EXHIBIT 99.1
INDEMNITY AND PLEDGE AGREEMENT
This Pledge Agreement ("Agreement") is made and entered into as of April
__, 2000 by and among E. Xxxxxxxx Xxxxxxxxx ("Xxxxxxxxx"), Mobile Storage Group,
Inc., a California corporation ("Mobile"), and Windward Capital Partners II,
L.P., a Delaware limited partnership ("Pledgor").
R E C I T A L S
A. Windward, Windward Capital XX XX, LLC, Windward/MSG Co-Invest, LLC
and Windward Acquisition/MS, LLC, Mobile and certain of Mobile's shareholders
(the "Shareholders") entered into an Amended and Restated Agreement and Plan of
Merger, dated as of April __, 2000 (the "Merger Agreement"). Capitalized terms
used herein and not otherwise defined herein shall have the meanings ascribed to
them in the Merger Agreement.
B. In order to induce Xxxxxxxxx to enter into, and consummate the
transactions contemplated by, the Merger Agreement, the Company desires to
indemnify Xxxxxxxxx as set forth herein, and Pledgor desires to pledge its
shares of capital stock of Mobile (the "Shares"), subject to the provisions
hereof, to secure the indemnification obligation of Pledgor to Xxxxxxxxx as set
forth herein.
NOW, THEREFORE, the parties agree as follows:
A. INDEMNITY
1. INDEMNIFICATION BY COMPANY.
The Company agrees to make whole, indemnify and hold harmless Xxxxxxxxx
with respect to any and all liability incurred by Xxxxxxxxx arising out of the
enforcement by secured creditors of those certain guarantees by Xxxxxxxxx of the
Guaranteed Indebtedness set forth on the Guaranteed Indebtedness Schedule to the
Merger Agreement.
2. NOTICES.
Xxxxxxxxx agrees to provide timely written notice to each of the Company
and Windward of any claims asserted against Xxxxxxxxx in connection with a
guaranty of any Guaranteed Indebtedness, specifying in sufficient detail the
nature and amount of any such claim. The Company shall, within 20 days after
receipt of such written notice, deliver such payment to Xxxxxxxxx as is
sufficient to satisfy its indemnification obligation arising from such claim,
e.g., payment of costs incurred by Xxxxxxxxx and payment in full to the holder
of any such Guaranteed Indebtedness or, if Xxxxxxxxx has paid the guaranteed
amount in full, payment to Xxxxxxxxx of the full amount thereof. If the Company
fails to satisfy its obligation to indemnify Xxxxxxxxx pursuant hereto,
Xxxxxxxxx shall send written notice (the "Second Notice") to Windward to such
effect, and Windward shall, no later than twenty (20) days after its
receipt of the Second Notice, pay in cash that portion of the Guaranteed
Indebtedness to which the notice relates and the costs, expenses and other
losses incurred by Xxxxxxxxx arising from the enforcement of such guaranty.
3. TERMINATION OF GUARANTIES
The Company agrees that it will use commercially reasonable efforts to
obtain the release of Xxxxxxxxx from any liability with respect to the
Guaranteed Indebtedness within ninety (90) days after the date hereof (the
"Release Target Date"). The Company further agrees that from and after the
Release Target Date, it shall pay to Xxxxxxxxx on or about the first of each
month, in arrears, a per annum fee of seventy-five hundredths of one percent
(0.75%) of the principal amount of the Guaranteed Indebtedness, payable on the
first of each month in an amount equal to (a) six point two five hundredths of
one percent (0.0625%) multiplied by (b) the average daily principal amount of
the Guaranteed Indebtedness for the immediately preceding month.
B. PLEDGE
1. CREATION OF SECURITY INTEREST
Pursuant to the provisions of the New York Uniform Commercial Code,
Pledgor hereby grants to Xxxxxxxxx, and Xxxxxxxxx hereby accepts, a present
security interest in the Shares as collateral to secure the payment of Pledgor's
indemnification obligation to Xxxxxxxxx under Section 1 this Agreement. For
purposes of this Agreement, the Shares pledged to Xxxxxxxxx hereby, together
with any additional collateral pledged pursuant to Sections 6 and 7 hereof, will
hereinafter be collectively referred to as the "Collateral."
2. RELEASE OF SECURITY INTEREST
Pledgor shall release its security interest in the Collateral at such
time as the Guaranteed Indebtedness has been repaid, cancelled, and/or
extinguished in full and/or the guarantees made by Xxxxxxxxx of such Guaranteed
Indebtedness have been released by the secured creditors.
