Each of the issuance, sale and delivery of this Note by the
Company and compliance by the Company with all of the provisions of this Note:
(i) is within the corporate powers of the Company; and
(ii) is legal and does not conflict with, result in any breach of
any of the provisions of, constitute a default under, or result in the
creation of any lien upon any property of the Company under the
provisions of,
(A) any agreement, charter instrument, bylaw or other
instrument to which the Company is a party or by which the
Company or any of its property may be bound, or
(B) any order, judgment, decree, or ruling of any court,
arbitrator or governmental authority applicable to the Company.
(m) This Note has been duly authorized by all necessary action on the
part of the Company, has been executed and delivered by duly authorized officers
of the Company, and constitutes a legal, valid and binding obligation of the
Company, enforceable in accordance with its terms, except that the
enforceability hereof may be:
(i) limited by applicable bankruptcy, reorganization,
arrangement, insolvency, moratorium or other similar laws affecting the
enforceability of creditors' rights generally; and
(ii) subject to the availability of equitable remedies.
6
(n) As of the date hereof, after giving effect to the consummation of
the transactions contemplated by this Note and the Warrant and the payment of
all fees, costs and expenses payable by the Company with respect to the
transactions contemplated thereby, the Company is Solvent. For purposes hereof,
"Solvent" means that (a) the fair saleable value of the assets of such person is
in excess of the total amount of the present value of its liabilities (including
for purposes of this definition all liabilities (including loss reserves as
determined by the Company), whether or not reflected on a balance sheet prepared
in accordance with generally accepted accounting principles and whether direct
or indirect, fixed or contingent, secured or unsecured, disputed or undisputed),
(b) such person is able to pay its debts or obligations in the ordinary course
as they mature and (c) such person does not have unreasonably small capital to
carry out its business as conducted and as proposed to be conducted.
(o) Other than a placement fee in the amount of five percent (5%) of
the original principal amount of this Note which is payable to Peacock, Hislop,
Staley & Given, Inc., no broker's or finder's fee or commission was, is or will
be payable by the Company with respect to any of the transactions contemplated
by this Note or the Warrant or for any other services rendered to the Company
ancillary to such transactions. The Company hereby agrees to indemnify and
defend the Holder against and agrees that it will hold the Holder harmless from
any claim, demand or liability for broker's or finder's fees or commissions
alleged to have been incurred by the Company in connection with any of the
transactions contemplated by this Note or the Warrant and any expenses
(including, without limitation, attorneys' fees and expenses) arising in
connection with any such claim, demand or liability.
4. Covenants of the Company
------------------------
The Company covenants and agrees that, so long as this Note shall be
outstanding and until the obligations incurred hereunder, whether or not
matured, are paid in full, the Company will:
(a) Within forty-five (45) days after the end of each fiscal quarter
(other than the last fiscal quarter of each fiscal year), provide to the Holder
copies of the unaudited financial statements of the Company consisting of a
consolidated balance sheet of the Company and its subsidiaries as of the end of
such quarter and a consolidated statement of income and a consolidated statement
of cash flows of the Company and its subsidiaries for such quarter and for the
portion of the fiscal year through such quarter, all in reasonable detail and
certified (subject to normal year-end audit adjustments) on behalf of the
Company by an officer of the Company as having been prepared in accordance with
generally acceptable accounting principles consistently applied.
(b) Within ninety (90) days after the end of each fiscal year, provide
to the Holder copies of the audited financial statements of the Company
consisting of a consolidated balance sheet and statement of stockholders' equity
of the Company and its subsidiaries as of the end of such fiscal year and a
consolidated statement of income and a consolidated statement of cash flows of
the Company and its subsidiaries for such fiscal year, setting forth in
7
comparative form the corresponding figures for the preceding fiscal year,
certified without qualification as to scope of audit by independent public
accountants of recognized national standing selected by the Company.
(c) Promptly upon any officer of the Company obtaining knowledge
thereof, provide to the Holder written notice of any action, suit, proceeding or
investigation pending or threatened against or affecting the Company or any
subsidiary of the Company or any of its or their respective properties before
any court, governmental agency or regulatory authority (whether federal, state
or local) which could reasonably be expected to have a Material Adverse Effect.
(d) Promptly upon their distribution, provide to the Holder copies of
all financial statements, reports, notices and proxy statements sent by the
Borrower to its security holders generally and all regular and periodic reports,
registration statements and other filings (and all amendments and supplements
thereto) filed by the Borrower from time to time with the Securities and
Exchange Commission or with any national securities exchange on which any of the
Company's securities are listed, and copies of all press releases and other
statements made available generally by the Company to the public concerning
material developments in the business of the Company.
(e) Provide to the Holder such other information respecting the
properties, business affairs, financial condition and/or operations of the
Company and any subsidiary of the Company as the Holder may from time to time
reasonably request.
(f) Promptly pay and discharge all lawful taxes, assessments and
governmental charges or levies imposed upon the Company or upon its income and
profits, or upon any of its property, before the same shall become in default,
as well as all lawful claims for labor, materials and supplies which, if unpaid,
might become a lien or charge upon such property or any part thereof; provided,
however, that the Company shall not be required to pay and discharge any such
tax, assessment, charge, levy or claim so long as the validity thereof shall be
contested in good faith by appropriate proceedings and the Company shall set
aside on its books adequate reserves with respect to any such tax, assessment,
charge, levy or claim so contested.
(g) Do or cause to be done all things reasonably necessary to preserve
and keep in full force and effect its corporate existence, rights and franchises
and comply with all laws applicable to the Company, except where the failure to
company would not have a material adverse effect on the Company.
(h) At all times reasonably maintain, preserve, protect and keep its
property used in the conduct of its business in good repair, working order and
condition, and from time to time make all needful and proper repairs, renewals,
replacements, betterments and improvements thereof as shall be reasonably
required in the conduct of its businesses.
8
(i) Carry on and conduct its business, and cause each of its
subsidiaries to carry on and conduct its business, in substantially the same
manner and in substantially the same fields of enterprise as it is presently
conducted and to do all things necessary to remain, and cause each of its
subsidiaries to remain, duly incorporated, validly existing and in good standing
as a domestic corporation in its jurisdiction of incorporation and maintain, and
cause each of its subsidiaries to maintain, its qualification as a foreign
corporation in each jurisdiction where the conduct of its business makes such
qualification necessary, except where the failure to maintain such qualification
could not reasonably be expected to have a Material Adverse Effect.
(j) Comply, and cause each of its subsidiaries to comply, in all
material respects with all laws, rules, regulations and governmental orders
(whether foreign, federal, state or local) having applicability to any of them
or to the business or business at any time conducted by any of them.
(k) Maintain, and cause each of its subsidiaries to maintain, with
financially sound and reputable insurance companies insurance on all their
property in such amounts and covering such risks as is consistent with sound
business practice, and furnish to the Holder upon request full information as to
the insurance carried.
(l) Comply, and cause each of its subsidiaries to comply, with all
laws, rules, regulations, orders, writs, judgments, injunctions, decrees or
awards to which it may be subject and obtain all licenses, certificates,
permits, franchises and other governmental authorizations necessary to the
ownership of its properties and the conduct of its business, the failure to
comply with which or obtain which could reasonably be expected to have a
Material Adverse Effect.
(m) At all times keep true and correct books, records and accounts for
itself and each subsidiary pursuant to a system of accounting established and
administered in accordance with generally accepted accounting principles,
consistently applied.
