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Exhibit 10.5
INDEMNIFICATION AGREEMENT
This
INDEMNIFICATION AGREEMENT, dated as of November 27, 2006 (the
"Agreement"), is among Atlas Copco North America Inc. (the
"Company"), Rental
Service Corporation, an Arizona Corporation ("RSC" and, together
with the
Company, the "Company Entities"), RSC Acquisition LLC ("Ripplewood
1"), RSC
Acquisition II LLC ("Ripplewood 2", and together with Ripplewood
1,
"Ripplewood"). OHCP II RSC, LLC ("Oak Hill 1"). OHCMP II RSC, LLC
("Oak Hill
2"), OHCP II RSC COI, LLC ("Oak Hill 3", and together with Oak Hill
1 and Oak
Hill 2, "Oak Hill"). Ripplewood Holdings L.L.C., a Delaware limited
liability
corporation (the "Ripplewood Manager") and Oak Hill Capital
Management, LLC (the
"Oak Hill Manager" and, together with the Ripplewood Manager, the
"Managers"),
and Atlas Copco Finance S.a.r.l., a company organized under the
laws of
Luxembourg ("AC"). Capitalized terms used herein without definition
have the
meanings set forth in Section 1 of this Agreement.
RECITALS
A. In
connection with the recapitalization of the Company (the
"Recapitalization"), Ripplewood and Oak Hill (together, the
"Investors") have
agreed to acquire 85.47% of the outstanding shares of capital stock
of the
Company pursuant to a Recapitalization Agreement, dated as of
October 6, 2006
(the "Recapitalization Agreement"), by and among Atlas Copco AB,
AC, Ripplewood,
Oak Hill and the Company.
B.
Pursuant to the Recapitalization, AC has agreed to sell a number
of
shares such that after the consummation of the Recapitalization it
will own
14.53% of the outstanding shares of capital stock of the
Company.
C. The
Company, AC, and the Investors have entered into a Stockholders
Agreement, dated as of the date hereof (as the same may be amended
from time to
time in accordance with the terms thereof, the "Stockholders
Agreement"),
setting forth certain agreements with respect to, among other
things, the
management of the Company and transfers of its shares in various
circumstances.
D.
Concurrently with the execution and delivery of this Agreement on
the
date hereof, the Company has entered into a Transaction Agreement
with RSC and
the Managers (as the same may be amended from time to time in
accordance with
its terms, the "Transaction Agreement") and a Monitoring Agreement
with RSC and
the Managers (as the same may be amended from time to time in
accordance with
its terms, the "Monitoring Agreement").
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E. In
connection with the Recapitalization and related transactions,
the
Company is selling shares of its common stock, without par value
("Shares"), to
the Investors (the "Equity Offering"),
F. In
connection with the Recapitalization, certain of the Company's
Subsidiaries, including RSC, intend (i) to enter into a senior
asset based loan
facility and a senior second-lien term loan facility (the "Bank
Financing") and
(ii) to issue senior unsecured notes (the "Bond Offering" and,
together with the
Bank Financing, the "Financings").
G. The
Managers have performed the Initial Services (as defined in the
Transaction Agreement) for the benefit of Company and its
Subsidiaries.
H. The
Company or one or more of its Subsidiaries from time to time in
the
future may (i) offer and sell or cause to be offered and sold
equity or debt
securities (such offerings, collectively, the "Subsequent
Offerings"), including
without limitation (a) offerings of shares of capital stock of the
Company or
any of its Subsidiaries, and/or options to purchase such shares to
employees,
directors, managers, dealers, franchisees and consultants of and to
the Company
or any of its Subsidiaries (any such offering, a "Management
Offering"), and (b)
one or more offerings of debt securities for the purpose of
refinancing any
indebtedness of the Company or any of its Subsidiaries or for other
corporate
purposes, and (ii) repurchase, redeem or otherwise acquire certain
securities of
the Company or any of its Subsidiaries or engage in
recapitalization or
structural reorganization transactions relating thereto (any such
repurchase,
redemption, acquisition, recapitalization or reorganization, a
"Redemption").
