e424b3
Filed
Pursuant to Rule 424(b)(3)
Registration Statement
No. 333-144038
Prospectus
Offer to Exchange
6 7/8% Senior Notes due 2015
(Registered under the Securities Act of 1933)
for all outstanding
6 7/8% Senior Notes due 2015 issued pursuant to an
Offering Memorandum dated April 23, 2007
($150 million aggregate principal amount outstanding)
of
(All Notes Guaranteed by Subsidiary Guarantors)
The exchange offer will expire at 5:00 p.m.,
New York City time, on August 20, 2007, unless
extended.
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The exchange notes are being registered with the Securities and Exchange Commission and
are being offered in exchange for the original notes that were previously issued in an
offering exempt from the registration requirements under the federal securities laws. The
terms of the exchange offer are summarized below and more fully described in this
prospectus. |
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We will exchange all original notes that are validly tendered and not withdrawn prior to
the expiration of the exchange offer. |
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You may withdraw tenders of original notes at any time prior to the expiration of the
exchange offer. |
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The terms of the exchange notes will be substantially identical to the terms of the
original notes, except that the exchange notes are registered under the Securities Act and
the transfer restrictions and registration rights applicable to the original notes will not
apply to the exchange notes. |
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Our restricted material domestic subsidiaries guaranteed the original notes and will guarantee the exchange notes. |
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We will not receive any proceeds from the exchange offer. |
See Risk Factors beginning on page 19 for a discussion of the risks that should be
considered by holders prior to tendering original notes.
Neither the Securities and Exchange Commission nor any state securities commission has
approved or disapproved of these securities or determined if this prospectus is truthful or
complete. Any representation to the contrary is a criminal offense.
The date
of this prospectus is July 20, 2007
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You should rely only on the information contained or incorporated by reference in this
prospectus. We have not authorized any person to provide you with any information or represent
anything about us or this offering that is different. If given or made, any such other information
or representation should not be relied upon as having been authorized by us. We are not making an
offer to exchange the exchange notes for the original notes in any jurisdiction where such an offer
is not permitted.
TABLE OF CONTENTS
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NOTICE TO NEW HAMPSHIRE RESIDENTS
NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A LICENSE HAS BEEN FILED
UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE REVISED STATUTES ANNOTATED, 1955, AS AMENDED, WITH THE
STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS
LICENSED IN THE STATE OF NEW HAMPSHIRE CONSTITUTES A FINDING BY THE SECRETARY OF STATE THAT ANY
DOCUMENT FILED UNDER RSA 421-B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT NOR THE
FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR A TRANSACTION MEANS THAT THE
SECRETARY OF STATE HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS OR RECOMMENDED OR GIVEN
APPROVAL TO, ANY PERSON, SECURITY, OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO
ANY PROSPECTIVE PURCHASER, CUSTOMER, OR CLIENT ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS
OF THIS PARAGRAPH.
MARKET AND INDUSTRY DATA
Some of the market and industry data contained in or incorporated by reference into this
prospectus are based on independent industry publications or other publicly available information.
Although we believe that these independent sources are reliable, we have not independently verified
and cannot assure you as to the accuracy or completeness of this information. As a result, you
should be aware that the market and industry data contained in or incorporated by reference into
this prospectus, and our beliefs and estimates based on such data, may not be reliable.
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DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
Some of the information included in this prospectus, including information incorporated by
reference, (as well as information included in oral statements or other written statements made or
to be made by us or our representatives) contains or may contain forward-looking statements within
the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of
1934, as amended (the Exchange Act). These statements can be identified by the fact that they do
not relate strictly to historical or current facts and may include the words may, could,
should, would, believe, expect, anticipate, estimate, intend, plan or other words
or expressions of similar meaning. We have based these forward-looking statements on our current
expectations about future events. The forward-looking statements include statements that reflect
managements beliefs, plans, objectives, goals, expectations, anticipations and intentions with
respect to our financial condition, results of operations, future performance and business,
including statements relating to our business strategy and our current and future development
plans. Important factors that could cause actual results to differ materially from our
expectations, or cautionary statements, are disclosed under Risk Factors and elsewhere in this
prospectus or in the documents we incorporate by reference containing a similar heading, including,
without limitation, in conjunction with the forward-looking statements included in or incorporated
by reference into this prospectus. All subsequent written and oral forward-looking statements
attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by
the cautionary statements.
From time to time, oral or written forward-looking statements are also included in our reports
on Forms 10-K, 10-Q and 8-K, Schedule 14A, press releases and other materials released to the
public. Although we believe that at the time made, the expectations reflected in all of these
forward-looking statements are and will be reasonable, any or all of the forward-looking statements
in this prospectus, our reports on Forms 10-K, 10-Q and 8-K, Schedule 14A and any other public
statements that are made by us may prove to be incorrect. This may occur as a result of inaccurate
assumptions or as a consequence of known or unknown risks and uncertainties. Many factors discussed
in this prospectus, certain of which are beyond our control, will be important in determining our
future performance. Consequently, actual results may differ materially from those that might be
anticipated from forward-looking statements. In light of these and other uncertainties, you should
not regard the inclusion of a forward-looking statement in this prospectus or other public
communications that we might make as a representation by us that our plans and objectives will be
achieved, and you should not place undue reliance on such forward-looking statements.
We undertake no obligation to publicly update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise. However, your attention is
directed to any further disclosures made on related subjects in our subsequent reports filed with
the Commission on Forms 10-K, 10-Q and 8-K and Schedule 14A.
INCORPORATION OF DOCUMENTS BY REFERENCE
We are incorporating by reference into this prospectus the documents we file with the SEC.
This means that we are disclosing important information to you by referring you to those documents.
The information incorporated by reference is an important part of this prospectus, and information
that we file later with the SEC will automatically update and supersede the information contained
in this prospectus. We are incorporating by reference the following documents.
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Our Annual Report on Form 10-K for the year ended December 31, 2006, filed with the SEC on March 1, 2007; |
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Our Proxy Statement on Form 14A filed with the SEC on April 30, 2007; |
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Our Period Report on Form 10-Q for the quarter ended March 31, 2007 filed with the SEC on May 10, 2007; |
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Our Current Reports on Form 8-K filed with the SEC on April 10, 2007, May 8, 2007 and May 10, 2007; and |
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All documents filed by us with the SEC pursuant to Section 13(a), 13(c), 14 or 15(d) of
the Exchange Act after the date of this prospectus and prior to the completion of the
offering made pursuant to this prospectus. |
Any statement contained in a document incorporated by reference in this prospectus shall be
deemed to be modified or superseded for the purposes of this prospectus to the extent that a
statement contained in this prospectus or in any other subsequently filed document that is also
incorporated by reference in this prospectus modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this prospectus. Information that we file with the SEC after the date of this
prospectus will automatically modify and supersede the information included or
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incorporated by reference in this prospectus to the extent that the subsequently filed
information modifies or supersedes the existing information.
We will provide without charge, upon written or oral request, a copy of any or all of the
documents that are incorporated by reference into this prospectus, other than exhibits to such
documents unless such exhibits are specifically incorporated by reference in such documents. To
obtain timely delivery, you must request a copy of these documents no
later than on August 13, 2007 at
the following address and telephone number:
Mobile Mini, Inc.
7420 South Kyrene Road, Suite 101
Tempe, Arizona 85283
Attention: Investor Relations
telephone: (480) 894-6311
WHERE YOU CAN OBTAIN ADDITIONAL INFORMATION
We file annual, quarterly and current reports, proxy statements and other information with the
Securities and Exchange Commission in accordance with the Securities Exchange Act of 1934. You can
inspect and copy, at prescribed rates, these reports, proxy statements and other information at the
public reference facilities of the SEC at 100 F Street, N.E., Room 1580, Washington, D.C. 20549.
Please call the SEC at 1-800-SEC-0330 for further information on its public reference room. The SEC
also maintains a website that contains reports, proxy statements and other information regarding
registrants that file electronically with the SEC at http:/ /www.sec.gov. You can also inspect
reports and other information that we file at the office of the New York Stock Exchange, Inc., 20
Broad Street, New York, New York 10005.
We have filed a registration statement on Form S-4 with the SEC, of which this prospectus is a
part, covering the exchange notes offered by this prospectus. As allowed by SEC rules, this
prospectus does not contain all the information set forth in the registration statement and the
related exhibits. We refer you to the registration statement and related exhibits for further
information, and this prospectus is qualified in its entirety by such other information.
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PROSPECTUS SUMMARY
This summary highlights selected information contained in or incorporated by reference into
this prospectus. This summary does not contain all of the information that you should consider
before investing in the notes. We urge you to read carefully this entire prospectus, all documents
incorporated by reference, including the financial statements and the notes to the financial
statements, and the Risk Factors section before making an investment decision. Unless the context
requires otherwise, references in this prospectus to we, our and us refers to Mobile Mini,
Inc. and its subsidiaries, unless the context indicates a different meaning.
Our Company
General
We were founded in 1983 and we believe we are the largest provider of portable storage
solutions in the United States through our total lease fleet of 149,600 portable storage and
portable office units at December 31, 2006. We offer a wide range of portable storage products in
varying lengths and widths with an assortment of differentiated features such as our proprietary
security systems, multiple doors, electrical wiring and shelving. At December 31, 2006, we operated
through a network of 54 branches located in the United States, one in Canada, six in the United
Kingdom, and one in The Netherlands. Our portable units provide secure, accessible temporary
storage for a diversified client base of over 91,000 customers, including large and small
retailers, construction companies, medical centers, schools, utilities, distributors, the U.S. and
U.K. military, hotels, restaurants, entertainment complexes and households. Our customers use our
products for a wide variety of storage applications, including retail and manufacturing inventory,
construction materials and equipment, documents and records and household goods. Based on an
independent market study, we believe our customers are engaged in a vast majority of the industries
identified in the four-digit SIC (Standard Industrial Classification) manual published by the U.S.
Bureau of the Census. During the twelve months ended December 31, 2006, we generated revenues of
approximately $273.4 million and EBITDA (as calculated in note (1) to Summary of Financial
Data) of approximately $116.8 million.
Since 1996, we have followed a strategy of focusing on leasing rather than selling our
portable storage units. We believe this leasing model is highly attractive because the vast
majority of our fleet (determined by unit count) consists of steel portable storage units which:
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provide predictable, recurring revenues from leases with an average duration of approximately 23 months; |
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have average monthly lease rates that recoup our current unit investment within an average of 34 months; |
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have long useful lives exceeding 25 years, low maintenance and high residual values; and |
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produce incremental leasing operating margins of approximately 54%. |
Since 1996, we have increased our total lease fleet from 13,600 units to 149,600 units, for a
compound annual growth rate, or CAGR, of 27.1%. As a result of our focus on leasing, we have
achieved substantial increases in our revenues, margins and profitability. Our annual leasing
revenues have increased from $17.9 million in 1996 to $245.1 million in 2006, representing a CAGR
of 29.9%. In addition to our leasing operations, we sell new and used portable storage units and
provide delivery, installation and other ancillary products and services.
Our fleet is primarily comprised of refurbished and customized steel portable storage
containers, which were built according to the standards developed by the International Organization
for Standardization (ISO), and other steel containers that we manufacture. We refurbish and
customize our purchased ISO containers by adding our proprietary locking and easy-opening door
systems. We maintain our steel containers on a regular basis. This maintenance consists primarily
of repainting units every two to three years, essentially keeping them in the same condition as
when they entered our fleet. Repair and maintenance expense for our fleet has averaged 3.5% of
lease revenues over the past three fiscal years and is expensed as incurred.
Our assets are characterized by low risk of obsolescence, extreme durability, long useful
lives and a history of high-value retention. We believe our historical experience with leasing
rates and sales prices for these assets demonstrates their high-value retention. We are able to
lease our portable storage containers at similar rates, without regard to the age of the container.
In addition, we have sold containers and steel offices from our lease fleet at an average of 148%
of original cost from 1997 through 2006. Appraisals on our fleet are conducted on a regular basis
by an independent appraiser selected by our banks, and the appraiser does not
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differentiate in value based upon the age of the container or the length of time it has been
in our fleet. Our most recent fair market value and orderly liquidation value appraisals were
conducted in December 2006. This fair market value appraisal appraised our lease fleet at a value
in excess of net book value. At December 31, 2006, based on these appraisals, the fair market value
of our lease fleet was approximately 114.7% of our lease fleet net book value; and the orderly
liquidation value appraisal, on which our borrowings under our revolving credit facility are based,
appraised our lease fleet at approximately $571.8 million, which equates to 82.0% of the lease
fleet net book value.
Industry Overview
The storage industry includes two principal segments, fixed self-storage and portable storage.
The fixed self-storage segment consists of permanent structures located away from customer
locations used primarily by consumers to temporarily store excess household goods. We do not
participate in the fixed self-storage segment.
The portable storage segment, in which our business operates, brings the storage solution to
the customers location providing immediate access to the storage unit. The advantages of portable
storage include convenience, immediate accessibility, better security and lower price. In contrast
to fixed self-storage, the portable storage segment is primarily used by businesses. This segment
of the storage industry is highly fragmented and remains local in nature with only a few national
participants. We believe the portable storage business in the United States exceeds $1.5 billion in
revenue annually. Historically, portable storage solutions included containers, van trailers and
roll-off units. We believe portable storage containers are achieving increased market share
compared to the other options because they provide ground level access and protect against damage
caused by wind or water. As a result, containers can meet the needs of a diverse range of
customers. Portable storage containers such as ours also provide improved aesthetics compared with
certain other portable storage alternatives such as van trailers. Although there are no published
estimates of the size of the portable storage segment, we believe the size of the segment is
expanding due to increasing awareness of the advantages of portable storage.
Our products also serve the mobile office industry. This industry provides mobile offices and
other modular structures and is estimated by us to exceed $3 billion in revenue annually in the
United States. We offer combined storage/office units and mobile offices in varying lengths and
widths, with lease duration in North America averaging approximately 20 months.
We also offer portable record storage units and many of our regular storage units are used for
document and record storage. The documents and records storage industry is experiencing significant
growth as businesses continue to generate substantial paper records that must be kept for extended
periods.
Our goal is to continue to be the leading U.S. provider of portable storage solutions and to
successfully introduce our operating methods into the United Kingdom. We believe our competitive
strengths and business strategy will enable us to achieve these goals.
Competitive Strengths
We believe that our competitive strengths, as outlined below, enable us to be the nations
leading provider of portable storage solutions.
Market Leadership. We believe that we are the largest provider of portable storage solutions
in a majority of our U.S. markets. At December 31, 2006, we maintained a total fleet of
approximately 155,000 units, comprised of approximately 149,600 units held for lease and
approximately 5,400 units held for sale. We believe we are creating brand awareness and the name
Mobile Mini is associated with high quality portable storage products, superior customer service
and value-added storage solutions. We have achieved significant growth in new and existing markets
by capturing market share from competitors and by creating demand among businesses and consumers
who were previously unaware of the availability of our products to meet their storage needs.
Superior, Differentiated Products. We offer the industrys broadest range of portable storage
products, with many customized features that differentiate our products from those of our
competition. We design and manufacture our own portable storage units in addition to restoring and
modifying used ocean-going containers. These capabilities allow us to offer a wide range of
products and proprietary features to better meet our customers needs, charge premium lease rates
and gain market share from our competitors, who offer more limited product selections. Our portable
storage units vary in size from 5 to 48 feet in length and 8 to 10 feet in width. The 10-foot wide
units we manufacture provide 40% more usable storage space than the standard eight-foot-wide
ocean-going containers offered by our competitors. The vast majority of our products have a
proprietary locking system and multiple door options. In addition, we offer portable storage units
with electrical wiring, shelving and other customized features.
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Geographic and Customer Diversification. From our 62 branches of which 54 are located in 31
states in the United States, one in Canada, six in the United Kingdom, and one in The Netherlands,
we served over 91,000 customers from a wide range of industries in 2006. Our customers include
large and small retailers, construction companies, medical centers, schools, utilities,
distributors, the U.S. and U.K. militaries, government agencies, hotels, restaurants, entertainment
complexes and households. Our diverse customer base demonstrates the broad applications for our
products and our opportunity to create future demand through targeted marketing. In 2006, our
largest and our second-largest customers accounted for 2.1% and 0.5% of our leasing revenues,
respectively, and our twenty largest customers accounted for approximately 5.3% of our leasing
revenues. During 2006, approximately 45.1% of our customers rented a single unit. We believe this
diversity also reduces our susceptibility to economic downturns in our markets or in any of the
industries in which our customers operate. The fact that our business continued to grow during the
economic downturn of 2002 and 2003, although at a slower than historic pace, demonstrates a measure
of resistance to recession in our business model.
Customer Service Focus. We believe the portable storage industry is particularly service
intensive and essentially local. Our entire organization is focused on providing high levels of
customer service, and our salespeople work out of our branch locations to better understand local
market needs. We have trained our sales force to focus on all aspects of customer service from the
sales call onward. We differentiate ourselves by providing flexible lease terms, security,
convenience, product quality, broad product selection and availability, and competitive lease
rates. We conduct on-going training programs for our sales force to assure high levels of customer
service and awareness of local market competitive conditions. Our customized enterprise resource
planning system also increases our responsiveness to customer inquiries and enable us to
efficiently monitor our sales forces performance. Due to our orientation towards customer service,
63.9% of our 2006 leasing revenues were derived from repeat customers.
Sales and Marketing Emphasis. We target a diverse customer base and, unlike most of our
competitors, we have developed sophisticated sales and marketing programs enabling us to expand
market awareness of our products and generate strong internal growth. We have nearly 400 dedicated
commissioned salespeople, and we assist them by providing them with our highly customized contact
management system and intensive sales training programs. We monitor our salespersons effectiveness
through our extensive sales monitoring programs. Yellow pages and direct-mail advertising are
integral parts of our sales and marketing approach. In 2006, our total advertising costs were $8.6
million, and we mailed approximately 8.0 million product brochures to existing and prospective
customers.
Customized Enterprise Resource Planning System. We made significant investments in improving
and developing a new (ERP) Enterprise Resource Planning system during the past three years, and in
2006, we underwent a conversion from our then existing ERP system in North America to a more
sophisticated and robust technology that enhanced our reporting processes obtained under our
previous environment. These investments and the subsequent conversion of our ERP system enable us
to further optimize fleet utilization, control pricing, capture detailed customer data, easily
control credit approval while approving it quickly, audit by exception reports, gain efficiencies
in internal control compliance and support our growth by projecting near-term capital needs. Our
ERP system allows us to carefully monitor, on a daily basis, the size, mix, utilization and lease
rates of our lease fleet by branch on a real time basis. Our systems also capture relevant customer
demographic and usage information, which we use to target new customers within our existing and new
markets. Our Tempe, Arizona corporate headquarters and each North America branch are linked through
a scaleable Windows-based wide area network that provides real-time transaction processing and
detailed reports on a branch-by-branch basis. We intend to continue this investment during 2007 to
further optimize the reporting features of this new system and to bring our European operations
onto this same platform to take advantage of our sophisticated reporting environment.
Business Strategy
Our business strategy consists of the following:
Focus on Core Portable Storage Leasing Business. We focus on growing our core leasing
business because it provides predictable, recurring revenue and high margins. We believe that we
can generate substantial demand for our portable storage units throughout North America and in
Europe. Our leasing revenues have grown from $17.9 million in 1996 to $245.1 million in 2006,
reflecting a CAGR of 29.9%.
Generate Strong Internal Growth. We focus on increasing the number of portable storage units
we lease from our existing branches to both new and repeat customers. Historically, we have been
able to generate strong internal growth within our existing markets through sophisticated sales and
marketing programs aimed to increase brand recognition, expand market awareness of the uses of
portable storage and differentiate our superior products from our competitors. We define internal
growth as growth in lease revenues on a year-over-year basis at our branch locations in operation
for at least one year, without inclusion of leasing revenue attributed to same-market acquisitions.
The internal growth rate has remained positive every quarter, but in 2002 and 2003 had fallen
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to single digits, from over 20% prior to 2002. In 2005, our internal growth rate accelerated
to an average of 25.3% for the year, reflecting a continued improvement in both economic and market
conditions. During 2006, our internal growth rate averaged 19.9% for the year. In our eight oldest
markets, all of which we have operated in for at least eleven years, we achieved an internal growth
rate of 14.8% in 2006, demonstrating that we can continue to achieve significant growth in our most
mature markets.
Branch Expansion. We believe attractive opportunities exist for geographic expansion, and we
have developed a new market entry strategy, which we replicate in each new market in the United
States. We typically enter a new market by acquiring the lease fleet assets of a small local
portable storage business to minimize start-up costs and then overlay our business model onto the
new branch. Our business model consists of significantly expanding the fleet inventory with our
differentiated products, introducing our sophisticated sales and marketing program supported by
increased advertising and direct marketing expenditures, adding experienced Mobile Mini personnel
and implementing our customized ERP system. As a result of implementing our business model, our new
branches typically achieve very strong organic growth during their first several years.
Continued Enhancement of Product Offerings. We continue to enhance our existing products to
meet our customers needs and requirements. We have historically been able to introduce new
products and features that expand the applications and overall market for our storage products. For
example, in 1998 we introduced a 10-foot wide storage unit that has proven to be a popular product
with our customers. In 1999, we completed the design of a records storage unit, which provides
highly secure, on-site, easily accessible storage. We market this unit as a records storage
solution for customers who require easy access to archived business records close at hand. In 2000,
we added wood mobile offices as a complementary product to better serve our customers. In 2001, we
redesigned and improved our security locking system, making it easier to use, especially in colder
climates. In 2003, we were issued patents in connection with the new locking system design and
other improvements made. One patent application was extended and issued in 2006. In 2006, we
applied for several patents for improvements or modifications to our locking systems. These
applications, all of which are still pending, were filed in the United States, Europe and China. In
2002, we added a 10-by-30-foot steel combination storage/office unit to complement the various
other sizes we have in our fleet. Currently, the 10-foot-wide unit, the record storage unit and the
10-by-30-foot steel combination storage/office unit are exclusively offered by Mobile Mini. We
believe our design and manufacturing capabilities increase our ability to service our customers
needs and expand demand for our portable storage solutions.
The Refinancing
In connection with, and as a condition to, the consummation of the offering of the original
notes, we made a tender offer with respect to our outstanding 91/2% Senior Notes Due 2013, which we
call the 2013 Notes. In conjunction with the tender offer, we solicited consents to make certain
proposed amendments to the indenture governing the 2013 Notes (the 2013 Notes Indenture).
Approximately 97% of the holders of the 2013 Notes tendered their notes and gave consent to an
amendment to the 2013 Notes Indenture removing substantially all of the restrictive covenants
contained therein.
The tender offer and consent solicitation was financed with the net proceeds of the original
notes offering. The total amount of funds required to purchase all of the outstanding 2013 Notes
pursuant to the tender offer and pay the consent payment pursuant to the consent solicitation was
approximately $106.3 million.
Concurrently with the offering of the original notes, we amended our existing senior secured
revolving credit facility. Under our amended senior secured revolving credit facility with a group
of banks, we may borrow up to $425.0 million (subject to restrictions based on borrowing base
availability, as defined in the credit facility agreements). At May 31, 2007, we had $191.5 million
of borrowings outstanding under the facility, and approximately $230.3 million of additional
borrowings available to us. See Description of Amended and Restated Senior Secured Revolving
Credit Facility.
We incur charges to our results of operations for the full year as a result of these
transactions.
Headquarters
Our principal executive offices are located at 7420 South Kyrene Road, Suite 101, Tempe,
Arizona 85283, and our telephone number is (480) 894-6311. Our web site is located at
www.mobilemini.com. Information on our web site does not constitute part of this prospectus.
We currently file periodic and other reports with the SEC. Information filed with the SEC is
available on the SEC website at http://www.sec.gov. Such information, however, is not incorporated
into or otherwise a part of this prospectus.
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The Exchange Offer
On May 7, 2007, we completed the private offering of $150.0 million aggregate principal amount
of 6 7/8% Senior Notes due 2015. As part of that offering of original notes, we agreed to undertake
an exchange offer for the original notes. The following summary contains basic information about
the exchange offer. It may not contain all the information that is important to you. For a more
complete understanding of the exchange offer, we encourage you to read this entire prospectus and
the other documents to which we refer.
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Securities Offered
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$150.0 million aggregate principal amount of new 6
7/8% Senior Notes due 2015, which have been
registered under the Securities Act. The form and
terms of these exchange notes are identical in all
material respects to those of the original notes.
The exchange notes, however, will not contain
transfer restrictions and registration rights
applicable to the original notes. |
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The Exchange Offer
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We are offering to exchange $2,000 principal amount
and any integral multiple of $1,000 principal
amount of our new 6 7/8% Senior Notes due 2015,
which have been registered under the Securities
Act, for $2,000 principal amount and each integral
multiple of $1,000 principal amount of our
outstanding 6 7/8% Senior Notes due 2015. |
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In order to be exchanged, an original note must be
properly tendered and accepted. All original notes
that are validly tendered and not withdrawn will be
exchanged. As of the date of this prospectus, there
is $150.0 million in aggregate principal amount of
original notes outstanding. |
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Expiration Date
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5:00 p.m., New York City time, on
August 20,
2007 unless we extend the expiration date. |
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Accrued Interest on the Exchange Notes and
Original Notes
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The exchange notes will bear interest from the most
recent date to which interest has been paid on the
original notes, or if no interest has been paid on
the original notes, from the date of issue of the
original notes. |
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Conditions to the Exchange Offer
|
|
The exchange offer is subject to customary
conditions. We may assert or waive these conditions
in our sole discretion. If we materially change the
terms of the exchange offer, we will resolicit
tenders of the original notes. See The Exchange
Offer Conditions to the Exchange Offer for more
information regarding conditions to the exchange
offer. |
|
|
|
Procedures for Tendering Original Notes
|
|
Except as described under the heading The Exchange
Offer Guaranteed Delivery Procedures, a
tendering holder must, on or prior to the
expiration date: |
|
|
|
|
|
transmit a properly completed and duly executed
letter of transmittal, together with all other
documents required by the letter of transmittal, to
Deutsche Bank Trust Company Americas at the address
listed in this prospectus; or |
|
|
|
|
|
if original notes are tendered in accordance with
the book-entry procedures described in this
prospectus, the tendering holder must transmit an
agents message to the exchange agent at the
address listed in this prospectus. |
|
|
|
|
|
See The Exchange Offer Procedures for Tendering. |
|
|
|
Special Procedures for Beneficial Holders
|
|
If you are the beneficial holder of original notes
that are registered in the name of your broker,
dealer, commercial bank, trust company or other
nominee, and you wish to tender original notes in
the exchange offer, you should promptly contact the
person in whose name your original notes are
registered and instruct that person to tender on
your behalf. See The Exchange Offer Procedures
for Tendering. |
10
|
|
|
Guaranteed Delivery Procedures
|
|
If you wish to tender your original notes and you
cannot deliver your original notes, the letter of
transmittal or any other required documents to the
exchange agent before the expiration date, you may
tender your original notes by following the
guaranteed delivery procedures under the heading
The Exchange Offer Guaranteed Delivery
Procedures. |
|
|
|
Withdrawal Rights
|
|
Tenders of original notes may be withdrawn at any
time before 5:00 p.m., New York City time, on the
expiration date. |
|
|
|
Acceptance of Original Notes and Delivery of
Exchange Notes
|
|
Subject to the conditions stated under the heading
The Exchange Offer Conditions to the Exchange
Offer, we will accept for exchange any and all
original notes that are properly tendered in the
exchange offer before 5:00 p.m., New York City
time, on the expiration date. The exchange notes
will be delivered promptly after the expiration
date. See The Exchange Offer Terms of the
Exchange Offer. |
|
|
|
United States Federal Income Tax Considerations
|
|
We believe that your exchange of original notes for
exchange notes in the exchange offer will not
result in any gain or loss to you for U.S. federal
income tax purposes. See United States Federal
Income Tax Considerations. |
|
|
|
Exchange Agent
|
|
Deutsche Bank Trust Company Americas is serving as
exchange agent in connection with the exchange
offer. The address and telephone number of the
exchange agent are listed under the heading The
Exchange Offer Exchange Agent. |
|
|
|
Use of Proceeds
|
|
We will not receive any proceeds from the issuance
of exchange notes in the exchange offer. We will
pay all expenses incident to the exchange offer.