3. REPRESENTATIONS AND WARRANTIES
Pledgor hereby represents and warrants to Xxxxxxxxx that Pledgor has
good title (both record and beneficial) to the Collateral, free and clear of all
claims, pledges, security interests, liens or encumbrances of every nature
whatsoever (except for any such encumbrances imposed under the Shareholders
Agreement), and that Pledgor has the right to pledge and xxxxx Xxxxxxxxx the
security interest in the Collateral granted under this Agreement. Pledgor
further agrees that, until the release of Xxxxxxxxx' security interest in the
Collateral as provided in Section 2 of Article B of this Agreement, Pledgor will
not, without Xxxxxxxxx' prior written consent, (i) sell, assign or transfer, or
attempt to sell, assign or transfer, any of the Collateral, other than to an
affiliate and only if such affiliate executes a written
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acknowledgment that such Collateral remains subject to this Agreement, or (ii)
grant or create, or attempt to grant or create, any security interest, lien,
pledge, claim or other encumbrance with respect to any of the Collateral.
4. RIGHTS ON DEFAULT
In the event that the Company and Pledgor are unable or unwilling to
timely indemnify Xxxxxxxxx for any claim made pursuant to Article A hereof,
Xxxxxxxxx will have full power to sell, assign and deliver the whole or any part
of the Collateral at any broker's exchange or elsewhere, at public or private
sale, at the option of Xxxxxxxxx, in order to satisfy any part of the
obligations of Pledgor now existing or hereinafter arising hereunder. On any
such sale, Xxxxxxxxx or his assigns may purchase all or any part of the
Collateral.
5. ADDITIONAL REMEDIES
Pledgor agrees that Xxxxxxxxx' reasonable expenses of holding the
Collateral, preparing it for resale or other disposition, and selling or
otherwise disposing of the Collateral, including attorneys' fees and other legal
expenses, will be deducted from the proceeds of any sale or other disposition
and will be included in the amounts Pledgor must tender to redeem the
Collateral. Any forbearance or failure or delay by Xxxxxxxxx in exercising any
right, power or remedy hereunder will not be deemed to be a waiver of any such
right, power or remedy and any single or partial exercise of any such right,
power or remedy hereunder will not preclude the further exercise thereof.
6. DISTRIBUTIONS; VOTING
All distributions made with respect to the Collateral during the term of
this pledge (excluding only ordinary cash distributions, which will be payable
to Pledgor so long as Pledgor has indemnified Xxxxxxxxx for any claim made
pursuant to Article A hereof) will be held in pledge under this Agreement.
Notwithstanding this Agreement, so long as Pledgor owns the Shares, Pledgor will
be entitled to vote any Shares comprising the Collateral.
7. ADJUSTMENTS
In the event that during the term of this pledge, any distribution,
reclassification, readjustment, unit split or other change is declared or made
with respect to the Collateral, or if warrants or any other rights, options or
securities are issued in respect of the Collateral, then all new, substituted
and/or additional units or other securities issued by reason of such change or
by reason of the exercise of such warrants, rights, options or securities, will
be immediately pledged to Xxxxxxxxx to be held under the terms of this Agreement
in the same manner as the Collateral is held hereunder.
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8. SUCCESSORS AND ASSIGNS
This Agreement will inure to the benefit of the respective heirs,
personal representatives, successors and assigns of the parties hereto.
9. GOVERNING LAW; SEVERABILITY
This Agreement will be governed by and construed in accordance with the
internal laws of the State of New York, excluding that body of law relating to
conflicts of law. Should one or more of the provisions of this Agreement be
determined by a court of law to be illegal or unenforceable, the other
provisions nevertheless will remain effective and will be enforceable.
10. MODIFICATION; ENTIRE AGREEMENT
This Agreement will not be amended without the written consent of both
parties hereto. This Agreement constitutes the entire agreement of the parties
hereto with respect to the subject matter hereof and supersedes all prior
agreements and understandings related to such subject matter.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
E. XXXXXXXX XXXXXXXXX
/s/ E. XXXXXXXX XXXXXXXXX
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MOBILE STORAGE GROUP, INC.
By: /s/ XXXXXX X. XXXXXXX
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Xxxxxx X. Xxxxxxx
President
PLEDGOR
WINDWARD CAPITAL PARTNERS II, L.P.
By Windward Capital XX XX, LLC
By: /s/ XXXX X. XXXXXX
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Name: Xxxx X. Xxxxxx
Title: Managing Member
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