(n) Deliver to the Holder:
(i) promptly, but in any event within three (3) Business Days of
becoming aware of the existence of any condition or event which constitutes
a Default or an Event of Default, a written notice specifying the nature
and period of existence thereof and what action the Company is taking or
proposes to take with respect thereto; and
(ii) prompt notice in writing of any other development, financial
or otherwise, relating specifically to the Company or any of its
subsidiaries which could reasonably be expected to have a Material Adverse
Effect.
(o) Upon at least two (2) Business Days' prior notice, permit the
Holder, by its representatives and agents, to inspect during normal business
hours any of the property,
9
corporate books and financial records of the Company and each subsidiary, to
examine and make copies of the books of accounts and other financial records of
the Company and each subsidiary, and to discuss the affairs, finances and
accounts of the Company and each subsidiary with, and to be advised as to the
same by, their respective officers, employees and independent public accountants
(and by this provision the Company authorizes said accountants to discuss the
finances and affairs of the Company and its subsidiaries).
(p) At all times comply, and cause each of its subsidiaries to comply,
in all material respects with all applicable environmental laws and regulations,
and promptly take any and all necessary remedial actions in response to the
presence, storage, use, disposal, transportation or release of any hazardous
materials on, under or about any real property owned, or, to the extent
permitted by the property owner, leased or operated by the Company or any of its
subsidiaries. In the event that the Company or any subsidiary undertakes any
remedial action with respect to any hazardous material on, under or about any
real property, the Company or such subsidiary shall conduct and complete such
remedial action in compliance in all material respects with all applicable
environmental laws and regulations and in accordance with the policies, orders
and directives of all federal, state and local governmental authorities.
(q) Provide the Holder with prompt written notice of any amendment or
modification of the Senior Credit Agreement or any other document, instrument or
agreement governing or relating to any Senior Debt, or any waiver of any term or
provision thereof. Each such notice shall be accompanied by a description of the
proposed amendment, modification or waiver and a brief explanation of the
principal reasons for such amendment, modification or waiver.
(r) Provide prompt written notice to the lenders under the Senior
Credit Agreement and to the Holder if the Company shall make or propose to make
any payment of interest hereunder using funds on deposit in the Reserve Account.
(s) Use its best efforts to cause all payments of interest hereunder
to be made utilizing cash generated by the Company's operations prior to using
funds on deposit in the Reserve Account to make all or any portion of any such
payment.
5. Financial Covenants
-------------------
(a) Subject to normal year-end and closing audit adjustments for
calculations or determinations made in accordance with generally accepted
accounting principles, consistently applied for all relevant periods:
(i) The Company shall at all times while this Note is outstanding
maintain a Tangible Net Worth of not less than the amount set forth in the
table below for the applicable fiscal year of the Company:
Fiscal Year ending Minimum Tangible
10
December 31, Net Worth
------------ ---------
1997 $12,000,000
1998 $13,500,000
1999 and thereafter $15,000,000
For purposes hereof, "Tangible Net Worth" means, as of any date, the total
of: consolidated assets of the Company and its subsidiaries, minus their
consolidated liabilities, minus (A) patents, copyrights, trademarks, trade
names, franchises, licenses, customer and subscription lists, goodwill and
other similar intangibles (excluding net reorganization value), (B)
leasehold improvements, (C) organization expenses, (D) obligations due to
the Company from affiliates (including any officer, director or shareholder
thereof) and (E) security deposits and prepaid costs and expenses and other
deferred assets.
(ii) The Company shall at all times while this Note is
outstanding maintain a Total Funded Indebtedness Ratio of not greater than
the ratio set forth in the table below for the applicable fiscal year of
the Company:
Fiscal Year ending Maximum Total Funded
December 31, Indebtedness Ratio
------------ ------------------
1997 0.8 to 1
1998 0.79 to 1
1999 and thereafter 0.78 to 1
For purposes hereof, "Total Funded Indebtedness Ratio" means, as of any
date, a ratio, the numerator of which shall be an amount equal to the total
consolidated indebtedness of the Company and its subsidiaries (whether
secured, unsecured, assumed, or otherwise) which has a scheduled maturity
date of more than one (1) year from the date of determination, including
any capitalized lease obligations and guaranteed indebtedness of any other
person ("Total Consolidated Indebtedness"), and the denominator of which
shall be the sum of Total Consolidated Indebtedness plus total
stockholders' equity of the Company and its subsidiaries at such date
determined in accordance with generally accepted accounting principles on a
consolidated basis (excluding treasury stock and excluding the effects of
any foreign currency translation adjustments).
(iii) The Company shall at all times while this Note is
outstanding maintain a Senior Funded Indebtedness Ratio of not greater than
the ratio set forth in the table below for the applicable fiscal year of
the Company:
11
Fiscal Year ending Maximum Senior Funded
December 31, Indebtedness Ratio
------------ ------------------
1997 0.74 to 1
1998 0.73 to 1
1999 and thereafter 0.72 to 1
For purposes hereof, "Senior Funded Indebtedness Ratio" means, as of any
date, a ratio, the numerator of which shall be an amount equal to the total
outstanding Senior Debt of the Company and its subsidiaries which has a
scheduled maturity date of more than one (1) year from the date of
determination, and the denominator of which shall be the sum of Total
Consolidated Indebtedness plus total stockholders' equity of the Company
and its subsidiaries at such date determined in accordance with generally
accepted accounting principles on a consolidated basis (excluding treasury
stock and excluding the effects of any foreign currency translation
adjustments).
(b) Without limiting any other provision of this Note, and without
prejudice to any other remedies which the Holder may have in respect of a
Default or Event of Default hereunder, during such time as the Company shall
fail to comply fully with each of the financial covenants set forth in
subsection (a) above, the Company agrees that it will not, and will not permit
any subsidiary to:
(i) incur any indebtedness (whether secured, unsecured, funded,
unfunded, assumed, or otherwise), including any capitalized lease
obligations and guaranteed indebtedness of any other person; provided, that
this provision shall not prohibit the Company from issuing preferred stock
or other equity securities; and provided, further, that this provision
shall not prohibit the Company from borrowing under the Senior Credit
Agreement so long as the total indebtedness outstanding under the Senior
Credit Agreement, at all times during the period in which the Company fails
to comply with the provisions of subsection (a) above, does not exceed the
total amount outstanding under the Senior Credit Agreement as of the
initial date that the Company shall have failed to comply with the
provisions of subsection (a) above.
(ii) enter into a transaction (including, without limitation, the
purchase or sale of any property or service) with, or make any payment or
transfer to, any director, officer or other affiliate (including without
limitation any holder of five percent (5%) or more of any class of the
Company's equity securities) except in the ordinary course of business and
pursuant to the reasonable requirements of the Company's or such
subsidiary's business and upon fair and reasonable terms no less favorable
to the Company or such subsidiary than the Company or such subsidiary would
obtain in a comparable arms-length transaction, or
(iii) engage in or consummate any transaction or series of
transactions that would otherwise be permitted under Section 6(c) of this
Note.
12
6. Negative Covenants
------------------
(a) The Company shall not, nor shall it permit any subsidiary to,
permit any amendment or modification to be made to its certificate or articles
of incorporation or by-laws which is materially adverse to the interests of the
Holder as the holder of this Note (provided that the Company shall notify the
Holder of any other amendment or modification thereto as soon as practicable
thereafter). The parties acknowledge and agree that any such amendments or
modifications that are described in the Company's Registration Statement on Form
S-2 as filed with the Securities and Exchange Commission on July 2, 1997 shall
not be subject to the provisions of this section 6(a).