See Use of Proceeds. |
11
The Exchange Notes
The form and terms of the exchange notes and the original notes are identical in all material
respects, except that transfer restrictions and registration rights applicable to the original
notes will not apply to the exchange notes. The exchange notes will evidence the same debt as the
original notes and will be governed by the same indenture. Where we refer to notes in this
prospectus, we are referring to both the original notes and the exchange notes.
|
|
|
Issuer
|
|
Mobile Mini, Inc. |
|
|
|
Securities Offered
|
|
$150,000,000 principal amount of 67/8% Senior Notes due 2015. |
|
|
|
Maturity
|
|
May 1, 2015. |
|
|
|
Interest Rate
|
|
67/8% per year (calculated using a 360-day year). |
|
|
|
Interest Payment Dates
|
|
Each May 1 and November 1, beginning on November 1, 2007. Interest will accrue
from the issue date of the notes. |
|
|
|
Ranking
|
|
The notes and the guarantees will be our or our subsidiaries unsecured senior
obligations and will rank equally with all of our and our subsidiary guarantors
existing and future senior unsecured debt and senior to any future subordinated
debt. As of May 31, 2007, we and our subsidiaries had $149.9 million of senior
unsecured debt. The notes will effectively rank junior to any of our and the
guarantors secured debt to the extent of the value of the assets securing that
debt, including debt under our revolving credit facility. As of May 31, 2007, we
had $191.5 million of senior secured debt and an additional $230.3 million
available to be borrowed under our revolving credit facility based upon the most
restrictive of our covenants, all of which would be guaranteed by the guarantors
under the notes and would be effectively senior to the notes. Currently, the
guarantors have no other debt. |
|
|
|
Guarantees
|
|
All of our domestic subsidiaries will unconditionally guarantee the notes on a
senior unsecured basis. If we cannot make payments required by the notes our
subsidiary guarantors must make them. The guarantees may be released under certain
circumstances. |
|
|
|
|
|
The notes will not be guaranteed by any of our foreign subsidiaries and will be
effectively subordinated to the obligations of such foreign subsidiaries. The
non-guarantor subsidiaries represented 5.1% of our combined revenue and 1.2% of
our combined EBITDA for the fiscal year ended December 31, 2006. In addition,
these non-guarantor subsidiaries represented 5.5% of our assets as of December 31,
2006. |
|
|
|
Optional Redemption
|
|
At any time before May 1, 2011, we may redeem some or all of the notes at a price
equal to 100% of their principal amount, plus the make-whole premium described
under Description of the Notes section under the heading Redemption Optional
Redemption plus accrued and unpaid interest to the date of redemption. In
addition, on or after May 1, 2011, we may redeem some or all of the notes at the
redemption prices listed in the Description of the Notes section under the
heading Redemption Optional Redemption, plus accrued and unpaid interest to
the date of redemption. |
|
|
|
Optional Redemption After Equity Offerings
|
|
At any time (which may be more than once) before May 1, 2010, we can choose to
redeem up to 35% of the outstanding notes with money that we raise in one or more
equity offerings, as long as: |
12
|
|
|
|
|
we pay 106.875% of the face amount of the notes, plus interest; |
|
|
|
|
|
we redeem the notes within 90 days of completing the equity offering; and |
|
|
|
|
|
at least 65% of the aggregate principal amount of notes originally issued
remains outstanding afterwards. |
|
|
|
Change of Control Offer
|
|
If a change of control of Mobile Mini occurs, we must give holders of the notes
the opportunity to sell us their notes at 101% of their face amount, plus accrued
interest. |
|
|
|
|
|
We might not be able to pay you the required price for notes you present to us at
the time of a change of control, because: |
|
|
|
|
|
we might not have enough funds at that time; or |
|
|
|
|
|
the terms of our revolving credit facility may prevent us from paying. |
|
Asset Sale Proceeds
|
|
If we or our subsidiaries engage in asset sales, we generally must either invest
the net cash proceeds from such sales in our business within a period of time,
prepay debt under our revolving credit facility or make an offer to purchase a
principal amount of the notes equal to the excess net cash proceeds. The purchase
price of the notes will be 100% of their principal amount, plus accrued interest. |
|
|
|
Certain Indenture Provisions
|
|
The indenture governing the notes contains covenants that, among other things,
limit our and our subsidiaries ability to: |
|
|
|
|
|
incur additional debt; |
|
|
|
|
|
pay dividends or distributions on our capital stock or repurchase our capital
stock; |
|
|
|
|
|
issue preferred stock of subsidiaries; |
|
|
|
|
|
make certain investments; |
|
|
|
|
|
create liens on our assets to secure debt; |
|
|
|
|
|
designate certain of our subsidiaries as unrestricted; |
|
|
|
|
|
enter into transactions with affiliates; |
|
|
|
|
|
merge or consolidate with another company; and |
|
|
|
|
|
transfer and sell assets. |
|
|
|
|
|
These covenants are subject to a number of important limitations and exceptions.
See Description of the Notes Certain Covenants.
|
|
|
|
Absence of a Public Market for the
Exchange Notes
|
|
The exchange notes are new securities, for which no established trading market
exists, and none may develop. There can be no assurance as to the development or
liquidity of any market for the exchange notes. The initial purchasers have
advised us that they intend to make a market in the exchange notes, but they are
not obligated to do so and they may discontinue notice. We do not intend to apply
for listing of the exchange notes on any securities exchange or to arrange for any
quotation system to quote the exchange notes. |
13
Risk Factors
See Risk Factors immediately following this summary for a discussion of risks that should be
considered by holders prior to tendering original notes in the exchange offer.
Additional Information
Our principal executive offices are located at 7420 South Kyrene Road, Suite 101, Tempe,
Arizona 85283 and our telephone number is (480) 894-6311. All of subsidiary guarantors share our
principal executive offices and telephone number.
14
Summary of Financial Data
The following table presents summary consolidated historical financial and other data, as of
and for each of the years in the three-year period ended December 31, 2006, and was derived from
our audited consolidated financial statements incorporated by reference in this prospectus. The
historical consolidated historical financial and other data, as of March 31, 2007 and for the
three-month period ended March 31, 2006 and 2007, have been derived from our historical unaudited
consolidated financial statements which in the opinion of management, include all adjustments
consisting of normal recurring accruals, which Mobile Mini, Inc. considers necessary for a fair
presentation of the financial position and the results of operations for these periods. Results of
operations for an interim period are not necessarily indicative of results for a full year.
On February 22, 2006, our Board of Directors approved a two-for-one stock split in the form of
a 100 percent stock dividend effected on March 10, 2006. Per share amounts, share amounts and
weighted numbers of shares outstanding give effect for this two-for-one stock split in the below
tables for all periods presented.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
|
Three Months Ended March 31, |
|
|
|
2004 |
|
|
2005 |
|
|
2006 |
|
|
2006 |
|
|
2007 |
|
|
|
|
|
|
|
(In thousands, except per share and operating data) |
|
|
|
|
|
Consolidated Statements of Income Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leasing |
|
$ |
149,856 |
|
|
$ |
188,578 |
|
|
$ |
245,105 |
|
|
$ |
51,534 |
|
|
$ |
66,053 |
|
Sales |
|
|
17,919 |
|
|
|
17,499 |
|
|
|
26,824 |
|
|
|
4,528 |
|
|
|
6,654 |
|
Other |
|
|
566 |
|
|
|
1,093 |
|
|
|
1,434 |
|
|
|
358 |
|
|
|
313 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
|
|
168,341 |
|
|
|
207,170 |
|
|
|
273,363 |
|
|
|
56,420 |
|
|
|
73,020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales |
|
|
11,352 |
|
|
|
10,845 |
|
|
|
17,186 |
|
|
|
2,914 |
|
|
|
4,459 |
|
Leasing, selling and general expenses |
|
|
90,696 |
|
|
|
109,257 |
|
|
|
139,906 |
|
|
|
29,996 |
|
|
|
36,838 |
|
Depreciation and amortization |
|
|
11,427 |
|
|
|
12,854 |
|
|
|
16,741 |
|
|
|
3,588 |
|
|
|
4,891 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total costs and expenses |
|
|
113,475 |
|
|
|
132,956 |
|
|
|
173,833 |
|
|
|
36,498 |
|
|
|
46,188 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations |
|
|
54,866 |
|
|
|
74,214 |
|
|
|
99,530 |
|
|
|
19,922 |
|
|
|
26,832 |
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
|
|
|
|
11 |
|
|
|
437 |
|
|
|
51 |
|
|
|
8 |
|
Other income |
|
|
|
|
|
|
3,160 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
(20,434 |
) |
|
|
(23,177 |
) |
|
|
(23,681 |
) |
|
|
(6,446 |
) |
|
|
(5,953 |
) |
Debt restructuring/extinguishment expense |
|
|
|
|
|
|
|
|
|
|
(6,425 |
) |
|
|
|
|
|
|
|
|
Foreign currency exchange gain |
|
|
|
|
|
|
|
|
|
|
66 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before provision for income taxes |
|
|
34,432 |
|
|
|
54,208 |
|
|
|
69,927 |
|
|
|
13,527 |
|
|
|
20,887 |
|
Provision for income taxes |
|
|
13,773 |
|
|
|
20,220 |
|
|
|
27,151 |
|
|
|
5,323 |
|
|
|
8,190 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
20,659 |
|
|
$ |
33,988 |
|
|
$ |
42,776 |
|
|
$ |
8,204 |
|
|
$ |
12,697 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.71 |
|
|
$ |
1.14 |
|
|
$ |
1.25 |
|
|
$ |
0.27 |
|
|
$ |
0.36 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted |
|
$ |
0.70 |
|
|
$ |
1.10 |
|
|
$ |
1.21 |
|
|
$ |
0.26 |
|
|
$ |
0.35 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common and common
share equivalents outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
28,974 |
|
|
|
29,867 |
|
|
|
34,243 |
|
|
|
30,686 |
|
|
|
35,641 |
|
Diluted |
|
|
29,565 |
|
|
|
30,875 |
|
|
|
35,425 |
|
|
|
31,682 |
|
|
|
36,633 |
|
Other Financial Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA(1) |
|
$ |
66,293 |
|
|
$ |
90,239 |
|
|
$ |
116,774 |
|
|
$ |
23,561 |
|
|
$ |
31,731 |
|
EBITDA margin(2) |
|
|
39.4 |
% |
|
|
43.6 |
% |
|
|
42.7 |
% |
|
|
41.8 |
% |
|
|
43.5 |
% |
Net cash provided by operating activities |
|
|
40,322 |
|
|
|
69,249 |
|
|
|
76,884 |
|
|
|
10,013 |
|
|
|
20,698 |
|
Net cash used in investing activities |
|
|
(80,508 |
) |
|
|
(113,275 |
) |
|
|
(192,763 |
) |
|
|
(24,051 |
) |
|
|
(34,545 |
) |
Net cash provided by financing activities |
|
|
40,555 |
|
|
|
43,282 |
|
|
|
116,966 |
|
|
|
133,737 |
|
|
|
14,871 |
|
Operating Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of branches (at year end) |
|
|
48 |
|
|
|
51 |
|
|
|
62 |
|
|
|
51 |
|
|
|
63 |
|
Lease fleet units (at year end) |
|
|
100,727 |
|
|
|
116,317 |
|
|
|
149,615 |
|
|
|
118,436 |
|
|
|
152,155 |
|
Lease fleet covenant utilization (annual average) |
|
|
80.7 |
% |
|
|
82.9 |
% |
|
|
82.7 |
% |
|
|
80.1 |
% |
|
|
79.0 |
% |
Lease revenue growth from prior year |
|
|
16.6 |
% |
|
|
25.8 |
% |
|
|
30.0 |
% |
|
|
24.5 |
% |
|
|
28.2 |
% |
Operating margin |
|
|
32.6 |
% |
|
|
35.8 |
% |
|
|
36.4 |
% |
|
|
35.3 |
% |
|
|
36.7 |
% |
Net income margin |
|
|
12.3 |
% |
|
|
16.4 |
% |
|
|
15.6 |
% |
|
|
14.5 |
% |
|
|
17.4 |
% |
15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
|
Three Months Ended March 31, |
|
|
|
2004 |
|
|
2005 |
|
|
2006 |
|
|
2006 |
|
|
2007 |
|
|
|
|
|
|
|
|
|
|
|
(In thousands) |
|
|
|
|
|
|
|
|
|
Consolidated Balance Sheet Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease fleet, net |
|
$ |
454,106 |
|
|
$ |
550,464 |
|
|
$ |
697,439 |
|
|
$ |
572,243 |
|
|
$ |
721,874 |
|
Total assets |
|
|
592,146 |
|
|
|
704,957 |
|
|
|
900,030 |
|
|
|
847,506 |
|
|
|
935,878 |
|
Total debt |
|
|
277,044 |
|
|
|
308,585 |
|
|
|
302,045 |
|
|
|
323,286 |
|
|
|
316,850 |
|
Stockholders equity |
|
|
216,369 |
|
|
|
267,975 |
|
|
|
442,004 |
|
|
|
397,851 |
|
|
|
455,840 |
|
|
|
|
(1) |
|
EBITDA, as further discussed below, is defined as net income before interest expense,
income taxes, depreciation and amortization, and debt restructuring expense. We present EBITDA
because we believe it provides useful information regarding our ability to meet our future
debt payment requirements, capital expenditures and working capital requirements and that it
provides an overall evaluation of our financial condition. In addition, EBITDA is a component
of certain financial covenants under our revolving credit facility and is used to determine
our available borrowing ability and the interest rate in effect at any point in time. |
|
|
|
EBITDA has certain limitations as an analytical tool and should not be used as a substitute for
net income, cash flows, or other consolidated income or cash flow data prepared in accordance
with generally accepted accounting principles in the United States or as a measure of our
profitability or our liquidity. In particular, EBITDA, as defined does not include: |
|
|
|
Interest expense because we borrow money to partially finance our capital expenditures,
primarily related to the expansion of our lease fleet, interest expense is a necessary
element of our cost to secure this financing to continue generating additional revenues. |
|
|
|
|
Income taxes EBITDA, as defined, does not reflect income taxes or the requirements for
any tax payments. |
|
|
|
|
Depreciation and amortization because we are a leasing company, our business is very
capital intensive and we hold acquired assets for a period of time before they generate
revenues, cash flow and earnings; therefore, depreciation and amortization expense is a
necessary element of our business. |
|
|
|
|
Debt restructuring or extinguishment expense as defined in our revolving credit
facility, debt restructuring and extinguishment expenses are not deducted in our various
calculations made under the credit agreement and are treated no differently than interest
expense. As discussed above, interest expense is a necessary element of our cost to finance
a portion of the capital expenditures needed for the growth of our business. |
When evaluating EBITDA as a performance measure, and excluding the above-noted charges, all of
which have material limitations, investors should consider, among other factors, the following:
|
|
|
increasing or decreasing trends in EBITDA; |
|
|
|
|
how EBITDA compares to levels of debt and interest expense; and |
|
|
|
|
whether EBITDA historically has remained at positive levels. |
Because EBITDA, as defined, excludes some but not all items that affect our cash flow from
operating activities, EBITDA may not be comparable to a similarly titled performance measure
presented by other companies. Set forth below is a reconciliation of EBITDA to net cash provided
by operating activities, the most directly comparable GAAP measure. A further reconciliation of
net income to EBITDA is also provided.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
|
Three Months Ended March 31, |
|
|
|
2004 |
|
|
2005 |
|
|
2006 |
|
|
2006 |
|
|
2007 |
|
|
|
|
|
|
|
|
|
|
|
(In thousands) |
| | | |
|
|
|
|
EBITDA |
|
$ |
66,293 |
|
|
$ |
90,239 |
|
|
$ |
116,774 |
|
|
$ |
23,561 |
|
|
$ |
31,731 |
|
Senior Note redemption premiums |
|
|
|
|
|
|
|
|
|
|
(4,987 |
) |
|
|
|
|
|
|
|
|
Interest paid |
|
|
(19,254 |
) |
|
|
(21,727 |
) |
|
|
(24,770 |
) |
|
|
(10,899 |
) |
|
|
(7,976 |
) |
Income and franchise taxes paid |
|
|
(372 |
) |
|
|
(495 |
) |
|
|
(733 |
) |
|
|
(65 |
) |
|
|
(115 |
) |
Provision for loss from natural disasters |
|
|
|
|
|
|
1,710 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation expense |
|
|
|
|
|
|
19 |
|
|
|
3,066 |
|
|
|
754 |
|
|
|
940 |
|
Gain on sale of lease fleet units |
|
|
(2,277 |
) |
|
|
(3,529 |
) |
|
|
(4,922 |
) |
|
|
(931 |
) |
|
|
(1,294 |
) |
Loss on disposal of property, plant and equipment |
|
|
604 |
|
|
|
704 |
|
|
|
454 |
|
|
|
29 |
|
|
|
9 |
|
Change in certain assets and liabilities, net of
effect of businesses acquired: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Receivables |
|
|
(3,309 |
) |
|
|
(5,371 |
) |
|
|
(6,580 |
) |
|
|
1,477 |
|
|
|
2,266 |
|
Inventories |
|
|
(2,178 |
) |
|
|
(4,823 |
) |
|
|
628 |
|
|
|
(1,003 |
) |
|
|
(4,005 |
) |
Deposits and prepaid expenses |
|
|
(669 |
) |
|
|
(480 |
) |
|
|
(1,446 |
) |
|
|
7 |
|
|
|
(673 |
) |
Other assets and intangibles |
|
|
37 |
|
|
|
(19 |
) |
|
|
(4 |
) |
|
|
(210 |
) |
|
|
(3 |
) |
Accounts payable and accrued liabilities |
|
|
1,447 |
|
|
|
13,021 |
|
|
|
(596 |
) |
|
|
(2,707 |
) |
|
|
(182 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities |
|
$ |
40,322 |
|
|
$ |
69,249 |
|
|
$ |
76,884 |
|
|
$ |
10,013 |
|
|
$ |
20,698 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
|
Three Months Ended March 31, |
|
|
|
2004 |
|
|
2005 |
|
|
2006 |
|
|
2006 |
|
|
2007 |
|
|
|
|
|
|
|
(In thousands except percentages) |
|
|
|
|
|
Net income |
|
$ |
20,659 |
|
|
$ |
33,988 |
|
|
$ |
42,776 |
|
|
$ |
8,204 |
|
|
$ |
12,697 |
|
Interest expense |
|
|
20,434 |
|
|
|
23,177 |
|
|
|
23,681 |
|
|
|
6,446 |
|
|
|
5,953 |
|
Income taxes |
|
|
13,773 |
|
|
|
20,220 |
|
|
|
27,151 |
|
|
|
5,323 |
|
|
|
8,190 |
|
Depreciation and amortization |
|
|
11,427 |
|
|
|
12,854 |
|
|
|
16,741 |
|
|
|
3,588 |
|
|
|
4,891 |
|
Debt restructuring/extinguishment expense |
|
|
|
|
|
|
|
|
|
|
6,425 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA |
|
$ |
66,293 |
|
|
$ |
90,239 |
|
|
$ |
116,774 |
|
|
$ |
23,561 |
|
|
$ |
31,731 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2) |
|
EBITDA margin is calculated as EBITDA divided by total revenues and expressed as a
percentage. |
17
RISK FACTORS
You should carefully consider the risks described below and all other information contained in
or incorporated by reference into this prospectus before tendering your original notes.
Risks Related to Our Indebtedness and the Notes
You may have difficulty selling the outstanding notes you do not exchange.
If you do not exchange your outstanding notes for the exchange notes offered in this exchange
offer, you will continue to be subject to the restrictions on the transfer of your outstanding
notes. Those transfer restrictions are described in the indenture governing the notes and in the
legend contained on the outstanding notes, and arose because we originally issued the outstanding
notes under exemptions from the registration requirements of the Securities Act.
In general, you may offer or sell your outstanding notes only if they are registered under the
Securities Act and applicable state securities laws, or if they are offered and sold under an
exemption from those requirements. We do not intend to register the outstanding notes under the
Securities Act.
If a large number of outstanding notes are exchanged for new notes issued in the exchange
offer, it may be particularly difficult for you to sell your outstanding notes. This is because
potential buyers will likely prefer to purchase exchange notes from a different seller if possible.
In addition, if you do not exchange your outstanding notes in the exchange offer, you will not be
entitled to have those outstanding notes registered under the Securities Act.
Please see The Exchange Offer Consequences of Exchanging or Failing to Exchange Original
Notes for further discussion of the possible consequences of failing to exchange your outstanding
notes in this exchange offer.
Our substantial indebtedness may impair our financial condition and we may incur significant
additional indebtedness.
We currently have, and after the issuance of the notes will have, a substantial amount of
debt. Our substantial indebtedness could adversely affect our operations, including our ability to
perform our obligations under the notes. We have, and as a result of the transactions, will
continue to have, a substantial amount of indebtedness. As of May 31, 2007, we and our guarantors
had approximately $191.5 million in senior secured indebtedness and $149.9 million in senior
unsecured indebtedness, including the notes.
Our substantial indebtedness could have important consequences to you. For example, it could:
|
|
|
make it more difficult for us to satisfy our obligations with respect to the notes; |
|
|
|
|
require us to dedicate a substantial portion of our cash flow from operations to
payments on our indebtedness, which would reduce the availability of our cash flow to fund
future working capital, capital expenditures, acquisitions and other general corporate
purposes; |
|
|
|
|
expose us to the risk of increased interest rates, as certain of our borrowings will be at variable rates of interest; |
|
|
|
|
require us to sell assets to reduce indebtedness or influence our decisions about whether to do so; |
|
|
|
|
increase our vulnerability to general adverse economic and industry conditions; |
|
|
|
|
limit our flexibility in planning for, or reacting to, changes in our business and our industry; |
|
|
|
|
restrict us from making strategic acquisitions or pursuing business opportunities; |
|
|
|
|
place us at a competitive disadvantage compared to our competitors that have relatively less indebtedness; and |
|
|
|
|
limit, along with the financial and other restrictive covenants in our indebtedness,
among other things, our ability to borrow additional funds. Failing to comply with those
covenants could result in an event of default which, if not cured or waived, could have a
material adverse effect on our business, financial condition and results of operations. |
18
Subject to the restrictions in our amended and restated senior secured revolving credit
facility and the indenture governing the notes, we and our subsidiaries may incur significant
additional indebtedness. Although the terms of the amended and restated revolving credit facility
and the indenture contain restrictions on the incurrence of additional indebtedness, these
restrictions are subject to a number of qualifications and exceptions, and additional indebtedness
incurred in compliance with these restrictions could be substantial. If new debt is added to our
current debt levels, the related risks that we now face could increase.
Your right to receive payment on the notes will be effectively subordinated to our obligations
under the amended and restated senior secured revolving credit facility.
The notes will not be secured. Our obligations under our amended and restated revolving credit
facility are secured by a first priority security interest on substantially all of our assets and
the assets of our domestic subsidiaries and certain foreign subsidiaries, including the stock or
other ownership interests in our domestic subsidiaries and 65% of the stock or other ownership
interests of 1st tier foreign subsidiaries. In the event of our liquidation or
insolvency, or if any of our secured indebtedness is accelerated, the assets securing such
indebtedness will be first applied to repay our obligations under our secured indebtedness in full
and then to repay our obligations under our unsecured indebtedness, including under the notes. As a
result, the notes are effectively subordinated to our amended and restated revolving credit
facility to the extent of the value of the assets securing that indebtedness and the holders of the
notes would, in all likelihood recover ratably less than the lenders of our secured indebtedness in
the event of a bankruptcy or insolvency. As of May 31, 2007, we had $191.5 million of senior
secured indebtedness outstanding and approximately $230.3 million of additional borrowing
availability based upon the most restrictive covenant in the agreement under our amended and
restated revolving credit facility, net of outstanding letters of credit obligations of
approximately $3.2 million.
Restrictive covenants in our debt instruments restrict or prohibit our ability to engage in or
enter into a variety of transactions, which could adversely affect us.
The indenture governing the notes will and our amended and restated revolving credit facility
does contain various restrictive covenants that will limit our discretion in operating our
business. In particular, these agreements will limit our ability to, among other things:
|
|
|
incur additional indebtedness; |
|
|
|
|
make restricted payments (including paying dividends on, redeeming or repurchasing our capital stock); |
|
|
|
|
issue preferred stock of subsidiaries; |
|
|
|
|
make certain investments or acquisitions; |
|
|
|
|
create liens on our assets to secure debt; |
|
|
|
|
engage in transactions with affiliates; |
|
|
|
|
merge, consolidate or transfer substantially all of our assets; and |
|
|
|
|
transfer and sell assets. |
In addition, our amended and restated revolving credit facility requires us to maintain
certain financial ratios and limits our ability to make capital expenditures. These covenants and
ratios could have an adverse effect on our business by limiting our ability to take advantage of
financing, merger and acquisition or other corporate opportunities and to fund our operations.
Breach of a covenant in our debt instruments could cause acceleration of a significant portion of
our outstanding indebtedness. Any future debt could also contain financial and other covenants more
restrictive than those imposed under the indenture governing the notes, and our amended and
restated revolving credit facility.
A breach of a covenant or other provision in any debt instrument governing our current or
future indebtedness could result in a default under that instrument and, due to cross-default and
cross-acceleration provisions, could result in a default under our other debt instruments. Upon the
occurrence of an event of default under the revolving credit facility or any other debt instrument,
the lenders could elect to declare all amounts outstanding to be immediately due and payable and
terminate all commitments to extend further
19
credit. If we were unable to repay those amounts, the lenders could proceed against the
collateral granted to them, if any, to secure the indebtedness. If the lenders under our current or
future indebtedness accelerate the payment of the indebtedness, we cannot assure you that our
assets or cash flow would be sufficient to repay in full our outstanding indebtedness, including
the notes.
Federal and state fraudulent transfer laws may permit a court to void the notes and the guarantees,
and, if that occurs, you may not receive any payments on the notes.
The issuance of the notes and the guarantees may be subject to review under federal and state
fraudulent transfer and conveyance statutes. While the relevant laws may vary from state to state,
under such laws the payment of consideration will be a fraudulent conveyance if (1) we paid the
consideration with the intent of hindering, delaying or defrauding creditors or (2) we or any of
our guarantors, as applicable, received less than reasonably equivalent value or fair consideration
in return for issuing either the notes or a guarantee, and, in the case of (2) only, one of the
following is also true:
|
|
|
we or any of our guarantors were or was insolvent or rendered insolvent by reason of
the incurrence of the indebtedness; or |
|
|
|
|
payment of the consideration left us or any of our guarantors with an unreasonably
small amount of capital to carry on the business; or |
|
|
|
|
we or any of our guarantors intended to, or believed that we or it would, incur debts
beyond our or its ability to pay as they mature. |
If a court were to find that the issuance of the notes or a guarantee was a fraudulent
conveyance, the court could void the payment obligations under the notes or such guarantee or
further subordinate the notes or such guarantee to presently existing and future indebtedness of
ours or such guarantor, or require the holders of the notes to repay any amounts received with
respect to the notes or such guarantee. In the event of a finding that a fraudulent conveyance
occurred, you may not receive any repayment on the notes. Further, the voidance of the notes could
result in an event of default with respect to our other debt and that of our subsidiaries that
could result in acceleration of such debt.
Generally, an entity would be considered insolvent if, at the time it incurred indebtedness:
|
|
|
the sum of its debts, including contingent liabilities, were greater than the fair
salable value of all its assets; or |
|
|
|
|
the present fair salable value of its assets were less than the amount that would be
required to pay its probable liability on its existing debts and liabilities, including
contingent liabilities, as they become absolute and mature; or |
|
|
|
|
it could not pay its debts as they become due. |
We cannot be certain as to the standards a court would use to determine whether or not we or
the guarantors were solvent at the relevant time, or regardless of the standard that a court uses,
that the issuance of the notes and the guarantees would not be subordinated to our or any
guarantors other debt. If any other subsidiary of ours guarantees the notes in the future, such
guarantee will become subject to the same risks described above.
If any of the guarantees were legally challenged, such challenged guarantee could also be
subject to the claim that, since the guarantee was incurred for our benefit, and only indirectly
for the benefit of the guarantor, the obligations of the applicable guarantor were incurred for
less than fair consideration. A court could thus void the obligations under the guarantees,
subordinate them to the applicable guarantors other debt or take other action detrimental to the
holders of the notes.
We may be unable to repurchase the notes upon a change of control.
In the event of a change of control (as defined in the indenture for the notes), we must
offer to purchase the notes at a purchase price equal to 101% of the principal amount, plus accrued
and unpaid interest to the date of repurchase. See Description of the Notes Change of Control.
In the event that we are required to make such an offer, there can be no assurance that we would
have sufficient funds available to purchase any notes, and we may be required to refinance the
notes. There can be no assurance that we would be able to accomplish a refinancing or, if a
refinancing were to occur, that it would be accomplished on commercially reasonable terms.
20
Our amended and restated revolving credit facility prohibits us from repurchasing any of the
notes, except under limited circumstances. Our amended and restated revolving credit facility also
provides that certain change of control events would constitute a default. In the event a change of
control occurs at a time when we are prohibited from purchasing the notes, we could seek the
consent of the lenders under the amended and restated revolving credit facility to purchase the
notes. If we did not obtain such a consent, we would remain prohibited from purchasing the notes.
In this case, our failure to purchase would constitute an event of default under the indenture
governing the notes.
We may be unable to generate sufficient cash flow to service our debt, including the notes.
To service our debt, we will require a significant amount of cash. Our ability to generate
cash, make scheduled payments or to refinance our obligations depends on our successful financial
and operating performance. Our financial and operating performance, cash flow and capital resources
depend upon prevailing economic conditions and certain financial, business and other factors, many
of which are beyond our control. These factors include among others:
|
|
|
economic and competitive conditions; |
|
|
|
|
operating difficulties, increased operating costs or pricing pressures we may experience; and |
|
|
|
|
delays in implementing any strategic projects. |
If our cash flow and capital resources are insufficient to fund our debt service obligations,
we may be forced to reduce or delay capital expenditures, sell material assets or operations,
obtain additional capital or restructure our debt.
An active trading market may not develop for the exchange notes.
The exchange notes are new securities for which there currently is no established market, and
we cannot be sure if an active trading market will develop for the exchange notes. We do not intend
to apply for listing of the exchange notes on any securities exchange or on any automated dealer
quotation system. The initial purchasers of the outstanding notes have indicated to us that they
intend to make a market in the exchange notes, as permitted by applicable laws and regulations.
However, the initial purchasers are not obligated to do so and any market making may be
discontinued at any time without notice.
The liquidity of, and trading market for, the exchange notes, may also be adversely affected
by, among other things:
|
|
|
changes in the overall market for high yield securities; |
|
|
|
|
changes in our financial performance or prospects; |
|
|
|
|
the prospects for companies in our industry generally; |
|
|
|
|
the number of holders of the notes; |
|
|
|
|
the interest of securities dealers in making a market for the notes; and |
|
|
|
|
prevailing interest rates. |
Risks Relating to Our Business
A slowdown in the non-residential construction sector of the economy could reduce demand from some
of our customers, which could result in lower demand for our products.
At the end of 2005 and 2006, customers in the construction industry, primarily in
non-residential construction, accounted for approximately 35% and 40%, respectively, of our leased
units. This industry tends to be cyclical. In 2002 and 2003 this industry sector suffered a
sustained economic slowdown which resulted in much slower growth in demand for leases and sales of
our products. If another sustained economic slowdown in the non-residential construction sector
were to occur, it is likely that we would again experience less demand for leases and sales of our
products. Also, because most of our cost of leasing is either fixed or semi variable,
21
this would cause our margins to contract and the adverse affect on operating results would be
more pronounced. Our internal growth rate slowed to 7.5% in 2002 and 7.4% in 2003 due to a slowdown
in the economy, particularly in this sector. During these years, our profitability declined.
Our planned growth could strain our management resources, which could disrupt our development of
our new branch locations.
Our future performance will depend in large part on our ability to manage our planned growth,
which in 2006 included our commencement of operations in the United Kingdom and The Netherlands.
Our growth could strain our management, human and other resources. To successfully manage this
growth, we must continue to add managers and employees and improve our operating, financial and
other internal procedures and controls. We also must effectively motivate, train and manage our
employees. If we do not manage our growth effectively, some of our new branches and acquisitions
may lose money or fail, and we may have to close unprofitable locations. Closing a branch would
likely result in additional expenses that would cause our operating results to suffer.
Our European expansion may divert our resources from other aspects of our business and require that
we incur additional debt, and will subject us to additional and different regulations. Failure to
manage these economic, financial, business and regulatory risks may adversely impact our growth in
Europe and other results of operations.