I. The
parties hereto recognize the possibility that claims might be
made
against and liabilities incurred by each Manager, each Investor, or
any of their
respective Affiliates or related Persons under applicable
securities laws or
otherwise in connection with the Transactions or the Securities
Offerings, or
relating to other actions or omissions of or by members of the
Company Group, or
relating to the provision of management consulting, monitoring and
financial
advisory services to the Company Group by either Manager or its
Affiliates, and
the parties hereto accordingly wish to provide for each Manager,
each Investor
and their respective Affiliates and related Persons to be
indemnified in respect
of any such claims and liabilities.
J. The
parties hereto recognize that claims might be made against and
liabilities incurred by directors and officers of any member of the
Company
Group in connection with their acting in such capacity, and
accordingly wish to
provide for such directors and officers to be indemnified to the
fullest extent
permitted by law in respect of any such claims and liabilities.
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NOW,
THEREFORE, in consideration of the foregoing premises, and the
mutual
agreements and covenants and provisions herein set forth, the
parties hereto
hereby agree as follows:
1.
Definitions.
(a) "AC
Indemnitee" means AC and its Affiliates, their respective
successors and assigns, and the respective directors, officers,
partners,
members, employees, agents, advisors, consultants, representatives
and
controlling persons (within the meaning of the Securities Act) of
each of them,
or of their partners, members and controlling persons, and each
other person who
is or becomes a director or an officer of any member of the Company
Group, in
each case irrespective of the capacity in which such person
acts.
(b)
"Affiliate" means, with respect to any Person, (i) any other
Person
directly or indirectly Controlling, Controlled by or under common
Control with,
such Person (ii) any Person directly or indirectly owning or
Controlling 10% or
more of any class of outstanding voting securities of such Person
or (iii) any
officer, director, general partner or trustee of any such Person
described in
clause (i) or (ii). "Control" of any Person shall consist of the
power to direct
the management and policies of such Person (whether through the
ownership of
voting securities, by contract, as trustee or executor, or
otherwise).
(c)
"Claim" means, with respect to any Indemnitee, any claim against
such
Indemnitee involving any Obligation with respect to which such
Indemnitee may be
entitled to be defended and indemnified by any member of the
Company Group under
this Agreement.
(d) "Commission" means
the United States Securities and Exchange
Commission or any successor entity thereto.
(e)
"Company Group" means the Company Entities and any of their
respective
Subsidiaries.
(f)
"Exchange Act" means the Securities Exchange Act of 1934, as
amended,
and the rules and regulations promulgated thereunder.
(g)
"Indemnitee" means (i) each Manager, each Investor, their
respective
Affiliates, their respective successors and assigns, and the
respective
directors, officers, partners, members, employees, agents,
advisors,
consultants, representatives and controlling persons (within the
meaning of the
Securities Act) of each of them, or of their partners, members and
controlling
persons, and each other person who is or becomes a director or an
officer of any
member of the Company Group, in each case irrespective of the
capacity in which
such person acts and (ii) solely with respect to Obligations
arising under the
securities laws in connection with the Bond Offering and imposed on
the AC
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Indemnitees by virtue of the fact that at the time of the Bond
Offering AC was
in control of the Company, the AC Indemnitees.
(h)
"Obligations" means, collectively, any and all claims,
obligations,
liabilities, causes of actions, actions, suits, proceedings,
investigations,
judgments, decrees, losses, damages, fees, costs and expenses
(including without
limitation interest, penalties and fees and disbursements of
attorneys,
accountants, investment bankers and other professional advisors),
in each case
whether incurred, arising or existing with respect to third parties
or otherwise
at any time or from time to time.
(i)
"Person" means an individual, corporation, limited liability
company,
limited or general partnership, trust or other entity, including a
governmental
or political subdivision or an agency or instrumentality
thereof.