(b) The Company shall not, nor shall it permit any subsidiary to,
enter into any indenture, agreement, instrument or other arrangement which, (i)
directly or indirectly prohibits or restrains, or has the effect of prohibiting
or restraining, or imposes materially adverse conditions upon, the incurrence
and maintenance of the indebtedness evidenced by this Note, or the execution and
delivery of any Subsidiary Guarantee pursuant to the provisions of Section 9 or
any provision of any Subsidiary Guarantee or (ii) contains any provision which
would be violated or breached by the Company's or any subsidiary's performance
of any of its obligations under this Note or any other document, instrument or
agreement related to the transactions contemplated hereby.
(c) The Company will not, nor will it permit any subsidiary to, merge
or consolidate with (except that a subsidiary may merge into the Company or any
wholly-owned subsidiary of the Company), or acquire a majority of the voting
shares of any other entity unless the primary business conducted by such entity
is substantially similar to, or is otherwise in the same line of business as,
the business of the Company and its subsidiaries as presently conducted.
(d) The Company will not, nor will it permit any subsidiary to, lease,
sell or otherwise transfer any property, to any other person or entity except
for (i) sales and leases of inventory in the ordinary course of business, (ii)
leases, sales, transfers or other dispositions of property that, together with
all other property of the Company and its subsidiaries previously leased, sold
or transferred (other than inventory sold or leased in the ordinary course of
business) as permitted by this Section 6(d)(ii) since the date hereof do not
constitute a substantial portion of the property of the Company and its
subsidiaries, and (iii) sales, transfers and other dispositions of property that
is unrelated to the Company's primary business of designing and manufacturing,
and selling and leasing for its own account, portable storage containers.
(e) The Company will not and will not permit any of its subsidiaries
to (a) file or consent to the filing of any consolidated, combined or unitary
income tax return with any person or entity other than the Company and its
subsidiaries or (b) enter into any tax sharing agreement or similar arrangement.
13
(f) The Company will not, and will not permit any person or entity
acting on its behalf to, offer this Note or any part hereof or any similar
securities for issue or sale to, or solicit any offer to acquire any of the same
from, any person or entity so as to bring the issuance and sale of this Note
within the provisions of Section 5 of the Securities Act.
7. Events of Default.
(a) An "Event of Default" shall exist if any of the following occurs and is
continuing:
(i) the Company shall fail to make any payment of principal or
interest on this Note on or before the date such payment is due (provided,
that the Company shall not be deemed to have failed to make an interest
payment if such payment is made with funds on deposit in the Reserve
Account), or the Company shall fail to pay any other amount due hereunder
(other than principal or interest) within ten (10) days of receipt of
written notice from the Holder;
(ii) the Company shall fail to deposit into the Reserve Account
on or before the date that is six (6) months after the date of any
disbursement therefrom any amount necessary to cause the amount on deposit
in the Reserve Account at such time to equal six (6) months' interest under
this Note, based on the principal amount outstanding under this Note at
such time;
(iii) the Company or any subsidiary shall fail to comply with any
other provision hereof, and such failure continues for more than thirty
(30) days after the earlier of the date upon which (i) the Company or such
subsidiary shall have become aware of such failure or (ii) written notice
of such failure shall first have been given to the Company or such
subsidiary by the Holder;
(iv) any warranty, representation or other statement by or on
behalf of the Company or any subsidiary contained herein or in any
instrument furnished in compliance herewith or in reference hereto shall
have been false or misleading in any material respect when made;
(v) any event shall occur or any condition shall exist in respect
of the indebtedness of the Company under the Senior Credit Agreement or
under any agreement securing or relating to such indebtedness, that
immediately or with any one or more of the passage of time or the giving of
notice:
(A) causes such indebtedness, or a portion thereof, to
become due prior to its stated maturity or prior to its regularly
scheduled date or dates of payment; or
14
(B) causes any one or more of the holders thereof or a
trustee therefor to require the Company or any subsidiary to
repurchase such indebtedness from the holders thereof;
(vi) a receiver, liquidator, custodian or trustee of the Company
or any subsidiary, or of all or any substantial part of the property of
either, shall be appointed by court order and such order remains in effect
for more than sixty (60) days, or an order for relief shall be entered with
respect to the Company or any subsidiary, or the Company or any subsidiary
shall be adjudicated a bankrupt or insolvent, or all or any substantial
part of the property of the Company or any subsidiary shall be sequestered
by court order and such order shall remain in effect for more than sixty
(60) days;
(vii) a petition shall be filed against the Company or any
subsidiary under any bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution or liquidation law of any jurisdiction,
whether now or hereafter in effect, and shall not be dismissed within sixty
(60) days after such filing;
(viii) the Company or any subsidiary shall file a petition in
voluntary bankruptcy or seeking relief under any provision of any
bankruptcy, reorganization, arrangement, insolvency, readjustment of debt,
dissolution or liquidation law of any jurisdiction, whether now or
hereafter in effect, or shall consent to the filing of any petition against
it under any such law;
(ix) the Company or a subsidiary shall make an assignment for the
benefit of its creditors, or admit in writing its inability, or fail, to
pay its debts generally as they become due, or shall consent to the
appointment of a receiver, liquidator or trustee of the Company or a
subsidiary or of all or a substantial part of its property;
(x) a final, non-appealable judgment or judgments in the
aggregate for the payment of money in excess of Two-Hundred Fifty Thousand
Dollars ($250,000) is or are outstanding against one or more of the Company
and the subsidiaries and any one of such judgments shall have been
outstanding for more than sixty (60) days from the date of its entry and
shall not have been discharged in full or stayed;
(xi) the Reserve Account Security Agreement shall fail to remain
in full force or effect or any action shall be taken to discontinue or to
assert the invalidity of the Reserve Account Security Agreement, or the
Company or any subsidiary shall fail to comply with any of the terms and
provisions of the Reserve Account Security Agreement, or the Company denies
the enforceability of the Reserve Account Security Agreement or gives
notice (written or otherwise) to such effect; or
(xii) any Subsidiary Guarantee shall fail to remain in full force
or effect or any action shall be taken to discontinue or to assert the
invalidity or
15
unenforceability of any Subsidiary Guarantee, or any subsidiary shall fail
to comply with any of the terms or provisions of a Subsidiary Guarantee, or
any subsidiary denies that it has any further liability under a Subsidiary
Guarantee or gives notice (written or otherwise) to such effect.
(b) If any Event of Default specified in Section 7(a)(i) shall exist,
this Note shall automatically become immediately due and payable together with
interest accrued thereon, without presentment, demand, protest or notice of any
kind, all of which are hereby expressly waived.
(c) If any Event of Default other than those specified in Section
7(a)(i) shall exist and the indebtedness of the Company under the Senior Credit
Agreement shall have been declared due and payable prior to its stated maturity
or prior to its regularly scheduled date or dates of payment pursuant to Section
9.2(a) thereof (or any successor section having similar effect), the holder or
holders of this Note may exercise any right, power or remedy permitted to such
holder or holders by law, and shall have, in particular, without limiting the
generality of the foregoing, the right to declare the entire principal of, and
all interest accrued on, the Note then outstanding to be, and such Note shall
thereupon become, forthwith due and payable, without any further presentment,
demand, protest or other notice of any kind, all of which are hereby expressly
waived, and the Company shall forthwith pay to the holder or holders of this
Note the entire principal of, and interest accrued on, such Note, subject to the
provisions of Section 12 hereof.