Our expansion into markets in the United Kingdom and The Netherlands requires us to make
substantial investments, which could divert resources from other aspects of our business. We may
also be required to raise additional debt or equity capital to fund our expansion in Europe. In
addition, we may incur difficulties in staffing and managing our European operations, and face
fluctuations in currency exchange rates, exposure to additional regulatory requirements, including
certain trade barriers, changes in political and economic conditions, and exposure to additional
and potentially adverse tax regimes. Our success in Europe will depend, in part, on our ability to
anticipate and effectively manage these and other risks. Our failure to manage these risks may
adversely affect our growth in Europe and lead to increased administrative costs.
We may need additional debt or equity to sustain our growth, but we do not have commitments for
such funds.
We finance our growth through a combination of borrowings, cash flow from operations, and
equity financing. Our ability to continue growing at the pace we have historically grown will
depend in part on our ability to obtain either additional debt or equity financing. The terms on
which debt and equity financing is available to us varies from time to time and is influenced by
our performance and by external factors, such as the economy generally and developments in the
market, that are beyond our control. Also, additional debt financing or the sale of additional
equity securities may cause the market price of our common stock to decline. If we are unable to
obtain additional debt or equity financing on acceptable terms, we may have to curtail our growth
by delaying new branch openings, or, under certain circumstances, lease fleet expansion.
The supply and cost of used ocean-going containers fluctuates, and this can affect our pricing and
our ability to grow.
We purchase, refurbish and modify used ocean-going containers in order to expand our lease
fleet. If used ocean-going container prices increase substantially, we may not be able to
manufacture enough new units to grow our fleet. These price increases also could increase our
expenses and reduce our earnings, particularly if we are not able (due to competitive reasons or
otherwise) to raise our rental rates to absorb this increase cost. Conversely, an oversupply of
used ocean-going containers may cause container prices to fall. Our competitors may then lower the
lease rates on their storage units. As a result, we may need to lower our lease rates to remain
competitive. This would cause our revenues and our earnings to decline.
Covenants in our debt instruments restrict or prohibit our ability to engage in or enter into a
variety of transactions.
The indenture governing the notes and, our revolving credit facility agreement contain various
covenants that may limit our discretion in operating our business. In particular, we are limited in
our ability to merge, consolidate or transfer substantially all of our assets, issue preferred
stock of subsidiaries and create liens on our assets to secure debt. In addition, if there is
default, and we do not maintain certain financial covenants or we do not maintain borrowing
availability in excess of certain pre-determined levels, we may be unable to incur additional
indebtedness, make restricted payments (including paying cash dividends on our capital stock) and
redeem or repurchase our capital stock.
Our revolving credit facility requires us, under certain limited circumstances, to maintain
certain financial ratios and limits our ability to make capital expenditures. These covenants and
ratios could have an adverse effect on our business by limiting our ability to take advantage of
financing, merger and acquisition or other corporate opportunities and to fund our operations.
Breach of a covenant
22
in our debt instruments could cause acceleration of a significant portion of our outstanding
indebtedness. Any future debt could also contain financial and other covenants more restrictive
than those imposed under the indenture governing the Senior Notes, and the revolving credit
facility.
A breach of a covenant or other provision in any debt instrument governing our current or
future indebtedness could result in a default under that instrument and, due to cross-default and
cross-acceleration provisions, could result in a default under our other debt instruments. Upon the
occurrence of an event of default under the revolving credit facility or any other debt instrument,
the lenders could elect to declare all amounts outstanding to be immediately due and payable and
terminate all commitments to extend further credit. If we were unable to repay those amounts, the
lenders could proceed against the collateral granted to them, if any, to secure the indebtedness.
If the lenders under our current or future indebtedness accelerate the payment of the indebtedness,
we cannot assure you that our assets or cash flow would be sufficient to repay in full our
outstanding indebtedness, including the Senior Notes.
The amount we can borrow under our revolving credit facility depends in part on the value of
the portable storage units in our lease fleet. If the value of our lease fleet declines, we cannot
borrow as much. We are required to satisfy several covenants with our lenders that are affected by
changes in the value of our lease fleet. We would breach some of these covenants if the value of
our lease fleet drops below specified levels. If this happens, we may not be able to borrow the
amounts we need to expand our business, and we may be forced to liquidate a portion of our existing
fleet.
The supply and cost of raw materials we use in manufacturing fluctuates and could increase our
operating costs.
We manufacture portable storage units to add to our lease fleet and for sale. In our
manufacturing process, we purchase steel, vinyl, wood, glass and other raw materials from various
suppliers. We cannot be sure that an adequate supply of these materials will continue to be
available on terms acceptable to us. The raw materials we use are subject to price fluctuations
that we cannot control. Changes in the cost of raw materials can have a significant effect on our
operations and earnings. Rapid increases in raw material prices, as we experienced in 2004, are
difficult to pass through to customers, particularly to leasing customers. If we are unable to pass
on these higher costs, our profitability could decline. If raw material prices decline
significantly, we may have to write down our raw materials inventory values. If this happens, our
results of operations and financial condition will decline.
Some zoning laws in the United States and Canada and temporary planning permission regulations in
Europe restrict the use of our portable storage and office units and therefore limit our ability to
offer our products in all markets.
Most of our customers use our storage units to store their goods on their own properties.
Local zoning laws and temporary planning permission regulations in some of our markets do not allow
some of our customers to keep portable storage and office units on their properties or do not
permit portable storage units unless located out of sight from the street. If local zoning laws or
planning permission regulations in one or more of our markets no longer allow our units to be
stored on customers sites, our business in that market will suffer.
Unionization by some or all of our employees could cause increases in operating costs.
None of our employees are presently covered by collective bargaining agreements. However, from
time to time various unions have attempted to organize some of our employees. We cannot predict the
outcome of any continuing or future efforts to organize our employees, the terms of any future
labor agreements, or the effect, if any, those agreements might have on our operations or financial
performance.
We operate with a high amount of debt and we may incur significant additional indebtedness.
Our operations are capital intensive, and we operate with a high amount of debt relative to
our size. As of May 31, 2007, we had approximately $344.6 million of indebtedness outstanding,
including the exchange notes and borrowings and letters of credit under our credit facility. In
addition, under our revolving credit facility we have approximately $230.3 million available for
further borrowing. Our substantial indebtedness could have consequences. For example, it could:
|
|
|
require us to dedicate a substantial portion of our cash flow from operations to
payments on our indebtedness, which could reduce the availability of our cash flow to fund
future working capital, capital expenditures, acquisitions and other general corporate
purposes; |
|
|
|
|
make it more difficult for us to satisfy our obligations with respect to our Senior Notes; |
23
|
|
|
expose us to the risk of increased interest rates, as certain of our borrowings will be at variable rates of interest; |
|
|
|
|
require us to sell assets to reduce indebtedness or influence our decisions about whether to do so; |
|
|
|
|
increase our vulnerability to general adverse economic and industry conditions; |
|
|
|
|
limit our flexibility in planning for, or reacting to, changes in our business and our industry; |
|
|
|
|
restrict us from making strategic acquisitions or pursuing business opportunities; and |
|
|
|
|
limit, along with the financial and other restrictive covenants in our indebtedness,
among other things, our ability to borrow additional funds. Failing to comply with those
covenants could result in an event of default which, if not cured or waived, could have a
material adverse effect on our business, financial condition and results of operations. |
We depend on a few key management persons.
We are substantially dependent on the personal efforts and abilities of Steven G. Bunger, our
Chairman, President and Chief Executive Officer, and Lawrence Trachtenberg, our Executive Vice
President and Chief Financial Officer. The loss of either of these officers or our other key
management persons could harm our business and prospects for growth.
The market price of our common stock has been volatile and may continue to be volatile and the
value of your investment may decline.
The market price of our common stock has been volatile and may continue to be volatile. This
volatility may cause wide fluctuations in the price of our common stock on the Nasdaq Global Select
Market. The market price of our common stock is likely to be affected by:
|
|
|
changes in general conditions in the economy, geopolitical events or the financial markets; |
|
|
|
|
variations in our quarterly operating results; |
|
|
|
|
changes in financial estimates by securities analysts; |
|
|
|
|
other developments affecting us, our industry, customers or competitors; |
|
|
|
|
the operating and stock price performance of companies that investors deem comparable to us; and |
|
|
|
|
the number of shares available for resale in the public markets under applicable securities laws. |
24
USE OF PROCEEDS
We will not receive any proceeds from the exchange offer. In consideration for the exchange
notes, we will receive the original notes of like principal amount, the terms of which are
identical in all material respects to the exchange notes. The original notes surrendered for the
exchange notes will be retired and canceled. Accordingly, issuance of the exchange notes will not
result in any increase in our indebtedness. We have agreed to bear the expenses of the exchange
offer. No underwriter is being used in connection with the exchange offer.
On May 7, 2007, we issued and sold the original notes. We used the proceeds from that
offering, which after discounts to the initial purchasers and other transaction fees and expenses
paid by us, approximated $145.8 million, to repurchase previously issued notes and to pay down our
credit facility.
25
CAPITALIZATION
The
following table summarizes our cash and cash equivalents and
capitalization as of March 31,
2007 on an actual basis and as adjusted to give effect to $149.3 million of proceeds from the
offering of the 6 7/8% Senior Notes Due 2015.
The table should be read in conjunction with Use of Proceeds included elsewhere in this
prospectus and our consolidated financial statements and related notes incorporated by reference
into this prospectus.
|
|
|
|
|
|
|
|
|
|
|
As of March 31, 2007 |
|
|
|
Actual |
|
|
As Adjusted |
|
|
|
(Dollars in millions) |
|
Cash and cash equivalents |
|
$ |
2.4 |
|
|
$ |
2.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt: |
|
|
|
|
|
|
|
|
Amended and restated revolving credit facility(1) |
|
$ |
|
|
|
$ |
182.6 |
|
Existing revolving credit facility(2) |
|
|
218.9 |
|
|
|
|
|
9 1/2% senior notes due 2013 |
|
|
97.5 |
|
|
|
|
|
6 7/8% Senior Notes Due 2015(3) |
|
|
|
|
|
|
149.3 |
|
Other debt |
|
|
0.5 |
|
|
|
0.5 |
|
|
|
|
|
|
|
|
Total debt |
|
|
316.9 |
|
|
|
332.4 |
|
Stockholders equity |
|
|
455.8 |
|
|
|
449.1 |
|
|
|
|
|
|
|
|
Total capitalization |
|
$ |
772.7 |
|
|
$ |
781.5 |
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Does not reflect approximately $3.2 million in letters of credit outstanding under our
amended and restated revolving credit facility. |
|
(2) |
|
As of May 31, 2007, approximately $191.5 million was outstanding under the existing
revolving credit facility. |
|
(3) |
|
The 6 7/8% Senior Notes Due 2015 were at a principal amount of $150.0 million, issued at a
discount of 99.548% and initially reflected on our balance sheet in
the amount of $149.3 million. |
26
SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA
The following table presents our selected consolidated historical financial and other data, as
of and for each of the years in the five-year period ended December 31, 2006 and was derived from
our audited consolidated financial statements incorporated by reference into this prospectus. The
historical consolidated historical financial and other data, as of March 31, 2007 and for the
three-month period ended March 31, 2006 and 2007, have been derived from our historical unaudited
consolidated financial statements which in the opinion of management, include all adjustments
consisting of normal recurring accruals, which Mobile Mini, Inc. considers necessary for a fair
presentation of the financial position and the results of operations for these periods. Results of
operations for an interim period are not necessarily indicative of results for a full year.
On February 22, 2006, our Board of Directors approved a two-for-one stock split in the form of
a 100 percent stock dividend effected on March 10, 2006. Per share amounts, share amounts and
weighted numbers of shares outstanding give effect for this two-for-one stock split in the below
tables for all periods presented.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
Year Ended December 31, |
|
|
March 31, |
|
|
|
2002 |
|
|
2003 |
|
|
2004 |
|
|
2005 |
|
|
2006 |
|
|
2006 |
|
|
2007 |
|
|
|
(In thousands, except per share and operating data) |
|
Consolidated Statements of Income Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leasing |
|
$ |
116,169 |
|
|
$ |
128,482 |
|
|
$ |
149,856 |
|
|
$ |
188,578 |
|
|
$ |
245,105 |
|
|
$ |
51,534 |
|
|
$ |
66,053 |
|
Sales |
|
|
16,008 |
|
|
|
17,248 |
|
|
|
17,919 |
|
|
|
17,499 |
|
|
|
26,824 |
|
|
|
4,528 |
|
|
|
6,654 |
|
Other |
|
|
920 |
|
|
|
838 |
|
|
|
566 |
|
|
|
1,093 |
|
|
|
1,434 |
|
|
|
358 |
|
|
|
313 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
|
|
133,097 |
|
|
|
146,568 |
|
|
|
168,341 |
|
|
|
207,170 |
|
|
|
273,363 |
|
|
|
56,420 |
|
|
|
73,020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales |
|
|
10,343 |
|
|
|
11,487 |
|
|
|
11,352 |
|
|
|
10,845 |
|
|
|
17,186 |
|
|
|
2,914 |
|
|
|
4,459 |
|
Leasing, selling and general expenses |
|
|
70,225 |
|
|
|
80,124 |
|
|
|
90,696 |
|
|
|
109,257 |
|
|
|
139,906 |
|
|
|
29,996 |
|
|
|
36,838 |
|
Florida litigation expense |
|
|
1,320 |
|
|
|
8,502 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
8,435 |
|
|
|
10,026 |
|
|
|
11,427 |
|
|
|
12,854 |
|
|
|
16,741 |
|
|
|
3,588 |
|
|
|
4,891 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total costs and expenses |
|
|
90,323 |
|
|
|
110,139 |
|
|
|
113,475 |
|
|
|
132,956 |
|
|
|
173,833 |
|
|
|
36,498 |
|
|
|
46,188 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations |
|
|
42,774 |
|
|
|
36,429 |
|
|
|
54,866 |
|
|
|
74,214 |
|
|
|
99,530 |
|
|
|
19,922 |
|
|
|
26,832 |
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
13 |
|
|
|
2 |
|
|
|
|
|
|
|
11 |
|
|
|
437 |
|
|
|
51 |
|
|
|
8 |
|
Other income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,160 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
(11,587 |
) |
|
|
(16,299 |
) |
|
|
(20,434 |
) |
|
|
(23,177 |
) |
|
|
(23,681 |
) |
|
|
(6,446 |
) |
|
|
(5,953 |
) |
Debt restructuring/extinguishment expense(1) |
|
|
(1,300 |
) |
|
|
(10,440 |
) |
|
|
|
|
|
|
|
|
|
|
(6,425 |
) |
|
|
|
|
|
|
|
|
Foreign currency exchange gain |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
66 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before provision for income taxes |
|
|
29,900 |
|
|
|
9,692 |
|
|
|
34,432 |
|
|
|
54,208 |
|
|
|
69,927 |
|
|
|
13,527 |
|
|
|
20,887 |
|
Provision for income taxes |
|
|
11,661 |
|
|
|
3,780 |
|
|
|
13,773 |
|
|
|
20,220 |
|
|
|
27,151 |
|
|
|
5,323 |
|
|
|
8,190 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
18,239 |
|
|
$ |
5,912 |
|
|
$ |
20,659 |
|
|
$ |
33,988 |
|
|
$ |
42,776 |
|
|
$ |
8,204 |
|
|
$ |
12,697 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.64 |
|
|
$ |
0.21 |
|
|
$ |
0.71 |
|
|
$ |
1.14 |
|
|
$ |
1.25 |
|
|
$ |
0.27 |
|
|
$ |
0.36 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted |
|
$ |
0.63 |
|
|
$ |
0.20 |
|
|
$ |
0.70 |
|
|
$ |
1.10 |
|
|
$ |
1.21 |
|
|
$ |
0.26 |
|
|
$ |
0.35 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common and
common share equivalents outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
28,509 |
|
|
|
28,625 |
|
|
|
28,974 |
|
|
|
29,867 |
|
|
|
34,243 |
|
|
|
30,686 |
|
|
|
35,641 |
|
Diluted |
|
|
28,884 |
|
|
|
28,925 |
|
|
|
29,565 |
|
|
|
30,875 |
|
|
|
35,425 |
|
|
|
31,682 |
|
|
|
36,633 |
|
Other Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA(2) |
|
$ |
51,222 |
|
|
$ |
46,457 |
|
|
$ |
66,293 |
|
|
$ |
90,239 |
|
|
$ |
116,774 |
|
|
$ |
23,561 |
|
|
$ |
31,731 |
|
EBITDA Margin(3) |
|
|
38.5 |
% |
|
|
31.7 |
% |
|
|
39.4 |
% |
|
|
43.6 |
% |
|
|
42.7 |
% |
|
|
41.8 |
% |
|
|
43.5 |
% |
Net cash provided by operating activities |
|
|
41,186 |
|
|
|
40,690 |
|
|
|
40,322 |
|
|
|
69,249 |
|
|
|
76,884 |
|
|
|
10,013 |
|
|
|
20,698 |
|
Net cash used in investing activities |
|
|
(89,064 |
) |
|
|
(55,269 |
) |
|
|
(80,508 |
) |
|
|
(113,275 |
) |
|
|
(192,763 |
) |
|
|
(24,051 |
) |
|
|
(34,545 |
) |
Net cash provided by financing activities |
|
|
49,007 |
|
|
|
12,730 |
|
|
|
40,555 |
|
|
|
43,282 |
|
|
|
116,966 |
|
|
|
133,737 |
|
|
|
14,871 |
|
Operating Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of branches (at year end) |
|
|
46 |
|
|
|
47 |
|
|
|
48 |
|
|
|
51 |
|
|
|
62 |
|
|
|
51 |
|
|
|
63 |
|
Lease fleet units (at year end) |
|
|
83,679 |
|
|
|
89,542 |
|
|
|
100,727 |
|
|
|
116,317 |
|
|
|
149,615 |
|
|
|
118,436 |
|
|
|
152,155 |
|
Lease fleet covenant utilization (annual
average) |
|
|
79.1 |
% |
|
|
78.7 |
% |
|
|
80.7 |
% |
|
|
82.9 |
% |
|
|
82.7 |
% |
|
|
80.1 |
% |
|
|
79.0 |
% |
Lease revenue growth from prior year |
|
|
16.5 |
% |
|
|
10.6 |
% |
|
|
16.6 |
% |
|
|
25.8 |
% |
|
|
30.0 |
% |
|
|
24.5 |
% |
|
|
28.2 |
% |
Operating margin |
|
|
32.1 |
% |
|
|
24.9 |
% |
|
|
32.6 |
% |
|
|
35.8 |
% |
|
|
36.4 |
% |
|
|
35.3 |
% |
|
|
36.7 |
% |
Net income margin |
|
|
13.7 |
% |
|
|
4.0 |
% |
|
|
12.3 |
% |
|
|
16.4 |
% |
|
|
15.6 |
% |
|
|
14.5 |
% |
|
|
17.4 |
% |
27
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
At December 31, |
|
March 31, |
|
|
2002 |
|
2003 |
|
2004 |
|
2005 |
|
2006 |
|
2006 |
|
2007 |
|
|
(In thousands) |
Consolidated Balance Sheet Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease fleet, net |
|
$ |
337,685 |
|
|
$ |
383,672 |
|
|
$ |
454,106 |
|
|
$ |
550,464 |
|
|
$ |
697,439 |
|
|
$ |
572,243 |
|
|
$ |
721,874 |
|
Total assets |
|
|
460,890 |
|
|
|
515,080 |
|
|
|
592,146 |
|
|
|
704,957 |
|
|
|
900,030 |
|
|
|
847,506 |
|
|
|
935,878 |
|
Total debt |
|
|
213,222 |
|
|
|
240,610 |
|
|
|
277,044 |
|
|
|
308,585 |
|
|
|
302,045 |
|
|
|
323,286 |
|
|
|
316,850 |
|
Stockholders equity |
|
|
178,669 |
|
|
|
189,293 |
|
|
|
216,369 |
|
|
|
267,975 |
|
|
|
442,004 |
|
|
|
397,851 |
|
|
|
455,840 |
|
(1) |
|
In 2002, the debt restructuring expense was recorded pursuant to SFAS No. 4, Reporting
Gains and Losses from Extinguishment of Debt. As required by SFAS No. 145, losses from debt
extinguishment have been presented in pre-tax earnings. |
|
(2) |
|
EBITDA, as further discussed below, is defined as net income before interest expense, income
taxes, depreciation and amortization, and debt restructuring expense. We present EBITDA
because we believe it provides useful information regarding our ability to meet our future
debt payment requirements, capital expenditures and working capital requirements and that it
provides an overall evaluation of our financial condition. In addition, EBITDA is a component
of certain financial covenants under our revolving credit facility and is used to determine
our available borrowing ability and the interest rate in effect at any point in time. |
|
|
|
EBITDA has certain limitations as an analytical tool and should not be used as a substitute for
net income, cash flows, or other consolidated income or cash flow data prepared in accordance
with generally accepted accounting principles in the United States or as a measure of our
profitability or our liquidity. In particular, EBITDA, as defined does not include: |
|
|
|
Interest expense because we borrow money to partially finance our capital expenditures,
primarily related to the expansion of our lease fleet, interest expense is a necessary
element of our cost to secure this financing to continue generating additional revenues. |
|
|
|
|
Income taxes EBITDA, as defined, does not reflect income taxes or the requirements for
any tax payments. |
|
|
|
|
Depreciation and amortization because we are a leasing company, our business is very
capital intensive and we hold acquired assets for a period of time before they generate
revenues, cash flow and earnings; therefore, depreciation and amortization expense is a
necessary element of our business. |
|
|
|
|
Debt restructuring or extinguishment expense as defined in our revolving credit
facility, debt restructuring and extinguishment expenses are not deducted in our various
calculations made under the credit agreement and are treated no differently than interest
expense. As discussed above, interest expense is a necessary element of our cost to finance
a portion of the capital expenditures needed for the growth of our business. |
|
|
When evaluating EBITDA as a performance measure, and excluding the above-noted charges, all of
which have material limitations, investors should consider, among other factors, the following: |
|
|
|
increasing or decreasing trends in EBITDA; |
|
|
|
|
how EBITDA compares to levels of debt and interest expense; and |
|
|
|
|
whether EBITDA historically has remained at positive levels. |
|
|
Because EBITDA, as defined, excludes some but not all items that affect our cash flow from
operating activities, EBITDA may not be comparable to a similarly titled performance measure
presented by other companies. Set forth below is a reconciliation of EBITDA to net cash provided
by operating activities, the most directly comparable GAAP measure. A further reconciliation of
net income to EBITDA is also provided. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
Year Ended December 31, |
|
|
March 31, |
|
|
|
2002 |
|
|
2003 |
|
|
2004 |
|
|
2005 |
|
|
2006 |
|
|
2006 |
|
|
2007 |
|
|
|
(In thousands) |
|
EBITDA |
|
$ |
51,222 |
|
|
$ |
46,457 |
|
|
$ |
66,293 |
|
|
$ |
90,239 |
|
|
$ |
116,774 |
|
|
$ |
23,561 |
|
|
$ |
31,731 |
|
Senior Note redemption premiums |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4,987 |
) |
|
|
|
|
|
|
|
|
Interest paid |
|
|
(11,258 |
) |
|
|
(8,841 |
) |
|
|
(19,254 |
) |
|
|
(21,727 |
) |
|
|
(24,770 |
) |
|
|
(10,899 |
) |
|
|
(7,976 |
) |
Income and franchise taxes paid |
|
|
(448 |
) |
|
|
(298 |
) |
|
|
(372 |
) |
|
|
(495 |
) |
|
|
(733 |
) |
|
|
(65 |
) |
|
|
(115 |
) |
Provision for loss from natural disasters |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,710 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation expense |
|
|
76 |
|
|
|
|
|
|
|
|
|
|
|
19 |
|
|
|
3,066 |
|
|
|
754 |
|
|
|
940 |
|
Gain on sale of lease fleet units |
|
|
(2,116 |
) |
|
|
(1,601 |
) |
|
|
(2,277 |
) |
|
|
(3,529 |
) |
|
|
(4,922 |
) |
|
|
(931 |
) |
|
|
(1,294 |
) |
Loss on disposal of property, plant and
equipment |
|
|
47 |
|
|
|
44 |
|
|
|
604 |
|
|
|
704 |
|
|
|
454 |
|
|
|
29 |
|
|
|
9 |
|
Gain on sale of short-term investments |
|
|
|
|
|
|
(59 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
Year Ended December 31, |
|
|
March 31, |
|
|
|
2002 |
|
|
2003 |
|
|
2004 |
|
|
2005 |
|
|
2006 |
|
|
2006 |
|
|
2007 |
|
|
|
(In thousands) |
|
Change in certain assets and
liabilities, net of effect of businesses
acquired: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Receivables |
|
|
(486 |
) |
|
|
327 |
|
|
|
(3,309 |
) |
|
|
(5,371 |
) |
|
|
(6,580 |
) |
|
|
1,477 |
|
|
|
2,266 |
|
Inventories |
|
|
2,334 |
|
|
|
(1,781 |
) |
|
|
(2,178 |
) |
|
|
(4,823 |
) |
|
|
628 |
|
|
|
(1,003 |
) |
|
|
(4,005 |
) |
Deposits and prepaid expenses |
|
|
(890 |
) |
|
|
(3,132 |
) |
|
|
(669 |
) |
|
|
(480 |
) |
|
|
(1,446 |
) |
|
|
7 |
|
|
|
(673 |
) |
Other assets and intangibles |
|
|
(174 |
) |
|
|
(35 |
) |
|
|
37 |
|
|
|
(19 |
) |
|
|
(4 |
) |
|
|
(210 |
) |
|
|
(3 |
) |
Accounts payable and accrued liabilities |
|
|
2,879 |
|
|
|
9,609 |
|
|
|
1,447 |
|
|
|
13,021 |
|
|
|
(596 |
) |
|
|
(2,707 |
) |
|
|
(182 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities |
|
$ |
41,186 |
|
|
$ |
40,690 |
|
|
$ |
40,322 |
|
|
$ |
69,249 |
|
|
$ |
76,884 |
|
|
$ |
10,013 |
|
|
$ |
20,698 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
Year Ended December 31, |
|
|
March 31, |
|
|
|
2002 |
|
|
2003 |
|
|
2004 |
|
|
2005 |
|
|
2006 |
|
|
2006 |
|
|
2007 |
|
|
|
(In thousands except percentages) |
|
Net income |
|
$ |
18,239 |
|
|
$ |
5,912 |
|
|
$ |
20,659 |
|
|
$ |
33,988 |
|
|
$ |
42,776 |
|
|
$ |
8,204 |
|
|
$ |
12,697 |
|
Interest expense |
|
|
11,587 |
|
|
|
16,299 |
|
|
|
20,434 |
|
|
|
23,177 |
|
|
|
23,681 |
|
|
|
6,446 |
|
|
|
5,953 |
|
Income taxes |
|
|
11,661 |
|
|
|
3,780 |
|
|
|
13,773 |
|
|
|
20,220 |
|
|
|
27,151 |
|
|
|
5,323 |
|
|
|
8,190 |
|
Depreciation and amortization |
|
|
8,435 |
|
|
|
10,026 |
|
|
|
11,427 |
|
|
|
12,854 |
|
|
|
16,741 |
|
|
|
3,588 |
|
|
|
4,891 |
|
Debt restructuring/extinguishment expense(1) |
|
|
1,300 |
|
|
|
10,440 |
|
|
|
|
|
|
|
|
|
|
|
6,425 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA |
|
$ |
51,222 |
|
|
$ |
46,457 |
|
|
$ |
66,293 |
|
|
$ |
90,239 |
|
|
$ |
116,774 |
|
|
$ |
23,561 |
|
|
$ |
31,731 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3) |
|
EBITDA margin is calculated as EBITDA divided by total revenues expressed as a
percentage. |
29
THE EXCHANGE OFFER
Terms of the Exchange Offer
As of the date of this prospectus, $150.0 million aggregate principal amount of the original
notes is outstanding. This prospectus, together with the letter of transmittal, is being sent to
all holders of original notes known to us. Our obligation to accept original notes for exchange in
the exchange offer is subject to the conditions described below under Conditions to the Exchange
Offer.
Upon the terms and conditions described in this prospectus and in the accompanying letter of
transmittal, we will accept for exchange original notes that are properly tendered on or before the
expiration date and not withdrawn as permitted below. For each original note accepted for exchange,
the holder of the original note will receive an exchange note having a principal amount equal to
that of the surrendered original note. Original notes tendered in the exchange offer must be in
denominations of the principal amount of $2,000 and any integral multiples of $1,000 in excess
thereof.
As used in this prospectus, the term expiration date means 5:00 p.m., New York City time, on
August 20, 2007. However, if we, in our sole discretion, extend the period of time for which the
exchange offer is open, the term expiration date means the latest time and date to which we
extend the exchange offer. We reserve the right to extend the period of time during which the
exchange offer is open. If the exchange offer period is extended, we would give notice of the
extension to the holders of original notes by means of a press release or other public announcement
no later than 9:00 a.m., New York City time, on the next business day following the previously
scheduled expiration date. During any extension period, all original notes previously tendered will
remain subject to the exchange offer and may be accepted for exchange by us. Any original notes not
accepted for exchange will be returned to the tendering holder after the expiration or termination
of the exchange offer.
We reserve the right to amend or terminate the exchange offer, and not to accept for exchange
any original notes not previously accepted for exchange, upon the occurrence of any of the
conditions of the exchange offer specified below under Conditions to the Exchange Offer. We
will give notice of any extension, amendment, non-acceptance or termination to the holders of the
original notes as described above. If we materially change the terms of the exchange offer, we will
resolicit tenders of the original notes and provide notice to the noteholders. If the change is
made less than five business days before the expiration of the exchange offer, we will extend the
offer so that the noteholders have at least five business days to tender or withdraw.
Our acceptance of the tender of original notes by a tendering holder will form a binding
agreement upon the terms and subject to the conditions provided in this prospectus and in the
accompanying letter of transmittal.
Procedures for Tendering
Except as described below, a tendering holder must, on or prior to the expiration date:
|
|
|
transmit a properly completed and duly executed letter of transmittal, including all
other documents required by the letter of transmittal, to Deutsche Bank Trust Company
Americas at the address listed below under the heading Exchange Agent; or |
|
|
|
|
if original notes are tendered in accordance with the book-entry procedures listed below,
the tendering holder must transmit an agents message to the exchange agent at the address
listed below under the heading Exchange Agent. |
In addition:
|
|
|
the exchange agent must receive, on or before the expiration date, certificates for the
original notes or a timely confirmation of book-entry transfer of the original notes into
the exchange agents account at the Depository Trust Company, the book-entry transfer
facility; or |
|
|
|
|
the holder must comply with the guaranteed delivery procedures described below. |
The Depository Trust Company will be referred to as DTC in this prospectus.