(j)
"Related Document" means any agreement, certificate, instrument
or
other document to which any member of the Company Group may be a
party or by
which it or any of its properties or assets may be bound or
affected from time
to time relating in any way to the Transactions or any Securities
Offering or
any of the transactions contemplated thereby, including without
limitation, in
each case as the same may be amended from time to time, (i) any
registration
statement filed by or on behalf of any member of the Company Group
with the
Commission in connection with the Transactions or any Securities
Offering,
including all exhibits, financial statements and schedules appended
thereto, and
any submissions to the Commission in connection therewith, (ii) any
prospectus,
preliminary or otherwise, included in such registration statements
or otherwise
filed by or on behalf of any member of the Company Group in
connection with the
Transactions or any Securities Offering or used to offer or confirm
sales of
their respective securities in any Securities Offering, (iii) any
private
placement or offering memorandum or circular, information statement
or other
information or materials distributed by or on behalf of any member
of the
Company Group or any placement agent or underwriter in connection
with the
Transactions or any Securities Offering, (iv) any federal, state or
foreign
securities law or other governmental or regulatory filings or
applications made
in connection with any Securities Offering, the Transactions or any
of the
transactions contemplated thereby, (v) any dealer-manager,
underwriting,
subscription, purchase, stockholders, option or registration rights
agreement or
plan entered into or adopted by any member of the Company Group in
connection
with any Securities Offering, (vi) any purchase, repurchase,
redemption,
recapitalization or reorganization or other agreement entered into
by any member
of the Company Group in connection with any Redemption, or (vii)
any quarterly,
annual or current reports or other filing filed, furnished or
supplementally
provided by any member of the Company Group with or to the
Commission or any
securities exchange, including all exhibits, financial statements
and schedules
appended thereto, and any submission to the Commission or any
securities
exchange in connection therewith.
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(k) "Securities
Act" means the Securities act of 1933, as amended, and the
rules and regulations promulgated thereunder.
(1)
"Securities Offerings" means any Management Offering, any
Redemption
and any Subsequent Offering.
(m)
"Subsidiary" means each corporation or other Person in which a
Person
owns or Controls, directly or indirectly, capital stock or other
equity
interests representing more than 50% of the outstanding voting
stock or other
equity interests.
(n)
"Transactions" means the Equity Offering, the Financings and
the
Recapitalization.
2.
Indemnification.
(a) Each
of the Company Entities (each, an "Indemnifying Party" and
collectively, the "Indemnifying Parties"), jointly and severally,
agrees to
indemnify, defend and hold harmless each Indemnitee:
(i) from and against any and all Obligations, whether incurred
with
respect to
third parties or otherwise, in any way resulting from, arising
out of or
in connection with, based upon or relating to (A) the
Securities
Act, the
Exchange Act or any other applicable securities or other laws,
in
connection
with any Securities Offering, the Financings, any Related
Document
or any of the transactions contemplated thereby, (B) any other
action or
failure to act of any member of the Company Group or any of
their
predecessors, whether such action or failure has occurred or is
yet
to occur
or (C) the performance by a Manager of management consulting,
monitoring, financial advisory or other services for any member of
the
Company
Group (whether performed prior to or on the date hereof,
hereafter,
pursuant to the Transaction Agreement, the Monitoring Agreement
or
otherwise), except to the extent that any such Obligation is found
in a
final
judgment by a court of competent jurisdiction to have resulted
from
the gross
negligence or intentional misconduct of such Manager; and
(ii) to the fullest extent permitted by applicable law, from
and
against
any and all Obligations in any way resulting from, arising out
of
or in
connection with, based upon or relating to (A) the fact that
such
Indemnitee
is or was a director or an officer of any member of the Company
Group or is or was
serving at the request of such corporation as a
director,
officer, employee or agent of or advisor or consultant to
another
corporation, partnership, joint venture, trust or other
enterprise
or (B) any
breach or alleged breach by such Indemnitee of his or her
fiduciary
duty as a director or an officer of any member of the Company
Group;
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in each case including but not limited to any and all fees, costs
and expenses
(including without limitation fees and disbursements of attorneys
and other
professional advisers) incurred by or on behalf of any Indemnitee
in asserting,
exercising or enforcing any of its rights, powers, privileges or
remedies in
respect of this Agreement, the Transaction Agreement or the
Monitoring
Agreement, provided that no Indemnifying Party shall be obligated
to indemnify
and hold harmless any Indemnitee under this Section 2(a) in respect
of any claim
made against the Indemnitee by any of its own directors, officers,
partners,
members, stockholders, employees, agents, advisors, consultants,
representatives
and controlling persons (any of the foregoing, a "Related Person")
to the extent
arising from any obligation of such Indemnitee to such Related
Person (whether
arising from contract, by law or otherwise).
(b)
Without in any way limiting the foregoing Section 2(a), each of
the
Indemnifying Parties agrees, jointly and severally, to indemnify,
defend and
hold harmless each Indemnitee from and against any and all
Obligations resulting
from, arising out of or in connection with, based upon or relating
to
liabilities under the