(d) No course of dealing on the part of any holder of the Note nor any
delay or failure on the part of any holder of the Note to exercise any right
shall operate as a waiver of such right or otherwise prejudice such holder's
rights, powers and remedies.
8. Default Rate of Interest
------------------------
Upon the occurrence and during the continuation of an Event of
Default, all outstanding principal, interest and other amounts due hereunder
shall bear interest at the Default Rate.
9. Subsidiary Guarantees
---------------------
The Company shall cause each subsidiary which may from time to time
account for five percent (5%) or more of the Company's consolidated net revenues
or consolidated net assets (a "Material Subsidiary") to execute a guarantee
agreement (a "Subsidiary Guarantee") pursuant to which such subsidiary shall
agree to unconditionally guarantee the full payment and performance as and when
due of all obligations under this Note. Each Subsidiary Guarantee shall be
substantially in the form attached hereto as Exhibit A and shall otherwise be
reasonably acceptable in form and substance to the Holder.
10. Opinion of Company Counsel
--------------------------
16
Upon the closing of the transactions contemplated by this Note, the
Company's legal counsel, Bryan Cave LLP, shall provide a legal opinion,
addressed to the Holder, substantially in the form attached hereto as Exhibit B.
This Section 10 shall constitute direction by the Company to such counsel to
deliver such closing opinion to the Holder.
11. Payment of Fees
---------------
The Company shall pay all reasonable fees, expenses and costs incurred
by the Holder in connection with the issuance of this Note and the Warrant and
the negotiation an documentation of the transactions contemplated hereby and
thereby (including, without limitation, reasonable fees and expenses of Squire,
Sanders & Dempsey L.L.P., special counsel to the Holder).
12. Subordination of Note
---------------------
(a) This Note evidences subordinated debt (all obligations hereunder,
whether principal, interest or otherwise, "Subordinated Debt") and shall be
subordinate and junior in right of payment to all Senior Debt to the extent
provided in this Section 12 and nothing in this Section 12 shall be construed as
a limit on the extent of the secured claim of the Senior Debt lenders. For
purposes hereof, "Senior Debt" means and includes all obligations, liabilities
and indebtedness of the Company now or hereafter existing, whether fixed or
contingent, and whether for principal, interest, fees, expenses, indemnification
or otherwise, which by its terms is senior in right of payment to the
Subordinated Debt (including, without limitation, indebtedness under the Senior
Credit Agreement) and senior in right of payment to any other indebtedness of
the Company which by its terms ranks pari passu with the Subordinated Debt.
(b) The Senior Debt shall continue to be Senior Debt and entitled to
the benefits of these subordination provisions irrespective of any amendment,
modification or waiver of any term of the Senior Debt, any extension or renewal
of the Senior Debt, any refinancing or refunding of the Senior Debt or the
granting or release of any collateral or security securing the repayment of the
Senior Debt.
(c) In the event the Company shall default in the payment of any
principal of, or interest on, any Senior Debt when the same becomes due and
payable, whether at maturity, at a date fixed for prepayment, by declaration of
acceleration or otherwise, then, unless and until such default shall have been
cured or waived or shall have ceased to exist, no direct or indirect payment (in
cash, property or securities or by set-off or otherwise) shall be made or agreed
to be made on account of any Subordinated Debt, or as a sinking fund for any
Subordinated Debt, or in respect of any redemption, retirement, purchase,
prepayment or other acquisition of any Subordinated Debt (including without
limitation any deposit by the Company into the Reserve Account); provided, that
payments from the Reserve Account in accordance with Section 2 shall be
permitted.
17
(d) Upon the occurrence of any Default (as defined in the Senior
Credit Agreement), then, unless and until such Default shall have been cured or
waived in writing or shall have ceased to exist, no direct or indirect payment
(in cash, property or securities or by set-off or otherwise) shall be made or
agreed to be made on account of any Subordinated Debt, or as a sinking fund for
any Subordinated Debt, or in respect of any redemption, retirement, purchase,
prepayment or other acquisition of any Subordinated Debt (including without
limitation any deposit by the Company into the Reserve Account) during any
period of one-hundred eighty (180) days after the time a notice of such Default
shall have been given to the Company by the holders of Senior Debt or the agent
therefor stating that such notice is a "Blockage Notice" given pursuant to this
Section 12(d), other than payments from the Reserve Account in accordance with
Section 2. Only one such period of up to one-hundred eighty (180) days may be
commenced within any three-hundred sixty (360) day period; provided, that if the
Default which is the subject of a Blockage Notice shall have been cured or
waived in writing or shall have ceased to exist within ninety (90) days after
such Blockage Notice shall have been given, then one (1) additional Blockage
Notice may be given, covering a period of up to one-hundred eighty (180) days,
during such three-hundred sixty (360) day period. No Blockage Notice shall be
given with respect to a Default which existed and was known to the holders of
the Senior Debt or the agent therefor at the time the most recent Blockage
Notice was given (unless such Default has been cured or waived in writing for a
period in the interim equal to the greater of (i) thirty (30) days, or (ii) the
number of days from the date of such cure or waiver through and including the
date of the next scheduled payment of interest under this Note). In the event
that the holders of Senior Debt or the agent therefor shall deliver any Blockage
Notice pursuant to this Section 12(d), any payment of principal, interest or
other amounts that, but for such Blockage Notice, would have been payable by the
Company to the holder of any Subordinated Debt during the period covered by such
Blockage Notice shall be immediately due and payable in full upon the expiration
of the period covered by such Blockage Notice.
(e) In the event of
(i) any insolvency, bankruptcy, receivership, liquidation,
reorganization, readjustment, composition or other similar proceeding which
relates to the Company or its property,
(ii) any proceeding for the liquidation, dissolution or other
winding-up of the Company, voluntary or involuntary, whether or not
involving insolvency or bankruptcy proceedings,
(iii) any assignment by the Company for the benefit of creditors,
or
(iv) any other marshaling of the assets of the Company,
then and in any such event:
18
(A) all Senior Debt shall first be paid in full, in cash, before
any payment or distribution, whether in cash, securities or other property
(other than payments from the Reserve Account in accordance with Section
2), shall be made to any holder of any Subordinated Debt on account of any
Subordinated Debt;
(B) any payment or distribution, whether in cash, securities or
other property (other than securities of the Company or any other
corporation provided for by a plan or reorganization or readjustment the
payment of which is subordinated, at least to the extent of the
Subordinated Debt as provided in this Section 12(e), to the payment of all
Senior Debt at the time outstanding and to any Securities issued to the
holders of Senior Debt in respect of the Senior Debt under any such plan or
reorganization or readjustment), that would otherwise (but for this Section
12(e)) be payable or deliverable in respect of Subordinated Debt, shall be
paid or delivered directly to the holders of Senior Debt in accordance with
the priorities then existing among such holders of Senior Debt until all
Senior Debt shall have been paid in full, in cash; and
(C) if any holder of Subordinated Debt fails to file a claim or
proof of debt in respect of such Subordinated Debt in such proceedings at
least thirty (30) business days prior to the latest date permitted by rule
of law or court order for such filing, then the holders of Senior Debt
shall be authorized (but not obligated) to file such claim or proof on
behalf of such holder of Subordinated Debt. Each holder of the Subordinated
Debt agrees that, while it shall retain the right to vote its claim and
otherwise act in any bankruptcy, insolvency or similar proceeding related
to the Company, such holder will not take any act or vote in any way so as
to contest the enforceability of the subordination provisions set forth
herein.