The term agents message means a message, transmitted to DTC and received by the exchange
agent and forming a part of a book-entry transfer, that states that DTC has received an express
acknowledgment that the tendering holder agrees to be bound by the letter of transmittal and that
we may enforce the letter of transmittal against this holder.
30
The method of delivery of original notes, letters of transmittal and all other required
documents is at your election and risk. In all cases, you should allow sufficient time to assure
timely delivery to the exchange agent. You should not send any letter of transmittal, original
notes or other related documentation to us.
If you are a beneficial owner whose original notes are registered in the name of a broker,
dealer, commercial bank, trust company or other nominee, and wish to tender original notes, you
should promptly instruct the registered holder to tender on your behalf. Any registered holder that
is a participant in DTCs book-entry transfer facility system may make book-entry delivery of the
original notes by causing DTC to transfer the original notes into the exchange agents account.
Signatures on a letter of transmittal or a notice of withdrawal must be guaranteed unless the
original notes surrendered for exchange are tendered:
|
|
|
by a registered holder of the original notes who has not completed the box entitled
Special Issuance Instructions or Special Delivery Instructions on the letter of
transmittal, or |
|
|
|
|
for the account of an eligible institution. |
If signatures on a letter of transmittal or a notice of withdrawal are required to be
guaranteed, the guarantees must be by an eligible institution. An eligible institution is a
financial institution including most banks, savings and loan associations and brokerage houses
that is a participant in the Securities Transfer Agents Medallion Program, the New York Stock
Exchange Medallion Signature Program or the Stock Exchange Medallion Program.
We will determine in our sole discretion all questions as to the validity, form and
eligibility of original notes tendered for exchange. This discretion extends to the determination
of all questions concerning the timing of receipts and acceptance of tenders. These determinations
will be final and binding.
We reserve the right to reject any particular original note not properly tendered or which
acceptance of might, in our judgment or our counsels judgment, be unlawful. We also reserve the
right to waive any defects or irregularities or conditions of the exchange offer as to any
particular original note either before or after the expiration date, including the right to waive
the ineligibility of any tendering holder. Our interpretation of the terms and conditions of the
exchange offer as to any particular original note either before or after the expiration date,
including the letter of transmittal and the instructions to the letter of transmittal, shall be
final and binding on all parties. Unless waived, any defects or irregularities in connection with
tenders of original notes must be cured within a reasonable period of time. Neither we, the
exchange agent nor any other person will be under any duty to give notification of any defect or
irregularity in any tender of original notes. Nor will we, the exchange agent or any other person
incur any liability for failing to give notification of any defect or irregularity.
If the letter of transmittal is signed by a person other than the registered holder of
original notes, the letter of transmittal must be accompanied by a written instrument of transfer
or exchange in satisfactory form duly executed by the registered holder with the signature
guaranteed by an eligible institution. The original notes must be endorsed or accompanied by
appropriate powers of attorney. In either case, the original notes must be signed exactly as the
name of any registered holder appears on the original notes.
If the letter of transmittal or any original notes or powers of attorney are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or
others acting in a fiduciary or representative capacity, these persons should so indicate when
signing. Unless waived by us, proper evidence satisfactory to us of their authority to so act must
be submitted.
By tendering, each holder will represent to us that, among other things,
|
|
|
the exchange notes are being acquired in the ordinary course of business of the person
receiving the exchange notes, whether or not that person is the holder, and |
|
|
|
|
neither the holder nor the other person has any arrangement or understanding with any
person to participate in the distribution of the exchange notes. |
In the case of a holder that is not a broker-dealer, that holder, by tendering, will also
represent to us that the holder is not engaged in and does not intend to engage in a distribution
of the exchange notes.
31
If any holder or other person is an affiliate of ours, as defined under Rule 405 of the
Securities Act, or is engaged in, or intends to engage in, or has an arrangement or understanding
with any person to participate in, a distribution of the exchange notes, that holder or other
person cannot rely on the applicable interpretations of the staff of the SEC and must comply with
the registration and prospectus delivery requirements of the Securities Act in connection with any
resale transaction.
Each broker-dealer that receives exchange notes for its own account in exchange for original
notes, where the original notes were acquired by it as a result of market-making activities or
other trading activities, must acknowledge that it will deliver a prospectus that meets the
requirements of the Securities Act in connection with any resale of the exchange notes. The letter
of transmittal states that by so acknowledging and by delivering a prospectus, a broker-dealer will
not be deemed to admit that it is an underwriter within the meaning of the Securities Act. See
Plan of Distribution.
Acceptance of Original Notes for Exchange; Delivery of Exchange Notes
Upon satisfaction or waiver of all of the conditions to the exchange offer, we will accept,
promptly after the expiration date, all original notes properly tendered and not withdrawn. We will
issue the exchange notes promptly after acceptance of the original notes. See Conditions to the
Exchange Offer below. For purposes of the exchange offer, we will deemed to have accepted properly
tendered original notes for exchange when, as and if we have given oral or written notice to the
exchange agent, with prompt written confirmation of any oral notice.
The exchange notes will bear interest from the most recent date to which interest has been
paid on the original notes, or if no interest has been paid on the original notes, from the date of
issue of the original notes. Holders whose original notes are accepted for exchange will receive
interest, as interest on the exchange notes, accrued from the date of issue of the original notes
and will be deemed to have waived the right to receive interest accrued on the original notes.
Unaccepted or non-exchanged original notes will be returned without expense to the tendering
holder of the original notes. In the case of original notes tendered by book-entry transfer in
accordance with the book-entry procedures described below, the non-exchanged original notes will be
credited to an account maintained with the book-entry transfer facility as promptly as practicable
after the expiration or termination of the exchange offer.
Book-Entry Transfer
The exchange agent will make a request to establish an account for the original notes at DTC
for purposes of the exchange offer promptly after commencement of the exchange offer. Any financial
institution that is a participant in DTCs systems must make book-entry delivery of original notes
by causing DTC to transfer those original notes into the exchange agents account at DTC in
accordance with DTCs procedure for transfer. The participant should transmit its acceptance to DTC
on or prior to the expiration date or comply with the guaranteed delivery procedures described
below. DTC will verify this acceptance, execute a book-entry transfer of the tendered original
notes into the exchange agents account at DTC and then send to the exchange agent confirmation of
the book-entry transfer. The confirmation of the book-entry transfer will include an agents
message confirming that DTC has received an express acknowledgment from the participant that the
participant has received and agrees to be bound by the letter of transmittal and that we may
enforce the letter of transmittal against the participant. Delivery of exchange notes issued in the
exchange offer may be effected through book-entry transfer at DTC. However, the letter of
transmittal or facsimile of it or an agents message, with any required signature guarantees and
any other required documents, must:
|
(1) |
|
be transmitted to and received by the exchange agent at the address listed below under
Exchange Agent on or prior to the expiration date; or |
|
|
(2) |
|
comply with the guaranteed delivery procedures described below. |
Guaranteed Delivery Procedures
If a registered holder of original notes desires to tender the original notes, and the
original notes are not immediately available, or time will not permit the holders original notes
or other required documents to reach the exchange agent before the expiration date, or the
procedure for book-entry transfer described above cannot be completed on a timely basis, a tender
may nonetheless be made if:
|
|
|
the tender is made through an eligible institution; |
32
|
|
|
prior to the expiration date, the exchange agent received from an eligible institution a
notice of guaranteed delivery, substantially in the form provided by us, by facsimile
transmission, mail or hand delivery, |
|
(1) |
|
stating the name and address of the holder of original notes and the amount of
original notes tendered, |
|
|
(2) |
|
stating that the tender is being made and |
|
|
(3) |
|
guaranteeing that within three New York Stock Exchange trading days after the
expiration date, the certificates for all physically tendered original notes, in proper
form for transfer, or a book-entry confirmation, as the case may be, together with a
properly completed and duly executed letter of transmittal, or a facsimile of the letter
of transmittal and any other documents required by the letter of transmittal, will be
deposited by the eligible institution with the exchange agent; and |
|
|
|
the certificates for all physically tendered original notes, in proper form for transfer,
or a book-entry confirmation, as the case may be, a properly completed and duly executed
letter of transmittal, or a facsimile of the letter of transmittal and all other documents
required by the letter of transmittal, are received by the exchange agent within three New
York Stock Exchange trading days after the expiration date. |
Withdrawal Rights
Tenders of original notes may be withdrawn at any time before 5:00 p.m., New York City time,
on the expiration date.
For a withdrawal to be effective, the exchange agent must receive a written notice of
withdrawal at the address or, in the case of eligible institutions, at the facsimile number,
indicated below under Exchange Agent before 5:00 p.m., New York City time, on the expiration
date. Any notice of withdrawal must:
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specify the name of the person, referred to as the depositor, having tendered the
original notes to be withdrawn; |
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identify the original notes to be withdrawn, including the certificate number or numbers
and principal amount of the original notes; |
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contain a statement that the holder is withdrawing its election to have the original
notes exchanged; |
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be signed by the holder in the same manner as the original signature on the letter of
transmittal by which the original notes were tendered, including any required signature
guarantees, or be accompanied by documents of transfer to have the trustee with respect to
the original notes register the transfer of the original notes in the name of the person
withdrawing the tender; and |
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specify the name in which the original notes are registered, if different from that of
the depositor. |
If certificates for original notes have been delivered or otherwise identified to the exchange
agent, then prior to the release of these certificates the withdrawing holder must also submit the
serial numbers of the particular certificates to be withdrawn and signed notice of withdrawal with
signatures guaranteed by an eligible institution unless this holder is an eligible institution. If
original notes have been tendered in accordance with the procedure for book-entry transfer
described above, any notice of withdrawal must specify the name and number of the account at the
book-entry transfer facility to be credited with the withdrawn original notes. We will determine
all questions as to the validity, form and eligibility, including time of receipt, of notices of
withdrawal. Any original notes so withdrawn will be deemed not to have been validly tendered for
exchange. No exchange notes will be issued unless the original notes so withdrawn are validly
re-tendered. Properly withdrawn original notes may be re-tendered by following the procedures
described under Procedures for Tendering above at any time on or before 5:00 p.m., New York
City time, on the expiration date.
Conditions to the Exchange Offer
Notwithstanding any other provision of the exchange offer, we shall not be required to accept
original notes for exchange, or to issue exchange notes in exchange for any original notes, and may
terminate or amend the exchange offer, if at any time before the acceptance of the original notes
for exchange or the issuance of the exchange notes for the original notes:
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there has been instituted any proceeding seeking to restrain or prohibit the making or
completion of the exchange offer, or assessing or seeking any damages as a result of the
exchange offer, or resulting in a material delay in our ability to accept for exchange or
exchange some or all of the original notes in the exchange offer; or |
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any action shall have been taken, proposed or threatened by any governmental authority,
domestic or foreign, that in our sole judgment might directly or indirectly result in any of
such consequences or, in our sole judgment, might result in the holders of exchange notes
having obligations with respect to resales and transfers of exchange notes which are greater
than those described in the interpretations of the SEC staff referred to in this prospectus,
or would otherwise make it inadvisable to proceed with the exchange offer; or |
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there shall have occurred: |
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any general suspension of or general limitation on prices for, or trading in,
securities on any national securities exchange or in the over-the-counter market; or |
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any limitation by a governmental authority which may adversely affect our ability
to complete the transactions contemplated by the exchange offer; or |
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a declaration of a banking moratorium or any suspension of payments in respect of
banks in the United States or any limitation by any governmental agency or authority
which adversely affects the extension of credit; or |
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a commencement of a war, armed hostilities or other similar international calamity
directly or indirectly involving the United States, or, in the case of any of the
preceding events existing at the time of the commencement of the exchange offer, a
material acceleration or worsening of these calamities; or |
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any change, or any development involving a prospective change, shall have occurred or be
threatened in our business, financial condition, operations or prospects and those of our
subsidiaries taken as a whole that is or may be adverse to us, or we shall have become aware
of facts that have or may have an adverse impact on the value of the original notes or the
exchange notes; which in our sole judgment in any case makes it inadvisable to proceed with
the exchange offer and/or with such acceptance for exchange or with such exchange. |
These conditions to the exchange offer are to our sole benefit and we may assert them
regardless of the circumstances giving rise to any of these conditions, or we may waive them in
whole or in part in our sole discretion. If we do so, the exchange offer will remain open for at
least five business days following any waiver of the preceding conditions. Our failure at any time
to exercise any of the foregoing rights will not be deemed a waiver of any right.
In addition, we will not accept for exchange any original notes tendered, and no exchange
notes will be issued in exchange for any original notes, if at that time any stop order is
threatened or in effect relating to the registration statement of which this prospectus constitutes
a part or the qualification of the indenture under the Trust Indenture Act of 1939.
Exchange Agent
We have appointed Deutsche Bank Trust Company Americas as the exchange agent for the exchange
offer. You should direct all executed letters of transmittal to the exchange agent at the address
indicated below. You should direct questions and requests for assistance, requests for additional
copies of this prospectus or of the letter of transmittal and requests for notices of guaranteed
delivery to the exchange agent addressed as follows:
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Delivery To Deutsche Bank Trust Company Americas, Exchange Agent
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By Hand Before 4:30 p.m.:
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By Registered or Certified Mail: |
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Deutsche Bank Trust Company Americas
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Deutsche Bank Trust Company Americas |
DB Services Tennessee, Inc.
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DB Services Tennessee, Inc. |
Corporate Trust & Agency Services
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Reorganization Unit |
Reorganization Unit
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P.O. Box 292737 |
648 Grassmere Park Road
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Nashville, TN 37229-2737 |
Nashville, TN 37211 |
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Fax: (615) 835-3701 |
Confirm by Telephone: (615) 835-3572 |
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SPU-Reorg.Operations@db.com |
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By Hand or Overnight Delivery after
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By Facsimile Transmission |
4:30 p.m. on the Expiration Date:
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(for Eligible Institutions only): |
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Deutsche Bank Trust Company Americas
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Fax: (615) 835-3701 |
DB Services Tennessee, Inc. |
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Corporate Trust & Agency Services
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Confirm by Telephone: (615) 835-3572 |
Reorganization Unit |
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648 Grassmere Park Road
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Information (800) 735-7777 |
Nashville, TN 37211 |
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Confirm by Telephone: (615) 835-3572 |
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SPU-Reorg.Operations@db.com |
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If you deliver the letter of transmittal to an address other than the address indicated above
or transmit instructions via facsimile other than to the facsimile number indicated, then your
delivery or transmission will not constitute a valid delivery of the letter of transmittal.
Fees and Expenses
We will not make any payment to brokers, dealers, or others for soliciting acceptances of the
exchange offer. The expenses to be incurred in connection with the exchange offer will be paid by
us. These expenses will include reasonable and customary fees and out-of-pocket expenses of the
exchange agent and reasonable out-of-pocket expenses incurred by brokerage houses and other
fiduciaries in forwarding materials to beneficial holders in connection with the exchange offer.
Accounting Treatment
We will not recognize any gain or loss for accounting purposes upon the consummation of the
exchange offer. We will amortize the expense of the exchange offer over the term of the exchange
notes under generally accepted accounting principles.
Transfer Taxes
Holders who tender their original notes for exchange will not be obligated to pay any related
transfer taxes, except that holders who instruct us to register exchange notes in the name of, or
request that original notes not tendered or not accepted in the exchange offer be returned to, a
person other than the registered tendering holder will be responsible for the payment of any
applicable transfer taxes.
Consequences of Exchanging or Failing to Exchange Original Notes
Holders of original notes who do not exchange their original notes for exchange notes in the
exchange offer will continue to be subject to the provisions in the indenture regarding transfer
and exchange of the original notes and the restrictions on transfer of the original notes as
described in the legend on the original notes. In general, the original notes may not be offered or
sold, unless
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registered under the Securities Act, except under an exemption from, or in a transaction not
subject to, the Securities Act and applicable state securities laws. We do not currently anticipate
that we will register original notes under the Securities Act.
Based on interpretations by the staff of the SEC, as described in no-action letters issued to
third parties, we believe that exchange notes issued in the exchange offer in exchange for original
notes may be offered for resale, resold or otherwise transferred by holders of the original notes,
other than any holder which is an affiliate of ours within the meaning of Rule 405 under the
Securities Act, without compliance with the registration and prospectus delivery provisions of the
Securities Act, as long as the exchange notes are acquired in the ordinary course of the holders
business and the holders have no arrangement or understanding with any person to participate in the
distribution of the exchange notes. However, the SEC has not considered this exchange offer in the
context of a no-action letter. We cannot assure you that the staff of the SEC would make a similar
determination with respect to this exchange offer as in the other circumstances.
Each holder, other than a broker-dealer, must acknowledge that it is not engaged in, and does
not intend to engage in, a distribution of exchange notes and has no arrangement or understanding
to participate in a distribution of exchange notes. If any holder is an affiliate of ours, is
engaged in or intends to engage in or has any arrangement or understanding with any person to
participate in the distribution of the exchange notes to be acquired in the exchange offer, that
holder could not rely on the applicable interpretations of the staff of the SEC and must comply
with the registration and prospectus delivery requirements of the Securities Act in connection with
any resale transaction.
Each broker-dealer that receives exchange notes for its own account in exchange for original
notes must acknowledge that the original notes were acquired by the broker-dealer as a result of
market-making activities or other trading activities and that it will comply with the registration
and prospectus delivery requirements of the Securities Act in connection with any resale of the
exchange notes. Furthermore, any broker-dealer that acquired any of its original notes directly
from us:
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may not rely on the applicable interpretations of the staff of the SEC contained in Exxon
Capital Holdings Corp., SEC no-action letter (May 13, 1988), Morgan, Stanley & Co. Inc., SEC
no-action letter (June 5, 1991) and Shearman & Sterling, SEC no-action letter (July 2, 1993)
and |
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must also be named as a selling noteholder in connection with the registration and
prospectus delivery requirements of the Securities Act relating to any resale transaction. |
See Plan of Distribution.
In addition, to comply with state securities laws, the exchange notes may not be offered or
sold in any state unless they have been registered or qualified for sale in such state or an
exemption from registration or qualification, with which there has been compliance, is available.
The offer and sale of the exchange notes to qualified institutional buyers, as defined under Rule
144A of the Securities Act, is generally exempt from registration or qualification under the state
securities laws. We currently do not intend to register or qualify the sale of exchange notes in
any state where an exemption from registration or qualification is required and not available.
36
DESCRIPTION OF AMENDED AND RESTATED
SENIOR SECURED REVOLVING CREDIT FACILITY
Concurrently with the closing of our issuance of the outstanding notes on May 7, 2007, we
entered into an amended and restated senior secured revolving credit facility, with Deutsche Bank
AG, New York Branch, as agent and the other lenders named in the revolving credit facility, to
increase our borrowing limit from $350 million to $425 million.
Borrowings under our revolving credit facility will mature in May 2012 and be limited to the
lesser of (x) $425.0 million and (y) a borrowing base amount determined by reference to a
percentage of the collateral value of the fleet, receivables, inventories, and real property
securing the revolving credit facility. At May 31, 2007, the amount available for borrowings under
this calculation was $425.0 million (less approximately $3.2 million of outstanding letters of
credit), based upon the most restrictive of our covenants. In addition, our revolving credit
facility includes a sub-limit borrowing availability of up to $50.0 million for letters of credit.
Mandatory prepayments of loans under our revolving credit facility will be required in the
event of:
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certain asset sales and dispositions by us and our subsidiaries; |
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certain issuances of debt or equity securities by us and our subsidiaries; and |
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certain insurance proceeds received by us and our subsidiaries, |
in each case, subject to certain exceptions and reinvestment rights.
Voluntary prepayments and commitment reductions are permitted in whole or in part, subject to
minimum prepayment or reduction requirements, provided that voluntary prepayments of Eurodollar
loans on a date other than the last day of the relevant interest period will be subject to the
payment of customary breakage costs, if any. Such voluntary prepayments and commitment reductions
may be made without premium or penalty.
All of our obligations under our revolving credit facility are unconditionally guaranteed by
each of our existing and each subsequently acquired or organized domestic subsidiaries. Also, our
revolving credit facility provides that any obligation incurred by any of our UK subsidiaries is
unconditionally guaranteed by each of our existing and subsequently acquired or organized UK
subsidiaries and under certain circumstances by other foreign subsidiaries. At May 31, 2007, our UK
subsidiaries had $19.2 million in aggregate principal amount of indebtedness outstanding under the
credit facility. Our revolving credit facility and the related guarantees are secured by
substantially all of our present and future assets and all present and future assets of each
borrower and guarantor, including but not limited to (i) a first-priority pledge of the outstanding
capital stock or other ownership interests owned by us and each guarantor (with limits on stocks of
certain foreign subsidiaries) and (ii) perfected first-priority security interests in all of our
present and future tangible and intangible assets and the present and future tangible and
intangible assets of each borrower and guarantor (in each case, other than certain equipment assets
subject to capitalized lease obligations).
Loans under our revolving credit facility, at our option and subject to certain conditions,
bear interest at a rate based on either (1) the prime rate of Deutsche Bank AG, New York Branch,
plus a spread ranging from -0.25% (negative) to 0.25% depending on our leverage ratio, or (2) the
London inter-bank offered rate (LIBOR) plus a spread ranging from 1.25% to 2.00% depending on our
leverage ratio. Interest on outstanding borrowings is payable monthly or, with respect to LIBOR
borrowings, either quarterly or on the last day of the applicable interest period (whichever is
more frequent). In addition to paying interest on any outstanding principal amount under our
revolving credit facility, we will be required to pay an unused revolving credit facility fee to
the senior lenders equal to a range of 0.25% to 0.375%per annum on the unused daily balance of the
revolving credit commitment, payable monthly in arrears, based upon the actual number of days
elapsed in a 360 day year (or 365 for Sterling loans). For each letter of credit we issue, we are
required to pay (i) a per annum fee equal to the margin over the LIBOR rate from time to time in
effect, (ii) a fronting fee on the aggregate outstanding stated amounts of such letters of credit,
plus (iii) customary administrative charges.
The revolving credit facility documentation contains certain customary representations and
warranties and customary covenants restricting our ability to, among others (i) declare dividends
or redeem or repurchase capital stock, (ii) prepay, redeem or purchase other debt, (iii) incur
liens, (iv) make loans and investments, (v) incur additional indebtedness, (vi) amend or otherwise
alter debt and other material agreements, (vii) make capital expenditures, (viii) engage in
mergers, acquisitions and asset sales, (ix) transact with affiliates, and (x) alter the business we
conduct. We also are required to comply with specified financial covenants and affirmative
covenants.
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Events of default under our revolving credit facility include, but are not limited to, (i) our
failure to pay principal or interest when due, (ii) our material breach of any representations or
warranty, (iii) covenant defaults, (iv) events of bankruptcy, (v) cross default to certain other
debt, (vi) unsatisfied final judgments over a threshold to be determined, and (vii) a change of
control. We will pay the senior lenders certain syndication and administration fees, reimburse
certain expenses and provide certain indemnities to the senior lenders, the administrative agent
and the arranger, in each case which are customary for credit facilities of this type.
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DESCRIPTION OF NOTES
The outstanding notes are, and the exchange notes will be, issued pursuant to the Indenture
dated as of May 7, 2007 (the Indenture), among us, the Guarantors and Law Debenture Trust Company
of New York, as Trustee (the Trustee).
The Indenture is by its terms subject to and governed by the Trust Indenture Act of 1939, as
amended. The statements under this section of this prospectus relating to the exchange notes and
the Indenture are summaries of the material provisions of the Indenture and do not restate the
Indenture in its entirety. Copies of the Indenture and the Registration Rights Agreement related to
the notes are available at the corporate trust office of the Trustee, and we have filed copies of
the Indenture and the Registration Rights Agreement as exhibits to the registration statement on
Form S-4 of which this prospectus is a part. See Where You Can Find More Information. You can
find definitions of certain capitalized terms used in this description under Certain
Definitions. For purposes of this section, references to the Company includes only Mobile Mini,
Inc. and not its Subsidiaries. Unless specifically identified otherwise, references to the notes
means the originally issued notes together with the exchange notes.
General
The Company issued $150.0 million in aggregate principal amount of the outstanding notes to
the Initial Purchasers on May 7, 2007. The Initial Purchasers sold the outstanding notes to
qualified institutional buyers as defined in Rule 144A under the Securities Act. The terms of the
exchange notes are substantially identical to the terms of the outstanding notes. However, the
exchange notes are not subject to transfer restrictions or registration rights unless held by
certain broker-dealers, affiliates of the Company or certain other persons. See The Exchange Offer
Consequences of Exchanging or Failing to Exchange. The Company does not plan to list the
exchange notes on any securities exchange or seek quotation on any automated quotation system. The
outstanding notes are listed on Nasdaqs PORTAL system.
The exchange notes will be senior unsecured Obligations of the Company, ranking equal in right
of payment with all other senior unsecured Obligations of the Company. All of our Subsidiaries on
the Issue Date will guarantee the exchange notes with unconditional Guarantees that will be
unsecured and senior to any existing and future Subordinated Indebtedness of such Subsidiaries. The
exchange notes and the Guarantees will be effectively subordinated to all existing and future
secured Indebtedness of the Company to the extent of the assets securing such debt. As of May 31,
2007, the Company had approximately $191.5 million of secured Indebtedness outstanding and
approximately $230.3 million of unused commitments, net of outstanding letters of credit, under the
Credit Agreement. All of the outstanding Indebtedness under the Credit Agreement is guaranteed by
the Guarantors on a secured basis. The Notes will not be guaranteed by any of our Foreign
Subsidiaries and will be effectively subordinated to any obligations of such Foreign Subsidiaries.
The Foreign Subsidiaries have approximately $19.2 million outstanding Indebtedness as of May 31,
2007, all of which is outstanding under the Credit Agreement or intercompany obligations.
The Company will issue the exchange notes in fully registered form in denominations of $2,000
and integral multiples thereof. Deutsche Bank Trust Company Americas will initially act as Paying
Agent and Registrar for the Notes. The exchange notes may be presented for registration or transfer
and exchange at the offices of the Registrar. The Company may change any Paying Agent and Registrar
without notice to holders of the exchange notes (the Holders). The Company will pay principal
(and premium, if any) on the exchange notes at the Paying Agents corporate office in New York, New
York. At the Companys option, interest may be paid at the Paying Agents corporate trust office or
by check mailed to the registered address of Holders. Any outstanding notes that remain outstanding
after the completion of this exchange offer, together with the exchange notes issued in connection
with the exchange offer, will be treated as a single class of securities under the Indenture.
Principal, Maturity and Interest
The exchange notes will mature on May 1, 2015. Additional notes may be issued from time to
time, subject to the limitations set forth under Certain Covenants Limitation on Incurrence of
Additional Indebtedness. Interest on the exchange notes will accrue at the rate of 6 7/8% per
annum and will be payable semiannually in cash on each May 1 and November 1, commencing on November
1, 2007, to the persons who are registered Holders at the close of business on the April 15 and
October 15 immediately preceding the applicable interest payment date. Interest on the exchange
notes will accrue from the most recent date to which interest has been paid or, if no interest has
been paid, from and including the date of issuance.
The exchange notes will not be (and the outstanding notes are not) entitled to the benefit of
any mandatory sinking fund.
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Redemption
Optional Redemption. The Company may redeem the notes at any time at its option, in
whole or in part, upon not less than 30 nor more than 60 days notice. To redeem the notes prior to
May 1, 2011, the Company must pay a redemption price equal to the greater of:
(a) 100% of the principal amount of the notes to be redeemed; and
(b) the sum of the present values of (1) the redemption price of the notes at May 1, 2011
(as set forth below) and (2) the remaining scheduled payments of interest from the redemption
date to May 1, 2011, but excluding accrued and unpaid interest, if any, to the redemption date,
discounted to the date of redemption on a semi-annual basis (assuming a 360-day year consisting
of twelve 30-day months), at the Treasury Rate (determined on the second business day
immediately preceding the date of redemption) plus 50 basis points,
plus, in either case, accrued and unpaid interest, if any, to the redemption date (subject to the
right of holders of record on the relevant record date to receive interest due on the relevant
interest payment date).
Any notice to holders of notes of such a redemption will include the appropriate calculation
of the redemption price, but need not include the redemption price itself. The actual redemption
price, calculated as described above, will be set forth in a officers certificate delivered to the
Trustee no later than two business days prior to the redemption date (unless clause (b) of the
definition of Comparable Treasury Price is applicable, in which case such officers certificate
shall be delivered on the redemption date).
Beginning on May 1, 2011, the Company may redeem the notes at its option, in whole or in part,
upon not less than 30 nor more than 60 days notice, at the following redemption prices (expressed
as percentages of the principal amount thereof) if redeemed during the twelve-month period
commencing on May 1 of the year set forth below:
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2011 |
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103.438 |
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2012 |
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101.719 |
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2013 and thereafter |
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100.000 |
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In addition, the Company must pay accrued and unpaid interest on the notes redeemed.
Optional Redemption Upon Equity Offerings. At any time, or from time to time, on or prior to
May 1, 2010, the Company may, at its option, use the net cash proceeds of one or more Equity
Offerings (as defined below) to redeem up to 35% of the principal amount of the notes issued under
the Indenture at a redemption price of 106.875% of the principal amount thereof plus accrued and
unpaid interest thereon, if any, to the date of redemption; provided that:
(1) at least 65% of the principal amount of notes issued under the Indenture remains
outstanding immediately after any such redemption; and
(2) the Company makes such redemption not more than 90 days after the consummation of any
such Equity Offering.
Equity Offering means a public or private offering of Qualified Capital Stock of the Company
or any of its Subsidiaries other than:
(1) public offerings with respect to the common stock of the Company or any subsidiary
registered on Form S-8; and
(2) issuances to any Subsidiary of the Company.
Selection and Notice of Redemption
In the event that the Company chooses to redeem less than all of the notes, selection of the
notes for redemption will be made by the Registrar either:
(1) in compliance with the requirements of the principal national securities exchange, if
any, on which the notes are listed; or,
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(2) on a pro rata basis, by lot or by such method as the Registrar shall deem fair and
appropriate.
No notes of a principal amount of $2,000 (and integral multiples of $1,000 in excess thereof)
or less shall be redeemed in part. If a partial redemption is made with the proceeds of an Equity
Offering, the Registrar will select the notes only on a pro rata basis or on as nearly a pro rata
basis as is practicable (subject to DTC procedures). Notice of redemption will be delivered at
least 30 but not more than 60 days before the redemption date to each Holder of notes to be
redeemed at its registered address. On and after the redemption date, interest will cease to accrue
on notes or portions thereof called for redemption as long as the Company has deposited with the
Paying Agent funds in satisfaction of the applicable redemption price.
Guarantees
The outstanding notes are, and the exchange notes will be, unconditionally guaranteed by all
Domestic Restricted Subsidiaries of the Company existing on the Issue Date and thereafter by all
acquired or created Domestic Restricted Subsidiaries, subject to compliance with the covenant
described under Certain Covenants Additional Subsidiary Guarantees. The Guarantors will
jointly and severally guarantee the Companys obligations under the Indenture and the notes on a
senior unsecured basis. The obligations of each Guarantor under its Guarantee will be limited as
necessary to prevent the Guarantee from constituting a fraudulent conveyance or fraudulent transfer
under applicable law.
Each Guarantor may consolidate with or merge into or sell its assets to the Company or another
Guarantor that is a Restricted Subsidiary of the Company without limitations, or with other Persons
upon the terms and conditions set forth in the Indenture. See Certain Covenants Merger,
Consolidation and Sale of Assets. In the event a Guarantor ceases to be a Subsidiary of the
Company in a transaction that complies with the covenant described under Certain Covenants
Limitation on Asset Sales and the other covenants contained in the Indenture, then the Guarantors
Guarantee will be released.
The notes will not be guaranteed by any of our Foreign Subsidiaries and will be effectively
subordinated to the obligations of such Foreign Subsidiaries. The non-guarantor Subsidiaries
represented 5.1% and 1.2% of our combined revenue and EBITDA, respectively, for the fiscal year
ended December 31, 2006 and approximately 5.5% of our assets for the same period.
Change of Control
Upon the occurrence of a Change of Control, each Holder will have the right to require that
the Company purchase all or a portion of such Holders notes pursuant to the offer described below
(the Change of Control Offer), at a purchase price equal to 101% of the principal amount thereof
plus accrued and unpaid interest, if any, to the date of purchase.
Within 30 days following the date upon which the Change of Control occurred, the Company must
deliver a notice to each Holder, with a copy to the Trustee, which notice shall govern the terms of
the Change of Control Offer. Such notice shall state, among other things, the purchase date, which
must be no earlier than 30 days nor later than 60 days from the date such notice is mailed, other
than as may be required by law (the Change of Control Payment Date). Holders electing to have a
Note purchased pursuant to a Change of Control Offer will be required to surrender the Note, with
the form entitled Option of Holder to Elect Purchase on the reverse of the Note completed, to the
Paying Agent at the address specified in the notice prior to the close of business on the third
business day prior to the Change of Control Payment Date.
The Company will not be required to make a Change of Control Offer upon a Change of Control if
a third party makes the Change of Control Offer in the manner, at the times and otherwise in
compliance with the requirements set forth in the Indenture applicable to a Change of Control Offer
made by the Company and purchases all notes validly tendered and not withdrawn under such Change of
Control Offer.
If a Change of Control Offer is made, there can be no assurance that the Company will have
available funds sufficient to pay the Change of Control purchase price for all the notes that might
be delivered by Holders seeking to accept the Change of Control Offer. In the event the Company is
required to purchase outstanding notes pursuant to a Change of Control Offer, the Company expects
that it would seek third party financing to the extent it does not have available funds to meet its
purchase obligations. However, there can be no assurance that the Company would be able to obtain
such financing.
A Change of Control will be an event of default under the Credit Agreement, upon which event
all amounts outstanding under the Credit Agreement shall, unless otherwise agreed by the required
lenders thereunder, become due and payable. There can be no assurance that, in the event of a
Change of Control, the Company will be able to obtain the necessary consents from the lenders under
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the Credit Agreement to waive such default or consummate a Change of Control Offer. The
failure of the Company to make or consummate the Change of Control Offer or pay the applicable
Change of Control purchase price when due would result in an Event of Default and would give the
Trustee and the Holders of the notes the rights described under Events of Default.
Neither the Board of Directors of the Company nor the Trustee may waive the covenant relating
to a Holders right to redemption upon a Change of Control. Restrictions in the Indenture described
herein on the ability of the Company and its Restricted Subsidiaries to incur additional
Indebtedness, to grant liens on its property, to make Restricted Payments and to make Asset Sales
may also make more difficult or discourage a takeover of the Company, whether favored or opposed by
the management of the Company. Consummation of any such transaction in certain circumstances may
require redemption or repurchase of the notes, and there can be no assurance that the Company or
the acquiring party will have sufficient financial resources to effect such redemption or
repurchase. Such restrictions and the restrictions on transactions with Affiliates may, in certain
circumstances, make more difficult or discourage any leveraged buyout of the Company or any of its
Subsidiaries by the management of the Company. While such restrictions cover a wide variety of
arrangements which have traditionally been used to effect highly leveraged transactions, the
Indenture may not afford the Holders protection in all circumstances from the adverse aspects of a
highly leveraged transaction, reorganization, restructuring, merger or similar transaction.
The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any
other securities laws and regulations thereunder to the extent such laws and regulations are
applicable in connection with the repurchase of notes pursuant to a Change of Control Offer. To the
extent that the provisions of any securities laws or regulations conflict with the Change of
Control provisions of the Indenture, the Company shall comply with the applicable securities laws
and regulations and shall not be deemed to have breached its obligations under the Change of
Control provisions of the Indenture by virtue thereof.
The definition of Change of Control includes a phrase relating to the direct or indirect sale,
lease, transfer, conveyance or other disposition of all or substantially all of the properties or
assets of the Company and its Restricted Subsidiaries taken as a whole. Although there is a limited
body of case law interpreting the phrase substantially all, there is no precise established
definition of the phrase under applicable law. Accordingly, the ability of a holder of notes to
require the Company to repurchase its notes as a result of a sale, lease, transfer, conveyance or
other disposition of less than all of the assets of the Company and its Restricted Subsidiaries
taken as a whole to another Person or group may be uncertain.
Certain Covenants
The Indenture will contain, among others, the following covenants:
Suspension of Covenants. During any period of time that: (i) the notes have Investment Grade
Ratings from two Rating Agencies and (ii) no Default or Event of Default has occurred and is
continuing under the Indenture (the occurrence of the events described in the foregoing clauses (i)
and (ii) being collectively referred to as a Covenant Suspension Event), the Company and the
Restricted Subsidiaries will not be subject to the following provisions of the Indenture:
(1) Limitation on Incurrence of Additional Indebtedness;
(2) Limitation on Restricted Payments;
(3) Limitation on Dividend and Other Payment Restrictions Affecting Restricted
Subsidiaries;
(4) Limitation on Asset Sales;
(5) Limitation on Transactions with Affiliates; and
(6) clause (2) of the first paragraph of Merger, Consolidation and Sale of Assets
(collectively, the Suspended Covenants). Upon the occurrence of a Covenant Suspension Event, the
Guarantees of the Subsidiary Guarantors will also be suspended as of such date (the Suspension
Date). In the event that the Company and the Restricted Subsidiaries are not subject to the
Suspended Covenants for any period of time as a result of the foregoing, and on any subsequent date
(the Reversion Date) one or both of the Rating Agencies withdraws its Investment Grade Rating or
downgrades the rating assigned to the notes below an Investment Grade Rating, then the Company and
the Restricted Subsidiaries will thereafter again be subject to the Suspended Covenants with
respect to future events and the Guarantees of the Subsidiary Guarantors will be reinstated if such
42
Guarantees are then required by the terms of the Indenture. The period of time between the
Suspension Date and the Reversion Date is referred to in this description as the Suspension
Period. Notwithstanding that the Suspended Covenants may be reinstated, no Default or Event of
Default will be deemed to have occurred as a result of a failure to comply with the Suspended
Covenants during the Suspension Period (or upon termination of the Suspension Period or after that
time based solely on events that occurred during the Suspension Period).
On the Reversion Date, all Indebtedness incurred during the Suspension Period will be
classified as having been incurred or issued pursuant to clause (a) of Limitation on Incurrence
of Additional Indebtedness below (to the extent such Indebtedness would be permitted to be
Incurred or issued thereunder as of the Reversion Date and after giving effect to Indebtedness
incurred or issued prior to the Suspension Period and outstanding on the Reversion Date). To the
extent such Indebtedness would not be so permitted to be incurred or issued pursuant to clause (a)
of Limitation on Incurrence of Additional Indebtedness, such Indebtedness will be deemed to
have been outstanding on the Issue Date, so that it is initially classified as permitted under
clause (3) of the definition of Permitted Indebtedness. Calculations made after the Reversion
Date of the amount available to be made as Restricted Payments under Limitation on Restricted
Payments will be made as though the covenant described under Limitation on Restricted Payments
had been in effect since the Issue Date and throughout the Suspension Period. Accordingly,
Restricted Payments made during the Suspension Period will reduce the amount available to be made
as Restricted Payments under the second paragraph of Limitation on Restricted Payments. As
described above, however, no Default or Event of Default will be deemed to have occurred on the
Reversion Date as a result of any actions taken by the Company or its Restricted Subsidiaries
during the Suspension Period. The Company should provide notice to the Trustee if a Suspension
Period event has occurred or if there has been a reversion event.
Limitation on Incurrence of Additional Indebtedness. (a) The Company will not, and will not
permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume,
guarantee, acquire, become liable, contingently or otherwise, with respect to, or otherwise become
responsible for payment of (collectively, incur) any Indebtedness (other than Permitted
Indebtedness); provided, however, that if no Default or Event of Default shall have occurred and be
continuing at the time of or as a consequence of the incurrence of any such Indebtedness, the
Company or any of its Restricted Subsidiaries that is or, upon such incurrence, becomes a Guarantor
may incur Indebtedness (including, without limitation, Acquired Indebtedness) and any Restricted
Subsidiary of the Company that is not or will not, upon such incurrence, become a Guarantor may
incur Acquired Indebtedness, in each case if on the date of the incurrence of such Indebtedness,
after giving effect to the incurrence thereof, the Consolidated Fixed Charge Coverage Ratio of the
Company is greater than 2.0 to 1.0.
(b) The Company will not, and will not permit any Guarantor to directly or indirectly, incur
any Indebtedness which by its terms (or by the terms of any agreement governing such Indebtedness)
is expressly subordinated in right of payment to any other Indebtedness of the Company or such
Guarantor, as the case may be, unless such Indebtedness is also by its terms (or by the terms of
any agreement governing such Indebtedness) made expressly subordinate to the notes or the
applicable Guarantee, as the case may be, to the same extent and in the same manner as such
Indebtedness is subordinated to other Indebtedness of the Company or such Guarantor, as the case
may be.
Limitation on Restricted Payments. The Company will not, and will not cause or permit any of
its Restricted Subsidiaries to, directly or indirectly:
(1) declare or pay any dividend or make any distribution (other than dividends or
distributions payable in Qualified Capital Stock of the Company) on or in respect of shares of
the Companys Capital Stock to holders of such Capital Stock;
(2) purchase, redeem or otherwise acquire or retire for value any Capital Stock of the
Company or any warrants, rights or options to purchase or acquire shares of any class of such
Capital Stock (other than any such Capital Stock or warrants, rights or options owned by the
Company or any Restricted Subsidiary of the Company);
(3) make any principal payment on, purchase, defease, redeem, prepay, decrease or otherwise
acquire or retire for value, prior to any scheduled final maturity, scheduled repayment or
scheduled sinking fund payment, any Subordinated Indebtedness; or
(4) make any Investment (other than Permitted Investments) (each of the foregoing actions
set forth in clauses (1), (2), (3) and (4) being referred to as a Restricted Payment);
if at the time of such Restricted Payment or immediately after giving effect thereto,
(i) a Default or an Event of Default shall have occurred and be continuing; or
43
(ii) the Company is not able to incur at least $1.00 of additional Indebtedness (other
than Permitted Indebtedness) in compliance with the Limitation on Incurrence of Additional
Indebtedness covenant; or
(iii) the aggregate amount of Restricted Payments (including such proposed Restricted
Payment) made subsequent to the Issue Date (the amount expended for such purposes, if other
than in cash, being the fair market value of such property as determined in good faith by the
Board of Directors of the Company) shall exceed the sum of:
(w) 50% of the cumulative Consolidated Net Income (or if cumulative Consolidated Net
Income shall be a loss, minus 100% of such loss) of the Company from April 1, 2003 to the
date the Restricted Payment occurs (the Reference Date) (treating such period as a single
accounting period); plus
(x) 100% of the aggregate net cash proceeds received by the Company from any Person
(other than a Subsidiary of the Company) from the issuance and sale subsequent to July 1,
2003 and on or prior to the Reference Date of (1) Qualified Capital Stock of the Company,
(2) warrants, options or other rights to acquire Qualified Capital Stock of the Company
(but excluding any debt security that is convertible into, or exchangeable for, Qualified
Capital Stock) or (3) convertible or exchangeable Disqualified Capital Stock or debt
securities that have been converted or exchanged in accordance with their terms for
Qualified Capital Stock; plus
(y) without duplication of any amounts included in clause (iii) (x) above, 100% of the
aggregate net cash proceeds of any equity contribution received by the Company from a
holder of the Companys Capital Stock subsequent to July 1, 2003 and on or prior to the
Reference Date (excluding, in the case of clauses (iii) (x) and (y), any net cash proceeds
from an Equity Offering to the extent used to redeem the notes in compliance with the
provisions set forth under Redemption Optional Redemption Upon Equity Offerings); plus
(z) without duplication, the sum of:
(1) the aggregate amount returned in cash on or with respect to Investments
(other than Permitted Investments) made subsequent to July 1, 2003 whether through
interest payments, principal payments, dividends or other distributions or payments;
(2) the net cash proceeds received by the Company or any of its Restricted
Subsidiaries from the disposition of all or any portion of such Investments (other
than to a Restricted Subsidiary of the Company); and
(3) upon redesignation of an Unrestricted Subsidiary as a Restricted Subsidiary,
the fair market value of such Subsidiary; provided, however, that the sum of clauses
(1), (2) and (3) above shall not exceed the aggregate amount of all such Investments
made subsequent to the Issue Date.
Notwithstanding the foregoing, the provisions set forth in the immediately preceding paragraph
do not prohibit:
(1) the payment of any dividend within 60 days after the date of declaration of such
dividend if the dividend would have been permitted on the date of declaration;
(2) the redemption, repurchase, retirement, defeasance or other acquisition of any shares
of Capital Stock of the Company, either (i) solely in exchange for shares of Qualified Capital
Stock of the Company or (ii) through the application of net proceeds of a substantially
concurrent sale for cash (other than to a Restricted Subsidiary of the Company) of shares of
Qualified Capital Stock of the Company;
(3) the redemption, repurchase, retirement, defeasance or other acquisition of any
Subordinated Indebtedness either (i) solely in exchange for shares of Qualified Capital Stock of
the Company, or (ii) through the application of net proceeds of a substantially concurrent sale
for cash (other than to a Restricted Subsidiary of the Company) of (a) shares of Qualified
Capital Stock of the Company or (b) Refinancing Indebtedness;
(4) so long as no Default or Event of Default shall have occurred and be continuing
redemption, repurchase, retirement, defeasance or other acquisition by the Company of Common
Stock of the Company from officers, directors and employees of the Company or any of its
Subsidiaries or their authorized representatives upon the death, disability or termination of
employment of
44
such employees or termination of their seat on the board of the Company, in an aggregate
amount not to exceed $1.5 million in any calendar year with any unused amounts in such calendar
year being carried forward to the next succeeding calendar year; provided that the aggregate
amount of repurchases that may be made pursuant to this clause (4) shall not exceed $3.0 million
in any calendar year;
(5) so long as no Default or Event of Default shall have occurred and be continuing,
Restricted Payments in an aggregate amount not to exceed $25.0 million;
(6) repurchases of Qualified Capital Stock deemed to occur upon the exercise of stock
options, warrants or other convertible or exchangeable securities; and
(7) repurchases of Qualified Capital Stock constituting fractional shares in an aggregate
amount not to exceed $100,000.
If the Company makes a Restricted Payment which, at the time of the making of such Restricted
Payment, in the good faith determination of the Board of Directors of the Company, would be
permitted under the requirements of the Indenture, such Restricted Payment shall be deemed to have
been made in compliance with the Indenture notwithstanding any subsequent adjustment made in good
faith to the Companys financial statements affecting Consolidated Net Income.
In determining the aggregate amount of Restricted Payments made subsequent to the Issue Date
in accordance with clause (iii) of the immediately preceding paragraph, amounts expended pursuant
to clauses (1), (2)(ii), 3(ii)(a) and (4) shall be included in such calculation. As of December 31,
2006, the amount of Restricted Payments permitted to be made pursuant to clause (iii) of the
immediately preceding paragraph was approximately $134.6 million.
Limitation on Asset Sales. The Company will not, and will not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless:
(1) the Company or the applicable Restricted Subsidiary, as the case may be, receives
consideration at the time of such Asset Sale at least equal to the fair market value of the
assets sold or otherwise disposed of (as determined in good faith by the Companys Board of
Directors);
(2) at least 75% of the consideration received by the Company or the Restricted Subsidiary,
as the case may be, from such Asset Sale shall be in the form of cash, Cash Equivalents and/or
Replacement Assets (as defined below) (or a combination thereof) and is received at the time of
such disposition; provided that
(a) the amount of any liabilities (as shown on the Companys or such Restricted
Subsidiarys most recent balance sheet) of the Company or any such Restricted Subsidiary
(other than liabilities that are by their terms subordinated to the notes or any Guarantee of
a Guarantor) that are assumed by the transferee of any such assets; and
(b) the fair market value of any securities or other assets received by the Company or
any such Restricted Subsidiary in exchange for any such assets that are converted into cash
within 180 days after such Asset Sale;
shall be deemed to be cash for purposes of this provision; and
(3) upon the consummation of an Asset Sale, the Company shall apply, or cause such
Restricted Subsidiary to apply, the Net Cash Proceeds relating to such Asset Sale within 365
days of receipt thereof either:
(a) to repay (i) any Obligations under the Credit Agreement and effect a permanent
reduction in the availability under such Credit Agreement and (ii) in the case of an Asset
Sale by a Restricted Subsidiary that is not a Guarantor, Obligations of such Restricted
Subsidiary;
(b) to invest or commit to invest in properties and assets that replace the properties
and assets that were the subject of such Asset Sale or in properties and assets (including
Capital Stock) that will be used in the business of the Company and its Restricted
Subsidiaries as existing on the Issue Date or in businesses reasonably related thereto
(Replacement Assets);
(c) to acquire or commit to acquire all or substantially all of the assets of, or a
majority of the voting Capital Stock of a Permitted Business; and/or
45
(d) a combination of prepayment and investment permitted by the foregoing clauses (3)(a)
through (3)(c);
provided that in the case of a commitment to invest under clauses (b) and (c) above, such
investment or acquisition shall be consummated within six months after such commitment.
When the Net Cash Proceeds from Asset Sales not applied or invested as provided in the
preceding paragraph total $15.0 million or more (each, a Net Proceeds Offer Trigger Date), the
Company will, within 30 days, make an offer to purchase (the Net Proceeds Offer) to all Holders
and, to the extent required by the terms of any Pari Passu Debt, an offer to purchase to all
holders of such Pari Passu Debt, on a date (the Net Proceeds Offer Payment Date) not less than 30
nor more than 60 days following the applicable Net Proceeds Offer Trigger Date, from all Holders
(and holders of any Pari Passu Debt) on a pro rata basis, that amount of notes (and Pari Passu
Debt) equal to the Net Proceeds Offer Amount at a price equal to 100% of the principal amount of
the notes (and Pari Passu Debt) to be purchased, plus accrued and unpaid interest thereon, if any,
to the date of purchase; provided, however, that if at any time any non-cash consideration received
by the Company or any Restricted Subsidiary of the Company, as the case may be, in connection with
any Asset Sale is converted into or sold or otherwise disposed of for cash (other than as
contemplated by clause 2(b) above and other than interest received with respect to any such
non-cash consideration), then such conversion or disposition shall be deemed to constitute an Asset
Sale hereunder and the Net Cash Proceeds thereof shall be applied in accordance with this covenant.
Notwithstanding the first two paragraphs of this covenant, the Company and its Restricted
Subsidiaries will be permitted to consummate an Asset Sale without complying with such paragraph to
the extent that:
(1) at least 75% of the consideration for such Asset Sale constitutes Replacement Assets; and
(2) such Asset Sale is for fair market value;
provided that any cash or Cash Equivalents received by the Company or any of its Restricted
Subsidiaries in connection with any Asset Sale permitted to be consummated under this paragraph
shall constitute Net Cash Proceeds subject to the provisions of the first two paragraphs of this
covenant.
In the event of the transfer of substantially all (but not all) of the property and assets of
the Company and its Restricted Subsidiaries as an entirety to a Person in a transaction permitted
under Merger, Consolidation and Sale of Assets, which transaction does not constitute a Change
of Control, the successor corporation shall be deemed to have sold the properties and assets of the
Company and its Restricted Subsidiaries not so transferred for purposes of this covenant, and shall
comply with the provisions of this covenant with respect to such deemed sale as if it were an Asset
Sale. In addition, the fair market value of such properties and assets of the Company or its
Restricted Subsidiaries deemed to be sold shall be deemed to be Net Cash Proceeds for purposes of
this covenant.
Each Net Proceeds Offer will be mailed to the record Holders as shown on the register of
Holders within 30 days following the Net Proceeds Offer Trigger Date, with a copy to the Trustee,
and shall comply with the procedures set forth in the Indenture. Upon receiving notice of the Net
Proceeds Offer, Holders may elect to tender their notes in whole or in part in integral multiples
of $2,000 (and integral multiples of $1,000 in excess thereof) in exchange for cash. To the extent
Holders properly tender notes in an amount exceeding the Net Proceeds Offer Amount, notes of
tendering Holders will be purchased on a pro rata basis (based on amounts tendered). A Net Proceeds
Offer shall remain open for a period of 20 business days or such longer period as may be required
by law. If any Net Cash Proceeds remain after the consummation of any Net Proceeds Offer, the
Company may use those Net Cash Proceeds for any purpose not otherwise prohibited by the Indenture.
Upon completion of each Net Proceeds Offer, the amount of Net Cash Proceeds will be reset at zero.
The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any
other securities laws and regulations thereunder to the extent such laws and regulations are
applicable in connection with the repurchase of notes pursuant to a Net Proceeds Offer. To the
extent that the provisions of any securities laws or regulations conflict with the Asset Sale
provisions of the Indenture, the Company shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations under the Asset Sale
provisions of the Indenture by virtue thereof.
Limitation on Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries. The
Company will not, and will not cause or permit any of its Restricted Subsidiaries to, directly or
indirectly, create or otherwise cause or permit to exist or become effective any encumbrance or
restriction on the ability of any Restricted Subsidiary of the Company to:
46
(1) pay dividends or make any other distributions on or in respect of its Capital Stock;
(2) make loans or advances to the Company or any other Restricted Subsidiary or to pay any
Indebtedness or other obligation owed to the Company or any other Restricted Subsidiary of the
Company; or
(3) transfer any of its property or assets to the Company or any other Restricted
Subsidiary of the Company, except in each case for such encumbrances or restrictions existing
under or by reason of:
(a) applicable law, rule, regulation or order;
(b) the Indenture, the notes and the Guarantees;
(c) the Credit Agreement;
(d) customary non-assignment provisions of any contract or any lease governing a
leasehold interest of any Restricted Subsidiary of the Company;
(e) any instrument governing Acquired Indebtedness, which encumbrance or restriction
is not applicable to any Person, or the properties or assets of any Person, other than the
Person or the properties or assets of the Person so acquired;
(f) agreements existing on the Issue Date to the extent and in the manner such
agreements are in effect on the Issue Date;
(g) any encumbrance or restriction on the transfer of assets subject to any Lien
permitted under the Indenture imposed by the holder of such Lien;
(h) restrictions imposed by any agreement to sell assets or Capital Stock permitted
under the Indenture to any Person pending the closing of such sale;
(i) Purchase Money Indebtedness for property acquired in the ordinary course of
business that only impose restrictions on the property so acquired;
(j) any agreement pursuant to which Indebtedness was issued if (A) the encumbrance or
restriction applies only in the event of a payment default or a default with respect to a
financial covenant contained in such Indebtedness, (B) the encumbrance or restriction is
not materially more disadvantageous to the holders of the notes than is customary in
comparable financings (as determined by the Company) and (C) the Company determines that
any such encumbrance or restriction will not materially affect the Companys ability to
make principal or interest payments on the notes;
(k) Indebtedness permitted to be incurred subsequent to the date of the Indenture
pursuant to the provisions of the covenant described under Limitation on Incurrence of
Additional Indebtedness; provided that such encumbrances or restrictions are no less
favorable to the Company, taken as a whole, in any material respect than the encumbrances
or restrictions contained in the Credit Agreement as in effect on the Issue Date;
(1) any Qualified Securitization Transaction; provided that such encumbrances and
restrictions are customarily required by the institutional sponsor or arranger at the time
of entering into such Qualified Securitization Transaction in similar types of documents
relating to the purchase of similar Receivables in connection with the financing therewith;
(m) customary provisions in joint venture agreements and other similar agreements (in
each case relating solely to the respective joint venture or similar entity or the equity
interests therein) entered into in the ordinary course of business; and
(n) an agreement governing Indebtedness incurred to Refinance the Indebtedness issued,
assumed or incurred pursuant to an agreement referred to in clauses (b) and (d) through (k)
above; provided, however, that the provisions relating to such encumbrance or restriction
contained in any such Indebtedness are no less favorable to the Company in any material
respect as determined by the Board of Directors of the Company in their reasonable and good
faith judgment than the provisions relating to such encumbrance or restriction contained in
agreements referred to in such clauses (b) and (d) through (k).
47
Limitation on Preferred Stock of Restricted Subsidiaries. The Company will not permit any of
its Restricted Subsidiaries that are not Guarantors to issue any Preferred Stock (other than to the
Company or to a Wholly Owned Restricted Subsidiary of the Company) or permit any Person (other than
the Company or a Wholly Owned Restricted Subsidiary of the Company) to own any Preferred Stock of
any Restricted Subsidiary that is not a Guarantor.
Limitation on Liens. The Company will not, and will not cause or permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume or permit or suffer to exist any
Liens of any kind against or upon any property or assets of the Company or any of its Restricted
Subsidiaries, whether owned on the Issue Date or acquired after the Issue Date, or any proceeds
therefrom, or assign or otherwise convey any right to receive income or profits therefrom unless:
(1) in the case of Liens securing Subordinated Indebtedness, the notes or the Guarantee of
such Guarantor, as the case may be, are secured by a Lien on such property, assets or proceeds
that is senior in priority to such Liens; and
(2) in all other cases, the notes or the Guarantee of such Guarantor, as the case may be,
are equally and ratably secured, except for:
(a) Liens existing as of the Issue Date to the extent and in the manner such Liens are in
effect on the Issue Date;
(b) Liens securing Indebtedness and other Obligations under the Credit Agreement incurred
pursuant to clause (2) of the definition of Permitted Indebtedness;
(c) Liens securing the notes and the Guarantees;
(d) Liens of the Company or a Wholly Owned Restricted Subsidiary of the Company on assets
of any Restricted Subsidiary of the Company;
(e) Liens securing Refinancing Indebtedness which is incurred to Refinance any
Indebtedness which has been secured by a Lien permitted under the Indenture and which has been
incurred in accordance with the provisions of the Indenture; provided, however, that such
Liens: (i) are no less favorable to the Holders in any material respect and are not more
favorable to the lienholders in any material respect with respect to such Liens than the Liens
in respect of the Indebtedness being Refinanced; and (ii) do not extend to or cover any
property or assets of the Company or any of its Restricted Subsidiaries not securing the
Indebtedness so Refinanced; and
(f) Permitted Liens.
Merger, Consolidation and Sale of Assets. The Company will not, in a single transaction or
series of related transactions, consolidate or merge with or into any Person, or sell, assign,
transfer, lease, convey or otherwise dispose of (or cause or permit any Restricted Subsidiary of
the Company to sell, assign, transfer, lease, convey or otherwise dispose of) all or substantially
all of the Companys assets (determined on a consolidated basis for the Company and the Companys
Restricted Subsidiaries) whether as an entirety or substantially as an entirety to any Person
unless:
(1) either:
(a) the Company shall be the surviving or continuing corporation; or
(b) the Person (if other than the Company) formed by such consolidation or into which
the Company is merged or the Person which acquires by sale, assignment, transfer, lease,
conveyance or other disposition the properties and assets of the Company and of the
Companys Restricted Subsidiaries substantially as an entirety (the Surviving Entity):
(x) shall be a corporation organized and validly existing under the laws of the
United States or any State thereof or the District of Columbia; and
(y) shall expressly assume, by supplemental indenture (in form and substance
reasonably satisfactory to the Trustee), executed and delivered to the Trustee, the due
and punctual payment of the principal of, and premium, if any, and interest on all of the
notes and the performance of every covenant of the notes, the Indenture and the
Registration Rights
48
Agreement on the part of the Company to be performed or observed;
(2) immediately after giving effect to such transaction and the assumption contemplated by
clause (1) (b) (y) above (including giving effect to any Indebtedness and Acquired Indebtedness
incurred or anticipated to be incurred in connection with or in respect of such transaction),
either (x) the Company or such Surviving Entity, as the case may be, shall be able to incur at
least $1.00 of additional Indebtedness (other than Permitted Indebtedness) pursuant to the
covenant described under Certain Covenants Limitation on Incurrence of Additional
Indebtedness or (y) the Consolidated Fixed Charge Coverage Ratio of the Company would be no
less than such ratio immediately prior to such transaction;
(3) immediately before and immediately after giving effect to such transaction and the
assumption contemplated by clause (1) (b) (y) above (including, without limitation, giving
effect to any Indebtedness and Acquired Indebtedness incurred or anticipated to be incurred and
any Lien granted in connection with or in respect of the transaction), no Default or Event of
Default shall have occurred or be continuing; and
(4) the Company or the Surviving Entity shall have delivered to the Trustee an officers
certificate and an opinion of counsel, each stating that such consolidation, merger, sale,
assignment, transfer, lease, conveyance or other disposition and, if a supplemental indenture is
required in connection with such transaction, such supplemental indenture comply with the
applicable provisions of the Indenture and that all conditions precedent in the Indenture
relating to such transaction have been satisfied.
For purposes of the foregoing, the transfer (by lease, assignment, sale or otherwise, in a
single transaction or series of transactions) of all or substantially all of the properties or
assets of one or more Restricted Subsidiaries of the Company the Capital Stock of which constitutes
all or substantially all of the properties and assets of the Company, shall be deemed to be the
transfer of all or substantially all of the properties and assets of the Company.