(f) In the event that any Subordinated Debt shall be declared due and
payable as the result of the occurrence of any one or more defaults in respect
thereof, under circumstances when the terms of Section 12(e) of this Note do not
prohibit payment on Subordinated Debt, no direct or indirect payment (in cash,
securities, other property or by set-off or otherwise) shall be made or agreed
to be made on account of any Subordinated Debt, or as a sinking fund for any
Subordinated Debt, or in respect of any redemption, retirement, purchase,
prepayment or other acquisition of any Subordinated Debt, unless and until all
Senior Debt shall have been paid in full, in cash, or such declaration and its
consequences shall have been rescinded and all such defaults shall have been
remedied or waived in writing or shall have ceased to exist.
(g) In the event that
(i) any payment or distribution shall be paid to or collected or
received by any holders of Subordinated Debt in contravention of any of the
terms of this Section 12 and prior to the payment in full, in cash, of the
Senior Debt at the time outstanding, and
19
(ii) any holder of such Senior Debt shall have notified such
holders of Subordinated Debt, within ninety (90) days of any such payment
or distribution, of the facts by reason of which such collection or receipt
so contravenes this Section 12,
then and in any such event such holders of Subordinated Debt will deliver such
payment or distribution, to the extent necessary to pay all such Senior Debt in
full, in cash, to the holders of such Senior Debt and, until so delivered, the
same shall be held in trust by such holders of Subordinated Debt as the property
of the holders of such Senior Debt. If after any amount is delivered to the
holders of Senior Debt pursuant to this Section 12(g) and (i) the holders of
Subordinated Debt shall be required by an order or judgment of a court of
competent jurisdiction to disgorge a payment (the "Avoided Payment") received by
them and so paid over (in whole or in part) to the holders of Senior Debt, or
(ii) the outstanding Senior Debt shall thereafter be paid in full, in cash,
without giving effect to such delivery made pursuant to this Section 12(g),
then, in either case, the holders of Senior Debt shall return to such holders of
Subordinated Debt an amount equal to the amount delivered to such holders of
Senior Debt pursuant to this Section 12(g), so long as (in the case of the
immediately preceding clause (ii) only) after the return of such amount the
Senior Debt shall remain paid in full, in cash. For purposes of clause (i) of
the immediately preceding sentence, if less than all of the Avoided Payment was
paid over to the holders of Senior Debt and the holders of Subordinated Debt are
able to satisfy their obligations under such order or judgment in whole or in
part from the portion of the Avoided Payment not so paid over to the holders of
the Senior Debt, the holders of Senior Debt shall not be required to return any
portion of the Avoided Payment in excess of the amount actually required by the
holders of the Subordinated Debt to satisfy their obligations.
(h) Upon the payment in full, in cash, of all Senior Debt, the holders
of Subordinated Debt shall be subrogated to all rights of any holder of Senior
Debt to receive any further payments or distributions applicable to the Senior
Debt until the Subordinated Debt shall have been paid in full, and such payments
or distributions received by the holders of Subordinated Debt by reason of such
subrogation, of cash, securities or other property that otherwise would be paid
or distributed to the holders of Senior Debt, shall, as between the Company and
its creditors other than the holders of Senior Debt, on the one hand, and the
holders of Subordinated Debt, on the other hand, be deemed to be a payment by
the Company on account of Senior Debt, and not on account of Subordinated Debt.
13. Miscellaneous
-------------
(a) The titles of the Sections of this Note appear as a matter of
convenience only, do not constitute a part hereof and shall not affect the
construction hereof. The words "herein," "hereof," "hereunder" and "hereto"
refer to this Note as a whole and not to any particular Section or other
subdivision. References to Sections are, unless otherwise specified, references
to Sections of this Note. References to Exhibits are, unless otherwise
specified, references to Exhibits attached to this Note.
20
(b) Each covenant contained herein shall be construed (absent an
express contrary provision herein) as being independent of each other covenant
contained herein, and compliance with any one covenant shall not (absent such an
express contrary provision) be deemed to excuse compliance with one or more
other covenants.
(c) THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF ARIZONA (WITHOUT REGARD TO PROVISIONS
THEREOF RELATING TO CONFLICT OF LAWS).
(d) All warranties, representations, certifications and covenants made
by the Company herein or in any certificate or other instrument delivered by it
or on its behalf hereunder at or prior to the closing of the transactions
contemplated hereby shall be considered to have been relied upon by the Holder
and shall survive the delivery of this Note regardless of any investigation made
by the Holder or on its behalf. All statements in any certificate or other
instrument delivered by or on behalf of the Company pursuant to the terms hereof
shall constitute warranties and representations by the Company hereunder. All
payment obligations of the Company hereunder (including, without limitation,
reimbursement obligations in respect of costs, expenses and fees of or incurred
by the holder of the Note) other than the obligation to pay the principal of and
interest on this Note, shall survive the payment or prepayment of the Note and
such interest and the termination hereof.
(e) This Note shall inure to the benefit of and be binding upon the
successors and assigns of each of the parties hereto except that the Company
shall not have the right to assign its rights or obligations hereunder. The
provisions hereof are intended to be for the benefit of all holders, from time
to time, of this Note, and shall be enforceable by any such holder. This Note
shall not be deemed to confer any right or benefit upon any person other than
the parties hereto and their successors and permitted assigns.
(f) This Note may be amended, and the observance of any term hereof
may be waived, with (and only with) the written consent of the Company and the
Holder.
(g) The Company shall pay when billed the reasonable costs and
expenses (including reasonable attorneys' fees expenses) incurred by the holder
of this Note in connection with the consideration, negotiation, preparation or
execution of any amendments, waivers, consents, standstill agreements and other
similar agreements with respect hereto (whether or not any such amendments,
waivers, consents, standstill agreements or other similar agreements are
executed). At any time when the Company and the holder of this Note are
conducting restructuring or workout negotiations in respect hereof, or an Event
of Default exists, the Company shall pay when billed the reasonable costs and
expenses (including reasonable attorneys' fees and expenses and the fees of
other professional advisors) incurred by the holder of this Note in connection
with inspections made pursuant to this Note and in connection with the
assessment, analysis or enforcement of any rights or remedies that are or may be
available to the holder of this Note. If the Company shall fail to pay when due
any principal of, or interest on, this Note, the Company shall pay to the Holder
of this Note, to the
21
extent permitted by law, such amounts as shall be sufficient to cover the costs
and expenses, including but not limited to reasonable attorneys' fees and
expenses incurred by such holder in collecting any sums due on this Note.
(h) The Company agrees to indemnify the Holder of this Note, and its
directors, officers and employees, against all losses, claims, damages,
penalties, judgments, liabilities and expenses (including, without limitation,
all expenses of litigation or preparation therefor whether or not the any holder
of this Note is a party thereto) which any of them may pay or incur arising out
of or relating to this Note, the Warrant, transactions contemplated hereby or
thereby or the direct or indirect application or proposed application of the
proceeds of the Notes, except to the extent that they arise out of the gross
negligence or willful misconduct of the party seeking indemnification. The
obligations of the Company under this Section 13(h) shall survive the payment
and satisfaction of this Note and shall continue to be the liability, obligation
and indemnification of the Company, binding upon the Company.