Notwithstanding the foregoing clauses (1), (2) and (3), the Company may merge with an
Affiliate that is a Person that has no material assets or liabilities and which was organized
solely for the purpose of reorganizing the Company in another jurisdiction.
The Indenture will provide that upon any consolidation, combination or merger or any transfer
of all or substantially all of the assets of the Company in accordance with the foregoing in which
the Company is not the continuing corporation, the successor Person formed by such consolidation or
into which the Company is merged or to which such conveyance, lease or transfer is made shall
succeed to, and be substituted for, and may exercise every right and power of, the Company under
the Indenture, the notes and the Registration Rights Agreement with the same effect as if such
surviving entity had been named as such.
Each Guarantor (other than any Guarantor whose Guarantee is to be released in accordance with
the terms of the Guarantee and the Indenture in connection with any transaction complying with the
provisions of Limitation on Asset Sales) will not, and the Company will not cause or permit any
Guarantor to, consolidate with or merge with or into any Person other than the Company or any other
Guarantor unless:
(1) the entity formed by or surviving any such consolidation or merger (if other than the
Guarantor) or to which such sale, lease, conveyance or other disposition shall have been made is
a corporation or a partnership or a limited liability company, in each case, organized and
existing under the laws of the United States or any State thereof or the District of Columbia;
(2) such entity (if other than the Guarantor) assumes by supplemental indenture all of the
obligations of the Guarantor under its Guarantee, the Indenture and the Registration Rights
Agreement;
(3) immediately after giving effect to such transaction, no Default or Event of Default
shall have occurred and be continuing; and
(4) immediately after giving effect to such transaction and the use of any net proceeds
therefrom on a pro forma basis, the Company could satisfy the provisions of clause (2) of the
first paragraph of this covenant.
Any merger or consolidation of a Guarantor with and into the Company (with the Company being
the surviving entity) or another Guarantor that is a Restricted Subsidiary of the Company need only
comply with clause (4) of the first paragraph of this covenant. The phrase all or substantially
all of the assets of the Company or a Guarantor will likely be interpreted under applicable state
law and will be dependent upon particular facts and circumstances. As a result, there may be a
degree of uncertainty in ascertaining whether a sale or transfer of all or substantially all of
the assets of the Company or a Guarantor has occurred.
49
Limitations on Transactions with Affiliates. The Company will not, and will not permit any of
its Restricted Subsidiaries to, directly or indirectly, enter into or permit to exist any
transaction or series of related transactions (including, without limitation, the purchase, sale,
lease or exchange of any property or the rendering of any service) with, or for the benefit of, any
of its Affiliates (each, an Affiliate Transaction), other than (x) Affiliate Transactions
permitted under the third paragraph of this covenant and (y) Affiliate Transactions on terms that
are no less favorable than those that might reasonably have been obtained in a comparable
transaction at such time on an arms-length basis from a Person that is not an Affiliate of the
Company or such Restricted Subsidiary.
All Affiliate Transactions (and each series of related Affiliate Transactions which are
similar or part of a common plan) involving aggregate payments or other property with a fair market
value in excess of $5.0 million shall be approved by the Board of Directors of the Company or such
Restricted Subsidiary, as the case may be, such approval to be evidenced by a Board Resolution
stating that such Board of Directors has determined that such transaction complies with the
foregoing provisions. If the Company or any Restricted Subsidiary of the Company enters into an
Affiliate Transaction (or a series of related Affiliate Transactions related to a common plan) that
involves an aggregate fair market value of more than $20.0 million, the Company or such Restricted
Subsidiary, as the case may be, shall, prior to the consummation thereof, obtain a favorable
opinion as to the fairness of such transaction or series of related transactions to the Company or
the relevant Restricted Subsidiary, as the case may be, from a financial point of view, from an
Independent Financial Advisor and file the same with the Trustee.
The restrictions set forth in the first paragraph of this covenant shall not apply to:
(1) reasonable fees and compensation (including the payment of reasonable and customary
benefits (including retirement, health, option, deferred compensation and other benefit plans)
to officers and employees of the Company) paid to and indemnity provided on behalf of, officers,
directors, employees or consultants of the Company or any Restricted Subsidiary of the Company
as determined in good faith by the Companys Board of Directors or senior management;
(2) transactions exclusively between or among the Company and any of its Restricted
Subsidiaries or exclusively between or among such Restricted Subsidiaries, provided such
transactions are not otherwise prohibited by the Indenture;
(3) any agreement as in effect as of the Issue Date or any amendment thereto or any
transaction contemplated thereby (including pursuant to any amendment thereto) in any
replacement agreement thereto so long as any such amendment or replacement agreement is not more
disadvantageous to the Holders in any material respect than the original agreement as in effect
on the Issue Date;
(4) Restricted Payments or Permitted Investments permitted by the Indenture;
(5) any sale, conveyance or other transfer of Receivables and other related assets
customarily transferred in a Qualified Securitization Transaction; and
(6) the issuance of Qualified Capital Stock of the Company otherwise permitted hereunder.
Additional Subsidiary Guarantees. If the Company or any of its Restricted Subsidiaries
transfers or causes to be transferred, in one transaction or a series of related transactions, any
property to any Domestic Restricted Subsidiary that is not a Guarantor, or if the Company or any of
its Restricted Subsidiaries shall organize, acquire or otherwise invest in another Domestic
Restricted Subsidiary having total assets with a book value in excess of $500,000, then such
transferee or acquired or other Restricted Subsidiary shall:
(1) execute and deliver to the Trustee a supplemental indenture in form reasonably
satisfactory to the Trustee pursuant to which such Restricted Subsidiary shall unconditionally
guarantee all of the Companys obligations under the notes and the Indenture on the terms set
forth in the Indenture; and
(2) deliver to the Trustee an opinion of counsel that such supplemental indenture has been
duly authorized, executed and delivered by such Restricted Subsidiary and constitutes a legal,
valid, binding and enforceable obligation of such Restricted Subsidiary.
Thereafter, such Restricted Subsidiary shall be a Guarantor for all purposes of the Indenture.
Conduct of Business. The Company and its Restricted Subsidiaries will not engage in any
businesses other than a Permitted
50
Business, except to the extent as would not be material to the Company and its Restricted
Subsidiaries taken as a whole.
Payments for Consent. The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, pay or cause to be paid any consideration to or for the
benefit of any Holder of notes for or as an inducement to any consent, waiver or amendment of any
of the terms or provisions of the Indenture or the notes unless such consideration is offered to be
paid and is paid to all Holders of the notes that consent, waive or agree to amend in the time
frame set forth in the solicitation documents relating to such consent, waiver or agreement.
Reports to Holders. The Indenture will provide that, whether or not required by the rules and
regulations of the Commission, so long as any notes are outstanding, the Company will furnish the
Trustee, on behalf of the Holders of the notes:
(1) all quarterly and annual financial information that would be required to be contained
in a filing with the Commission on Forms 10-Q and 10-K if the Company were required to file such
Forms, including a Managements Discussion and Analysis of Financial Condition and Results of
Operations that describes the financial condition and results of operations of the Company and
its consolidated Subsidiaries (showing in reasonable detail, either on the face of the financial
statements or in the footnotes thereto and in Managements Discussion and Analysis of Financial
Condition and Results of Operations, the financial condition and results of operations of the
Company and its Restricted Subsidiaries separate from the financial condition and results of
operations of the Unrestricted Subsidiaries of the Company, if any) and, with respect to the
annual information only, a report thereon by the Companys certified independent accountants;
and
(2) all current reports that would be required to be filed with the Commission on Form 8-K
if the Company were required to file such reports, in each case within the time periods
specified in the Commissions rules and regulations.
In addition, following the consummation of the exchange offer contemplated by the Registration
Rights Agreement, whether or not required by the rules and regulations of the Commission, the
Company will file a copy of all such information and reports with the Commission for public
availability within the time periods specified in the Commissions rules and regulations (unless
the Commission will not accept such a filing) and make such information available to securities
analysts and prospective investors upon request. In addition, the Company has agreed that, for so
long as any notes remain outstanding, it will furnish to the Holders and to securities analysts and
prospective investors, upon their request, the information required to be delivered pursuant to
Rule 144A(d) (4) under the Securities Act.
Events of Default
The following events are defined in the Indenture as Events of Default:
(1) the failure to pay interest on any notes when the same becomes due and payable and the
default continues for a period of 30 days;
(2) the failure to pay the principal on any notes, when such principal becomes due and
payable, at maturity, upon redemption or otherwise (including the failure to make a payment to
purchase notes tendered pursuant to a Change of Control Offer or a Net Proceeds Offer);
(3) a default in the observance or performance of any other covenant or agreement contained
in the Indenture which default continues for a period of 60 days after the Company receives
written notice specifying the default (and demanding that such default be remedied) from the
Trustee or the Holders of at least 25% of the outstanding principal amount of the notes (except
in the case of a default with respect to the Merger, Consolidation and Sale of Assets
covenant, which will constitute an Event of Default with such notice requirement but without
such passage of time requirement);
(4) the failure to pay at final maturity (giving effect to any applicable grace periods and
any extensions thereof) the stated principal amount of any Indebtedness of the Company or any
Restricted Subsidiary of the Company, or the acceleration of the final stated maturity of any
such Indebtedness (which acceleration is not rescinded, annulled or otherwise cured within 20
days of receipt by the Company or such Restricted Subsidiary of notice of any such acceleration)
if the aggregate principal amount of such Indebtedness, together with the principal amount of
any other such Indebtedness in default for failure to pay principal at final stated maturity or
which has been accelerated (in each case with respect to which the 20-day period described above
has elapsed), aggregates $15.0 million or more at any time;
(5) one or more judgments in an aggregate amount in excess of $15.0 million shall have been
rendered against the Company or
51
any of its Restricted Subsidiaries and such judgments remain undischarged, unpaid or
unstayed for a period of 60 days after such judgment or judgments become final and
non-appealable;
(6) certain events of bankruptcy affecting the Company or any of its Significant
Subsidiaries; or
(7) any Guarantee of a Significant Subsidiary ceases to be in full force and effect or is
declared to be null and void and unenforceable or is found to be invalid or any Guarantor that
is a Significant Subsidiary denies its liability under its Guarantee (other than by reason of
release of a Guarantor in accordance with the terms of the Indenture).
If an Event of Default (other than an Event of Default specified in clause (6) above with
respect to the Company) shall occur and be continuing, the Trustee or the Holders of at least 25%
in principal amount of outstanding notes may declare the principal of and accrued interest on all
the notes to be due and payable by notice in writing to the Company and the Trustee specifying the
respective Event of Default and that it is a notice of acceleration (the Acceleration Notice),
and the same shall become immediately due and payable.
If an Event of Default specified in clause (6) above with respect to the Company occurs and is
continuing, then all unpaid principal of, and premium, if any, and accrued and unpaid interest on
all of the outstanding notes shall ipso facto become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any Holder.
The Indenture will provide that, at any time after a declaration of acceleration with respect
to the notes as described in the preceding paragraph, the Holders of a majority in principal amount
of the notes may rescind and cancel such declaration and its consequences:
(1) if the rescission would not conflict with any judgment or decree;
(2) if all existing Events of Default have been cured or waived except nonpayment of
principal or interest that has become due solely because of the acceleration;
(3) to the extent the payment of such interest is lawful, interest on overdue installments
of interest and overdue principal, which has become due otherwise than by such declaration of
acceleration, has been paid;
(4) if the Company has paid the Trustee its reasonable compensation and reimbursed the
Trustee for its expenses, disbursements and advances; and
(5) in the event of the cure or waiver of an Event of Default of the type described in
clause (6) of the description above of Events of Default, the Trustee shall have received an
officers certificate and an opinion of counsel that such Event of Default has been cured or
waived. No such rescission shall affect any subsequent Default or impair any right consequent
thereto.
The Holders of a majority in principal amount of the notes may waive any existing Default or
Event of Default under the Indenture, and its consequences, except a default in the payment of the
principal of or interest on any notes.
Holders of the notes may not enforce the Indenture or the notes except as provided in the
Indenture and under the TIA. Subject to the provisions of the Indenture relating to the duties of
the Trustee, the Trustee is under no obligation to exercise any of its rights or powers under the
Indenture at the request, order or direction of any of the Holders, unless such Holders have
offered to the Trustee reasonable indemnity. Subject to all provisions of the Indenture and
applicable law, the Holders of a majority in aggregate principal amount of the then outstanding
notes have the right to direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee or exercising any trust or power conferred on the Trustee.
Under the Indenture, the Company is required to provide an officers certificate to the
Trustee promptly upon any such officer obtaining knowledge of any Default or Event of Default
(provided that such officers shall provide such certification at least annually whether or not they
know of any Default or Event of Default) that has occurred and, if applicable, describe such
Default or Event of Default and the status thereof.
Legal Defeasance and Covenant Defeasance
The Company may, at its option and at any time, elect to have its obligations and the
obligations of the Guarantors discharged
52
with respect to the outstanding notes (Legal Defeasance). Such Legal Defeasance means that
the Company shall be deemed to have paid and discharged the entire indebtedness represented by the
outstanding notes, except for:
(1) the rights of Holders to receive payments in respect of the principal of, premium, if
any, and interest on the notes when such payments are due;
(2) the Companys obligations with respect to the notes concerning issuing temporary notes,
registration of notes, mutilated, destroyed, lost or stolen notes and the maintenance of an
office or agency for payments;
(3) the rights, powers, trust, duties and immunities of the Trustee and the Companys
obligations in connection therewith; and
(4) the Legal Defeasance provisions of the Indenture.
In addition, the Company may, at its option and at any time, elect to have the obligations of
the Company released with respect to certain covenants that are described in the Indenture
(Covenant Defeasance) and thereafter any omission to comply with such obligations shall not
constitute a Default or Event of Default with respect to the notes. In the event Covenant
Defeasance occurs, certain events (not including non-payment, bankruptcy, receivership,
reorganization and insolvency events) described under Events of Default will no longer constitute
an Event of Default with respect to the notes.
In order to exercise either Legal Defeasance or Covenant Defeasance:
(1) the Company must irrevocably deposit with the Trustee, in trust, for the benefit of the
Holders cash in U.S. dollars, non-callable U.S. government obligations, or a combination
thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm
of independent public accountants, to pay the principal of, premium, if any, and interest on the
notes on the stated date for payment thereof or on the applicable redemption date, as the case
may be;
(2) in the case of Legal Defeasance, the Company shall have delivered to the Trustee an
opinion of counsel in the United States reasonably acceptable to the Trustee confirming that:
(a) the Company has received from, or there has been published by, the Internal
Revenue Service a ruling; or
(b) since the date of the Indenture, there has been a change in the applicable federal
income tax law,
in either case to the effect that, and based thereon such opinion of counsel shall confirm that,
the Holders will not recognize income, gain or loss for federal income tax purposes as a result
of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such Legal Defeasance had not
occurred;
(3) in the case of Covenant Defeasance, the Company shall have delivered to the Trustee an
opinion of counsel in the United States reasonably acceptable to the Trustee confirming that the
Holders will not recognize income, gain or loss for federal income tax purposes as a result of
such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such Covenant Defeasance had
not occurred;
(4) no Default or Event of Default shall have occurred and be continuing on the date of
such deposit (other than a Default or an Event of Default resulting from the borrowing of funds
to be applied to such deposit and the grant of any Lien securing such borrowings);
(5) such Legal Defeasance or Covenant Defeasance shall not result in a breach or violation
of, or constitute a default under the Indenture (other than a Default or an Event of Default
resulting from the borrowing of funds to be applied to such deposit and the grant of any Lien
securing such borrowings) or any other material agreement or instrument to which the Company or
any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound;
(6) the Company shall have delivered to the Trustee an officers certificate stating that
the deposit was not made by the Company with the intent of preferring the Holders over any other
creditors of the Company or with the intent of defeating, hindering, delaying or defrauding any
other creditors of the Company or others;
53
(7) the Company shall have delivered to the Trustee an officers certificate and an opinion
of counsel, each stating that all conditions precedent provided for or relating to the Legal
Defeasance or the Covenant Defeasance have been complied with;
(8) the Company shall have delivered to the Trustee an opinion of counsel to the effect
that assuming no intervening bankruptcy of the Company between the date of deposit and the 91st
day following the date of deposit and that no Holder is an insider of the Company, after the
91st day following the date of deposit, the trust funds will not be subject to the effect of any
applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors rights
generally;
(9) certain other customary conditions precedent are satisfied.
Notwithstanding the foregoing, the opinion of counsel required by clause (2) above with
respect to a Legal Defeasance need not be delivered if all notes not theretofore delivered to the
Trustee for cancellation (1) have become due and payable or (2) will become due and payable on the
maturity date within one year, or are to be called for redemption within one year, under
arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in
the name, and at the expense, of the Company.
Satisfaction and Discharge
The Indenture will be discharged and will cease to be of further effect (except as to
surviving rights or registration of transfer or exchange of the notes, as expressly provided for in
the Indenture) as to all outstanding notes when:
(1) either:
(a) all the notes theretofore authenticated and delivered (except lost, stolen or
destroyed notes which have been replaced or paid and notes for whose payment money has
theretofore been deposited in trust or segregated and held in trust by the Company and
thereafter repaid to the Company or discharged from such trust) have been delivered to the
Trustee for cancellation; or
(b) all notes not theretofore delivered to the Trustee for cancellation (1) have become
due and payable or (2) will become due and payable within one year, or may be called for
redemption within one year, under arrangements satisfactory to the Trustee for the giving of
notice of redemption by the Trustee in the name, and at the expense, of the Company, and the
Company has irrevocably deposited or caused to be deposited with the Trustee funds in an
amount sufficient to pay and discharge the entire Indebtedness on the notes not theretofore
delivered to the Trustee for cancellation, for principal of, premium, if any, and interest on
the notes to the date of deposit, together with irrevocable instructions from the Company
directing the Trustee to apply such funds to the payment thereof at maturity or redemption, as
the case may be;
(2) the Company has paid all other sums payable under the Indenture by the Company; and
(3) the Company has delivered to the Trustee an officers certificate and an opinion of
counsel stating that all conditions precedent under the Indenture relating to the satisfaction
and discharge of the Indenture have been complied with.
Modification of the Indenture
From time to time, the Company, the Guarantors and the Trustee, without the consent of the
Holders, may amend the Indenture for certain specified purposes, including curing ambiguities,
defects or inconsistencies, so long as such change does not, in the opinion of the Trustee,
adversely affect the rights of any of the Holders in any material respect. In formulating its
opinion on such matters, the Trustee will be entitled to rely on such evidence as it deems
appropriate, including, without limitation, solely on an opinion of counsel. Other modifications
and amendments of the Indenture may be made with the consent of the Holders of a majority in
principal amount of the then outstanding notes issued under the Indenture, except that, without the
consent of each Holder affected thereby, no amendment may:
(1) reduce the amount of notes whose Holders must consent to an amendment;
(2) reduce the rate of or change or have the effect of changing the time for payment of
interest, including defaulted interest, on any notes;
(3) reduce the principal of or change or have the effect of changing the fixed maturity of
any notes, or change the date on
54
which any notes may be subject to redemption or reduce the redemption price therefor;
(4) make any notes payable in money other than that stated in the notes;
(5) make any change in provisions of the Indenture protecting the right of each Holder to
receive payment of principal of and interest on such Note on or after the due date thereof or to
bring suit to enforce such payment, or permitting Holders of a majority in principal amount of
notes to waive Defaults or Events of Default;
(6) after the Companys obligation to purchase notes arises thereunder, amend, change or
modify in any material respect the obligation of the Company to make and consummate a Change of
Control Offer in the event of a Change of Control or make and consummate a Net Proceeds Offer
with respect to any Asset Sale that has been consummated or, after such Change of Control has
occurred or such Asset Sale has been consummated, modify any of the provisions or definitions
with respect thereto; or
(7) release any Guarantor that is a Significant Subsidiary from any of its obligations
under its Guarantee or the Indenture otherwise than in accordance with the terms of the
Indenture.
Governing Law
The Indenture will provide that it, the notes and the Guarantees, if any, will be governed by,
and construed in accordance with, the laws of the State of New York but without giving effect to
applicable principles of conflicts of law to the extent that the application of the law of another
jurisdiction would be required thereby.
The Trustee
The Indenture will provide that, except during the continuance of an Event of Default, the
Trustee will perform only such duties as are specifically set forth in the Indenture. During the
existence of an Event of Default, the Trustee will exercise such rights and powers vested in it by
the Indenture, and use the same degree of care and skill in its exercise as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
The Indenture and the provisions of the TIA contain certain limitations on the rights of the
Trustee, should it become a creditor of the Company, to obtain payments of claims in certain cases
or to realize on certain property received in respect of any such claim as security or otherwise.
Subject to the TIA, the Trustee will be permitted to engage in other transactions; provided that if
the Trustee acquires any conflicting interest as described in the TIA, it must eliminate such
conflict or resign.
Certain Definitions
Set forth below is a summary of certain of the defined terms used in the Indenture. Reference
is made to the Indenture for the full definition of all such terms, as well as any other terms used
herein for which no definition is provided.
Acquired Indebtedness means Indebtedness of a Person or any of its Subsidiaries existing at
the time such Person becomes a Restricted Subsidiary of the Company or at the time it merges or
consolidates with or into the Company or any of its Subsidiaries or assumed in connection with the
acquisition of assets from such Person and in each case not incurred by such Person in connection
with, or in anticipation or contemplation of, such Person becoming a Restricted Subsidiary of the
Company or such acquisition, merger or consolidation.
Affiliate means, with respect to any specified Person, any other Person who directly or
indirectly through one or more intermediaries controls, or is controlled by, or is under common
control with, such specified Person. The term control means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or otherwise; and the terms
controlling and controlled have meanings correlative of the foregoing.
Asset Acquisition means (1) an Investment by the Company or any Restricted Subsidiary of the
Company in any other Person pursuant to which such Person shall become a Restricted Subsidiary of
the Company or any Restricted Subsidiary of the Company, or shall be merged with or into the
Company or any Restricted Subsidiary of the Company, or (2) the acquisition by the Company or any
Restricted Subsidiary of the Company of the assets of any Person (other than a Restricted
Subsidiary of the Company) which constitute all or substantially all of the assets of such Person
or comprises any division or line of business of such Person or any other
55
properties or assets of such Person other than in the ordinary course of business.
Asset Sale means any direct or indirect sale, issuance, conveyance, transfer, lease (other
than operating leases entered into in the ordinary course of business), assignment or other
transfer for value by the Company or any of its Restricted Subsidiaries (including any Sale and
Leaseback Transaction) to any Person other than the Company or a Restricted Subsidiary of the
Company of: (1) any Capital Stock of any Restricted Subsidiary of the Company; or (2) any other
property or assets of the Company or any Restricted Subsidiary of the Company other than in the
ordinary course of business; provided, however, that asset sales or other dispositions shall not
include: (a) a transaction or series of related transactions for which the Company or its
Restricted Subsidiaries receive aggregate consideration (exclusive of any indemnities) of less than
$2.0 million; (b) the sale, lease, conveyance, disposition or other transfer of all or
substantially all of the assets of the Company as permitted under Merger, Consolidation and Sale
of Assets; (c) any Restricted Payment permitted by the Limitation on Restricted Payments
covenants or that constitutes a Permitted Investment; (d) the sale or discount, in each case
without recourse, of accounts receivable arising in the ordinary course of business, but only in
connection with the compromise or collection thereof; (e) the sale of or other disposition of cash
or Cash Equivalents; (f) any sale or disposition deemed to occur in connection with creating or
granting any Liens pursuant to the covenant described under Certain Covenants Limitations on
Liens; (g) the lease, assignment or sublease of any real or personal property in the ordinary
course of business; (h) any sale of Receivables pursuant to a Qualified Securitization Transaction;
(i) sales of Unrestricted Subsidiaries; and (j) disposals, trade-ins or replacements of obsolete or
worn out equipment.
Board of Directors means, as to any Person, the board of directors (or similar governing
body) of such Person or any duly authorized committee thereof.
Board Resolution means, with respect to any Person, a copy of a resolution certified by the
Secretary or an Assistant Secretary of such Person to have been duly adopted by the Board of
Directors of such Person and to be in full force and effect on the date of such certification, and
delivered to the Trustee.
Borrowing Base means, as of any date, an amount equal to the sum of:
(1) 85% of the aggregate book value of all accounts receivable of the Company and its
Restricted Subsidiaries (other than any Special Purpose Vehicle) as of the end of the most
recent fiscal quarter preceding such date; and
(2) 80% of the aggregate cost basis of the portable storage unit lease fleet (or any
successor line item or items reflecting such portable storage unit lease fleet) as indicated on
its consolidated balance sheet as owned by the Company and its Restricted Subsidiaries as of the
end of the most recent fiscal quarter preceding such date (plus 80% of the fair market value of
any portable storage units acquired since the end of such fiscal quarter),
all calculated on a consolidated basis and in accordance with GAAP.
Capital Stock means:
(1) with respect to any Person that is a corporation, any and all shares, interests,
participations or other equivalents (however designated and whether or not voting) of corporate
stock, including each class of Common Stock and Preferred Stock of such Person, and all options,
warrants or other rights to purchase or acquire any of the foregoing; and
(2) with respect to any Person that is not a corporation, any, and all partnership,
membership or other equity interests of such Person, and all options, warrants or other rights
to purchase or acquire any of the foregoing.
Capitalized Lease Obligation means, as to any Person, the obligations of such Person under a
lease that are required to be classified and accounted for as capital lease obligations under GAAP
and, for purposes of this definition, the amount of such obligations at any date shall be the
capitalized amount of such obligations at such date, determined in accordance with GAAP.
Cash Equivalents means:
(1) marketable direct obligations issued by, or unconditionally guaranteed by, the United
States Government or issued by any agency thereof and backed by the full faith and credit of the
United States, in each case maturing within one year from the date of acquisition thereof;
56
(2) marketable direct obligations issued by any state of the United States of America or
any political subdivision of any such state or any public instrumentality thereof maturing
within one year from the date of acquisition thereof and, at the time of acquisition, having one
of the two highest ratings obtainable from either S&P or Moodys;
(3) commercial paper maturing no more than one year from the date of creation thereof and,
at the time of acquisition, having a rating of at least A-1 from S&P or at least P-1 from
Moodys;
(4) certificates of deposit or bankers acceptances maturing within one year from the date
of acquisition thereof issued by any bank organized under the laws of the United States of
America or any state thereof or the District of Columbia or any U.S. branch of a foreign bank
having at the date of acquisition thereof combined capital and surplus of not less than $250.0
million;
(5) repurchase obligations with a term of not more than seven days for underlying
securities of the types described in clause (1) above entered into with any bank meeting the
qualifications specified in clause (4) above; and
(6) investments in money market funds which invest substantially all their assets in
securities of the types described in clauses (1) through (5) above.
Change of Control means the occurrence of one or more of the following events:
(1) any sale, lease, exchange or other transfer (in one transaction or a series of related
transactions) of all or substantially all of the assets of the Company to any Person or group of
related Persons for purposes of Section 13(d) of the Exchange Act (a Group), together with any
Affiliates thereof (whether or not otherwise in compliance with the provisions of the
Indenture);
(2) the approval by the holders of Capital Stock of the Company of any plan or proposal for
the liquidation or dissolution of the Company (whether or not otherwise in compliance with the
provisions of the Indenture);
(3) any Person or Group (other than any entity formed for the purpose of owning Capital
Stock of the Company) shall become the owner, directly or indirectly, beneficially or of record,
of shares representing more than 50% of the aggregate ordinary voting power represented by the
issued and outstanding Capital Stock of the Company; or
(4) the replacement of a majority of the Board of Directors of the Company over a two-year
period from the directors who constituted the Board of Directors of the Company at the beginning
of such period, and such replacement shall not have been approved by a vote of at least a
majority of the Board of Directors of the Company then still in office who either were members
of such Board of Directors at the beginning of such period or whose election as a member of such
Board of Directors was previously so approved.
Common Stock of any Person means any and all shares, interests or other participations in,
and other equivalents (however designated and whether voting or non-voting) of such Persons common
stock, whether outstanding on the Issue Date or issued after the Issue Date, and includes, without
limitation, all series and classes of such common stock.
Comparable Treasury Issue means the United States treasury security selected by an
Independent Investment Bank as having a maturity comparable to the remaining term of the notes that
would be utilized, at the time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the remaining term of
such notes. Independent Investment Bank means one of the Reference Treasury Dealers appointed by
the Company.
Comparable Treasury Price means, with respect to any redemption date:
(1) the average of the bid and ask prices for the Comparable Treasury Issue (expressed in
each case as a percentage of its principal amount) on the third business day preceding such
redemption date, as set forth in the most recently published statistical release designated
H.15(519) (or any successor release) published by the Board of Governors of the Federal
Reserve System and which establishes yields on actively traded United States treasury securities
adjusted to constant maturity under the caption Treasury Constant Maturities, or
(2) if such release (or any successor release) is not published or does not contain such
prices on such business day, the average of the Reference Treasury Dealer Quotations for such
redemption date.
57
Consolidated Assets means, as of the date of determination, the total assets (less goodwill
and intangible assets) of the Company and its Restricted Subsidiaries as shown on the balance sheet
of the Company and its Subsidiaries for the most recently ended fiscal quarter for which financial
statements are available, determined on a consolidated basis in accordance with GAAP.
Consolidated EBITDA means, with respect to any Person, for any period, the sum (without
duplication) of:
(1) Consolidated Net Income; and
(2) to the extent Consolidated Net Income has been reduced thereby:
(a) all income taxes of such Person and its Restricted Subsidiaries paid or accrued in
accordance with GAAP for such period (other than income taxes attributable to extraordinary,
unusual or nonrecurring gains or losses or taxes attributable to sales or dispositions outside
the ordinary course of business);
(b) Consolidated Interest Expense; and
(c) Consolidated Non-cash Charges less any non-cash items increasing Consolidated Net
Income for such period,
all as determined on a consolidated basis for such Person and its Restricted Subsidiaries in
accordance with GAAP.
Consolidated Fixed Charge Coverage Ratio means, with respect to any Person, the ratio of
Consolidated EBITDA of such Person during the four full fiscal quarters (the Four Quarter Period)
ending prior to the date of the transaction giving rise to the need to calculate the Consolidated
Fixed Charge Coverage Ratio for which financial statements are available (the Transaction Date)
to Consolidated Fixed Charges of such Person for the Four Quarter Period. In addition to and
without limitation of the foregoing, for purposes of this definition, Consolidated EBITDA and
Consolidated Fixed Charges shall be calculated after giving effect on a pro forma basis for the
period of such calculation to:
(1) the incurrence or repayment of any Indebtedness of such Person or any of its Restricted
Subsidiaries (and the application of the proceeds thereof) giving rise to the need to make such
calculation and any incurrence or repayment of other Indebtedness (and the application of the
proceeds thereof), other than the incurrence or repayment of Indebtedness in the ordinary course
of business for working capital purposes pursuant to working capital facilities, occurring
during the Four Quarter Period or at any time subsequent to the last day of the Four Quarter
Period and on or prior to the Transaction Date, as if such incurrence or repayment, as the case
may be (and the application of the proceeds thereof), occurred on the first day of the Four
Quarter Period; and
(2) any asset sales or other dispositions or Asset Acquisitions (including, without
limitation, any Asset Acquisition giving rise to the need to make such calculation as a result
of such Person or one of its Restricted Subsidiaries (including any Person who becomes a
Restricted Subsidiary as a result of the Asset Acquisition) incurring, assuming or otherwise
being liable for Acquired Indebtedness and also including any Consolidated EBITDA (including any
pro forma expense and cost reductions calculated on a basis consistent with Regulation S-X under
the Exchange Act) attributable to the assets which are the subject of the Asset Acquisition or
asset sale or other disposition during the Four Quarter Period) occurring during the Four
Quarter Period or at any time subsequent to the last day of the Four Quarter Period and on or
prior to the Transaction Date, as if such asset sale or other disposition or Asset Acquisition
(including the incurrence, assumption or liability for any such Acquired Indebtedness) occurred
on the first day of the Four Quarter Period. If such Person or any of its Restricted
Subsidiaries directly or indirectly guarantees Indebtedness of a third Person, the preceding
sentence shall give effect to the incurrence of such guaranteed Indebtedness as if such Person
or any Restricted Subsidiary of such Person had directly incurred or otherwise assumed such
guaranteed Indebtedness.
Furthermore, in calculating Consolidated Fixed Charges for purposes of determining the
denominator (but not the numerator) of this Consolidated Fixed Charge Coverage Ratio:
(1) interest on outstanding Indebtedness determined on a fluctuating basis as of the
Transaction Date and which will continue to be so determined thereafter shall be deemed to have
accrued at a fixed rate per annum equal to the rate of interest on such Indebtedness in effect
on the Transaction Date; and
(2) notwithstanding clause (1) above, interest on Indebtedness determined on a fluctuating
basis, to the extent such interest is
58
covered by agreements relating to Interest Swap Obligations, shall be deemed to accrue at
the rate per annum resulting after giving effect to the operation of such agreements.
Consolidated Fixed Charges means, with respect to any Person for any period, the sum,
without duplication, of:
(1) Consolidated Interest Expense; plus
(2) the product of (x) the amount of all dividend payments on any series of Preferred Stock
of such Person and, to the extent permitted under the Indenture, its Restricted Subsidiaries
(other than dividends paid in Qualified Capital Stock) paid, accrued or scheduled to be paid or
accrued during such period times (y) a fraction, the numerator of which is one and the
denominator of which is one minus the then current effective consolidated federal, state and
local income tax rate of such Person, expressed as a decimal.
Consolidated Interest Expense means, with respect to any Person for any period, the sum of,
without duplication:
(1) the aggregate of the interest expense of such Person and its Restricted Subsidiaries
for such period determined on a consolidated basis in accordance with GAAP, including without
limitation: (a) any amortization of debt discount and amortization or write-off of deferred
financing costs; (b) the net costs under Interest Swap Obligations incurred in the fiscal
quarter beginning after the Issue Date; (c) all capitalized interest; and (d) the interest
portion of any deferred payment obligation; and
(2) the interest component of Capitalized Lease Obligations paid, accrued and/or scheduled
to be paid or accrued by such Person and its Restricted Subsidiaries during such period as
determined on a consolidated basis in accordance with GAAP; less
(3) interest income for such period.
Consolidated Net Income means, with respect to any Person, for any period, the aggregate net
income (or loss) of such Person and its Restricted Subsidiaries for such period on a consolidated
basis, determined in accordance with GAAP; provided that there shall be excluded therefrom (without
duplication):
(1) after-tax gains from Asset Sales (without regard to the $2.0 million limitation set
forth in the definition thereof) or abandonments or reserves relating thereto;
(2) after-tax items classified as extraordinary or nonrecurring gains;
(3) the net income (but not loss) of any Restricted Subsidiary of the referent Person to
the extent that the declaration of dividends or similar distributions by that Restricted
Subsidiary of that income is restricted by a contract, operation of law or otherwise;
(4) the net income of any Person, other than a Restricted Subsidiary of the referent
Person, except to the extent of cash dividends or distributions paid to the referent Person or
to a Wholly Owned Restricted Subsidiary of the referent Person by such Person;
(5) any restoration to income of any contingency reserve, except to the extent that
provision for such reserve was made out of Consolidated Net Income accrued at any time following
the Issue Date;
(6) income or loss attributable to discontinued operations (including, without limitation,
operations disposed of during such period whether or not such operations were classified as
discontinued);
(7) in the case of a successor to the referent Person by consolidation or merger or as a
transferee of the referent Persons assets, any earnings of the successor corporation prior to
such consolidation, merger or transfer of assets;
(8) fees and expenses incurred in connection with this offering of the notes and related
refinancing transactions in an aggregate amount not to exceed $15 million; and
(9) charges to earnings incurred in connection with the early retirement of the 2013 Notes
and the repurchase of 35% of the
59
2013 Notes in fiscal year 2006 with the proceeds from a concurrent equity issuance.
Consolidated Non-cash Charges means, with respect to any Person, for any period, the
aggregate depreciation, amortization and other non-cash expenses of such Person and its Restricted
Subsidiaries reducing Consolidated Net Income of such Person and its Restricted Subsidiaries for
such period, determined on a consolidated basis in accordance with GAAP (excluding any such charges
constituting an extraordinary item or loss or any such charge which requires an accrual of or a
reserve for cash charges for any future period).
Credit Agreement means the Second Amended and Restated Loan and Security Agreement dated as
of February 17, 2006, between the Company, certain of the Companys subsidiaries, the lenders party
thereto in their capacities as lenders thereunder, Deutsche Bank AG, New York Branch, as
administrative agent (the Agent) and Deutsche Bank Securities Inc. and Banc of America
Securities, LLC as joint lead arrangers, together with the related documents thereto (including,
without limitation, any notes, guarantee agreements and security documents), in each case as such
agreements may be amended (including any amendment and restatement thereof), supplemented or
otherwise modified from time to time, including one or more credit agreements, loan agreements,
indentures or similar agreements extending the maturity of, refinancing, replacing, renewing or
otherwise restructuring (including increasing the amount of available credit thereunder or adding
Subsidiaries of the Company as additional borrowers or guarantors thereunder) all or any portion of
the Indebtedness under such agreement or agreements or any successor or replacement agreement or
agreements and whether by the same or any other agent, lender or group of lenders.
Currency Agreement means any foreign exchange contract, currency swap agreement or other
similar agreement or arrangement designed to protect the Company or any Restricted Subsidiary of
the Company against fluctuations in currency values.
Default means an event or condition the occurrence of which is, or with the lapse of time or
the giving of notice or both would be, an Event of Default.
Disqualified Capital Stock means that portion of any Capital Stock which, by its terms (or
by the terms of any security into which it is convertible or for which it is exchangeable at the
option of the holder thereof), or upon the happening of any event (other than an event which would
constitute a Change of Control), matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is redeemable at the sole option of the holder thereof (except, in each
case, upon the occurrence of a Change of Control) on or prior to the final maturity date of the
notes.
Domestic Restricted Subsidiary means a Restricted Subsidiary incorporated or otherwise
organized or existing under the laws of the United States, any state thereof or any territory or
possession of the United States.
Exchange Act means the Securities Exchange Act of 1934, as amended, or any successor statute
or statutes thereto.
exchange notes means the 6 7/8% Senior Notes due 2015 issued in exchange for the Initial
Notes, which exchange notes are registered under the Securities Act and issued pursuant to the
terms of a certain registration rights agreement dated as of May 7, 2007 by and among the Company,
the Guarantors and the initial purchasers named therein.
fair market value means, with respect to any asset or property, the price which could be
negotiated in an arms-length, free market transaction, for cash, between a willing seller and a
willing and able buyer, neither of whom is under undue pressure or compulsion to complete the
transaction. Fair market value shall be determined by the Board of Directors of the Company acting
reasonably and in good faith and shall be evidenced by a Board Resolution of the Board of Directors
of the Company delivered to the Trustee.
Foreign Subsidiaries means any Restricted Subsidary that is not a Domestic Restricted
Subsidiary.
GAAP means generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity as may be approved by a significant segment of the
accounting profession of the United States, which are in effect as of the Issue Date.
Guarantee means a guarantee of the notes by a Guarantor.
Guarantor means each of the Companys Domestic Restricted Subsidiaries that in the future
executes a supplemental indenture
60
in which such Restricted Subsidiary agrees to be bound by the terms of the Indenture as a
Guarantor; provided that any Person constituting a Guarantor as described above shall cease to
constitute a Guarantor when its respective Guarantee is released in accordance with the terms of
the Indenture.
Indebtedness means with respect to any Person, without duplication:
(1) all Obligations of such Person for borrowed money;
(2) all Obligations of such Person evidenced by bonds, debentures, notes or other similar
instruments;
(3) all Capitalized Lease Obligations of such Person;
(4) all Obligations of such Person issued or assumed as the deferred purchase price of
property, all conditional sale obligations and all Obligations under any title retention
agreement (but excluding trade accounts payable and other accrued liabilities arising in the
ordinary course of business that are not overdue by 90 days or more or are being contested in
good faith by appropriate proceedings promptly instituted and diligently conducted);
(5) all Obligations for the reimbursement of any obligor on any letter of credit, bankers
acceptance or similar credit transaction;
(6) guarantees and other contingent obligations in respect of Indebtedness referred to in
clauses (1) through (5) above and clause (8) below;
(7) all Obligations of any other Person of the type referred to in clauses (1) through (6)
which are secured by any lien on any property or asset of such Person, the amount of such
Obligation being deemed to be the lesser of the fair market value of such property or asset or
the amount of the Obligation so secured;
(8) all Obligations under currency agreements and interest swap agreements of such Person;
and
(9) all Disqualified Capital Stock issued by such Person with the amount of Indebtedness
represented by such Disqualified Capital Stock being equal to the greater of its voluntary or
involuntary liquidation preference and its maximum fixed repurchase price, but excluding accrued
dividends, if any.
For purposes hereof, the maximum fixed repurchase price of any Disqualified Capital Stock
which does not have a fixed repurchase price shall be calculated in accordance with the terms of
such Disqualified Capital Stock as if such Disqualified Capital Stock were purchased on any date on
which Indebtedness shall be required to be determined pursuant to the Indenture, and if such price
is based upon, or measured by, the fair market value of such Disqualified Capital Stock, such fair
market value shall be determined reasonably and in good faith by the Board of Directors of the
issuer of such Disqualified Capital Stock.
Independent Financial Advisor means a firm: (1) which does not, and whose directors,
officers and employees or Affiliates do not, have a direct or indirect financial interest in the
Company; and (2) which, in the judgment of the Board of Directors of the Company, is otherwise
independent and qualified to perform the task for which it is to be engaged.
Initial Notes means the 6 7/8% Senior Notes due 2015 issued under the Indenture and not
registered under the Securities Act.
Interest Swap Obligations means the obligations of any Person pursuant to any arrangement
with any other Person, whereby, directly or indirectly, such Person is entitled to receive from
time to time periodic payments calculated by applying either a floating or a fixed rate of interest
on a stated notional amount in exchange for periodic payments made by such other Person calculated
by applying a fixed or a floating rate of interest on the same notional amount and shall include,
without limitation, interest rate swaps, caps, floors, collars and similar agreements.
Investment means, with respect to any Person, any direct or indirect loan or other extension
of credit (including, without limitation, a guarantee) or capital contribution to (by means of any
transfer of cash or other property to others or any payment for property or services for the
account or use of others), or any purchase or acquisition by such Person of any Capital Stock,
bonds, notes, debentures or other securities or evidences of Indebtedness issued by, any other
Person. Investment shall exclude (i) extensions of trade credit by the Company and its Restricted
Subsidiaries on commercially reasonable terms in accordance with
61
normal trade practices of the Company or such Restricted Subsidiary, as the case may be; (ii)
the acquisition of property and assets from suppliers and other vendors in the normal course of
business and consistent with past practice; and (iii) prepaid expenses and workers compensation,
utility, lease and similar deposits, in the normal course of business and consistent with past
practice. If the Company or any Restricted Subsidiary of the Company sells or otherwise disposes of
any Common Stock of any direct or indirect Restricted Subsidiary of the Company such that, after
giving effect to any such sale or disposition, such Person is no longer a Restricted Subsidiary,
the Company shall be deemed to have made an Investment on the date of any such sale or disposition
equal to the fair market value of the Common Stock of such Restricted Subsidiary not sold or
disposed of.
Investment Grade Rating means a rating equal to or higher than Baa3 (or equivalent) by
Moodys or BBB- (or equivalent) by S&P, or an equivalent rating by any other Rating Agency.
Issue Date means May 7, 2007.
Lien means any lien, mortgage, deed of trust, pledge, security interest, charge or
encumbrance of any kind (including any conditional sale or other title retention agreement, any
lease in the nature thereof and any agreement to give any security interest).
Moodys means Moodys Investors Service, Inc. or any successor to the rating agency business
thereof.
Net Cash Proceeds means, with respect to any Asset Sale, the proceeds in the form of cash or
Cash Equivalents including payments in respect of deferred payment obligations when received in the
form of cash or Cash Equivalents (other than the portion of any such deferred payment constituting
interest) received by the Company or any of its Restricted Subsidiaries from such Asset Sale net
of:
(1) reasonable out-of-pocket expenses and fees relating to such Asset Sale (including,
without limitation, legal, accounting and investment banking fees and sales commissions);
(2) taxes paid or payable after taking into account any reduction in consolidated tax
liability due to available tax credits or deductions and any tax sharing arrangements;
(3) repayment of Indebtedness that is secured by the property or assets that are the
subject of such Asset Sale;
(4) amounts required to be paid to any Person owning a beneficial interest in or having a
Lien on the assets subject to the Asset Sale; and
(5) appropriate amounts to be provided by the Company or any Restricted Subsidiary, as the
case may be, as a reserve, in accordance with GAAP, against any liabilities associated with such
Asset Sale and retained by the Company or any Restricted Subsidiary, as the case may be, after
such Asset Sale, including, without limitation, pension and other post-employment benefit
liabilities, liabilities related to environmental matters and liabilities under any
indemnification obligations associated with such Asset Sale.
notes means the Initial Notes and any exchange notes.
Obligations means all obligations for principal, premium, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under the documentation
governing any Indebtedness.
Pari Passu Debt means any Indebtedness of the Company or any Guarantor that ranks pari passu
in right of payment with the notes or such Guarantee, as applicable.
Permitted Business means any business conducted by the Company on the Issue Date, any
reasonable extension thereof, and any additional business reasonably ancillary, incidental,
complementary or related to, or a reasonable extension, development or expansion of, the business
conducted by the Company and the Restricted Subsidiaries on the Issue Date, in each case, as
determined in good faith by the Board of Directors of the Company.
Permitted Indebtedness means, without duplication, each of the following:
(1) Indebtedness under the notes issued on the Issue Date in an aggregate principal amount
not to exceed $150.0 million;
62
(2) Indebtedness incurred pursuant to the Credit Agreement in an aggregate principal amount
at any time outstanding not to exceed the greater of (A) $425.0 million less the amount of all
required permanent repayments (which are accompanied by a corresponding permanent commitment
reduction) thereunder with the Net Cash Proceeds from Asset Sales and (B) $25.0 million plus the
Borrowing Base;
(3) other Indebtedness of the Company and its Restricted Subsidiaries outstanding on the
Issue Date reduced by the amount of any scheduled amortization payments or mandatory prepayments
when actually paid or permanent reductions thereon;
(4) Interest Swap Obligations of the Company or any Restricted Subsidiary of the Company
covering Indebtedness of the Company or any of its Restricted Subsidiaries; provided, however,
that such Interest Swap Obligations are entered into to protect the Company and its Restricted
Subsidiaries from fluctuations in interest rates on its outstanding Indebtedness to the extent
the notional principal amount of such Interest Swap Obligation does not, at the time of the
incurrence thereof, exceed the principal amount of the Indebtedness to which such Interest Swap
Obligation relates;
(5) Indebtedness under Currency Agreements; provided that in the case of Currency
Agreements which relate to Indebtedness, such Currency Agreements do not increase the
Indebtedness of the Company and its Restricted Subsidiaries outstanding other than as a result
of fluctuations in foreign currency exchange rates or by reason of fees, indemnities and
compensation payable thereunder;
(6) Indebtedness of a Restricted Subsidiary of the Company to the Company or to a
Restricted Subsidiary of the Company for so long as such Indebtedness is held by the Company or
a Restricted Subsidiary of the Company or the holder of a Lien permitted under the Indenture, in
each case subject to no Lien held by a Person other than the Company or a Restricted Subsidiary
of the Company or the holder of a Lien permitted under the Indenture; provided that if as of any
date any Person other than the Company or a Restricted Subsidiary of the Company or the holder
of a Lien permitted under the Indenture owns or holds any such Indebtedness or holds a Lien in
respect of such Indebtedness, such date shall be deemed the incurrence of Indebtedness not
constituting Permitted Indebtedness under this clause (6) by the issuer of such Indebtedness;
(7) Indebtedness of the Company to a Restricted Subsidiary of the Company for so long as
such Indebtedness is held by a Restricted Subsidiary of the Company or the holder of a Lien
permitted under the Indenture, in each case subject to no Lien other than a Lien permitted under
the Indenture; provided that (a) any Indebtedness of the Company to any Restricted Subsidiary of
the Company that is not a Guarantor is unsecured and subordinated, pursuant to a written
agreement, to the Companys obligations under the Indenture and the notes and (b) if as of any
date any Person other than a Restricted Subsidiary of the Company or the holder of a Lien
permitted under the Indenture owns or holds any such Indebtedness or any Person holds a Lien in
respect of such Indebtedness, such date shall be deemed the incurrence of Indebtedness not
constituting Permitted Indebtedness under this clause (7) by the Company;
(8) Indebtedness arising from the honoring by a bank or other financial institution of a
check, draft or similar instrument inadvertently (except in the case of daylight overdrafts)
drawn against insufficient funds in the ordinary course of business; provided, however, that
such Indebtedness is extinguished within five business days of incurrence;
(9) Indebtedness of the Company or any of its Restricted Subsidiaries in respect of
performance bonds, bankers acceptances, workers compensation claims, surety or appeal bonds,
payment obligations in connection with self-insurance or similar obligations, and bank
overdrafts (and letters of credit in respect thereof) in the ordinary course of business;
(10) Indebtedness represented by Capitalized Lease Obligations and Purchase Money
Indebtedness of the Company and its Restricted Subsidiaries incurred in the ordinary course of
business in an aggregate principal amount not to exceed the greater of (x) $15.0 million and (y)
2.0% of Consolidated Assets of the Company at any one time outstanding;
(11) Refinancing Indebtedness;
(12) Indebtedness represented by guarantees by the Company or its Restricted Subsidiaries
of Indebtedness otherwise permitted to be incurred under the Indenture;
(13) Indebtedness of the Company or any Restricted Subsidiary consisting of guarantees,
indemnities or obligations in respect of purchase price adjustments in connection with the
acquisition or disposition of assets;
63
(14) Indebtedness incurred pursuant to a Qualified Securitization Transaction; provided,
however, that after giving effect to any such incurrence, the aggregate principal amount of all
Indebtedness under this clause (14) plus any Indebtedness incurred pursuant to clause (2) and
outstanding on the date of such incurrence does not exceed the greater of (a) $425.0 million and
(b) $25.0 million plus the Borrowing Base;
(15) Acquired Indebtedness of the Company or any Restricted Subsidiary, in an aggregate
principal amount not to exceed $10.0 million;
(16) additional Indebtedness of the Company and its Restricted Subsidiaries in an aggregate
principal amount not to exceed $25.0 million at any one time outstanding (which amount may, but
need not, be incurred in whole or in part under the Credit Agreement); and
(17) Indebtedness of Foreign Subsidiaries that are Restricted Subsidiaries in an aggregate
principal amount not to exceed $50.0 million at any one time outstanding.
For purposes of determining compliance with the Limitation on Incurrence of Additional
Indebtedness covenant, (1) in the event that an item of Indebtedness meets the criteria of more
than one of the categories of Permitted Indebtedness described in clauses (1) through (17) above or
is entitled to be incurred pursuant to the Consolidated Fixed Charge Coverage Ratio provisions of
such covenant, the Company shall, in its sole discretion, classify (or later reclassify) such item
of Indebtedness in any manner that complies with the covenant described under Certain Covenants
Limitation on Incurrence of Additional Indebtedness; provided that all Indebtedness outstanding
under the Credit Agreement up to the maximum amount permitted under clause (2) of this definition
above shall be deemed to have been incurred pursuant to clause (2) of this definition; (2) the
outstanding principal amount of any particular Indebtedness shall be counted only once and any
obligations arising under any guarantee, lien, letter of credit or similar instrument supporting
such Indebtedness shall be disregarded; (3) the maximum amount of Indebtedness that the Company or
a Restricted Subsidiary may incur pursuant to the Limitation on Incurrence of Additional
Indebtedness covenant shall not be deemed to be exceeded, with respect to any outstanding
Indebtedness, due solely to the result of fluctuations in the exchange rates of currencies; and (4)
the accrual of interest, accretion or amortization of original issue discount, the payment of
interest on any Indebtedness in the form of additional Indebtedness with the same terms, and the
payment of dividends on Disqualified Capital Stock in the form of additional shares of the same
class of Disqualified Capital Stock will not be deemed to be an incurrence of Indebtedness or an
issuance of Disqualified Capital Stock for purposes of the covenant described under Certain
Covenants Limitation on Incurrence of Additional Indebtedness.
Permitted Investments means:
(1) Investments by the Company or any Restricted Subsidiary of the Company in any Person
that is or will become immediately after such Investment a Restricted Subsidiary of the Company
or that will merge or consolidate into the Company or a Restricted Subsidiary of the Company;
(2) Investments in the Company by any Restricted Subsidiary of the Company;
(3) investments in cash and Cash Equivalents;
(4) loans and advances to employees, directors and officers of the Company and its
Restricted Subsidiaries in the ordinary course of business for bona fide business purposes not
in excess of $500,000 at any one time outstanding;
(5) Currency Agreements and Interest Swap Obligations entered into in the ordinary course
of the Companys or its Restricted Subsidiaries businesses and otherwise in compliance with the
Indenture;
(6) additional Investments in an aggregate principal amount not to exceed the greater of
(x) $15.0 million and (y) 2.0% of Consolidated Assets of the Company at any one time
outstanding;
(7) Investments in securities of trade creditors or customers received pursuant to any plan
of reorganization or similar arrangement upon the bankruptcy or insolvency of such trade
creditors or customers or in good faith settlement of delinquent obligations of such trade
creditors or customers;
64
(8) Investments made by the Company or its Restricted Subsidiaries as a result of
consideration received in connection with an Asset Sale made in compliance with the Limitation
on Asset Sales covenant;
(9) Investments represented by guarantees that are otherwise permitted under the Indenture;
(10) Investments the payment for which is Qualified Capital Stock of the Company;
(11) Investments in a Special Purpose Vehicle in connection with a Qualified Securitization
Transaction; provided, however, that the only assets transferred to such Special Purpose Vehicle
consist of Receivables and related assets of such Special Purpose Vehicle; and
(12) Investments in existence on the date of the Indenture and an Investment in any Person
to the extent such Investment replaces or refinances an Investment in such Person existing on
the date of the Indenture in an amount not exceeding the amount of the Investment being replaced
or refinanced; provided, however, that the new Investment is on terms and conditions no less
favorable to the Company and its Restricted Subsidiaries than the Investment being renewed or
replaced.
Permitted Liens means the following types of Liens:
(1) Liens for taxes, assessments or governmental charges or claims either (a) not
delinquent or (b) contested in good faith by appropriate proceedings and as to which the Company
or its Restricted Subsidiaries shall have set aside on its books such reserves as may be
required pursuant to GAAP;
(2) statutory Liens of landlords and Liens of carriers, warehousemen, mechanics, suppliers,
materialmen, repairmen and other Liens imposed by law incurred in the ordinary course of
business for sums not yet delinquent or being contested in good faith, if such reserve or other
appropriate provision, if any, as shall be required by GAAP shall have been made in respect
thereof;
(3) Liens incurred or deposits made in the ordinary course of business in connection with
workers compensation, unemployment insurance and other types of social security, including any
Lien securing letters of credit issued in the ordinary course of business consistent with past
practice in connection therewith, or to secure the performance of tenders, statutory
obligations, surety and appeal bonds, bids, leases, warranty requirements, government contracts,
performance and return-of-money bonds and other similar obligations (exclusive of obligations
for the payment of borrowed money);
(4) judgment Liens not giving rise to an Event of Default so long as such Lien is
adequately bonded and any appropriate legal proceedings which may have been duly initiated for
the review of such judgment shall not have been finally terminated or the period within which
such proceedings may be initiated shall not have expired;
(5) easements, rights-of-way, zoning restrictions and other similar charges or encumbrances
in respect of real property not interfering in any material respect with the ordinary conduct of
the business of the Company or any of its Restricted Subsidiaries;
(6) any interest or title of a lessor under any Capitalized Lease Obligation; provided that
such Liens do not extend to any property or assets which is not leased property subject to such
Capitalized Lease Obligation other than proceeds thereof;
(7) Liens securing Purchase Money Indebtedness incurred or in the ordinary course of
business; provided, however, that (a) such Purchase Money Indebtedness shall not exceed the
purchase price or other cost of such property or equipment and shall not be secured by any
property or equipment of the Company or any Restricted Subsidiary of the Company other than the
property and equipment so acquired and (b) the Lien securing such Purchase Money Indebtedness
shall be created within 90 days of such acquisition;
(8) Liens upon specific items of inventory or other goods and proceeds of any Person
securing such Persons obligations in respect of letters of credit or bankers acceptances
issued or created for the account of such Person to facilitate the purchase, shipment or storage
of such inventory or other goods;
(9) Liens securing reimbursement obligations with respect to commercial letters of credit
which encumber documents and other property relating to such letters of credit and products and
proceeds thereof;
(10) Liens encumbering deposits made to secure obligations arising from statutory,
regulatory, contractual, or warranty
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requirements of the Company or any of its Restricted Subsidiaries, including rights of
offset and setoff;
(11) Liens securing Interest Swap Obligations which Interest Swap Obligations relate to
Indebtedness that is otherwise permitted under the Indenture;
(12) Liens securing Indebtedness under Currency Agreements;
(13) Liens securing Acquired Indebtedness incurred in accordance with the covenant
described under Certain Covenants Limitation on Incurrence of Additional Indebtedness;
provided that:
(a) such Liens secured such Acquired Indebtedness at the time of and prior to the
incurrence of such Acquired Indebtedness by the Company or a Restricted Subsidiary of the
Company and were not granted in connection with, or in anticipation of, the incurrence of such
Acquired Indebtedness by the Company or a Restricted Subsidiary of the Company, and
(b) such Liens do not extend to or cover any property or assets of the Company or of any
of its Restricted Subsidiaries other than the property or assets that secured the Acquired
Indebtedness prior to the time such Indebtedness became Acquired Indebtedness of the Company
or a Restricted Subsidiary of the Company and are no more favorable to the lienholders than
those securing the Acquired Indebtedness prior to the incurrence of such Acquired Indebtedness
by the Company or a Restricted Subsidiary of the Company;
(14) Liens on assets of a Restricted Subsidiary of the Company that is not a Guarantor to
secure Indebtedness of such Restricted Subsidiary that is otherwise permitted under the
Indenture;
(15) leases, subleases, licenses and sublicenses granted to others that do not materially
interfere with the ordinary cause of business of the Company and its Restricted Subsidiaries;
(16) bankers Liens, rights of setoff and similar Liens with respect to cash and Cash
Equivalents on deposit in one or more bank accounts in the ordinary course of business;
(17) Liens arising from filing Uniform Commercial Code financing statements regarding
leases;
(18) Liens in favor of customs and revenue authorities arising as a matter of law to secure
payments of custom duties in connection with the importation of goods;
(19) Liens securing Indebtedness permitted to be incurred pursuant to clause (16) or (17)
of the definition of Permitted Indebtedness; provided, that, in the case of clause (17), such
Liens do not extend to any assets other than the assets of such Foreign Subsidiaries;
(20) Liens on Receivables to reflect sales of receivables pursuant to a Qualified
Securitization Transaction;
(21) other Liens securing Indebtedness for borrowed money with respect to property or
assets with an aggregate fair market value (valued at the time of creation thereof) of not more
than $15.0 million at any time in the aggregate; and
(22) deposits made in the ordinary course of business to secure liability to insurance
carriers.
Person means an individual, partnership, corporation, unincorporated organization, trust or
joint venture, or a governmental agency or political subdivision thereof.
Preferred Stock of any Person means any Capital Stock of such Person that has preferential
rights to any other Capital Stock of such Person with respect to dividends or redemptions or upon
liquidation.
Purchase Money Indebtedness means Indebtedness of the Company and its Restricted
Subsidiaries incurred in the normal course of business for the purpose of financing all or any part
of the purchase price, or the cost of installation, construction or improvement, of property or
equipment.
Qualified Capital Stock means any Capital Stock that is not Disqualified Capital Stock.
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Qualified Securitization Transaction means any transaction or series of transactions that
may be entered into by the Company or any Restricted Subsidiary in connection with or reasonably
related to a transaction or series of transactions in which the Company or any Restricted
Subsidiary may sell, convey or otherwise transfer to (1) a Special Purpose Vehicle or (2) any other
Person, or may grant a security interest in, any equipment and related assets (including contract
rights) or Receivables or interests therein secured by goods or services financed thereby (whether
such Receivables are then existing or arising in the future) of the Company or any Restricted
Subsidiary, and any assets relating thereto including, without limitation, all security or
ownership interests in goods or services financed thereby, the proceeds of such Receivables, and
other assets which are customarily sold or in respect of which security interests are customarily
granted in connection with securitization transactions involving such assets, as any agreement
governing any such transactions may be renewed, refinanced, amended, restated or modified from time
to time.