(i) The Company shall pay all amounts payable with respect to this
Note (without any presentment of such Note and without any notation of such
payment being made thereon) by crediting, by federal funds bank wire transfer,
the account of the holder thereof in any bank in the United States of America as
may be designated in writing by such holder, or in such other manner as may be
reasonably directed or to such other address in the United States of America as
may be reasonably designated in writing by such holder. If any payment due on,
or with respect to, this Note shall fall due on a day other than a business day,
then such payment shall be made on the first business day following the day on
which such payment shall have so fallen due; provided that if all or any portion
of such payment shall consist of a payment of interest, for purposes of
calculating such interest, such payment shall be deemed to have been originally
due on such first following business day, such interest shall accrue and be
payable to (but not including) the actual date of payment, and the amount of the
next succeeding interest payment shall be adjusted accordingly. If any payment
is to be made on the first business day following the day on which the same
shall have fallen due and is not so paid on such first business day, interest
shall accrue thereon (to the extent permitted by applicable law) at the Default
Rate from (in each case) the originally scheduled day of its payment.
(j) This Note constitutes the final written expression of all of the
terms hereof and is a complete and exclusive statement of those terms.
(k) Two or more duplicate originals hereof may be signed by the
parties, each of which shall be an original but all of which together shall
constitute one and the same instrument. This Note may be executed in one or more
counterparts and shall be effective when each party hereto shall have executed a
counterpart hereof (whether or not the other parties hereto shall have signed
that same counterpart), and each set of counterparts that, collectively, show
execution by each party hereto shall constitute one duplicate original.
IN WITNESS WHEREOF, the undersigned has caused this Note to be
executed by its officer thereunto duly authorized as of this ___ day of July,
1997.
22
MOBILE MINI, INC.
By: __________________________
Name: ________________________
Title: _______________________
Accepted:
ARIZONA LAND INCOME CORPORATION
By: __________________________
Name: ________________________
Title: _______________________
23
EXHIBIT A
[FORM OF SUBSIDIARY GUARANTEE]
SUBORDINATED GUARANTEE (as amended from time to time, this "Guarantee")
dated as of __________, 199__, by (the "Guarantor"), a ____________ corporation,
in favor of ARIZONA LAND INCOME CORPORATION (together with its successors and
assigns, the "Lender").
WITNESSETH:
WHEREAS, Mobile Mini, Inc., a Delaware corporation (together with its
successors, assigns and transferees, the "Company"), has delivered to the Lender
that certain and the Lender have entered into that certain Senior Subordinated
Promissory Note dated July 31, 1997 (as amended, modified, waived or restated
from time to time, the "Note"); and
WHEREAS, the Company, pursuant to the Note, has agreed to cause the
Guarantor to guaranty the payment and performance of all obligations of the
Company arising under, or in respect of, the Note and all other documents
executed in connection therewith, as hereinafter provided; and
WHEREAS, the Guarantor will, as a [wholly-owned] subsidiary of the Company,
derive substantial benefits from the loan made by the Lender to the Company as
evidenced by the Note; and
WHEREAS, the Guarantor is willing to execute this Guarantee in order to
induce the Lender to make such loan;
NOW THEREFORE, in order to induce the Lender to make the loan which is
evidenced by the Note and in consideration of the premises and mutual agreements
set forth herein, and other good and valuable consideration to the Guarantor
paid (the receipt and sufficiency of which are hereby acknowledged), the
Guarantor hereby agrees with the Lender as follows:
1. Definitions.
Terms used herein and not otherwise defined herein shall have the
respective meanings given to such terms in the Note.
2. Guaranteed Obligations.
The Guarantor hereby irrevocably and unconditionally guaranties to the
Lender and to the holders from time to time of the Note, as and for its own
debt, until final and indefeasible payment has been made, the due and punctual
payment of the principal of, and interest on, the
1
Note at any time outstanding, and the due and punctual payment of all amounts
payable, and all other indebtedness owing, by the Company under the Note and any
the other documents, instruments or agreements executed in connection therewith
(all such obligations so Guaranteed are herein collectively referred to as the
"Guaranteed Obligations"), in each case when and as the same shall become due
and payable, whether at maturity, pursuant to mandatory or optional prepayment,
by acceleration or otherwise, all in accordance with the terms and provisions
thereof; it being the intent of each Guarantor that the guaranty set forth
herein shall be a guaranty of payment and not a guaranty of collection.
3. Performance under this Guarantee.
In the event the Company fails to pay when due any payment of principal or
interest on the Note, the Guarantor shall, upon demand of the holder of the Note
to whom such payment is due, but subject to Section 14 hereof, immediately pay
to such holder the entire amount of the Guaranteed Obligations due to such
holder at such time.
4. Waivers.
To the fullest extent permitted by law, the Guarantor does hereby waive:
(a) notice of acceptance of this Guarantee;
(b) notice of any purchase of the Note or the creation, existence or
acquisition of any of the Guaranteed Obligations;
(c) notice of the amount of the Guaranteed Obligations, subject,
however, to the Guarantor's right to make inquiry of the holder of the Note
to ascertain the amount of the Guaranteed Obligations at any reasonable
time;
(d) notice of adverse change in the financial condition of the
Company, any other guarantor of the Note or any other fact that might
increase the Guarantor's risk hereunder;
(e) notice of presentment for payment, demand, protest, and notice
thereof as to the Note or any other instrument;
(f) notice of any Event of Default;
(g) all other notices (except if such notice is specifically otherwise
required to be given to the Guarantor under this Guarantee) and demands to
which the Guarantor might otherwise be entitled;
(h) the right by statute or otherwise to require any holder of the
Note to institute suit against the Company or to exhaust the rights and
remedies of any holder of the Note against the Company or any other
guarantor of the Note, the Guarantor
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being bound to the payment of each and all Guaranteed Obligations, whether
now existing or hereafter accruing, as fully as if such Guaranteed
Obligations were directly owed by the Guarantor;
(i) any defense arising by reason of any disability or other defense
(other than the defense that the Guaranteed Obligations shall have been
fully and finally performed and indefeasibly paid) of the Company or by
reason of the cessation from any cause whatsoever of the liability of the
Company in respect of the Guaranteed Obligations;
(j) any stay (except in connection with a pending appeal), valuation,
appraisal, redemption or extension law now or at any time hereafter in
force which, but for this waiver, might be applicable to any sale made
under any judgment, order or decree based on the Note as well as any
redemption in respect of any such judgment, order or decree; and Guarantor
covenants that it will not at any time insist upon or plead, or in any
manner claim or take the benefit or advantage of such law; and
(k) any claim of any nature arising out of any right of indemnity,
contribution, reimbursement or any similar right, or any claim of
subrogation arising, in respect of any payment made under this Guarantee or
in connection with this Guarantee, against the Company or the estate of the
Company, in each case if, and for so long as, the Company is the subject of
any proceeding brought under Title 11 of the United States Code, or any
bankruptcy, reorganization, arrangement, insolvency, readjustment of debt,
dissolution or liquidation law of any jurisdiction, whether now or
hereafter in effect, and further agrees that it will not file any claims
against the Company or the estate of the Company in the course of such
proceeding in respect of the rights referred to in this clause (k), and
further agrees that any of the holders of the Note may specifically enforce
the provisions of this clause (k).
Until all of the Guaranteed Obligations shall have been indefeasibly paid in
full, the Guarantor shall have no right of subrogation, reimbursement, or
indemnity whatsoever in respect thereof and no right of recourse to or with
respect to any assets or property of the Company. Nothing shall discharge or
satisfy the obligations of the Guarantor hereunder except the full and final
performance and indefeasible payment of the Guaranteed Obligations.
5. Releases.
The Guarantor consents and agrees that, without notice to or by the
Guarantor and without affecting or impairing the obligations of the Guarantor
hereunder, each holder of the Note and/or any agent acting on behalf of the
holders of the Note, in the manner provided in the Note, by action or inaction,
may
(a) compromise or settle, extend the period of duration or the time
for the payment of, or may refuse to, or otherwise not, enforce, or may, by
action or inaction,
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release all or any one or more parties to, the Note or any related
document, instrument or agreement,
(b) grant other indulgences to the Company in respect thereof,
(c) amend or modify in any manner and at any time (or from time to
time) any one or more of the Note or any related document, instrument or
agreement,
(d) release or substitute any one or more of the endorsers or
guarantors of the Guaranteed Obligations, whether parties hereto or not,
and
(e) exchange, enforce, waive, or release, by action or inaction, any
security for the Guaranteed Obligations or any other guaranty of the Note.
6. Marshaling; Return of Payments.
The Guarantor consents and agrees:
(a) that neither the holders of the Note nor any agent therefor shall
be under any obligation to marshal any assets in favor of the Guarantor, or
against or in payment of any or all of the Guaranteed Obligations, and
(b) that, to the extent the Company makes a payment or payments to any
holder of the Note, which payment or payments or any part thereof is
subsequently invalidated, declared to be fraudulent or preferential, set
aside, or required, for any of the foregoing reasons or for any other
reason, to be repaid or paid over to a custodian, trustee, receiver, or any
other party under any (i) bankruptcy, reorganization, compromise,
arrangement, insolvency, readjustment of debt, dissolution or liquidation
or similar law, whether now or hereinafter in effect, of any jurisdiction,
(ii) common law, or (iii) equitable cause, then to the extent of such
payment or repayment, the obligation or part thereof intended to be
satisfied thereby shall be revived and continued in full force and effect
as if said payment or payments had not been made and the Guarantor shall be
primarily liable for such obligation.
7. Liability.
The Guarantor agrees that its liability in respect of this Guarantee shall
be immediate and shall not be contingent upon the exercise or enforcement by any
holder of the Note and/or any agent therefor of whatever remedies such Person
may have against the Company or any other guarantor or the enforcement of any
lien or the realization upon any security such person may at any time possess.
8. Primary Obligations.
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This Guarantee is a primary and original obligation of the Guarantor and is
an absolute, unconditional, continuing, and irrevocable guaranty of payment and
shall remain in full force and effect without respect to future changes in
conditions, including change of law or any invalidity or irregularity with
respect to the issuance of any obligations (including, without limitation, the
Note) of the Company to any holder of the Note, or with respect to the execution
and delivery of any agreement (including, without limitation, the Note) by the
Company for the benefit of any holder of the Note and/or any agent therefor.
9. No Election.
No election to proceed in one form of action or proceeding, or against any
party, or on any obligation, shall constitute a waiver by any holder of the Note
and/or any agent for the holders of the Note of its right to proceed in any
other form of action or proceeding or against other parties unless such holder
and/or such agent has expressly waived such right in writing. Specifically, but
without limiting the generality of the foregoing, no action or proceeding by any
holder of the Note and/or any agent for the holders of the Note shall serve to
diminish the liability of the Guarantor hereunder except to the extent that such
holder of the Note or such agent finally and unconditionally shall have realized
payment by such action or proceeding, notwithstanding the effect of any such
action or proceeding upon the Guarantor's right of subrogation against the
Company.
10. Delay or Omission; No Waiver.
No course of dealing on the part of any holder of the Note or any agent
therefor and no delay or failure on the part of any such Person to exercise any
right under this Guarantee shall impair such right or operate as a waiver of
such right or otherwise prejudice such person's rights, powers and remedies
hereunder. Every right and remedy given by this Guarantee or by law to any
holder of the Note may be exercised from time to time as often as may be deemed
expedient by such person.
11. Restoration of Rights and Remedies.
If any holder of the Note or any agent therefor shall have instituted any
proceeding to enforce any right or remedy under this Guarantee and such
proceeding shall have been discontinued or abandoned for any reason, or shall
have been determined adversely to such holder, then and in every such case such
holder and the Guarantor shall, except as may be limited or affected by any
determination in such proceeding, be restored to their respective former
positions hereunder, and thereafter the rights and remedies of such holder of
the Note shall continue as though no such proceeding had been instituted.
12. Representations of the Guarantor.
(a) Information. The Guarantor is
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(i) fully aware of the financial condition of the Company and delivers
this Guarantee based solely upon its own independent investigation thereof
and in no part upon any representation or statement of any holder of the
Note with respect thereto, and
(ii) in a position to obtain, and hereby assumes full responsibility
for obtaining, any additional information concerning the financial
condition of the Company as it may deem material to its obligations
hereunder, and the Guarantor is not relying upon, nor expecting, such
holder to furnish it any information in any holder of the Note's or any
other party's possession concerning the financial condition of the Company.
(b) Financial Condition. The Guarantor warrants and represents to the
Lender that, as of the Closing Date:
(i) the Fair Market Value of the assets of the Guarantor, taken as a
whole, exceeds its liabilities (after giving effect to the execution and
delivery of this Guarantee) taken as a whole;
(ii) the Guarantor is meeting its liabilities as they mature and has
sufficient capital to conduct its business;
(iii) the Guarantor is entering into this Guarantee without actual
intent to hinder, delay or defraud either present or future creditors; and
(iv) there are not now pending any material court or administrative
proceedings or undischarged judgments against the Guarantor, and no federal
or state tax liens have been filed or threatened against the Guarantor, nor
is the Guarantor in default or claimed default under any agreement for
borrowed money.
13. Miscellaneous.
(a) Expenses. The Guarantor will reimburse each holder of the Note for all
reasonable out-of-pocket costs of collection or enforcement (including, without
limitation, attorneys' fees and expenses) incurred in enforcing the obligations
of the Guarantor under this Guarantee.
(b) Amendments. This Guarantee may, from time to time and at any time, be
amended by, and only by, an instrument or instruments in writing executed by the
Guarantor and the holders of the Note at the time outstanding.
(c) Successors and Assigns. All covenants, agreements, representations and
warranties made herein and in certificates delivered in connection herewith by
or on behalf of the Guarantor shall bind the successors and assigns of the
Guarantor, whether so expressed or
6
not, and all such covenants, agreements, representations and warranties shall
inure to the benefit of all holders from time to time of the Note.
(e) Governing Law. THIS GUARANTEE SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF ARIZONA (WITHOUT REGARD TO ANY
CONFLICTS OF LAWS PRINCIPLES). THE GUARANTOR HEREBY IRREVOCABLY SUBMITS TO THE
NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR ARIZONA STATE COURT
IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTEE AND THE
GUARANTOR HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT.
(f) Headings, etc. Any headings or captions preceding the text of the
several sections hereof are intended solely for convenience of reference and
shall not constitute a part of this Guarantee nor shall they affect its meaning,
construction or effect. Each covenant contained in this Guarantee shall be
construed (absent an express contrary provision therein) as being independent of
each and every other covenant contained herein and compliance with any one
covenant shall not (absent such an express contrary provision) be deemed to
excuse compliance with any and all other covenants.
14. Subordination of this Guarantee.
The Guaranteed Obligations are subordinate and junior in right of payment
to any and all (a) indebtedness and contingent obligations of the Guarantor
owing to the holders of Senior Debt in respect of the Senior Debt and (b)
indebtedness or securities of the Guarantor payable to the Company or any of its
subsidiaries and pledged as collateral security for the repayment of Senior
Debt, in each case, to the same extent and on the same terms as the Subordinated
Debt is subordinated to the Senior Debt pursuant to Section 12 of the Note. The
subordination provisions contained in Section 12 of the Note are hereby
incorporated in their entirety herein by this reference thereto.