Rating Agency means (1) each of Moodys and S&P and (2) if Moodys or S&P ceases to rate the
notes for reasons outside of the Companys control, a nationally recognized statistical rating
organization within the meaning of Rule 15c3-1(c)(2)(vi)(F) under the Exchange Act selected by the
Company or any parent company of the Company as a replacement agency for Moodys or S&P, as the
case may be.
Receivables means any right of payment from or on behalf of any obligor, whether
constituting an account, chattel paper, instrument, general intangible or otherwise, arising from
the financing by the Company or any Restricted Subsidiary of goods or services, and monies due
thereunder, security or ownership interests in the goods and services financed thereby, records
relating thereto, and the right to payment of any interest or finance charges and other obligations
with respect thereto, proceeds from claims on insurance policies related thereto, any other
proceeds related thereto, and other related rights.
Reference Treasury Dealer means Deutsche Bank Securities Inc. and its successors; provided,
however, that if it shall cease to be a primary U.S. Government securities dealer in New York City
(a Primary Treasury Dealer), the Company shall substitute therefor another Primary Treasury
Dealer.
Reference Treasury Dealer Quotations means, with respect to each Reference Treasury Dealer
and any redemption date, the average, as determined by the Company, of the bid and asked prices for
the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount)
quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. on the third
business day preceding such redemption date.
Refinance means, in respect of any security or Indebtedness, to refinance, extend, renew,
refund, repay, prepay, redeem, defease or retire, or to issue a security or Indebtedness in
exchange or replacement for, such security or Indebtedness in whole or in part. Refinanced and
Refinancing shall have correlative meanings.
Refinancing Indebtedness means any Refinancing by the Company or any Restricted Subsidiary
of the Company of Indebtedness incurred in accordance with the covenant described under Certain
Covenants Limitation on Incurrence of Additional Indebtedness (other than pursuant to clauses
(2), (4), (5), (6), (7), (8) , (9), (10), (12), (13), (14), (16) or (17) of the definition of
Permitted Indebtedness), in each case that does not:
(1) result in an increase in the aggregate principal amount of Indebtedness of such Person
as of the date of such proposed Refinancing above the sum of (i) the aggregate principal amount
of such Indebtedness, plus (ii) the accrued interest on and amount of any premium required to be
paid under the terms of the instrument governing such Indebtedness, plus (iii) the amount of
reasonable expenses incurred by the Company in connection with such Refinancing; or
(2) create Indebtedness with: (a) a Weighted Average Life to Maturity that is less than the
Weighted Average Life to Maturity of the Indebtedness being Refinanced; or (b) a final maturity
earlier than the final maturity of the Indebtedness being Refinanced;
provided that (x) if such Indebtedness being Refinanced is Indebtedness solely of the Company (and
is not otherwise guaranteed by a Restricted Subsidiary of the Company), then such Refinancing
Indebtedness shall be Indebtedness solely of the Company and (y) if such Indebtedness being
Refinanced is subordinate or junior to the notes or any Guarantee, then such Refinancing
Indebtedness shall be subordinate to the notes or such Guarantee, as the case may be, at least to
the same extent and in the same manner as the Indebtedness being Refinanced.
Restricted Subsidiary of any Person means any Subsidiary of such Person which at the time of
determination is not an Unrestricted Subsidiary.
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S&P means Standard & Poors Ratings Group or any successor to the rating agency business
thereof.
Sale and Leaseback Transaction means any direct or indirect arrangement with any Person or
to which any such Person is a party, providing for the leasing to the Company or a Restricted
Subsidiary of any property, whether owned by the Company or any Restricted Subsidiary at the Issue
Date or later acquired, which has been or is to be sold or transferred by the Company or such
Restricted Subsidiary to such Person or to any other Person from whom funds have been or are to be
advanced by such Person on the security of such Property.
Securities Act means the Securities Act of 1933, as amended.
Significant Subsidiary", with respect to any Person, means any Restricted Subsidiary of such
Person that satisfies the criteria for a significant subsidiary set forth in Rule 1.02(w) of
Regulation S-X under the Exchange Act.
Special Purpose Vehicle means a bankruptcy-remote entity or trust or other special purpose
entity that is formed by the Company, any Subsidiary of the Company or any other Person for the
purpose of, and engages in no material business other than in connection with a Qualified
Securitization Transaction or other similar transactions of Receivables or other similar or related
assets.
Subordinated Indebtedness means Indebtedness of the Company or any Guarantor that is
subordinated or junior in right of payment to the notes or the Guarantee of such Guarantor, as the
case may be.
Subsidiary", with respect to any Person, means:
(1) any corporation of which the outstanding Capital Stock having at least a majority of
the votes entitled to be cast in the election of directors under ordinary circumstances shall at
the time be owned, directly or indirectly, by such Person; or
(2) any other Person of which at least a majority of the voting interest under ordinary
circumstances is at the time, directly or indirectly, owned by such Person.
Treasury Rate means, with respect to any redemption date, the rate per annum equal to the
yield to maturity of the Comparable Treasury Issue, compounded semi-annually, assuming a price for
such Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the
Comparable Treasury Price for such redemption date.
Unrestricted Subsidiary of any Person means:
(1) any Subsidiary of such Person that at the time of determination shall be or continue to
be designated an Unrestricted Subsidiary by the Board of Directors of such Person in the manner
provided below; and
(2) any Subsidiary of an Unrestricted Subsidiary.
The Board of Directors may designate any Subsidiary (including any newly acquired or newly
formed Subsidiary) to be an Unrestricted Subsidiary unless such Subsidiary owns any Capital Stock
of, or owns or holds any Lien on any property of, the Company or any other Subsidiary of the
Company that is not a Subsidiary of the Subsidiary to be so designated; provided that:
(1) the Company certifies to the Trustee that such designation complies with the covenant
described under Certain Covenants Limitation on Restricted Payments; and
(2) each Subsidiary to be so designated and each of its Subsidiaries has not at the time of
designation, and does not thereafter, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable with respect to any Indebtedness pursuant to which the
lender has recourse to any of the assets of the Company or any of its Restricted Subsidiaries.
For purposes of making the determination of whether any such designation of a Subsidiary as an
Unrestricted Subsidiary complies with the covenant described under Certain Covenants
Limitation on Restricted Payments, the portion of the fair market value of the net assets of such
Subsidiary of the Company at the time that such Subsidiary is designated as an Unrestricted
Subsidiary that is represented by the interest of the Company and its Restricted Subsidiaries in
such Subsidiary, in each case as determined in good faith by the Board of Directors of the Company,
shall be deemed to be an Investment. Such designation will be permitted only if such Investment
would be permitted at such time under the Limitation on Restricted Payments covenant.
The Board of Directors may designate any Unrestricted Subsidiary to be a Restricted Subsidiary
only if:
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(1) immediately after giving effect to such designation, the Company is able to incur at
least $1.00 of additional Indebtedness (other than Permitted Indebtedness) in compliance with
the covenant described under Certain Covenants Limitation on Incurrence of Additional
Indebtedness; and
(2) immediately before and immediately after giving effect to such designation, no Default
or Event of Default shall have occurred and be continuing. Any such designation by the Board of
Directors shall be evidenced to the Trustee by promptly filing with the Trustee a copy of the
Board Resolution giving effect to such designation and an officers certificate certifying that
such designation complied with the foregoing provisions.
Weighted Average Life to Maturity means, when applied to any Indebtedness at any date, the
number of years obtained by dividing (a) the then outstanding aggregate principal amount of such
Indebtedness into (b) the sum of the total of the products obtained by multiplying (i) the amount
of each then remaining installment, sinking fund, serial maturity or other required payment of
principal, including payment at final maturity, in respect thereof, by (ii) the number of years
(calculated to the nearest one-twelfth) which will elapse between such date and the making of such
payment.
Wholly Owned Restricted Subsidiary of any Person means any Wholly Owned Subsidiary of such
Person which at the time of determination is a Restricted Subsidiary of such Person.
Wholly Owned Subsidiary of any Person means any Subsidiary of such Person of which all the
outstanding voting securities (other than in the case of a foreign Subsidiary, directors
qualifying shares or an immaterial amount of shares required to be owned by other Persons pursuant
to applicable law) are owned by such Person or any Wholly Owned Subsidiary of such Person.
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BOOK-ENTRY; DELIVERY AND FORM
The exchange notes will be represented by one or more permanent global notes in definitive,
fully registered form without interest coupons. Upon issuance, the exchange notes will be deposited
with the Trustee as custodian for the Depository Trust Company (DTC) in New York, New York, and
registered in the name of DTC or its nominee.
Ownership of beneficial interests in a global note will be limited to persons who have
accounts with DTC, which we refer to as participants, or persons who hold interests through
participants. Ownership of beneficial interests in a global note will be shown on, and the transfer
of that ownership will be effected only through, records maintained by DTC or its nominee (with
respect to interests of participants) and the records of participants (with respect to interests of
persons other than participants).
So long as DTC, or its nominee, is the registered owner or holder of any of the exchange
notes, DTC or that nominee, as the case may be, will be considered the sole owner or holder of such
exchange notes represented by the global note for all purposes under the Indenture and the exchange
notes. No beneficial owner of an interest in a global note will be able to transfer such interest
except in accordance with DTCs applicable procedures, in addition to those provided for under the
Indenture and, if applicable, those of Euroclear and Clearstream Banking.
Payments of the principal of, and interest on, a global note will be made to DTC or its
nominee, as the case may be, as the registered owner thereof. None of the Company, any Subsidiary
of the Company, the Trustee or any paying agent will have any responsibility or liability for any
aspect of the records relating to or payments made on account of beneficial ownership interests in
a global note or for maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
We expect that DTC or its nominee, upon receipt of any payment of principal or interest in
respect of a global note, will credit participants accounts with payments in amounts proportionate
to their respective beneficial interests in the principal amount of such global note as shown on
the records of DTC or its nominee. We also expect that payments by participants to owners of
beneficial interests in such global note held through such participants will be governed by
standing instructions and customary practices, as is now the case with securities held for the
accounts of customers registered in the names of nominees for such customers. Such payments will be
the responsibility of such participants.
Transfers between participants in DTC will be effected in the ordinary way in accordance with
DTC rules and procedures and will be settled in same-day funds. Transfers between participants in
Euroclear and Clearstream Banking will be effected in the ordinary way in accordance with their
respective rules and operating procedures.
We expect that DTC will take any action permitted to be taken by a holder of notes only at the
direction of one or more participants to whose account the DTC interests in a global note is
credited and only in respect of such portion of the aggregate principal amount of notes as to which
such participant or participants has or have given such direction. However, if there is an event of
default under the notes, DTC will exchange the applicable global note for certificated notes, which
it will distribute to its participants.
If DTC is at any time unwilling or unable to continue as a depositary for the global notes or
if at any time DTC ceases to be a clearing agency registered under the Exchange Act and a
successor depositary is not appointed by us within 90 days, we will issue certificated notes in
exchange for the global notes. Holders of an interest in a global note may receive certificated
notes in accordance with DTCs rules and procedures in addition to those provided for under the
applicable indenture.
DTC has advised us that: DTC is a limited purpose trust company organized under the laws of
the State of New York, a banking organization within the meaning of New York Banking Law, a
member of the Federal Reserve System, a clearing corporation within the meaning of the Uniform
Commercial Code and a Clearing Agency registered pursuant to the provisions of Section 17A of the
Exchange Act. DTC was created to hold securities for its participants and facilitate the clearance
and settlement of securities transactions between participants through electronic book-entry
changes in accounts of its participants, thereby eliminating the need for physical movement of
certificates. Indirect access to the DTC system is available to others such as banks, brokers,
dealers and trust companies and certain other organizations that clear through or maintain a
custodial relationship with a participant, either directly or indirectly, whom we refer to as
indirect participants.
Although DTC, Euroclear and Clearstream Banking are expected to follow the foregoing
procedures in order to facilitate transfers of interests in a global note among participants of
DTC, Euroclear and Clearstream Banking, they are under no obligation to perform or continue to
perform such procedures, and such procedures may be discontinued at any time. None of the Company,
any Subsidiary of the Company, the Trustee or the paying agent will have any responsibility for the
performance by DTC, Euroclear or Clearstream
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Banking or their respective participants or indirect participants of their respective obligations
under the rules and procedures governing their operations.
Registration Covenant; Exchange Offer
We have filed a registration statement to comply with our obligation under the registration
rights agreements to register the issuance of the exchange notes. See The Exchange Offer.
Notices
Notices to Holders of exchange notes will be given by mail to the addresses of such Holders as
they may appear in the register of Holders maintained by the Trustee.
Title
Mobile Mini, Inc., the Trustee and any agent of Mobile Mini or the Trustee may treat the
Person in whose name an exchange note is registered as the absolute owner thereof (whether or not
such exchange note may be overdue) for the purpose of making payment and for all other purposes.
Governing Law
The Indenture and the notes will be governed by, and construed in accordance with, the laws of
the State of New York.
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UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a general discussion of certain United States federal income (and as to
non-U.S. Holders, estate tax) considerations relating to the purchase, ownership and disposition of
the notes, and the exchange of the notes by such holder for exchange notes. This discussion is
based upon the Internal Revenue Code of 1986, as amended (the Code), existing and proposed
Treasury Regulations, and judicial decisions and administrative interpretations thereunder, as of
the date hereof, all of which are subject to change, possibly with retroactive effect, or different
interpretations. We cannot assure you that the Internal Revenue Service (the IRS) will not
challenge one or more of the tax considerations described herein, and we have not obtained, nor do
we intend to obtain, a ruling from the IRS or an opinion of counsel with respect to the United
States federal tax consequences resulting from acquiring, holding or disposing of the notes, or
exchanging the notes for exchange notes.
This summary does not address all of the tax consequences that may be relevant to you in light
of your personal investment circumstances, or to certain types of holders subject to special tax
treatment, including, without limitation:
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certain financial institutions; |
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brokers, dealers or traders in securities or commodities; |
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insurance companies; |
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regulated investment companies; |
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real estate investment trusts; |
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S corporations; |
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partnerships and other pass-through entities; |
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expatriates; |
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tax-exempt organizations; |
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persons who are subject to alternative minimum tax; |
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holders who hold the notes as a position in a straddle or as part of a hedging or conversion transaction; and |
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U.S. holders that have a functional currency other than the United States dollar. |
If you are an entity treated as a partnership for United States federal income tax purposes,
the tax treatment of each partner of such partnership will generally depend upon the status of the
partner and upon the activities of the partnership. Partners in partnerships that hold notes should
consult their tax advisors to determine the tax consequences of the acquisition, ownership, and
disposition of the notes.
This discussion is limited to holders who purchase notes at the initial offering price and who
hold the notes as capital assets within the meaning of Section 1221 of the Code. This discussion
also does not address the tax considerations arising under the laws of any foreign, state or local
jurisdiction.
YOU ARE URGED TO CONSULT YOUR OWN TAX ADVISOR AS TO THE PARTICULAR TAX CONSIDERATIONS TO YOU
OF THE ACQUISITION, OWNERSHIP, AND DISPOSITION OF THE NOTES, INCLUDING THE EFFECT AND APPLICABILITY
OF FEDERAL, STATE, LOCAL, FOREIGN OR OTHER TAX LAWS.
TO ENSURE COMPLIANCE WITH TREASURY DEPARTMENT CIRCULAR 230, EACH HOLDER OF A NOTE IS HEREBY
NOTIFIED THAT: (A) ANY DISCUSSION OF FEDERAL TAX ISSUES IN THIS OFFERING MEMORANDUM IS NOT INTENDED
OR WRITTEN TO BE RELIED UPON, AND CANNOT BE RELIED UPON, BY A HOLDER FOR THE PURPOSE OF AVOIDING
PENALTIES THAT MAY BE IMPOSED ON SUCH HOLDER UNDER THE CODE; (B) SUCH DISCUSSION IS BEING USED IN
CONNECTION WITH THE PROMOTION OR MARKETING (WITHIN THE MEANING OF CIRCULAR 230) OF THE NOTES BY THE
COMPANY; AND (C) A HOLDER OF A NOTE SHOULD SEEK ADVICE BASED ON ITS PARTICULAR CIRCUMSTANCES FROM
AN INDEPENDENT TAX ADVISOR.
U.S. Holders
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You are a U.S. Holder if you are the beneficial owner of a note and you are, for U.S.
federal income tax or estate tax purposes, as applicable:
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a citizen or resident of the United States, including an alien individual
who is a lawful permanent resident of the United States or meets the substantial
presence test under section 7701(b)(1)(A)(3) of the Code; |
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a corporation (or an entity treated as a corporation) created or
organized in the United States or under the laws of the United States, any state
thereof, or the District of Columbia; |
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an estate, the income of which is subject
to United States federal income tax regardless of its source; or |
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a trust, if a United States court can exercise primary supervision over
the administration of the trust and one or more United States persons can control
all substantial decisions of the trust or certain other trusts that have a valid
election in effect to be treated as a United States person. |
Interest on Notes. If you are a U.S. Holder, interest on the notes will generally be taxable
to you as ordinary income at the time it is paid or accrued, depending on your method of tax
accounting.
Sale, Exchange, Redemption, Retirement or Other Taxable Disposition of the Notes. You will
generally recognize capital gain or loss upon the sale, exchange, redemption, retirement or other
taxable disposition of a note equal to the difference between the amount of money and fair market
value of property received in exchange for the note (except to the extent attributable to the
payment of accrued interest to the extent not previously included in income, which amount generally
will be taxable as ordinary income as described above) and your adjusted tax basis in the note.
Your adjusted tax basis in a note will generally equal the price you paid for the note. Gain
or loss realized on the sale, exchange or other disposition of a note will generally be capital
gain or loss and will be long-term capital gain or loss if, at the time of the sale, exchange or
other disposition, you have held the note for more than one year. Long-term capital gains of
non-corporate taxpayers are generally taxed at a reduced rate. Taxpayers are subject to limitations
on the deductibility of capital losses.
Exchange Offer. In satisfaction of your registration rights as provided for herein, we intend
to offer exchange notes for the notes. The exchange notes should not differ materially in kind or
extent from the notes, and therefore your exchange of notes for exchange notes should not
constitute a taxable disposition of the notes for United States federal income tax purposes. As a
result, you should not recognize taxable income, gain or loss on such exchange, your holding period
or the exchange notes should generally include the holding period for the notes so exchanged, and
your adjusted tax basis in the exchange notes should generally be the same as your adjusted tax
basis in the notes so exchanged.
Information Reporting and Backup Withholding. Information reporting will apply to payments of
interest on, and the proceeds of the sale or other disposition (including a redemption or
retirement), of the notes with respect to certain U.S. Holders. If you are a U.S. Holder, you will
also be subject to backup withholding at the current rate of 28% with respect to any interest and
premium we pay on a note unless you (1) are an entity (including a corporation or a tax-exempt
organization) that is exempt from backup withholding and, when required, demonstrate this fact; or
(2) timely provide us with a correct taxpayer identification number, certify that the taxpayer
identification number is correct and that you have not been notified by the IRS that you are
subject to backup withholding due to underreporting of interest or dividends, and you otherwise
comply with applicable requirements of the backup withholding rules. Any amount withheld under the
backup withholding rules is allowable as a credit against your United States federal income tax
liability (and may entitle you to a refund), provided that the required information is timely
furnished to the IRS.
Non-U.S. Holders
In the following discussion, we summarize certain United States federal income and estate tax
considerations resulting from the acquisition, ownership and disposition of the notes by Non-U.S.
Holders. You are a Non-U.S. Holder subject to the following discussion if you are a beneficial
owner of a note and are an individual, a corporation, a trust or an estate that is not a U.S.
Holder.
Interest on Notes. Subject to the discussion below of backup withholding, interest paid on the
notes to you generally will not be subject to United States federal income tax if:
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such interest is not effectively connected with your conduct of a trade or
business within the United States; |
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you do not actually or constructively own 10% or more of the total voting power
of all classes of our stock entitled to vote; |
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you are not a controlled foreign corporation with respect to which we are a
related person within the meaning of the Code; and |
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you are not a bank receiving interest pursuant to a loan agreement entered into
in the ordinary course of your trade or business. |
To qualify for the exemption from taxation described above, the withholding agent as defined
below, must have received a statement from you (generally on IRS Form W-8BEN) that:
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is signed under penalties of perjury by you as the beneficial owner of the note; |
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certifies that you are not a United States person; and, |
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provides your name and address. |
Certain securities clearing organizations and other entities who are not beneficial owners,
may be able to provide a signed statement to the withholding agent. However, in such case, the
signed statement may require a copy of the beneficial owners W-8BEN or the substitute form.
If you are not exempt from tax under these rules, payments made to you will be subject to
withholding of United States federal income tax at a rate of 30% unless:
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the interest is effectively connected with your conduct of a United
States trade or business, in which case you will be subject to the United States
federal income tax on such interest (generally in the same manner as a U.S.
Holder unless an applicable income tax treaty provides otherwise) (and, with
respect to corporate holders, under certain circumstances an additional branch
profits tax may apply); or |
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the rate of withholding is reduced or eliminated by an applicable
income tax treaty; and |
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you provide us with proper certification on IRS Form W-8ECI or IRS Form W-8BEN,
respectively, as to your exemption from withholding. |
Sale or Other Disposition of the Notes. You generally will not be required to pay United
States federal income tax on gain realized on the sale, exchange, redemption, retirement or other
disposition of a note unless:
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if you are an individual, you are present in the United States for 183 days or
more in the year of such sale, exchange, redemption, retirement or other disposition,
and either: |
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have a tax home in the United States and certain other
requirements are met; or |
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(B) |
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the gain from the disposition is attributable to an office or other
fixed place of business in the United States; or |
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the gain is effectively connected with your conduct of a United States trade or
business (and if an income tax treaty applies, is attributable to a U.S. permanent
establishment), in which case you will be subject to United States federal income tax on
such gain generally in the same manner as a U.S. Holder (and, with respect to corporate
holders, in some circumstances an additional branch profits tax may apply). |
Information Reporting and Backup Withholding. If you are a Non-U.S. Holder that receives
payments of interest directly from us or through the United States office of a custodian, nominee,
agent or broker, there is a possibility that both information reporting and backup withholding at a
rate of 28% will apply to the payments. However, backup withholding and information reporting will
not apply if you timely certify, generally on an IRS Form W-8BEN, that you are not a United States
person or if you otherwise establish an exemption.
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Backup withholding or information reporting generally will not apply to proceeds received on
the sale, exchange, redemption, retirement or other disposition of a note made to or through a
foreign of a broker except that information reporting may apply to those proceeds if the broker has
certain connections to the United States and you fail to certify that you are not a United States
person or otherwise establish an exemption, payments of such proceeds made to or through the U.S.
office of a broker generally are subject to information reporting and backup withholding unless you
certify that you are not a United States person or otherwise establish an exemption.
Any amounts withheld under the backup withholding rules may be credited against your United
States federal income tax liability, or refunded to the extent amounts withheld exceed that
liability, provided that the required information is timely furnished to the IRS.
United States Federal Estate Tax. A note held by an individual who at the time of death is not
a citizen or resident of the United States (as specially defined for United States federal estate
tax purposes) will not be subject to United States federal estate tax if interest on the note is
exempt from withholding under the rules discussed above for Non U.S. Holders Interest on Notes
(without regard to the certification requirement).
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PLAN OF DISTRIBUTION
Each broker-dealer that receives exchange notes for its own account in the exchange offer must
acknowledge that it will deliver a prospectus in connection with any resale of the exchange notes.
This prospectus, as it may be amended or supplemented from time to time, may be used by a
broker-dealer in connection with resales of exchange notes received in exchange for original notes
where the original notes were acquired as a result of market-making activities or other trading
activities. We have agreed that, for a period of 365 days after the consummation of the exchange
offer, we will make this prospectus, as amended or supplemented, available to any broker-dealer for
use in connection with any resale. In addition, until August 13,
2007, all dealers effecting
transactions in the exchange notes may be required to deliver a prospectus.
We will not receive any proceeds from any sale of exchange notes by broker-dealers. Exchange
notes received by broker-dealers for their own account in the exchange offer may be sold from time
to time in one or more transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the exchange notes or a combination of these methods of resale.
These resales may be made at market prices prevailing at the time of resale, at prices related to
these prevailing market prices or negotiated prices. Any resale may be made directly to purchasers
or to or through brokers or dealers who may receive compensation in the form of commissions or
concessions from any broker-dealer or the purchasers of any of the exchange notes. Any
broker-dealer that resells exchange notes that were received by it for its own account in the
exchange offer and any broker or dealer that participates in a distribution of the exchange notes
may be deemed to be an underwriter within the meaning of the Securities Act, and any profit on the
resale of exchange notes and any commission or concessions received by those persons may be deemed
to be underwriting compensation under the Securities Act. The letter of transmittal states that, by
acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an underwriter within the meaning of the Securities Act.
Furthermore, any broker-dealer that acquired any of its original notes directly from us:
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may not rely on the applicable interpretations of the staff of the SEC contained in Exxon
Capital Holdings Corp., SEC no-action letter (May 13, 1988), Morgan, Stanley & Co., SEC
no-action letter (June 5, 1991) and Shearman & Sterling, SEC no-action letter (July 2,
1993); and |
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must also be named as a selling noteholder in connection with the registration and
prospectus delivery requirements of the Securities Act relating to any resale transaction. |
We agree to pay all expenses incident to the exchange offer, including the expenses of one
counsel for the holders of the notes, other than commissions or concessions of any brokers or
dealers. We will indemnify the holders of the notes, including any broker-dealers, against various
liabilities, including liabilities under the Securities Act.
NOTICE TO CANADIAN RESIDENTS
Resale Restrictions
The distribution of the original notes in Canada was made on a private placement basis only
and was exempt from the requirement that the Company prepare and file a prospectus with the
relevant Canadian regulatory authorities. Accordingly, any resale of the original notes and the
exchange notes must be made in accordance with applicable securities laws, which will vary
depending on the relevant jurisdiction, and which may require resales to be made in accordance with
exemptions from registration and prospectus requirements. Canadian purchasers are advised to seek
legal advice prior to any resale of the original notes and the exchange notes.
The Company is not a reporting issuer, as such term is defined under applicable securities
legislation, in any province of Canada in which the original notes were offered. Under no
circumstances will be Company be required to file a prospectus or similar document with any
securities regulatory authority in Canada. Canadian investors are advised that the Company
currently has no intention to file a prospectus or similar document with any securities regulatory
authority in Canada qualifying the resale of the original notes or the exchange notes to the public
in Canada or any province or territory thereof.
Representation of Purchasers
By exchanging original notes for exchange notes in the exchange offer, a Canadian Holder is
representing to us that:
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(i) the Holder is entitled under applicable provincial securities laws to receive the
exchange notes without the benefit of a prospectus qualified under those securities laws;
(ii) where required by law, the Holder is exchanging as principal and not as agent; and
(iii) the Holder has reviewed the text above under Resale Restrictions.
Each Canadian investor who acquires exchange notes in the exchange offer acknowledges that its
name and other specific information, including the amount of exchange notes it has acquired, may be
disclosed to Canadian securities regulatory authorities and become available to the public in
accordance with the requirements of applicable Canadian securities laws. By acquiring exchange
notes, each Canadian investor consents to the disclosure of such information.
Taxation and Eligibility for Investment
Canadian acquirers of exchange notes should consult their own legal and tax advisers with
respect to the tax consequences of an investment in the exchange notes in their particular
circumstances and with respect to the eligibility of the exchange notes for investment by the
purchaser under relevant Canadian federal and provincial legislation and regulations.
Rights of Action for Damages or Rescission Ontario
An investor who acquires securities offered by this prospectus pursuant to the exchange offer
has, without regard to whether the investor relied upon a misrepresentation, a right of action for
damages or, alternatively, while still the owner of the securities, for rescission against the
issuer and any selling security holder provided that:
(a) if the investor exercises its right of rescission, it shall cease to have a right of
action for damages against the issuer or any selling security holders;
(b) the issuer and the selling security holders, if any, will not be liable if they prove
that the investor acquired the securities with knowledge of the misrepresentation;
(c) the issuer and the selling security holders, if any, will not be liable for all or any
portion of damages that they can prove do not represent the depreciation in value of the
securities as a result of the misrepresentation relied upon; and
(d) in no case shall the amount recoverable exceed the price at which the securities were
offered.
Section 138 of the Securities Act (Ontario) provides that no action shall be commenced to
enforce these rights more than:
(a) in the case of an action for recession, 180 days from the day of the transaction that
gave rise to the cause of action; or
(b) in the case of an action for damages, the earlier of:
(i) 180 days from the day that the investor first had knowledge of the facts giving rise
to the cause of action, or
(ii) three years from the day of the transaction that gave rise to the cause of action.
The foregoing summary is subject to the express provisions of the Securities Act (Ontario) and
the rules, regulations and other instruments thereunder, and reference is made to the complete text
of such provisions contained therein. Such provisions may contain limitations and statutory
defences on which the Company may rely. The enforceability of these rights may be limited as
described herein under Enforcement of Legal Rights.
The rights of action discussed above will be granted to the investors to whom such rights are
conferred. The rights discussed above are in addition to and without derogation from any other
right or remedy which investors may have at law. Similar rights may be available to investors
resident in other Canadian jurisdiction under local provincial securities laws.
In light of U.S. jurisprudence, including a decision by the Supreme Court of the United
States, prospective Canadian investors should consult their own legal advisers as to whether
similar rights may be available to them in the United States.
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Enforcement of legal rights
The Company is incorporated under the law of the State of Delaware. All, or substantially
all, of the directors and officers of the Company, as well as the experts named herein, may be
located outside of Canada and, as a result, it may not be possible for Canadian investors to effect
service of process within Canada upon the Company or such persons. All or a substantial portion of
the assets of the Company and such other persons may be located outside of Canada and, as a result,
it may not be possible to satisfy a judgment against the Company or such persons in Canada or to
enforce a judgment obtained in Canadian courts against the Company or such persons outside of
Canada.
LEGAL MATTERS
Squire, Sanders & Dempsey L.L.P. has passed upon the validity and enforceability of the
exchange notes and the related guarantees on behalf of the issuers.
EXPERTS
The consolidated financial statements of Mobile Mini, Inc. appearing in the Companys
Annual Report on Form 10-K for the year ended December 31, 2006 (including schedules
appearing therein) and Mobile Mini Inc.s
managements assessment of the
effectiveness of internal control over financial reporting as of December 31, 2006 included therein,
have been audited by Ernst & Young LLP,
independent registered public accounting firm, as set forth in
their reports thereon, included therein, and incorporated herein by reference.
Such consolidated financial statements and managements assessment are incorporated
herein by reference in reliance upon such reports given on the authority of such
firm as experts in accounting and auditing.
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