15. Liability of the Guarantor.
It is understood that while the amount of the Guaranteed Obligations
guaranteed hereby is not limited, if in any action or proceeding involving any
state, federal or foreign bankruptcy, insolvency or other law affecting the
rights of creditors generally, this Guarantee would be held or determined to be
void, invalid or unenforceable on account of the amount of the aggregate
liability under this Guarantee with respect to the Guarantor, then,
notwithstanding any other provision of this Guarantee to the contrary, the
aggregate amount of such liability shall, with respect to the Guarantor, without
any further action of the Lender or any other Person, be automatically limited
and reduced with respect to the Guarantor to the highest amount which is valid
and enforceable as determined in such action or proceeding.
[Remainder of page intentionally blank. Next page is signature page.]
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IN WITNESS WHEREOF, the Guarantor has caused this Guarantee to be executed
and delivered as of the date first hereinabove mentioned.
[_______________________]
By: ____________________
Name: __________________
Title: _________________
8
EXHIBIT B
[Form of Opinion of Counsel for the Company]
July 31, 1997
Arizona Land Income Corporation
2999 North 44th Street, Suite 100
Phoenix, Arizona 85018
Ladies and Gentlemen:
Reference is made to that certain Senior Subordinated Promissory Note
dated July 31, 1997 (the "Note"), made by Mobile Mini, Inc. a Delaware
corporation (the "Company), in favor of Arizona Land Income Corporation (the
"Lender"). Capitalized terms used herein and not defined herein have the
meanings specified by the Note.
We have acted as counsel to the Company in connection with the
transactions contemplated by Note. In acting as such counsel, we have examined:
(a) the Note;
(b) the Stock Purchase Warrant dated as of July 31, 1997 issued by the
Company to the Lender in connection with the transactions contemplated by
the Note (the "Warrant"); and
(c) such other documents, instruments and agreements relating to the
transactions contemplated by the Note and the Warrant as we have deemed
relevant in connection with this opinion.
The Note and the Warrant are herein collectively referred to as the Transaction
Documents.
We have relied on certificates of, or communications from, public
officials as to the matters covered therein. We have relied upon the accuracy of
representations and warranties of the Company in the Transaction Documents as to
factual matters underlying the opinions expressed herein. In our examination, we
have assumed the genuineness of all signatures of all parties (other than
signatures on behalf of the Company), the authenticity of all documents
submitted to us as originals and the conformity to the appropriate authentic
original documents of all documents submitted to us as certified, confirmed or
photostatic copies. We have further
1
assumed the due authorization, execution and delivery of the Transaction
Documents by, or on behalf of, all parties thereto, other than the Company. To
the extent that the obligations of the Company may be dependent upon such
matters, we assume that (a) all parties to the Transaction Documents (other than
the Company) are duly organized, validly existing and in good standing under the
laws of the jurisdiction in which such parties are organized, (b) that such
parties (other than the Company) have all requisite governmental certificates of
authority, licenses, permits, consents and qualifications to engage in the
transactions covered by this opinion and (c) that each document executed by such
parties (other than the Company) has been duly executed by its officer or
officers and that each such document is its legal, valid, binding and
enforceable obligation.
Based upon the foregoing, and in reliance thereon and subject to the
assumptions, limitations, qualifications and exceptions hereinafter set forth,
we are of the following opinions:
1. The Company is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware, is duly qualified
and in good standing as a foreign corporation in each state where the failure to
be so qualified would have a Material Adverse Effect and has all requisite
corporate power and authority to execute and deliver the Transaction Documents
and consummate the transactions contemplated thereby.
2. The Company has the requisite corporate power and authority to
execute, deliver and issue the Transaction Documents and to perform its
obligations thereunder in accordance with the terms thereof.
3. Each of the Transaction Documents has been duly authorized by all
necessary corporate action on the part of the Company (no action on the part of
the stockholders of the Company being required in respect thereof), has been
executed and delivered by one or more duly authorized officers of the Company
and constitutes a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms except as such
enforceability may be limited by the effect of (i) applicable bankruptcy,
insolvency, reorganization, arrangement, moratorium, fraudulent conveyance or
other similar laws, statutes, or rules of general application relating to, or
affecting, the enforcement of creditors' rights, and (ii) general equitable
principles, regardless of whether considered in a proceeding at law or in
equity.
4. The shares of Common Stock issuable upon exercise of the Warrant
have been duly and validly reserved and, when issued in accordance with the
terms of the Warrant, will be duly and validly issued, fully paid and
nonassessable.
5. The issuance of the shares of Common Stock issuable upon exercise
of the Warrant, the execution, delivery and issuance of the Transaction
Documents by the Company and the performance by the Company of its obligations
thereunder and the consummation of the transactions contemplated thereby do not
and will not (a) violate any provision of any applicable law, rule or regulation
(including, without limitation, laws with respect to the maximum allowable rate
of interest), or of any order, writ, judgment, decree, determination or award
2
known to us, which is presently in effect having applicability to the Company,
(b) conflict with or result in a breach of, or constitute a default under, any
indenture, loan or credit agreement or other material agreement or instrument
known to us to which the Company is a party or by which the Company or any of
its property is bound, or (c) result in or require the creation or imposition of
any material lien upon or with respect to any of the properties now owned or
hereafter acquired by the Company.
6. All required consents, approvals and authorizations, and all
designations, declarations, filings, registrations, qualifications and
recordations required on the part of the Company in connection with the issuance
of the shares of Common Stock issuable upon exercise of the Warrant, the
execution, delivery and issuance of the Transaction Documents, the use of the
proceeds thereof and the consummation of the transactions contemplated thereby
have been obtained.
7. To our knowledge, there is no action, suit, proceeding,
governmental investigation or arbitration pending or threatened against the
Company or any material property thereof before any court or arbitrator or any
governmental or administrative body, agency or official which challenges the
validity, or seeks to enjoin the performance of, any of the Transaction
Documents, the consummation of any of the transactions contemplated thereby the
issuance of the shares of Common Stock issuable upon exercise of the Warrant or
which could reasonably be expected to have a Material Adverse Effect.
8. The Note is not required to be registered under the Securities Act
of 1933, as amended, and the Company is not required to qualify an indenture
with respect to the Note under the Trust Indenture Act of 1939, as amended.
9. The offer, sale and issuance of the Warrant in conformity with the
terms thereof constitute transactions exempt from the registration requirements
of Section 5 of the Securities Act of 1933, as amended, and from the
registration and qualification requirements of applicable state securities laws,
and, under such federal and state laws as they presently exist, the issuance of
the shares of Common Stock issuable upon exercise of the Warrant would be exempt
from such registration and qualification requirements.
10. The Company is not an "investment company" within the meaning of
the Investment Company Act of 1940, as amended, and the Company is not a
"holding company" or an "affiliate" of a "holding company," or a "subsidiary
company" of a "holding company," or a "public utility" within the meaning of the
Public Utility Holding Company Act of 1935, as amended.
3
This opinion is limited to the laws and regulations of the United
States of America, the State of Arizona and the General Corporation Law of the
State of Delaware, in each case as in effect on the date of this letter. We
assume no obligation to advise you of any changes in the foregoing laws
subsequent to the delivery of this opinion.
Very truly yours,
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